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ISDICTION: Writ Petition No. 5879 of 1980. (Under Article 32 of the Constitution of India) AND Writ Petition No. 5877 of 1980. (Under Article 32 of the Constitution of India) AND Transfered Case No. 29 of 1981. (Calcutta High Court Writ Petition No. 11508 of 1981) With Civil Appeal No. 2819 of 1980. (Appeal by special leave from the judgment and order dated 21st November, 1980 of the Division Bench of the High Court of Calcutta in F.M.A.T. No. 3408 of 1980) Soli J. Sorabji, K.K. Venugopal, section Rangarajan, section Balakrishnan, M.K.D. Namboodiry, P. Radhakrishnan, N.A. Subrahmaniam, C.S. Vaidyanathan, M.N. Krishna Mani and Vinnet Kumar for the Petitioners and Appellant. L.N. Sinha, Attorney General, K. Parasaran, Solicitor General, M.K. Banerji, Additional Solicitor General, Govind Swaminadhan, for R. 3, N. Nettar and Miss A. Subhashini for Respondents Nos. 1 to 4. T.S. Krishnamoorthy Iyer and Raju Ramchandran for Respondent No. 5. F.S. Nariman, Anil B. Divan, P.H. Parekh, Mrs. Vineeta Sengupta, Gautam Philip and Sanjeev Agarwal for Respondent Nos. 6 to 240 in WPs. P.P. Rao, P.C. Kapur and R. Venkataramani for interveners 1 88. 740 FOR APPLICANT/INTERVENERS A.B. Patel: R.B. Datar Indra Sen: N.M. Kshatriya, R.K. Habbu: B.R. Aggarwala, Catholic Bishop Con P.A. Francis, J.B. Dadachanji ference of India: and D.N. Mishra The following Judgments were delivered CHINNAPPA REDDY, J. I have the good fortune of having before me the scholarly judgment of my brother Misra J., I agree with my brother Misra, J that the Writ Petitions must fail. With much that he has said, also, I agree. But with a little, to my own lasting regret, I do not agree. It is, therefore, proper for me to explain the points of my disagreement. Quite a considerable part of the hearing of the petitions was devoted to a debate on the question, what is Religion ? Religion: Everyone has a religion, or at least, a view or a window on religion, be he a bigot or simple believer, philosopher or pedestrian, atheist or agnostic. Religion, like 'democracy ' and 'equality ' is an elusive expression, which everyone understands according to his pre conceptions. What is religion to some is pure dogma to others and what is religion to others is pure superstition to some others. Karl Marx in his contribution to the Critique of Hegel 's Philosophy of Law described religion as the 'Opium of the people '. He said further "Basically religion is a very convenient sanctuary for bourgeois thought to flee to in times of stress. Bertrand Russell, in his essay 'Why I am not Christian ', said, "Religion is based, I think, primarily and mainly upon fear. " It is partly the terror of the unknown and partly, as I have said, the wish to feel that you have a kind of elder brother, who will stand by you in all your troubles and disputes. Fear is the basis of the whole thing fear of the mysterious, fear of defeat, fear of death. Fear is the parent of cruelty, and, therefore, it is no wonder if cruelty and religion have gone hand in hand. As a worshipper at the alter of peace, I find it difficult to reconcile myself to religion, which throughout the ages, has justified war calling it a Dharma Uddha, a Jehad or a 741 Crusade. I believe that by getting mixed up with religion, ethics has lost 'much of its point, much of its purpose and a major portion of its spontaneity '. I apprehend I share the views of those who have neither faith nor belief in religion and who consider religion as entirely unscientific and irrational. Chanting of prayer appears to me to be mere jingoism and observance of ritual, plain superstition. But my views about religion. my prejudices and my predilections, if they be such, are entirely irrelevant. So are the views of the credulous, the fanatic, the bigot and the zealot. So also the views of the faithful, the devout, the Acharya, the Moulvi, the Padre and the Bhikshu each of whom may claim his as the only true or revealed religion. For our present purpose, we are concerned with what the people of the Socialist, Secular, Democratic Republic of India, who have given each of its citizens Freedom of conscience and the right to freely profess, practise and propogate religion and who have given every religious denomination the right to freely manage its religious affairs, mean by the expressions 'religion ' and 'religious denomination '. We are concerned with what these expressions are designed to mean in articles 25 and 26 of the Constitution. Any Freedom or Right involving the conscience must naturally receive a wide interpretation and the expression 'religion ' and 'religious denomination ' must therefore, be interpreted in no narrow, stifling sense but is a liberal, expansive way. Etymology is of no avail. Religion is derived from 'religare ' which means "to bind". Etymologically, therefore, every bond between two people is a religion, but that is not true. To say so is only to indulge in etymological deception. Quite obviously, religion is much more than a mere bond uniting people. Quite obviously, again, religion is not to be confined to the traditional, established, well known or popular religions like Hinduism, Mahomedanism, Buddhism and Christianity. There may be and, indeed, there are, in this vast country, several religions, less known or even unknown escept in the remote corners or in the small pockets of the land where they may be practised. A religion may not be wide spread. It may have little following. It may not have even a name, as indeed most tribal religions do not have. We may only describe them by adding the suffix 'ism ' to the name of the founder teacher, the tribe, the area or the deity. The nomenclature is not of the essence. Again, a band of persons, large or small, may not be said to be 742 adherents of a religion merely because they share some common beliefs and common interests and practise common rites and ceremonies; nor can pietistic recitation and solemn ritual combine to produce religion, on that account only. Secret societies dedicated to secular tasks and indulging in queer oaths and observances, guilds and groups of persons who meet but to dine and wine but who subject their members to extravagant initiation ceremonies, village and tribal sorcerers and coven of witches who chant rant and dance in the most weird way possible are all far removed from religion. They appear to lack the 'spiritual connection '. But, all this is unsatisfactory. We are not arriving at any definition of religion. We are only making peripheral journeys and not getting any nearer to the core of the problem presented to us. Let us examine the relevant provisions of the Constitution for such light as they may throw on the meaning of the expressions 'religion ' and religious denomination '. They are not defined. The word 'religion ' does not occur in the Preamble to the Constitution, but the Preamble does promise to secure to its citizens "Liberty of thought, expression, belief, faith and worship". The Freedom of conscience and the Right to profess, propagate and practice religion,flow of the idea so expressed in the Preamble. In Part III of the Constitution, under the head "Right to Freedom of Religion", there are four Articles. Art25(i) guarantees to all persons, subject to public order, morality and health and to the other provisions of Part III of the Constitution, freedom of conscience and the right freely to profess, practise and propagate religion. Freedom of conscience is not to be separated from the Right to profess, practice and propagate religion. They go together and together they form part of the Right to Freedom of Religion. Clause (2) of article 25, however, stipulates that the freedom and the right guaranteed by cl. (1) shall not prevent the State from making any law regulating or restricting, any economic, financial, political or other secular activity which may be associated with religious practice. Or to provide for social welfare and reform or to throw open Hindu religious institutions of a public character to all classes and sections of Hindus. So, the Article makes it clear that secular activity may be associated with Religion, though the guarantee of the article does not extend to such activity, article 26 guarantees that every religious denomination or any section thereof shall have the right, subject to public order, morality and health, to establish and maintain institutions for 743 religious and charitable purposes, to manage its own affairs in matters of religion, to own and acquire movable and immovable property and to administer such property in accordance with law. article 27 prohibits compulsion for payment of taxes for promotion of any particular religion. article 28 bars religious instruction in any institution wholly maintained out of State funds and prevents compulsion to attend any religious instruction or religious worship in educational institutions recognised by the State or receiving aid out of State funds. Apart from Articles 25 to 28, the word 'religion ' occurs in articles 15(1), 15(2), 16(2), 16(5), 23(2), 29(2) and 30 of the Constitution. article 15(1) prescribes that the State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them. article 15(2) provides, in particular, that no citizen shall, on ground only of religion, race, caste, sex, place of birth or any of them, be subject to any disability, liability restriction or condition with regard to access to shops, public restaurants, hotels and places of public entertainment; or the use of wells, tanks, bathing ghats, roads and places of public resort maintained wholly or partly out of State funds or dedicated to the use of the general public. Art.16(2) guarantees that no citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them, be ineligible for, or discriminated against in respect of any employment or office under the State. article 16(5) exempts from the right guaranteed under article 16 the operation of any law which provides that the incumbent of an office in connection with the affairs of any religious or denominational institution or any member of the governing body thereof shall be a person professing a particular religion or belonging to a particular denomination. article 23(2), while enabling the State to impose compulsory service for public purposes, prohibits the State from making any discrimination on grounds only of religion, race, caste or class or any of them. 744 article 29(2) provides that no citizen shall be denied admission to any educational institution maintained by the State or receiving aid out of State funds on grounds of religion, race, caste, language or any of them. article 30(1) guarantees to all minorities, whether based on religion or language the right to establish and administer educational institutions of their choice. article 30(2) further provides that the State shall not, in granting aid to educational institutions, discriminate against any educational institutions on the ground that it is under the management of a minority, whether based on religion or language. It is readily seen that the several provisions of the Constitution where the expressions 'religion ' and 'religious denomination ' are used are either those which are concerned with equality and equal opportunity or those which are concerned with freedom of religion. article 15(1), article 16(2), article 23(2), article 29(2) are the several equality and equal opportunity clauses of the Constitution which bar discrimination on the ground of religion, and they place religion in equation with race, caste, sex, place of birth, residence and language for the purposes of the various aspects of equality dealt with by them. article 30 recognises the existence of minority groups based on religion along with minority groups based on language. articles 25 to 28 deal with the Right to Freedom of Religion which, as we said earlier is traceable to the idea of "Liberty of Thought, Expression, Belief, Faith and Worship" in the Preamble to the Constitution. article 25 guarantees freedom of conscience and the right freely to profess, practise and propagate religion, but saves laws regulating or restricting any economic, financial, political or other secular activity which may be associated with religious practice. Reading article 25 in the background of the proclamation regarding Liberty in the Preamble to the Constitution, we may safely conclude that the Constitution views religion, as comprising thought, expression, belief, faith or worship, as involving the conscience and as something which may be professed, practised and propagated and which is any man 's attribute in the same manner as race, sex language, residence etc. We also see that economic, financial, political or other secular activity may be associated with religious practice though such activity is not covered by the guarantee of freedom of conscience and the right freely to profess, practise and propagate religion. So, the Constitution considers Religion as a matter of thought, expression, belief, faith and worship, a matter 745 involving the conscience and a matter which may be professed, practised and propagated by anyone and which may even have some secular activity associated with it. We have already said that any Freedom or Right involving the conscience must naturally receive a wide interpretation and the expressions 'Religion ' and 'Religious Denomination ' must, therefore, be interpreted in no narrow, stifling sense but in a liberal, expansive way. How has the Court looked at the expression 'religion and 'religious denomination ' and how has the Court attempted to define them ? We begin with the well known Shirur Mutt case where Mukherjea J, speaking for himself and six of his colleagues, examined the question in some detail and, of course, with great erudition. We must first notice that the Court, there, was considering the question of the vires of the Madras Hindu Religious and Charitable Endowments Act 1951 which was sought to be made applicable to the institution known as Shirur Mutt, one of the eight Mutts situated at Udipi and reputed to have been founded by Shri Madhwa Charya, the renowned exponent of 'dualistic thesim ' in the Hindu Religion. The trustees and the beneficiaries of the Mutt, it was claim and established, were the followers of Shri Madhwa Charya. The question arose whether the spiritual fraternity constituted by the followers of Shri Madhwa Charya could be said to be a 'religious denomination ' within the meaning of article 26, entitling them to manage their own affairs in 'matters of religion '. The Court noticed that while cl. (b) of article 26 guaranteed to a religious denomination the right to manage its own affairs in matters of religion, other clauses of the Article dealt with the right of a religious denomination to acquire and own property and to administer such property in accordance with law. The administration of its property by a religious denomination having thus been placed on a different footing from the right to manage its own affairs in matters of religion, the Court said: "the latter is a Fundamental Right which no legislature can take away, whereas the former can be regulated by laws which the legislature can validly impose. It is clear, therefore, that questions merely relating to administration of properties belonging to a religious group or institution are not matters of religion to which clause (b) of the Article applies." 746 Mukherjea, J, then proceeded to consider what were matters of religion ? He noticed that 'religion ' was a term which was hardly susceptible of any rigid definition. He rejected the definition given in Davis vs Benson as neither precise nor adequate and went on to say, "Religion is certainly a matter of faith with individuals or communities and it is not necessarily theistic. There are well known religions in India like Buddhism and Jainism which do not believe in God or in any Intelligent First Cause. A religion undoubtedly has its basis in a system of beliefs or doctrines which are regarded by those who profess that religion as conducive to their spiritual well being, but it would not be correct to say that religion is nothing else but a doctrine or belief. A religion may not only lay down a code of ethical rules for its followers to accept, it might prescribe rituals and observavances, ceremonies and modes of worship which are regarded as integral parts of religion, and these forms and dress. " Mukherjea,J., accepted the following observations of Latham, CJ in Vide Adelaide Company vs The Commonwealth(1), as fully applicable to the protection of religion as guaranteed by the Indian Constitution: "It is sometimes suggested in discussions on the subject of freedom of religion that, though the civil Government should not interfere with religious opinions, it nevertheless may deal as it pleases with any acts which are done in pursuance of religious belief without infringing the principle of freedom of religion. It appears to me to be difficult to maintain this distinction as relevant to the interpretation of section 116. The section refers in express terms to the exercise of religion, and, therefore, it is intended to protect from the operation of any Commonwealth laws acts which are done in the exercise of religion. Thus the section goes far beyond protecting liberty of opinion. It protects also acts done in pursuance of religious belief as part of religion. " 747 Mukherjea, J., thereafter, pointed out that freedom of religion under the Indian Constitution also was not confined to religious beliefs only, it extended to religious practices as well subject to the restrictions which the Constitution itself had laid down. Under article 26(b) he said, a religious denomination or organisation enjoyed complete autonomy in the matter of deciding as to what rites and ceremonies were essential according to the tenets of their religion they held and no outside authority had any jurisdiction to interfere with their decision in such matters. But, he said, the scale of expenses to be incurred in connection with the religious observances would be a matter of administration of property belonging to the religious denomination and to be controlled by secular authorities in accordance with any law laid down by a competent legislature. He added, "It should be noticed, however, that under article 26 (d), it is the Fundamental Right of a religious denomination or its representative to administer its properties in accordance with the law; and the law, therefore, must leave the right of administration to the religious denomination itself, subject to such restrictions and regulations as it might choose to impose a law which takes away the right of administration from the hands of a religious denomination altogether and vests it in any other authority, would amount to a violation of the right guaranteed under cl. D of article 26". Mukherjea, J also considered the question whether the followers of Madhwacharya could be considered a religious denomination and whether Sivalli Brahmins constituted a section of that religious denomination. The meaning of the word denomination was culled out from the Oxford Dictionary where it has been defined to mean 'a collection of individuals classed together under the same name. a religious sect or body having a common faith and organisation and designated by a distinctive name". Reference was then made to "a galaxy of religious teachers and philosophers who founded the different sects and sub sects of the Hindu religion that we find in India at the present day". It was emphatically stated that each one of such sects or sub sects could certainly be called a religious denomination as it was designated by a distinctive name in many cases it was the name of the founder and had a common faith and common spiritual organisation. It was observed," the followers of Ramanuja, who are known by the name of Shri Vaishnobas, undoubtedly constitute a religious denomination; and so do the 748 followers of Madhwacharya and other religious teachers. It is a fact well established by tradition that the eight Udipi Maths were founded by Madhwacharya himself and the trustees and the beneficiaries of these Maths profess to be followers of that teacher. The High Court has found that the Math in question is in charge of Sivalli Brahmins who constitute a section of the followers of Madhwacharya. As article 26 contemplates not merely a religious denomination, but also a section thereof, the Math or the spiritual fraternity represented by it can legitimately come within the purview of this article. " So, in the Shirur Mutt case, Mukherjea J expressed difficulty in defining the term 'religion ' with exactitude, but explained it as something founded upon beliefs or doctrines, regarded by those professing the religion as conductive to their spiritual well being and attended by practices and observances viewed by the religious community as integral to the religion. Mukherjea J, however, found less difficulty in defining 'religious denomination ' in the same terms as in the Oxford Dictionary. Ratilal Panachand Gandhi vs The State of Bombay and Ors.(1) was decided by five of the Learned Judges who constituted the Bench which decided the Shirur Mutt case. What was said in the Shirur Mutt was reiterated and it was again emphasised that religion was not merely an opinion, doctrine or belief and that it had its outward expression in acts as well. The following observations of Davar J, in Jamshedjee vs Sunnabal(2) were approved: "If this is the belief of the community, and it is proved undoubtedly to be the belief of the Zoroastrian community, a secular judge is bound to accept that belief it is not for him to sit in judgment on that belief, he is not right to interfere with the conscience of a donor who makes a gift in favour of what he believes to be the advancement of his religion and the welfare of his community or mankind". I have stated almost at the outset that judges ' faith or lack of faith in religion is irrelevant in deciding what are matters of religion. In the Durgah Committee Ajmer vs Syed Hussain Ali & others(3) the Court reiterated the position that the freedom guaranteed by article 25(1) was not only the right to entertain such religious beliefs as 749 my appeal to his conscience but also afforded him the right to exhibit his belief in his conduct by such outward acts as may appear to him proper in order to spread his ideas for the benefit of others. A note of caution was, however, struck and it was said that practices in order to qualify as matters of religion should be regarded by the said religion as its essential and integral part. Otherwise, it was pointed out, even purely secular practices which were not an essential or an integral part of religion were apt to be clothed with a religious form and stake a claim for treatment as religious practices. Mukherjea J 's definition of 'religious denomination ' in the Shirur Mutt case was also accepted and the case was permitted to be argued on the broad and general ground that the Chishtia Soofies constituted either a religious denomination or a section of a religious denomination. In Tilkayat Shri Govindlalji Maharaj vs The State of Rajasthan and Ors.(1) the question was whether the famous Nath Dwara Temple was a public temple? It was held that it was a public temple. It was assumed that the followers of Vallabha constituted a religious denomination. In Raja Virakishore vs State of Orissa(2) one of the arguments sought to be advanced before the Supreme Court was that the worshippers of Lord Jagan Nath constituted a religious denomination and that the Shri Jagan Nath Temple Act, which took away the right of management from the denomination, contravened the Fundamental Right guaranteed by article 26(d) of the Constitution. The answer of the State was that the temple did not pertain to any particular sect, cult or creed of Hindus, but was a public temple above all sects, cults and creeds and, therefore, it was not the temple of any particular denomination The Court however, did not permit the worshippers to raise the argument as the state of pleadings were found to be defective. In Sasti Yagnapurushad ji and Ors. vs Muldas Bhudardas Vaishya and Anr.(1) the question arose whether the Swaminarayan sect followed a religion distinct and separate from the Hindu religion and whether, consequently, the temple belonging to the sect was outside the ambit of Bombay Hindu Places of Public Worships (Entry 750 Authorisation) Act ? Gajendragadkar, CJ, on an exhaustive consideration of various Hindu Texts and the texts and history of the Swaminarayan sect, came to the conclusion that the Swaminarayan sect was not a religion, distinct and separate from the Hindu Religion. It is obvious that religion, undefined by the Constitution, is incapable of precise judicial definition either. In the background of the provisions of the Constitution and the light shed by judicial precedent, we may say religion is a matter of faith. It is a matter of belief and doctrine. It concerns the conscience i.e. the spirit of man. It must be capable of overt expression in word and deed, such as, worship or ritual. So, religion is a matter of belief and doctrine, concerning the human spirit, expressed overtly in the form of ritual and worship. Some religions are easily identifiable as religions, some are easily identifiable as not religions. There are many in the penumbral region which instinctively appear to some as religion and to others as not religions. There is no formula of general application. There is no knife edge test. Primarily, it is a question of the consciousness of the community, how does the fraternity or sodality (if it is permissible to use the word without confining it to Roman Catholic groups) regard itself, how do others regard the fraternity or sodality. A host of other circumstances may have to be considered, such as, the origin and the history of the community, the beliefs and the doctrines professed by the community, the rituals observed by the community, what the founder, if any, taught, what the founder was understood by his followers to have taught, etc. In origin, the founder may not have intended to found any religion at all. He may have merely protested against some rituals and observances; he may have disagreed with the interpretation of some earlier religious tenets. What he said, what he preached and what he taught, his protest, his dissent, his disagreement might have developed into a religion in the course of time, even during his life time. He may be against religion itself, yet, history and the perception of the community may make a religion out of what was not intended to be a religion and he may be hailed as the founder of a new religion. There are the obvious examples of Buddhism and Jainism and for that matter Christianity itself. Neither Buddha nor Mahavira, nor Christ ever thought of founding a new religion, yet three great religions bear their names. If the word 'religion ' is once explained, though with some difficulty, the expression 'religious denomination ' may be defied 751 with less difficulty. As we mentioned earlier Mukherjea J, borrowed the meaning of the word denomination from the Oxford Dictionary and adopted it to define religious denomination as "a collection of individuals classed together under the same name, a religious sect or body having a common faith and organisation and designated by a distinctive name". The followers of Ramanuja, the followers of Madhwacharya, the followers of Vallabha, the Chishtia Soofies have been found or assumed by the Court to be religious denominations. It will be noticed that these sects possessed no distinctive name except that of their founder teacher and had no special organisation except a vague, loose un knit one. The really distinctive feature about each one of these sects was a shared belief in the tenets taught by the teacher founder. We take care to mention here that whatever the ordinary features of a religious denomination may be considered to be, all are not of equal importance and surely the common faith of the religious body is more important than the other features. It is, perhaps, necessary to say that judicial definitions are not statutory definitions, they are mere explanations, every word of which is not to be weighed in golden scales. Law has a tendency to harden with the passage of time and judicial pronouncements are made to assume the form of statutory pronouncements. So soon as a word or expression occur in the statute is judicially defined, the tendency is to try to interpret the language employed by the judges in the judicial definition as if it has been transformed into a statutory definition. That is wrong. Always, words and expressions to be interpreted are those employed in the statute and not those used by judges for felicitous explanation. Judicial definition, we repeat, is explanatory and not definitive. One remark requires to be added here. Religious denomination has not to owe allegiance to any parent religion. The entire following of a religion may be no more than the religious denomination. This may particularly be so in the case of small religious groups or `developing ' religions, that is, religions in the formative stage. We may now consider whether Aurobindoism if one may be excused for using the word `Aurobindoism ' to describe what Shri Aurobindo taught and practised and what he was understood by his followers to have taught and practised was a religion and whether the followers of Shri Aurobindo could be called a religious denomination. Shri Aurobindo was a poet, a savant, a philosopher and a mystic. Was he or was he not a religious teacher ? 752 The Encyclopaedia Brittanica (1978 Edition) describes him as "seer, poet and Indian nationalist who originated the philosophy of cosmic salvation through spiritual evolution, a divine existence that will appear through the development of the "agnostic man" to usher in a transcendant spiritual age in which man and the universe are destined to become divine". The Encyclopaedia goes on to say, "he devoted himself for the rest of his life solely to the development of his unique philosophy. There (at Pondicherry) he founded an ashrama (retreat) as an international cultural centre for spiritual development, attracting students from all over the world. The only requirement for entrance was a sincere wish to develop spiritually." "According to Aurobindo 's theory of cosmic salvation, the paths to union with Brahman are two way streets, or channels, Enlightment comes to man from above, while the spirital mind (supermind) of man strives through logic illumination to reach up ward from below. When these two forces blend in an individual, agnostic man is created. This logic illumination transcends both reason and intuition and eventually leads to the freeing of the individual from the bonds of individuality and, by extension all mankind will eventually achieve mukti (liberation)". "Thus, Aurobindo created a dialectic mode of salvation not only for the individual but for all mankind. Energy of sachidananda ("existence, thought, joy") comes down from Brahman (thesis) to meet energy from the supermind of man striving upward toward spirituality (antithesis) and melds in man to create a new spiritual superman (synthesis). From these evolved divine beings, a divine universe also evolved. " Under the head `History of Hinduism '. Encyclopaedia Brittanica again refers to Aurobindo and says : "Another modern teacher whose doctrines have had some influence outside India was Sri Aurobindo, who began his career as a revolutionary. He withdrew from politics, however, and settled in Pondicherry, then a French possession. There he established an ashrama (a retreat) and achieved a high reputation as a sage. His followers looked on him as the first incarnate manifestation of super beings whose evolution he prophesied, and apprently he did not discourage this belief. After his death, the leadership of the Aurobindo Ashram was taken over by "the Mother", Mme Mira 753 Richard, a French woman who had been one of his leading disciples. " The Encyclopaedia Brittanica refers to Aurobindo again under the head `Idealism ' and says : "Aurobindo, reinterpreting the Indian Idealistic heritage in the light of his own Western education, rejected the maya doctrine of illusion, replacing it with the concept of evolution, aguring that the "illumination of individuals will lead to the emergence of a divine community". Aurobindo founded the influential Pondicherry Ashram, a religious and philosophical community, and headed it until his death. " The Encyclopaedia of Philosophy (1972 Edition) says, "Shri Aurobindo was an Indian metaphysician and founder of new religious movement with head quarters at Pondicherry The religious movement associated with him has increased its following in India, and has made some converts in the West. . God must `descent ' into human experience. This illumination of individual will lead to the emergence of a divinised community. . . Aurobindo produced a synthesis between older Indian religious ideas and the world affirming attitudes of Christian theism. " The Dictionary of Comparative Religion says of Aurobindo : "According to Aurobindo, there is a progressive evolution of the divine being through matter to higher spiritual forms, and the Aurobindo movement is held to represent vanguard of this evolutionary process in our own times. Aurobindo practised and taught an `integral yoga ' in which meditative and spiritual exercises are integrated with physical, cultural and intellectual pursuits. " Frederic Spiegelberg, in his book `Living Religions of the World ' refers to Shri Aurobindo : "We pass beyond specific religions to a synthetic vision of the religious impulse itself, a vision designed to embrace all previous and future history all previous and future paths. Shri Aurobindo is a man worshipped by hundreds of thousands and respected by 754 millions. . In his retreat at Pondicherry he is less the philosopher of Hinduism than the philosopher of religion in general, the voice of that which comparative religion leaves undisputed. " On the topic Religion, the Gazetteer of India, published by the Govt. of India, has this to say : "Shri Aurobindo gave new interpretations of the vedas and The Vedanta, and in his Essays on the Gita, he expounded what he called "the integral view of life". His great work, the Life Divine, is a summing up of his philosophy of "the Descent of the Divine into Matter". The importance of Sri Aurobindo 's mission lies in his attempt to explain the true methods of Yoga. " It is clear from these extracts that the world and India treated and respected Shri Aurobindo as a religious teacher and the founder of a new religious movement whose principal thesis was the evolution or transformation of humanity into divinity through the practice of Integral Yoga. One may or may not accept Shri Aurobindo 's thesis or teaching, but, without doubt, it was unique ; without doubt, it was novel; without doubt, it had never been so taught before. Shri Aurobindo first conceived the theory of Ascent and Descent, involution and evolution. He was the first expositor of the Integral Yoga. He expressly professed to depart from the Yoga of the Gita and dissented from the Maya Vada. Pedestrian minds like ours may not understand the niceties of the metaphysical exercises involved. We do not desire to enter into any polemics over Shri Aurobindo 's teachings as it is not within the judicial province to do so except to the limited extent of finding out whether his teachings have the necessary spiritual content to qualify as religious doctrine and how his followers understood those teachings. So, we refrain from quoting Shri Aurobindo. But this fact stands out prominently that whatever else he was, he truly was a religious teacher and taught and was understood to have taught new religious doctrine and practice. I fail to see why `Aurobindoism ' cannot be classified, if not as a new religion, as a new sect of Hinduism and why the followers of Shri Aurobindo cannot be termed a religious denomination. 755 Shri Aurobindo, of course, disclaimed that he was founding a religion. No great religious teacher ever claimed that he was founding a new religion or a new school of religious thought. The question is not whether Shri Aurobindo refused to claim or denied that he was founding a new religion or a new school of religious thought but whether his disciples and the community thought so. There is no doubt that they did, not only his disciples and followers, but religious leaders all the world over and of all faiths. If the followers of Shri Aurobindo constitute a `religious denomination ', as, to my mind, they undoubtedly do, the members of Shri Aurobindo Society are certainly a distinct and identifiable section of the `religious denomination '. The members of the society are followers and disciples of Shri Aurobindo. The society was formed to preach and propagate the beliefs and ideals of Shri Aurobindo. The primary object of the society was "To make known to the members of the public in general the aims and ideals of Shri Aurobindo and the Mother, their system of Integral Yoga and to work for its fulfilment in all possible ways and for the attainment of a spiritualised society as envisaged by Shri Aurobindo. " It is nobody 's case that this is not the principal object of the society or that it is only a facade for other activities. However, it was argued that the Society had represented itself as, `a non political, non religious organisation ' and claimed exemption from income tax on the ground that it was engaged in educational, cultural and scientific research. If the society consists of the disciples and followers of Sri Aurobindo, if its primary object is to profess, practise and propagate the system of Integral Yoga, and, if, therefore, it is a section of a religious denomination, the circumstance that it is engaged in several secular activities and has represented itself to be a non religious organisation for certain purposes cannot detract from the fact that it is a section of a religious denomination within the meaning of article 26 Therefore, we must hold, the Aurobindo Society is a section of a religious denomination within the meaning of the expression in article 26 of the Constitution. But, the question is has the Fundamental Right guaranteed by article 26 been infringed by the . We have to notice straight away that the Act did not take away or purport to take away the management of the Shri Aurobindo Society. What it did or purported to do was "to provide for the 756 taking over, in the public interest, of the management of Auroville for a limited period and for matters connected therewith or incidental thereto. " The long preamble says, "Whereas Shri Aurobindo Society, a non governmental organisation had been a channel of funds for the setting up of a cultural township known as Auroville, where people of different countries are expected to live together in harmony in one community and are expected to engage in cultural, educational, scientific and other pursuits aiming at human unity. " x x x "AND WHEREAS Auroville was developed as a cultural township with the aid of funds received from different organisations in and outside India as also from the substantial grants received from the Central and State Governments; AND WHEREAS pursuant to the complaints received with regard to the misuse of funds by Sri Aurobindo Society, a committee was set up under the chairmanship of the Lieutenant Governor of Pondicherry with representatives of the Government of Tamil Nadu and of the Ministry of Home Affairs in the Central Government, and the said committees had, after a detailed scrutiny, of the accounts of Shri Aurobindo Society, found instances of serious irregularities in the management of the said Society, misutilisation of its funds and their diversion to other purposes ; AND WHEREAS in view of the serious difficulties which have arisen with regard to the management of Auroville, it is necessary to take over, for a limited period, the management, thereof and any delay in taking over the management of Auroville would be highly detrimental to the interests and objectives of Auroville; The long preamble itself explains what Auroville is. section 3(c) of the Act defines Auroville as meaning "so much of the undertakings as form part of, or are relatable to, the township which is known as Auroville and the charter of which proclaimed by the `Mother ' on the 23rd day of February, 1968". 757 Now, the idea of Auroville was conceived by Madame M. Alfasse, affectionately and respectfully known to the disciples and followers of Shri Aurobindo as the Mother. The idea of a cultural township which would promote international understanding and world peace had great appeal to the Government of India and the United Nations Educational, Scientific and Cultural Organisation and they extended their support to the project. But, things turned out to be not so smooth sailing after all. There was dissension among the members of the Shri Aurobindo Society. Things came to such a pass that the impugned Act was necessitated. Misra J. has narrated the facts leading to the intervention of parliament. Parliament concerned itself with the management of Auroville only and with no other activity of the Shri Aurovindo Society, including `its affairs in matters of religion '. In fact, section 4(2) makes it explicit that, except for matters relating to the management of Auroville, the provisions of the West Bengal Societies Registration Act, 1961, under which the Society was registered, shall continue to apply to the Society in the same manner as before. Since the only activity of the Society which was touched by the Act was the management of Auroville, the question arises whether Auroville is an institution established and maintained for religious and charitable purposes and whether its management of Auroville is `a matter of religion '. Auroville is a township and not a place of worship. It is a township dedicated, not to the practice and propagation of any religious doctrine but to promote international understanding and world peace, surely, a secular and not a religious activity. The highest that can be said in favour of Auroville being a religious institution or its management being a religious matter, is that it was conceived by the Mother and shaped and sculpted by Shri Aurobindo 's disciples and followers in the pursuit of one of the ideas and ideals of Shri Aurobindo, a great religious teacher. On the other hand, the ideal itself, that is, the promotion of international understanding and world peace is by no means a religious ideal and it was because of the nature of the ideal that the Government of India and the UNESCO adopted the project. Shri Aurobindo himself was not a mere religious teacher. He was a visionary, a humanist and a nationalist who had blossomed into an internationalist. It appears, therefore, that Auroville, though the child of the Mother and though nurtured by the devotees of Shri Aurobindo, has an individuality, distinctly secular, of its own. The management of the International, cultural township of Auroville is not, in our opinion, a matter of religion. We have mentioned earlier that laws regulating or restricting any economic, financial, political or other secular 758 activity which may be associated with religious practice are excluded from the guarantee of freedom of conscience and the right freely to profess, practise and propagate religion. We have also pointed out that the administration of the property of a religious denomination is different from the right of the religious denomination to manage its own affairs in matters of religion and that laws may be made which regulate the right to administer the property of a religious denomination. Questions merely relating to administration of properties belonging to a religious group or institution are not matters of religion to which clause (b) of article 26 applies. It has been so decided in the Shirur Mutt case as well as other cases following it. We are, therefore, of the view that the Auroville Emergency Provisions Act which provides for the taking over the management of Auroville for a limited period does not offend the rights guaranteed by articles 25 and 26 of the Constitution. A passing reference was also made in the course of argument to Arts 29 and 30 of the Constitution, and it was said that the rights guaranteed by those Articles were also infringed. We are entirely at a loss to understand how the rights guaranteed by articles 29 and 30 can be said to have been infringed by the Auroville Emergency Provisions Act. No section of citizens having a culture of its own has been denied the right to conserve that culture and no religious minority has been denied the right to establish and to administer an educational institution of its choice. On the several other questions argued before us I accept the conclusion of Misra J. The Writ Petitions are accordingly dismissed but in the circumstances there will be no order regarding costs. MISRA J. The first two petitions under Article 32 of the Constitution of India filed in this Court and the third under Article 226 of the Constitution filed in the Calcutta High Court and later on transferred to this Court, seek to challenge the vires of the Auroville (Emergency Provisions) Ordinance, 1980 (Ordinance No. 19 of 1980), later on replaced by the (Act No. 59 of 1980). The fourth is an appeal by special leave against the order of the Division Bench of the Calcutta High Court dated 21st of November, 1980 vacating the interim order passed by a Single Judge in the writ petition. All these cases raise common questions of constitutional importance and, therefore, they were posted before the Constitution Bench. 759 Man as a rational being, endowed with a sense of freedom and responsibility, does not remain satisfied with his material existence. He wants to know and realise the meaning of his life. It is this perennial urge in man that inspires him to indulge in great creative activities. He creates great cultures and civilisations and tries to realise the meaning and value of life in and through them. To the biologist life is indefinable. It cannot be defined in terms of any things. The biologists have, however, explained and illustrated characteristics of life. But no formulation of the nature and characteristics of life has won general acceptance. It means that the insignia of life have not as yet been comprehended fully. Life has not been viewed in its proper perspective. It still seems to be a riddle, a mystery. Life appears to be a mystery not only to the scientists but also to the philosophers. Philosophers may be said to be rather more conscious of the difficulties that the concept of life involves than the scientists. A philosopher is also aware of the fact that unless one is able to fathom the depths of life and has a full comprehension of its nature, one cannot understand and determine the nature of human personality and its destiny. Similar other deeper and ultimate problems of life have been agitating the mind of seers and philosophers viz., Where did the world come from ? Was it created or evolved ? Is there any unity in diversity ? Each thinker tried to solve the ultimate problems in his own way. By and large they believed there is a real creative force behind the process of the world. Some called it as God, the others as ultimate truth, the conscience. According to some the objects, if left to themselves, would remain motionless and for their initial movement they must have required some external agency which might have set the universal ball rolling. In early ages when man knew little about the laws of nature, he attributed all changes in nature to certain agencies, which due partly to his egocentric way of viewing things and partly to his conscious or sub conscious awareness of the supremacy of man in the whole hierarchy of things in nature, were conceived after the image of man. Later on, in view of the supremacy of kings in all walks of life and their services to society, these unseen mighty agencies were fashioned specifically after them. Since God was conceived to be the supreme among such agencies. He naturally was sought to be represented by the supreme among kings. Thus anthropomorphism, i.e. the idea of 760 God in terms of human figure is partly due to ignorance and partly due to the influence of uncommon persons in the society. During 18th and 19th centuries the entire scientific thought sought to explain the universe mechanically and strived to do away with God completely. If it allowed anything like God to enter its universe at all, it did so only after transforming Him into a mechanical principle. Later on with the formulation of the theory of relativity this isolationist view of things has given way to one of mutual relatedness of each object to every one else. Recognition of the immense potentiality of dynamism inherent in the mutual relatedness of objects in the universe has precluded the necessity of an extra cosmic or metaphysical principle, such as the God of Aristotle who was supposed to have existed prior to the beginning of the world, and given it the first stroke of movement resulting in continuous motion ever since. Thus, the idea of God has led to more or less its adjustment to fresh acquisition of knowledge in each epoch. A view of God which fails to do that tends to become discarded in favour of a new one. If it fails to keep pace with the expanding horizon of knowledge, it begins to lose its ground and shrink into a mere cult of only historical importance, it becomes fossilised and is liable to crumble at the vital touch of the present. Our scriptures proclaimed from the very start that there is only one reality in the world which is described in different ways : "Ekam Sad Wipra Bahuda Vadanti. " One of such Indian sages and philosophers was Sri Aurobindo. He was born on August 15, 1872 in Calcutta. When he was barely seven years old he was taken to England for education. In view of his amazing ability in learning languages he was offered scholarship to join Kings College, Cambridge. There he distinguished himself by his extraordinary ability to compose Greek and Latin verses. He is said to have won all the prizes for the year in Kings College for Greek and Latin verses. He sailed for India in 1893 and settled down at Baroda. He served in several capacities in Baroda State, sometimes as an administrator and at others as Professor of French and English. During his stay there he learnt Sanskrit. 761 The years from 1902 to 1910 were stormy ones for Sri Aurobindo as he embarked on a course of action to free India from British rule. As a result of his political activities and revolutionary literary efforts he was sent to jail in 1908. Two years later he fled from British India to refuge in the French Mandate of Pondicherry (modern Pondicherry) in South East India. He took a decision to give up all political activities so as to concentrate himself with the life of meditation and yoga at Pondicherry. Madam M. Alfassa, a French Lady, who came to be known as 'The Mother ' became a disciple of Sri Aurobindo. Very soon more and more disciples came to join him from various parts of India and abroad and thus 'the Ashram ' came into being. The disciples and devoted followers of Sri Aurobindo and the Mother with a view to propagate and practise the ideals and beliefs of Sri Aurobindo formed a Society called Sri Aurobindo Society in the year 1960. The petitioner Society at all material times was and is still a Society duly registered under the provisions of the West Bengal Societies Registration Act, 1961. This Society is completely distinct from Aurobindo Ashram in Pondicherry. The Society was established and registered for the purpose of carrying out inter alia the following objects in and outside India: (i) To make known to the members of the public in general the aims and ideals of Sri Aurobindo and the Mother, their system of integral yoga and to work for its fulfilment in all possible ways and for the attainment of a spiritualised society as envisaged by Sri Aurobindo; (ii) To Train selected students and teachers from all over the world in the integral system or education i.e., spiritual, psychic, mental, vital and physical; (iii)To help in cash and/or kind by way of donations, gifts, subsidies and in also other ways in the all round development of Sri Aurobindo International Centre of Education and to help similar centres of education; (iv) To establish study groups, libraries, Ashrams and other institutions, centres, branches and societies for study and practice of integral yoga of Sri Aurobindo and the Mother and to help the existing ones; 762 (v) To establish centres of physical culture, sports and volunteer organisations for inculcating and promoting the spirit of discipline, co operation and service to others and to undertake activities for promotion of health and bodily perfection: (vi) To organise, encourage, promote and assist in the study, research and pursuit of science, literature and fine arts; (vii)To enquire, purchase, build, construct or take on lease or in exchange or hire any movable or immovable property, or gifts or privileges; and (viii)Generally to do all other acts, deeds and things necessary, conductive, suitable or incidental to or for the attainment of the above objects or any of them or part of them. The management of the Society vested in its Executive Committee. Rules and regulations have been duly framed for the management of the Society and also for safe custody and protection of its assets, properties and funds. Sri Aurobindo Society (hereinafter referred to as 'the Society ') preaches and propagates the ideals and teachings of Sri Aurobindo inter alia through its numerous centres scattered throughout India by way of weekly meetings of its members. The Mother as the founder president also conceived of a project of setting up a cultural township known as 'Auroville ' where people of different countries are expected to engage in cultural, educational and scientific and other pursuits aiming at human unity. The Society has been a channel of funds for setting up the cultural township known as Auroville. At the initiative of the Government of India, the United Nations Educational, Scientific and Cultural Organisation being of the opinion that the Auroville project would contribute to international understanding and promotion of peace sponsored the project by proposing a resolution to this effect at its General Conference in 1966. This resolution was unanimously adopted at this Conference. By a further resolution passed in 1961 the UNESCO 763 invited its member States and international non governmental organisations to participate in the development of Auroville as an international cultural township to bring together the values of different cultures and civilisations in a harmonious environment with integrated living standards which correspond to man 's physical and spiritual needs. 1970 UNESCO had directed its Director General to take such steps as may be feasible, within the budgetary provisions to promote the development of Auroville as an important international cultural programme. Sri Aurobindo Society received large funds in the shape of grants from different organisations in India and abroad for development of the township. The assistance included contributions from the State Governments of the value of Rs 66.50 lakhs and the Central Government of the value of Rs. 26.14 lakhs. After the death of the Mother on 17th of November 1973 a number of problems of varying nature affecting the smooth running of the project cropped up. The Government of India on receiving complaints about mismanagement of the project and misuse of funds by Sri Aurobindo Society set up a committee under the chairmanship of the Governor of Pondicherry with representatives of the Government of Tamil Nadu and of the Ministry of Home Affairs in the Central Government to look into the matter. The committee made a detailed scrutiny of the accounts of Sri Aurobindo Society relating to Auroville and found instances of serious irregularities in the management of the Society, misutilisation of its funds and their diversion to other purposes. Further, various other serious difficulties had arisen plaguing the management of Auroville and rendering thereby any further growth of the township almost impossible in the circumstances that taking over the management of Auroville became imperative to ensure growth of the township in tune with its objectives. Keeping in view the international character of the project and considering the government 's involvement in actively sponsoring the project through UNESCO, the growth and management of the project had become the primary responsibility of the Government of India. The ideals of the project formed India 's highest aspirations, which could not be allowed to be defeated or frustrated. Sri Aurobindo Society had lost complete control over the situation and the members of the Auroville approached the Government of India to give protection against oppression and victimisation at the hands of the said Society. There were internal quarrels between the various factions of Sri Aurobindo Society. There have also been instances 764 of law and order situation. Financial management of the project has not been sound and several instances of mismanagement, diversion of funds have been revealed. A large sum of money was given by Sri Aurobindo Society to AURO Construction an agency whose status is not at all defined, whose functions and capabilities for taking up large construction works also had not been made known. The Government in the circumstances could not be a silent spectator to the mismanagement of the project and intereine quarrels amongst its members, which if not checked could lead to the destruction of the project so nobly conceived. The Government, therefore, decided to issue a Presidential ordinance. After the filing of the writ petition the ordinance has now been replaced by the . The constitutional validity of the Act has been challenged on four grounds: 1. Parliament has no legislative competence to enact the impugned statute. The impugned Act infringes Articles 25, 26, 29 and 30 of the Constitution. The impugned Act is violative of Article 14 of the Constitution; and 4. The Act was mala fide. We take up the first ground first. According to Mr. Soli Sorabjee, counsel for petitioners, the , hereinafter referred to as the impugned Act, is a law relating to a matter in the State Legislative List and is, therefore, beyond the legislative competence of Parliament, hence unconstitutional and void. The impugned Act, according to him, provides for taking over the management of Auroville for a limited period from the Society. The management of Auroville was prior to the impugned Act vested in the Governing Body/Board of Trustees of the Society under the Provisions of the West Bengal Societies Registration Act and memorandum and rules and regulations of the Society, as is evident from section 5(5) of the impugned Act itself. The society was registered under the but after the enforcement of the West Bengal Societies Registration Act, 1961 the Society was deemed to be 765 registered under that Act. The West Bengal Societies Registration Act (for short 'the West Bengal Act ') contains specific provisions to deal with the Society adequately. Sections 22 and 23 of the West Bengal Act empower the Registrar of the Societies to call for an information or explanation relating to the management of the affairs of any society registered thereunder and also to investigate into the affairs of the society, if there were circumstances suggesting that the society was guilty of mismanagement of its affairs or of any unlawful fact. The Registrar has also the power to prosecute and punish those persons found guilty of mismanagement. Under section 26 of the Act a society is also liable to be dissolved by the order of the Registrar on the ground inter alia of mismanagement. Obviously, therefore, the West Bengal Act contains in built self contained provisions for dealing with the mismanagement of the registered societies. The West Bengal Act is a legislation exclusively relatable to Entry 32 of List II of Seventh Schedule. The provisions of the West Bengal Act apply to the Society as is evident from section 2(f) and (g) of the impugned Act. Section 4(2) of the impugned Act, however, excludes the application of certain provisions of the West Bengal Act to the Society and declares that the provisions of the West Bengal Act will continue to apply to the Society subject however, to such exclusions. Section 8(2) provides that on relinquishment of management by the Central Government the management of the property of the Society forming part or relatable to Auroville shall vest in the Governing Body of the Society and shall be carried on in accordance with the provisions of the West Bengal Act. Section 11 of the impugned Act gives over riding effect to the impugned Act over all other Acts (including the West Bengal Act) and instruments thereunder. Therefore, the object and purpose of the impugned Act is to take away the management of Auroville from the Society and to bring it under the management of the Central Government under the provisions of the impugned Act. This process necessarily involves during the takeover period the suspension of the provisions of the West Bengal Act and the memorandum and rules in so far as they are applicable to the management of the Auroville by the Society. Consequently, the impugned Act for a limited period abrogates, suspends or temporarily repeals certain provisions of the West Bengal Act or in other words the State Act is pro tanto overborne by the Central Act. Therefore, the question arises whether Parliament has legislative competence to repeal, permanently or temporarily, any provisions of the West 766 Bengal Act which is a law made by the State Legislature in the exercise of its exclusive legislative competence under Entry 32 of the State Legislative List. It was contended for the petitioners that the legislature has no authority to repeal statutes which it could not directly enact. The power to repeal or alter the statute is co extensive with the power of direct legislation of a legislative body. In support of this contention reliance was placed on the Privy Council decision in Attorney General for Ontario vs Attorney General for the Dominion(1). The Parliament has no competence to enact the West Bengal Act, and therefore it had no power to repeal the provisions of the West Bengal Act by the impugned Act. Inasmuch as the Parliament has sought to repeal or override certain provisions of the West Bengal Act which are referable to Entry 32 in List II, and are exclusively within the competence of the State Legislature, the impugned Act by Parliament is without legislative competence and hence void. It was further contended for the petitioners that the proper approach to the question is to see if the impugned legislation is covered by any of the entries in list II of the Seventh Schedule. It is not at all necessary to probe into the question as to whether the impugned legislation can be covered by any of the entries of List I or List III of the Seventh Schedule. Reliance was placed on the Union of India vs H.S. Dhillon(2) wherein the following proposition was laid down : "It seems to us that the best way of dealing with the question of the validity of the impugned Act and with the contentions of the parties is to ask ourselves two questions, first, is the impugned Act legislation with respect to entry 49 List II ? and secondly, if it is not, it is beyond the legislative competence of Parliament ? The positive case of the petitioners is that the subject matter of the impugned Act is covered by entry 32, List II of the Seventh Schedule. The Solicitor General for the Union of India, however, tried to bring the impugned Act within the four corners of item 44, List I of the Seventh Schedule of the Constitution. It may be pointed out at the very outset that the function of the Lists is not to confer powers. They merely demarcate the 767 legislative fields. The entries in the three Lists are only legislative heads or fields of legislation and the power to legislate is given to appropriate legislature by Articles 245 and 248 of the Constitution. It would be appropriate at this stage to read entry 32, List II and entry 44, List I of the Seventh Schedule : Entry 32, List II "Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities ; unincorporated trading, literary, scientific, religious and other societies and associations; co operative societies. " Entry 44, List I: "Incorporation, regulation and winding up of corporations, whether trading or not, with objects not confined to one State, but not including universities. " For the petitioners, however, it was urged that the registration of the Society under the West Bengal Act does not make it a corporation. Halsbury 's Laws of England, 3rd Edn., Vol. 9, p. 4, deals with corporations in the following terms: "A corporation aggregate has been defined as a collection of individuals united into one body under a special denomination, having perpetual succession under an artificial form, and vested by the policy of the law with the capacity of acting in several respects as an individual, particularly of taking and granting property, of contracting obligations and of suing and being sued, of enjoying privileges and immunities in common, and of exercising a variety of political rights, more or less extensive, according to the design of the institution or the powers conferred upon it, either at the time of the creation or at any subsequent period of its existence. " A corporation has, therefore, only one capacity, namely, the corporate capacity. On an analysis it would appear that the essential elements in the legal concept of a corporation are: (1) a continuous identity, i.e., the original member or members or his or their successors are one, (2) the persons to be incorporated, (3) the name by which the persons are incorporated, (4) a place, and 768 (5) words sufficient in law to show incorporation. In law the individual incorporators are members of which it is composed or something wholly different from the corporation itself, for a corporation is a legal person just as much as an individual. A corporation aggregate can express its will by deed under a common seal. The Society was registered, as stated earlier, under the Societies Registration Act and later on was deemed to be registered under the West Bengal Societies Registration Act, 1961. Whether such a registered society can be held to be a corporation in the light of the functions of a corporation quoted above ? In the Board of Trustees, Ayurvedic and Unani Tibia College vs The State of Delhi and Ors.(1) it was held that a society registered under the Societies Registration Act may have the characteristics which are analogous to some of the characteristics of a corporation but is not a corporation. As it is not incorporated and remains an unincorporated society, therefore, it must come under the second part of entry 32 of List II. Reliance was placed in this case on Taff Vale Railway vs Amalgamated Society of Servants.(2) The petitioners also rely on Katra Educational Society vs State of Uttar Pradesh and Ors.(3) In that case also the appellant was a society registered under the Societies Registration Act 21 of 1860, which conducts an educational institution styled 'Dwarka Prasad Girls Intermediate College ' at Allahabad. The management of the affairs of the society was entrusted by the memorandum of association to an executive committee whose membership was confined to the members of the society. The Intermediate Education Act was subsequently passed by the State Legislature. Section 8 of the Act authorised the State Government to promulgate regulations in respect of matters covered by sections 16A to 161 of the Act. The Regional Inspector of Girls Schools called upon the society to submit and get approved a scheme of administration of the institution managed by it. The sections were later on modified by subsequent amendment. The society challenged the Act on the ground that it was beyond the legislative competence of the State legislature inasmuch as in substance it sought to substitute the provisions of the , a field of legislation which was exclusively within the competence of Parliament and in any case the Act in so far as it affected the powers of the trustees of charitable institutions 769 could not be enacted without conforming to the requirements of Article 254. The contention was repelled and it was held by this Court, relying on the Board of Trustees, Ayurvedic and Unani Tibia College vs The State of Delhi (supra) that by registration under the a society does not acquire corporate status. It cannot also be said that the pith and substance of the Act relates to charities or charitable institutions or to trusts or trustees. It was further held that the true nature and character of the Act falls within the express legislative power conferred by entry 11 of List II and merely because it incidentally trenches upon or affects a charitable institution or the powers of the trustees of the institution, it will not on that account be beyond the legislative authority of the State Legislature. As the Society is an unincorporated society, says the counsel for petitioners, the impugned Act does not and cannot fall under entry 44 of List I of the Seventh Schedule and it would fall under entry 32 of List II of the Seventh Schedule and once it is covered by entry 32 of List II, it is not at all necessary to examine whether it may or it may not fall in other two lists of the schedule. On the other hand, the stand of the Union of India as well as of the interveners, is that the first part of entry 32 of List II is not attracted as the subject matter of the impugned Act is not incorporation, regulation or winding up of a corporation. It has only taken over the management of Auroville from the Society for a short period in respect of the property. Auroville, of which the management has been taken over by the Central Government under the impugned Act means so much of the undertaking as form part of or relatable to the cultural township which is known as Auroville and the charter of which was proclaimed by the Mother on 25th day of February, 1968. The property of Auroville is situated not in West Bengal but in Pondicherry in Tamil Nadu. The fact that the Society, which was registered under the West Bengal Act, has been a channel of funds for the setting up of the cultural township of Auroville and has been managing some aspects of Auroville, does not bring Auroville under the domain of the West Bengal Act. The right of management of property is itself a property right. The Solicitor General also tried to bring the subject matter of the impugned legislation under various other entries of List I or List III of the Seventh Schedule viz., entries 10, 20, 41 and 42 of List III and entry 10 of List I. But it is not necessary for us to examine 770 whether the subject matter of the impugned legislation falls under any of the entries of List I or List III if once we hold that the subject matter does not fall within the ambit of any of the entries of List II. Even if the subject matter of the impugned legislation is not covered by any specific entry of List I or List III, it will be covered by the residuary entry 97 of List I. In our opinion the impugned Act even incidentally does not trench upon the field covered by the West Bengal Act as it is in no way related to constitution, regulation and winding up of the Society In R.C. Cooper vs Union(1) it was laid down that a law relating to the business of a corporation is not a law with respect to regulation of a corporation. Having heard the counsel for the parties, our considered opinion is that the subject matter of the impugned Act is not covered by entry 32 of List II of the Seventh Schedule. Even if the subject matter of the impugned Act is not covered by any specific entry of List I or III of the Seventh Schedule of the Constitution it would in any case be covered by the residuary entry 97 of List I. The Parliament, therefore, had the legislative competence to enact the impugned Act. This leads us to the second ground of attack, namely, the impugned Act is violative of Articles 25, 26, 29 and 30 of the Constitution. Article 25(1) confers freedom of conscience and the right freely to profess, practise and propagate religion. Of course, this right is subject to public order, morality and health and to the other Articles of Part III of the Constitution. Sub clause (2) of this Article, however, provides that nothing in this Article shall affect the operation of any existing law or prevent the State from making any law (a) regulating or restricting any economic, financial, political or other secular activity which may be associated with religious practice; (b) providing for social welfare and reform or the throwing open of Hindu religious institutions of a public character to all classes and sections of Hindus. 771 Article 26 confers on every religious denomination or any section thereof, subject to public order, morality and health, the right (a) to establish and maintain institutions for religious and charitable purposes; (b) to manage its own affairs in matters of religion; (c) to own and acquire movable and immovable property; and (d) to administer such property in accordance with law. In order to appreciate the contentions of the parties, it is necessary to know the implication of the words 'religion ' and 'religious denomination '. The word 'religion ' has not been defined in the Constitution and indeed it is a term which is hardly susceptible of any rigid definition. In reply to a question on Dharma by Yaksha, Dharmaraja Yudhisthira said thus: tarko pratisth,srutyo vibhinna neko risiyasya matan pramanam dharmaya tatwan nihitan guhayan mahajano jein gatah sa pantha Mahabharta Aranyakaparvan 313.117. (Formal logic is vascillating. Srutis are contradict ory. There is no single rishi whose opinion is final. The principle of Dharma is hidden in a cave. The path of the virtuous persons is the only proper course.) The expression 'Religion ' has, however, been sought to be defined in the 'Words and Phrases ', Permanent Edn., 36 A, p. 461 onwards, as given below: "Religion is morality, with a sanction drawn from a future state of rewards and punishments. The term 'religion ' and 'religious ' in ordinary usage are not rigid concepts. 772 'Religion ' has reference to one 's views of his relations to his Creator and to the obligations they impose of re verence for his being and character, and of obedience to his will. The word 'religion ' in the primary sense (from 'religare, to rebind bind back), imports, as applied to moral questions, only a recognition of a conscious duty to obey restraining principles of conduct. Tn such sense we suppose there is no one who will admit that he is without religion. 'Religion ' is bond uniting man to God, and virtue whose purpose is to render God worship due him as source of all being and principle of all government of things. 'Religion ' has reference to man 's relation to divinity; to the moral obligation of reverence and worship, obedience and submission, It is the recognition of God as as object of worship, love and obedience; right feeling toward God, as highly apprehended. 'Religion ' means the services and adoration of God or a god as expressed in forms of worship; an apprehension, awareness, or conviction of the existence of a Supreme Being; any system of faith, doctrine and worship, as the Christian religion, the religions of the orient; a particular system of faith or worship. The term 'religion ' as used in tax exemption law, simply includes: (I) a belief, not necessarily referring to supernatural powers; (2) a cult, involving a gregarious association openly expressing the belief; (3) a system of moral practice directly resulting from an adherence to the belief; and (4) an organization within the cult designed to observe the tenets or belief, the content of such belief being of no moment. While 'religion ' in its broadest sense includes all forms of belief in the existence of superior beings capable of exercising power over the human race, as commonly accepted it means the formal recognition of God, as members of societies and associations, and the term, "a religious purpose ', as used in the constitutional provision exempting from taxation property used for religious purposes, means 773 the use of property by a religious society or body of persons as a place for public worship. 'Religion ' is squaring human life with superhuman life. Belief in a superhuman power and such an adjustment of human activities to the requirements of that power as may enable the individual believer to exist more happily is com mon to all 'religions '. The term 'religion ' has reference to one 's views on his relations to his creator, and to the obligations they impose of reverence for his being and character and obdience to his will. The term 'religion ' has reference to one 's views of his relations to his Creator, and to the obligations they impose of reverence for his being and character, and of obedience to his will. With man 's relations to his Maker and the obligations he may think they impose, and the manner in which an expression shall be made by him of his belief on those subjects, no interference can be permitted, provided always the laws of society, designed to secure its peace and prosperity, and the morals of its people, are not interfered with. " These terms have also been judicially considered in The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur MUtt(1) where in the following proposition of law have been laid down: (1) Religion means "a system of beliefs or doctrines which are regarded by those who profess that religion as conducive to their spiritual well being". (2) A religion is not merely an opinion, doctrine or belief. It has its outward expression in acts as well. (3) Religion need not be theistic. (4) "Religious denomination" means a religious sect or body having a common faith and organisation and designated by a distinctive name. (5) A law which takes away the rights of administration from the hands of a religious denomination altogether 774 and vests in another authority would amount to violation of the right guaranteed under clause (d) of article 26. " The aforesaid propositions have been consistently followed in later cases including The Durgah Committee, Ajmer & Anr. vs Syed Hussain Ali & Ors(1) and can be regarded as well settled. The words "religious denomination" in Article 26 of the Constitution must take their colour from the word 'religion ' and if this be so, the expression "religious denomination" must also satisfy three conditions: (1) It must be a collection of individuals who have a system of beliefs or doctrines which they regard as conducive to their spiritual well being, that is, a common faith; (2) common organisation; and (3) designation by a distinctive name. In view of the propositions laid down by the Court in the aforesaid reported cases we have to examine the teachings of Sri Aurobindo to see whether they constitute a religion. It will be appropriate at this stage to succintly deal with the teaching of Sri Aurobindo. According to Sri Aurobindo there is a divine consciousness pervading the whole universe. A portion of this consciousness by a process. Of involution through various planes has finally resulted in the formation of the physical world, namely the stars, the planets, the earth and so on. Then came the reverse process of evolution i e., from stone to plant, from plant to animal, from animal to man or in other words from matter to life, from life to mind and so on. This evolution will not stop with man who is only a transitional species. The evolution would go further transforming man into superman and the mind into supermind. The superman according to Sri Aurobindo would be totally different from man as man from animal and animal from plant. In this transformation back to all prevading divine consciousness in which man would become superman, man would lose his present character of body, vital and mind. His body would become a body of light, his vital a vital of light and his mind a mind of light. 775 This transformation, or evolution of man into superman is A bound to take place but in the course of thousands of years. This process, however, according to Sri Aurobindo can be accelerated by the practice of integral yoga. His theory of this transformation consists of two aspects: (a) An inner ascent of the consciousness to the Divine. (b) A descent of Divine consciousness in the mind, vital and body. The distinctive feature of Sri Aurobindo 's yoga is that it is universal. Any one born in any part of the world, born of parents professing any religion can accept his yoga. In short, he originated the philosophy of cosmic salvation through spiritual evolution. Divine existence that will appear through the development of the agnostic man will usher into a transcendental spiritual age in which man and universe are destined to become divine. D Thus, according to Sri Aurobindo 's theory of cosmic salvation the paths of union with Brahman are two way streets or channels. Enlightenment comes to man from above while the spiritual mind (supermind) of man strives through yogic illumination to reach upwards from below. When these two forces blend in an individual agnostic man is created. This yogic illumination transcends both reason and intuition and eventually leads to the freeing of the individual from the hands of individuality and by exclusion of all mankind, will eventually achieve Mukti or liberation. Sri Aurobindo created a dialectic mode of salvation not only for individual but for all mankind. Energy or Sachidananda (existence, consciousness and joy) comes down from Brahma to meet energy from the supermind of man striving upwards towards his spirituality (antithesis) and melts in man to create a new spiritual superman (synthesis). From these divine beings a divine universe is also evolved. The Divine, though one, has two aspects one is static and the other dynamic. The dynamic side of the Divine is the energy or the creative side. People in the past realised only the static aspect of the Divine and did not know much of the dynamic side as it is much more difficult to realise it. For this reason, the purpose of the creation was not understood by them and they declared the world to be futile and deceptive. That means either the Divine was unable to make a perfect world and He had Do purpose in the creation or 776 man has not been able to understand the same. Sri Aurobindo 's yoga gives the full experience of both the aspects of the Divine, that is why he calls his Yoga the Integral Yoga or the Perfect Yoga. Sri Aurobindo says the Divine is real and His creation is bound to be real. He has shown to the world the purpose of the creation and has declared that the world is still in an imperfect condition passing through the transitory Period towards its perfection. Man is a creature of this world and he cannot know much of things other than this world. He has, however, a capacity in himself to develop to the next stage of evolution because Nature cannot stop with imperfect results and the present humanity must evolve further till the final perfection is obtained. We look at things and happenings from the oufer surface, having no knowledge whatsoever of the real causes and effects, the different forces and influences of the subtle worlds working behind them. We can see and feel only the results on the material plane and nothing more. Our senses have a very limited scope and they can give us the knowledge of the things which can only materialise. But in fact that is not all that we are. We have another part in ourselves which is veiled by the external consciousness and we call that as our soul the spark of divinity within; which is one everywhere the true self. As our sense give us the knowledge of the external things by directing our consciousness outwardly, in the same way if we can direct our consciousness inwardly and rise into the inner consciousness, we can know the things of the higher worlds and go beyond the limitation of our physical sense, then only can we have the true knowledge of this world and the worlds beyond and that practice is called 'Yoga '. The meaning of the word. 'Yoga ' is to join join our external consciousness with our true self. According to Sri Aurobindo, humanity is under the sway of dark and ignorant forces and that is the reason for human sufferings, disease and death all the signs of imperfection. It is clear that man has to progress towards a Light which brings knowledge, power, happiness! love, beauty and even physical immortality. The Divine is the essence of the whole universe and to realise and possess Him should be the supreme aim of human life. To acquire all the qualities of the Divine is the final purpose of Nature 's evolution. 777 The soul progresses by gathering experience in the ordinary life but A it is a very long, slow and devious process from birth to birth. Yoga hastens the soul 's development. The progress that can be made in any lives is made in a few years by the help of Yoga. The Yoga of Sri Aurobindo is called the 'Integral Yoga ' or the 'Supermental Yoga '. The Yogas of the past were only of ascent to the Spirit. Sri Aurobindo 's Yoga is both of ascent and descent. One can realise the Divine in consciousness by the old Yogas but cannot establish the Divine on earth in a collective no less than in an individual physical life. In the old Yogas the world was considered either an illusion or a transitional phase: it had no prospect of having all the terms of its existence fulfilled. Sri Aurobindo on the other hand says that the world is a real creation of the Divine and life in it can be completely divinised down to the very cells of the body. The kingdom of God on earth can be brought about in the most literal sense by a total transformation of collective man. To put it in Sri Aurobindo 's words: "Here and not elsewhere the highest God head has to be found, the soul 's divine nature developed out of the imperfect physical human nature and through unity with God and man and universe the whole large truth of being discovered and lived and made visibly wonderful. That completes the long cycle of our becoming and admits us to a supreme result; that is opportunity given to the soul by the human birth and until that is accomplished, it can not cease. " For this transformation a new power called the 'supermind ' which was sealed to this earth till now is needed, F Shri Soli Sorabjee, for the petitioners, bas contended that the followers of Sri Aurobindo satisfy the aforesaid three conditions and, therefore, they constitute a religious denomination. Strong reliance was placed on The Commissioner, Hindu Religious Endowments, Madras vs Lakshmindra Thirtha Swamiar of Sri Shitur Mutt (supra). In that case the followers of Rarnanuja, the fol lowers of Madhwacharya and the followers of other religious teachers were held to be the religious denomination. On the strength of this case it was contended that Sri Aurobindo was also a religious teacher and, therefore, there is no reason on principle which compels the conclusion that the followers of Aurobindo who share common faith and organisation and have a distinctive name do not constitute a 778 religious denomination. A similar view was taken in Nalam Ramalingayya vs The Commissioner of Charitable and Hindu Religious Institutions and Endowments, Hyderabad(1). Dealing with the expression 'religious denomination ', a Division Bench of the Andhra Pradesh High Court relying on Sri Lakshmindra 's case (supra) observed as follows: "To hold that there exists a religious denomination, there must exist a religious sect or a body having a common faith and organisation and designated by a distinctive name . Of course, any sect or sub. sect professing certain religious cult having a common faith and common spiritual organisation, such as Vaishnavites, Madhvites, Saivites may be termed as religious denomination but L certainly not any caste, sub caste or sect of Hindu religion, who worship mainly a particular deity or god. " It was further contended that the words "religion ' and 'religious denomination ' must not be construed in the narrow, restrictive and orthodox or traditional sense but must be given a broad meaning. It may be observed that in the case of The Commissioner, Hindu Religious Endowments, Madras vs Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (supra) different sects and sub. sects of the Hindu religion founded by various religious teachers were called a religious denomination on the ground that they being part of Hindu religion would also be designated as a religious denomination if the followers of Hindu religion constituted a religious denomination as the part must bear the impress of the whole. This observation was in this content. The other case taking a similar view viz. Nalam Ramalingayya vs The Commissioner of Charitable and Hindu Religious Institutions and Endowments, Hyderabad (supra) is also based on the same ground. For the petitioners it was further submitted that Sri Aurobindo and the Mother were adverse to 'religion ' as 'Religiosity" and "Religionism" but not lo "True Religion". Reference was made to various writings of Sri Aurobindo and the Mother: Sri Aurobindo "In order to exceed our Nature and become divine, we must first get God, for we are the lower imperfect term of 779 Our being. He is its higher perfect term, The finite to A become infinite, must know, have and touch infinity; the symbol being in order to become its own reality, must know, love and preceive that Reality. This necessarily is the imperative justification of religion; not of a church, creed or theology for all these things are religiosity, not religion but that personal and intimate religious temper and spirit which moves men to worship, to aspire to or to pant after his own idea of the supreme. (SABCV 17, p. 54 55) "It is true in a sense that Religion should be the dominant thing in life. When it identifies with a creed or cult or system of ceremonial acts it may well become a retarding force There are two aspects of religion. Spiritual Religion and Religionism. True Religion is spiritual Religion, which seeks to live in spirit in what is . beyond the intellect. Religionism on the other hand entrenches itself in some narrow pietistic exaltation of the lower members. It lays exclusive stress on intellectual dogmas, forms and ceremonies . (SABCV 15, p. 166 67) The Mother "We give the name of religion to any concept of the world or the universe which is presented as the exclusive Truth in which one must have an absolute faith, generally because this Truth is declared to be the result of a revelation. Most religions affirm the existence of a God and the rules to be followed to obey him, but there are some Godless religions, such as socio political organisations which, in the name of an Ideal or the State, claim the same right to be obeyed (MCV No. 13, p. 212 13) "The first and principal article of these established and formal religions runs always "Mine is the supreme, the only truth, all others are in falsehood or inferior. " For without this fundamental dogma, established religions could not have existed. If you do not believe and. proclaim that you 780 alone possess the one or the highest truth, you will not be able to impress people and make them flock to you. (MCV No. 3, p. 77) "He who has a spiritual experience and faith, formulates it in the most appropriate words for himself. But if he is convinced that this expression is the only correct and true one for this experience and faith, he becomes dogmatic and tends to create a religion. (MCV No. 13. p. 22) "Imagine someone who, in some way or other has heard of something like the Divine or has a personal feeling that something of the kind exists, and begins to make all sorts of efforts, efforts of will, of discipline, efforts of concentration, all sorts of efforts to find this Divine, to discover what he is, to become acquainted with Him and unite with Him. Then this person is doing Yoga. Now if this person has noted down all the processes he has used and constructs a fixed system, and sets up all that he has discovered is absolute laws for example he says, the Divine is like this, to find the Divine you must do this, make this particular gesture, take this attitude, perform this ceremony and you must admit that this is the truth, you must say "I accept that this is the Truth and I fully adhere to it; and your method is the only right one, the only one which exists" if all that is written down, organised arranged into fixed laws and ceremonies, it becomes a religion. (MCV No. 8, p. 147) Sri Aurobindo "You express your faith in Sri Aurobindo with certain words, which are for you the best expression of this faith; this is quite all right. But if you are convinced that these very words are the only correct ones to express what Sri Aurobindo is, then you become dogmatic and are ready to create a religion." (Sri Aurobindo Circle 21 No. 1965) "That is why religions always blunder, always for they want to standardise the expression of an experience and impose it on all as an irrefutable truth. The experience was 781 true, complete in itself, convincing for him who had it. A The formulae he has made of it is excellent for him; but to want to impose it on others is a gross error which bas altogether disasterous consequences always and which always takes away, far away from the Truth. " "That is why all religions, however fine they may be have always led men to the worst excesses. All crimes, all horrors that have been prepetrated in the name of religion are among the darkest spots in human history." (Bulletin No. 1968, p. 129 31) "You see, this is what I have learned : the failure of the religions. It is because they were divided. They wanted people to be religious to the exclusion of the other religious. And what the new consciousness wants is: no more divisions. to find the meeting point." (MCV No. 13, p. 293 94) "There is no word so plastic and uncertain in its meaning as the word religion. The word is European and, therefore, it is as well to know first what the Europeans mean by it. In this matter we find them. divided in opinion. Sometimes they use it as equivalent to a set of beliefs, sometimes as equivalent to morality coupled with a belief in God, sometimes as equivalent to a set of pietistic actions and emotions. Faith, works and pious observances, these are the three recognised elements of European religion. Religion in India is a still more plastic term and may mean anything from the heights of Yoga to strangling your fellowman and relieving him of the wordly goods he may happen to be carrying with him. It would, therefore, take too long to enumerate everything that can be included in Indian religion." Sri Aurobindo (Glossary of Terms in Sri Aurobindo 's Writings, p. 132) Emphasis was also laid upon the opinion of the authoritative sources in support of the contention that the teachings of Sri Aurobindo constitute a religion and the Society a religious denomination. The Encyclopaedia of Philosophy (1972 ed., Vol. 1, pp. 782 208 9) observes: "Sri Aurobindo was an Indian metaphysician and founder of a new religious movement with headquarters at Pondichery. The religious movement associated with him has increased its following in India, and has made some converts in the West. . God must 'descend ' into human experience. This illumination of individual will lead to the emergence of a divinised community,. Aurobindo produced a synthesis between older Indian religious ideas and the world affirming attitudes of Christian theism. " The Encyclopaedia Brittanica talking about Sri Aurobindo says: "Sri Aurobindo devoted himself to discover the way by which the Universe might be made divine. Sri Aurobindo has been acclaimed as the prophet of the Superman, as the hierophant of the 'new age '. He has called his stand point that of a spiritual religion of humanity." The Dictionary of Comparative Religion (1970 ed., p. 117) mentions: "According to Aurobindo, there is a progressive evolution of the divine Being through matter no higher spiritual forms, and the Aurobindo movement is held to represent vanguard of this evolutionary process in our own times. Aurobindo practised and taught an 'integral yoga ' in which meditative and spiritual exercises are integrated with physical, cultural and intellectual pursuits. " Encyclopaedia Americana (1966 Vol. 12, p. 634) states: "He (Sri Aurobindo) abandoned politics to found a religious school(1910) at Pondicherry. A practising Yoga philosopher, he wrote numerous spiritual and mystical works. " The Gazetteer of India, published by the Government of India, Vol. 1, Country and People, Chapter 8, Religion, pp. 413 500, Section on Sri Aurobindo, states: "Sri Aurobindo gave new interpretations of the vedas and the Vedanta. and in his Essays on the Gita he expoun 783 ded what he called "the integral view of Life". His great A work, The Life Divine, is a summing up of his philosophy of "the Descent of the Divine into Matter". The importance of Sri Aurobindo 's misiion lies in his attempt to explain the true methods of Yoga. " In the Newsweek (Nov. 20, 1972) the International Weekly, its 'religion ' Editor, Woodward, writes: "The Next Religion": Some students of oriental thought believe that Sri Aurobindo 's spiritual vision and discipline may blossom into the first new religion of global scope since the rise of Islam thirteen centuries ago . Sri Aurobindo left behind a nucleus of disciples in Pondicherry where the Master 's work is carried on by 1800 devotees who live in India 's largest Ashram or spiritual community. " Reference was also made to the opinions of the philosophers and professors of religion about the teachings of Sri Aurobindo. Frederic Spiegelberg, in his book 'Living Religions of the World ', p. 190 205, writes that in Sri Aurobindo: "We pass beyond specific religions to a synthetic vision of the religious impulse itself, a vision designed to embrace all previous and future history all previous and future paths. Sri Aurobindo is a man worshipped by hundreds of thousands and respected by millions. In his retreat at Pondicherry he is less the philosopher of Hinduism than the philosopher of religion in general, the voice of that which comparative religion leaves undisputed. " Mr. Robert Neil Minor, Professor of Religion, University of Kansas, writes: "on the level of Mind, then Aurobindo 's system can not be falsified. It therefore cannot be verified on the level of Mind. But as a religion it is a total package. Aurobindo did not offer a religious view of which one could accept and reject parts. He offered an integral system based upon an integral vision. He offered. as well, the vision itself." (Sri Aurobindo: The Perfect and the Good, 177) 784 And, the opinions of similar other professors of religion and philosophers have been quoted to show that the teachings of Sri Aurobindo have been treated as religion by theologians and by professors and by important news agencies. The interpretations of the term 'religion ' used in different Acts were also referred to but it is not necessary to refer to them as we are to interpret the term 'religion ' and 'religious denomination, with references to Articles 25 and 26 of the Constitution. Mr. section Rangarajan appearing for the petitioners in one of the other writ petitions substantially adopted the contentions raised by Mr. Soli Sorabjee and further supplemented the same by raising the following points. According to him the ingredients of religion are . (1) A spiritual ideal; (2) A set of concepts or precepts on God Man relationship underlying the ideal: (3) A methodology given or evolved by the founder or followers of the religion to achieve the ideal; and (4) A definite following of persons having common faith in the precepts and concepts; and in order to constitute a 'religious denomination ' two further ingredients are needed: (5) The followers should have a common organisation; (6) They should be designated and designable by a distinct name This may usually be the name of the founder himself. The counsel contends that the ideal in Sri Aurobindo 's religion is a 'Divine Life in a Divine Body ' by Divinising Man and by trans forming his mind, vital and physical. According to Sri Aurobindo, in the beginning the whole universe was full of all pervading Divine consciousness. He called the dynamic portion of the Divine as 'Supermind '. The Divine the Supermind according to him, wanted to see its manifestation even in matter. By a process of involution the Divine. which is the subtlest became grosser and grosser giving 785 rise to various planes of consciousness. This was achieved through , lnvolution Evolution and Divinisation of Man. The methodology for achieving the ideal was the 'Integral Yoga ' which only means using all the methods Bhakthi, knowledge, work meditation, concentration, attaining perfection to derive optimum benefits of each one of them, by total surrender to the Divine and by becoming the instrument of the Divine. Sri Aurobindo has a definite following. In the beginning, this consisted of a few disciples. Slowly their number increased and an Ashram grew. Then there are definite organisations, Ashrams, Sri Aurobindo Society with more than 300 centres the world over. The devotees of Sri Aurobindo are also referred to as Aurobindonians. There are certain other attributes which indicate that the followers of Sri Aurobindo constitute a religious denomination, for example, chanting of Mantras, specially prepared by Sri Aurobindo, a particular symbol also used for identification, place of pilgrimage 1) is the Samadhi of Sri Aurobindo and the Mother, provision for meditation at the Samadhi. Flowers are offered at the Samadhi by the devotees. The uniqueness of his philosophy and his teachings according to Mr. Rangarajan constitute religion and the special features in his philosophy also make the Society a religious denomination. Thus, all the ingredients of religion and religious denomination are satisfied and there is no reason why his teachings be not taken to be religious and the institutions viz, the Society and the Auroville be not taken to be a religious denomination within the meaning of Articles 25 and 26 of the Constitution. The Solicitor General for the Union of India and Mr. F.S. Nariman, counsel for the respondents Nos. 6 to 238, on the other hand contended that the teachings of Sri Aurobindo do not constitute religion nor is the Society and the Auroville a religious denomination, and in any case there is no violation of Article 26 of the Constitution inasmuch as the impugned Act has taken over only the management of Auroville from the Society and does not interfere with the freedom contemplated by Articles 25 and 26 of the Constitution. H Reference was made to rule 9 of the Rules and Regulations of 786 Sri Aurobindo Society, which deals with membership of the Society and provides: "9. Any person or institution or organisation either in India or abroad who subscribes to the aims and objects of the Society, and whose application for member ship is approved by the executive Committee, will be member of the Society. The membership is open to people everywhere without any distinction of nationality, religion, caste, creed or sex. " The only condition for membership is that the person seeking the membership of the Society must subscribe to the aims and objects of the Society. It was further urged that what is universal cannot be a religious denomination. In order to constitute a separate denomination, there must be something distinct from another. A denomination, argues the counsel, is one which is different from the other and if the Society was a religious denomination, then the person seeking admission to the institution would lose his previous religion He cannot be a member of two religions at one and the same time. But this is not the position in becoming a member of the society and Auroville. A religious denomination must necessarily be a new and one new methodology must be provided for a religion. Substantially, the view taken by Sri Aurobindo remains a part of the Hindu philosophy. There may be certain innovations in his philosophy but that would not make it a religion on that account. In support of his contention the Solicitor Gereral placed reliance on Hiralal Mallick vs State of Bihar(l). Dealing with meditation this Court observed: "Modern scientific studies have validated ancient vedic insights a bequeathing to mankind new meditational, yogic and other therapeutics, at once secular, empirically tested and transreligious. The psychological, physiological and sociological experiments conducted on the effects of Transcendental Meditation (TM, for short) have proved that this science of creative intelligence, in its meditational applications, tranquilizes the tense inside, helps meet stress (1) [19781] SCR 301. 787 without distress, overcome inactivities and instabilities and A by holistic healing normalises the fevered and fatigued man. Rehabilitation of psychiatric patients, restoration of juvenile offenders, augmentation of moral tone and temper and, more importantly, improvement of social behaviour of prisoners are among the proven finding recorded by researchers. Extensive studies of TM in many prisons in the U.S.A., Canada, Germany and other countries are reported to have yielded results of improved creativity, higher responsibility and better behaviour. Indeed, a few trial courts in the United States have actually prescribed TM as a recipe for rehabilitation. As Dr. M.P. Pali, Principal of the Kasturba Medical College, Mangalore, has put down: "Meditation is a science and this should be learnt under guidance and cannot be just picked up from books. Objective studies on the effects of meditation on human body and mind is a modern observation and has been studied by various investigation at MEERU Maharishi European Research University. Its tranquilizing effect on body and mind, ultimately leading to the greater goal of Cosmic Consciousness or universal awareness, has been studied by using over a hundred parameters. Transcendental Meditation practised for IS minutes in the morning and evening every day brings about a host of beneficial effects. To name only a few: 1. Body and mind get into a state of deep relaxation. B.M.R. drops, loss oxygen is consumed. E.E.G. shows brain wave coherence with 'alpha ' wave preponderance. Automatic stability increases. Normalisation of high blood pressure. Reduced use of alcohol and tobacco. Reduced stress, hence decreased plasma cortisol and blood lactate. Slowing of the heart etc. " 788 This Court dealing with punishment in a criminal case in Giasuddin vs A . P. State(l ) again observed: "There is a spiritual dimension to the first page of our Constitution which projects into penology. Indian courts may draw inspiration from Patanjali sutra even as they derive punitive patterns from the Penal Code (most of Indian meditational therapy is based on the sutras of Patanjali). on the strength of these authorities it is contended for the Union of India that the integral yoga propounded by Sri Aurobindo is only a science and not a religion. The Society itself treated Auroville not as a religious institution. Auroville is a township which was conceived, planned and developed as a centre of international culture for the promotion of the ideals which are central to the United Nations Educational Scientific and Cultural organisation (UNESCO). These ideals have been explained and proclaimed extensively in the writings of Sri Aurobindo and the Mother. In the year 1966, Sri Aurobindo Society, devoted as it was to the teachings of Sri Aurobindo and guided by the Mother, proposed this cultural township to UNESCO for the commemoration of the 20th anniversary of the UNESCO. The Union of India took up the matter with UNESCO and it did so on the explicit understanding that Auroville as proposed was in full consonance and conformity with India 's highest ideals and aspirations and that would help Auroville promote the aims and objects of UNESCO. Accordingly, at the Fourteenth Session of the General Conference of the UNESCO held in Paris in 1966, a resolution was passed noting that the proposal made by Sri Aurobindo Society to set up Auroville as a cultural township where people of the different countries will live together in harmony in one community and engage in cultural, educational, scientific and other pursuits and that the township will represent cultures of the world not only intellectually but also presenting different schools of architecture, paintings, soulpture, music etc. as a part of living, bringing together the values and ideals of civilisations and cultures, commended the project to those interested in UNESCO 's ideals as the project would contribute to international understanding and promotion of peace. (1) ; @ 164. 789 The said resolution of the UNESCO was followed by two other resolutions one at the 15th Session in 1968 and the other at the 16th Session in 1970. In the second resolution the UNESCO had noted that the Society had taken steps to establish Auroville as an international cultural township which would fulfil the ideas of the UNESCO. The UNESCO invited the member States and nongovernmental organisations to participate in the development of Auroville as an international cultural township designed to bring together the values of different cultures and civilisations in harmonious environment. The foundation stone of Auroville was laid on 28 February 1968 with the participation of youth or many nations, representing the coming together of all Nations in a spirit of human unity. The UNESCO conceived Auroville township as an instrument of education, promoting mutual respect and understanding between people in keeping with the spirit of Universal Declaration of Human Rights and Universal Declaration of Principles of International Cultural Cooperation. The Government of India took active part in making the 1 UNESCO interested in the project and take decision as aforesaid for the development of Auroville as an international cultural township with the participation of countries who are members of the UNESCO. Sri Aurobindo Society had brought the proposal of Auroville to the Government of India and explained that Auroville was to be an international cultural township. This fact is evident from the brochure submitted by Sri Aurobindo Society to the Government of India. The Charter of Auroville given by the Mother also indicates that it is not a religious institution, as is evident from the following: F "1. Auroville belongs to nobody in particular. Auroville belongs to humanity as a whole. But to live in Auroville one must be the willing servitor of the Divine 's consciousness. Auroville will be the place of an unending education, of constant progress, and a youth that never ages. Auroville wants to be the bridge between the past and the future. Taking advantage of all discoveries from without and from within, Auroville will boldly spring towards future realisations. 790 4. Auroville will be the site of material and spiritual research for a living embodiment of an actual human unity. On the own admission of the General Secretary of Sri Aurobindo Society, Pondicherry, Auroville was to be a symbol of international cooperation, an effort to promote international under standing by bringing together in close juxtaposition the values and ideals of different civilisations and cultures. The cultures of different regions of the earth will be represented in Auroville in such a way as to be accessible to all not merely intellectually in ideas, theories, principles and languages, but also in habits and customs; art in all forms paintings, sculpture, music, architecture, decor, dance; as well as physically through natural scenery, dress, games, sports and diet. It will be a representation in a concrete and Jiving manner; it will have a museum, an art gallery, a library of books, recorded music etc. It will also have other objects which will express its intellectual, scientific and artistic genious, spiritual tendencies and national characteristics. While participating in UNESCO meeting "Design for Integrated Living Programme in Auroville" was presented and that also goes a long way to show that it was only a cultural township and not a religious institution. Numerous utterings by Sri Aurobindo or the Mother unmistakably show that the Ashram or Society or Auroville is not a religious institution. In Sri Aurobindo 's own words (The Teaching and the Ashram of Sri Aurobindo, 1934, p. 6): "The Ashram is not a religious association Those who are here come from all religions and some are of no religion. There is no creed or set of dogmas, no governing religious body; there are only the teachings of Sri Aurobindo and certain psychological practices of concentration and meditation, etc., for the enlarging of the consciousness, receptivity to the Truth, mastery over the desires, the discovery of the divine self and consciousness concealed within each human being, a higher evolution of the nature. " 791 Sri Aurobindo himself said(1): "I may say that it is far from my purpose to propagate any religion, new or old. " Sri Aurobindo says again(2): "We are not a party or a church or religion," Sri Aurobindo exposes(3): "Churches and creeds have, for example, stood violently in the way of philosophy and science, burned a Giordano Bruno, imprisoned a Galileo, and so generally misconducted themselves in this matter that philosophy and science had a self defence to turn upon Religion and rend her to pieces in order to get a free field for their legitimate development. " The Mother said on 19.3.1973: "Here we do not have religion." Sri Aurobindo says again(4): "Yogic methods have some thing of the same relation to the customary psychological workings of man as has to scientific handling of the natural force of electricity or of steam to the normal operations of steam and of electricity. And the, too are formed upon a knowledge developed and confirmed by regular experiment, a practical analysis and constant results. All methods grouped under the common name of Yoga are special psychological processes founded on a fixed truth of nature and developing, out of normal functions, powers and results which were always latent but which her ordinary movements do not easily or do not often manifest. " 792 It is pertinent to quote Mother 's answer to a question(1): "Q. Sweet Mother, what is the difference between Yoga and religion; Mother 's Ans: Ah! My child. It is as though you were asking me the difference between a dog and a cat. " There can be no better proof than what Sri Aurobindo and the Mother themselves thought of their teachings and their institutions to find out whether the teachings of Sri Aurobindo and his Integral Yoga constitute a religion or a philosophy. The above utterings from time to time by Sri Aurobindo and the Mother hardly leave any doubt about the nature of the institution. It was on the basis that it was not a religions institution that the Society collected funds from the Central Government and the Governments of States and from abroad and the other non governmental agencies, Mr. F.S. Nariman appearing for respondents Nos. 6 to 238 adopted the arguments advanced by the Solicitor General Mr. K. Parasaran, and supplemented the same. He submitted that the Society was registered under the and a purely religious society could not have been registered under the . Section 20 of the provides what kind of Societies can be registered under the Act. It does not talk of religious institutions. Of course, it includes a society with charitable purposes. Section 2 of the Charitable Endowments Act, however, excludes charity as a religious purpose. It was further contended that the nature of the institution can be judged by the Memorandum of Association. The Memorandum of Association does not talk of any religion. The purpose of the Society was to make known to the members and the people in general the aims and ideals of Sri Aurobindo and the Mother; their system of Integral Yoga and to work for its fulfillment in all possible ways; to train selected students and teachers from all over the world in the Integral System of Education, i.e., the spiritual, psychic, mental, vital and physical; to help in cash or in kind by why of donations etc.; to organise, encourage, promote and assist in the study, research, and pursuit of science literature and fine arts etc. Nowhere it talks of propagating religion. This is the surest 793 index to know whether the Auroville or the Society was a religious A institution. It was further contended that a religious denomination must be professed by that body but from the very beginning the Society has eschewed the word 'religion ' in its constitution. The Society professed to be a scientific research organisation to the donors and got income tax exemption on the footing that it was not a religious institution. The Society has claimed exemption from income tax under section 80 for the donors and under section 35 for itself on that ground. Ashram Trust was different from Auroville Ashram. The Ashram Trust also applied for income tax exemption and got it on that very ground. So also Aurobindo Society claimed exemption on the footing that it was not a religious institution and got it. They professed to the Government also that they were not a religious institution in their application for financial assistance under tho Central Scheme of Assistance to voluntary Hindu organisations. On the basis of the materials placed before us viz., the Memorandum of Association of the Society, the several applications made by the Society claiming exemption under section 35 and section 80 of the Income tax Act, the repeated utterings of Sri Aurobindo and the Mother that the Society and Auroville were not religious institutions and host of other documents there is no room for doubt that neither the Society nor Auroville constitute a religious denomination and the teachings of Sri Aurobindo only represented his philosophy and not a religion. Even assuming but not holding that the Society or the Auroville were a religious denomination, the impugned enactment is not hit by Article 25 or 26 of the Constitution. The impugned enactment does not curtail the freedom of conscience and the right freely to profess practise and propagate religion. Therefore, there is no question of the enactment being hit by Article 25. Article 26 as stated earlier confers freedom to the religious denomination: (a) to establish and maintain institutions for religious and charitable purposes; (b) to manage its own affairs in matters of religion; (c) to own and acquire movable and immovable property; and 794 (d) to administer such property in accordance with law. The impugned enactment does not stand in the way of the Society establishing and maintaining institutions for religious and charitable purposes. It also does not stand in the way of the Society to manage its affairs in matters of religion. It has only taken over the management of the Auroville by the Society in respect of the secular matters. The position before the present Constitution came into force was that the State did not interfere in matters of religion in its doctrinal and ritualistic aspects treating it as a private purpose, but it did exercise control over the administration of property endowed for religious institutions (dedicated to the public) treating it as a public purpose, and this position has not changed even under the present Constitution.(1) The scope and extent of the rights conferred by Articles 25 and 26 of the Constitution are now well settled by the decision of this Court. To start with, in The Commissioner, Hindu Religions Endowments Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt(2) dealing with various aspects of Article 26 of the Constitution this Court observed as follows: "The other thing that remains to be considered in regard to article 26 is, what is the scope of clause tb) of the article which speaks of management of its own affairs in matters of religion ? "The language undoubtedly suggests that there could be other affairs of a religious denomination or a section thereof which are not matters of religion and to which the guarantee given by this clause would not apply. . It will be seen that besides the right to manage its own affairs in matters of religion, which is given by clause (b), the next two clauses of article 26 guarantee to a religious denomination the right to acquire and own property and to administer such property in accordance with law. The administration of its property by a religious denomination has thus been placed on a different footing 795 from the right to manage its own affairs in matters of A religion. The latter is a fundamental right which no legislature can take away, whereas the former can be regulated by laws which the legislature can validly impose. It is clear, therefore, that questions merely relating to administration of properties belonging to a religious group or institution are not matters of religion to which clause (b) of the article applies . . freedom of religion in our Constitution is not confined to religious beliefs only; it extends to religious practices as well subject to the restrictions which the Constitution itself has laid down. Under article 26(b), therefore, a religious denomination or organisation enjoys complete autonomy in the matter of deciding as to what rites and ceremonies are essential according to the tenets of the religion they hold and no outside authority has any jurisdiction to interfere with their decision in such matters. Of course, the scale of expenses to be incurred in connection with these religious observations would be a matter of administration of property belonging to the religious denomination and can be controlled by secular authorities in accordance with any law laid down by a competent legislature; for it could not be the injunction of any religion to destroy The institution and its endowments by incurring wasteful expenditure on rites and ceremonies. It should be noticed, however, that under article 26(b) it is the fundamental right of a religious denomination or its representative to administer its properties in accordance with law; and the law, therefore, must leave the right of administration to the religious denomination itself subject to such restrictions and regulations as it might choose to impose. A law which takes away the right of administration from the hands of a religious denomination altogether and vests it in any other authority would amount to a violation of the right guaranteed under clause (d) of Article 26." G The same principle was reiterated by this Court in The Durgah Committee, Ajmer and Anr. vs Syed Hussain Ali and ors.(l). In Tilkyat Shri Govindlaljl Maharaj vs The State of Rajasthan and ors.(2) it was held that the right to manage the properties of 796 a temple was a purely secular matter and could not be regarded as a religious practice under article 25(1) or as amounting to affairs in matters of religion under article 26(b) consequently, the Nathdwara Temple Act in so far as it provided for the management of the properties of the Nathdwara Temple under the provisions of the Act did not contravane articles 25(1) and 26(b) of the Constitution. In Sastri Yagnapurushadji and Ors. vs Muldas Bhudardas Vaishya and Anr.(l) the appellants who were the followers of the Swaminarayan sect and known as satsangis, filed a representative suit for a declaration that the relevant provisions of the Bombay Harijan Temple Entry Act, 1947 (as amended by Act 77 of 1948) did a not apply to their temples because, the religion of the Swaminarayan sect was distinct and different from Hindu religion and because, the relevant provisions of the Act were ultra vires. Dealing with the question this Court observed as will appear from the headnote: "The Indian mind has consistently through the ages been exercised over the problem of the nature of godhead, the problem that faces the spirit at the end of life, and the interrelation between the individual and the universal soul. According to Hindu religion the ultimate goal of humanity is release and freedom from the unceasing cycle of births and rebirths and a state of absorption and assimilation of the individual soul with the infinites. On the means to attain this and there is a great divergence of views; some emphasise the importance of Gyana, while others extol the virtue of Bhakti or devotion, yet others insist upon the paramount importance of the performance of duties with a heart full of devotion and in mind inspired by knowledge, Naturally it was realised by Hindu religion from the very beginning of its career that truth was many sided and different views contained different aspects of truth which no one could fully express. This knowledge inevitably bread a spirit of tolerance and willingness to understand and appreciate the opponent 's point of view. Because of this broad sweep of Hindu philosophic concept under Hindu philosophy, there is no scope for ex communicating any notion or principle as hertical and rejecting it as such. The development of Hindu religion .11 and philosophy shows that from time to time saints and 797 religious reformers attempted to remove from Hindu A thought and practices, elements of corruption and superstition, and revolted against the dominance of rituals and the power of the priestly class with which it came to be associated, and that led to the formation of different sects. In the teaching of these saints and religious reformers is noticeable a certain amount of divergance in their respec tive views; but underneath that divergence lie certain broad concepts which can be treated as basic and there is a kind of subtle indescribable unity which keeps them within the sweep of broad and progressive Hindu religion. The first among these basic concepts is the acceptance of the Vedas as the highest authority in religious and philosophic matters. This concept necessarily implies that all the systems claim to have drawn their principles from a common reservoir of thought enshrined in the Vedas. Unlike other religions in the world, the Hindu religion does not claim any one prophet; it does not worship any one God; it does not subscribe to any one dogma, it does not believe in any one philosophic concept; it does not follow any one set of religious rites of performances; in fact, it does not satisfy the traditional features of a religion or creed. It is a way of life and nothing more. The Constitution makers were fully conscious of the broad and comprehensive character of Hindu religion; and while guaranteeing the fundamental right to freedom of religion made it clear that reference to Hindus shall be construed as including a reference to persons professing the Sikh, Jaila or Budhist religion. Philosophically, Swaminarayan was a follower of Ramanuja and the essence of his teachings is acceptance of the Vedas with reverance, recognition of the fact that the path of Bhakti or devotion leads to Moksha, insistence or devotion to Lord Krishna and a determination to remove corrupt practices and restore Hindu religion to its original glory and purity. This shows unambiguously and unequivocally that Swaminarayan was a Hindu saint. Further, the facts that initiation is necessary to become a Satsangi, that persons of other religions could join the sect by initiation without any process of proselytising on such occasions, and that Swaminarayan himself is treated as a God, are not inconsistent with the basic Hindu religious and philosophic theory. " 798 In Digyadarsan Rajendra Ramdassji Varu vs State of Andfhra Pradesh and Anr.(1)dealing with Articles 25 and 26 of the Constitution this Court on the facts and circumstances of the case held: "It has nowhere been established that the petitioner has been prohibited or debarred from professing practising and propagating his religion. A good deal material has been placed on the record to show that the entire math is being guarded by police constables but that does not mean that the petitioner cannot be allowed to enter the math premises and exercise the fundamental right conferred by article 25(I) of the Constitution As regards the contravention of clause (b) and (d) of article 26 there is nothing in sections 46 and 47 which empowers the Commissioner to interfere with the autonomy of the religious denomination in the matter of deciding as to what rites and ceremonies are essential according to the tenets of the religion the denomination professes or practises nor has it been shown that any such order has been made by the Commissioner or that the Assistant Commissioner who has been put in charge of the day to day affairs is interfering in such matters. " On these observations the impugned Act in that case was upheld by the Court. Krishnan vs G.D.M. Committee(2) a full Bench of the Kerala High Court dealing with articles 25 and 26 observed: ". the real purpose and intendment of Articles 25 and 26 is to guarantee especially to the religious minorities in this country the freedom to profess, practise and propagate their Religion, to establish and maintain institutions for religious and charitable purposes, to manage its own affairs in matters of religion, to own and acquire properties and to administer such properties in accordance with law subject only to the limitations and restrictions indicated in those Articles. No doubt, the freedom guaranteed by these two Articles applied not merely to religious minorities but to all persons (Article 25) and all 799 religious denominations or sections thereof (Article 26). A But, in interpreting the scope and content of the guarantee contained in the two Articles the Court will always have to keep in mind the real purpose underlying the incorporation of these provisions in the fundamental rights chapter. When a challenge is raised before a court against the validity or any statute as contravening the fundamental rights guaranteed under Article 25 and 26 it is from the above perspective that tho court will approach the question and the tests to be applied for adjudging the validity of the statutes will be the same irrespective of whether the person or denomination complaining about the infringement of the said fundamental right belongs to a religious minority or not." In Ramalingayya vs The Commissioner of Charitable and Hindu Religious Institutions & Endowments(l) dealing with 'religious denomination ' the Andhra Pradesh High Court held: "Thus it is the distinct common faith and common spiritual organisation and the belief in a particular religious teacher of philosophy on which the religious denomination is founded or based, that is the essence of the matter, but not any caste, or sub caste or a particular deity worship by a particular caste or community." In United States vs Danial Andrew Seegar(2) the U.S. Supreme Court had to construe the provisions of section 6(j) of the Universal Military Training and Service Act of 1948 which, as a prerequisite of exempting a conscientious objector from military service, requires l? his belief in a relation to a Supreme Being involving duties superior to those arising from any human relation. Defendant 's claim to exemption as conscientious objector was denied after he, professing religious belief and faith and not disavowing, although not clearly demonstrating any belief in a relation to a Supreme Being, stated that "the cosmic order does, perhaps, suggest a creative intelligence" and decried the tremendous "spiritual" price man must pay for his willingness to destroy human life. The expression 'Supreme Being ' was liberally construed. 800 The Court dealing with the idea of God quoted from various religious teachers thus: "The community of all peoples is one. One is their origin for God made the entire human race live on all the face of the earth. One, too, is their ultimate end, God. Men expect from the various religions answers to the riddles of the human condition: What is man ? What is the meaning and purpose of our lives 1 What is the moral good and what is sin ? What are death, judgment, and retribution after death ? Ever since primordial days, numerous peoples have had a certain perception of that hidden power which hovers over the course of things and over the events that make up the lives of man; some have even come to know of a Supreme Being and Father. Religions in an advanced culture have been able to use more refined concepts and a more developed language in their struggle for an answer to man 's religious questions The proper question to ask, therefore, is not the futile one. Do you believe in God ? But rather, What kind of God do you believe in ? Instead of positing a personal God, whose existence man can neither prove nor disprove, the ethical concept is founded on human experience. It is anthropocentric, not theocentric. Religion, for all the various definitions that have been given of it, must surely mean the devotion of man to the highest ideal that he can conceive. And that ideal is a community of spirits in which the latent moral potentialities of men shall have been elicited by their reciprocal endeavours to cultivate the best in their fellow men. What ultimate reality is we do not know; but we have the faith that it expresses itself in the human world as the power which inspires in men moral purpose. " On an analysis of the aforesaid cases it is evident that even assuming that the Society or Auroville was a religious denomination, clause (b) of article 26 guarantees to a religious denomination a right to manage its own affairs in matters of religion. It will be seen that besides the right to manage its own affairs in matters of 801 religion, which is given by clause (b), the next two clauses of article 26 A guarantee to a religious denomination the right to acquire and own property and to administer such property in accordance with law. The administration of its property by a religious denomination has thus been placed on a different footing from the right to manage its own affairs in matters of religion. The latter is a fundamental right which no legislature can take away, whereas the former can be regulated by laws which the legislature can validly impose. It is clear, therefore, that questions merely relating to a religious group or institution are not matters of religion to which clause (b) of the article applies. The impugned Act had not taken away the right of management in matters of religion of a religious denomination, if the Society or Auroville is a religious denomination at all, rather it has taken away the right of management of the property of Auroville. Thus the impugned Act neither violates Article 25, nor Article 26 of the Constitution. The impugned Act was also feebly sought to be challenged as violating articles 29 and 30 of the Constitution. We are at a loss to understand how these two articles have any bearing on the impugned Act. These two articles confer four distinct rights: (i) Right of any section of citizens to conserve its own language, script or culture (article 29(1)). (ii) Right of all religious or linguistic minorities to establish and administer educational institutions of their choice (article 30(I)). (iii) Right of an educational institution not to be dis criminated against in matter of state aid on the ground that it is under the management of a minority (article 30(2)). (iv) Right of a citizen not to be denied admission into a state maintained or state aided educational institution on grounds only of religion, race, caste, language (article 29(2)). The impugned Act does not seek to curtail the rights of any section of citizens to conserve its own language, script or culture 802 conferred by article 29. In order to claim the benefit of article 30(I) the community must show: (a) that it is a religious or linguistic minority, (b) that the institution was established by it. Without satisfying these two conditions it cannot claim the guaranteed rights to administer it. In re The Kerala Education Bill(l) Article 30(1) of the Constitution which deals with the right of minorities to establish and administer education institutions, came for consideration. The Kerala Educational Bill, 1957, which had been passed by the Kerala Legislative Assembly was reserved by the Governor for consideration by the President. The contention of the State of Kerala was that the minority communities may exercise their fundamental right under Article 30(1) by establishing educational institutions of their choice wherever they like and administer the same in their own way and need not seek recognition from the Government, but that if the minority communities desire to have state recognition they must submit to the terms imposed, as conditions precedent to recognition, on every educational institution. The claim of the educational institutions of the minority communities, on the other hand was that their fundamental right under article 30(1) is absolute and could not be subjected to any restriction whatever. This Court, however, did not accept the extreme views propounded by the parties on either side but tried to reconcile the two. It observed: Article 29(]) gives protection to any section of citizens residing in the territory of India having a distinct language, P script or culture of its own right to conserve the same the distinct languages, script or culture of a minority community can best be conserved by and through educational institutions, for it is by education that their culture can be inculcated into the impressionable mind of the children of their community. It is through educational institutions that the language and script of the minority community can be preserved, improved and strengthened. It is, therefore, that article 30(I) confers on all minorities, whether based on religion or language, the right to establish and administer educational institutions of their choice. 803 The minorities, quite understandably, regard it as A essential that the education of their children should be in accordance with the teachings of their religion, and they hold, quite honestly, that such an education cannot be obtained in ordinary schools designed for all the members of the public but can only be secured in schools conducted under the influence and guidance of people well versed in the tenets of their religion and in the traditions of their culture. The minorities evidently desire that education should be imparted to the children of their community . in an atmosphere congenial to the growth of their culture. our Constitution makers recognised the validity of their claim and to allay their fears conferred on them the fundamental rights referred to above. But the conservation of the distinct languages, script or culture is not the only object of choice of the minority communities. They also desire that scholars of their educational institutions should go out in the world well and sufficiently equipped with the qualifications necessary for a useful career in life. But according to the Education Code now in operation to which it is permissible to refer for ascertaining the effect of the impugned provisions on existing state of affairs, the scholars of unrecognised schools are not permitted to avail themselves of the opportunities for higher education in the University and are not eligible for entering the public services. Without recognition, therefore, the educational institutions established or to be established by the minority communities cannot fulfill the real objects of their choice and the rights under article 30(1) cannot be effectively exercised. The right to establish educational institutions of their choice must, therefore, mean the right to establish real institutions which will effectively serve the needs of their community and the scholars who resort to their educational institutions." In Rev. Sidhaibhai Sabhai and Ors. vs State of Bombay and Anr.(l) dealing with article 30(I) of the Constitution, this Court held: "The right established by article 30(I) is a fundamental right declared in terms absolute. Unlike the fundamental 804 freedom guaranteed by article 19, it is not subject to reasonable restrictions. It is intended to be a real right for the protection of the minorities in the matter of setting up of educational institutions of their own choice. The right is intended to be effective and is not to be whittled down by so called regulative measures conceived in the interest not of the minority educational institutions, but of the public or the nation as a whole. If every order which while maintaining the formal character of a minority institution destroys the power of administration is held justifiable because it is in the public or national interest, though not in its interest as an educational institution, the right guaranteed by article 30(1) will be but a "teasing illusion", a promise of unreality. Regulations which may lawfully be imposed either by legislative or executive action as a condition of receiving grant or of recognition must be directed to making the institution while retaining its character as a minority institution effective an educational institution. Such regulation must satisfy a dual test the test of reasonableness, and the test that it is regulative of the educational character of the institution and is conducive to making the institution an effective vehicle of education for the minority community or other persons who resort to it." In State of Kerala vs Mother Provincial(l) the provisions of the Kerala University Act, 1969 which was passed to reorganise the University of Kerala with a view to establishing a teaching, residential and affiliating University for the southern districts of the State of Kerala, were challenged. Some of the provisions effected private colleges, particularly those founded by minority communities in the State. Their constitutional validity was challenged by some members of those communities on various grounds in writ petitions filed in the High Court. This Court held: "The minority institutions cannot he allowed to fall below the standards of excellence expected of educational institutions, or under the guise of exclusive right of management, to decline to follow the general pattern. While the management must be left to them, they may be compelled to keep in step with others. " 805 On an analysis of the two articles, article 29 and article 30 and the three cases referred to above, it is evident that the impugned Act does not seek to curtail the right of any section of citizens to conserve its own language, script or culture conferred by article 29. The benefit of article 30(I) can be claimed by the community only on proving that it is a religious or linguistic minority and that the institution was established by it. In the view that we have taken that Auroville or the Society is not a religious denomination, Articles 29 and 30 would not be attracted and, therefore, the impugned Act cannot be held to be violative of Articles 29 and 30 of the Constitution. This leads us to the third ground, namely, the impugned Act being violative of Article 14 of the Constitution inasmuch as Sri Aurobindo Society has been singled out for hostile treatment, and the legislation is against this particular institution. In order to appreciate this argument it would be necessary to refer to the circumstances which led to the passing of the impugned Act. Sri Aurobindo Society is a society registered under the West Bengal Societies Registration Act, 1961. The main objective of the Society is inter alia to make known to the member. and people in general the aims and ideals of Sri Aurobindo and the Mother; their system of Integral Yoga and to work for its fulfillment in all possible ways and for the adoption of a spiritualised society as envisaged by Sri Aurobindo. The Society was engaged right from its inception in collecting funds for the promotion of works of Sri Aurbindo and the Mother. The Society contributes funds to Sri Aurobindo Ashram and its international Centre of Education, Auroville. As the work of the Society began to grow it needed larger and larger funds for the sustenance of its own activities. In due course the Society opened several centres all over India, particularly at Calcutta, Bombay, New Delhi and Madras. It has centres also in U.S.A., Zurich. Osaka and Nairobi. Sri Aurobindo Society has two registered offices, one at Calcutta and another at Pondicherry. In order to facilitate the work of Sri Aurobindo Society to collect funds, on a representation made by the Society the Income tax Department of the Government of India gave exemption to the Society from income tax under section 35(1)(iii) of the Income Tax Act. Income tax exemption was claimed by the Society on the ground that it is engaged in educational, cultural and scientific activities and social sciences research. It was on this understanding that the exemption from income tax was granted to the 806 Society and it is through this exemption that the Society, had collected a huge amount from the public. For the first few years the development of Auroville showed a remarkable progress and development and things were growing at a rapid pace. A number of Indians and foreigners settled down in Auroville and devoted themselves to various activities of planning, designing, agriculture, education, construction and other works such as those of hand made paper and other crafts and industries. A remarkable harmony among members of Auroville was visible and this gave a promise to the Government of India of an early fulfillment of the ideals for which Auroville was established and encouraged by UNESCO and other international organisations of the world. After the passing away of the Mother in 1973, however, the situation changed and the Government received information that the affairs of the Society were not being properly managed, that there was mismanagement of the funds of the Society and diversion of the funds meant for Auroville to other purposes. The accounts of Sri Aurobindo Society were audited upto the year ending 31st December, 1974. For the years 1960 to 1971 the E; audit was conducted by late Sri Satinath Chattopadhyaya, Chartered Accountant and for the years 1972 to 1974 by Sri T. R. Thulsiram, Chartered Accountant and Internal Auditor of the Society. The letter addressed by him to the President, Sri Aurobindo Society dated May 26, 1976 relating to the affairs of Bharat Niwas as on 31st March, 1976 is revealing one and the relevant portion is extracted below: "Thus we have an unutilised deficit of about 10 lakhs at the end of 31.12.74 and of about 12 lakhs at the end of 1975 or upto 31.3.76. The situation has not improved uptil now. The activities of construction have almost come to a close after 31.12 74. Further, there are heavy bank overdrafts apart from the reduction in O. D. facilities and freezing of the money in O. D. account. Therefore, in these circumstances it is clearly seen that government monies received for the specific purpose of Bharat Niwas have been diverted for other purposes and there are no more free liquid resources either as cash or in bank accounts. So we cannot explain saying that monies are immediately available for construction and that the construction activities are 807 being continued without stop. This really is a serious matter A that calls for the proper solution. Therefore, in the above circumstances it is absolutely necessary that earlier steps be taken to correct the situation before serious audit objections are raised by the Government Auditors. We are afraid to say that we ourselves would be constrained to make a qualified report of audit, if the state of affairs does not get corrected immediately. " The situation in. Auroville became so acute that at the instance of the Ministry of Home Affairs, Government of India, an enquiry was conducted in 1976 br the Chief Secretary, Pondichery, into certain aspects of the functioning of Sri Aurobindo Society. The report of the Chief Secretary mentioned instances of serious irregularies in the management of the Society, suspected misuse of funds and auditors ' comments about the misutilisation of funds and its diversion, and it was suggested that a further probe in the financial matters of the Society and organisations connected with the Auroville Project may be made by a team of competent auditors. Considering the special position of Auroville as a cultural township of international importance, the substantial grants of the order of more than Rs. 90 lakhs given by the Government of India and the State Governments towards the fulfillment of the ideals of Auroville, the presence of a large number of foreigners in Auroville who had left their hearth and home for Auroville which had received sponsorship from Indian Government and UNESCO, the continued groupism and infighting which was bringing bad name to Auroville and the special responsibility of the Government of India in regard p to the foundation and development of Auroville, the Government of India decided to set up a committee under the Chairmanship of the Lt. Governor of Pondichery with the Chief Secretary of the Tamil Nadu and Additional Secretary of the Ministry of Home Affairs as members by a resolution of the Ministry of Home Affairs Government of India, dated 21st December, 1976. The above Committee got a quick audit made of the funds of the Society and the grants given to the Society for Auroville through a team of competent auditors. An important finding of this Committee was that the earlier apprehension about instances of serious irregularities in the manage 808 ment of the Society, misutilisation of the funds, and the diversion was confirmed. This Committee also submitted to the Government of India two volumes of the audit report. Some of the other important findings of the Committee based on audit reports were as follows: "The professional services required from Architects for the construction of Phase I of Bharat Niwas were not rendered by them and still full payment was made to these architects. Rs. 13.30 lacs sanctioned by various State Governments for construction of pavillions of their respective States were diverted and utilised towards construction in Bharat Niwas for common zone facilities this was without the approval of the State Government. Whilst the books of Bharat Niwas show that there was an unutilised balance of Rs. 22.64 lacs the Project was without any liquid resources thus showing that moneys received out of Govt. grants were diverted for other activities notwithstanding that this position was brought to the notice of the Society by their statutory auditor in its letter dated 26.5.76. Although there was no fresh receipt of steel in Bharat Niwas Phase 2 the stock was purportely revalued at a higher rate of Rs 2000 per metric ton against the earlier rate of Rs. 1700 per metric ton adopted on 31.12.73 This resulted is an over statement of the value of stock to the amount of Rs. 42,000/ . There was a transfer of materials of stock worth Rs. 2.30 lacs to Auro Stores by a journal entry on 31.12.1975 Auro Stores is a concern of Navjattas. The audit team concluded that as a result of this there was an unreal expenditure which had not resulted in outflow of resources and resulted in overstatement of expenditure on Bharat Niwas. An undischarged amount of Rs. 1.45 lacs payable to the contractors Messrs E.C.C. Ltd. towards the construc tion of Bharat Niwas stood included in the total expenditure as on 31.12.74 the utilisation certificates furnished 809 with regard to total expenditure were held to be incorrect to that extent. Although materials purchased out of Govt. grants could not be hypothecated without the approval of the Government the Society hypothecated steel from Auro Stores and obtained a loan of Rs. 6.88 lacs from the State Bank of India resulting in an expenditure of interest charge of Rs. 9561.40 which was held to be inadmissible and an irregularity. Although the Society completed construction of Health Centre in Dec. 1973 at a total cost of over Rs. 2 lacs and the Health Centre started functioning from Dec. 1973 the Society had not furnished the utilisation certificates in the prescribed form nor was the completion report duly certified by the PWD authorities. Rs. One lac was stated to have been received for the Project of World University" and the money was stated to be utilised. There is no such World University in Auroville. A difference of Rs. 1,29,848/ was noticed in the case of the value of a piece of land purchased the value of the land said to have been purchased and not entered in the register was Rs. 88,5261/ and the amount said to have been paid in excess of the value for the land actually purchased was Rs. 31,322. The operation of purchase of lands was through individuals who were given huge sums of money as advances. It was noticed that in one transaction an amount of Rs. 43,250/ representing the balance out of advance paid to one V. Sunderamurthy was adjusted as being the cost of stamp papers used during 1971. The said individual had already taken into account the cost of stamp papers whilst adjusting all other advances during 1971. The voucher for this amount also did not give the details of the document numbers in respect of which stamp papers worth Rs. 43,250/ were used. 810 In 1975 76 land to the extent of 23.86 acres was purchased at the cost of Rs. 91,496 but was registered in the names of four individuals and the value of the lands so registered in individual names were treated as advances to these individuals. The names of these individuals were "Maggi", "Kalit ', "Shyamala" and "Ravindra Reddy". The audit team found that assets and liabilities of the project were overstated to the extent of Rs. 5,l0,670. The balance sheet of Auroville project has been so framed that the assets side does not throw any light as to whether the corresponding assets from donations have been acquired and the problem is aggravated by the fact that a register of assets is not maintained. There was a complete lack of financial control which was the most serious drawback of the system and this want of financial control was revealed in a number of established and conventional procedure which would have serious implications. It was not possible for the Audit Team to establish nor the Society could establish that moneys paid were really exchanged with certain materials or goods of corresponding value. The lack of adequate scrutiny resulted in the fact that in most of the cases the bills were not supported by adequate details of materials having been passed. The expenditure of Auroville project working out to nearly 3 crores, there was no system of control of expenditure no rules and regulations or procedures according to which a particular individual or office bearer could incur an expenditure only upto a particular limit and not above that. Persons who were authorised to operate bank accounts had full authority to draw as much as they wanted and there was no system of reporting or feed back. In view of the large scale construction activities, large amounts of stores materials of various descriptions were being handled by the project. We have not come across proper records of stores and stock accounts being maintained by the project, This indeed was a serious drawback 811 since in the absence of such a system it was not possible to A verify from the records that the moneys which were shown as having been spent for purchase of materials were really paid in exchange of the materials of the required quantity and quality and whether the material purchased was actually received by the project, whether the quantity which was shown as having been utilised for the construction has been actually so utilised and the balance of stores which represented by the value was the real balance representing the various stock items. Huge amounts of cash were being handled by persons operating the main account and the number of individuals who were given advances there was no system under which cash could be verified at any interval. Even apart from the audit report, one very important point may be mentioned. The Society has been claiming that they have been holding more than Rs. 20 lacs in reserve in the account of Aurobindo Society to meet their obligations with regard to Auroville. And yet the Society has incurred heavy debts in the name of Auroville and allocated huge accumulation of interest to the extent of Rs. 20 lacs. " The Committee came to the conclusion that the time was ripe for taking recourse two either of the following two alternatives: (a) Incorporation of Sri Auroville Society by a statute as a society of national importance and bringing it under Entry 63 of the Union List of the Seventh Schedule of the Constitution; (b) Takeover of the management of Auroville project by the Government for a limited period by legislation under article 31 A(l)(b) of the Constitution. There was an intensive examination of the Committee 's report as also of the audit report. All kinds of possibilities were explored by the Government of India for remedying the situation including several discussions with the managers of the Sri Aurobindo Society. At the same time, it was apparent that the Government grants which were given for the construction works remained unutilised and 812 diverted. The construction work itself was stagnant. The Auroville township had been conceived to be spread over 10 sq. miles (minimum) for about 50,000 people. Considering the multi dimensional task, the work which was accomplished by 1976 was not even marginal. It became obvious that the work had already come to a standstill and that there was not much prospect of further growth of Auroville. On a close examination of the audit report certain clarifications were sought from those at the helm of the affairs in the Sri Aurobindo Society on various points which had come to light through the audit report. AD extensive correspondence on this subject was, therefore, undertaken. The Government of India received from the Sri Aurobindo Society answers which were often evasive and which only confirmed the findings of the Committee 's report and audit report. It may also be mentioned that the atmosphere in Auroville became so bad that it gave rise to law and order problem. The Government of Tamil Nadu was obliged several times to promulgate orders under section 144 Cr. P. C. Even so, the situation remained so bad that there were about three instances in which residents of Auroville sustained injuries because of fighting between groups. The Government of India examined the charges and counter charges in detail. Union Education Minister also paid a visit to Auroville towards the end of October, 1980. Thus after full consideration of various aspects of the problem, the Government of India decided to take recourse to the promulgation of an ordinance. Accordingly, the impugned ordinance was promulgated on 10th November, 1980. Mr. K. K. Venugopal, appearing for the petitioners, however, referred to the decision of the respective Ministries on the audit report. During October November, 1979, he contended the Ministry of Education and the Ministry of Home Affairs took decision on six major points. One of the points on which decision was taken was that there were no legal grounds for takeover of Auroville and neither the Government was interested. This decision, among others was later on endorsed by the respective Union Ministers. The report submitted by Mr. P. P. Srivastava, Joint Secretary, Ministry of Home Affairs, who visited Pondichery and Auroville on a fact finding 813 mission from 8th to 10th October, 1980, contained the following A observations: "All along the view of the Ministry of Home Affairs has been that there is no case of takeover of the administration of Auroville. This is an internal matter and the Government need not interfere. The Government of Tamil Nadu should be asked to depute two officers to help the Shri Aurobindo Society for administering the finances and the administration. " The contention of Mr. Venugopal is that the audit report had once been considered and the Government did not choose to take any further steps on assurance given on the behalf of the Society that the irregularities pointed out by the audit report will be rectified and proper management would be carried out in future. There was absolutely no reason for Government to have come forward with the proposal of the impugned ordinance or the impugned Act taking over the management of the Auroville from the Society. The circumstances obtaining on the date of the impugned ordinance or the impugned Act were the relevant considerations for the enactment. And the earlier report of the audit which had already been considered by the Government and the irregularities having been condoned, they cannot be made the basis for the impugned ordinance or the Act. For the respondents, however, it is contended that despite the assurance given by the office bearers of the Society nothing tangible had been done and the condition of the institution was going from bad to worse. The Government was involved in this case inasmuch as it was at the instance of the Government that the UNESCO and other members of UNESCO had generously donated for the construction of Auroville, the cultural township to the tune of crores of rupees. It was, therefore, a matter of vital concern for the Government of India to see that the donations so generously received from Government of India and from other States as also from abroad were properly utilised to carry out the mission of Shri Aurobindo and the Mother. In view of the prevailing situation in the Auroville and the Society the only way to put the management on the wheels was to take over the management of the institution. 814 It was further contended by Mr. Venugopal that if the management of the institution had been taken over by the Government on the ground of mis management, there could be other institutions where similar situation might be prevailing. There should have been a general legislation rather than singling out Shri Aurobindo Society for hostile treatment. The argument cannot be accepted for two reasons. Firstly, because it has not been pointed out which were the other institutions where similar situations were prevailing. Besides, there is a uniqueness with this institution inasmuch as the Government is also involved. Even a single institution may be taken as a class. The C: situation prevailing in the Auroville had converted the dream of the Mother into a nightmare. There had arisen acute law and order situation in the Auroville, numerous cases were pending against various foreigners, the funds meant for the Auroville had been diverted towards other purposes and the atmosphere was getting out of hand. In the circumstances the Government intervened and promulgated the ordinance and later on substituted it by the impugned enactment. It cannot be said that it is violative of Article 14 on that account. We get support for our view from the following decisions. In Budhan Chowdhury vs The State of Bihar(l) a Constitution Bench of seven Judges of this Court explained the true meaning and scope of Article 14 as follows: "It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and, (ii) that the differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to objects or occupation or the like, What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well established by the decisions of this Court that 815 article 14 condemns discrimination not only by a substantive law but also by a law of procedure. " These observations were quoted with approval by this Court in Shri Ram Krishna Dalmia vs Shri Justice S.R. Tendolkar and Ors.(l) In this case the Court further laid down: "(a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles; (c) that it must be presumed that the legislature under stands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; (d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest, (e) that in order to sustain the presumption of consti tutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and (f) that while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of 816 always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. " In Ram Prasad Narayan Sahi and Anr. vs The State of Bihar and ors.(l) the Court of Wards had granted to the appellant a large area of land belonging to the Bettiah Raj which was then under the management of the Court of Wards, on the recommendation of the Board of Revenue, at half the usual rates. The Bihar Legislature passed an Act called the Sathi Lands (Restoration) Act, 1950 which declared that, notwithstanding anything contained in any law for the time being in force the settlement granted to the appellants shall be null and void and that no party to the settlement or his successors in interest shall be deemed to have acquired any right or incurred any liability thereunder, and empowered the Collector to eject the appellants if they refused to restore the lands. The appellants challenged the constitutionality of the Act under Article 226. This Court held: "The dispute between the appellants and the State was really a private dispute and a matter to be determined by a judicial tribunal in accordance with the law applicable to the case, and, as the Legislature had, in passing the impugned enactment singled out the appellants and deprived them of their right to have this dispute adjudicated upon by a duly constituted Court, the enactment contravened the provisions of article 14 of the Constitution which guarantees to every citizen the equal protection of the laws, and was void. Legislation which singles out a particular individual from the fallow subjects and visits him with a disability which is not imposed upon the others and against which even the right of complaint is taken away is highly discriminatory. " The facts of this case are distinguishable from the case in hand. In that case the legislation was made only for a particular person. In the cases in hand on account of the uniqueness of the institution and on account of the involvement of the Government and the 817 stake being a high one about public funds, Parliament could take a particular institution as a class by itself. In Ram Chandra Deb vs The State of Orrisa(1) Sri Jagannath Temple Act, 1955 was sought to be challenged being violative of Article 14 of the Constitution inasmuch as the legislature had made a separate Act for a particular temple alone and there were adequate provisions in the Orrisa Religious Endowments Act, 1951 which was the general Act applicable to all public temples and religious institutions and contained adequate provisions to meet all situations similar contention as raised in the present cases was raised in that case that a particular temple had been singled out for hostile discrimination. It was contended that the Commissioner of Hindu Religious Endowments had ample powers under the Act to frame a scheme for the proper management of the temple also and the legislature by enacting a separate piece of legislation for the temple alone, ignoring the other temples of Orrisa such as those at Bhubaneswar where also there might be similar administration, bad contravened Article 14. This argument was, however, repelled by the Orrisa High Court with the following observations: "The principles underlying article 14 of the Constitution have been reiterated in several decisions of the Supreme Court and it is unnecessary to repeat them in detail. All that article prohibits is class legislation and not reason able classification for the purpose of legislation so long as such classification is not arbitrary and "bears a rational relation to the object sought to be achieved by the statutes in question". In Charanjit Lal vs Union of India ; a separate law enacted for one company was held not to offend article 14 of the Constitution on the ground that there were special reasons for passing legislation for that company. " When that case came up in appeal to this Court at the instance of the son of the petitioner, in Raja Birakishore vs The State of Orrisa(2) this Court held: "There is no violation of article 14 of the Constitution. The Jagannath Temple occupies a unique position in the State of Orrisa and is a temple of national importance and 818 no other temple in that State can compare with it. It stands in a class by itself and considering the fact that it attracts pilgrims from all over India, in large numbers, it could be the subject of special consideration by the State Government. A law may be constitutional even though it related to a single individual if on account of special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by him self. " It was next contended that there were provisions in the Societies Registration Act itself to meet the situation arising in Auroville. There was to necessity for the impugned ordinance or the enactment. Shri Venugopal referred to the various provisions of the Societies Registration Act to show that it was open to the Registrar to call for an explanation from the Society for any illegality or irregularity committed by them or if there was a mis appropriation of funds,. inasmuch as the Act was a self contained Code and there was absolutely no justification for any ordinance or the enactment. The law and order situation also could be controlled by resorting to the provisions of the Code of Criminal Procedure. Whether the remedies provided under the Societies Registration Act were sufficient to meet the exigencies of the situation is not for the Court to decide but it is for the Government and if the Government thought that the conditions prevailing in the Auroville and the Society can be ameliorated not by resorting to the provisions of the Societies Registration Act but by a special enactment, that is an area of the Government and not of the Court. Para 6 of the preamble of the Act gives the reasons for the enactment. It reads: "AND whereas pursuant to the complaints received with regard to mis use of funds by Shri Aurobindo Society, a Committee was set up under the Chairmanship of the Lt. Governor of Pondicherry with representatives of the Government of Tamil Nadu and of the Ministry of Home Affairs in the Central Government, and the said Committee had after detailed scrutiny of the accounts of Sri Aurobindo Society found instances of serious irregularities in the management of the said Society, mis utilisation of its funds and their diversion to other purposes. " 819 On the basis of para 6 of the preamble it is argued that the grounds A given were non existant at the time of the impugned ordinance or the enactment and, therefore, the law made on that basis itself is bad. We are afraid the argument has no substance. Obviously, there were serious irregularities in the management of the said Society as has been pointed out in the earlier part of the judgment. There has been mis utilisation of funds and their diversion to other purposes. This is evident from the audit report. There was no material change in the situation on the date of the impugned ordinance or the Act, rather the situation had grown from bad to worse and the sordid situation prevailing in the Auroville so pointed out by the parties fully justified the promulgation of the ordinance and the passing of the enactment. Of course, each party tried to apportion the blame on the other. Whosoever be responsible, the fact remains that the prevailing situation in the Auroville was far from satisfactory. The amount donated for the construction of the cultural township Auroville and other institutions was to the tune of Rs. 3 crores. It was the responsibility of the Government to see that the amount was not mis utilised and the management was properly carried out. So, the basis of the argument that the facts as pointed out in the preamble were non est is not correct. Mr Venugopal tried to explain the various adverse remarks made by the auditors. On a perusal of the audit report, which is a voluminous one, all we can say is that on the facts found by the audit committee, the report is rather a mild one. There seems to be serious irregularities in the accounts. A substantial amount received by way of donations had not been properly spent, there being mis utilisation and diversion of the funds. The Attorney General appearing for the Union of India contended that even assuming for the sake of argument, but not conceding that the facts brought to the notice of the legislature were wrong, it will not be open to the Court to hold the Act to be bad on that account. We find considerable force in this contention. The Court would not do so even in case of a litigation which has become final on the ground that the facts or the evidence produced in the case were not correct. The Parliament had to apply its mind on the facts before it. 820 The Attorney General also raised a sort of preliminary objection on behalf of the Union of India, that in view of article 31A the petitioners could not challenge the Act on the ground of contravention of article 14 of the Constitution. In so far as it is material for the purposes of this case, article 31A reads: "31A. (I) Notwithstanding anything contained in article l 3, no law providing for (a) . . . . . . . (b) the taking over of the management of any property by the State for a limited period either in the public interest or in order to assure the proper management of the property, (c) . . . . . . . . (d) . . . . . . . . (e) . . . . . . . . shall be deemed to be void on the ground that it is inconsiststent with, or takes away or abridges any of the rights conferred by article 14 or article 19. " We find this argument to be plausible but instead of expressing any concluded opinion on this point we preferred to deal with the various contentions raised by Mr. Venugopal on article 14 of the Constitution in view of the importance of the question involved in this case. A subsidiary point was further submitted by Mr. Venugopal that no qualifications have been prescribed and, therefore any person could be appointed as an Administrator. We can normally assume that the Government would certainly appoint a responsible person as an administrator especially when there is a heavy stake in which the Government of India is also involved inasmuch as at the instance of the Government the UNESCO gave financial support to the institution. It was further submitted that the report of the Committee was a tainted one as the Chairman, Kulkarni and the Secretary were parties. There is no foundation for this submission. 821 We, therefore, hold that the impugned ordinance or the impugned Act is not violative of Article 14 of the Constitution. Now we turn to the last but not the least important ground of mala fides. The Act is sought to be challenged on the ground that it is mala fide. This argument is on the basis that Kirit Joshi, who had his own axe to grind in the matter, was instrumental in getting the impugned ordinance and the Act passed. This argument bas been advanced only to be rejected. Allegations about mala fides are more easily made than made out. It will be too much to contend that Kirit Joshi, who was only an Educational Adviser to the Government of India, Ministry of Education and Culture (Department of Education), was responsible for the impugned enactment. The impugned enactment was passed following the due procedure and merely because he made a complaint about the situation prevailing in the management of Auroville and the Society, it cannot be said that the impugned enactment was passed at his behest. For the reasons given above all the writ petitions must fail. In view of the final decision on the writ petitions themselves, it is not necessary to pass any specific order in the appeal filed against the interim order in one of the writ petitions. The parties in the circumstances of the case are left to bear their own costs. section R. Petitions dismissed.
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Sri Aurobindo was an Indian philosopher. He had a successful career but then became involved in politics and writing. Later, he left these things to focus on meditation and yoga in Pondicherry, India. A French woman named Madam M. Alfassa, who became known as the Mother, became Sri Aurobindo's student. Soon, more students from India and other countries joined them. This led to the creation of the Aurobindo Ashram. The students and followers of Sri Aurobindo and the Mother wanted to share their ideas and beliefs. So, in 1960, they formed a group called the Sri Aurobindo Society. This Society is registered under the laws of West Bengal and is separate from the Aurobindo Ashram in Pondicherry. The Society was created to promote its goals in India and other countries. The Executive Committee manages the Society. There are rules for managing the Society and protecting its money and property. The Sri Aurobindo Society shares the teachings of Sri Aurobindo through meetings at centers all over India. The Mother, as the founder, also planned a town called 'Auroville'. In Auroville, people from different countries would work together in culture, education, science, and other areas to promote unity. The Society has been used to provide money for building Auroville. The Indian government and UNESCO believed that Auroville could help international understanding and peace. UNESCO supported the project with a resolution in 1966. In 1968, UNESCO asked its member countries and other organizations to help develop Auroville. The goal was to create a place where different cultures could live together peacefully and meet people's physical and spiritual needs. In 1970, UNESCO told its Director General to take steps to help Auroville grow as an international cultural program. The Sri Aurobindo Society received a lot of money from groups in India and other countries to develop Auroville. This included money from state governments (Rs. 66.50 lakhs) and the central government (Rs. 26.14 lakhs). After the Mother died in 1973, problems arose that affected the project. The Indian government received complaints about mismanagement and misuse of funds by the Sri Aurobindo Society. So, they formed a committee led by the Governor of Pondicherry to investigate. The committee looked at the Society's financial records for Auroville. They found serious problems in how the Society was managed, including misuse and diversion of funds. Also, other problems were making it hard for Auroville to grow. Because of these issues, the government felt it was necessary to take over the management of Auroville to ensure it grew according to its goals. Given the project's international importance and the government's support through UNESCO, the Indian government felt responsible for its growth and management. The project's ideals represented India's highest hopes, and the government did not want them to fail. The Sri Aurobindo Society had lost control, and the people of Auroville asked the government for protection from the Society. There were also internal conflicts within the Society. There were also law and order issues. The project's finances were not well managed, and there were cases of mismanagement and diversion of funds. The Sri Aurobindo Society gave a large sum of money to AURO construction, an agency with unclear status and abilities. In these circumstances, the government could not ignore the project's mismanagement and internal conflicts, which could destroy the project. Therefore, the government decided to issue a Presidential Ordinance (a temporary law). After a legal challenge was filed, the ordinance was replaced by an Act (a law passed by Parliament). The Act's legality has been challenged on four grounds: (i) Parliament did not have the power to pass the law; (ii) The law violates certain articles of the Constitution related to freedom of religion and culture; (iii) The law violates the Constitution's guarantee of equality; and (iv) The law was made in bad faith. The Court rejected the challenges and stated the following: The Parliament had the power to pass the law. The law does not fall under the category of laws that state governments can make. Even if the law does not fit into any specific category of laws, it would still be covered by a general category that gives Parliament the power to make laws on any matter not listed elsewhere. The different lists in the Constitution only define the areas in which different levels of government can make laws. The Auroville Act does not interfere with the West Bengal Societies Registration Act because it does not deal with the creation, regulation, or ending of the Society. The term "religious denomination" (a religious group) must be understood in the context of the word "religion". A religious denomination must have: (i) a system of beliefs that its members consider important for their spiritual well-being; (ii) a common organization; and (iii) a distinctive name. The term 'religion' has been legally defined as: (1) a system of beliefs that people consider important for their spiritual well-being; (2) not just an opinion or belief, but also expressed in actions; (3) not necessarily involving a god; (4) "Religious denomination" means a religious group with a common faith, organization, and name; (5) a law that takes away a religious group's right to manage its own affairs and gives it to another authority would violate the Constitution. According to the majority of judges: Based on the Society's documents, applications for tax exemptions, and statements by Sri Aurobindo and the Mother, there is no doubt that neither the Society nor Auroville is a religious denomination. Sri Aurobindo's teachings are a philosophy, not a religion. Sri Aurobindo and the Mother repeatedly said that the Ashram, Society, and Auroville were not religious institutions. Their own views on their teachings and institutions are the best evidence of whether they constitute a religion or a philosophy. Because it was not considered a religious institution, the Society was able to collect funds from the government and other organizations. Even if the Society or Auroville were a religious denomination, the law would still not violate the Constitution. The law does not restrict freedom of conscience or the right to practice and share religion. The law does not prevent the Society from establishing or maintaining institutions for religious and charitable purposes, or from managing its religious affairs. Even if the Society or Auroville were a religious denomination, the Constitution only guarantees the right to manage its religious affairs. The right to own and manage property can be regulated by law. The law has not taken away the right to manage religious affairs, but rather the right to manage Auroville's property. Therefore, the law does not violate the Constitution. The Auroville Act does not restrict any group's right to preserve its language, script, or culture. Only religious or linguistic minorities can claim the right to establish and manage educational institutions. Since Auroville and the Society are not religious denominations, these rights do not apply. The Auroville Takeover Act does not violate the Constitution's guarantee of equality. The government's action was taken after careful consideration and is justified because: (i) no other similar institutions were identified; and (ii) the government is involved in this institution. A single institution can be treated as a separate class. The situation in Auroville had turned the Mother's dream into a nightmare. There were law and order problems, cases against foreigners, and misuse of funds. In these circumstances, the government intervened. It is up to the government, not the Court, to decide whether the existing laws were sufficient to address the situation. If the government believed that a special law was needed, that is its decision. The facts stated in the Act's introduction were accurate. There were serious problems in the Society's management, including misuse and diversion of funds. This is clear from the audit report. The situation had worsened over time, justifying the law. While each party blamed the other, the situation in Auroville was unsatisfactory. A large sum of money had been donated for Auroville's construction, and the government had a responsibility to ensure it was used properly. The audit report revealed serious irregularities in the accounts, with significant amounts of donations being misused or diverted. Even if the legislature was given wrong information, the Court cannot declare the Act invalid. The Court cannot overturn a final legal decision even if the facts or evidence were incorrect. The Parliament had to make its decision based on the information it had. It is reasonable to assume that the government would appoint a responsible person as administrator, especially since the government and UNESCO have a significant stake in the institution. The claim that the committee's report was biased is unfounded. The allegation that the Act was made in bad faith is also without merit. According to Judge Chinnappa Reddy (dissenting): Sri Aurobindo was a religious teacher who taught a new religious doctrine. Therefore, Aurobindoism can be considered a new religion or a sect of Hinduism, and its followers a religious denomination. Sri Aurobindo did not claim to be founding a religion, but that is not the point. The question is whether his followers and the community thought so. There is no doubt that they did. Therefore, the Aurobindo Society is a religious denomination under the Constitution. The Constitution promises freedom of thought, expression, belief, faith, and worship. The freedom of conscience and the right to practice and share religion are guaranteed in the Constitution. Secular (non-religious) activities may be associated with religion. The Constitution guarantees every religious denomination the right to establish and maintain institutions for religious and charitable purposes, manage its religious affairs, and own and manage property. The Constitution views religion as involving thought, expression, belief, faith, worship, and conscience. It can be practiced and shared by anyone and may have secular activities associated with it. Religion, as undefined by the Constitution, is a matter of faith, belief, and doctrine concerning the human spirit. It must be expressed in actions like worship. Some religions are easily identified, while others are not. There is no simple test. It depends on how the community sees itself and how others see it. Other factors include the community's origin, history, rituals, and the founder's teachings. The founder may not have intended to start a religion, but his teachings may have developed into one over time. The common faith of a religious body is more important than its other features. Judicial definitions are explanations, not strict rules. The words in the Constitution should be interpreted, not the words used by judges in their explanations. A religious denomination does not have to belong to any parent religion. The entire following of a religion may be no more than the religious denomination. This is especially true for small or new religions. Aurobindoism can be considered a religious denomination because the world and India treated Sri Aurobindo as a religious teacher and the founder of a new religion. The law did not take away the management of the Shri Aurobindo Society, but only the management of Auroville. Except for matters relating to Auroville, the law under which the Society was registered continues to apply. The management of Auroville cannot be considered a matter of religion. Auroville is a town, not a place of worship. It is dedicated to promoting international understanding and world peace, which is a secular activity. The most that can be said is that Auroville was conceived by the Mother and shaped by Sri Aurobindo's followers in pursuit of his ideas. However, the ideal of promoting international understanding and world peace is not a religious ideal, and that is why the government and UNESCO supported the project. Sri Aurobindo was not just a religious teacher, but also a visionary, humanist, and nationalist. Therefore, Auroville has its own secular identity. Hence, the law that takes over the management of Auroville for a limited time does not violate the Constitution. The law does not infringe on the rights guaranteed by the Constitution regarding culture and education. No group has been denied the right to establish and manage an educational institution of its choice.
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No. 1 to 4. 740 FOR APPLICANT/INTERVENERS A.B. It may not have even a name, as indeed most tribal religions do not have. article 16(5) exempts from the right guaranteed under article 16 the operation of any law which provides that the incumbent of an office in connection with the affairs of any religious or denominational institution or any member of the governing body thereof shall be a person professing a particular religion or belonging to a particular denomination. A religion undoubtedly has its basis in a system of beliefs or doctrines which are regarded by those who profess that religion as conducive to their spiritual well being, but it would not be correct to say that religion is nothing else but a doctrine or belief. He added, "It should be noticed, however, that under article 26 (d), it is the Fundamental Right of a religious denomination or its representative to administer its properties in accordance with the law; and the law, therefore, must leave the right of administration to the religious denomination itself, subject to such restrictions and regulations as it might choose to impose a law which takes away the right of administration from the hands of a religious denomination altogether and vests it in any other authority, would amount to a violation of the right guaranteed under cl. He may be against religion itself, yet, history and the perception of the community may make a religion out of what was not intended to be a religion and he may be hailed as the founder of a new religion. Was he or was he not a religious teacher ? The question is not whether Shri Aurobindo refused to claim or denied that he was founding a new religion or a new school of religious thought but whether his disciples and the community thought so. If the followers of Shri Aurobindo constitute a `religious denomination ', as, to my mind, they undoubtedly do, the members of Shri Aurobindo Society are certainly a distinct and identifiable section of the `religious denomination '. It is nobody 's case that this is not the principal object of the society or that it is only a facade for other activities. If the society consists of the disciples and followers of Sri Aurobindo, if its primary object is to profess, practise and propagate the system of Integral Yoga, and, if, therefore, it is a section of a religious denomination, the circumstance that it is engaged in several secular activities and has represented itself to be a non religious organisation for certain purposes cannot detract from the fact that it is a section of a religious denomination within the meaning of article 26 Therefore, we must hold, the Aurobindo Society is a section of a religious denomination within the meaning of the expression in article 26 of the Constitution. x x x "AND WHEREAS Auroville was developed as a cultural township with the aid of funds received from different organisations in and outside India as also from the substantial grants received from the Central and State Governments; AND WHEREAS pursuant to the complaints received with regard to the misuse of funds by Sri Aurobindo Society, a committee was set up under the chairmanship of the Lieutenant Governor of Pondicherry with representatives of the Government of Tamil Nadu and of the Ministry of Home Affairs in the Central Government, and the said committees had, after a detailed scrutiny, of the accounts of Shri Aurobindo Society, found instances of serious irregularities in the management of the said Society, misutilisation of its funds and their diversion to other purposes ; AND WHEREAS in view of the serious difficulties which have arisen with regard to the management of Auroville, it is necessary to take over, for a limited period, the management, thereof and any delay in taking over the management of Auroville would be highly detrimental to the interests and objectives of Auroville; The long preamble itself explains what Auroville is. The highest that can be said in favour of Auroville being a religious institution or its management being a religious matter, is that it was conceived by the Mother and shaped and sculpted by Shri Aurobindo 's disciples and followers in the pursuit of one of the ideas and ideals of Shri Aurobindo, a great religious teacher. The management of the International, cultural township of Auroville is not, in our opinion, a matter of religion. We have also pointed out that the administration of the property of a religious denomination is different from the right of the religious denomination to manage its own affairs in matters of religion and that laws may be made which regulate the right to administer the property of a religious denomination. The first two petitions under Article 32 of the Constitution of India filed in this Court and the third under Article 226 of the Constitution filed in the Calcutta High Court and later on transferred to this Court, seek to challenge the vires of the Auroville (Emergency Provisions) Ordinance, 1980 (Ordinance No. The disciples and devoted followers of Sri Aurobindo and the Mother with a view to propagate and practise the ideals and beliefs of Sri Aurobindo formed a Society called Sri Aurobindo Society in the year 1960. The Society was established and registered for the purpose of carrying out inter alia the following objects in and outside India: (i) To make known to the members of the public in general the aims and ideals of Sri Aurobindo and the Mother, their system of integral yoga and to work for its fulfilment in all possible ways and for the attainment of a spiritualised society as envisaged by Sri Aurobindo; (ii) To Train selected students and teachers from all over the world in the integral system or education i.e., spiritual, psychic, mental, vital and physical; (iii)To help in cash and/or kind by way of donations, gifts, subsidies and in also other ways in the all round development of Sri Aurobindo International Centre of Education and to help similar centres of education; (iv) To establish study groups, libraries, Ashrams and other institutions, centres, branches and societies for study and practice of integral yoga of Sri Aurobindo and the Mother and to help the existing ones; 762 (v) To establish centres of physical culture, sports and volunteer organisations for inculcating and promoting the spirit of discipline, co operation and service to others and to undertake activities for promotion of health and bodily perfection: (vi) To organise, encourage, promote and assist in the study, research and pursuit of science, literature and fine arts; (vii)To enquire, purchase, build, construct or take on lease or in exchange or hire any movable or immovable property, or gifts or privileges; and (viii)Generally to do all other acts, deeds and things necessary, conductive, suitable or incidental to or for the attainment of the above objects or any of them or part of them. The management of Auroville was prior to the impugned Act vested in the Governing Body/Board of Trustees of the Society under the Provisions of the West Bengal Societies Registration Act and memorandum and rules and regulations of the Society, as is evident from section 5(5) of the impugned Act itself. Therefore, the object and purpose of the impugned Act is to take away the management of Auroville from the Society and to bring it under the management of the Central Government under the provisions of the impugned Act. The society challenged the Act on the ground that it was beyond the legislative competence of the State legislature inasmuch as in substance it sought to substitute the provisions of the , a field of legislation which was exclusively within the competence of Parliament and in any case the Act in so far as it affected the powers of the trustees of charitable institutions 769 could not be enacted without conforming to the requirements of Article 254. It was further held that the true nature and character of the Act falls within the express legislative power conferred by entry 11 of List II and merely because it incidentally trenches upon or affects a charitable institution or the powers of the trustees of the institution, it will not on that account be beyond the legislative authority of the State Legislature. On the other hand, the stand of the Union of India as well as of the interveners, is that the first part of entry 32 of List II is not attracted as the subject matter of the impugned Act is not incorporation, regulation or winding up of a corporation. The words "religious denomination" in Article 26 of the Constitution must take their colour from the word 'religion ' and if this be so, the expression "religious denomination" must also satisfy three conditions: (1) It must be a collection of individuals who have a system of beliefs or doctrines which they regard as conducive to their spiritual well being, that is, a common faith; (2) common organisation; and (3) designation by a distinctive name. Divine existence that will appear through the development of the agnostic man will usher into a transcendental spiritual age in which man and universe are destined to become divine. But in fact that is not all that we are. On the strength of this case it was contended that Sri Aurobindo was also a religious teacher and, therefore, there is no reason on principle which compels the conclusion that the followers of Aurobindo who share common faith and organisation and have a distinctive name do not constitute a 778 religious denomination. sects of the Hindu religion founded by various religious teachers were called a religious denomination on the ground that they being part of Hindu religion would also be designated as a religious denomination if the followers of Hindu religion constituted a religious denomination as the part must bear the impress of the whole. Now if this person has noted down all the processes he has used and constructs a fixed system, and sets up all that he has discovered is absolute laws for example he says, the Divine is like this, to find the Divine you must do this, make this particular gesture, take this attitude, perform this ceremony and you must admit that this is the truth, you must say "I accept that this is the Truth and I fully adhere to it; and your method is the only right one, the only one which exists" if all that is written down, organised arranged into fixed laws and ceremonies, it becomes a religion. Sri Aurobindo (Glossary of Terms in Sri Aurobindo 's Writings, p. 132) Emphasis was also laid upon the opinion of the authoritative sources in support of the contention that the teachings of Sri Aurobindo constitute a religion and the Society a religious denomination. The Gazetteer of India, published by the Government of India, Vol. Thus, all the ingredients of religion and religious denomination are satisfied and there is no reason why his teachings be not taken to be religious and the institutions viz, the Society and the Auroville be not taken to be a religious denomination within the meaning of Articles 25 and 26 of the Constitution. 6 to 238, on the other hand contended that the teachings of Sri Aurobindo do not constitute religion nor is the Society and the Auroville a religious denomination, and in any case there is no violation of Article 26 of the Constitution inasmuch as the impugned Act has taken over only the management of Auroville from the Society and does not interfere with the freedom contemplated by Articles 25 and 26 of the Constitution. A denomination, argues the counsel, is one which is different from the other and if the Society was a religious denomination, then the person seeking admission to the institution would lose his previous religion He cannot be a member of two religions at one and the same time. As Dr. M.P. Sri Aurobindo Society had brought the proposal of Auroville to the Government of India and explained that Auroville was to be an international cultural township. In Sri Aurobindo 's own words (The Teaching and the Ashram of Sri Aurobindo, 1934, p. 6): "The Ashram is not a religious association Those who are here come from all religions and some are of no religion. 791 Sri Aurobindo himself said(1): "I may say that it is far from my purpose to propagate any religion, new or old. " It was further contended that a religious denomination must be professed by that body but from the very beginning the Society has eschewed the word 'religion ' in its constitution. On the basis of the materials placed before us viz., the Memorandum of Association of the Society, the several applications made by the Society claiming exemption under section 35 and section 80 of the Income tax Act, the repeated utterings of Sri Aurobindo and the Mother that the Society and Auroville were not religious institutions and host of other documents there is no room for doubt that neither the Society nor Auroville constitute a religious denomination and the teachings of Sri Aurobindo only represented his philosophy and not a religion. Unlike other religions in the world, the Hindu religion does not claim any one prophet; it does not worship any one God; it does not subscribe to any one dogma, it does not believe in any one philosophic concept; it does not follow any one set of religious rites of performances; in fact, it does not satisfy the traditional features of a religion or creed. A good deal material has been placed on the record to show that the entire math is being guarded by police constables but that does not mean that the petitioner cannot be allowed to enter the math premises and exercise the fundamental right conferred by article 25(I) of the Constitution As regards the contravention of clause (b) and (d) of article 26 there is nothing in sections 46 and 47 which empowers the Commissioner to interfere with the autonomy of the religious denomination in the matter of deciding as to what rites and ceremonies are essential according to the tenets of the religion the denomination professes or practises nor has it been shown that any such order has been made by the Commissioner or that the Assistant Commissioner who has been put in charge of the day to day affairs is interfering in such matters. " In Ramalingayya vs The Commissioner of Charitable and Hindu Religious Institutions & Endowments(l) dealing with 'religious denomination ' the Andhra Pradesh High Court held: "Thus it is the distinct common faith and common spiritual organisation and the belief in a particular religious teacher of philosophy on which the religious denomination is founded or based, that is the essence of the matter, but not any caste, or sub caste or a particular deity worship by a particular caste or community." The impugned Act had not taken away the right of management in matters of religion of a religious denomination, if the Society or Auroville is a religious denomination at all, rather it has taken away the right of management of the property of Auroville. The contention of the State of Kerala was that the minority communities may exercise their fundamental right under Article 30(1) by establishing educational institutions of their choice wherever they like and administer the same in their own way and need not seek recognition from the Government, but that if the minority communities desire to have state recognition they must submit to the terms imposed, as conditions precedent to recognition, on every educational institution. In the view that we have taken that Auroville or the Society is not a religious denomination, Articles 29 and 30 would not be attracted and, therefore, the impugned Act cannot be held to be violative of Articles 29 and 30 of the Constitution. 90 lakhs given by the Government of India and the State Governments towards the fulfillment of the ideals of Auroville, the presence of a large number of foreigners in Auroville who had left their hearth and home for Auroville which had received sponsorship from Indian Government and UNESCO, the continued groupism and infighting which was bringing bad name to Auroville and the special responsibility of the Government of India in regard p to the foundation and development of Auroville, the Government of India decided to set up a committee under the Chairmanship of the Lt. There is no such World University in Auroville. The Committee came to the conclusion that the time was ripe for taking recourse two either of the following two alternatives: (a) Incorporation of Sri Auroville Society by a statute as a society of national importance and bringing it under Entry 63 of the Union List of the Seventh Schedule of the Constitution; (b) Takeover of the management of Auroville project by the Government for a limited period by legislation under article 31 A(l)(b) of the Constitution. And the earlier report of the audit which had already been considered by the Government and the irregularities having been condoned, they cannot be made the basis for the impugned ordinance or the Act. It cannot be said that it is violative of Article 14 on that account. (l) In this case the Court further laid down: "(a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles; (c) that it must be presumed that the legislature under stands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; (d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest, (e) that in order to sustain the presumption of consti tutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and (f) that while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of 816 always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. " Whether the remedies provided under the Societies Registration Act were sufficient to meet the exigencies of the situation is not for the Court to decide but it is for the Government and if the Government thought that the conditions prevailing in the Auroville and the Society can be ameliorated not by resorting to the provisions of the Societies Registration Act but by a special enactment, that is an area of the Government and not of the Court. Governor of Pondicherry with representatives of the Government of Tamil Nadu and of the Ministry of Home Affairs in the Central Government, and the said Committee had after detailed scrutiny of the accounts of Sri Aurobindo Society found instances of serious irregularities in the management of the said Society, mis utilisation of its funds and their diversion to other purposes. "
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Sri Aurobindo was an Indian philosopher. This Society is registered under the laws of West Bengal and is separate from the Aurobindo Ashram in Pondicherry. There are rules for managing the Society and protecting its money and property. The Sri Aurobindo Society shares the teachings of Sri Aurobindo through meetings at centers all over India. The Society has been used to provide money for building Auroville. The Sri Aurobindo Society received a lot of money from groups in India and other countries to develop Auroville. The Indian government received complaints about mismanagement and misuse of funds by the Sri Aurobindo Society. Because of these issues, the government felt it was necessary to take over the management of Auroville to ensure it grew according to its goals. The Sri Aurobindo Society had lost control, and the people of Auroville asked the government for protection from the Society. There were also law and order issues. In these circumstances, the government could not ignore the project's mismanagement and internal conflicts, which could destroy the project. The Act's legality has been challenged on four grounds: (i) Parliament did not have the power to pass the law; (ii) The law violates certain articles of the Constitution related to freedom of religion and culture; (iii) The law violates the Constitution's guarantee of equality; and (iv) The law was made in bad faith. The Auroville Act does not interfere with the West Bengal Societies Registration Act because it does not deal with the creation, regulation, or ending of the Society. The term 'religion' has been legally defined as: (1) a system of beliefs that people consider important for their spiritual well-being; (2) not just an opinion or belief, but also expressed in actions; (3) not necessarily involving a god; (4) "Religious denomination" means a religious group with a common faith, organization, and name; (5) a law that takes away a religious group's right to manage its own affairs and gives it to another authority would violate the Constitution. According to the majority of judges: Based on the Society's documents, applications for tax exemptions, and statements by Sri Aurobindo and the Mother, there is no doubt that neither the Society nor Auroville is a religious denomination. Sri Aurobindo's teachings are a philosophy, not a religion. Sri Aurobindo and the Mother repeatedly said that the Ashram, Society, and Auroville were not religious institutions. Because it was not considered a religious institution, the Society was able to collect funds from the government and other organizations. Even if the Society or Auroville were a religious denomination, the law would still not violate the Constitution. The law does not restrict freedom of conscience or the right to practice and share religion. The law does not prevent the Society from establishing or maintaining institutions for religious and charitable purposes, or from managing its religious affairs. Even if the Society or Auroville were a religious denomination, the Constitution only guarantees the right to manage its religious affairs. The right to own and manage property can be regulated by law. Therefore, the law does not violate the Constitution. If the government believed that a special law was needed, that is its decision. There were serious problems in the Society's management, including misuse and diversion of funds. A large sum of money had been donated for Auroville's construction, and the government had a responsibility to ensure it was used properly. The Parliament had to make its decision based on the information it had. The claim that the committee's report was biased is unfounded. Therefore, Aurobindoism can be considered a new religion or a sect of Hinduism, and its followers a religious denomination. Sri Aurobindo did not claim to be founding a religion, but that is not the point. There is no doubt that they did. Therefore, the Aurobindo Society is a religious denomination under the Constitution. It can be practiced and shared by anyone and may have secular activities associated with it. The entire following of a religion may be no more than the religious denomination. Aurobindoism can be considered a religious denomination because the world and India treated Sri Aurobindo as a religious teacher and the founder of a new religion. The management of Auroville cannot be considered a matter of religion. Auroville is a town, not a place of worship. The most that can be said is that Auroville was conceived by the Mother and shaped by Sri Aurobindo's followers in pursuit of his ideas. Hence, the law that takes over the management of Auroville for a limited time does not violate the Constitution.
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iminal Appeal No. 42 of 1953. Appeal by Special Leave from the Judgment and Order dated the 5th February, 1953, of the High Court of Judicature at Bombay in Criminal Appeal No. 1149 of 1952 arising out of the Judgment and Order dated the 22nd April, 1952, of the Court of the Presidency Magistrate 19th Court, Bombay, in Case No. 933/P of 1951. B. M. Mistry, J. B. Dadachanji, Rajinder Narain and R. D. Chadda for the appellant. M. C. Setalvad, Attorney General for India (R. Ganapathy Iyer and P. G. Gokhale, with him) for the respondent. February 19, April 28, September 23, and September 24. [The present Criminal Appeal (No. 42 of 1953) came up for hearing in the first instance before a Bench of Hon 'ble Judges composed of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ. who delivered the following Judgments dated 19th February, 1954]. BHAGWATI J. This is an appeal by special leave from a judgment of the High Court of Judicature at Bombay reversing the order of acquittal passed in favour of the appellant by the Court of the Presidency Court, Bombay, and convicting him of an offence under section 66(b) of the Bombay Prohibition Act, 1949, and sentencing him to one month 's ' rigorous imprisonment and a fine of Rs. 500. The appellant, who was the Officiating Regional Transport Officer, Bombay Region, was on the 29th May, 195 1, at about 9.30 P.m., proceeding in his jeep car towards the Colaba Bus Stand when he knocked down three persons, Mrs. Savitribai Motwani, her husband and Miss Parvatibai Abhichandani. The police arrested the appellant and took him to the police station. From the police station he was taken to St. George 's Hospital in order to be examined by the doctor for alleged consumption of liquor. The doctor found his breath smelling of alcohol. He however found the conjunctiva were congested, the pupils were semi dilated and reacting to light. The speech was coherent and he could behave himself and walk along a straight line. The doctor was therefore of opinion that he did not seem to be under the influence of alcohol though he had taken alcohol in some form or the other. The appellant was put up before the Presidency Magistrate for his trial under two offences, one under section 338 of the Indian Penal Code on three counts for causing grievous hurt to the three injured persons by doing a rash and negligent act, i.e., driving his motor car in a rash and negligent manner, and the other under section 66 (b) of the Bombay Prohibition Act. The appellant cross examined the doctor and suggested that he had taken a medicinal preparation, B. G. Phos, and also stated in answer to the Magistrate on the 20th December, 1951, that he had not consumed any liquor but had taken medicinal preparation containing a small percentage of alcohol. He also filed a written statement on the 13th March, 1952, setting out in detail the whole history of his case. He stated there that owing to his ill health he had been recommended to take tonics, specially those containing vitamin B Complex and Phosphates and had regularly taken tonics, such as Wampole 's Phospho Lecitin, B. G. Phos, and Huxley 's Nerve Vigour. He further stated that on the night in question he had at about 9 or 9.15 P.m. after dinner 616 taken a dose of B. G. Phos and was proceeding in his jeep car for a drive via Cuffee Parade and Marine Drive when the accident took place. He produced his driving licence and registration certificate and a copy of the agenda of the Regional Transport Authority 's meeting to be held next day and a carton of B. G. Phos on which it was stated that it contained 17 per cent alcohol according to its formula. The learned Presidency Magistrate acquitted the appellant of both these offences. In regard to the offence under section 66(b) of the Bombay Prohibition Act he observed that the evidence did not go to show conclusively that the appellant had consumed alcohol without a permit, that there were certain medicinal preparations which were allowed to be used by law and there was no satisfactory evidence to show that the appellant had not consumed those tonics but only liquor for which he ought to have a permit. The respondent, the State of Bombay, took two appeals before the High Court against each of these two cases. The High Court confirmed the acquittal in regard to the charge under section 338 of the Indian Penal Code but reversed the order acquitting him of the charge under section 66(b) of the Bombay Prohibition Act. The High Court followed a decision of its own Division Bench in Rangarao Bala Mane vs State(1) where it had been held that "Once it is proved by the prosecution that a person has drunk or consumed liquor without a permit, it is for that person to show that the liquor drunk by him was not prohibited liquor, but was alcohol or liquor which he is permitted by law to take, e.g., medicated alcohol. The prosecution is not to discharge the burden of the accused, and if in answer to a charge of drinking liquor without a permit the accused suggests that the liquor which was drunk by him was not liquor in a prohibited form or was alcohol in a medicated form, he must show it. " The High Court observed that the Magistrate had misdirected himself on a point of law and it was therefore open to it to examine the evidence and come to its own conclusion whether the appellant had shown that he had (1) 617 taken B. G. Phos that night after dinner and that the alcoholic smell which was still found in his mouth as late as 11.30 P.m. when he was examined by the doctor" ' was the smell of the alcoholic con tents of B. G. Phos. It came to the conclusion that the appellant had failed to prove the existence of circumstances from which the Court could come to the conclusion that the liquor which was consumed by the appellant was not prohibited liquor but liquor which was excepted by the Bombay Prohibition Act from its operation and set aside the order of acquittal passed by the learned Presidency Magistrate in his favour convicting him of the offence and sentencing him as above. It was contended on behalf of the appellant before us that the Bombay Prohibition Act, 1949, was impugned after the advent of the Constitution and this Court by its decision in The State of Bombay and Another vs F.N.Balsara(1) inter alia declared the provisions of clause (b) of section 13 to be invalid so far as it affects the consumption or use of liquid medicinal and toilet preparations containing alcohol, that the effect of that declaration was to lift the consumption or use of liquid medicinal and toilet preparations containing alcohol from the prohibition enacted in section 13(b) and that section 66(b) was inoperative and unenforceable so far as such medicinal and toilet preparations containing alcohol were Concerned. It was therefore incumbent on the prosecution, if a charge under section 66(b) was framed against an accused, to prove that the accused had consumed or used an intoxicant in contravention of the provisions of the Act, which provision so far as section 13(b) was concerned was to be read as prohibiting the consumption or use of liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol, which were the only categories of validly prohibited liquor. On this interpretation of the effect of the judgment in The State of Bombay and Another vs P. N. Balsara (supra) there was no question whatever of the applicability of section 105 or of section 106 of the (1) ; 618 Evidence Act as was sought to be done by the High Court. It was further ' urged that even if an onus was cast on the accused to prove that he had consumed a liquid medicinal or toilet preparation containing alcohol that onus was lighter in burden than the onus on the prosecution and the moment the accused indicated his defence the onus again shifted on the prosecution to negative such defence. It was urged on the other hand on behalf of the respondent that the effect of the declaration in The State of Bombay and Another vs F. N. Balsara (supra) was to graft an exception or a proviso to section 13(b) and that the onus and the burden of proving the existence of circumstances bringing his case within the exception or proviso lay on the accused and the Court was to presume the absence of such circumstances. (Vide section 105 of the Evidence Act). It was further urged that the prosecution could not possibly prove that no form of liquid medicinal or toilet preparation containing alcohol was taken by the accused, that the fact of the consumption of such medicinal or toilet preparation containing alcohol was especially within the knowledge of the accused and that therefore the burden of proving such fact was upon him, and that once the prosecution had discharged the onus which lay upon it to prove that the accused had consumed liquor it would be for the accused to show that the liquor which was taken by him was a liquid medicinal or toilet preparation containing alcohol. (Vide section 106 of the Evidence Act). The relevant provisions of the Bombay Prohibition Act, 1949, may be here set out. The Act was passed inter alia to amend and consolidate the law relating to the promotion and enforcement of and carrying into effect the policy of prohibition in the Province of Bombay. Section 2(22) defined 'an "intoxicant" to mean any liquor. . . . Section 2(24) defined "liquor" to include (a) spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol. Chapter III enacted the prohibitions and section 13(b) provided: No person shall. . . . (b) consume or use 619 liquor Section 66(b) is the penal section and provided: "Whoever in contravention of the provisions of this Act, or of any rule, regulation or order made, or of any licence, permit, pass or authorisation issued, thereunder (b) consumes, uses, possesses or transports any intoxicant or hemp shall, on conviction, be punished. " It may be noted that the Act as it stood before the amendment by Bombay Act XXVI of 1952 which came into operation on the 22nd October, 1952, enacted in section 103 the only presumption as to the commission of offences in certain cases which cases had nothing to do with the question before us. This Court in The State of Bombay and Another vs F. N. Balsara (supra) held that the definition of liquor contained in section 2(24) was not ultra vires inasmuch as the word liquor as understood in India at the time of the Government of India Act, 1935, covered not only those alcoholic liquids which are generally used as beverages and produce intoxication but also all liquids containing alcohol. It however considered the restrictions imposed by sections 12 and 13 of, the Act on the possession, sale, use and consumption of liquor not reasonable restrictions on the fundamental right guaranteed by article 19(1) (b) of the Constitution to "acquire, hold and dispose of property" so far as medicinal and toilet preparations containing alcohol were concerned and declared the said sections invalid so far as they prohibited the possession, sale, use and consumption of these articles. The sections were however not wholly declared void on this ground as the earlier categories mentioned in the definition of liquor, viz., spirits of wine, methylated spirits, wine, beer and toddy, were distinctly separable items which were easily severable from the last category, viz., all liquids containing alcohol, and the restrictions on the possession, sale, use and consumption of these earlier categories were not unreasonable restrictions. It therefore declared section 13(b) invalid to the extent of the inconsistency, i.e., so far as it affected the 620 consumption or use of liquid medicinal and toilet preparations containing alcohol. The question that falls to be determined is what was the effect of this declaration The effect of the declaration of a statute as un constitutional has been thus set out by Cooley on Constitutional Limitations, Vol. I, page 382. "Where a Statute is adjudged to be unconstitutional, it is as if it had never been. Rights cannot be built up under it; contracts which depend upon it for their consideration are void; it constitutes a protection to no one who has acted under it and no one can be punished for having refused obedience to it before the decision was made. And what is true of an Act void in toto is true also as to any part of an Act which is found to be unconstitutional and which consequently has to be regarded as having never at any time been Possessed of any legal force. . See also the dictum of Field J. in Norton vs Shelby County(1): "An unconstitutional Act is not law, it confers no rights, it imposes no duties, it affords no protection, it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed. " To the same effect are the passages from Rottschaefer on Constitutional Law, at page 34: "The legal status of a legislative provision in so far as its application involves violation of constitutional provisions, must however be determined in the light of the theory on which Courts ignore it as law in the decision of cases in which its application produces unconstitutional results. That theory implies that the legislative provision never had legal force as applied to cases within that class. " Willoughby on Constitution of the United States, Second Edition, Vol. 1, page 10: "The Court does not annul or repeal the statute if it finds it in conflict with the Constitution. It simply refuses to recognise it, and determines the rights of the (1) ; , 621 parties just as if such statute had no application. The Court may give its reasons for ignoring or disregarding the statute, but the decision affects the parties only, and there is no judgment against the statute. The opinion or reasons of the Court may operate as a precedent for the determination of other similar cases, but it does not strike the statute from the statute book; it does not repeal the statute. The parties to that suit are concluded by the judgment, but no one else is bound. A new litigant may bring a new suit, based on the very same statute, and the former decision can be relied on only as a precedent " "It simply refuses to recognise it and determines the rights of the parties just as if such statute had no application " And Willis on Constitutional Law, at page 89 " A judicial declaration of the unconstitutionality of a statute neither annuls nor repeals the statute but has the effect of ignoring or disregarding it so far as the determination of the rights of private parties is concerned. The courts generally say that the effect of an unconstitutional statute is nothing. It is as though it had never been passed The declaration was a judicial pronouncement and. even though under article 141 of the Constitution the law declared by this Court is binding on all the Courts within the territory of India and is to be the law of the land the effect of that declaration was not to enact a statutory provision or to alter or amend section 13(b) of the Act. No exception or proviso was also grafted in terms on section 13(b). The only effect of the declaration was that the prohibition enacted in section 13(b) was to be enforceable in regard to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol. The prohibition which was enacted in section 13(b) against the consumption or use of liquor could in the light of the declaration made by this Court only refer to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, today and all non medicinal and 80 622 non toilet liquid preparations consisting of or containing alcohol, and that was the only prohibition which could be enforced under section 13(b) and the penal section 66(b). The consumption or use of liquid medicinal or toilet preparations. containing alcohol could not be validly prohibited and any person consuming or using such medicinal or toilet preparations containing alcohol could not be hauled up for having contravened the provisions of the Act. No offence could be committed by the consumption of liquid medicinal or toilet preparations containing alcohol and the provision enacted in section 13(b) read in the light of the definitions of intoxicant and liquor contained in sections 2 (22) and 2(24) of the Act in so far as it prohibited the consumption or use of liquor including liquid medicinal or toilet preparations containing alcohol was rendered inoperative and unenforceable by the declaration to the extent of the inconsistency and liquid medicinal or toilet preparations containing alcohol were lifted out of the category of validly prohibited liquor. Whatever may be the implications or the consequences of the unconstitutionality of section 13(b) to the extent of the inconsistency in other respects, here was the State enforcing the penal provisions of section 66(b) and encroaching upon the liberties of the subject. Penal statutes should be strictly construed and the, State could only penals the consumption or use of validly prohibited liquor which only could constitute an offence under section 66(b). The consumption or use of any intoxicant meaning any liquor in contravention of the provisions of this Act was to be punished and unless and until the prosecution proved that the accused had consumed or used liquor in contravention of the enforceable provi sions of the Act the accused could not be held guilty and punished under section 66(b). The accused could be held guilty only if he had contravened the enforceable provisions of the Act and for the purpose of the present enquiry the only provision of the Act which he could be charged with having contravened was section 13(b), the prohibition contained in which was by reason of the declaration made by this Court enforceable only in regard to the consumption or use of Validly prohibited liquor, i.e., spirits of wine. , methylated spirits, 623 wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol. It was strenuously urged before us on behalf of the respondent that the declaration in effect, though not in terms, enacted an exception or proviso to section 13(b) and that therefore the onus lay upon the appellant to prove the existence of circumstances bringing his case within the exception or proviso. (Vide section 105 of the Evidence Act.) It cannot be disputed that no exception or proviso was in terms enacted by this declaration. It had the effect of rendering the prohibition of consumption or use of liquid medicinal and toilet preparations containing alcohol as having never at any time been possessed of any legal force and so not to be enforceable wherever any accused person was charged with having contravened the provisions of section 13(b) of the Act. The effect of the declaration on the provisions of section 13(b) could be worked out in any of the following modes: No person shall consume or use spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol as are not or which are not or other than or save or except or provided they are not or but shall not include liquid medicinal or toilet preparations containing alcohol or all non medicinal and non toilet liquid preparations consisting of or containing alcohol. When these several interpretations were possible in regard to the effect of the declaration on the provisions of section 13(b), where would be the justification for interpreting the effect of the declaration to be that of grafting an exception o r proviso on section 13(b) so as to attract the operation of the provisions of section 105 of the Evidence Act? It is clear that where several interpretations are possible, the Court should adopt an interpretation favourable to the accused, rather than one which casts an extra or special burden upon him, which if at all should be done by clear and unequivocal provision in that behalf rather than in this indirect manner. (See also In re Kanakasabai Pillai(1) ). It would be more in consonance with the principles of (1) A.I.R. 1940 Mad. 1. 624 criminal jurisprudence to interpret the effect of this declaration to be that the prohibition enacted in section 13(b) where it came to be enforced against any accused person after the declaration should be enforceable as regards the consumption or use of validly prohibited liquor, ?I.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol, as above stated. If this is the effect of the declaration made by this Court there is no room for holding that the only duty of the prosecution was to prove that the accused had taken liquor in some form or the other and that the burden lay on the accused to prove that be had taken a liquid medicinal or toilet preparation containing alcohol. When an accused person is charged with having committed an offence it is for the prosecution to prove all the ingredients of the offence with which he has been charged and the ingredients of the offence under section 13(b) as stated above were that he had consumed or used liquor validly prohibited, i.e. spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol. There was no presumption enacted in the Act as it stood which would throw the burden of proof on the accused to show that he had consumed or used liquid medicinal or toilet preparation containing alcohol. There was no exception or proviso enacted either in terms or in effect in section 13(b) which attracted the operation of section 105 of the Evidence Act and cast upon the accused the burden of proving the existence of circumstances bringing his case within such exception or proviso. The mere circumstance that the fact in regard to his consumption or use of liquid medicinal or toilet preparation containing alcohol was specially within the knowledge of the accused also could not shift the burden of proving the ingredients of the offence from the prosecution to the accused, because it is a cardinal principle of criminal jurisprudence as administered in this country that it is for the prosecution and prosecution alone to prove all the ingredients of the offence with which the 625 accused has been charged. The accused is not bound to open his lips or to enter upon his defence unless and until the prosecution has discharged the burden which lies upon it and satisfactorily proved the guilt of the accused. Section 106 of the Evidence Act cannot be construed to mean that the accused has by reason of the circumstance that the facts are especially within his own knowledge to prove that he has not committed the offence. (See Attygalle vs The King(1), also In re Kanakasabai Pillai(2)). It is for the prosecution to prove that he has committed the offence and that burden is not in any manner whatsoever displaced by section 106 of the Evidence Act. The High Court in arriving at its decision in Rangarao Bala Mane vs State (supra) above referred to was impressed with the circumstance that the prosecution could not possibly prove that no form of medicated alcohol was taken by the accused, that there were evidently numerous forms of medicated alcohol and that it was impossible for the prosecution on the very face of things to exclude all those forms. The difficulty was illustrated by the High Court in the manner following: "For instance, if the prosecution were to lead evidence to show that the accused had not taken medicated alcohol in the form of B. G. Phos, the accused would contend that he had taken it in some other form. If the prosecution were to lead evidence that the accused had not taken it in the form of Winedex, the accused would say that he had taken it in the form of Waterbury 's Compound or Hall 's Wine. These are only two instances to show how, it is impossible for the prosecution to exclude all forms of medicated alcohol. " It therefore came to the conclusion that once the prosecution had discharged the onus which was upon it to prove that the accused person had consumed liquor, it would be for the accused to show that the liquor which was taken by him was liquor in the form of medicated alcohol, in other words, not prohibited liquor. The difficulty thus envisaged by the High Court was, in my opinion, imaginary. Where an accused (1) A.I.R. 1936 P.C. 169. (2) A.I.R. 1940 Madras 1. 626 person is suspected of having committed the prohibition offence, it would be for the police to investigate the offence and while investigating the offence, it would be for the police to find out whether the accused has consumed liquor which falls within 'the enforceable prohibition enacted in section 13(b). As there are a number of preparations which come within the category of liquid medicinal and toilet preparations consisting of or containing alcohol, there are a number of preparations which come within the category of non medicinal or non toilet liquid preparations consisting of or containing alcohol and it would be really for the police investigating the alleged offence to find out which out of the latter category of preparations the accused had consumed and bring him to book for the same. The circumstance that the accused person was smelling of alcohol and that he had consumed liquor in some form or the other would not be an unequivocal circumstance pointing to the guilt of the accused. The smell of alcohol could as well be the result of his having consumed medicinal or toilet preparations consisting of or containing alcohol as his having consumed validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol. To hold the accused guilty under these circumstances would be to convict him merely because he was smelling of alcohol and depriving him of the benefit of doubt which an accused person is always entitled to in the event of the facts and circumstances being consistent either with his guilt or his innocence. To adopt the reasoning which appealed to the High Court would further be tantamount to laying down that once an accused person was shown to have consumed liquor in some form or the other the presumption was that he had consumed validly prohibited liquor and the onus would be upon him to rebut that presumption by showing that lie had consumed medicinal or toilet preparation containing alcohol. The difficulty in the way of the prosecution proving its case need not deflect the Court from arriving at a correct conclusion. If these difficulties are genuinely 627 felt it would be for the Legislature to step in and amend the law. It would not be the function of the Court to read something in the provisions of the law ' which is not there or to find out a way of obviating the difficulties in enforcing the law howsoever meritorious the intentions of the Legislature might be. If these difficulties were felt in the matter of enforcing the policy of prohibition by the State of Bombay the only remedy was to effect the necessary amendments when the Bombay Act XXVI of 1952 was enacted on the 22nd October, 1952, after this Court made the declara tion in The State of Bombay and Another vs F. N. Balsara (supra). In my opinion it was not enough for the prosecution in the present case merely to prove that the appellant had taken alcohol in some form or the other. The prosecution ought to have proved that the appellant had in contravention of the provisions of the Act med an intoxicant meaning any liquor which consumer regard to the declaration made by this Court having could only be validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations con sisting of or containing alcohol. The evidence of the doctor only went to show that the appellant had consumed alcohol in some form or the other. That was not enough and I have therefore come to the conclusion that the prosecution failed to prove that the appellant had committed the offence with which he was charged. In view of the conclusion reached above it is un necessary to go into the interesting question which was canvassed before us at some length as to the burden of proof on the prosecution as well as the defence in a criminal trial having regard to the provisions of section 105 of the Evidence Act as also the applicability in India of the principles enunciated in Woolmington vs The Director of Public Prosecutions(1). I would therefore allow the appeal, and quash the conviction and sentence passed upon the appellant by the High Court. (1) ; , 628 JAGANNADHADAS J. I have had the benefit of the judgments of both my learned brothers. perusing But, with great regret, I feel unable to agree with the view taken by my learned brother Justice Bhagwati. Two questions of law have been raised in this case, viz., (1) on whom does the burden of proof lie to make out that the "liquor" consumed by the appellant was or was not medicinal or toilet preparations though contain ing alcohol, and (2) what is the nature and quantum of proof required if the burden is upon the appellant. The answer to question No. 1 depends upon the effect of the decision of this Court in The State, of Bombay and Another vs F. N. Balsara (supra) which, while holding that the definition of liquor in sub section (24) of section 2 of the Bombay Prohibition Act, 1949 (Act XXV of 1949) is valid, has declared that clause (b) of section 13 in so far as it affects the consumption or use of medicinal or toilet preparations containing alcohol, is invalid. My learned brother Justice Bhagwati, while holding that the effect of the declaration was not to alter and amend section 13(b) of the Act, is of the opinion that in the light thereof the prohibition under section 13(b) is to be understood to relate (so far as is relevant for the present purpose) to consumption or use of "non medicinal or non toilet liquid preparation containing alcohol" and that, therefore, the burden lies on the prosecution to make out all the ingredients of the prohibition so understood with the negative thereof On the other hand, my learned brother Justice Venkatarama Ayyar is of the opinion that the effect of the decision in The State of Bombay and Another vs F. N. Balsara (Supra) is not to amend or alter section 13(b) but only to render it partly unenforceable, and hence to provide a defence to the accused, on the ground of unconstitutionality in so far as that section is sought to be applied to medicinal or toilet preparations containing alcohol and that, therefore, the burden of making out the facts required for this plea is on the accused. I agree that no legislative function can be attributed to a judicial decision and that the decision in The State of Bombay and Another vs F. N. Balsara (supra) does not, 629 proprio vigore amend the Act. The effect of a judicial declaration of the unconstitutionality of a statute has been stated at page 10 of Vol. I of Willoughby on the Constitution of the United States, Second Edition, as follows: "The Court does not annul or repeal the statute if it finds it in conflict with the Constitution. It simply refuses to recognize it, and determines the rights of the parties just as if such statute had no application. The Court may give its reasons for ignoring or disregarding the statute, but the decision affects the parties only, and there is no judgment against the statute. The opinion or reasons for the court may operate as a precedent for the determination of other similar cases, but it does not strike the statute from the statute book; it does not repeal. . . the statute. The parties to that suit are concluded by the judgment, but no one else is bound. A new litigant may bring a new suit, based on the very same statute, and the former decision. . can be relied on only as a precedent. " This and other similar passages from other treatises relate, however, to cases where the entire legislation is unconstitutional from the very commencement of the Act, a situation which falls within the scope of article 13(2) of our Constitution. They do not directly cover a situation which falls within article 13(1). In the present case, though the decision in The State of Bombay and Another vs F. N. Balsara (Supra) does not by itself bring about a change in the Act, the declarations made therein are founded on article 13(1) and it is with the effect thereof we are concerned. The question is what is the effect of article 13(1) on a pre existing valid statute, which in respect of a severable part there. of violates fundamental rights. Under article 13(1) such part is "void" from the date of the commencement of the Constitution, while the other part continues to be valid. Two views of the result brought about by this voidness are possible, viz., (1) the said severable part becomes unenforceable, while it remains part of the Act, or (2) the said part goes out of the Act and the Act stands appropriately amended pro tanto. The first is the view which appears to have been adopted 81 630 by my learned brother, Justice Venkatarama Ayyar, an the basis of certain American decisions. I feel inclined to agree with it. This aspect, however, was not fully presented by either side and was only suggested from the Bench in the course of arguments. We have not had the benefit of all the relevant material being placed before us by the learned advocates on either side. The second view was the basis of the arguments before us. It is, therefore, necessary and desirable to deal with this case on that assumption. The question, then, for consideration is what is the notional amendment which must be imported into the Act consistently with the decision in The State of Bombay and Another vs F. N. Balsara (supra). The relevant portions thereof are as follows: (1) The definition of "liquor" in the Act to its full extent continues to be valid, (2) section 13(b) of the Act in so far as it relates to liquid toilet or medicinal preparations containing alcohol is invalid, and (3) this portion of the content of section 13(b) is severable. The argument of the appellant 's learned counsel is that the essence of the valid prohibition under section 13(b) now is the consumption or use of liquor other than liquid medicinal or toilet preparations containing alcohol. Ha urges, therefore, that section 13(b) must be taken to stand amended accordingly. The argument, if I understood it a right, was that the word "liquor" stands amended as "prohibited liquor" or that it must be understood with this limited connotation. I am unable to see how this can be done. The definition of the word "liquor" with its inclusive content remaining intact and valid, that content has to be imported wholesale into the meaning of the word "liquor" in section 13(b) and it appears to me that it is not permissible to read it or understand it in a different sense. So to read it or understand it would be to import a new definition of "prohibited liquor" into the Act and to make the consumption or use of "prohibited liquor", the offence. What, however, the Balsara decision has done is not to authorise the importation of a new definition and the rewriting of section 13(b). It keeps section 13(b) intact 631 but treats the consumption or use of liquid toilet or medicinal preparations containing alcohol as severable and takes such consumption or use out of the ambit of the section itself as the prohibition thereof is un constitutional. This can be done and only done, in my opinion, by grafting an appropriate exception or proviso into section 13(b). My learned brother, Justice Bhagwati, has in his, judgment suggested that, if it is a question of treating section 13(b) as amended,. the amendment can be made in one of many modes and that there is no reason to choose between them and that it is not fair to an accused person to read it in a manner throwing the burden on him, when a more favourable mode is open. The various modes of amendment are indicated in the following suggested reading of section 13(b). "No person shall consume or use spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing 'A ' alcohol as are not or which are not or other than or save or except or provided they are not or but shall include liquid medicinal or toilet preparations containing alcohol, or all non medicinal and non toilet liquid 'B ' preparations consisting of or containing alcohol." (The underlinings and markings are mine). Now, if the relevant portion of the section is recast in the manner above indicated, in any of the alternative modes in the portion marked 'A ' above, I have no doubt that every one of these modes is only an exception or a proviso which falls within the specific terms of section 105 of the Evidence Act, i.e., an exception or proviso "in the law defining the offence. " If, on the other hand, the section is treated as amended by incorporating the portion marked 'B ' omitting the portion marked 'A ', it appears to me, with great respect, that it is to alter the very content of the word ' "liquor" in the section, for which I can find no legal justification. What the decision in The State of Bombay 632 and Another vs F. N. Balsara (supra) authorises is, as I have already explained above, to keep the word "liquor" intact with its full content and sever from the provision taken as alcohol (not merely from the word "liquor") medicinal or toilet preparations. I feel accordingly confirmed in the view that I have taken, viz., that this can only be done by engrafting an exception or a proviso. As regards the other view suggested by my learned brother Justice Bhagwati, that without importing any alteration or amendment in the section itself, the same is to be understood as having reference to what maybe called "prohibited liquor", understanding that word with reference to the decision in The State of Bombay and Another vs F. N. Balsara (supra), here again, with great respect, I feel difficulty in imputing into a specific statutory provision a meaning different from what its plain words, in the light of the definition, indicate. The decision in The State Of Bombay and Another vs F. N. Balsara (supra), if it does not bring about an amendment in the provision does not also provide any mere aid to interpretation. The question is not done of insisting on a merely technical view of the matter. I feel unable to impute to the decision in The State of Bombay and Another vs F. N. Balsara (supra), taken with article 13(1), the effect of rendering section 13(b) unworkable, which certainly was not intended. In this view, therefore, (and on the basis put forward by learned counsel on both sides), the effect of article 13(1) on section 13(b) of the Act in the light of the decision in The State of Bombay and Another vs F. N. Balsara (supra) is that it stands amended pro tanto by means of an appropriate exception or proviso. It follows that section 105 of the Evidence Act would in terms apply to such a situation. Thus in either view of the effect ' of article 13(1) of the Constitution on section 13(b) of the Bombay Act in the light of the judgment in The State of Bombay and Another vs F. N. Balsara (supra) the opinion expressed by the learned Judges of the Bombay High Court that the burden of proof in a case like this lies on the accused is correct. 633 As regards the second question that has been raised namely as to the nature and quantum of the evidence required to discharge this burden of proof, considerable arguments have been advanced before us. Our attention has been drawn to the existence of conflicting decisions in the High Courts on this topic. On the one side there is the decision of the Full Bench of the Allahabad High Court in Prabhoo vs Emperor(1) and on the other, there is a later Special Bench decision of the Bombay High Court in Government of Bombay vs Sakur(2). In my opinion it is unnecessary for us to resolve that conflict in this case, since, on either view, the finding of the appellate Court that the burden has not been discharged on the available material seems to me to be correct. In particular it is to be noticed that the appellant put forward a specific defence in Paragraph 8 of the written statement filed by him into Court in answer to the charge. In support of this defence he has given no proof of any circumstances, which must be within his knowledge, to render the defence reasonably probable even if be may not have been able to prove the same strictly to the hilt. I am, therefore, of the opinion that the conviction of the appellant under section 66(b) of the Bombay Prohibition Act, 1949, is correct. But in the circumstances, it is not necessary to send him back to jail. I would, therefore, reduce the sentence of imprisonment to the period already undergone. In the result, the appeal has to be dismissed subject to this modification. VENKATARAMA AYYAR J. I regret that I am unable to agree with the view taken by my learned brother, Bhagwati J. The facts giving rise to this appeal have been stated in his Judgment which I have had the advantage of reading and it is unnecessary to restate them. The point for decision shortly is whether in a prosecution under section 66(b) of the Bombay Prohibition Act, XXV of 1949, for contravention of section 13(b), the prosecution has to establish not merely that liquor had been taken in some form but that further what was taken was not a medicinal preparation. The (1) I.L.R. 1941 All. (2) 48 Bom. L. R. 746; A.I.R. 1947 Bom. 634 learned Judges of the Bombay High Court held following an earlier decision of that Court in Rangrao Bala Mane vs State (supra) that once the prosecution had established that the accused had taken alcohol in some form it was for him to establish that he had taken a medicinal preparation, both on the ground that it was in the nature of an exception which it was for the party pleading it to establish under section 105 of the Evidence Act and that it was a matter specially within his knowledge and that therefore the burden of proving it lay on him under section 106 of the Evidence ' Act. The appellant challenges the correctness of this deci sion and contends that it is opposed to the decision of this Court in The State of Bombay and Another vs F. N. Balsara (supra). It will be convenient first to refer to the statutory provisions bearing on the question and ascertain what the position is thereunder, and then consider how it is affected by the decision of this Court in The State Of Bombay and Another vs F. N. Balsara (supra). The relevant provisions of the Bombay Prohibition Act are sections 2(24), 13(b) and 66(b). Section 2(24) defines "liquor" as including all liquids consisting of or containing alcohol. Section 13(b) enacts that no person shall use or consume liquor and a contravention of this provision is made punishable under section 66(b). As medicinal preparations containing alcohol are liquor as defined in section 2(24) the consumption thereof will be an offence punishable under the Act and it will be no answer to a prosecution for contravention of section 13(b) that what was consumed was a medicinal preparation and a question of the kind now presented to us therefore could not possibly arise under the Act prior to the Constitution. I may next consider the effect of the decision of this Court in The State of Bombay and Another vs F. N. Balsara (supra) on the legal position under the Act. It was there held inter alia that section 13(b) in so far as it prohibited the consumption of medicinal preparations was an unreasonable restriction on the rights of an owner to hold and enjoy property and was therefore void as being repugnant to article 19 (1) (f) of the 635 Constitution. The appellant contends that the effect of this declaration was to remove medicinal preparations from out of the purview of section 13(b); that ' that section should therefore be read as if it had been amended to the effect that no person shall use or consume liquor other than medicinal preparations or toilets; that in that view no question of the accused having to rely on an exception arose and no question of the burden being thrown on him under section 105; and that as the offence itself consisted in consuming a liquor which was not a medicinal preparation, the burden would lie on the prosecution to establish that what was consumed was a prohibited liquor. On the other hand, the respondent contends that the definition of liquor in section 2(24) includes not only beverages but also medicinal preparations, that the extended definition would apply to section 13(b) as well, that the immunity of medicinal preparations containing alcohol from the operation of the section by reason of the decision in The, State of Bombay and Another vs F. N. Balsara (supra) must in consequence be treated as an exception to it and that the 'section should be read as containing a saving in favour of those preparations, in the nature of an exception or proviso, the burden of establishing which under section 105 of the Evidence Act would be on the accused. I agree with the appellant that section 105 has no application. We are not here concerned with any exception, general or special, under the Penal Code or any other law defining the offence. The exception or proviso, if it may be so called, arises as a result of the decision of this Court and not under any statute and section 105 cannot therefore in terms apply. At the same time it is difficult to see how the decision in The State of Bombay and Another vs F. N. Balsara (Supra) can be considered to effect an amendment of section 13(b) so as to exclude medicinal preparations from out of its ambit. The rival contentions which have been presented to us on the effect of the decision in The State of Bombay and Another vs F. N. Balsara (supra) proceed both of them on the basis that ' section 13(b) has in some manner been amended by it; according to the appellant, the 636 section must be taken to have been amended by excluding medicinal preparations from the word " liquor" according to the respondent, by inserting an exception or proviso to the section in favour of such preparations. That, however, is not the correct position. Decisions of Court do not amend or add to a statute. That is a purely legislative function. They merely interpret the law and declare whether it is valid or not and the result of a declaration that it is not valid is that no effect could be given to it in a Court of law. If therefore section 13(b) cannot be construed as itself amended or modified by reason of the decision in The State of Bombay and Another vs F. N. Balsara (supra), there is no reason to hold that medicinal preparations containing alcohol, which fell within its scope before, have gone out of it after that decision. This argument therefore does not furnish any ground for throwing the burden on the prosecution under section 13( b) to establish not merely that what was consumed was liquor but that it was not a medicinal preparation. The question of burden of proof must therefore be decided not on the basis of a suppositions amendment of the section or addition of an exception or proviso to it but on the language of the section as it stands and with reference to Well established principles of law. Under that section it is an offence to use or consume liquor and that under the definition in section 2(24) includes medicinal preparations containing alcohol. One of the points raised in The State of Bombay and Another vs F. N. Balsara (supra) was that the State Legislature which was competent to legislate on into xicating liquor could not under that head of legislation enact a law in respect of medicinal preparations containing alcohol because the words "intoxicating liquor" meant beverages and not medicines but this contention was negatived by this Court on the ground that the words "intoxicating liquor" had acquired an extended sense as including medicinal preparations containing alcohol and that the Legislature was competent while enacting a law with reference to intoxicating liquors to legislate on medicinal preparations 637 containing alcohol. The definition of "liquor" in section 2(24) in its extended sense having thus been held to be valid, it follows that unless there is something in the particular provision to the contrary, the word "liquor" must wherever it occurs in the statute include medicinal preparations and that is the meaning which it must bear in section 13(b). In The State of Bombay and Another vs F. N. Balsara (supra), it is on the footing that medicinal preparations are included in section 13 that the entire discussion on its validity with reference to article 19(1) (f) proceeds. We therefore start with this that under section 13(b), the Legislature has made it an offence to take alcohol in any form, whether as beverages or as medicinal preparations. That being the position and it having been decided that the section in so far as it relates to medicinal preparations is void as repugnant to article 19(1) (f), the question as to who should prove whether what was consumed was alcohol or medicinal preparation containing alcohol appears to me to admit of a simple answer. There is a strong presumption in favour of the constitutionality of a statute and it is for those who assail it as unconstitutional to establish it. The contention of the appellant is, when analyzed, that section 13(b) is bad in so far as it hits medicinal preparations containing alcohol as it contravenes article 19(1) (f) of the Constitution, and the decision of this Court in The State of Bombay and Another vs F. N. Balsara (supra) is relied on as supporting it. But before the appellant can bring himself within that decision, he must establish that what he consumed was a medicinal preparation. The plea of unconstitutionality is not established unless all the elements necessary to sustain such a plea are established ; and as observed by this Court in Rao Shiv Bahadur Singh vs The State of Vindhya Pradesh(1), "the burden of making out facts requisite for the constitutional invalidity of the convictions" is on the appellant. He has therefore to make out as a fact that what he consumed was a medicinal preparation and as a matter of law, that section 13(b) is bad in so far as it prohibits it. The decision of this Court concludes the (1) ; ,1202. 82 638 question in his favour so 'far as the second point is concerned. But the burden of establishing the first point, that in fact what he consumed was a medicinal preparation, still remains on him. It was argued for the appellant that this Court had declared that section 13(b) was void under article 13(1) of the Constitution in so far as it related to medicinal preparations; that that meant that it was to that extent a nullity and that it should in consequence be read as if it did not include medicinal preparations. The question is, what is the legal effect of a statute being declared unconstitutional. The answer to it depends on two considerations, firstly, does the constitutional prohibition which has been infringed affect the competence of the Legislature to enact the law or does it merely operate as a check on the exercise of a power which is within its competence; and secondly, if it is merely a check, whether it is enacted for the benefit of individuals or whether it is imposed for the benefit of the general public on grounds of public policy. If the statute is beyond the competence of the Legislature, as for example, when a State enacts a law which is within the exclusive competence of the Union, it would be a nullity. That would also be the position when a limitation is imposed on the legislative power in the interests of the public, as, for instance, the provisions in Chapter XIII of the Constitution relating to inter State trade and commerce. But when the law is within the com petence of the Legislature and the unconstitutionality arises by reason of its repugnancy to provisions enacted for the benefit of individuals, it is not a nullity but is merely unenforceable. Such an unconstitutionality can be waived and in that case the law becomes enforceable. In America this principle is well setted. (Vide Cooley on Constitutional Limitations, Volume 1, pages 368 to 371; Willis on Constitutional Law, at pages 524, 531, 542 and 558; Rottschaefer on Constitutional Law, at pages 28 and 29 30). In Shepard vs Barron(1), it was observed that "provisions of a constitutional nature, intended for the protection of the property owner, may be waived by him. " In Pierce vs Somerset Railway(2), (1) ; ; (2) I71 U.S. 64I ; ; 639 the position was thus stated: "A person may by his acts or omission to act waive a right which he might otherwise have under the Constitution of the United States, as well as under a statute." In Pierce Oil Corporation vs Phoenix Refining Co.(1), where a statute was impugned on the ground that it imposed unreasonable restrictions on the rights of a corporation to carry on business and thereby violated the rights guaranteed under the Fourteenth Amendment, the Court observed "There is nothing in the nature of such a constitutional right as is here asserted to prevent its being waived or the right to claim it barred, as other rights may be, by deliberate election or by conduct inconsistent with the assertion of such a right." The position must be the same under our Constitution when a law contravenes a prescription intended for the benefit of individuals. The rights guaranteed under article 19(1) (f) are enacted for the benefit of owners of properties and when a law is found to infringe that provision, it is open to. any person whose rights have been infringed to waive it and when there is waiver there is no legal impediment to the enforcement of the law. It would be otherwise if the statute was a nullity; in which case it can neither be waived nor enforced. If then the law is merely unenforceable and can take effect when waived it cannot be treated as non est and as effaced out of the statute book. It is scarcely necessary to add that the question of waiver is relevant to the present controversy not as bearing on any issue of fact arising for determination in this case but as showing the nature of the right declared under article 19(1) (f) and the effect in law of a statute contravening it. Another point of distinction noticed by American jurists between unconstitutionality arising by reason of lack of legislative competence and that arising by reason of a check imposed on a competent Legislature may also be mentioned. While a statute passed by a Legislature which had no competence cannot acquire validity when the Legislature subsequently acquires competence, a statute which was within the competence of the Legislature at the time of its enactment but (1) 259 U S 125; ; 640 which infringes a constitutional prohibition could be enforced proprio vigore when once the prohibition is removed. The law is thus stated in Willoughby on the Constitution of the United States, Volume 1, at page 11: "The validity of a statute is to be tested by the constitutional power of a legislature at the time of its enactment by that legislature,, and, if thus tested it is beyond the legislative power, it is not rendered valid, without re enactment, if later, by constitutional amendment, the necessary legislative power is granted. However, it has been held that where an act is within the general legislative power of the enacting body, but is rendered unconstitutional by reason of some adventitious circumstance, as for example, when a State legislature is prevented from regulating a matter by reason of the fact that the Federal Congress has already legislated upon that matter, or, by reason of its silence, is to be construed as indicating that there should be no regulation, the act does not need to be re enacted in order to be enforced, if this cause of its unconstitutionality is removed. " The authority cited in support of this observation is the decision in Wilkerson vs Rahrer(1). There the State of Kansas enacted a law in 1889 forbidding the sale of intoxicating liquors in the state. Though it was valid with reference to intra state sales, it was unconstitutional in so far as it related to inter State sales. In 1890 the Congress passed a legislation conferring authority on the States to enact prohibition laws with reference to inter State trade. A prosecution having been instituted under the 1889 Act in respect of sales effected after the Congress legislation of 1890, one of the contentions urged was that as the State law was unconstitutional when it was enacted it was void and it could not be enforced even though the bar had been removed by the Congress legislation of 1890. In repelling this contention the Court observed: " This is not the case of a law enacted in the unauthorized exercise of a power exclusively confided to Congress, but of a law which it was competent for (1) ; ; 35 L. Ed.572. 641 the State to pass, but which could not operate upon articles occupying a certain situation until the passage of the Act of Congress. That Act in terms removed the obstacle, and we perceive no adequate ground for adjudging that a re enactment of the State law was required before it could have the effect upon imported which it had always had upon domestic property. " The position is thus stated by Cooley in his work on Constitutional Law, at page 201 : " A court 's decision merely decides the case that is then under adjudication, and a finding of unconstitu tionality does not destroy the statute but. merely involves a refusal to enforce it. " Rottschaefer, after referring to the conflict of authorities on the point in the States refers to the decision in Wilkerson V. Rahrer(1), as embodying the better view. This question again, it may be noted, does not arise as such for determination in this case and is material only as showing that an infringement of a constitutional ' prohibition which does not affect the competence of a Legislature but is merely a check on its exercise does not render the law a nullity. In view of the principles discussed above, the use of the word "void" in article 13(1) is not decisive on the question as to the precise effect of a law being repugnant to article 19(1) (f). Reference may be made in this connection to the statement of the law in Corpus Juris, Volume 67, page 263 et seq., to which counsel for the respondent invited our attention. It is there pointed out that the word "void" in statutes and decisions might mean either that is "absolutely void" or "relatively void" ; that "that is 'absolutely void which the law or the nature of things forbids to be enforced at all, and that is relatively void ' which the law condemns as a wrong to individuals and refuses to enforce as against them"; that what is absolutely void is incapable of confirmation and ratification; and that what is relatively void could be waived. The true scope of article 13(1) was considered by this Court in Kesavan Madhava Menon vs State Of (I) ; ; 642 Bombay(1). There the point for determination was whether the Constitution was retrospective in its operation. In the course of his judgment Das J. observed: "It should further be seen that article 13(1) does not in terms make the existing laws which are inconsistent with the fundamental rights void ab initio or for all purposes. On the contrary, it provides that all existing laws, in so far as they are inconsistent with the fundamental rights, shall be void to the extent of their inconsistency. They are not void for all purposes but they are void only to the extent they come into conflict with the fundamental rights. . . Article 13(1) cannot be read as obliterating the entire operation of the inconsistent laws, or to wipe them out altogether from the statute book. . . . The effect of article 13(1) is quite different from the effect of the expiry of a temporary statute or the repeal of a statute by a subsequent statute. As already explained, article 13(1) only has the effect of nullifying or rendering all inconsistent existing laws ineffectual or nugatory and devoid of any legal force or binding effect only with respect to the exercise of fundamental rights on and after the date of commencement of the Constitution. " It is true that the question which the Court was considering there was different from the one which we have now to decide in this appeal. But those observations embody a principle which is applicable to the present case as well. In effect, "void" in article 13(1) was construed as meaning, in the language of American jurists, "relatively void. Therefore both on the ground that a judicial determination does not operate as an amendment of the statute and, on the ground that a declaration that the impugned law is void under article 13(1) as repugnant to article 19(1) (f) merely renders it unenforceable, I am of the opinion that the decision in The State of Bombay and Another vs F. N. Balsara (supra) cannot be held to remove medicinal preparations from out of the purview of section 13(b). I therefore agree with the learned Judges (1) ; 643 of the Bombay High Court, though not for the reasons given by them, that the burden of establishing that. what was consumed was a medicinal preparation lies on the appellant. It was next contended that even if the burden lay on the appellant,to prove that he had taken a medicinal preparation, he must be held on the evidence to have discharged it because the doctor who examined him at 11 30 P.m., on the day of the occurrence stated in his evidence that he was coherent in his speech and could walk along a straight line, that the smelling of alcohol could be caused by oxidation and that the condition of the conjunctive in the eyes could result from street dust. It was argued that if the prosecution evidence did not exclude the possibility of the defence being true, then notwithstanding section 105 of the Evidence Act the burden which lay on the posecution of establishing the offence had not been discharged and reliance was placed on the decision in Woolmington vs Director of Public Prosecutions(1), and on Indian authorities wherein it was followed: Emperor vs U.Damapala(2); Parbhoo vs Emperor(1). In opposition to these authorities counsel for the respondent relied on the decision in Government of Bombay vs Sakur(4). The question is whether if the burden lay upon the appellant the conclusion of the learned Judges that it had not been discharged is on the evidence a reasonable one. If it is, this Court cannot interfere with it in an appeal under article 136. It must be noted that the appellant himself led no evidence in support of the plea. If at least the evidence which the prosecution adduced disclosed facts which would lend support to the defence, it might then have been open to the appellant to rely on them without himself having to adduce independent evidence but none such were elicited. The learned Judges in the Court below have approached the case from the correct standpoint and have discussed the entire evidence with a view to find whether on that the (1) ; (2) I.L.R. 14 Rang. (3) I.L.R. 194i All. (4) A.I.R. 1947 Bom. 38; 48 Bom. L.R. 616. 644 defence was reasonably probable. They held that the giving of coherent answers or walking in a straight line would only show that the appellant was not drunk at that time but would not show that he had not consumed liquor. They also remarked that the appellant could have informed both the sub inspector and the doctor who examined him that he had taken medicine in which case the police might have been in a position to find out whether there was a medicine bottle at his residence at that time. If the learned Judges were right in their view that the burden lay on the appellant, their finding that it had not been discharged is not one which is open to attack. It was also contended that the trial magistrate having acquitted the appellant, the presumption of innocence which the law raises in favour of the accused became reinforced and that there were no compelling reasons for the appellate Court to have reversed the order of acquittal. But the judgment of the trial Court was based on the view that the burden was on the prosecution to establish that the accused had not taken a medicinal preparation and when the learned Judges differed from that view, they had to review the evidence afresh and decide whether the appellant had discharged the burden and their finding on the question is not vitiated by any misdirection. In the result the conviction of the appellant under section 66(b) of the Bombay Prohibition Act must be confirmed. As regards the sentence of one month 's imprisonment passed on him, it appears that he has already served 22 days out of it. The justice of the case does not require that he should be again sent to jail. I would, therefore, reduce the sentence of imprisonment to the period already undergone. Subject to this modification, I am of the opinion that this appeal should be dismissed. By THE Court Having regard to the judgments of the majority, the appeal will be dismissed subject to the modification that the sentence imposed upon the appellant will be reduced to that already undergone. Bail bond will be cancelled. Appeal dismissed and sentence reduced. 645 [There was an application for review of the aforesaid Judgments under article 137 of the Constitution and the Hon 'ble Judges of the original Bench (Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ.) passed the following order dated 28th April, 1954, referring the case for the opinion of the Constitution Bench.] The Order of the Court was pronounced by BHAGWATI J. We grant the review and reopen the case to enable us to obtain the opinion of a larger Bench on the constitutional question raised in the judgments previously delivered by us. Under proviso to article 145 of the Constitution, we refer the following question for the opinion of the Constitution Bench of the Court. "What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara(1) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, on the ground that it infringes article 19(1) (f) of the Constitution?" On receipt of the opinion the case will be taken up for further consideration. [In pursuance of the above reference under the proviso to article 145(3) of the Constitution their Lordships of the Constitution Bench (Mehr Chand Mahajan C. J., Mukherjea, section R. Das, Vivian Bose and Ghulam Hasan JJ.) gave the following Opinion dated 23rd September, 1954.] MEHR CHAND MAHAJAN C.J. (Mukherjea, Vivian Bose and Ghulam Hasan JJ. concurring) A Bench of this Court hearing an appeal under the provisions of Chapter IV of the Constitution has referred, under article 145(3) of the Constitution, for the opinion of the Constitution Bench the following point: "What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara(1) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid (1) 83 646 medicinal or toilet preparations containing alcohol, on ,the ground that it infringes article 19(1) (f) of the Constitution?" The facts giving rise to the reference are these: Shri Pesikaka, the appellant in the case, was at the relevant period, officiating Regional Transport Officer, Bombay Region. On the 29th May, 1951, at about 9 30 P.m., while proceeding in his jeep towards Colaba Bus Stand, he knocked down three persons. He was arrested by the police and taken to the police station and then to St. George 's Hospital. The doctor, found his breath smelling of alcohol, conjunctiva congested, pupils semi dilated and reacting to light, and speech coherent. He could behave himself and walk along a straight line. In the opinion of the doctor the appellant did not seem to be under the influence of alcohol, though he had taken alcohol in some form or other. On these facts. the appellant was prosecuted for having committed offences under section 338, Indian Penal Code (rash driving), as well as under section 66(b) of the Bombay Prohibition Act. In defence it was suggested that he had taken a medicinal preparation, B.G. Phos, and had not consumed any liquor, and that on the night in q question he had taken at about 9 or 9 15 p.m. after dinner a dose of B. G. Phos which contained 17 per cent. of alcohol according to its formula. The learned Presidency Magistrate acquitted the appellant on the finding that the prosecution had failed to establish his guilt under either of the sections under which he was charged. With regard. to the offence under section 66(b) of the Bombay Prohibition Act, it was observed that there were certain medicinal preparations which were allowed to be used by law, and there was no satisfactory evidence to show that the appellant had not consumed those tonics but only liquor for which he ought to have a permit. The State of Bombay appealed against the acquittal order to the High Court. The High Court confirmed the acquittal in regard to the charge under section 338, Indian Penal Code, but reversed the order acquitting him of the charge under section 66(b) of the Bombay Prohibition Act followed a decision of its own ' Division 647 Bench in Rangrao Bala Mane vs The State (supra) where it had been held that once it was proved by the prosecution that a person had drunk or consumed liquor without a permit, it was for that person to show that the liquor drunk by him was not prohibited liquor, but was alcohol or liquor which he was permitted by law to take, e.g., medicated alcohol. On this view of the law, on the merits of the case it was held that the appellant had failed to prove the existence of circum stances from which the Court could come to the conclusion that the liquor which was consumed by the appellant was not prohibited liquor but liquor which was excepted by the Bombay Prohibition Act from its operation. In the result the appellant was sentenced to one month 's rigorous imprisonment and a fine. of Rs. 500. Against this order an appeal was admitted in this Court by special leave and was heard by a Bench of the Court consisting of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ. on the 19th February, 1954. The learned Judges could not reach an una nimous decision and expressed different and divergent opinions. Bhagwati J. wanted to allow the appeal and quash the conviction. He was of the opinion that the onus rested on the prosecution to prove that the liquor consumed by the appellant was prohibited liquor under section 13(b) of the Act and that the prosecution had failed to prove this. This, in the opinion of the learned Judge, was the consequence of the declaration of unconstitutionality of a portion of section 13(b) by this Court in The State of Bombay and Another vs F. N. Balsara (supra). Venkatarama Ayyar dissented from this view. He was of the opinion that the decision in The State of Bombay and Another vs F. N. Balsara (supra) could not be held to have the effect of taking out medicinal preparations from the purview of section 13(b) and that its effect was merely to render that part of the section unenforceable and that the onus rested on the accused to establish the plea of unconstitutionality, and it could not be held established unless all the elements necessary to sustain such a plea were proved and the accused had therefore to make out as a fact that what he had 648 consumed was a medicinal 'preparation. On the merits of the case it was held that the accused had failed to discharge the burden that rested on him. In the result the conviction of the appellant by the High Court was upheld. Jagannadhadas J. agreed in the result reached by Venkatarama Ayyar J. but on different grounds. lie was of the opinion that the only way to give full effect to the judgment in The, State Bombay and Another vs F. N. Balsara (supra) was to engraft an appropriate exception or proviso upon section 13(b) in the light of that decision. He considered that The State of Bombay and Another vs F., N. Balsara (supra) did not import a new definition or re write section 13(b). It kept the section intact but treated the consumption of liquid or medicinal preparations containing alcohol as beyond its ambit and thus engrafted an exception or proviso on to section 13(b). On this view of the effect of Balsara 's decision it was held that the onus rested on the accused to establish that his case fell within the exception and he had failed to discharge that onus. In accordance with the opinion of the majority the conviction of the appellant, under section 66(b) of the Bombay Prohibition Act was confirmed and the appeal was dismissed but the sentence was reduced to that already undergone. On a petition for review being presented, the learned Judges granted the review on the 26th April, 1954, and reopened the case, to enable them to obtain the opinion of the Constitution Bench of this Court on the constitutional question formulated and mentioned above. For a proper appreciation of the question referred to us, it is necessary to set out what this Court decided In The State of Bombay and Another vs F. N. Balsara (supra). In that case the constitutional validity of the Bombay Prohibition Act (XXV of 1949) was challenged on different grounds. This attack substantially failed and the Act was maintained as it was passed, with the exception of 'a few provisions that were declared invalid. Inter alia, clause (b) of section 13 so far as it affected the consumption or use of such medicinal and toilet preparations containing alcohol was held invalid. 640 Section 2(24) of the Act defined a "liquor" to include spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol. Section 13(b) prohibits the use or consumption of liquor without a permit. Section 66(b) which is the penal section provides that "whoever in contravention of the provisions of this Act consumes, uses any intoxicant shall, on conviction, be punished. " The appellant was charged under section 66(b) of the Act for having used or consumed liquor the use of which was prohibited by section 13(b). In The State of Bombay and Another vs F. N. Balsara (supra), the part of the section that brought all liquids containing alcohol within its ambit was declared invalid and the section therefore, though it stood intact as enacted in respect of prohibited liquor up to the date of the coming into force of the Constitution and qua non citizens subsequently, a part of it was declared invalid, and so far as it concerned citizens, qua them that part of the section ceased to have legal effect. The problem now raised is; what is the effect of this partial declaration of the invalidity of section 13(b) on the case of a citizen prosecuted under section 66(b) for committing a breach of the provisions of the section after the coming into force of the Constitution. Our opinion on this question is that the effect of the declaration in The State of Bombay and Another vs F. N. Balsara (supra), that clause (b) of section 13 of the Bombay Prohibition Act is void under article 13(1) of the Constitution in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, is to render part of section 13(b) of the Bombay Prohibition Act, inoperative, ineffective and ineffectual and thus unenforceable. The part of the section which has been declared void has no legal force so far as citizens are concerned and it cannot be recognized as valid law for determining the rights of citizens. In other words, the ambit of the section stands narrowed down so far as its enforceability against citizens is concerned and no notice can be taken of the part of the section struck down in a prosecution for contravention of the provisions of that section, with 650 the consequence that in prosecutions against citizens of India under section 13(b), the offence of contravention of the section can only be proved if it is established that they have used or consumed liquor or an intoxicant which is prohibited by that part of the section which has been declared valid and enforceable and without reference to its unenforceable part. No notice at all should be taken of that other part as it has no relevance in such an enquiry, having no legal effect. In a criminal case unless the prosecution proves a contravention of a provision that is legally enforceable and valid, it cannot succeed. No onus is cast on the accused to prove that his case falls under that part of the section which has been held unenforceable. The High Court was in error in placing the onus on the accused to prove that he had consumed alcohol that could be consumed without a permit merely on proof that he was smelling of alcohol. In our judgment, that was not the correct approach to the question. The bare circumstance that a citizen accused of an offence under section 66(b) is smelling of alcohol is compatible both with his innocence as well as his guilt. It is a neutral circumstance. The smell of alcohol may be due to the fact that the accused had contravened the enforceable part of section 13(b) of the Prohibition Act. It may well be due also to the tact that he had taken alcohol which fell under the unenforceable and inoperative part of the section. That being so, it is the duty of the prosecution to prove that the alcohol of which he was smelling was such that it came within the category of prohibited alcohols and the onus was not discharged or shifted by merely proving a smell of alcohol. The onus thus cast on the prosecution may be light or heavy according to the circumstances of each case. The intensity of the smell itself may be such that it may negative its being of a permissible variety. Export evidence may prove that consumption in small doses of medicinal or other preparations permitted cannot produce the smell or a state of body or mind amounting to drunkenness. Be that as it may, the question is one of fact to be decided according to the circumstance of each case. It is open to the accused to prove in defence that what he 651 consumed was not prohibited alcohol, but failure of the defence to prove it cannot lead to his conviction unless it is established to the satisfaction of the Judge by the prosecution that the case comes within the enforceable part of section 13(b), contravention of which alone is made an offence under the provisions of section 66 of the Bombay Prohibition Act. Our reasons for this opinion are these. The meaning to be given to the expression "void" in article 13(1) is no longer res integra. It stands concluded by the majority decision in Kesava Madhava Menon vs The State of Bombay(,). The minority view there was that the word "void" had the same meaning as " repeal" and therefore a statute which came into clash with fundamental rights stood obliterated from the statute book altogether, and that such a statute was void ab initio. The majority however held that the word "void" in article 13(1), so far as existing laws were concerned, could not be held to obliterate them from the statute book, and could not make such laws void altogether, because in its opinion, article 13 had not been given any retrospective effect. The majority however held that after the coming into force of the Constitution the effect of article 13(1) on such repug nant laws was that it nullified them, and made them ineffectual and nugatory and devoid of any legal force or binding effect. It was further pointed out in one of the judgments representing the majority view, that the American rule that if a statute is repugnant to the Constitution the statute is void from its birth, has no application to cases concerning obligations incurred or rights accrued in accordance with an existing law that was constitutional in its inception, but that if any law was made after the 26th January, 1950, which was repugnant to the Constitution, then the same rule shall have to be followed in India as followed in America. The result therefore of this pronouncement is that the part of the section of an existing law which is un constitutional is not law, and is null and void. For determining the rights and obligations of citizens the part declared void should be notionally taken to be (I) (1951] S.C.R, 228. 652 obliterated. from the section for all intents and purposes, though it may remain written on the statute book and be a good law when a question arises for determination of rights and obligations incurred prior to 26th January, 1950, and also for the determination of rights of persons who have not been given fundamental rights by the Constitution. Thus, in this situation, there is no scope for introducing terms like "relatively void" coined by American Judges in construing a Constitution which is not drawn up in similar language and the implications of which are not quite familiar in this country. We are also not able to endorse the opinion expressed by our learned brother, Venkatarama Ayyar, that a declaration of unconstitutionality brought about by lack of legislative power stands on a different footing from a declaration of unconstitutionality brought about by reason of abridgement of fundamental rights. We think that it is not a correct proposition that constitutional provisions in Part III of our Constitution merely operate as a check on the exercise of legislative power. It is axiomatic that when the lawmaking power of a State is restricted by a written fundamental law, then any law enacted and opposed to the fundamental law is in excess of the legislative authority and is thus a nullity. Both these declarations of unconstitutionality go to the root of the power itself and there is no real distinction between them. They represent but two aspects of want of legislative power. The legislative power of Parliament and the State Legislatures as conferred by articles 245 and 246 of the Constitution stands curtailed by the fundamental rights chapter of Constitution. A mere reference to the provisions of article 13(2) and articles 245 and 246 is sufficient to indicate that there is no competency in Parliament or a State Legislature to make a law which comes info clash with Part III of the Constitution after the coming into force of the Constitution. Article 13(2) is in these terms : "The State shall not make any law which takes away or abridges; the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void. " 653 This is a clear and unequivocal mandate of the funda mental law prohibiting the State from making any laws which come into conflict with Part III of the Constitution. The authority thus conferred by articles 245 and 246 to make laws subject wise in the different Legislatures is qualified by the declaration made in article 13(2). That power can only be exercised subject to the prohibition contained in article 13(2). On the construction of article 13(2) there was no divergence of opinion between the majority and the minority in Kesava Madhava Menon vs The State of Bombay (supra). It was only on the construction of article 13(1) that the difference arose because it was felt that that article could not retrospectively invalidate laws which when made were constitutional according to the Constitution then in force. Again, we are not able to subscribe to the view that in a criminal prosecution it is open to an accused person to waive his constitutional right and get convicted. A reference. to Cooley 's Constitutional Limitations, Vol. I, p. 371, makes the proposition clear. Therein the learned professor says that a party may consent to waive rights of property, but the trial and punishment for public offences are not within the province of individual consent or agreement. In our opinion, the doctrine of waiver enunciated by some American Judges in construing the American Constitution cannot be introduced in our Constitution without a fuller discussion of the matter. No inference in deciding the case should have been raised on the basis of such a theory. The learned Attorney General when questioned about the doctrine did not seem to be very enthusiastic about it. Without finally expressing an opinion on this question we are not for the moment convinced that this theory has any relevancy in construing the fundamental rights conferred by Part III of our Constitution. We think that the rights described as fundamental rights are a necessary consequence of the declaration in the preamble that the people of India have solemnly resolved to constitute India into a sovereign democratic republic and to secure to all its citizens justice, social, economic and political; 84 654 liberty of thought, expression, belief, faith and worship; equality of status and of opportunity. These fundamental rights have not been put in the Constitution merely for individual benefit, though ultimately they come into operation in considering individual rights. They have been put there as a matter of public policy and the doctrine of waiver can have no application to provisions of law which have been enacted as a matter of constitutional policy. Reference to some of the articles, inter alia, articles 15(1), 20, 21 makes the proposition quite plain. A citizen cannot get discrimination by telling the State "You can discriminate", or get convicted by waiving the protection given under articles 20 and 21. The learned Attorney General contended that the correct approach to the question was that there being a strong Presumption in favour of the constitutionality, of a statute, it is for those who assail it as unconstitutional to establish it, and therefore it was for the appellant to establish that the statute was. unconstitutional, and that unless he proved facts requisite for the constitutional invalidity of the conviction he could not succeed. We cannot agree that that is a correct way of judging criminal cases. The constitutional invalidity of a part of section 13(b) of the Bombay Prohibition Act having been declared by this Court, that part of the section ceased to have any legal effect in judging cases of citizens and had to be regarded as null and void in determining whether a citizen was guilty of an offence. Article 141 of the Constitution declares that the law declared by the Supreme Court shall be binding on all Courts within the territory of India. In view of this clear enactment there is no scope in India for the application of the American doctrine enunciated by Willoughby ("The Constitution of the United States" Vol. I, P. 10), wherein the learned author states, "the declaration by a court of unconstitutionality of a statute which is in conflict with the Constitution affects the parties only and there is no judgment against the statute; that the opinion or reasons of the court may operate as a precedent for the determination of other similar cases, but it does 655 not strike the statute from the statute book; the parties to that suit are concluded by the judgment, but no one else is bound; a new litigant may bring a new suit, based on the very same statute, and the former decision cannot be pleaded as an estoppel, but can be relied on only as a precedent. " Once a statute is declared void under article 13(1) or 13(2) by this Court, that declaration has the force of law, and the statute so declared void is no longer law qua persons whose fundamental rights are thus infringed. In America there is no similar statutory provision and that being so, the doctrine enunciated by the learned author can have no application here. In this country once a law has been struck down as unconstitutional law by a Court, no notice can be taken of that law by any Court, and in every case an accused person need not start proving that the law is unconstitutional. The Court is not empowered to look at that part of the law which has been declared as void, and therefore there is no onus resting on the accused person to prove that the law that has already been declared unconstitutional is unconstitutional in that particular case as well. The Court has to take notice only of what the law of the land is, and convict the accused only if he contravenes the law of the land. Our learned brother, Jagannadhadas J., took the view that the only appropriate way of giving effect to the judgment in The State of Bombay and Another vs F. N. Balsara (supra) was by engrafting an exception or proviso to section 13(b) in the light of that decision and that the onus of proving the exception was on the accused person. This, in our judgment, is again not a true approach to the question. As pointed out by the learned Judge himself, the Court has no power to re write the section. It has to be kept intact. The Court therefore has no power to engraft an exception or a proviso on section 13(b) of the Bombay Prohibition Act. Apart from this circumstance it seems plain that unless there is a power to make a law inconsistent with the provisions of Part III of the Constitution, there can be no power to engraft an exception of the nature suggested by our brother. An exception or proviso 656 can only be engrafted for the purpose of excluding from the substantive part of the section certain matters which but for the proviso would be within it. But when there is no power to enact at all what is proposed to be embodied in the exception, there is no power to enact an exception by enacting a law which the Legislature is not competent to make. The State has no power to make a law abridging fundamental rights and therefore there is no power to engraft an exception by taking something out of a law which cannot be enacted. It is therefore difficult to treat what was declared void in The State of Bombay and Another vs F. N. Balsara (supra) as an exception to section 13(b) of the Bombay Prohibition Act and apply the rule enunciated in sec tion 105 of the Evidence Act to the case of the appellant. The only correct approach to the subject is to ignore the part of the section declared void by this Court in The State of Bombay and Another vs F. N. Balsara (supra) and see if the prosecution has succeeded in bringing the offence home to the accused on the part of the section that remains good law. With the observations made above the opinion in this case is returned to the Bench which originally heard the appeal. DAS J. I respectfully beg to differ from the opinion of the majority of this Court just delivered by my Lord the Chief Justice. It is, therefore, incumbent on me to formulate my answer to the question referred to this Constitution Bench and state shortly the reasons in support thereof. It is necessary at the outset to refer to the relevant statutory provisions bearing on the question. The appellant before us was prosecuted on a charge under section 13 read with section 66(b) of the Bombay Prohibition Act, 1949 (Act XXV of 1949). The relevant part of section 66(b) of the Act which is the penal section reads as follows: "66. Whoever in contravention of the provisions of this Act (a). . . . . (b)consumes, uses, possesses or transports any intoxicant or hemp, 657 (c). . . . . . . (d). . . . . . . shall, on conviction, be punished. . . " By section 2 (22) "intoxicant" is defined as meaning "any liquor, intoxicating drug, opium or a any Other substance which the State Government may, by notification in the Official Gazette, declare to be an intoxicant. " Read in the light of this definition consumption, use, etc., of "liquor" is within the mischief of this section. Further, it will be noticed that what is made punishable is not consumption, use, etc. of liquor simpliciter but consumption, use, etc., of liquor "in contravention of the provisions of this Act. " The prosecution, as the charge shows, relied on section 13 as being the provision of the Act in contravention of which the consumption, use, etc., was alleged to have been made by the appellant who was the accused person. That section is to be found in Chapter III beaded "Prohibitions". So far as it is material for our purpose, it runs thus: "13. No person shall (b) consume or use liquor; or (c) By section 2 (24) "liquor" is defined as including "(a) spirits of wine; denatured spirits, wine, beer, toddy and all liquids consisting of or containing alcohol; and (b) any other intoxicating substance which the State Government may, by notification in the Official Gazette, declare to be liquor for the purposes of this Act. " Therefore the prohibition of section 13(b)extends to the consumption or use of each and everyone of the above enumerated items which are included in the definition of "liquor". It follows that whoever consumes or uses any of these enumerated substances contravenes the provisions of section 13(b) and consumption or use of any of these substances in contravention of this provision is an offence punishable under section 66(b). 658 The Bombay Prohibition Act containing the above ,provisions came into force on the 20th May, 1949. It is conceded on all hands that it was a perfectly valid piece of legislation enacted well within its legislative competency by the then Bombay Legislative Assembly. Then came the Constitution of India on the 26th January, 1950. Article 19(1)(f) gives to all citizens the fundamental right to acquire, hold and dispose of property. By sub article(5) however,it is provided that nothing in clause(f) shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of the right conferred by sub clause (f) either in the interests of the general public or for the protection of the interests of any Scheduled Tribe. The Bombay Prohibition Act, 1949, was an existing law. By virtue of sub article (5) the right conferred by sub clause (f) cannot affect the operation of the Act in so far as it imposes reasonable restrictions of the kind mentioned in that sub article. If, however, this existing law imposes restrictions which are unreasonable then it becomes inconsistent with the right guaranteed to the citizens by article 19(1)(f) and consequently under article 13(1) "shall, to the extent of such inconsistency, be void". It is beyond all dispute that it is for the Court to judge whether the restrictions imposed by any existing law or any Part thereof on the fundamental rights of citizens are reasonable or unreasonable in the interest of the general public or for the protection of the interests of any Scheduled Tribe. If the Court holds that the restrictions are unreasonable then the Act or the part thereof which imposes such unreasonable restrictions comes into conflict and becomes inconsistent with the fundamental right con ferred on the citizens by article 19(1)(f) and is by article 13(1). rendered void, not in toto or for all purposes or for all persons but "to the extent of such inconsistency", i.e., to the extent it is inconsistent with the exercise of that fundamental right by the citizens. This is plainly the position, as I see it. Shortly after the commencement of the Constitution the validity of the Bombay Prohibition Act was 659 challenged in its entirety. One F. N. Balsara, claiming to be an Indian citizen prayed to the High Court, at Bombay, infer alia, for a writ of mandamus against the State of Bombay and the Prohibition Commissioner ordering them (i) to forbear from enforcing against him the provisions of the Prohibition Act and (ii) to allow him to exercise his right to possess, consume and use certain articles, namely, whisky, brandy, wine, beer, medicated wine, eau de cologne, lavender water and medicinal preparations containing alcohol. The High Court, agreeing with some of the petitioner 's contentions and disagreeing with others, declared some of the provisions of the Act to be invalid and the rest to be valid. Both the State of Bombay and the petitioner, Balsara, appealed to this Court after obtaining a certificate from the High Court under article 132(1) of the Constitution. The judgment of this Court in those appeals was pronounced on the 25th May, 1951. See The State of Bombay and Another vs F. N. Balsara (supra). So far as it is material for our present purpose this Court held (1) that under entry 31 of List II of the Seventh Schedule to the Government of India Act, 1935, the Provincial Legislatures had the power to make laws with respect to "intoxicating liquors, that is to say, the 'production, manufacture, possession, transport, purchase and sale of intoxicating liquors" and there was, therefore, no legislative incompetency in the Bombay Legislature to enact the Bombay Prohibition Act, 1949; (2) that the word "liquor" as understood in India at the time of the Government of India Act, 1935, covered not only those alcoholic liquids which are generally used as beverages and produce intoxication, but also liquids containing alcohol and, therefore, the definition of "liquor" contained in section 2(24) of the Act was not ultra vires, and (3) that the restrictions imposed by sections 12 and 13 of the Act on the possession, sale, use and consumption of liquor were not reasonable restrictions on the fundamental right guaranteed by article 19(1)(f), so far as medicinal and toilet preparations containing 660 alcohol were concerned and that the said sections were invalid so far as they prohibited the possession, sale, use. and consumption of these articles, but that those sections were not wholly void on this ground as the earlier categories mentioned in the definition of liquor, namely, spirits of wine, methylated spirit, wine, beer and toddy were distinctly separable items which were easily severable from the last category, namely, all liquors containing alcohol and further that the last category of "all liquids consisting of or containing alcohol" were again capable of being split up in several sub categories, e.g., liquid medicinal and toilet preparations containing alcohol and the restrictions on the possession, sale, use and consumption of the earlier categories and all liquids containing alcohol other than medicinal and toilet preparations were not unreasonable. In the result this Court declared certain provisions of the Act invalid. Amongst the provisions declared invalid was section 13(b), but it was so declared only "so far as it affects the consumption or use of such medicinal and toilet preparations containing alcohol." This declaration, no doubt, was made pursuant to article 13(1) of the Constitution. The very foundation of this declaration was that the prohibition imposed by this section against the consumption or use of liquid medicinal or toilet preparations was an unreasonable restriction on the exercise of the fundamental right of citizens to acquire, hold and dispose of property which in that case was liquid medicinal or toilet preparations containing alcohol ' The law thus declared by this Court is, by virtue of article 141 of the Constitution, binding on all Courts within the territory of India. The offence with which the appellant was charged was alleged to have been committed on the 29th May, 1951, that is to say, four days after this Court pronounced its judgment in The State of Bombay and Another vs F. N. Balsara (supra). On the 22nd April, 1952, the learned Presidency Magistrate acquitted the appellant of that charge with the following remark: "The evidence also does not go to show conclusively that the accused had consumed alcohol without a permit There are. certain medicinal preparations which are 661 allowed to be used by law and there must be satisfactory evidence to show that the accused has not consumed those tonics but only liquor for which he ought to have a permit. " The State appealed to the High Court against this order of acquittal. The High Court following its own earlier decision in Rangrao Bala, Mane vs State (supra) reversed the order of the Presidency Magistrate. The appellant came up to this Court in appeal after having obtained special leave from this Court. The appeal came up for hearing before a Division Bench of this Court consisting of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ. Bhagwati J. clearly and, if I may respectfully say so, correctly accepted the position that the declaration made by this Court in The State of Bombay and Another vs F. N. Balsara (supra) "was a judicial pronouncement and that even though under article 141 of the Constitution the law declared by this Court was binding on all Courts in India and is to be the law of the land the effect of that declaration was not to enact a statutory provision or to alter or amend section 13(b) of the Act." Having accepted this position the learned Judge logically and, again I say with respect, correctly repelled the argu ment that the result of the decision in The State of Bombay and Another vs F. N. Balsara (supra) was to introduce, not in terms but in effect, an exception or proviso to section 13(b) and that consequently the onus lay on the appellant to prove the existence of circumstances bringing his case within the exception or proviso as laid down in section 105 of the Evidence Act. The learned Judge, however, observed: "The only effect of the declaration was that the prohibition enacted in section 13(b) was to be enforce. able in regard to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and 85 662 non toilet liquid preparations consisting of or containing alcohol. The prohibition which was enacted in section 13(b) against the consumption or use of liquor could in the light of the declaration made by this Court only refer to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol, and that was the only prohibition which could be enforced under the section 13(b) and the penal section 66(b). " The learned Judge proceeded to illustrate how the effect of the declaration could be worked out: "The effect of the declaration on the provisions of section 13(b) could be worked out in any of the following modes: No person shall consume or use spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol as are not or which are not or other than or save or except or provided they are not or but shall not include liquid medicinal or toilet preparations containing alcohol or all non medicinal and non toilet liquid preparations consisting of or containing alcohol. When these several interpretations were possible in regard to the effect of the declaration on the provisions of section,13(b), where would be the justification for interpreting the effect of the declaration to be that of grafting an exception or proviso on section 13(b) so as to attract the operation of the provisions of section 105 of the Evidence Act9 It is clear that where several interpretations are possible, the Court should adopt an interpretation favourable to the accused, rather than one which casts an extra or special burden upon him, which if at all should be done by clear and unequivocal provision in that behalf rather than in this indirect manner. (See also In re Kanakasabai Pillai)(1). " With the utmost respect to the learned Judge, the modes of working out the effect of the declaration indicated by him clearly involve the acceptance of one or other of the different forms of amendment of the section, although according to his views expressed (1) A.I. R. 1940 Mad. I. 663 earlier in his judgment the effect of the declaration was not to alter or amend section 13(b) of the Act. Venkatarama Ayyar J., however, took the view that as the Court had no legislative function and as judicial decisions did not amend or add to a statute but merely interpreted the law and declared whether it was valid or not, the result of a judicial declaration that a statute or any part thereof was not valid was only that no effect could be given to it in a Court of law but that it did not mean that the statute or the part thereof declared void had gone out of the statute book after the Court 's decision. He also held that section 105 of the Evidence Act would not in terms apply as article 19(1)(f) could not be said to form an exception to section 13(b). He rested his decision on the ground that the inclusive definition of "liquor" adopted in section 2(24) of the Act having been held to be within entry 31 in List II of the Seventh Schedule to the Government of India Act, 1935, and, therefore, valid, that meaning should be its connotation in section 13(b) as well and that under the section so read the offence would be established as soon as consumption or use of "liquor" so defined was established and that the plea that what was consumed was medicinal preparation containing alcohol was really a plea that the section, in so far as it prohibits consumption or use of liquid medicinal or toilet preparations containing alcohol, infringed the citizens ' fundamental right under article 19(1)(f) and was, therefore, unconstitutional as declared by this Court. His view was that it was for those who pleaded unconstitutionality to establish all the elements which would go to establish that plea. Jagannadhadas J. felt inclined to agree with the view of Venkatarama Ayyar J. but as that aspect of the matter had not been fully argued he passed on to the argument canvassed before them, namely, that the part of the section declared invalid went out of the Act and the Act stood appropriately amended pro tanto. This, according to the learned Judge, involved, that the word "liquor" stood amended as "prohibited liquor" or that it was to be understood with this limited connotation. This argument he could not accept. His view was that what the decision in The, State of Bombay and Another vs 664 F. N. Balsara (supra) had done was not to authorise ,the importation of a new definition or to rewrite the section but, leaving the section intact, to treat the consumption or use of liquid medicinal or toilet preparations containing alcohol as taken out of the ambit of the section itself as the prohibition thereof was unconstitutional. This, according to the learned Judge, could only be done by grafting an appropriate exception or proviso into section 13(b). The result of the hearing before that Bench was that Bhagwati J. held that the appeal should be allowed but Jagannadhadas and Venkatarama Ayyar JJ. were for dismissing the appeal. An application for review was, however, made on the ground that the judgments of the learned Judges involved a decision on constitutional matters which that Bench had no jurisdiction to decide but which could only be dealt with by a Constitution Bench. By an order made on the 26th April, 1954, under the proviso to sub article (3) of article 145 that Bench accordingly referred the following question for the opinion of the Constitution Bench, namely: "What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara (supra) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, on the ground that it infringes article 19(1)(f) of the Constitution?" The effect of a judicial declaration of a statute as unconstitutional has been stated by Field J. in Norton vs Shelby County(1) to be that the statute is no law and that, in legal contemplation, it is to be treated as inoperative as though it had never been passed. Cooley, in his Constitutional Limitations, Volume 1, page 382, has adopted this dictum of Field J. and expressed the view that where a statute is adjudged to be unconstitutional it is as if it had never been. I am unable to accept the proposition so widely stated. Even American text book writers have felt that the statement of (1) ; ; 665 Field J. needs to be somewhat qualified. (See, Willoughby on the Constitution of the United States, Volume 1, page 11 and Willis on Constitutional Law, page 890). The dictum, it will be observed, related to a statute which was made after the commencement of the Constitution and which was in violation of the provisions of the Constitution. It cannot obviously apply to a case where a statute which was enacted before the commencement of the Constitution is declared to have become unconstitutional and void. In such a situation it cannot be said that the judicial declaration means that such a statute is void for all purposes including past transactions that took place before the commencement of the Constitution. The Bombay Act was an existing law and the declaration in The State of Bombay and Another vs F. N. Balsara (supra) cannot and does not affect anything done under the Act prior to the commencement of the Constitution. It will be further noticed that the decision in The State of Bombay and Another vs F. N. Balsara (supra) does not declare the entire Act or even the entire section 13(b) to be void. It only declares void a part of section 13(b), that is to say only that part of it which prohibits a citizen from consuming or using only liquid medicinal or toilet preparations containing alcohol. The section, in its entirety, is still enforceable against all noncitizens. Even as against citizens the prohibition of the section with respect to the consumption or use of the earlier categories of liquor, namely, "spirits of wine, denatured spirits, wine, beer, toddy" ' is fully operative. Moreover, even the prohibition against consumption or use of the last category of liquor, namely, "all liquids consisting of or containing alcohol" remains operative even as against citizens except in so far as it prohibits them from consuming or using liquid medicinal or toilet preparations containing alcohol. In such a situation the passages from Cooley on Constitutional Limitations and the dictum of Field J. can have no application. This is put beyond controversy by the decision of this Court in Keshava Madhava Menon vs The State of Bombay (supra). The Bombay Act being an existing law, the declaration made by 666 this Court in The State of Bombay and Another vs F. N. Balsara (supra) must be taken to have been made under article 13(1). The article does not in terms make the existing laws which are inconsistent with the fundamental rights void ab initio or for all purposes. The declaration in The State of Bombay and Another vs F. N. Balsara (supra), as I understand it, is that the prohibition contained in section 13(b) against the consumption or use of one particular variety of liquid Consisting of or containing alcohol, namely, liquid medicinal or toilet preparations containing alcohol imposes an unreasonable restriction on the exercise of a citizen 's fundamental right under article 19(1) (f) and is, therefore, unconstitutional and as such void to that extent. The result of it is that the prohibi tion of that part of section 13(b) will be ineffective against and inapplicable to a citizen who consumes or uses liquid medicinal or toilet preparations containing alcohol. No part of the section is obliterated or scratched out from the statute book or in any way altered or amended, for that is not the function of the Court. The judicial declaration that a art of the section is unconstitutional and void only nullifies that offending Part in the sense that it renders that part ineffective against and inapplicable to a citizen who consumes or uses liquid medicinal or toilet preparations containing alcohol in exercise of his fundamental right. In other words, when a citizen is charged with an offence under section 66(b) read with section 13(b) he will be entitled to say "I am a citizen of India. I have consumed or used liquid medicinal or toilet preparations containing alcohol. I am entitled to do so under article 19(1) (f). The Supreme Court has in The State, of Bombay and Another vs F. N. Balsara (supra) declared the law, namely, that in such cir cumstances the prohibition of section 13(b) is void as against me with respect to such consumption or use of liquid medicinal or toilet preparations containing alcohol " This plea, if substantiated, will be a complete answer to the charge. In short, the judicial declaration serves to provide a defence to a citizen who has consumed or used liquid medicinal or toilet preparations 667 containing alcohol. Test the matter in this way. Suppose after the declaration a person is charged with an offence under section 66(b) read with section 13(b) and in such a case the prosecution proves that the accused has taken alcohol in some form or other, as is the evidence of the doctor in the present case. What is to happen if nothing further is proved by either party ? Surely, in such a situation a conviction must follow. If the accused person desires to avail himself of the benefit of the declaration in The State of Bombay and Another vs F. N. Balsara (supra), surely he must prove first of all that he is a citizen. The onus of this clearly lies on the accused. The next question is whether that is the only onus that lies on the accused. To my mind he has to allege and prove not only that he is a citizen but that he has consumed or used liquid medicinal or toilet preparations containing alcohol and it is only on such proof that he can claim the benefit of the declaration of law made in The State of Bombay and Another vs F. N. Balsara (supra) and establish his defence. The very basis of that declaration is that a citizen has the fundamental right to consume or use liquid medicinal or toilet preparations containing alcohol and section 13(b) in so far as it prohibits such consumption or use imposes an unreasonable restriction on his fundamental right under article 19(1) (f). In other words, the on us is on him to establish the situation or circumstances in which that part of the section which has been declared to be void should not be applicable to him. If he establishes the fact that he is a citizen and that he has consumed or used such liquid, then the declaration in The State of Bombay and Another vs F. N. Balsara (supra) will establish the law, namely, that the prohibition of section 13(b) and the penalty under section 66(b) are not applicable to him being inconsistent with his fundamental right. To say that after the judicial pronouncement the section should be read qua a citizen as if liquid medicinal or toilet preparations are not there or that the ambit of the offence has narrowed down to a prohibition against the consumption or use of only the earlier categories of liquor set forth in the definition is, to my mind, 868 tantamount to saying, covertly if not openly , that the judicial pronouncement has to that extent amended the section. To say that after the declaration the offence has become limited to the consumption or use of prohibited liquor is to alter or amend the definition of liquor although it has been held to be valid. I repeat that it is not within the competence of a Court to alter or amend a statute and that the effect of the declaration made by this Court in The State of Bombay and Another vs F. N. Balsara (supra) is not to lift or take away or add anything out of or to the section at all. What it does is to declare, as a matter of law, that in a certain situation, namely, when liquid medicinal or toilet preparations containing alcohol are consumed or used, a certain part of section 13(b), that is to say, that part of it which prohibits the consumption or use of liquid medicinal or toilet preparations containing alcohol, shall be void qua a particular class of persons, namely, citizens. In other words, the declaration in The State Of Bombay and Another vs F. N. Balsara (supra) serves to provide a defence only to a citizen who has consumed or used liquid medicinal or toilet preparations. It is for the accused person, who seeks to ward off the applicability of the section to him by having resort to the declaration made in The State of Bombay and Another vs F. N. Balsara (supra), to establish the situations or circumstances on which that declaration is founded. In short a person who challenges the validity of the section on the ground of its unconstitutionality has the advantage of the declaration as a matter of law but the facts on which that declaration is based have nevertheless to be established in each particular case where the declaration is sought to be availed of. I answer the question referred to us accordingly. It has been strenuously urged before us, as before the Division Bench, that such a view as to the effect of this Court 's declaration will run counter to the well established principle of criminal jurisprudence that the onus of establishing the charge is always on the prosecution, for it will throw the burden of proof on the accused person. This argument has considerably impressed Bhagwati J. and has also weighed with my 669 learned colleagues on the present Bench. It is, however, not unusual in certain classes of cases or in certain circumstances to throw the onus of proof of a defence on the accused person. Section 105 of the Evidence Act is an instance in point. Section 114, ill. (a) of the same Act is another provision to which reference may be made. Section 103 of this very Bombay Prohibition Act raises a very strong presumption of guilt and throws the burden on the accused to prove his innocence in certain cases. Take section 96 of the Indian, Penal Code which says " Nothing is an offence which is done in the exercise of the right of private defence. " Nobody will contend that this section requires the prosecution to prove that the acts constituting the offence charged against the accused were not done in the exercise of the right of private defence. It is obvious that this section serves to provide the accused person with a defence and if the accused person can prove that he did the acts complained of in defence of his person or property and if the acts were reasonable in the circumstances of the case he establishes his defence. It is not necessary to multiply instances. It seems to me that the declaration in The State of Bombay and Another vs F. N. Balsara (supra) gives a citizen who has consumed or used liquid medicinal or toilet preparations containing alcohol a defence to a charge under section 66(b) read with section 13(b) of the Bombay Prohibition Act, but it is for the accused person to prove the facts on which that declaration of law is founded. I see no hardship whatever in this, for the requisite facts are within his special knowledge. To adopt the contrary view will be to ignore the sound principle well established in law that a judicial declaration of invalidity does not repeal, alter or amend a statute. As I hold that the declaration does not operate as an amendment of the section, I must logically hold, 'with respect to the view of Jagannadhadas J. that the declaration cannot be treated as having grafted an exception or proviso to section 13(b). 86 670 In coming to the conclusion that I have, I have in a large measure found myself in agreement with the views of Venkatarama Ayyar J. on that part of the ' case. 1, however, desire to guard myself against being understood to agree with the rest of the observations to be found in his judgment, particularly those relating to waiver of unconstitutionality, the fundamental rights being a mere check on legislative power or the effect of the declaration under article 13(1) being "relatively void. " On those topics prefer to express no opinion on this occasion. BY THE COURT. The reference is answered in accordance with the opinion of the majority. [After the opinion of the Constitution Bench the following Order, dated 24th September, 1954, was pronounced by a Bench composed of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ. who had originally heard the appeal.] The Order of the Court was pronounced by BHAGWATI J. We have received the opinion expressed by the Constitution Bench. According to that opinion, which is expressed in the majority judgment, the onus lay on the prosecution to prove that the alcohol of which the accused was smelling was such that it came within the category of prohibited alcohols. We have heard the learned Attorney General on the question whether that onus has been discharged and he has frankly conceded that on the material placed before us it cannot be urged that that onus has been discharged by the prosecution. The result, therefore, is that the conviction of the appellant will be quashed and the fine, if paid, will be refunded. Conviction set aside.
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The court decided that because of a previous case, *The State of Bombay and Another vs F. N. Balsara*, part of a law called the Bombay Prohibition Act was no longer valid. This part, section 13(b), dealt with alcohol in medicine and toiletries. The court said that this section was not enforceable because it violated the Constitution. Since part of section 13(b) was declared unconstitutional by the Supreme Court, it no longer had any legal power when deciding cases. It was considered invalid when figuring out if someone was guilty of a crime. India's Constitution, in article 141, makes it clear that if the Supreme Court says a law is unconstitutional, that law is no longer valid. This is different from the American idea that a law only affects the people in a specific case. In India, if a law is struck down, courts can't use it anymore because it's considered void. Just because someone accused of breaking section 66(b) of the Bombay Prohibition Act smells like alcohol doesn't automatically mean they're guilty. The smell could be from legally consuming alcohol allowed under the parts of section 13(b) that are still valid. Or, it could be from alcohol in products covered by the part of the law that is no longer in effect. So, it was up to the government to prove that the alcohol the person smelled was the kind that was illegal under the enforceable parts of section 13(b). One judge, Justice R. DAS, disagreed. He said that the *Balsara* case gives people a defense if they used alcohol from medicine or toiletries. But, it's up to the person accused to prove that they meet the requirements for that defense. The court discussed and explained the *Balsara* case (*The State of Bombay and Another vs F. N. Balsara*). They also followed the ruling in *Kesava Madhava Menon vs The State of Bombay*. Other cases, including *rangarao Bala Maize vs The State*, *In re Kanakasabai Pillai*, and *Norton vs Shelby County*, were also mentioned.
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In regard to the offence under section 66(b) of the Bombay Prohibition Act he observed that the evidence did not go to show conclusively that the appellant had consumed alcohol without a permit, that there were certain medicinal preparations which were allowed to be used by law and there was no satisfactory evidence to show that the appellant had not consumed those tonics but only liquor for which he ought to have a permit. It came to the conclusion that the appellant had failed to prove the existence of circumstances from which the Court could come to the conclusion that the liquor which was consumed by the appellant was not prohibited liquor but liquor which was excepted by the Bombay Prohibition Act from its operation and set aside the order of acquittal passed by the learned Presidency Magistrate in his favour convicting him of the offence and sentencing him as above. It was contended on behalf of the appellant before us that the Bombay Prohibition Act, 1949, was impugned after the advent of the Constitution and this Court by its decision in The State of Bombay and Another vs F.N.Balsara(1) inter alia declared the provisions of clause (b) of section 13 to be invalid so far as it affects the consumption or use of liquid medicinal and toilet preparations containing alcohol, that the effect of that declaration was to lift the consumption or use of liquid medicinal and toilet preparations containing alcohol from the prohibition enacted in section 13(b) and that section 66(b) was inoperative and unenforceable so far as such medicinal and toilet preparations containing alcohol were Concerned. It was therefore incumbent on the prosecution, if a charge under section 66(b) was framed against an accused, to prove that the accused had consumed or used an intoxicant in contravention of the provisions of the Act, which provision so far as section 13(b) was concerned was to be read as prohibiting the consumption or use of liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol, which were the only categories of validly prohibited liquor. On this interpretation of the effect of the judgment in The State of Bombay and Another vs P. N. Balsara (supra) there was no question whatever of the applicability of section 105 or of section 106 of the (1) ; 618 Evidence Act as was sought to be done by the High Court. It was further urged that the prosecution could not possibly prove that no form of liquid medicinal or toilet preparation containing alcohol was taken by the accused, that the fact of the consumption of such medicinal or toilet preparation containing alcohol was especially within the knowledge of the accused and that therefore the burden of proving such fact was upon him, and that once the prosecution had discharged the onus which lay upon it to prove that the accused had consumed liquor it would be for the accused to show that the liquor which was taken by him was a liquid medicinal or toilet preparation containing alcohol. even though under article 141 of the Constitution the law declared by this Court is binding on all the Courts within the territory of India and is to be the law of the land the effect of that declaration was not to enact a statutory provision or to alter or amend section 13(b) of the Act. If this is the effect of the declaration made by this Court there is no room for holding that the only duty of the prosecution was to prove that the accused had taken liquor in some form or the other and that the burden lay on the accused to prove that be had taken a liquid medicinal or toilet preparation containing alcohol. 1 depends upon the effect of the decision of this Court in The State, of Bombay and Another vs F. N. Balsara (supra) which, while holding that the definition of liquor in sub section (24) of section 2 of the Bombay Prohibition Act, 1949 (Act XXV of 1949) is valid, has declared that clause (b) of section 13 in so far as it affects the consumption or use of medicinal or toilet preparations containing alcohol, is invalid. My learned brother Justice Bhagwati, while holding that the effect of the declaration was not to alter and amend section 13(b) of the Act, is of the opinion that in the light thereof the prohibition under section 13(b) is to be understood to relate (so far as is relevant for the present purpose) to consumption or use of "non medicinal or non toilet liquid preparation containing alcohol" and that, therefore, the burden lies on the prosecution to make out all the ingredients of the prohibition so understood with the negative thereof On the other hand, my learned brother Justice Venkatarama Ayyar is of the opinion that the effect of the decision in The State of Bombay and Another vs F. N. Balsara (Supra) is not to amend or alter section 13(b) but only to render it partly unenforceable, and hence to provide a defence to the accused, on the ground of unconstitutionality in so far as that section is sought to be applied to medicinal or toilet preparations containing alcohol and that, therefore, the burden of making out the facts required for this plea is on the accused. Thus in either view of the effect ' of article 13(1) of the Constitution on section 13(b) of the Bombay Act in the light of the judgment in The State of Bombay and Another vs F. N. Balsara (supra) the opinion expressed by the learned Judges of the Bombay High Court that the burden of proof in a case like this lies on the accused is correct. The point for decision shortly is whether in a prosecution under section 66(b) of the Bombay Prohibition Act, XXV of 1949, for contravention of section 13(b), the prosecution has to establish not merely that liquor had been taken in some form but that further what was taken was not a medicinal preparation. 634 learned Judges of the Bombay High Court held following an earlier decision of that Court in Rangrao Bala Mane vs State (supra) that once the prosecution had established that the accused had taken alcohol in some form it was for him to establish that he had taken a medicinal preparation, both on the ground that it was in the nature of an exception which it was for the party pleading it to establish under section 105 of the Evidence Act and that it was a matter specially within his knowledge and that therefore the burden of proving it lay on him under section 106 of the Evidence ' Act. As medicinal preparations containing alcohol are liquor as defined in section 2(24) the consumption thereof will be an offence punishable under the Act and it will be no answer to a prosecution for contravention of section 13(b) that what was consumed was a medicinal preparation and a question of the kind now presented to us therefore could not possibly arise under the Act prior to the Constitution. The appellant contends that the effect of this declaration was to remove medicinal preparations from out of the purview of section 13(b); that ' that section should therefore be read as if it had been amended to the effect that no person shall use or consume liquor other than medicinal preparations or toilets; that in that view no question of the accused having to rely on an exception arose and no question of the burden being thrown on him under section 105; and that as the offence itself consisted in consuming a liquor which was not a medicinal preparation, the burden would lie on the prosecution to establish that what was consumed was a prohibited liquor. On the other hand, the respondent contends that the definition of liquor in section 2(24) includes not only beverages but also medicinal preparations, that the extended definition would apply to section 13(b) as well, that the immunity of medicinal preparations containing alcohol from the operation of the section by reason of the decision in The, State of Bombay and Another vs F. N. Balsara (supra) must in consequence be treated as an exception to it and that the 'section should be read as containing a saving in favour of those preparations, in the nature of an exception or proviso, the burden of establishing which under section 105 of the Evidence Act would be on the accused. The rival contentions which have been presented to us on the effect of the decision in The State of Bombay and Another vs F. N. Balsara (supra) proceed both of them on the basis that ' section 13(b) has in some manner been amended by it; according to the appellant, the 636 section must be taken to have been amended by excluding medicinal preparations from the word " liquor" according to the respondent, by inserting an exception or proviso to the section in favour of such preparations. It was argued for the appellant that this Court had declared that section 13(b) was void under article 13(1) of the Constitution in so far as it related to medicinal preparations; that that meant that it was to that extent a nullity and that it should in consequence be read as if it did not include medicinal preparations. Therefore both on the ground that a judicial determination does not operate as an amendment of the statute and, on the ground that a declaration that the impugned law is void under article 13(1) as repugnant to article 19(1) (f) merely renders it unenforceable, I am of the opinion that the decision in The State of Bombay and Another vs F. N. Balsara (supra) cannot be held to remove medicinal preparations from out of the purview of section 13(b). "What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara(1) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, on the ground that it infringes article 19(1) (f) of the Constitution?" concurring) A Bench of this Court hearing an appeal under the provisions of Chapter IV of the Constitution has referred, under article 145(3) of the Constitution, for the opinion of the Constitution Bench the following point: "What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara(1) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid (1) 83 646 medicinal or toilet preparations containing alcohol, on ,the ground that it infringes article 19(1) (f) of the Constitution?" to the offence under section 66(b) of the Bombay Prohibition Act, it was observed that there were certain medicinal preparations which were allowed to be used by law, and there was no satisfactory evidence to show that the appellant had not consumed those tonics but only liquor for which he ought to have a permit. The High Court confirmed the acquittal in regard to the charge under section 338, Indian Penal Code, but reversed the order acquitting him of the charge under section 66(b) of the Bombay Prohibition Act followed a decision of its own ' Division 647 Bench in Rangrao Bala Mane vs The State (supra) where it had been held that once it was proved by the prosecution that a person had drunk or consumed liquor without a permit, it was for that person to show that the liquor drunk by him was not prohibited liquor, but was alcohol or liquor which he was permitted by law to take, e.g., medicated alcohol. This, in the opinion of the learned Judge, was the consequence of the declaration of unconstitutionality of a portion of section 13(b) by this Court in The State of Bombay and Another vs F. N. Balsara (supra). He was of the opinion that the decision in The State of Bombay and Another vs F. N. Balsara (supra) could not be held to have the effect of taking out medicinal preparations from the purview of section 13(b) and that its effect was merely to render that part of the section unenforceable and that the onus rested on the accused to establish the plea of unconstitutionality, and it could not be held established unless all the elements necessary to sustain such a plea were proved and the accused had therefore to make out as a fact that what he had 648 consumed was a medicinal 'preparation. Our opinion on this question is that the effect of the declaration in The State of Bombay and Another vs F. N. Balsara (supra), that clause (b) of section 13 of the Bombay Prohibition Act is void under article 13(1) of the Constitution in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, is to render part of section 13(b) of the Bombay Prohibition Act, inoperative, ineffective and ineffectual and thus unenforceable. In other words, the ambit of the section stands narrowed down so far as its enforceability against citizens is concerned and no notice can be taken of the part of the section struck down in a prosecution for contravention of the provisions of that section, with 650 the consequence that in prosecutions against citizens of India under section 13(b), the offence of contravention of the section can only be proved if it is established that they have used or consumed liquor or an intoxicant which is prohibited by that part of the section which has been declared valid and enforceable and without reference to its unenforceable part. It is open to the accused to prove in defence that what he 651 consumed was not prohibited alcohol, but failure of the defence to prove it cannot lead to his conviction unless it is established to the satisfaction of the Judge by the prosecution that the case comes within the enforceable part of section 13(b), contravention of which alone is made an offence under the provisions of section 66 of the Bombay Prohibition Act. I, P. 10), wherein the learned author states, "the declaration by a court of unconstitutionality of a statute which is in conflict with the Constitution affects the parties only and there is no judgment against the statute; that the opinion or reasons of the court may operate as a precedent for the determination of other similar cases, but it does 655 not strike the statute from the statute book; the parties to that suit are concluded by the judgment, but no one else is bound; a new litigant may bring a new suit, based on the very same statute, and the former decision cannot be pleaded as an estoppel, but can be relied on only as a precedent. " Bhagwati J. clearly and, if I may respectfully say so, correctly accepted the position that the declaration made by this Court in The State of Bombay and Another vs F. N. Balsara (supra) "was a judicial pronouncement and that even though under article 141 of the Constitution the law declared by this Court was binding on all Courts in India and is to be the law of the land the effect of that declaration was not to enact a statutory provision or to alter or amend section 13(b) of the Act." Venkatarama Ayyar J., however, took the view that as the Court had no legislative function and as judicial decisions did not amend or add to a statute but merely interpreted the law and declared whether it was valid or not, the result of a judicial declaration that a statute or any part thereof was not valid was only that no effect could be given to it in a Court of law but that it did not mean that the statute or the part thereof declared void had gone out of the statute book after the Court 's decision. He rested his decision on the ground that the inclusive definition of "liquor" adopted in section 2(24) of the Act having been held to be within entry 31 in List II of the Seventh Schedule to the Government of India Act, 1935, and, therefore, valid, that meaning should be its connotation in section 13(b) as well and that under the section so read the offence would be established as soon as consumption or use of "liquor" so defined was established and that the plea that what was consumed was medicinal preparation containing alcohol was really a plea that the section, in so far as it prohibits consumption or use of liquid medicinal or toilet preparations containing alcohol, infringed the citizens ' fundamental right under article 19(1)(f) and was, therefore, unconstitutional as declared by this Court. By an order made on the 26th April, 1954, under the proviso to sub article (3) of article 145 that Bench accordingly referred the following question for the opinion of the Constitution Bench, namely: "What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara (supra) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, on the ground that it infringes article 19(1)(f) of the Constitution?" The declaration in The State of Bombay and Another vs F. N. Balsara (supra), as I understand it, is that the prohibition contained in section 13(b) against the consumption or use of one particular variety of liquid Consisting of or containing alcohol, namely, liquid medicinal or toilet preparations containing alcohol imposes an unreasonable restriction on the exercise of a citizen 's fundamental right under article 19(1) (f) and is, therefore, unconstitutional and as such void to that extent. Suppose after the declaration a person is charged with an offence under section 66(b) read with section 13(b) and in such a case the prosecution proves that the accused has taken alcohol in some form or other, as is the evidence of the doctor in the present case. To my mind he has to allege and prove not only that he is a citizen but that he has consumed or used liquid medicinal or toilet preparations containing alcohol and it is only on such proof that he can claim the benefit of the declaration of law made in The State of Bombay and Another vs F. N. Balsara (supra) and establish his defence. If he establishes the fact that he is a citizen and that he has consumed or used such liquid, then the declaration in The State of Bombay and Another vs F. N. Balsara (supra) will establish the law, namely, that the prohibition of section 13(b) and the penalty under section 66(b) are not applicable to him being inconsistent with his fundamental right. It seems to me that the declaration in The State of Bombay and Another vs F. N. Balsara (supra) gives a citizen who has consumed or used liquid medicinal or toilet preparations containing alcohol a defence to a charge under section 66(b) read with section 13(b) of the Bombay Prohibition Act, but it is for the accused person to prove the facts on which that declaration of law is founded.
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The court decided that because of a previous case, *The State of Bombay and Another vs F. N. Balsara*, part of a law called the Bombay Prohibition Act was no longer valid. This part, section 13(b), dealt with alcohol in medicine and toiletries. The court said that this section was not enforceable because it violated the Constitution. Since part of section 13(b) was declared unconstitutional by the Supreme Court, it no longer had any legal power when deciding cases. It was considered invalid when figuring out if someone was guilty of a crime. India's Constitution, in article 141, makes it clear that if the Supreme Court says a law is unconstitutional, that law is no longer valid. This is different from the American idea that a law only affects the people in a specific case. In India, if a law is struck down, courts can't use it anymore because it's considered void. Just because someone accused of breaking section 66(b) of the Bombay Prohibition Act smells like alcohol doesn't automatically mean they're guilty. The smell could be from legally consuming alcohol allowed under the parts of section 13(b) that are still valid. Or, it could be from alcohol in products covered by the part of the law that is no longer in effect. So, it was up to the government to prove that the alcohol the person smelled was the kind that was illegal under the enforceable parts of section 13(b). One judge, Justice R. DAS, disagreed. He said that the *Balsara* case gives people a defense if they used alcohol from medicine or toiletries. But, it's up to the person accused to prove that they meet the requirements for that defense. The court discussed and explained the *Balsara* case (*The State of Bombay and Another vs F. N. Balsara*). They also followed the ruling in *Kesava Madhava Menon vs The State of Bombay*. Other cases, including *rangarao Bala Maize vs The State*, *In re Kanakasabai Pillai*, and *Norton vs Shelby County*, were also mentioned.
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eference No. 1 of 1951. The circumstances which led to this Special Reference by the President and the questions referred appear from the full text of the reference dated 7th January, 1951, which is reproduced below : "WHEREAS in the year 1912 the Governor General of India in Council acting in his legislative capacity enacted the , section 7 of which conferred power on the Central Government by notification to extend to the Province of Delhi (that is to say, the present State of Delhi) or any part thereof, with such restrictions and modifications as it thought fit, any enactment which wag in force in any part of British India at the date of such notification; "AND WHEREAS in 1947 the Dominion Legislature enacted the Ajmer Merwara (Extension of Laws) Act, 1947, section 2 of which conferred power on the Central Government by notifica tion to extend to the Province of Ajmer Merwara (that is to say, the present State of Ajmer), with such restrictions and modifications as it thought fit, any enactment which was in force in any other Province at the date of such notifica tion; 753 "AND WHEREAS, by virtue of the powers conferred by the said sections of the said Acts, notifications were issued by the Central Government from time to time extending a number of Acts in force in the Governors ' Provinces to the Province of Delhi and the Province of Ajmer Merwara, sometimes with, and sometimes without, restrictions and modifications, and the Acts so extended and the orders,rules, by laws and other instruments issued under such Acts were and are re garded as valid law in force in the Province (now State) of Delhi and in the Province of Ajmer Merwara (now State of Ajmer), as the case may be, and rights and privileges have been created, obligations and liabilities have been in curred and penalties, forfeitures and punishments have been incurred or imposed under such Acts and instruments; "AND WHEREAS Parliament with the object inter alia of making a uniform provision for extension of laws with regard to all Part C States except Coorg and the Andaman and Nico bar Islands enacted the Part C States (Laws) Act, 1950, section 2, of which confers power on the Central Government by notification to extend to any Part C State (other than Coorg and the Andaman and Nicobar Islands) or to any part of such State, with such restrictions and modifications as it thinks fit, any enactment which is in force in a Part A State at the date of the notification and also confers the power on the Central Government to make provision in any enactment so extended for the repeal or amendment of any corresponding law (other than a Central Act) which is for the time being applicable to that Part C State; "AND WHEREAS section 4 of the Part C States (Laws) Act, 1950 has repealed section 7 of the , and the Ajmer Merwara (Extension of Laws)Act, 1947, but the effect of the provisos to the said section is, notwithstand ing the said repeals, to continue, inter alia in force the Acts extended to the Provinces of Delhi and Ajmer Merwara or the States of Delhi and Ajmer under the provisions repealed by the said section; "AND WHEREAS notifications have been issued by the Central (Government from time to time under section 9, of the States (Laws) Act, 1950, extending Acts in force in Part A States to various Part C States sometimes with, and sometimes without, restrictions and modifications; "AND WHEREAS the Federal Court of India in Jatindra Nath Gupta vs Province of Bihar(1) held by a majority that (1)[1949] F.C.R. 595. 754 the proviso to sub section (3) of section 1 of the Bihar Maintenance of Public Order Act, 1947, was ultra vires of the Bihar Legislature inter alia on the ground that the said proviso conferred power on the Provincial Government to modify an Act of the Provincial Legislature and thus amounted to a delegation of legislative power; "AND WHEREAS, as a result of the said decision of the Federal Court, doubts have arisen regarding the validity of Section 7 of the , Section 2 of the Ajmer Merwara (Extension of Laws) Act, 1947, and Section 2 of the Part C States (Laws) Act, 1950, and of the Acts extended to the Provinces of Delhi and Ajmer Merwara and various Part C States under the said sections respectively, and of the orders and other instruments issued under the Acts so extended: "AND WHEREAS the validity of Section 7 of the , and section 2 of the Ajmer Merwara (Extension of Laws) Act, 1947, and of the Acts extended by virtue of the powers conferred by the said sections has been challenged in some cases pending at present before the Punjab High Court, the Court of the Judicial Commissioner of Ajmer, and the District Court and the Subordinate Courts in Delhi; "AND WHEREAS, in view of what is hereinbefore stated, it appears to me that the following questions of law have. arisen and are of such nature and of such public importance that it is expedient that the opinion of the Supreme Court of India should be obtained thereon; Now, THEREFORE, in exercise of the powers conferred upon me by clause (1) of article 143 of the Constitution, I, Rajendra Prasad, President of India, hereby refer the said questions to the Supreme Court of India for consideration and report thereon, namely : "(1) Was section 7 of the , or any of the provisions thereof and in what particular or particu lars or to what extent ultra vires the Legislature which passed the said Act ? "(2) Was the Ajmer Merwara (Extension of Laws) Act, 1947, or any of the provisions thereof and in what particular or particulars or to what extent ultra vires the Legislature which passed the said Act ? "(3) Is section 2 of the Part C States (Laws) Act, 1950, or any of the provisions thereof and in what particular or particulars or to what extent ultra vires the Parliament?" 755 Arguments were heard on the 9th, 10th, 11th, 12th, 16th, 17th, 18th, 19th, 20th, 23rd, 24th, 25th, 26th, 27th and 30th days of April, 1951. M.C. Setalvad, Attorney General for India, (G. N. Joshi, with him) for the President of India. C.K. Daphtary, Advocate General of Bombay (G. N. Joshi, with him) for the State of Bombay. (R. Ganapathy lyer, for the State of Madras. M.L. Saxena,for the State of Uttar Pradesh. A.R. Somanatha lyer, Advocate General of Mysore (R. Ganapathy lyer, with him) for the State of Mysore. P.S. Safeer, for Captain Deep Chand. N.S. Bindra, for Pt. Amarnath Bharadwaj. M.M. Gharakhan, for the Ajmer Electric Supply Co. Ltd. N.C. Chatterjee, (G. C. Mathur, Basant Chandra Ghose, and Tilak Raj Bhasin, with him) for the Maidens Hotel. Jessaram Banasingh, for Runglal Nasirabad. Jyoti Sarup Gupta and K.B. Asthana, for the Municipal Committee, Ajmer. Din Dayal Kapur, for Shri Munshilal and two others. May 23. The following judgments were delivered. KANIA C.J. This is a reference made by the President of India under article 143 of the Constitution asking the Court 's opinion on the three questions submitted for its consideration and report. The three questions are as fol lows: "(1) Was section 7 of the , or any of the provisions thereof and in what particular or particu lars or to what exent ultra vires the Legislature which passed the said Act ?" Section 7 of the , mentioned in question, runs as follows : 756 "The Provincial Government may, by notification in the official gazette, extend with such restrictions and modifi cations as it thinks fit to the Province of Delhi or any part thereof, any enactment which is in force in any part of British India at the date of such notification. " "(2) Was the Ajmer Merwara (Extension of Laws) Act, 1947, or any of the provisions thereof and in what particu lar or particulars or to what extent ultra vires the Legis lature which passed the said Act ?" Section 2 of the Ajmer Merwara (Extension of Laws) Act, 1947, runs as follows: ' 'Extension of Enactments to Ajmer Merwara. The Cen tral Government may, by notification in the official ga zette, extend to the Province of Ajmer Merwara with such restrictions and modifications as it thinks fit any enact ment which is in force in any other Province at the date of such notification. " "(3) Is section 2 of the Part C States (Laws) Act, 1950, or any of the provisions thereof and in what particu lar or particulars or to what extent ultra vires the Parlia ment ?" Section 2 of the Part C States (Laws) Act, 1950, runs as follows : "Power to extend enactments to certain Part C States. The Central Government may, by notification in the Official Gazette, extend to any Part C State (other than Coorg and the Andaman and Nicobar Islands) or to any part of such State, with such restrictions and modifications as it thinks fit, any enactment which is in force in a Part A State at the date of the notification and provision may be made in any enactment so extended for the repeal or amend ment. of any corresponding law (other than a Central Act) which is for the time being applicable to that Part C State. " The three sections referred to in the three questions are all in respect of what is described as the delegation of. legislative power and the three particular Acts are selected to raise the question in respect of the three main stages in the constitutional development of India. 757 The first covers the legislative powers of the Indian Legis lature during the period prior to the Government of India Act, 1915. The second is in respect of its legislative power after the Government of India Act, 1935, as amended by the Indian Independence Act of 1947. 'The last is in respect of the power of the Indian Parliament under the present Consti tution of 1950. It is therefore necessary to have an idea of the legislative powers of the Indian Legislature during those three periods. Without going into unnecessary details, it will not be out of place to know the historical back ground. The East India Company first started its operations as a trading company in India and gradually acquired politi cal influence. The Crown in England became the legislative authority in respect of areas which had come under the control of the East India Company. The Indian Councils Act of 1861, section 22, gave power to the Governor General in Council, with additional nominated members, to make laws. The constitutional position therefore was that the British Parliament was the sovereign body which passed the Indian Councils Act. It gave the Governor General in Council in his legislative capacity powers to make laws over the territo ries in India under the governance of the Crown. Under the English Constitution the British Parliament with its legis lative authority in the King and the two Houses of Parlia ment is supreme and its sovereignty cannot be challenged anywhere. It has no written Charter to define or limit its power and authority. Its powers are a result of convention but are now recognised as completely absolute, uncontrolled and unfettered. Sir Cecil Cart in his book on English Admin istrative Law at page 15 observes: "A more basic difference between the Constitutions of the United States and Britain is the notorious fact that Britain has no written Constitu tion, no fundamental statute which serves as a touchstone for all other legislation and which cannot be altered save by. some specially solemn and dilatory process. In Britain the King in Parliament is all powerful. There is no Act which cannot be passed and will not be valid within 758 the ordinary limits of judicial interpretation . . Even Magna Carts is not inviolate . . The efficient secret of the English Constitution was the close union and nearly complete fusion of the executive and legislative powers. In other words by the system of Cabinet Government the executive authority is entrusted to a committee consisting of members of the dominant party in the legisla ture and in the country." In Halsbury 's Laws of England, Vol. VI, Article 429, it is further stated that it is for this reason that there is no law which the King in Parliament cannot make or unmake whether relating to the Constitution itself or otherwise; there is no necessity as in States whose Constitutions are drawn up in a fixed and rigid form and contained in written documents for the existence of a judicial body to determine whether any particular legislative Act is within the consti tutional powers of Parliament or not; and laws affecting the Constitution itself may be enacted with the same ease and subject to the same procedure as ordinary laws. In England, when occasions of conferment of powers on subordinate bodies became frequent and assumed larger scope, questions about the advisability of that procedure were raised and a Commit tee on the Minister 's Powers, what is generally described as the Donoughmore Committee was appointed. The Committee recommended that certain cautions should be observed by the Parliament in the matter of confermen of such powers on subordinate bodies. This is natural because of the well recognised doctrine of the English Constitution that Parlia ment is supreme and absolute and no legislation can control its powers. Such a legislative body which is supreme has thus cer tain principal characteristics. It is improper to use the word "constitutional" in respect of laws passed by such a sovereign body. The question of constitutionality can arise only if there is some touchstone by which the question could be decided. In respect of a sovereign body like the British Parliament there is no 759 touchstone. They are all laws and there is no distinction in the laws passed by the Parliament as constitutional or other laws. Such laws are changed by the same body with the same ease as any other law. What law follows from this is that no court or authority has any right to pronounce that any Act of Parliament is unconstitutional. In Dicey 's Law of the Constitution, 9th Edition, in considering the Constitution of France,it was observed that the supreme legislative power under the Republic was not vested in the ordinary Parliament of two Chambers, but in a National Assembly or Congress composed of the Chamber of Deputies and the Senate sitting together. The Constitutions of France which in this respect were similar to those of Continental polities exhibited as compared with the expansiveness or flexibility of English institutions that characteristic which was described by the author as rigid. A flexible constitution was one under which every law of every description can legally be changed with the same ease and in the same manner by one and the same body. The flexibility of the British Constitution consists in the right of the Crown and the two Houses to modify or repeal any law whatever. They can modify or.repeal in the same manner in which they can pass an Act enabling a company to make a new railway from Oxford to London. Therefore, in England laws are called constitutional because they refer to subjects proposed to affect the fundamental institutions of the State and not because they are legally more sacred or difficult to change than other laws. Under the circumstances the term "constitutional law or enactment" is rarely applied to any English statute to give a definite description to its character. Under a rigid constitution, the term "consti tutional" means that a particular enactment belongs to the articles of the constitution and cannot be legally changed with the same ease and in the same manner as ordinary laws, and it is because of this characteristic that courts are invested with powers to determine whether a particular legislation is permitted or not by the constitution. Such a question can 760 never arise in respect of an enactment of the British Parliament. As against this, the Governor General in Council with legislative powers established under the Indian Councils Act stood in a different position. Its charter was the Indian Councils Act. Its powers were there necessarily defined and limited. That power, again, at any time could be withdrawn, altered and expanded or further curtailed. Moreover, as the powers were conferred by an Act of the British parliament, the question whether the action of the Governor General in Council in his legislative capacity was within or without its legislative power was always capable of being raised and decided by a court of law. In Dicey 's Law of the Constitution, 9th Edition the author has distin guished the position of a sovereign legislature and a subordinate law making body. The distinction is drawn from the fact that the subordinate legislatures have a limited power of making laws. At page 99, he has specifically considered the position of the legislative Council of British India prior to 1915 and stated as follows: "Laws are made for British India by a Legislative Council having very wide powers of Legislation. This Council, or, as it is technically expressed, the Governor General in Council, can pass laws as important as any Acts passed by the Brit ish Parliament. But the authority of the Council in the way of law making is as completely subordinate to, and as much dependent upon, Acts of Parliament as is the power of the London and North Western Railway Company to make bye laws . Now observe, that under these Acts the Indian Council is in the strictest sense a non sovereign legisla tive body, and this independently of the fact that the laws or regulations made by the Governor General in Council can be annulled or disallowed by the Crown; and note that the position of the Council exhibits all the marks or notes of legislative subordination. (1) The Council is bound by a large number of rules which cannot be changed by the Indian legislative body itself and which can be changed by the superior power of the Imperial parliament. 761 (2) The Acts themselves, from which the Council derives its authority, cannot be changed by the Council and. they stand in marked contrast with the laws or regulations which the Council is empowered to make. These fundamental rules contain, it must be added, a number of specific restrictions on the subjects with regard to which the Council may legis late . (3) The courts in India . may, when the occasion arises, pronounce upon the validity or constitu tionality of laws made by the Indian Council. " It is there fore clear that the Indian Legislature in 1861 and upto 1915 was a subordinate legislature and not a sovereign legisla ture. At this stage it may again be noticed that the Govern ment was unitary and not federal. There was no distribution of legislative powers as between the Centre and the differ ent Provinces. Another important factor to be borne in mind is that while the British Parliament was supreme, its execu tive Government came into power and remained in power so long only as the Parliament allowed it to remain and the Parliament itself was not dissolved. The result is that the executive government was a part of the legislature and the legislature controlled the actions of the executive. Indeed, the legislature was thus supreme and was in a position effectively to direct the actions of the executive govern ment. In India the position was quite different if not the reverse. The Governor General was appointed by the Crown and even after the expansion of the legislative body before the Government of India Act of 1915 in numbers, it had no con trol over the executive. In respect of the Indian Legisla ture functioning prior to the Government of India Act of 1915 the control from the Secretary of State was justified on the ground that the Provincial Legislatures were but an enlargement of the executive government for the purpose of making laws and were no more than mere advisory bodies without any semblance of power. The executive Government of India was not responsible to the Indian Legislature and the composition of the Indian Legislature was such that the executive officers 762 together with the nominated members constituted the majority in the Legislature. The result was that the Legislative Council was practically a creature of the executive Govern ment of India and its functions were practically limited to registering the decrees of the executive government. It would not be wrong, according to Mr. Cowell in his lecture on "Courts and Legislative Authorities in India," to de scribe the laws made in the Legislative Councils as in reality the orders of Government. Every Bill passed by the Governor General 's Council required his assent to become an Act. The Indian Councils Act of 1892 empowered the Governor General in Council, with the approval of the Secre tary of State in Council, to make regulations as to the conditions under which nomination of the additional members should be made. The word `election ' was carefully avoided. The existence of a strong official block in the Councils was the important feature of the Act. As noticed by a writer on Indian Constitution, the Government maintained a tight and close control over the conduct of official members in the Legislature and they were not allowed to vote as they pleased. They were not expected to ask questions or move resolutions or (in some Councils) to intervene in debate without Government 's approval. Their main function was to vote to vote with the Government. However eloquent the non official speakers might talk and however reasonable and weighty their arguments might be, when the time for voting came the silent official flanks stepped in and decided the matter against them. All these factors contributed to the unreality of the proceedings in the Council because the number of elected members was small and the issue was often known beforehand. Speaking in the. House of Lords in Decem ber 1908 on the Bill which resulted in the Government of India Act of 1909, Lord Morley, the then Secretary of State for India, declared: "If I were attempting to set up a Parliamentary system in India, or if it could be said that this chapter of rules led directly or necessarily up to the establishment of a Parliamentary system in India. I for one would have 763 nothing at all to do with it . . A Parliamentary system is not at all the goal to which I would for one moment aspire. " The constitution of the Central Legislative Council under the Regulation of November, 1909, as revised in 1912, was this: Ordinary members of the Governor Gene ral 's Council, The Commander in Chief and the Lt. Governor . 8 Nominated members of whom not more than 28 must be officials . 33 Elected members, . 27 and The Governor General . 1 69 The executive government was thus supreme and was not bound to obey or carry out the mandates of the legislature. Instances where Finance Bills were rejected and other Bills were backed by the popular feeling and which decisions the Governor General overruled, are well known. The Indian Legislature was powerless to do anything in the matter. Without the consent of the executive government no Bill could be made into an Act nor an Act could be amended or repealed without its consent. The possibility of the Legis lature recalling the power given tinder an Act to the execu tive against the latter 's consent was therefore nil. Once an Act giving such power (like the ) was passed, practically the power was irrevocable. In my opinion, it is quite improper to compare the power and position of the Indian Legislature so established and functioning with the supreme and sovereign character of the British Parliament. The legislative power of the Indian Legislature came to be changed as a result of the Act of 1915 by the creation of Provincial legislatures. I do not propose to go into the details of the changes, except to the extent they are di rectly material for the discussion of the questions submit ted for the Court 's opinion, Diarchy 764 was thus created but there was no federation under the Act of 1915. Under the Government of India Act, 1935, the legis lative powers were distributed between the Central legisla ture and the Provincial legislature, each being given exclu sive powers in respect of certain items mentioned in Lists I and II of the Seventh Schedule. List III contained subjects on which it was open to the Centre or the Province to legis late and the residuary power of legislation was controlled by section 104. This Act however was still passed by the British Parliament and therefore the powers of the Indian Central legislature as well as the Provincial legislatures were capable of being altered, expanded or limited according to the desire of the British Parliament without the Indian legislature or the people of India having any voice in the matter. Even under this Act, the executive government was not responsible to the Central Legislature or the Provincial Legislature, as the case may be. I emphasize this aspect because it shows that there was no fusion of legislative and executive powers as was the case with the Constitution in England. The result of the Indian Independence Act, 1947, was to remove the authority of the British Parliament to make any laws for India. The Indian Central Legislature was given power to convert itself into a Constituent Assembly to frame a Constitution for India, including the power to amend or repeal the Government of India Act, 1935, which till the new Constitution was adopted, was to be the Constitution of the country. Even with that change it may be noticed that the executive government was not responsible to the Central Legislature. In fact with the removal of the control of the Parliament it ceased to be responsible to anyone. Under the Constitution of India as adopted on the 26th of January, 1950, the executive government of the Union is vested in the President acting on the advice of the Minis ters. A Parliament is established to make laws and a Su preme Court is established with the powers defined in dif ferent articles of the Constitution. The executive, legislative and judicial 765 functions of the Government, which have to be discharged, were thus distributed but the articles giving power to these bodies do not vest the legislative or judicial powers in these bodies expressly. Under the Constitution of India, the Ministers are responsible to the legislatures and to that extent the scheme of the British Parliament is adopted in the Constitution. While however that characteristic of the British Parliament is given to the Indian Legislature, the principal point of distinction between the British Parlia ment and the Indian Parliament remains and that is that the Indian Parliament is the creature of the Constitution of India and its powers, rights, privileges and obligations have to be found in the relevant articles of the Constitu tion of India. It is not a sovereign body, uncontrolled with unlimited powers. The Constitution of India has con ferred on the Indian Parliament powers to make laws in respect of matters specified in the appropriate places and Schedules, and curtailed its rights and powers under certain other articles and in particular by the articles found in Chapter 111 dealing with Fundamental Rights. In case of emergency where the safety of the Union of India is in danger, the President is given express power to suspend the Constitution and assume all legislative powers. Similarly. in the event of the breaking.down of the administrative machinery of a State, the President is given powers under article 257 to assume both legislative and executive powers in the manner and to the extent found in the article. There can be no doubt that subject to all these limitations and controls, within the scope of its powers and on the subjects on which it is empowered to make law% the Legislature is supreme and its powers are plenary. The important question underlying the three questions submitted for the Court 's consideration is what is described as the delegation of legislative powers. A legislative body which is sovereign like an autocratic ruler has power to do anything. It may, like a Ruler, by an individual decision, direct that a certain person may be put to death or a cer tain property may be 766 taken over by the State. A body of such character may have power to nominate someone who can exercise all its powers and make all its decisions. This is possible to be done because there is no authority or tribunal which can question the right or power of the authority to do so. The contentions urged on behalf of the President of India are that legislative power carries with it a power of delegation to any person the legislature may choose to appoint. Whether sovereign or subordinate, the legislative authority can so delegate its function if the delegation can stand three tests. (1) It must be a delegation in respect of a subject or matter which is within the scope of the legis lative power of the body making the delegation. (2) Such power of delegation is not negatived by the instrument by which the legislative body is created or established. And (3) it does not create another legislative body having the same powers and to discharge the same functions which it itself has, if the creation of such a body is prohibited by the instrument which establishes the legislative body it self. It was urged that in the ease of an unwritten consti tution, like the British Parliament there can De no affirm ative limitation or negative prohibition against delegation and therefore the power of delegation is included to the fullest extent within the power of legislation. The British Parliament can efface itself or even abdicate because it has a power to pass the next day a law repealing or annulling the previous day 's legislation. When the British Parliament established legislative bodies in India, Canada and Austra lia by Acts of the British Parliament, the legislatures so established, although in a sense subordinate, because their existence depended on the Acts of the British Parliament and which existence could be terminated or further let tered by an Act of the British Parliament, neverthe less are supreme with plenary powers of the same nature as the British Parliament, on the subjects and matters within their respective legislative authority. As the power of delegation is 767 included in the power of legislation, these legislative bodies have also, subject to the three limitations mentioned above, full power of delegation in their turn. These legis lative bodies were not agents of the British Parliament. Not being agents or delegates of the British Parliament, the doctrine delegata potestas non potest delegare cannot apply to their actions and if these legislatures delegate powers to some other authority to make rules or regulations, or authorise the executive government to enforce laws made by them or other legislatures wholly or in part and with or without restrictions or modifications, the legislatures are perfectly competent to do so. The history of legislation in England and India and the other Dominions supports this contention. It is recognised as a legislative practice and is seen in several Acts passed by the legislatures of the Dominions and in India. Such delegation of the legislative functions has been recognised over a series of years by the Judicial Committee of the Privy Council and it is too late to contest the validity of such delegation. It was lastly contended that the observations of the Federal Court in Jatindra Nath Gupta vs Province of Bihar(1), tending to show that delegation was not permissible, required to be recon sidered. Before considering these arguments in detail, I think it is essential to appreciate clearly what is conveyed by the word "delegation ' '. That word is not used, either in discus sions or even in some decisions of the courts, with the same meaning. When a legislative body passes an Act it has exercised its legislative function. The essentials of such function are the determination of the legislative policy and its formulation as a rule of conduct. These essentials are the characteristics of a legislature by itself. It has nothing to do with the principle of division of powers found in the Constitution of the United States of America. Those essentials are preserved, when the legislature specifies the basic conclusions of fact, upon ascertainment of which, from relevant data, by a designated administrative agency, (1) 768 it ordains that its statutory command is to be effective. The legislature having thus made its laws, it is clear that every detail for working it out and for carrying the enact ments into operation and effect may be done by the legisla ture or may be left to another subordinate agency or to some executive officer. While this also is sometimes described as a delegation of legislative powers, in essence it is different from delegation of legislative power which means a determination of the legislative policy and formulation of the same as a rule of conduct. I find that the word "delega tion" is quite often used without bearing this fundamental distinction in mind. While the so called delegation, which empowers the making of rules and regulations, has been recognised as ancillary to the power to define legislative policy and formulate the rule of conduct, the important question raised by the Attorney General is in respect of the right of the legislature to delegate the legislative func tions strictly so called. In support of his contention that the legislative power of the Indian Legislature carried with it the power of delegation, the Attorney General relied on several decisions of the Judicial Committee of the Privy Council and decisions of the Supreme Court of Canada and Australia. The first is The Queen vs Burah(1). Act XXII of 1869 of the Council of the Governor General of India for making laws and regula tions was an Act to remove the Garo Hills from the jurisdic tion of the tribunals established under the General Regula tions and Acts passed by any legislature in British India and provided that "no Act hereafter passed by the Council of the Governor General for making laws and regulations shall be deemed to extend to any part of the said territory unless the same was specifically named therein. " The administration of civil and criminal justice within the said territory was vested in such officers as the Lieutenant Governor may from time to time appoint. Sections 8 and 9 of the said Act provided as follows : (1) 51. A. 178, 769 "Section 8. The said Lieutenant Governor may from time to time, by notification in the Calcutta Gazette, extend to the said territory any law, or any portion of any law, now in force in the other territories subject to his Government, or which may hereafter be enacted by the Council of the Governor General ,or of the said Lieutenant Governor. for making laws and regulations, and may on making such exten sion direct by whom any powers of duties incident to the provisions so extended shall be exercised or performed, and make any order which he shall deem requisite for carrying such provisions into operation." "Section 9. The said Lieutenant Governor may from time to time, by notification in the Calcutta Gazette, extend mutatis mutandis all or any of the provisions contained in the other sections of this Act to the Jaintia Hills, the Nags Hills, and to such portion of the Khasi Hills as for the time being forms part of British India. Every such notification shall specify the boundaries of the territories to which it applies. " The Lieutenant Governor of Bengal issued a notification in exercise of the power conferred on him by section 9 and extended the provisions of the said Act to the territory known as the Khasi and Jaintia Hills and excluded therefrom the jurisdiction of the ordinary civil and criminal courts. By a majority judgment the Calcutta High Court decided that the said notification had no legal force or effect. In the Calcutta High Court, Mr. Kennedy, counsel for the Crown, boldly claimed for the Indian Legislative Council the power to transfer legislative functions to the Lieutenant Governor of Bengal and Markby J. framed the question for decision as follows: "Can the Legislature confer on the Lieutenant Governor legislative power?" Answer: "It is a general prin ciple of law in India that any substantial delegation of legislative authority by the Legislature of this country is void." Lord Selbourne after agreeing with the High Court that Act XXII of 1869 was within the legislative 770 power of the Governor General in Council, considered the limited question whether consistently with that view the 9th section of that Act ought nevertheless to be held void and of no effect. The Board noticed that the majority of the Judges of the Calcutta High Court based their decision on the view that the 9th section was not legislation but was a delegation of legislative power. They noticed that in the leading judgment Markby J. the principle of agency was relied upon and the Indian Legislature seemed to be regarded an agent delegate, acting under a man.date from the Imperial Parliament. They rejected this view. They observed: "The Indian Legislature has powers expressly limited by the Act of the Imperial Parliament. which created it, and it can, of course, do nothing beyond the limits which circumscribe these powers. But, when acting within those limits, it is not. in any sense an agent or delegate of the Imperial Parliament, but has, and was intended to have, plenary powers of legislation, as large, and of the same nature as those of Parliament itself. The established courts of justice, when a question arises whether the prescribed limits have been exceeded, must of necessity determine that question; and the only way in which they. can properly do. so, is by looking to the terms of the instrument by which, affirmatively, the legislative powers were created, and by which, negatively, they are restricted. If what has been done is legislation, within the general scope of the affirm ative words which give the power, and if it violates no express condition or restriction by which that power is limited . it is not for any court of justice to inquire further, or to enlarge constructively those condi tions and restrictions. "Their Lordships agree that the Governor General in Council could not, by any form of enactment, create in India and arm with general legislative authority, a new legislative power not created or authorised by the Councils Act. Nothing of that kind has, in their Lordships opinion, been done or attempted in the present case. What has been done is this. The Governor General in Council has deter mined in the 771 due and ordinary course of legislation, to remove a particu lar district from the jurisdiction of the ordinary courts and offices, and to place it under new courts and offices, to be appointed by and responsible to the Lieut. Governor of Bengal; leaving it to the Lieut. Governor to say at what time that change shall take place; and also enabling him not to make what laws he pleases for that or any other district, but to apply by public notification to that district any law, or part of a law, which either already was, or from time to time might be, in force by proper legislative authority, in the other territories subject to his gov ernment. The legislature determined that, so far, a certain change should take place; but that it was expedi ent to leave the time and the manner of carrying it into effect to the discretion of the Lieut. Governor; and also, that the laws which were or might be in force in the other territories subject to the same Government were such as it might be fit and proper to apply to this district also; but that, as it was not certain that all those laws, and every part of them, could with equal convenience be so applied, it was expedient, on that point also, to entrust a discretion to the Lieut. Governor. This having been done as to the Garo Hills, what was done as to the Khasi and. Jaintia Hills ? The legislature decided that it was fit and proper that the adjoining district of the Khasi and Jaintia Hills should also be removed from the jurisdiction of the existing courts and brought under the same provisions with the Garo Hills . if and when the Lieut. Governor should think it desirable to do so; and that it was also possible that it might be expedient that not all, but some only, of those provisions should be applied to that adjoining district; and accordingly the legislature entrusted for these purposes also a discretionary power to the Lieut. Governor. " The important part of the decision, dealing with the the question before them was in these terms : "Their Lordships think that it is a fallacy to speak of the 772 powers thus conferred upon the Lieut. Governor (large as they undoubtedly are) as if, when they were exercised the efficacy of the acts done under them would be due to any other legislative authority than that of the Governor Gener al in Council. Their whole operation is directly and imme diately under and by virtue of this Act (XXI of 1869) it self. The proper legislature has exercised its judgment as to place, person, laws powers and the result of that judg ment has been to legislate conditionally as to all these things. The conditions having been fulfilled, the legisla tion is now absolute. Where plenary powers of legislation exist as to particular subjects, whether in an Imperial or in a Provincial Legislature, they may (in their Lordships judgment) be well exercised, either absolutely or condition ally. Legislation, conditional on the use of particular powers, or on the exercise of a limited discretion, entrust ed by the legislature to persons in whom it places confi dence, is no uncommon thing;and, in many circumstances, it may be highly convenient. The British Statute Book abounds with examples of it: and it cannot be supposed that the Imperial Parliament did not, when constituting the Indian Legislature, contemplate this kind of conditional legisla tion as within the scope of the legislative powers which is from time to time conferred. It certainly used no words to exclude it." (The italics are mine). They then mentioned by way of illustrations the power given to the Governor General in Council (not in his legislative capacity) to extend the Code of Civil Procedure and Code of Criminal Procedure by section 385, Civil Procedure Code. and section 445, Criminal Procedure Code, to different territories. They held that a different conclusion will be casting doubt upon the validity of a long series of legislation, appropriate, as far as they can judge, to the peculiar circumstances of India; great part of which belongs to the period antecedent to the year 1861, and must therefore be presumed to have been known to and in the view of, the Imperial Parliament, when the Coun cils Act of that year was passed. For such doubt their Lordships were unable 773 to discover any foundation either in the affirmative or in the negative words of the Act before them. I have quoted in extenso extracts from this judgment because it is considered the foundation for the argument advanced by the learned Attorney General. In my opinion this judgment does not support the contention as urged. The Privy Council noted the following:(1) That the Garo Hills were removed by the Act from the jurisdiction of the ordi nary courts. (2) That in respect of the Khasi and Jaintia Hills the same position had been arrived at. (:3) That the power was to be exercised over areas which, notwithstanding the Act, remained under the administrative control of the Lieut. Governor. (4) That the authority given to the Lieut. Governor was not to pass new laws but only to extend Acts which were passed by the Lieut. Governor. or the Gover nor General in respect of the Province both being competent legislatures for the area in question. He was not given any power to modify any law. (5) They rejected the view of the majority of the Judges of the Calcutta High Court that the Indian Legislature was a delegate or an agent of the British Parliament. (6) That within the powers conferred on the Indian Legislature it was supreme and its powers were as plenary and of the same nature as the British Parliament. (7) That by the legislation the Indian Parliament had not created a legislative body with all the powers which it had. (8) The objection on the ground of delegation was rejected because what was done was not delegation at all but it was conditional legislation. Throughout the judgment it is nowhere suggested that the answer of Markby J. to the ques tion framed by him (and quoted earlier in this judgment) was incorrect. (9) It emphasized that the order of the Lieut Governor derived its sanction from the Act of the Governor General and not because it was an order of the Lieut. Gover nor. (10) That in the legislation of the Governor General in Council (legislative) all that was necessary to consti tute legislation was found. This applied equally to future laws as the appropriate legislative body for the area was 774 the same. This decision therefore carefully and deliberate ly did not endorse the contention that the power of delega tion was contained in the power of legislation. The Board after affirming that what was done was no delegation at all held that the legislation was only conditional legislation. In Emperor vs Benoari Lal Sarma and others (1), the question arose about the Special Criminal Courts Ordinance 1I of 1942, issued by the Governor General under the powers vested in him on the declaration of an emergency on the outbreak of war. The validity of that Ordinance was chal lenged in India either (1) because the language of the section showed that the Governor General, notwithstanding the preamble, did not consider that an emergency existed but was making provision in case one should arise in future, or (2) else because the section amounted to what was called delegated legislation by which the Governor General without legal authority sought to pass the decision as to whether an emergency existed, to the Provincial Government instead of deciding it for himself. The relevant provision of the Government of India Act, 1935, was in these terms: "72. The Governor General may, in cases of emergency, make and promulgate ordinances for the peace and good gov ernment of British India or any part thereof, and any Ordi nance so made shall for the space of not more than six months from its promulgation, have the like force of law as an Act passed by the Indian Legislature;but the power of making Ordinances under this section is subject to the like restrictions as the power of the Indian Legislature to make laws; and any Ordinance made under this section is subject to the like disallowance as an Act passed by the Indian Legislature and may be controlled or superseded by any such Act. " In rejecting this second objection, their Lordships observed that under paragraph 72 of Schedule 9, the Gover nor General himself must discharge the duty of (I) 72 I.A. 27. 775 legislation and cannot transfer it to other authorities. But the Governor General had not delegated his legislative powers at all. After stating again that what was done was not delegated legislation at all, but was. merely an example of the not uncommon legislative arrangement by which the local application of the provision of a statute is deter mined by the judgment of a local administrative body as to its necessity, their Lordships disagreed with the majority view of the Federal Court that what was done was delegation of legislative functions. If the power of delegation was contained in the power of legislation as wide as contended by the Attorney General, there appears no reason why the Privy Council should have rejected the argument that the Act was an act of delegation and upheld its validity on the ground that it was conditional legislation. Moreover they reaffirmed the following passage from Russell vs The Queen (1): "The short answer to this objection (against delegation of legislative power) is that the Act does not delegate any legislative powers whatever. It contains within itself the whole legislation on the matters with which it deals. The provision that certain parts of the Act shall come into operation only on the petition of a majority electors does not confer on these persons powers to legislate. Parliament itself enacts the condition and everything which is to follow upon the condition being fulfilled. Conditional legislation of this kind is in many cases convenient, and is certainly not unusual, and the power so to legislate cannot be denied to the Parliament of Canada when the subject of legislation is within its competency." (The italics are mine). Support for this last mentioned statement was found in the decision of the Privy Council in The Queen vs Burah(2). It is clear that this decision does not carry the matter further. Even though this was a war measure the Board emphasized that the Governor General must himself discharge the duty of legislation and cannot transfer it to other authorities. They examined the impugned Act and (1) 7 App. (2) 5 I.A. 178. 776 came to the conclusion that it contained within itself the whole legislation on the matters with which it dealt and there was no delegation of legislative functions. A close scrutiny of these decisions and the observations contained therein, in my opinion, clearly discloses that instead of supporting the proposition urged by the Attorney General impliedly that contention is negatived. While the Judicial Committee has pointed out chat the Indian Legislature had plenary powers to legislate on the subjects falling within its powers and that those powers were of the same nature and as supreme as the British Parliament, they do not endorse the contention that the Indian Legislature, except that it could not create another body with the same powers as it has, or in other words, efface itself, had unlimited powers of delegation. When the argument of the power of the Indian Legislature to delegate legislative powers in that manner to subordinate bodies was directly urged before the Privy Council, in each one of their deci sions the Judicial Committee has repudiated the suggestion and held that what was done was not delegation but was subsidiary legislation or conditional legislation. Thus while the Board has reiterated its views that the powers of the Indian Legislature were "as plenary and of the same nature as the British Parliament" no one, in no case, and in no circumstances, during the last seventy years, has stated that the Indian Legislature has power of delegation (as contended in this case) and which would have been a direct, plain, obvious and conclusive answer to the argument. Instead of that, they have examined the impugned legislation in each case and pronounced on its validity on the ground that it was conditional or subsidiary legislation. The same attitude is adopted by the Privy Council in respect of the Canadian Constitution. The expressions "subsidiary" or "conditional legislation" are used to indicate that the powers conferred on the subordinate bodies were not powers of legislation but powers conferred only to carry the enact ment into operation and effect, or that the Legislature having discharged legislative functions had specified the basic conclusions of fact upon 777 ascertainment of which, from relevant data by a designated administrative agency, that body was permitted to bring the statute into operation. Even in such cases the Board has expressly pointed out that the force of. these rules, regu lations or enactments does not arise out of the decision of the administrative or executive authority to bring into operation the enactment or the rules framed thereunder. The authoritative force and binding nature of the same are found in the enactment passed by the legislature itself. Therefore, a correct reading of these decisions does not support the contention urged by the Attorney General. Some decisions of the Privy Council on appeal from the Supreme Court of Canada and some decisions of the Supreme Court of Canada, on the point under discussion, on which the learned Attorney General relied for his contention, may be noticed next. In Hodge vs The Queen(1), which was an appeal from the Court of Appeal, Ontario, Canada, a question about the validity of the Liquor Licences Act arose. After hold ing that the temperance laws were under section 92 of the British North America Act for "the good government", their Lordships considered the objection that the Imperial Parlia ment had conferred no authority on the local legislature to delegate those powers to the Licence Commissioners. In other words, it was argued that the power conferred by the Imperial Parliament on the local legislature should be exercised in full by that body and by that body alone. The maxim delegata potestas non potest delegare was relied upon to support the objection. Their Lordships observed: "The objection thus raised by the appellants was founded on an entire misconception of the true character and position of the Provincial Legislatures. They are in no sense delegates of, or acting under mandate from, the Imperial Parliament. When the British North America Act enacted that there should be a legislature for Ontario and that its Legislative Assem bly should have exclusive authority to make laws for the Province and for Provincial purposes in relation to the matters (1) 9 App. Cas.117. 778 enumerated in section 92, it conferred powers, not in any sense to be exercised by delegation from, or as agents of, the Imperial Parliament, but authority as plenary and as ample within the limits prescribed by section 92 as the Imperial Parliament in the plenitude of its power possessed and could bestow. Within these limits of subjects and area the local legislature is supreme and has the same authority as the Imperial Parliament, or the Parliament of the Domin ion, would have had under like circumstances to confide to a municipal institution or body of its own creation authority to make byelaws or resolutions as to subjects specified the enactment, and with the object of carrying the enactment into operation and effect. It is obvious that such authority is ancillary to legislation ' and without it an attempt to provide for vary ing details and machinery to carry them out might become oppressive or absolutely fail . It was argued at the Bar that a legislature committing important regulations to agents or delegates effaces itself. That is not so. It retains its power intact and can whenever. it pleases de stroy the agency it has created and set up another or take the matter directly into its own hands. How far it shall seek the aid of subordinate agencies and how long it shall continue them are matters for the legislature and not for the courts of law to decide." (The italics are mine.) As regards the creation of new offences, their Lordships ob served that if byelaws or resolutions are warranted the power to enforce them seemed necessary and equally lawful. This case also does not help the Attorney General. It recognises only the grant of power to make regulations which are "ancillary to legislation". In In re The Initiative and Referendum Act(1), the Act of the Legislative Assembly of Manitoba was held outside the scope of section 92 of the British North America Act inas much as it rendered the Lieut Governor powerless to prevent the Act from becoming actual law, if approved by the voters, even without his consent. Their Lordships observed: "Section 92 of the (1) 779 Act of 1867 entrusts the legislative power in a Province to its legislature and to that legislature only. No doubt a body with power of legislation on the subjects entrusted to it.so ample as that enjoyed by a Provincial Legislature in Canada could, while preserving its own capacity intact, seek the assistance of subordinate agencies as had been done in Hodge vs The Queen(1), but it does not follow that it can create and endow with its own capacity a new legislative power not created by the Act to which it owes its own exist ence. " In In re George Edwin Gray(2), the question of delega tion of powers in respect of the War Measures Act, 19 14, came for consideration. The provisions there were very similar to the Defence of India Act and the Rules made thereunder in India during the World War I. In delivering judgment Sir Charles Fitzpatrick C.J. observed as follows: "The practice of authorising administrative bodies to make regulations to carry out the object of an Act instead of setting out all the details of the Act itself is well known and its legality is unquestioned. ' ' He rejected the argument that such power cannot be granted to the extent as to enable the express provisions of a statute to be amended or re pealed, as under the Constitution, Parliament alone is to make laws under the Canadian Constitution. He observed that Parliament cannot indeed abdicate its function but within reasonable limits at any rate it can delegate its powers to the executive government. Such powers must necessarily be subject to determination at any time by Parliament. He observed: "I cannot however find anything in that Constitu tional Act which would impose any limitation on the authori ty of the Parliament of Canada to which the Imperial Parlia ment is not subject." Against the objection that such wide discretion should not be left to the executive he observed that this objection should have been urged when the regula tions were submitted to Parliament for its approval or better still when the War Measures Act was being discussed. The Parliament was the delegating authority and it was for that body to put any (1) 9 App. (2) 57 S.C.R. Canada 150. 780 limitations on the powers conferred upon the executive. He then stated: "Our legislators were no doubt impressed in the hour of peril with the conviction that the safety of the country was the supreme law against which no other law can prevail. It is clearly our duty to give effect to their patriotic intentions." In the Chemical Reference case(D, Duff C.J. set out the true effect of the decision in the War Measures Act. He held that the decision of the Privy Council in the Fort Frances ' case(2) had decided the validity of the War Measures Act and no further question remained in that respect. He stated: "In In re Gray(3) was involved the principle, which must be taken in this Court to be settled, that an Order in Council in conformity with the conditions prescribed by, and the provisions of, the War Measures Act may have the effect of an Act of Parliament." The Court considered that the regu lations framed by the Governor General in Council to safe guard the supreme interests of the State were made by the Governor General in Council "who was conferred subordinate legislative authority." He stated: "The judgment of the Privy Council in the Fort Frances ' case(2), laid down the principle that in an emergency, such as war, the authority of the Dominion in respect of legislation relating to the peace, order and good government of Canada may, in view of the necessities arising from the emergency, disable or over bear the authority of the Provinces in relation to a vast field in which the Provinces would otherwise have exclusive jurisdiction. It must not however be taken for granted that every matter within the jurisdiction of the Parliament of Canada even in ordinary times could be validly committed by Parliament to the executive for legislative action in the case of an emergency. " Unlike the Indian Constitution, in the British North America Act there is no power to suspend the Constitution or enlarge the legislative powers in an emergency like war. The Courts therefore stretched the langugage of the sections to meet the emergen cy in (1) [1943] S.C.R. Canada 1. (3) [1918] 57 S.C.R, Canada 150. (2) 781 the highest interest of the country but it also emphasized that such action was not permissible in ordinary times. The War Measures Acts were thus considered by the z Supreme Court of Canada on a different footing. The question was of competence but owing to the unusual circumstances and exigencies what was stated in the legislation was considered a sufficient statement of the legislative policy. It ap pears to be thought that the same test cannot be applied in respect of legislation made in normal times, in respect of a permanent statute which is not of limited duration. The discussion in Benaori Lal Sarma 's case(1) in the judgment of the Privy Council mentioned above may be usefully noted in this connection as the legislation in that case was also a war measure but was held valid as conditional legislation. In so far as the observations in the Canadian decisions go beyond what is held in the Privy Council decisions, with respect, I am unable to agree. It appears that the word "delegation" has been given an extended meaning in some observations of the Canadian courts, beyond what is found in the Privy Council decisions. It is important to notice that in all the judgments of the Privy Council, the word "delega tion" as meaning conferment of_legislative functions strict ly, is not used at all in respect of the impugned legisla tion and has been deliberately avoided. Their validity was upheld on the ground that the legislation was either conditional or subsidiary or ancillary legislation. An important decision of the Supreme Court of Australia may be noticed next. In the Victorian Stevedoring and Gener al Contracting Company Proprietary Ltd. vs Dignan(2), the question whether delegation of legislative power was accord ing to the Constitution came to be examined by the High Court of Australia. It was argued that section 3 of the Act in question was ultra vires and void in so far as it pur ported to authorise the Governor General to make regulations which (nothwithstanding anything in any other Act) shall have (1) 72 I.A. 27. (2) 782 the force of law. In the judgment of Gavan Duffy C.J. and Starke J. it was stated: "The attack upon the Act itself was based upon the American Constitutional doctrine that no legislative body can delegate to another department of the Government or to any other authority the power either gener ally or specially to enact laws. This high prerogative has been entrusted to its own wisdom, judgment and patriotism and not to those of other persons and it will act ultra vires ii it undertakes to delegate the trust instead of executing it. (Cooley 's Principles of Constitutional Law, 3rd Edition, p. 111). Roche vs Kronheimer(1) was an authori ty for the proposition that an authority of subordinate law making may be invested in the executive. Whatever ,may be said for or against that decision I think we should not now depart from it." Mr. Justice Dixon considered the argu ment fully in these terms: "The validity of this provision is now attacked upon the ground that it is an attempt to grant to the executive a portion of the legislative power vested by the Constitution in the Parliament which is incon sistent with the distribution made by the Constitution of legislative, executive and judicial powers. In support of the rule that Congress cannot invest another organ of gov ernment with legislative power a second doctrine is relied upon in America but it has no application to the Australian Constitution. Because the powers of Government are consid ered to be derived from the authority of the people of the Union no agency to whom the people have confided a power may delegate its exercise. The well known maxim delegata potesta non potest delegare applicable to the law of agency in the general and Common Law is well understood and has had wider application in the construction of our Federal and State Constitutions than it has in private laws. No similar doc trine has existed in respect of British Colonial legisla tures, whether erected in virtue the prerogative or by Imperial Statute. It is important to observe that in Ameri ca the intrusion of the doctrines of agency into Constitu tional interpretation (1) (1921) 29 Corn. L.R. 329. 783 has in no way obscured the operation of the separation of powers. In the opinion of the Judicial Committee a general power of legislation belonging to a legislature constituted under a rigid Constitution does not enable it by any form of enactment to create and arm with general legislative authority a new legislative power not created or authorized by the instrument by which it is established. " In respect of the legislation passed during the emergency of war and where the power was strongly relied upon, Dixon J. observed: "It might be considered that the exigencies which must be dealt with under the defence power are so many, so great and so urgent and are so much the proper concern of the execu tive that from its very nature the power appears by neces sary intendment to authorise a delegation otherwise general ly forbidden to the legislature . . I think it certain that such a provision would be supported in America and the passage in Burah 's case appears to apply to it in which the Judicial Committee deny that in fact any delega tion there took place . . This does not mean that a law confiding authority to the executive will be followed, however extensive or vague the subject matter may be, if it does not fall outside the boundaries of federal power. Nor does it mean that the distribution of powers can supply no considerations or weight affecting the validity . . It may be acknowledged that the manner in which the Constitution accomplishes the separation of power itself logically and theoretically makes the Par liament the executive repository of the legislative power of the Commonwealth. The existence in Parliament of power to authorise subordinate legislation may be ascribed to a conception of that legislative power which depends less upon juristic analysis and perhaps more upon the history and usages of British legislation and the theories of English law . . Such subordinate legislation remains under Parliamentary control and is lacking in the independent and unqualified authority which is an attribute of true legisla tive power." He concludes: " But whatever it may be, we should now adhere to the interpretation 784 which results from the decision of Roche vs Kronheimer(1). This whole discussion shows that the learned Judge 12,was refuting the argument that because under the Consti tution of U.S.A. such conferment of power would be invalid it should be held invalid under the Canadian Constitution also. He was not dealing with the question raised before us. Ultimately he said that Roche vs Kronheimer(1) was conclu sive. Mr. Justice Evatt stated that in dealing with the doctrine of the separation of legislative and executive powers "it must be remembered that underlying the Common wealth frame of government there is the notion of the British system of an executive which is responsible to Parliament. That system is not in operation under the United States ' Constitution. He formulated the larger proposition that every grant by the Commonwealth Parliament of authority to make rules and regulations, whether the grantee is the executive government or some such authority, is itself a grant of legislative power. The true nature and quality of the legislative power of the Commonwealth Parlia ment involves as a part of its content power to confer law making powers upon authorities other than Parliament itself. If such power to issue binding commands may lawfully be granted by Parliament to the executive or other agencies an increase in the extent of such power cannot of itself inval idate the grant. It is true that the extent of the power granted will often be a very material circumstance in the examination of the validity of the legislation conferring the grant. " In this paragraph the learned Judge appears certainly to have gone much beyond what had been held in any previous decision but he seems to have made the observations in those terms because (as he himself had stated just previ ously) in his view every conferment of power whether it was by conditional legislation or ancillary legislation was a delegation of legislative power. He concluded however as follows:"On final analysis therefore the (1) (1921) 29 Corn. L.R. 329. 785 Parliament of the Commonwealth is not competent to abdicate its powers of legislation. This is not because Parliament is bound to perform any or all of its legislative powers or functions for it may elect not to do so and not because the doctrine of the separation of powers prevents Parliament from granting authority to other bodies to make laws or byelaws and thereby exercise legislative power for it does so in almost every statute but because each and every one of the laws passed by Parliament must answer the description of law upon one or more of the subject matters stated in the Constitution. A law by which Parliament gives all its lawmaking authority to another body would be bad merely because it would fail to pass the test last mentioned. "Read properly, these judgments therefore do not support the contention of the learned Attorney General. The decisions of the Privy Council on appeal from Canada do not carry the matter further. In the judgments of the two decisions of the Supreme Court of Canada and the deci sion of the Supreme Court of Australia there are observa tions which may appear to go beyond the limit mentioned above. These observations have to be read in the light of the facts of the case and the particular regulation or enactment before the court in each case. These decisions also uniformly reiterate that the legislature must perform its functions and cannot leave that to any other authority. Moreover the word "delegation" as stated by Evatt J. in his judgment is understood by some Judges to cover what is described as subsidiary or conditional legislation also. Therefore because at some places in these judgments the word "delegation" is used it need not be assumed that the word necessarily means delegation of legislative functions, as understood in the strict sense of the word. The actual decisions were on the ground that they were subordinate legislation or conditional legislation. Again, in respect of the Constitutions of the Dominions of Canada and Austra lia I may observe that the legislatures of those Dominions were not packed, as in India, and their Constitution was 786 on democratic lines. The principle of fusion of powers between the Legislature and Executive can well be considered in operation in those Dominions, while as I have pointed out above there was no such fusion at all so far as the Indian Constitution in force till 1935 was concerned. Conclusions therefore based on the fusion of legislative and executive powers are not properly applicable to the Indian Constitu tion. In my opinion therefore to the extent the observa tions in the Canadian and Australian decisions go beyond what is clearly decided by the Privy Council in respect of the Indian Legislature, they do not furnish a useful guide to determine the powers of the Indian Legislature to dele gate legislative functions to administrative or executive authorities. The Canadian and Australian Constitutions are both based on Acts of the British Parliament and therefore are crea tures of written instruments. To that extent they are rigid. Moreover in the Australian Constitution in distribut ing the powers among the legislative and executive authori ties, the word "vest" is used as in the Constitution of the U.S.A. To that extent the two Constitutions have common features. There is however no clear. separation of powers between the legislature and executive so as to be mutually and completely exclusive and there is fusion of power so that the Ministers are themselves members of the legisla ture. Our attention was drawn to several decisions of the Supreme Court of the United States of America mostly to draw a distinction between the legislative powers of the Congress in the United States of America and the legislative powers of the legislature under Constitutions prepared on the British Parliament pattern. It was conceded that as the Constitution itself provided that the legislative and execu tive powers were to vest exclusively in the legislature and the executive authority mentioned in the Constitution, it was not permissible for one body to delegate this authority and functions to another body. It may be noticed that several decisions of the Supreme Court of U.S.A, 787 are based on the incompetence of the delegate to receive the power sought to be conferred on it. Its competence to function as the executive body is expressly set out in the Constitution, and it has been thought that impliedly the Constitution has thereby prevented such body from receiving from the legislative body other powers. In view of my final conclusion I shall very briefly notice the position accord ing to the U.S.A. Constitution. In Crawford on Statutory Construction, it is stated as follows: "So far however as the delegation of any power to an executive official or Administrative Board is concerned, the legislature must declare the policy of the law and fix the legal principles which are to control in given cases and must provide a standard to guide the official or the ,Board empowered to execute the law. This standard must not be too indefinite or general. It may be laid down in broad general terms. It is sufficient if the legislature will lay down an intelligible principle to guide the executive or administra tive official . From these difficult criteria it is apparent that the Congress exercises considerable liberali ty towards upholding legislative delegations if a standard is established. Such delegations are not subject to the objection that the legislative power has been unlawfully delegated. The filling in mere matters of details within the policy of, and according to, the legal principles and stand ards, established by the Legislature, is essentially minis terial rather than legislative in character, even ' if considerable discretion is conferred upon the delegated authority. " In Hampton & Co. vs United States(1), Taft C.J. ob served: "It is a breach of the national fundamental law if Congress gives up its legislative power and transfers it to the President or to the judicial branch or if by law it attempts to invest itself or its members with either execu tive or judicial power. This is not to say that the three branches are not co ordinate parts of one Government and that each in the field of duties (1) ; , 406 & 407. 788 may not invoke the action of the two other branches in so far as the action invoked shall not be an assumption of the constitutional field of action of another branch . The field of Congress involves all and many varieties of legislative action and Congress has found it frequently necessary to use officers of the executive branch within defined limits to secure the exact effect intended by its act of legislation by vesting discretion in such officers to make public regulations, interpreting a statute and direct ing the details of its executive even to the extent of providing for penalizing a preach of such regulations . . Congress may feel itself unable conveniently to determine exactly when its exercise of the legislative power should become effective, because dependent on future conditions, and it may leave the determination of such time to the decision of an executive. " He agreed with the often cited passage from the judgment of Ranny J. of the Supreme Court of Ohio in Cincinnati W. & Z.R. Co. vs Clin ton County Commissioners (1), viz., "The true distinction therefore is between the delegation of power to make the law which necessarily involves a discretion as to what it shall be and conferring an authority or discretion as to its execution to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made. " In Locke 's Appeal(2), it. is slated: "The proper dis tinction is this. The legislature cannot delegate its power to make a law but it can make a law to delegate a power to determine some fact or state of things upon which the law makes or intends to make its own action depend. To deny this would be to stop the wheels of Government. There are many things upon which useful legislation must depend, which cannot be known to the law making power, and must therefore be a subject of enquiry and determination outside the halls of legislature." In Panama Refining Co. vs Ryan (s), it was observed by Hughes C.J. "The Congress is not permitted to (1) (3) ; (2) , 789 abdicate or transfer to others the essential legislative functions with which it is vested. Undoubtedly legislation must often be adapted to complex conditions involving a host of details with which the National Legislature cannot deal directly. The Constitution has never been regarded as denying to the Congress the necessary resources of flexibil ity and practicality which will enable it to perform its function in laying down policies and establish standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determi nation of facts to which the policy as declared by the legislature is to apply. Without capacity to give authori sations of that sort we should have the anomaly of a legis lative power which in many circumstances calling for its exertion would be but a futility but the constant recogni tion of the necessity and validity of such provisions and the wide range of administrative authority which has been declared by means of them cannot be allowed to obscure the limitations of the authority to delegate if our constitu tional system is to be maintained. Similarly, in Schechter vs United States (1), it is stated: "So long as the policy is laid down and standard established by a statuten no unconstitutional delegation of legislative power is involved in leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determi nation of facts to which the policy as declared by the legislature is to apply. " The complexity of this question of delegation of power and the consideration of the various decisions in which its application has led to the support or invalidation of Acts has been somewhat aptly put by Schwartz on American Adminis trative Law. After quoting from Wayman vs Southend (2) the observations of Marshall C.J. that the line has not been exactly drawn which separates those important subjects which must be entirely regulated by the legislature itself from those of less interest in which a general provision may be made and power given to those who are to (1) (2) ; U.S. 1825. 790 act under such general provision to fill up details, the author points out that the resulting judicial dilemma, when the American courts finally were squarely confronted with delegation cases, was resolved by the judicious choice of words to describe the word "delegated power". The authority transferred was, in Justice Holmes ' felicitous phrase, "softened by a quasi", and the courts were thus able to grant the fact of delegated legislation and still to deny the name. This result is well put in Prof. Cushman 's syllo gism: "Major premise: Legislative power cannot be constitu tionally delegated by Congress. Minor premise: It is essential that certain powers be delegated to administrative officers and regulatory commis sions. Conclusions: Therefore the powers thus delegated are not legislative powers. They are instead administrative or quasi legislative powers. ' ' It was argued on behalf of the President that the legis lative practice in India for over eighty years has recog nised this kind of delegation and as that is one of the principles which the court has to bear in mind in deciding the validity of Acts of the legislature, this Court should uphold that practice. In support of this contention a sched ule annexed to the case filed on behalf of the President, containing a list of Acts, is relied upon. In my opinion, out of those, the very few Acts which on a close scrutiny may be cited as instances, do not establish any such prac tice. A few of the instances can be supported as falling under the description of conditional legislation or subsid iary legislation. I do not discuss this in greater detail because unless the legislative practice is overwhelmingly clear, tolerance or acquiescence in the existence of an Act without a dispute about its validity being raised in a court of law for some years cannot be considered binding, when a question about the validity of such practice is raised and comes for decision before the Court. In my opinion, there fore; this broad 791 contention of the Attorney General that the Indian Legisla ture prior to 1935 had power to delegate legislative func tions in the sense contended by him is neither supported by judicial decisions nor by legislative practice. A fair and close reading and analysis of all these decisions of the Privy Council, the judgments of the Supreme Courts of Canada and Australia without stretching and straining the words and expressions used therein lead me. to the conclusion that while a legislature, as a part of its legislative functions, can confer powers to make rules and regulations for carrying the enactment into operation and effect, and while a legislature has power to lay down the policy and principles providing the rule of conduct, and while it may further provide that on certain data or facts being found and ascertained by an executive authority, the operation of the Act can be extended to certain areas or may be brought into force on such determination which is de scribed as conditional legislation, the power to delegate legislative functions generally is not warranted under the Constitution of India at any stage. In cases of emergency, like war where a large latitude has to be necessarily left in the matter of enforcing regulations to the executive, the scope of the power to make regulations is very wide, but. in those cases the suggestion that there was delega tion of "legislative functions" has been repudiated. Simi larly, varying according to the necessities of the case and the nature of the legislation, the doctrine of conditional legislation or subsidiary legislation or ancillary legisla tion is equally upheld under all the Constitutions. In my opinion, therefore, the contention urged by the learned Attorney General that legislative power carries with it a general power to delegate legislative functions, so that the legislature may not define its policy at all and may lay down no rule of conduct but that whole thing may be left either to the executive authority or administrative or other body, is unsound and not supported by the authorities on which he relies. I do not think that apart from the sover eign character of 792 the British Parliament which is established as a matter of convention and whose powers are also therefore absolute and unlimited, in any legislature of any other country such general powers of delegation as claimed by the Attorney General for a legislature, have been recognised or permit ted. It was contended by the learned Attorney General that under the power of delegation the legislative body cannot abdicate or efface itself. That was its limit. It was argued that so long as the legislature had power to control the actions of the body to which power was delegated, that so long as the actions of such body were capable of being revoked there was no abdication or effacement. In support of this argument some reliance was placed on certain obser vations in the judgments of the Privy Council in the cases mentioned above. It should be noticed that the Board was expressing its views to support the conclusion that the particular piece of legislation under consideration was either a conditional legislation or that the legislation derived its force and sanction from what the legislature had done and not from what the delegate had done. I do not think that those observations lead to the conclusion that up to that limit legislative delegation was permitted. The true test in respect of ' 'abdication" or "effacement" appears to be whether in conferring the power to the delegate, the legislature, in the words used to confer the power, retained its control. Does the decision of the delegate derive sanc tion from the act of the delegate or has it got the sanction from what the legislature has enacted and decided ? Every power given to a delegate can be normally called back. There can hardly be a case where this cannot be done because the legislative body which confers power on the delegate has always the power to revoke that authority and it appears difficult to visualize a situation in which such power can be irrevocably lost. It has been recognised that a legisla tive body established under an Act of the British Parliament by its very establishment has not the right to create anoth er legislative body with the same junctions and 793 powers and authority. Such power can be only in the British Parliament and not in the legislature established by an Act of the British Parliament. Therefore, to say that the true test of effacement is that the authority which confers power on the subordinate body should not be able to withdraw the power appears to be meaningless. In my opinion, therefore, the question whether there is "abdication" and "effacement" or not has to be decided on the meaning of the words used in the instrument by which the power is conferred on the au thority. Abdication, according to the Oxford Dictionary, means abandonment, either formal or virtual, of sovereignty. Abdication by a legislative body need not necessarily amount to a complete effacement of it. Abdication may be partial or complete. When in respect of a subject in the Legisla tive List the legislature says that it shall not legislate on that subject but would leave it to somebody else to legislate on it, why does it not amount to abdication or effacement ? If full powers to do anything and everything which the legislature can do are conferred on the subordi nate authority, although the legislature has power to control the action of the subordinate authority, by recall ing such power or repealing the Acts passed by the subordi nate authority, the power conferred by the instrument, in my opinion, amounts to an abdication or effacement of the legislature conferring such power. The power to modify an Act in its extension by the order of the subordinate authority has also come in for considera ble discussion. Originally when power was conferred on the subordinate authority to apply existing legislation to specified areas it was given only to apply the whole or a portion thereof. That power was further expanded by giving a power to restrict its application also. In the next stage power was given to modify "so as to adapt the same" to local conditions. It is obvious that till this stage the clear intention was that the delegate on whom power was con ferred was only left with the discretion to apply what was Considered suitable, as a whole or in part, 794 and to make adaptations which became necessary because of local conditions and nothing more. Only in recent years in some Acts power of modification is given without any words of limitation on that power. The learned Attorney General contended that the word "modify" according to the Oxford Dictionary means to limit, restrain, to assuage, to make less severe, rigorous, or decisive ;to tone down. " It is also given the meaning "to make partial changes in;to alter without radical transformation." He therefore contended that if the done of the power exceeded the limits of the power of modification beyond that sense, that would be exceeding the limits of the power and to that extent the exercise of the power may be declared invalid. He claimed no larger power under the term "modification. " On the other hand, in Rowland Burrows ' "Words and Phrases ", the word "modify" has been defined as meaning" vary, extend or enlarge, limit or restrict. " It has been held that modification implies an alteration. It may narrow or enlarge the provisions of the former Act. It has been pointed out that under the powers conferred by the , the Central Government has extended the application of the Bombay Debtors ' Relief Act to Delhi. The Bombay Act limits its application to poor agriculturists whose agricultural income is less than Rs. SO0. Under the power of modification conferred on it by the , the Central Government has removed this limit on the income, with the result that the principles, policy and machinery to give relief to poor peasants or agriculturists with an income of less than Rs. 500 is made applicable in Delhi to big landowners even with an income of 20 lakhs. This shows how the word ' 'modification" is understood and applied by the Central Government and acqui esced in by the Indian Legislature. I do not think such power of modification as actually exercised by the Central Government is permitted in law. If power of modification so understood is permitted, it will be open to the Central Legislature in effect to change the whole basis of the legislation and the reason for making the 795 law. That will be a complete delegation of legislative power, because in the event of the exercise of the power in that manner the Indian legislature has not applied its mind either to the policy under which relief should be given nor the class of persons, nor the circumstances nor the machin ery by which relief is to be given. The provisions of the Rent Restriction Act in different Provinces are an equally good example to show how dangerous it is to confer the power of modification on the executive government. Having considered all the decisions which were cited before us and giving anxious consideration to the elaborate and detailed arguments advanced by the learned Attorney General in the discussion of this case, I adhere to what I stated in Jatindra Nath Gupta 's case(1) that the power of delegation, in the sense of the legislature conferring power, on either the executive government or another author ity, "to lay down the policy underlying a rule of conduct" is not permitted. The word "delegation ", as I have pointed out, has been somewhat loosely used in the course of discus sion and even by some Judges in expressing their views. As I have pointed out throughout the decisions of the Privy Council the word "delegation" is used so as not to cover what is described as conditional legislation or subsidiary or ancillary legislation, which means the power to make rules and regulations to bring into operation and effect the enactment. Giving "delegation" the meaning which has always been given to it in the decisions of the Privy Council, what I stated in Jatindra Nath Gupta 's case, as the legisla ture not having the power of delegation is, in my opinion, correct. Under the new Constitution of 1950, the British Parlia ment, i.e. an outside authority, has no more control over the Indian Legislature. That Legislature 's powers are de fined and controlled and the limitations thereon prescribed only by the Constitution of India. But the scope of its legislative power has not become (1) 796 enlarged by the provisions found in the Constitution of India. While the Constitution creates the Parliament and although it does not in terms expressly vest the legislative powers in the Parliament exclusively, the whole scheme of the Constitution is based on the concept that the legisla tive functions of the Union will be discharged by the Par liament and by no other body. The essential of the legisla tive functions, viz., the determination of the legislative policy and its formulation as a rule of conduct, are still in the Parliament or the State Legislatures as the case may be and nowhere else. I take that view.because of the provi sions of article 357 and article 22 (4) of the Constitution of India. Article 356 provides against the contingency of the failure of the constitutional machinery in the States. On a proclamation to that effect being issued, it is provid ed in article 357 (1) (a) that the power of the legislature of the State shall be exercisable by or under the authority of the Parliament, and it shall be competent for the Parlia ment to confer on the President the power of the legislature of the State to make laws "and to authorise the President to delegate, subject to such conditions as he may think fit to impose. the powers so conferred to any other authority to be specified by him in that behalf. " Sub clause (b) runs as follows : " For Parliament, or for the President or other authority in whom such power to make laws is vested under sub cl. (a), to make laws conferring powers and imposing duties, or authorising the conferring of powers and the imposition of duties, upon the Union or officers and author ities thereof. " It was contended that on the breakdown of such machinery authority had to be given to the Parliament or the President, firstly, to make laws in respect of sub jects on which the State Legislature alone could otherwise make laws and, secondly, to empower the Parliament or the President to make the executive officers of the State Gov ernment to act in accordance with the laws which the Parlia ment or the President may pass in such emergency. It was argued that for this purpose the word "to delegate" is used. I do not think this argument is sound. Sub clause (2) re lates to the power 797 of the President to use the State executive officers. But under clause (a) Parliament is given power to confer on the President the power of the legislature of the State to make laws. Article 357 (1) (a) thus expressly gives power to the Parliament to authorise the President to delegate his legis lative powers. If powers of legislation include the power of delegation to any authority there was no occasion to make this additional provision in the article at all. The word ing of this clause therefore supports the contention that normally a power of legislation does not include the power of delegation. Article 22 (4) again is very important in this connec tion. It deals with preventive detention and provides that no law shall be valid which will permit preventive detention of a person for a period over three months, unless the conditions laid down in article 22 (4) (a) are complied with. The exception to this is in respect of an Act of the Parliament made on the conditions mentioned in article 22 (4) (b). According to that, the Parliament has to pass an Act consistently with the provisions of article 22 (7). The important point is that in respect of this fundamental right given to a person limiting the period of his detention up to three months, an exception is made in favour of the Parlia ment by the article. It appears to me a violation of the provisions of this article on fundamental rights to suggest that the Parliament having the power to make a legislation within the terms of article 22(7) has the power to delegate that right in favour of the executive government. In my opinion, therefore the argument that under the Constitution of 1950 the power of legislation carries with it the power of delegation, in the larger sense, as contended by the Attorney General cannot be accepted. Having regard to the position of the British Parliament, the question whether it can validly delegate its legislative functions cannot be raised in a court of law. Therefore from the fact that the British Parliament has delegated legisla tive powers it does not follow. that the power of delegation is recognised in law as necessarily included in the power of legislation, Although 798 in the Constitution of India there is no express separation of powers, it is clear that a legislature is created by the Constitution and detailed provisions are made for making that legislature pass laws. Is it then too much to say that under the Constitution the duty to make laws, the duty to exercise its own wisdom, judgment and patriotism in making laws is primarily cast on the legislatures ? Does it not imply that unless it can be gathered from other provisions of the Constitution, other bodies, executive or judicial, are not intended to discharge legislative functions ? I am unable to read the decisions to which our attention has been drawn as laying down that once a legislature observes the procedure prescribed for passing a bill into an Act, it becomes a valid law, unless it is outside the Legislative Lists in the Seventh Schedule prescribing its respective powers. I do not read articles 245 and 246 as covering the question of delegation of legislative powers. In my opinion, on a true construction of articles 245 and 246 and the Lists in the Seventh Schedule, construed in the light of the judicial decisions mentioned above, legislation delegating legislative powers on some other bodies is not a law on any of the subjects or entries mentioned in the Legislative Lists. It amounts to a law which states that instead of the legislature passing laws on any subject covered by the entries, it confers on the body mentioned in the legislation the power to lay down the policy of the law and make a rule of conduct binding on the persons covered by the law. As a result of considering all these decisions together it seems to me that the legislature in India, Canada, Aus tralia and the U.S.A. has to discharge its legislative functions, i.e., to lay down a rule of conduct. In doing so it may, in addition, lay down conditions, or state facts which on being fulfilled or ascertained according to the decision of another body or the executive authority, the legislation may become applicable to a particular area. This is described as conditional legislation. The legislature may also, in laying down the rule of conduct, express itself generally if the conditions and circumstances so require. The extent of the 799 specific and detailed lines of the rule of conduct to be laid down may vary according to the circumstances or exigen cies, of each case. The result will be that if, owing to unusual circumstances or exigencies, the legislature does not choose to lay down detailed rules or regulations, that work may be left to another body which is then deemed to have subordinate legislative powers. Having regard to the distinction noticed above between the power of delegation of legislative functions and the authority to confer powers which enables the donee of the power to make regulations or rules to bring into effect or operation the law and the power of the legislature to make conditional legislation, I shall proceed to consider the three specific questions mentioned in the Reference. It may be noticed that occasions to make legislation of the type covered by the three sections mentioned in the three ques tions began in the early stages of the occupation of India where small bits of territories were acquired and in respect of which there was no regular legislative body. It was thought convenient to apply to these small areas laws which were made by competent ' legislature in contiguous areas. That practice was adopted to avoid setting up a separate, sometimes inconvenient and sometimes costly, machinery of legislation for the small area. Nor might it have been considered possible for the Governor General in Council to enact laws for the day to day administration of such bits of territory or for all their needs having regard to different local conditions. As local conditions may differ to a cer tain extent, it appears to have been considered also conven ient to confer powers on the administrator to apply the law either in whole or in part or to restrict its operation even to a limited portion of such newly acquired area. This aspect of legislation is prominently noticed in Act XXII of 1869 discussed in The Queen vs Burah(1). Under section 22 of the Indian Councils Act of 1861, the Governor General in Council was given power to make laws for all persons and for all places and things whatever within British India. The Province of Delhi was carved out of the Province of Punjab and was put (1) 5 I.A. 178. 800 under a Chief Commissioner and by section 2 of the the laws in force in the Punjab continued to be operative in the newly created Province of Delhi. The Province of Delhi had not its legislative body and so far as this Chief Commissioner 's Province is concerned it is not disputed that the power to legislate was in the Governor General in Council in his legislative capacity. The first question as worded has to be answered according to the powers and position of the legislature in 1912. Section 7 of the enables the Government (executive) to extend by notification with such restrictions and modifica tions as it thinks fit, to the Province of Delhi or any part thereof, any enactment which is in force in any part of British India, at the date of such notification, i.e., a law which was in force not necessarily in the Province of Punjab only, from which the Province of Delhi was carved out, but any Central or provincial law in force in any Province. Again, the Government is given power to extend any such law with such restrictions and modifications as it thinks fit. Moreover it enables the Provincial Government to extend an Act which is in force "at the date of such notification. " Those words therefore permit extension of future laws which may be passed either by the Central or any Provincial legis lature, also with such restrictions and modifications as the Provincial Government may think fit. At this stage, sections 8 and 9 of Act XXII of 1869 under which powers were given to the Lieut. Governor in The Queen vs Burah(1) may be com pared. They permitted the extension of Acts which were or might be made by the Governor General in Council (legisla tive) or the Lieut. Governor, both of whom were the competent legislative authorities for the whole area under the admin istrative jurisdiction of the Lieut. Governor. The power was confined to extend only those Acts, over the area specified in Act XXII of 1869, although that area was declared by Act XXII of 1869 as not subject to the laws of the Province, unless the area was specifically mentioned in the particular Act. On (1) 5 I.A. 178. 801 the authority of that decision therefore, so far as section 7 of the gives power to the executive (Cen tral) Government to extend Acts passed by the Central Legis lature to the Province of Delhi, the same may be upheld. The question then remains in respect of the power of the executive government to extend Acts of other Provincial legislatures (with or without restrictions or modifications) to the Chief Commissioner 's Province. It is obvious that in respect of these Acts the Central Legislature has not ap plied its mind at all. It has not considered whether the Province of Delhi requires the rule of conduct laid down in those Acts, as necessary or beneficial for the welfare of the people of the Province or for its government. They are passed by other Provincial legislatures according to their needs and circumstances. The effect of section 7 of the therefore in permitting the Central Govern ment to apply such Provincial Acts to the Province of Delhi is that, instead of the Central Legislature making up its mind as to the desirability or necessity of making laws on certain subjects in respect of the Province of Delhi, that duty and right are conferred on the executive government. For example, the question whether a rent act, or an excise act, or what may be generally described as a prohibition act, or a debt relief act is desirable or necessary, as a matter of policy for the Province of Delhi is not considered and decided by the Central Legislature which, in my opinion, has to perform that duty, but that duty and function without any reservation is transferred over to the executive govern ment. Section 7 of the thus contains an entirely different quality of power from the quality of power conferred by sections 8 and 9 of Act XXII of 1869. All the decisions of the Privy Council unequivocally affirm that it is not competent for the Indian Legislature to create a body possessing the same powers as the Central Legislature itself. It is stated that the legislature cannot efface itself. One may well ask, if section 7 of the has done 802 anything else. The Privy Council decisions emphasize two aspects in respect of this question. The first is whether the new body is empowered to make laws. The second is, does the sanction flow from the legislation made by the legisla ture or from the decision of the newly created body. As regards the first, it is obvious that in principle there is no difference if the newly created body itself writes out on a sheet of paper different sections of an Act or states that the Act will be what is written or printed on another clear ly identifiable paper. Therefore if such new body says that the law in Delhi will be the same as Bombay or Madras Act so and so of such and such year it has made the law. Moreover it may be remembered that in doing so the new body may re strict or modify the provisions of such Act also. On the second aspect the sanction flows clearly from the notifica tion of the newly created body that Bombay or Madras Act so and so with such modifications as may be mentioned, will be the law. That has not been the will or decision of the legis lature. The legislature has not applied its mind and said "Bombay Act . . . is the law of this Province". In my opinion, it is futile to contend that the sanction flows from the statement of the legislature that the law will be what the newly created body decides or specifies, for that statement only indicates the new body and says that we confer on it power to select a law of another province. The illustrations of the extension of the Civil and Criminal Procedure Codes, mentioned in the judgment in The Queen vs Burah(1) have to be considered along with the fact that at that time the Governor General in Council, in its legislative capacity, had power of legislation over the whole of India on all subjects. The Civil and Criminal Procedure Codes were enacted by the Central Legislature and it could have made the same applicable at once to the whole of India. But having passed the laws, it laid down a condi tion that its application may be referred to certain areas until the particular Provincial Government (executive) considered it convenient for these Codes to be made (1) 5 I.A. 178, 803 applicable to its individual area. A Provincial Govern ment, e.g., of Bombay, was not empowered to lay down any policy in respect of the Civil Procedure Code or the Crimi nal Procedure Code nor was it authorised to select, if it liked, a law passed by the Legislature of Madras for its application to the Province of Bombay. If it wanted to do so, the Legislature of the Province of Bombay had to exer cise its judgment and decision and pass the law which would be enforceable in the Province of Bombay. It may be noticed that the power to extend, mutatis mutandis, the laws as contained in sections 8 and 9 of Act XXII of 1869 brings in t.he idea of adaptation by modification, but so far only as it is necessary for the purpose. In my opinion, therefore, to the extent section 7 of the permits the Central executive government to apply any law passed by a Provincial legislature to the Province of Delhi, the same is ultra vires the Central Legislature. To that extent the Central Legislature has abdicated its functions and there fore the Act to the extent is invalid. Question 2 relates to Ajmer Merwara (Extension of Laws) Act. Till the Government of India Act, 1915, there was unitary government in India. By the Act of 1915, Provincial legislatures were given powers of legislation but there was no distribution of legislative powers between the Centre and the Provinces. That was brought about only by the Govern ment of India Act, 1935. Section 94 of that Act enumerates the Chief Commissioner 's Provinces. They include the Prov inces of Delhi and Ajmer Merwara. Under sections 99 and 100 there was a distribution of legislative powers between Provinces and Centre, but the word "Province" did not in clude a Chief Commissioner 's Province and therefore the Central Legislature was the only law making authority for the Chief Commissioner 's Provinces. The Ajmer Merwara Act was passed under the Government of India Act as adapted by the Indian Independence Act. Although by that Act the control of British Parliament over the Government of India 804 and the Central Legislature was removed, the powers of the Central Legislature were still as those found in the Govern ment of India Act, 1935. The Independence Act therefore made no difference on the question whether the power of delega tion was contained in the legislative power. The result is that to the extent to which section 7 of the is held ultra vires, section 2 of the Ajmer Merwara Act, 1947, should also be held ultra vires. This brings me to Question 3. section 2 of the Part C States (Laws) Act, 1950, is passed by the Indian Parliament. Under article 239 of the Constitution of India, the powers for the administration of Part C States are all vested in the President. Under article 240 the Parliament is empowered to create or continue for any State specified in Part C, and administered through a Chief Commissioner or Lieutenant Governor; (a) a body whether nominated or elected or partly nominated or partly elected, to function as a legislature for the State, or (b) a Council of Advisers or Ministers. It is common ground that no law creating such bodies has been passed by the Parliament so far. Article 246 deals with the distribution of legislative powers between the Centre and the States but Part C States are outside its operation. Therefore on any subject affecting Part C States, Parliament is the sole and exclusive legislature until it passes an Act creating a legislature or a Council in terms of article 240. Proceeding on the footing that a power of legislation does not carry with it the power of delegation (as claimed by the Attorney General), the question is whether section 2 of the Part C States (Laws) Act is valid or not. By that section the Parliament has given power to the Central Government by notification to extend to any part of such State (Part C State), with such restrictions and modifications as it thinks fit, any enactment which is in force in Part A State at the date of the.notification. The section although framed on the lines of the and the Ajmer Merwara Act is restricted in 805 its scope as the executive government is empowered to extend only an Act which is in force in any of the Part A States. For the reasons I have considered certain parts of the two sections covered by Questions 1 and 2 ultra rites, that part of section 2 of the Part C States (Laws) Act, 1950, which empowers the Central Government to extend laws passed by any Legislature of Part A State, will also be ultra vires. To the extent the Central Legislature or Parliament has passed Acts which are applicable to Part A States, there can be no objection to the Central Government extending, if necessary, the operation of those Acts to the Province of Delhi, be cause the Parliament is the competent legislature for that Province. To the extent however the section permits the Central Government to extend laws made by any legislature of Part A State to the Province of Delhi, the section is ultra vires. In view of my conclusion in respect of the first part of section 2 of the Part C States (Laws) Act, 1950, I do not think it necessary to deal with separately the other part of the section relating to the power to repeal or amend a corresponding law for the time being applicable to that Part C State. Before concluding, I must record the appreciation of the Court in the help the learned Attorney General and the counsel appearing in the Reference have rendered to the Court by their industry in collecting all relevant materials and putting the same before the Court in an extremely fair manner. My answers to the questions are that all the three sections mentioned in the three questions are ultra vires the Legislatures, functioning at the relevant dates, to the extent power is given to the Government (executive) to extend Acts other than Acts of the Central Legislature as mentioned in the judgment. FAZL ALI J. The answer to the three questions which have been referred by the President under article 143 of the Constitution of India, depends upon the proper answer to another question which was the 806 subject of very elaborate arguments before us and which may be stated thus: Can a legislature which is sovereign or has plenary powers within the field assigned to it, delegate its legislative functions to an executive authority or to anoth er agency, and, if so. to what extent it can do so ? In dealing with this question, three possible answers may be considered. They are : (1) A legislature which is sovereign in a particular field has unlimited power of delegation and the content of its power must necessarily include the power to delegate legislative functions; (2) Delegated legislation is permissible only within certain limits; and (3) Delegated legislation is not permissible at all by reason of certain principles of law which are wellknown and well recognised. I will first consider the last alternative, but I should state that in doing so I will be using the expressions, "delegated legislation," and "delegation of legislative authority," in the loose and popular sense and not in the strict sense which I shall explain later. One of the principles on which reliance was placed to show that legislative power cannot be delegated is said to be embodied in the well known maxim, delegatus non potest delegare, which in simple language means that a delegated authority cannot be redelegated, or, in other words, one agent cannot lawfully appoint another to perform the duties of agency. This maxim however has a limited application even in the domain of the law of contract or agency wherein it is frequently invoked and is limited to those cases where the contract of agency is of a confidential character and where authority is coupled with discretion or confidence. Thus, auctioneers, brokers, directors, factors, liquidators and other persons holding a fiduciary position have generally no implied authority to employ deputies or sub agents. The rule is so stated in Broom 's Legal Maxims, and many other books, and it is also stated that in a number of cases the authority to employ 807 agents is implied. In applying the maxim to the act of a legislative body, we have necessarily to ask "who is the principal and who is the delegater" In some cases where the question of the power of the Indian or a colonial legisla ture came up for consideration of the courts, it was sug gested that such a legislature was a delegate of the British Parliament by which it had been vested with authority to legislate. But this view has been rightly repelled by the Privy Council on more than one occasion, as will appear from the following extracts from two of the leading cases on the subject: "The Indian Legislature has powers expressly limited by the Act of the Imperial Parliament which created it, and it can of course do nothing beyond the limits which circum scribe these powers. But when acting within those limits it is not in any sense an agent or delegate of the Imperial Parliament, but has, and was intended to have, plenary powers of legislation as large, and of the same nature, as those of Parliament itself. " Reg. vs Burah (1). "It appears to their Lordships, however, that the objec tion thus raised by the appellants is founded on an entire misconception of the true character and position of the Provincial Legislatures. They are in no sense delegates of or acting under any mandate from the Imperial Parliament. When the British North America Act enacted that there should be a Legislature for Ontario, and that its Legislative Assembly should have exclusive authority to make laws for the Province and for Provincial purposes in relation to the matters enumerated in section 92, it conferred powers, not in any sense to be exercised by delegation from or as agents of the Imperial Parliament, but authority as plenary and as ample, within the limits prescribed by section 92, as the Imperial Parliament in the plenitude of its power possessed and could bestow. Within these limits of subjects and areas the Local Legislature is supreme, and has the same authority as the Imperial Parliament.": Hodge vs The Queen (2). (1) 3 App. (2) 9 App. 117. 808 It has also been suggested by some writers that the legislature is a delegate of the people or the electors. This view again has not been accepted by some constitutional writers, and Dicey dealing with the powers of the British Parliament with reference to the Septennial Act, states as follows : "That Act proves to demonstration that in a legal point of view Parliament is neither the agent of the electors nor in any sense a trustee for its constituents. It is legally the sovereign legislative power in the state, and the Sep tennial Act is at once the result and the standing proof of such Parliamentary sovereignty." (1) The same learned author further observes: "The Judges know nothing about any will of the people except in so far as that will is expressed by an Act of Parliament, and would never suffer the validity of a statute to be questioned on the ground of its having been passed or being kept alive in opposition to the wishes of the elec tors." (2) There can be no doubt that members of a legislature represent the majority of their electors, but the legisla ture as a body cannot be said to be an agency of the elec torate as a whole. The individual members may and often do represent different parties and different shades of opinion, but the composite legislature which legislates, does so on its own authority or power which it derives from the Consti tution, and its acts cannot be questioned by the electorate, nor can the latter withdraw its power to legislate on any particular matter. As has been pointed out by Dicey, "the sole legal right of electors under the English Constitution is to elect members of Parliament. Electors have no legal right of initiating, of sanctioning, or of repealing the legislation of Parliament." (3) It seems to me therefore that it will not be quite accurate to say that the legislature being an agent of (1) Dicey 's:"Law of the Constitution", 8th edn., p. 45. (2) Ibid, p. 72. (3) Dicey 's "Law of the Constitution", 8th edn., p. 57. 809 its constituents, its powers are subject to the restrictions implied in the Latin maxim referred to. I shall however advert to this subject again when I deal with another principle which is somewhat akin to the principle underlying the maxim. The second principle on which reliance was placed was said to be founded on the well known doctrine of "separation of powers. " It is an old doctrine which is said to have originated from Aristotle, but, as is well known, it was given great prominence by Locke and Montesquieu. The doc trine may be stated in Montesquieu 's own words: "In every government there are three sorts of power, the legislative; the executive in respect to things dependent on the law of nations; and the executive in regard to matters that depend on the civil law . When the legislative and the executive powers are united in the same person, or in the same body of magistrates, there can be no liberty; because apprehensions may rise, lest the same monarch or senate should enact tyrannical laws, to execute them in a tyrannical manner. Again, there is no liberty, if the judi ciary power be not separated from the legislative and the executive. Were it joined with the legislative, the life and liberty of the subject would be exposed to abritrary control; for the judge would be then the legislator. Were it joined to the executive power, the judge might behave with violence and oppression. There should be an end of everything, were the same man or the same body, whether of the nobles or of the people, to exercise those three powers, that of enacting laws, that of executing the public resolu tions, and of trying the causes of individuals. "(1) The doctrine found many enthusiasts in America and was virtually elevated to a legal principle in that country. Washington, in his farewell address, said : "The spirit of enroachment tends to consolidate the powers of all governments in one, and thus to (1) Montesquieu 's Spirit of Laws, Vol. 1 by J. V. Pritchard, 1914 edn, pp. 162 3. 810 create, whatever the form of government, a real despotism." John Adams wrote on similar lines as follows:" It is by balancing one of these three powers against the other two that the efforts in human nature toward tyranny can alone be checked and restrained and any degree of free dom preserved." (1) These sentiments are fully reflected in the Constitu tions of the individual States as well as in the Federal Constitution of America. Massachusetts in her Constitution, adopted in 1780, provided that "in the govern ment of this commonwealth the legislative department shall never exercise the executive and judicial powers or either of them; the executive shall never exercise legislative and judicial powers or either of them; the judicial shall never exercise legislative and executive powers or either of them; to the end that it may be a government of laws and not of men. "(2) The Constitutions of 39 other States were drafted on similar lines, and so far as the Federal Constitution of the United States was concerned, though it does not express ly create a separation of governmental powers, yet from the three articles stating that the legislative power vests in Congress, the judicial power in the Supreme Court and the executive power in the President, the rule has been deduced that the power vested in each branch of the Government cannot be vested in any other branch. nor can one branch interfere with the power possessed by any other branch. This rule has been stated by Sutherland J. in Springer vs Government of the Philiipine Islands(s) in these words : "It may be stated then, as a general rule inherent in the American constitutional system, that unless otherwise expressly provided or incidental to the powers conferred, the Legislature cannot exercise either executive or judicial power; the Executive (1) Vide, Works, Vol. 1, p. 186. (2) Willoughby 's Constitution of the United States, Vol. III, 1616. (3) ; at 201, 811 cannot exercise either legislative or judicial power; the Judiciary cannot exercise either executive or legislative power. " From the rule so stated, the next step was to deduce the rule against delegation of legislative power which has so often been stressed in the earlier American decisions. It was however soon realized that the absolute rule against delegation of legislative power could not be sustained in practice, and as early as 1825, Marshall C.J. openly stated that the rule was subject to limitations and asserted that Congress "may certainly delegate to others powers which the Legislature may rightfully exercise itself ,,(1). In course of time, notwithstanding the maxim against delegation, the extent of delegation had become so great that an American writer wrote in 1916 that "because of the rise of the admin istrative process, the old doctrine prohibiting the delega tion of legislative power has virtually retired from the field and given up the fight".(2) This is in one sense an over statement, because the American Judges have never ceased to be vigilant to check any undue or excessive au thority being delegated to the executive as will appear from the comparatively recent decisions of the American Supreme Court in Panama Refining Co. vs Ryan (3) and Schechter Poultry Corp. vs United States(4). In the latter case, it was held that the National Industrial Recovery Act, in so far as it purported to confer upon the President the author ity to adopt and make effective codes of fair competition and impose the same upon members of each industry for which such a code is approved, was void because it was an uncon stitutional delegation of legislative power. Dealing with the matter, Cardozo J. observed as follows : ' "The delegated power of legislation which has found expression in this code is not canalized within (1) Wayman vs Southard (2) 41 American Bar Asscn. Reports, 356 at 368. (3) ; (4) ; 812 banks that keep it from overflowing. It is unconfined and vagrant . Here, in the case before us, is an attempt ed delegation not confined to any single act nor to any class or group of acts identified or described by reference to a standard. Here in effect is a roving commission to inquire into evils upon discovery to correct them . This is delegation running riot. No such plenitude of power is capable of transfer. "(1) The fact however remains that the American courts have upheld the so called delegated legislation in numerous instances, and there is now a wide gulf between the theoret ical doctrine and its application in practice. How numerous are the exceptions engrafted on the rule will appear on a reference to a very elaborate and informing note appended to the report of the case of Panama Refining Co. vs Ryan in 79, Lawyer 's Edition at page 448. In this note, the learned authors have classified instances of delegation upheld in America under the following 8 heads, with numerous sub heads : 1. Delegation of power to determine facts or conditions on which operation of statute is contingent. Delegation of non legislative or administrative functions. Delegation of power to make administrative rules and regulations. Delegation to municipalities and local bodies. Delegation by Congress to territorial legislature or commission. Delegation to private or non official persons or corporations. Vesting discretion in judiciary. Adopting law or rule of another jurisdiction. The learned American Judges in laying down exceptions to the general rule from time to time, have offered various expla nations, a few of which may be quoted as samples: (1) ; at 551. 813 " . however we may disguise it by veiling words we do not and cannot carry out the distinction between legislative and executive action with mathematical precision and divide the branches into watertight compartments, were it ever so desirable to do so, which I am far from believ ing that it is, or that the Constitution requires. " [Per Holmes J. in Springer vs The Government of Phillipine Is lands(1)] " . too much effort to detail and particularize, so as to dispense with the administrative or fact finding assist ance, would cause great confusion in the laws, and would result in laws deficient in both provision and execution." [Mutual Film Corporation vs Industrial Commission(2)] "If the legislature ' 'were ' strictly required to make provision for all the minutiae of regulation, it would, in effect, be deprived of the power to enact effective legisla tion on subjects over which it has undoubted power." "The true distinction. is this. The legislature cannot delegate its power to make a law; but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action depend. To deny this would be to stop the wheels of government. "(3) "The true distinction is between the delegation of power to make the law which necessarily involves a discretion as to what it shall be. and conferring authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made." [Per Ranney J. in Cincinnati W. & Z.R. Co. vs Clinton County Commissioners(4)]. (1) ; (31 Locke 's Appeal, (2) ; (4) 814 "Half the statutes on our books are in the alternative, depending on the discretion of some person or persons to whom is confided the duty of determining whether the proper occasion exists for executing them. But it cannot be said that the exercise of such discretion is the making of law." [Moore v.Reading(1)] "Congress may declare its will and, after fixing a primary standard, devolve upon administrative officers the power to fill up the details by prescribing administrative rules and regulations." [United States vs Shreveport Grain & E. Co.(2)] . . . . "The Constitution has never been regarded as denying to the Congress the necessary resources of flexibility and practicality which will enable it to perform its functions in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordi nate rules within the prescribed limits, the determination of facts to which the policy as declared by the legislature is to apply. Without capacity to give authorizations of that sort, we should have the anomaly of a legislative power which in many circumstances calling for its exertion would be but a futility." [Per Hughes C.J. in Panama Refining Co. Ryan(3)] "This is not to say that the three branches are not co ordinate parts of one government and that each in the field of its duties may not invoke the action of the two other branches in so far as the action invoked shall not be an assumption of the constitutional field of action of another branch." [Per Taft C.J. in J.W. Hampton Jr. & Co. vs U. S.(4)] I have quoted these extracts at the risk of encumbering my opinion for 2 reasons:firstly, because they (1) (3) ; (2) (4) ; 815 show that notwithstanding the prevalence of the doctrine of separation of powers in America, the rule against delega tion of legislative power is by no means an inelastic one in that country, and many eminent Judges there have tried to give a practical trend to it so as to bring it in line with the needs of the present day administration, and secondly, because they show that the rule against delegation is not a necessary corollary from the doctrine of separation of powers. It is to be noted that though the principle of separa tion of powers is also the basis of the Australian Constitu tion, the objection that the delegation of legislative power was not permissible because of.the distribution of powers contained in the Constitution has been raised in that Com monwealth only in a few cases and in all those cases it has been negatived. The first case in which this objection was raised was Baxter vs Ah Way(1). In that case, the validity of section 52 of the Customs Act, 1901, was challenged. That section after enumerating certain prohibited imports provid ed for the inclusion of "all goods the importation of which may be prohibited by proclamation. " Section 56 of the Act provided that "the power of prohibiting importation of goods shall authorise prohibition subject to any specified condition or restriction and goods imported contrary to any such condition or restriction shall be prohibited imports. " The ground on which these provisions were chal lenged was that they amounted to delegation of legislative power which had been vested by the Constitution in the Federal Parliament. Griffith C.J. however rejected the contention and in doing so relied on Queen vs Burah(2) and other cases, observing : " . . . unless the legislature is prepared to lay down at once and for all time, or for so far into the future as they may think fit, a list of prohibited goods, they must have power to make a prohibition depending upon a condition, and that condition may be the coming into exist ence or the discovery of some fact (1) ; (2) 3 App. 889. 816 . . And if that fact is to be the condition upon which the liberty to import the goods is to depend, there must be some means of ascertaining that fact, some person with power to ascertain it; and the Governor in Council is the authority appointed to ascertain and declare the fact. " The other cases in which a similar objection was taken, are Welebach Light Co. of Australasia Ltd. vs The Common wealth(1), Roche vs Kronheimer(2), and Victorian Stevedor ing and General Contracting Co. Pry. Ltd. and Meakes vs Dignan(3). In the last mentioned case in which the matter has been dealt with at great length, Dixon J. observed thus : " . . the time has passed for assigning to the constitutional distribution of powers among the separate organs of government, an operation which confined the legis lative power to the Parliament so as to restrain it from reposing in the Executive an authority of an essentially legislative character. "(4) In England, the doctrine of separation of powers has exer cised very little influence on the course of judicial deci sions or in shaping the Constitution, notwithstanding the fact that distinguished writers like Locke and Blackstone strongly advocated it in the 17th and 18th centuries. Locke in his treatise on Civil Government wrote as follows : "The legislature cannot transfer the power of making laws to any other hands; for it being a delegated power from the people, they who have it cannot pass it over to others. (g 141). Blackstone endorsed this view in these words : Wherever the right of making and enforcing the law is vested in the same man or one and the same body of men, there can be no public liberty. "(5) Again, Montesquieu, when he enunciated the doctrine of sepa ration of powers, thought that it represented the (1) ; (3) (1931) 46C.L.R. 73. (2) (4) Ibid, p. 100. (5) Commentaries on the Laws of England, 1765. 817 quintessence of the British Constitution for which he had great admiration. The doctrine had undoubtedly attracted considerable attention in England in the 17th and 18th centuries, but in course of time it came to have a very different meaning there from what it had acquired in the United States of America. In the United States, the empha sis was on the mutual independence of the three departments of Government. But, in England, the doctrine means only the independence of the judiciary, whereas the emergence of the Cabinet system forms a ]ink between the executive and the legislature. How the Cabinet system works differently from the so called non parliamentary system which obtains in the United States, may be stated very shortly. In the United States, the executive power is vested in the Presi dent, to whom, and not to the Congress, the members of the Cabinet are personally responsible and neither the President nor the members of the Cabinet can sit or vote in Congress, and they have no responsibility for initiating bills or seeking their passage through Congress. In England, the Cabinet is a body consisting of members of Parliament chosen from the party possessing a majority in the House of Com mons. It has a decisive voice in the legislative activities of Parliament and initiates all the important legislation through one or other of the Ministers, with the result that "while Parliament is supreme in that it can make or unmake Government, the Government once in power tends to control the Parliament. " The conclusion which I wish to express may now be stated briefly. It seems to me that though the rule against delega tion of legislative power has been assumed in America to be a corollary from the doctrine of separation of powers, it is strictly speaking not a necessary or inevitable corollary. The extent to which the rule has been relaxed in America and the elaborate explanations which have been offered to justi fy departure from the rule, confirm this view, and it is also supported by the fact that the trend of decisions in Australia, notwithstanding the fact that its Constitution 818 is at least theoretically based on the principle of separa tion of powers, is that the principle does not stand in the way of delegation in suitable circumstances. The division of the powers of Government is now a normal feature of all civilised constitutions, and, as pointed out by Rich J. in New South. Wales vs Commonwealth.(1), ,, it is "well known in all British communities ; yet, except m the United States, nowhere it has been held that by itself it forbids delegation of legislative power. It seems to me that the American jurists have gone too far in holding that the rule against delegation was a direct corollary from the separa tion of powers. I will now deal with the third principle, which, in my opinion, is the true principle upon which the rule against delegation may be founded. It has been stated in Cooley 's Constitutional Limitations, Volume 1 at page 224 in these words : "One of the settled maxims in constitutional law is, that the power conferred upon the legislature to make laws cannot be delegated by that department to any other body or authority. Where the sovereign power of the State has located the authority, there it must remain; and by the constitutional agency alone the laws must be made until the constitution itself is changed. The power to whose judgment, wisdom, and patriotism this high prerogative has been in trusted cannot relieve itself of the responsibility by choosing other agencies upon which the power shall be de volved, nor can it substitute the judgment, wisdom, and patriotism of any other body for those to which alone the people have seen fit to confide this sovereign trust. " The same learned author observes thus in his wellknown book on Constitutional Law (4th Edition, page 138): "No legislative body can delegate to another depart ment of the government, or to any other authority, the power, either generally or specially, to enact (1) ; at 108. 819 laws. The reason is found in the very existence of its own powers. This high prerogative has been intrusted to its own wisdom, judgment, and patriotism, and not to those of other persons, and it will act ultra vires if it undertakes to delegate the trust, instead of executing it. " This rule in a broad sense involves the principle underly ing the maxim, delegatus non potest delegare, but it is apt to be misunderstood and has been misunderstood. In my judg ment, all that it means is that the legislature cannot abdicate its legislative functions and it cannot efface itself and set up a parallel legislature to discharge the primary duty with which it has been entrusted. This rule has been recognized both in America and in England, and Hughes C.J. has enunciated it in these words : "The Congress manifestly is not permitted to abdicate, or to transfer to others, the essential legislative func tions with which it is thus vested. "(1) The matter is again dealt with by Evatt J. in Victorian Stevedoring and General Contracting Co. Pty. Ltd. and Neakes vs Dignan(2), in these words : "On final analysis therefore, the Parliament of the Commonwealth is not competent to 'abdicate ' its powers of legislation. This is not because Parliament is bound to perform any or all of its legislative powers or functions, for it may elect not to do so; and not because the doctrine of separation of powers prevents Parliament from granting authority to other bodies to make laws or bye laws and thereby exercise legislative power, for it does so in almost every statute; but because each and every one of the laws passed by Parliament must answer the description of a law upon one or more of the subject matters.stated in the Con stitution. A law by which Parliament gave all its lawmaking authority to another body would be bad merely because it would fail to pass the test last mentioned." (1) , (2) at 121, 820 I think that the correct legal position has been compre hensively summed up by Lord Haldane in In re the Initiative and Referendum Act(3): "No doubt a body, with a power of legislation on the subjects entrusted to it so ample as that enjoyed by a Provincial Legislature in Canada, could, while preserving its own capacity intact, seek the assistance of subordinate agencies, as has been done when in Hodge vs The Queen, the Legislature of Ontario was held entitled to entrust to a Board of Commissioners authority to enact regulations relat ing to taverns; but it does not follow that it can create and endow with its own capacity a new legislative power not created by the Act to which it owes its own existence. " What constitutes abdication and what class of cases will be covered by that expression will always be a question of fact, and it is by no means easy to lay down any comprehen sive formula to define it, but it should be recognized that the rule against abdication does not prohibit the Legisla ture from employing any subordinate agency of its own choice for doing such subsidiary acts as may be necessary to make its legislation effective, useful and complete. Having considered the three principles which are said to negative delegation of powers, I will now proceed to consid er the argument put forward by the learned Attorney General that the power of delegation is implicit in the power of legislation. This argument is based on the principle of sovereignty of the legislature within its appointed field. Sovereignty has been variously described by constitutional writers, and sometimes distinction is drawn between legal sovereignty and political sovereignty. One of the writers describes it as the power to make laws and enforce them by means of coercion it cares to employ, and he pro ceeds to say that in England the legal sovereign, i.e., the person or persons who according to the law of the land legislate and administer the Government, is the King in Parliament, whereas the political (1) at 945. 821 or the constitutional sovereign, i.e., the body of persons in whom power ultimately resides, is the electorate or the voting public(1). Dicey states that the legal conception of sovereignty simply means the power of law making unrestrict ed by any legal limit, and if the term "sovereignty" is thus used, the sovereign power under the English Constitution is the Parliament. The main attribute of such sovereignty is stated by him in in these words : "There is no law which Parliament cannot change (or to put the same thing somewhat differently, fundamental or so called constitutional laws are under our Constitution changed by the same body and in the same manner as other laws, namely, by Parliament acting in its ordinary legisla tive character) and any enactment passed by it cannot be declared to be void. According to the same writer, the characteristics of a non sovereign law making body are : ( 1 ) the existence of laws which such body must obey and cannot change;(2) the formation of a marked distinction between ordinary laws and fundamental laws;and (3) the existence of some person or persons, judicial or otherwise, having authority to pro nounce upon the validity or constitutionality of laws passed by such law making body. Dealing with the Indian or the colonial legislature, the learned writer characterizes it as a non sovereign legislature and proceeds to observe that its authority to make laws is as completely subordinate to and as much dependent upon Acts of Parliament as is the power of London and NorthWestern Railway Co. to make byelaws. This is undoubtedly an overstatement and is certainly not ap plicable to the Indian Parliament of today. Our present Parliament, though it may not be as sovereign as the Parlia ment of Great Britain, is certainly as sovereign as the Congress of the United States of America and the Legisla tures of other independent countries having a Federal Con stitution. But what is more relevant (1) Modern Political Constitutions, by Strong. 822 to our purpose is that Dicey himself, dealing with colonial and other similar legislatures, says that "they are in short within their own sphere copies of the Imperial Parlia ment, they are within their own sphere sovereign bodies, but their freedom of action is controlled by their subordination to the Parliament of the United Kingdom. " These remarks undoubtedly applied to the Legislative Council of 1912 which passed the , and they apply to the present Parliament also with this very material modification that its freedom of action is no longer controlled by subor dination to the British Parliament but is controlled by the Indian Constitution. At this stage, it will be useful to refer to certain cases decided by the Privy Council in England in which the question of the ambit of power exercised by the Indian and colonial legislatures directly arose. The leading case on the subject is Queen vs Burah(1), which has been cited by this court on more than one ' occasion and has been accepted as good authority. In that case, the question arose whether a section of Act No. XXII of 1869 which conferred upon the Lieutenant Governor of Bengal the power to determine whether a law or any part thereof should be applied to a certain territory was or was not ultra vires. While holding that the impugned provision was intra vires, the Privy Council made certain observations which have been quoted again and again and deserve to be quoted once more. Having held that the Indian Legislature was not a delegate of the Imperial Parliament and hence the maxim, delegatus non potest dele gare, did not apply (see ante for the passage dealing with this point), their Lordships proceeded to state as follows:. "Their Lordships agree that the Governor General in Council could not by any form of enactment, create in India, and arm with general legislative authority, a new legisla tive power, not created or authorized by the Councils Act. Nothing of that kind has, in their Lordships ' opinion, been done or attempted in the (1) 5 I.A. 178. 823 present case. What has been done is this. The Governor General in Council has determined, in the due and ordinary course of legislation, to remove a particular district from the jurisdiction of the ordinary Courts and offices, and to place it under new Courts and offices., to be appointed by and responsible to the Lieutenant Governor of Bengal, leav ing it to the Lieutenant Governor to say at what time that change shall take place; and also enabling him, not to make what laws he pleases for that or any other district, but to apply by public notification to that district any law, or part of a law, which either already was, or from time to time might be, in force, by proper legislative authority, 'in the other territories subject to his government '. " Then, later they added : "The proper Legislature has exercised its judgment as to place, person, laws, powers; and the result of that judgment has been to legislate conditionally as to all these things. The conditions having been fulfilled, the legislation is now absolute. Where plenary powers of legislation exist as to particular subjects, whether in an Imperial or in a provin cial legislature, they may (in their Lordships judgment) be well exercised, either absolutely or conditionally. Legis lation, conditional on the use of particular powers, or on the exercise of a limited discretion, entrusted by the Legislature to persons in whom it places confidence, is no uncommon thing; and, in many circumstances, it may be highly convenient. The British Statute Book abounds with examples of it; and it cannot be supposed that the Imperial Parlia ment did not, when constituting the Indian Legislature, contemplate this kind of conditional legislation as within the scope of the legislative powers which it from time to time conferred. " The next case on the subject is Russell vs The Queen (1). In that case, the Canadian Temperance Act, 1878, was challenged on the ground that it was (1) 7 App, Cas. 824 ultra vires the Parliament of Canada. The Act was to be brought into force in any county or city if on vote of the majority of the electors of that county city favouring such a course, the Governor General in Council declared the relative part of the Act to be on force. It was held by the Privy Council that this provision did not amount to a dele gation of legislative power to a majority of the voters in a city or county. The passage in which this is made clear, runs as follows: "The short answer to this objection is that the Act does not delegate any legislative powers whatever. It contains within itself the whole legislation on the matters with which it deals. The provision that certain parts of the Act shall come into operation only on the petition of a majority of electors does not confer on these persons power to legis late. Parliament itself enacts the condition and everything which is to follow upon the condition being fulfilled. Conditional legislation of this kind is in many cases con venient, and is certainly not unusual, and the power so to legislate cannot be denied to the Parliament of Canada when he subject of legislation is within its competency. If authority on. this point were necessary, it will be found in the case of Queen vs Burah, lately before this Board. The same doctrine was laid down in the case of lodge vs The Queen (1), where the question arose as to whether the legislature of Ontario had or had not the power of entrust ing to a local authority the Board of Commissioners the power of making regulations with respect to the Liquor Licence Act, 1877, which among other things created offences for the breach of hose regulations and annexed penalties thereto. their Lordships held that the Ontario Legislature had that power, and after reiterating that the Legislature which passed the Act was not a delegate, they observed as follows : "When the British North America Act enacted that there should be a legislature for Ontario, and that (1) 9 App. 825 its legislative assembly should have exclusive authority to make laws for the Province and for provincial purposes in relation to the matters enumerated in section 92, it con ferred powers not in any sense to be exercised by delegation from or as agents of the Imperial Parliament, but authority as plenary and as ample within the limits prescribed by section 92 as the Imperial Parliament in the plenitude of its powers possessed and could bestow. Within these limits of subjects and area the local legislature is supreme, and has the same authority as the Imperial Parliament, or the Parliament of the Dominion, would have had under like circumstances to confide to a municipal institution or body of its own creation authority to make byelaws or resolutions as to subjects specified in the enactment, and with the object of carrying the enactment into operation and effect." Another case which may be usefully cited is Powell vs Apollo Candle Co. (1). The question which arose in that case was whether section 133 of the Customs Regulations Act of 1879 of New South Wales was or was not ultra rites the colonial legislature. That section provided that "when any article of merchandise then unknown to the collector is imported, which, in the opinion of the collector or the commissioners, is apparently a substitute for any known dutiable article, or is apparently designed to evade duty, but possesses properties in the whole or in part which can be used or were intended to be applied for a similar purpose as such dutiable article, it shall be lawful for the Gover nor to direct that a duty be levied on such article at a rate to be fixed in proportion to the degree in which such unknown article approximates in its qualities or uses to such dutiable article. " Having repelled the contention that the colonial legislature was a delegate of the Imperial Parliament and having held that it was not acting as an agent or a delegate, the Privy Council proceeded to deal with the question raised in the following manner : (1) 10App. 826 "It is argued that the tax in question has been imposed by the Governor, and not by the Legislature, who alone had power to impose it. But the duties levied under the Order in Council are really levied by the authority of the Act under which the order is issued. The Legislature has not parted with its perfect control over the Governor, and has the power, of course, at any moment, of withdrawing or altering the power which they have entrusted to him. Under these circumstances their Lordships are of opinion that the judgment of the Supreme Court was wrong in declaring section 133 of the Customs Regulations Act of 1879 to be beyond the power of the Legislature. " Several other eases were cited at the Bar in which the supremacy of a legislature (which would be nonsovereign according to the tests laid down by Dicey) within the field ascribed to its operation, were affirmed, but it is unnec essary to multiply instances illustrative of that princi ple. I might however quote the pronouncement of the Privy Council in the comparatively recent case of Shannon vs Lower Mainland Dairy Products Board (1), which runs as follows : "The third objection is that it is not within the powers of the Provincial Legislature to delegate so called legislative powers to the Lieutenant Governor in Council, or to give him powers of further delegation. This objection appears to their Lordships subversive of the rights which the Provincial Legislature enjoys while dealing with matters falling within the classes of subjects in relation to which the constitution has granted legislative powers. Within its appointed sphere the Provincial Legislature is as supreme as any other Parliament; and it is unnecessary to try to enu merate the innumerable occasions on which Legislatures, Provincial, Dominion and Imperial, have entrusted var ious persons and bodies with similar powers to those con tained in this Act. " I must pause here to note briefly certain important principles which can be extracted from the cases (1) at 722. 827 decided by the Privy Council which I have so far cited, apart from the principle that the Indian and colonial legis latures are supreme in their own field and that the maxim, delegatus non potest delegare, does not apply to them. In the first place, it seems quite clear that the Privy Council never liked to commit themselves to the statement that delegated legislation was permissible. It was easy for them to have said so and disposed of the cases before them, but they were at pains to show that the provisions impugned before them were not instances of delegation of legislative authority but they were instances of conditional legislation which, they thought, the legislatures concerned were compe tent to enact, or that the giving of such authority as was entrusted in some cases to subordinate agencies was ancil lary to legislation and without it "an attempt to provide for varying details and machinery to carry them out might become oppressive or absolutely fail. " They also laid down: (1) that it will be not correct to describe conditional legislation and other forms of legislation which they were called upon to consider in several cases which have been cited as legislation through another agency. Each Act or enactment which was impugned before them as being delegated legislation, contained within itself the whole legislation on the matter which it dealt with, laying down the condition and everything which was to follow on the condition being fulfilled; (2) that legislative power could not be said to have been parted with if the legislature retained its power intact and could whenever it pleased destroy the agency it had created and set up another or take the matter directly into its own hands; (3) that the question as to the extent to which the aid of subordinate agencies could be sought by the legislatures and as to how long they should continue them were matters for each legislature and not for the court of law to decide; (4) that a legislature in committing important regulations to others does not efface itself; and (5) that the legislature, like the Governor General in Council, could not by any form of enactment create, and arm with legislative 828 authority, a new legislative power not created or authorised by the Councils Act to which it (the Governor General in Council) owes its existence. I have already indicated that the expressions "delegated legislation" and "delegating legislative power" are some times used in a loose sense, and sometimes in a strict sense. These expressions have been used in the loose or popular sense in the various treatises or reports dealing with the so called delegated legislation; and if we apply that sense to the facts before the Privy Council, there can be no doubt that every one of the cases would be an instance of delegated legislation or delegation of legislative au thority. But the Privy Council have throughout repelled the suggestion that the cases before them were instances of delegated legislation or delegation of legislative authori ty. There can be no doubt that if the legislature completely abdicates its functions and sets up a parallel legislature transferring all its power to it, that would undoubtedly be a real instance of delegation of its power. In other words, there will be delegation in the strict sense if legislative power with all its attributes is transferred to another authority. But the Privy Council have repeatedly pointed out that when the legislature retains its dominant power intact and can whenever it pleases destroy the agency it has created and set up another or take the matter directly into its own hands, it has not parted with its own legislative power. They have also pointed out that the act of the subordinate authority does not possess the true legislative attribute, if the efficacy of the act done by it is not derived from the subordinate authority but from the legisla ture by which the subordinate authority was entrusted with the power to do the act. In some of the cases to which reference has been made, the Privy Council have referred to the nature and principles of legislation and pointed out that conditional legislation simply amounts to entrusting a limited discretionary authority to others, and that to seek the aid of subordinate agencies in carrying out the object of the legislation is ancillary to legislation and properly 829 lies within the scope of the powers which every legislature must possess to function effectively. There is a mass of literature in America also about the socalled delegated legislation, but if the judgments of the eminent American Judges are carefully studied, it will be found that, though in some cases they have used the expression in the popular sense, yet in many cases they have been as careful as the Privy Council in laying down the principles and whenever they have upheld any provision impugned before them on the ground that it was delegation of legislative authority they have rested their conclusion upon the fact that there was in law no such delegation. The learned Attorney General has relied on the authority of Evatt J. for the proposition that "the true nature and scope of the legislative power of the Parliament involves as part of its content power to confer law making power upon authorities other than Parliament itself"(1). It is undoubt edly true that a legislature which is sovereign within its own sphere must necessarily have very great freedom of action, but it seems to me that in strict point of law the dictum of Evatt J. is not a precise or an accurate state ment. The first question which it raises is what is meant by law making power and whether such power in the true sense of the term can be delegated at all. Another difficulty which it raises is that once it is held as a general proposition that delegation of lawmaking power is implicit in the power of legislation, it will be difficult to draw the line at the precise point where the legislature should stop and it will be permissible to ask whether the legislature is competent to delegate 1, 10 or 99 per cent of its legislative power, and whether the strictly logical conclusion will not be that the legislature can delegate the full content of its power in certain cases. It seems to me that the correct and the strictly legal way of putting the matter is as the Privy Council have put it in several cases. The legislature in order to function effectively, has to call for sufficient data, has to (1) See the Victorian Stevedoring case: 830 legislate for the future as well as for the present and has to provide for a multiplicity of varying situations which may be sometimes difficult to foresee. In order to achieve its object, it has to resort to various types and forms of legislation, entrusting suitable agencies with the power to fill in details and adapt legislation to varying circum stances. Hence, what is known as conditional legislation, an expression which has been very fully explained and de scribed in a series of judgments, and what is known as subordinate legislation, which involves giving power to subordinate authorities to make rules and regulations to effectuate the object and purpose for which a certain law is enacted, have been recognized to be permissible forms. of legislation on the principle that a legislature can do everything which is ancillary to or necessary for effective legislation. Once this is conceded, it follows that the legislature can resort to any other form of legislation on the same principle, provided that it acts within the limits of its power, whether imposed from without or conditioned by the nature of the duties it is called upon to perform. The conclusions at which I have arrived so far may now be summed up : (1) The legislature must normally discharge its primary legislative function itself and not through others. (2) Once it is established that it has sovereign powers within a certain sphere, it must follow as a corollary that it is free to legislate within that sphere in any way which appears to it to be the best way to give effect to its intention and policy in making a particular law, and that it may utilize any outside agency to any extent it finds neces sary for doing things which it is unable to do itself or finds it inconvenient to do. In other words, it can do everything which is ancillary to and necessary for the full and effective exercise of its power of legislation. (3) It cannot abdicate its legislative functions, and therefore while entrusting power to an outside 831 agency, it must see that such agency, acts as a subordinate authority and does not become a parallel legislature. (4) The doctrine of separation of powers and the judi cial interpretation it has received in America ever since the American Constitution was framed, enables the American courts to check undue and excessive delegation but the courts of this country are not committed to that doctrine and cannot apply it in the same way as it has been applied in America. Therefore, there are only two main checks in this country on the power of the legislature to delegate, these being its good sense and the principle that it should not cross the line beyond which delegation amounts to "abdicacation and self effacement". I will now deal with the three specific questions with which we are concerned in this Reference, these being as follows : (1) Was section 7 of the , or any of the provisions thereof and in what particular or particulars or to what extent ultra vires the legislature which passed the said Act ? (2) Was the Ajmer Merwara (Extension of Laws) Act, 1947, or any of the provisions thereof and in what particular or particulars or to what extent ultra vires the legislature which passed the said Act ? (3) Is section 2 of the Part C States (Laws) Act, 1950, or any of the provisions thereof and in what particular or particulars or to what extent ultra vires the Parliament ? Before attempting to answer these questions, it will be Useful to state briefly a few salient facts about the compo sition and power of the Indian Legislature at the dates on which the three Acts in question were passed. It appears that formerly it was the executive Government which was empowered to make regulations and ordinances for "the good government of the factories and territories acquired in India", and up to 1833, the laws used to be passed by the Governor General in Council or by the Governors of Madras and 832 Bombay in Council, in the form of regulations. By the Charter Act of 1833, the Governor General 's Council was extended by the inclusion of a fourth member who was not entitled to sit or vote except at meetings for making laws and regulations. The Governor General in Council was by this Act empowered to make laws and regulations for the whole of India and the legislative powers which vested in the Governors of Madras and Bombay were withdrawn, though they were allowed to propose draft schemes. The Acts passed by the Governor General in Council were required to be laid before the British Parliament and they were to have the same force as an Act of Parliament. In 1853, the strength of the Council of the Governor General was further increased to 12 members, by including the fourth member as an ordinary member and 6 special members for the purpose of legislation only. Then came the Councils Act of 1861, by which the power of legislation was restored to the Governors of Madras and Bombay in Council, and a legislative council was ap pointed for Bengal; but the Governor General in Council was still competent to exercise legislative authority over the whole of India and could make laws for "all persons and all places and things", and for legislative purposes the Council was further remodelled so as to include 6 to 12 members nominated for a period of 2 years by the Governor General, of whom not less than one half were to be non officials. In this Council, no measure relating to certain topics could be introduced without the sanction of the Governor General, and no law was to be valid until the Governor General had given his assent to it and the ultimate power of disallowing a law was reserved to the Crown. Further, local legislatures were constituted for Madras and Bombay, wherein half the members were to be non officials nominated by the Governors, and the assent of the Governor as well as that of the Governor General was necessary to give validity to any law passed by the local legislature. A similar legislature was directed to be constituted for the lower Provinces of Bengal, 833 and powers were given to constitute legislative councils for certain other Provinces. In 1892, the Indian Councils Act was passed, by which the legislative councils were further expanded and certain fresh rights were given to the members. In 1909, came the MorleyMinto scheme under which the strength of the legislative council was increased by the inclusion of 60 additional members of whom 27 were elected and 33 nominated. Soon after this, in 1912, the was passed, and the points which may be noticed in connection with the legislature which functioned at that time are: firstly, within its ambit, its powers were as plenary as those of the legislature of 1861, whose powers came up for consideration before the Privy Council in Bu rah 's case, and secondly, considering the composition of the legislative council in which the non official and the executive elements predominated, there was no room for the application of the doctrine of separation of powers in its full import, nor could it be said that by reason of that doctrine the legislature could not invest the GovernorGener al with the powers which we find him invested with under the . It should be stated that in section 7 of that Act as it originally stood, the Governor General was mentioned as the authority who could by notification extend any enactment which was in force in any part of British India at the date of such notification, The "Provincial Government" was substituted for the "Governor General" subsequently. Coming to the second Act, namely, the Ajmer Merwara (Extension of Laws) Act, 1947, we find that when it was enacted on the 31st December, 1947, the Government of India Act, 1935, as adapted by the India (Provisional Constitu tion) Order, 1947, issued under the Indian Independence Act, 1947, was in force. Under that Act, there were three Legis lative Lists, called the Federal, Provincial and Concurrent Legislative Lists. Lists I and II contained a list of sub jects on which the Central Legislature and the Provincial Legislature could respectively legislate, and List III contained subjects on which both the Central and the 834 Provincial Legislatures could legislate. Section 100(4) of the Act provided that "the Dominion Legislature has power to make laws with ' respect to matters enumerated in the Provin cial Legislative List except for a Province or any part thereof. " Section 46 (3) stated that the word "Province", unless the context otherwise required, meant a Governor 's Province. Therefore, section 100 (4) read with the defini tion of "Province", empowered the Dominion Legislature to make laws with respect to subjects mentioned in all the three Lists for Ajmer Merwara, which was not a Governor 's Province. The Central Legislature was thus competent to legislate for Ajmer Merwara in regard to any subject, and it had also plenary powers in the entire legislative field allotted to it. Further, at the time the Act in question was passed, the Dominion Legislature was simultaneously functioning as the Constituent Assembly and had the power to frame the Constitution. The third Act with which we are concerned was passed after the present Constitution had come into force. Article 245 of the Constitution lays down that "subject to the provisions of this Constitution, Parliament may make laws from the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State. " On the pattern of the Government of India Act, 1935, Lists I and II in the Seventh Schedule of the Constitution enumerate the subjects on which the Parlia ment and the State Legislatures can respectively legislate, while List 11 enumerates subjects on which both the Parlia ment and the State Legislatures can legislate. Under article 246 (4), "Parliament has power to make laws with respect to any matter for any part of the territory of India not in cluded in Part A or Part B of the First Schedule notwith standing that such matter is a matter enumerated in the State List. " The points to be noted in connection with the Part C States (Laws) Act, 1950, are : (1) The present Parliament derives its authority from the Constitution which has been framed by the 835 people of India through their Constituent Assembly, and not from any external authority, and within its own field it is as supreme as the legislature of any other country possess ing a written federal Constitution. (2) The Parliament has full power to legislate for the Part C States in regard to any subject. (3) Though there is some kind of separation of govern mental functions under the Constitution, yet the Cabinet system, which is the most notable characteristic of the British Constitution, is also one of the features of our Constitution and the doctrine of separation of powers, which never acquired that hold or significance in this country as it has in America, cannot dominate the interpretation of any of the Constitutional provisions. I may here refer to an argument which is founded on articles 353 (b) and 357 (a) and (b) of the Constitution. Under article 353 (b), when a Proclamation of Emergency is made by the President " the power of Parliament to make laws with respect to any matter shall include power to make laws conferring powers and imposing duties, or authorising the conferring of powers and the imposition of duties, upon the Union or officers and authorities of the Union as respects that matter, notwithstanding that it is one which is not enumer ated in the Union List. " Under article 357, when there is a failure of constitu tional machinery in a State, "it shall be competent (a) for Parliament to confer on the President the power of the Legislature of the State to make laws, and to autho rise the President to delegate, subject to such conditions as he may think fit to impose, the power so conferred to any other authority to be specified by him in that behalf; (b) for Parliament, or for the President or other au thority in whom such power to make laws is vested under sub clause (a), to make laws conferring powers and imposing duties, or authorising the Conferring of 108 836 powers and the imposition of duties, upon the Union or officers and authorities thereof. In both these articles, the power of delegation is ex pressly conferred, and it is argued that if delegation was contemplated in normal legislation, there would have been an express power given to the ' Parliament, similar to the power given in articles 353(b) and 357(a) and (b). In other words, the absence of an express provision has been used as an argument for absence of the power to delegate. It should however be noticed that these are emergency provisions and give no assistance in deciding the question under considera tion. So far as article 353(b) is concerned, it is enough to say that a specific provision was necessary to empower the Parliament to make laws in respect of matters included in the State List upon which the Parliament was not otherwise competent to legislate. When the Parliament was specially empowered to legislate in a field in which it could not normally legislate, it was necessary to state all the powers it could exercise. Again, article 357(a) deals with complete transfer of legislative power to the President, while clause (b) is incidental to the powers conferred on the Parliament and the President to legislate for a State in case of fail ure of constitutional machinery in that State. These provi sions do not at all bear out the conclusion that is sought to be drawn from them. Indeed, the Attorney General drew from them the opposite inference, namely, that by these provisions the Constitution makers have recognized that delegation of power is permissible on occasions when it is found to be necessary. In my opinion, neither of these conclusions can be held to be sound. I will now deal with the three provisions in regard to which the answer is required in this Reference. They are as follows: Section 7 of the . "The Provincial Government may, by notification in the official gazette, extend with such restrictions and modifi cations as it thinks fit to the Province of Delhi or any part thereof, any enactment which is in 837 force in any part of British India at the date of such notification. " Section 2 of the Ajmer Merwara (Extension of Laws). Act, 1947. "The Central Government may, by notification in the official gazette, extend to the Province of Ajmer Merwara with such restrictions and modifications as it thinks fit any enactment which is in force in any other Province at the date of such notification. " Section 2 of the Part C States (Laws) Act, 1950. "The Central Government may, by notification in the official Gazette, extend to any Part C State (other than Coorg and the Andaman and Nicobar Islands) or to any part of such State, with such restrictions and modifications as it thinks fit, any enactment which is in force in a Part A State at the date of the notification; and provision may be made in any enactment so extended for the repeal or amend ment of any corresponding law (other than a Central Act) which is for the time being applicable to that Part C State. " At the first sight, these provisions appear to be very wide, their most striking features being these : 1. There is no specification in the Act by way of a list or schedule of the laws out of which the selection is to be made by the Provincial or the Central Government, as the case may be, but the Government has been given complete discretion to adopt any law whatsoever passed in any part of the country, whether by the Central or the Provincial Legis lature. The provisions are not confined merely to the laws in existence at the dates of the enactment of these Acts but extend to future laws also. The Government concerned has been empowered not only to extend or adopt the laws but also to introduce such restrictions and modifications as it thinks fit; and in the Part C States (Laws) Act, 1950, power has been given to the Central Government to make a provision in the enactment extended under the Act for the repeal or amendment of any corresponding law 838 (other than a Central Act) which is for the time being applicable to the Part C State concerned. There can be no doubt that the powers which have been granted to the Government are very extensive and the three Acts go farther than any Act in England or America, but, in my judgment, nothwithstanding the somewhat unusual features to which reference has been made, the provisions in question cannot be held to be invalid. Let us overlook for the time being the power to intro duce modifications with which I shall deal later, and care fully consider the main provision in the three Acts. The situation with which the respective legislatures were faced when these Acts were passed, was that there were certain State or States with no local legislature and a whole bundle of laws had to be enacted for them. It is clear that the legislatures concerned, before passing the Acts, applied their mind and decided firstly, that the situation would be met by the adoption of laws applicable to the other Prov inces inasmuch as they covered a wide range of subjects approached from a variety of points of view and hence the requirements of the State or States for which the laws had to be framed could not go beyond those for which laws had already been framed by the various legislatures, and second ly, that the matter should be entrusted to an authority which was expected to be familiar and could easily make itself familiar with the needs and conditions of the State or States for which the laws were to be made. Thus, everyone of the Acts so enacted was a complete law, because it em bodied a policy, defined a standard, and directed the au thority chosen to act within certain prescribed limits and not to go beyond them. Each Act was a complete expression of the will of the legislature to act in a particular way and of its command as to how its will should be carried out. The legislature decided that in the circumstances of the case that was the best way to legislate on the subject and it so legislated. It will be a misnomer to describe such legisla tion as amounting to abdication of powers, because from the very nature of the legislation 839 it is manifest that the legislature had the power at any moment of withdrawing or altering any power with which the authority chosen was entrusted, and could change or repeal the laws which the authority was required to make applica ble to the State or States concerned. What is even more important is that in each case the agency selected was not empowered to enact laws, but it could only adapt and extend laws enacted by responsible and competent legislatures. Thus, the power given to the Governments in those Acts was more in the nature of ministerial than in the nature of legislative power. The power given was ministerial, because all that the Government had to do was to study the laws and make selections out of them. That such legislation is neither unwarranted on princi ple nor without precedent, will be clear from what follows: 1. The facts of the case of Queen vs Burah(1) are so familiar that they need not be reproduced, but for the purpose of understanding the point under discussion, it will be necessary to refer to section 8 of Act XXII of 1869 and some of the observations of the Privy Council which obvious ly bear on that section. The section runs as follows : "The said Lieutenant Governor may from time to time, by notification in the Calcutta Gazette, extend to the said territory any law, or any portion of any law, now in force in the other territories subject to his Government, or which may hereafter be enacted by the Council of the Governor General, or of the said Lieutenant Governor, for making laws and regulations, and may on making such extension direct by whom any powers or duties incident to the provi sions so extended shall be exercised or performed, and make any order which he shall deem requisite for carrying such provisions into operation. " In their judgment, the Privy Council do not quote this section, but evidently they had it in mind when they made the following observations : (1) 5 I.A. 178. 840 "The legislature determined that, so far, a certain change should take place; but that it was expedient to leave the time and the manner, of carrying it into effect to the discretion of the Lieutenant Governor; and also, that the laws which were or might be in force in the other territo ries subject to the same Government were such as it might be fit and proper to apply to this district also; but that,.as it was not certain that all those laws, and every part of them, could with equal convenience be so applied, it was expedient, on that point also, to entrust a discretion to the Lieutenant Governor. " The language used here can be easily adapted in the following manner so as to cover the laws in question: "The legislature determined that . . the laws which were or might be in force in the other territories . . (omitting the words "subject to the same Government" for reasons to be stated presently) were such as it might be fit and proper to apply to this State also; but that, as it was not certain that all those laws, and every part of them, could with equal convenience be so applied, it was expedient, on that point also, to entrust a discretion to the Central or Provincial Government. " It seems to me that this line of reasoning fully fits in with the facts before us. The words "territories sub ject to the same Government" are not in my opinon material, because in Burah 's case only such laws as were in force in the other territories subject to the same Government were to be extended. We are not to lay undue emphasis on isolated words but look at the principle underlying the decision in that case. In the as originally enacted, the agency which was to adapt the laws was the Governor General. In the other two Acts, the agency was the Central Govern ment. In 1912, the Governor General exercised jurisdiction over the whole of the territories the laws of which were to be adapted for Delhi. The same remark applies to the Central Government, while dealing with the other two Acts. As I have already 841 stated, Burah 's case has been accepted by this Court as having been correctly decided, and we may well say that the impugned Acts are mere larger editions of Act XXII of 1869 which was in question in Burah 's case. It is now well settled in England and in America that a legislature can pass an Act to allow a Government or a local body or some other agency to make regulations consist ently with the provisions of the Act. At no stage of the arguments, it was contended before us that such a power cannot be granted by the legislature to another body. We have known instances in which regulations have been made creating offences and imposing penalties and they have been held to be valid. It seems to me that the making of many of these regulations involves the exercise of much more legis lative power and discretion than the selection of appropri ate laws out of a mass of ready made enactments. The fol lowing observations in a well known American case, which furnish legal justification for empowering a subordinate authority to make regulations, seem to me pertinent : "It is well settled that the delegation by a State legislature to a municipal corporation of the power to legislate, subject to the paramount law, concerning local affairs, does not violate the inhibition against the delega tion of the legislative function. It is a cardinal principle of our system of government that local affairs shall be managed by local authorities, and general affairs by the central authority, and hence, while the rule is also fundamental that the power to make laws cannot be delegated, the creation of municipalities exercising local self government has never been held to trench upon that rule. Such legislation is not regarded as a transfer of general legislative power, but rather as the grant of the authority to prescribe local regulations, according to immemorial practice, subject, of course, to the interposition of the superior in cases of necessity." (Per Fuller J. in Stoutenburgh vs Hennick(1). (1) ; 842 3. A point which was somewhat similar to the one raised before us arose in the case of Sprigg vs Sigcau(1). In that case, section 2 of the Pondoland Annexation Act, 1894, was brought into question. That section gave authority to the Governor to add to the existing laws in force in the terri tories annexed, such laws as he shall from time to time by Proclamation declare to be in force in such territories. Dealing with this provision, the Privy Council observed as follows : "The legislative authority delegated to the Governor by the Pondoland Annexation Act is very cautiously expressed, and is very limited in its scope. There is not a word in the Act to suggest that it was intended to make the Governor a dictator, or even to clothe him with the full legislative powers of the Cape Parliament. His only authority, after the date of the Act, is to add to the laws, statutes and ordi nances which had already been proclaimed and were in force at its date, such laws, statutes and ordinances as he 'shall from time to time by proclamation declare to be in force in such territories '. In the opinion of their Lordships, these words do not import any power in the Governor to make "new laws" in the widest sense of that term; they do no more than authorise him to transplant to the new territories, and enact there, laws, statutes and ordinances which already exist, and are operative in other parts of the Colony. It was argued for the appellant that the expression "all such laws made" occurring in the proviso, indicates authority to make new laws which are not elsewhere in force; but these words cannot control the plain meaning of the enactment upon which they are a proviso; and, besides that enactment is left to explain the meaning of the proviso by the reference back which is implied in the word "such" (pp. 247 8). Following the line of reasoning in the case cited, it may be legitimately stated that what the Central or the Provincial Government has been asked to do under the Acts in question is not to enact "new laws" but to transplant" to the territory concerned laws operative (1) , 843 in other parts of the country. I notice that in section 2 of the Pondoland Annexation Act, 1894, there was a proviso requiring that "all such laws made under or by virtue of this Act shall be ]aid before both Houses of Parliament within fourteen days after the beginning of the Session of Parliament next after the proclamation thereof as aforesaid, and shall be effectual, unless in so far as the same shall be repealed, altered, or varied by Act of Parliament." This provision however does not affect the principle. It was made only as a matter of caution and to ensure the superin tendence of Parliament, for the laws were good laws until they were repealed, altered or varied by Parliament. If the Privy Council have correctly stated the principle that the legislature in enacting subordinate or conditional legisla tion does not part with its perfect control and has the power at any moment of withdrawing or altering the power entrusted to another authority, its power of superintendence must be taken to be implicit in all such legislation. Refer ence may also be made here to the somewhat unusual case of Dorr vs United States(1), where delegation by Congress to a commission appointed by the President of the power to legis late for the Phillipine Islands was held valid. There are also some American cases in which the adopt ing of a law or rule of another jurisdiction has been per mitted, and one of the cases illustrative of the rule is Re Lasswell(2), where a California Act declaring the existence of an emergency and providing that where the Federal author ities fixed a Code for the government of any industry, that Code automatically became the State Code therefor, and fixing a penalty for violation of such Codes, was held to be constitutional and valid, as against the contention that it was an unlawful delegation of authority by the State legis lature to the Federal government and its administrative agencies. This case has no direct bearing on the points before us, but it shows that application of laws made (1) ; (2) (1934) 1 Cal. (2d), 183. 109 844 by another legislature has in some cases been held to be permissible. There are many enactments in India, which are not without their parallel in England, in which it is stated that the provisions of the Act concerned shall apply to certain areas in the first instance and that they may be extended by the Provincial Government or appropriate author ity to the whole or any part of a Province. The , is an instance of such enactment, as section 1 thereof provides as follows : "It (the Act) extends in the first instance to all the Provinces of India except Bombay, East Punjab and Delhi. But this Act or any part thereof may by notification in the official Gazette be extended to the whole or any part of the said Provinces by the Provincial Government concerned. " It is obvious that if instead of making similar provi sions in 50 or more Acts individually, a single provision is made in any one Act enabling the Provincial Governments to extend all or any of the 50 or more Acts, in which provision might have been but has not been made for extension to the whole or any part of the Provinces concerned there would be no difference in principle between the two alternatives. It was pointed out to us that in the Acts with which we are concerned, power has been given to extend not only Acts of the Central Legislature, which is the author of the Acts in question, but also those of the Provincial Legislatures. But it seems to me that the distinction so made does not affect the principle involved. The real question is: Can authority be given by a legislature to an outside agency, to extend an Act or series of Acts to a particular area ? This really brings us back to the principle of conditional legislation which is too deeply rooted in our legal system to be ques tioned now. Our attention has been drawn to several Acts con taining provisions similar to the Acts 845 which are the subject of the Reference, these being : 1. Sections 1 and 2 of Act I of 1865. Sections 5 and 5A of the Scheduled Districts Act, 1874 (Act XIV of 1874). The Burma Laws Act, 1898 (Act XIII of 1898). section 10 (1). Section 4 of the (Act XLVII of 1947). The Merchant Shipping Laws (Extension to Acceding States and Amendment) Act, 1949 (Act XVIII of 1949), section 4. The relevant provisions of two of these Acts, which were passed before the Acts in question, may be quoted, to bring out the close analogy. The Scheduled Districts Act, 1874. "The Local Government, with the previous sanction of the Governor General in Council, may, from time to time by notification in the Gazette of India and also in the local Gazette (if any), extend to any of the Scheduled Districts, or to any part of any such District, any enactment which is in force in any part of British India at the date of such extension. In declaring an enactment in force in a Scheduled District or part thereof under section 3 of this Act, or in extending an enactment to a Scheduled District or part thereof under section 5 of this Act, the Local Government with the previous sanction of the Governor General in Coun cil, may declare the operation of the enactment to be sub ject to such restrictions and modifications as that Govern ment think fit. " The Burma Laws Act, 1898. 10(1). "The Local Government, with the previous sanction of the Governor General in Council, may, by notification in the Burma Gazette, extend, with such restrictions and modi fications as it thinks fit, to all or any of the Shan States, or to any specified local area in the Shan State any enactment which is in force 846 in any part of Upper Burma at the date of the extension. " It is hard to say that any firm legislative practice had been established before the and other Acts we are concerned with were enacted, but one may presume that the legislature had made several experiments before the passing of these Acts and found that they had worked well and achieved the object for which they were intended. I will now deal with the power of modification which de pends on the meaning of the words "with such modifications as it thinks fit. " These are not unfamiliar words and they are often used by careful draftsmen to enable laws which are applicable to one place or object to be so adapted as to apply to another. The power of introducing necessary re strictions and modifications is incidental to the power to apply or adapt the law, and in the context in which the provision as to modification occurs, it cannot bear the sinister sense attributed to it. The modifications are to be made within the framework of the Act and they cannot be such as to affect its identity or structure or the essential purpose to be served by it. The power to modify certainly involves a discretion to make suitable changes, but it would be useless to give an authority the power to adapt a law without giving it the power to make suitable changes. The provision empowering an extraneous authority to introduce modifications in an Act has been nicknamed in England as "Henry VIII clause", because that monarch is regarded popu larly as the personification of executive autocracy. Sir Thomas Carr, who bad considerable experience of dealing with legislation of the character we are concerned with, refers to "Henry VIII clause" in this way in his book "Concerning English Administrative Law" at page 44: "Of all the types of orders which alter statutes, the so called 'Henry VIII clause ' sometimes inserted in big and complicated Acts, has probably caused the greatest flutter in England. It enables the Minister 847 by order to modify the Act itself so far as necessary for bringing it into operation. Any one who will look to see what sort of orders have been made under this power will find them surprisingly innocuous. The device is partly a draftsman 's insurance policy, in case he has overlooked something, and is partly due to the immense body of local Acts in England creating special difficulties in particular areas. These local Acts are very hard to trace, and the draftsman could never be confident that he has examined them all in advance. The Henry VIII clause ought, of course, to be effective for a short time only. " It is to be borne in mind that the discretion given to modify a statute is by no means absolute or irrevocable in strict legal sense, with which aspect alone we are princi pally concerned in dealing with a purely legal question. As was pointed out by Garth C.J. in Empress vs Burah(1), the legislature is " 'always in a position to see how the powers, which it has conferred, are being exercised, and if they are exercised injudiciously, or otherwise than in accordance with its intentions, or if, having been exercised, the result is in any degree inconvenient, it can always by another Act recall its powers, or rectify the inconvenience." The learned Chief Justice, while referring to the Civil Procedure Code of 1861, pointed out that it went further than the Act impugned before him, because "it gave the Local Governments a power to alter or modify the Code in any way they might think proper, and so as to intro duce a different law into their respective Provinces from that which was in force in the Regulation Provinces." Nevertheless, the Privy Council considered the Civil Proce dure Code of 1861 to be a good example of valid conditional legislation. In the course of the arguments, we were sup plied with a list of statutes passed by the Central and some of the Provincil Legislatures giving express power of modi fication to certain authorities, and judging from the number of instances included in it, it is not an unimpressive list. A few of the Acts which may be mentioned by (1) I.L.R. S Cal. 63 at 140. 848 way of illustration are: The Scheduled Districts Act, 1874, The Burma Laws Act, 1898, The Bombay Prevention of Prostitu tion Act, 1928, The Madras City Improvement Trust Act, 1945, The Madras Public Health Act, 1939, U.P. Kand Revenue Act, 1901. There are also many instances of such legislation in England, of which only a few may be mentioned below to show that such Acts are by no means confined to this coun try. In 1929, a Bill was proposed to carry out the policy of having fewer and bigger local authority in Scotland. During the debate, it was suddenly decided to create a new kind of body called the district council. There was no time to work out details for electing the new district councillors, and the Bill therefore applied to them the statutory provisions relating to the election of county councillors in rural areas "subject to such modifications and adaptations as the Secretary of State may by order prescribe." In 1925, the Parliament passed the Rating and Valua tion Act, and section 67 thereof provided that if any diffi culty arose in connection with its application to any excep tional area, or the preparation of the first valuation list for any area, the Minister "may by order remove the diffi culty. " It was also provided that "any such order may modify the provisions of this Act so far as may appear to the Minister necessary or expedient for carrying the order into effect." In 1929, a new Local Government Bill was introduced in Parliament, and section 120 thereof provided that "the Minister may make such order for removing difficulties as he may judge necessary. . and any such order may modify the provisions of this Act. " Section 1(2) of the Road Transport Lighting Act, 1927, provided that" the Minister of Transport may exempt wholly or partially, vehicles of particular kinds from the require ments of the Act," and sub section (3) empowered him to "add to or vary such requirements" by regulations. 849 By section 1 of the Trade Boards Act, 1918, "the Minis ter of Labour may, by special order, extend the provisions of the Trade Boards Act, 1909, to new trades. . and may alter or amend the Schedule to the Act. " The Unemployment Insurance Act, 1920, by sec tion 45 provided that "if any difficulty arises with respect to the constitution of special or supplementary schemes. . the Minister of Labour. . may by order do anything which appears to him to be necessary or expedient. . and any such order may modify the provi sions of this Act. . " Similar instances may be multiplied, but that will serve no useful purpose. The main justification for a provision empowering modifications to be made, is said to be that, but for it, the Bills would take longer to be made ready, and the operation of important and wholesome measures would be delayed, and that once the Act became operative, any defect in its provisions cannot be removed until amending legisla tion is passed. It is also pointed out that the power to modify within certain circumscribed limits does not go as far as many other powers which are vested by the legislature in high officials and public bodies through whom it decides to act in certain matters. It seems to me that it is now too late to hold that the Acts in question are ultra vires, merely because, while giving the power to the Government to extend an Act, the legislatures have also given power to the Government to subject it to such modifications and restric tions as it thinks fit. It must, however, be recognised that what is popularly known as the "Henry VIII clause" has from time to time provoked unfavourable comment in England, and the Committee on Ministers ' Powers, while admitting that it must be occasionally used, have added:" . . we are clear in our opinion, first, that the adoption of such a clause ought on each occasion when it is, on the initiative of the Minister in charge of the Bill, proposed to Parliament to be justified by him up to the essential. It can only be essential for the limited purpose of 850 bringing an Act into operation and it should accordingly be in most precise language restricted to those purely machin ery arrangements vitally requisite for that purpose;and the clause should always contain a maximum time limit of one year after which the powers should lapse. If in the event the time limit proves too short which is unlikely the Government should then come back to Parliament with a one clause Bill to extend it. " It may also be stated that in England "delegated legislation" often requires the regula tions or provisions made by the delegate authority to be laid before the Parliament either in draft form or with the condition that they are not to operate till approved by Parliament or with no further direction. The Acts before us are certainly open to the comment that this valuable safe guard has not been observed, but it seems to me that however desirable the adoption of this safeguard and other safe guards which have been suggested from time to time may be, the validity of the Acts, which has to be determined on purely legal considerations, cannot be affected by their absence. I will now deal with section 2 of the Part C States (Laws) Act, 1950, in so far as it gives power to the Central Government to make a provision in the enactment extended under the Act for the repeal or amendment of any correspond ing law which is for the time being applicable to the Part C State concerned. No doubt this power is a far reaching and unusual one, but, on a careful analysis, it will be found to be only a concomitant of the power of transplantation and modification. If a new law is to be made applicable, it may have to replace some existing law which may have become out of date or ceased to serve any useful purpose, and the agency which is to apply the new law must be in a position to say that the old law would cease to apply. The nearest parallel that I can find to this provision, is to be found in the Church of England Assembly (Powers) Act, 1919. By that Act, the Church Assembly is empowered to propose legislation touching matters concerning the Church of England, and 851 the legislation proposed may extend to the repeal or amend ment of Acts of Parliament including the Church Assembly Act itself. It should however be noticed that it is not until Parliament itself gives it legislative force on an affirma tive address of each House that the measure is converted into legislation. There is thus no real analogy between that Act and the Act before us. However, the provision has to be upheld, because, though it goes to the farthest limits, it is difficult to hold that it was beyond the powers of a legislature which is supreme in its own field; and all we can say is what Lord Hewart said in King vs Minister of Health(1), namely, that the particular Act may be regarded as "indicating the high water mark of legislative provisions of this character," and that, unless the legislature acts with restraint, a stage may be reached when legislation may amount to abdication of legislative powers. Before I conclude, I wish to make a few general observa tions here on the subject of "delegated legislation" and its limits, using the expression once again in the popular sense. This form of legislation has become a present day necessity, and it has come to stay it is both inevitable and indispensable. The legislature has now to make so many laws that it has no time to devote to all the legislative details, and sometimes the subject on which it has to legis late is of such a technical nature that all it can do is to state the broad principles and leave the details to be worked out by those who are more familiar with the subject. Again, when complex schemes of reform are to be the subject of legislation, it is difficult to bring out a selfcontained and complete Act straightaway, since it is not possible to foresee all the contingencies and envisage all the local requirements for which provision is to be made. Thus, some degree of flexibility becomes necessary, so as to permit constant adaptation to unknown future conditions without the necessity of having to amend the law again and again. The advantage of such a course is that it enables the delegate authority (1) at 236. 110 852 to consult interests likely to be affected by a particular law, make actual experiments when necessary, and utilize the results of its investigations and experiments in the best way possible. There may also arise emergencies and urgent situations requiring prompt action and the entrustment of large powers to authorities who have to deal with the var ious situations as they arise. There are examples in the Statute books of England and other countries, of laws, a reference to which will be sufficient to justify the need for delegated legislation. The British Gold Standard (Amendment) Act, 1931, empowered the Treasury to make and from time to time vary orders authorising the taking of such measures in relation to the Exchanges and otherwise as they may consider expedient for meeting difficulties arising in connection with the suspension of the Gold Standard. The National Economy Act, 1931, of England, empowered "His Majesty to make Orders in Council effecting economies in respect of the services specified in the schedule" and proved that the Minister designated in any such Order might make regulations for giving effect to the Order. The Food stuffs (Prevention of Exploitation) Act, 1931, authorised the Board of Trade to take exceptional measures for prevent ing or remedying shortages in certain articles of food and drink. It is obvious that to achieve the objects which were intended to be achieved by these Acts, they could not have been framed in any other way than that in which they were framed. I have referred to these instances to show that the complexity of modern administration and the expansion of the functions of the State to the economic and social sphere have rendered it necessary to resort to new forms of legis lation and to give wide powers to various authorities on suitable occasions. But while emphasizing that delegation is in these days inevitable, one should not omit to refer to the dangers attendant upon the injudicious exercise of the power of delegation by the legislature. The dangers in volved in defining the delegated power so loosely that the area it is intended to cover cannot be clearly ascertained, and in giving 853 wide delegated powers to executive authorities and at the same time depriving a citizen of protection by the courts against harsh and unreasonable exercise of powers, are too obvious to require elaborate discussion. For the reasons I have set out, I hold that none of the provisions which are the subject of the three questions referred to us by the President is ultra vires and I would answer those questions accordingly. PATANJALI SASTRI J. The President of India by an order, dated the 7th January, 1951, has been pleased to refer to this Court, under article 14:3 (1) of the Constitution, for consideration and report the following questions: 1. Was section 7 of the , or any of the provisions thereof and in what particular or particu lars or to what extent ultra vires the legislature which passed the said Act ? 2. Was the Ajmer Merwara (Extension of Laws) Act, 1947, or any of the provisions thereof and in what particular or particulars or to what extent ultra vires the legislature which passed the said Act ? 3. Is section 2 of the Part C States (Laws) Act, 1950, or any of the provisions thereof and in what particular or particulars or to what extent ultra rites the Parliament ? The reasons for making the reference are thus set out in the letter of reference: "And whereas the Federal Court of India in Jatindra Nath Gupta vs The Province of Bihar(1) held by a majority that the proviso to sub section (3) of section 1 of the Bihar Maintenance of Public Order Act, 1947, was ultra vires the Bihar Legislature inter alia on the ground that the said proviso conferred power on the Provincial Government to modify an act of the Provincial Legislature and thus amounted to a delegation of legislative power; And whereas as a result of the said decision of the Federal Court, doubts have arisen regarding (1) 854 the validity of section 7 of the , section 2 of the Ajmer Merwara (Extension of Laws) Act, 1947, and section 2 of the Part C States (Laws) Act, 1950, and of the Acts extended to the Provinces of Delhi and Ajmer Merwara and various Part C States under the said sections respectively, and of the orders and other instru ments issued under the Acts so extended; And whereas the validity of section 7 of the , and section 2 of the Ajmer Merwara (Extension of Laws) 'Act, 1947, and of the Acts extended by virtue of the powers conferred by the said sections has been challenged in some cases pending at present before the Punjab High Court, the Court of the Judicial Commissioner of Ajmer, and the District Court and the Subordinate Courts in Delhi. " The provisions referred to above are as follows: Section 7 of the : The Provincial Government may, by notification in the official Gazette, extend with such restrictions and modifi cations as it thinks fit to the Province of Delhi or any part thereof, any enactment which is in force in any part of British India at the date of such notification. " Section 2 of the Ajmer Merwara (Extension of Laws) Act, 1947: "Extension of enactments to Ajmer Merwara. The Central Government may, by notification in the official Gazette, extend to the Province of Ajmer Merwara with such restric tons and modifications as it thinks fit any enactment which is in force in any other Province at the date of such noti fication. Section 2 of the Part C States (Laws) Act 1950: "Power to extend enactments to certain Part C States. The Central Government may, by notification in the official Gazette, extend to any Fart C State (other than Coorg and the Andaman and Nicobar Islands) or to any part of such State, with such restrictions and modifications as it thinks fit, any 855 enactment which is in force in a Part A State at the date of the notification; and provision may be made in any enactment so extended for the repeal or amendment of any corresponding law (other than a Central Act) which is for the time being applicable to that Part C State. " The Central Legislature, which enacted these provisions, had, at all material times, the power to make laws itself for the designated territories. But, instead of exercising that power, it empowered the Provincial Government in the first mentioned case, and the Central Government in the others, to extend, by notification in the official Gazette, to the designated territories laws made by Provincial Legis latures all over India for territories within their respec tive jurisdiction. The principal features of the authority thus delegated to the executive are as follows: (1) The laws thus to be extended by the executive are laws made not by the delegating authority itself, namely, the Central Legislature, but by different Provincial Legis latures for their respective territories. (2) In extending such laws the executive is to have the power of restricting or modifying those laws as it thinks fit. (3) The law to be extended is to be a law in force at the time of the notification of extension, that is to say, the executive is empowered not only to extend laws in force at the time when the impugned provisions were enacted, which the Central Legislature could be supposed to have examined and found suitable for extension to the territories in question, but also laws to be made in future by Provincial Legislatures for their respective territories which the Central Legislature could possibly have no means of judging as to their suitability for such extension. (4) The power conferred on the executive by the enact ments referred to in Question No. a is not only to extend to the designated territories laws made by other legislatures but also to repeal or amend any corresponding law in force in the designated territories. 856 The question is: Was the delegation of such sweeping discretionary power to pick and choose laws made by other legislatures to operate elsewhere and to apply them to the territories in question within the competence of the Central Legislature ? In Jatindra Nath Gupta vs The Province of Bihar (1), which has led to this reference, the Federal Court of India held by a majority (Kania C.J., Mahajan and Mukher jea JJ.) that the proviso to sub section (3) of section 1 of the Bihar Maintenance of Public Order Act, 1937, pur porting to authorise the Provincial Government, on cer tain conditions which are not material here, to extend by notification, the operation of the Act for a further speci fied period after its expiry with or without modifications amounted to a delegation of legislative power and as such was beyond the competence of the legislature. The deci sion proceeded to some extent on the concession by counsel that delegation of legislative power was incom petent though it must be admitted there are observations in the judgments of their Lordships lending the weight of their authority in support of that view. Fazl Ali J. in a dissenting judgment held that the power to extend and the power to modify were separate powers and as the Provincial Government had in fact extended the operation of the Act without making any modification in it, the proviso operated as valid conditional legislation. While agreeing with the conclusion of the majority that the detention of the petitioners in that case was unlawful, 1 preferred to rest my decision on a narrower ground which has no rele vancy in the present discussion. In the light of the fuller arguments addressed to us in the present case, I am unable to agree with the majority view. The Attorney General, appearing on behalf of the Presi dent, vigorously attacked the majority view in Jatindra Nath Gupta 's case(1) as being opposed alike to sound con stitutional principles and the weight of authority. He cited numerous decisions of the Privy (1) 857 Council and of the American, Australian and Canadian Courts and also called attention to the views expressed by various writers on the subject in support of his contention that legislative power involves as part of its content a power to delegate it to other authorities and that a legislative body empowered to make laws on certain subjects and for a certain territory is competent, while acting within its appointed limits, to delegate the whole of its legislative power to any other person or body short of divesting itself completely of such power. It is now a commonplace of constitutional law that a legislature created by a written constitution must act within the ambit of its powers as defined by the constitu tion and subject to the limitations prescribed thereby, and that every legislative act done contrary the provisions of the constitution is void. In England no such problem can arise as there is no constitutional limitation on the powers of Parliament, which, in the eye of the law, is sovereign and supreme. It can, by its ordinary legislative procedure, alter the constitution, so that no proceedings passed by it can be challenged on constitutional grounds in a court of law. But India, at all material times, in 1912, 1947 and 1950 when the impugned enactments were passed had a written constitution, and it is undoubtedly the function of the courts to keep the Indian legislatures within their consti tutional bounds. Hence, the proper approach to questions of constitutional validity is "to look to the terms of the instrument by which, affirmatively, the legislative powers were created, and by which, negatively, they were restrict ed. If what has been done is legislation within the general scope of the affirmative words which gave the power and if it violates no express condition or restriction by which the power is limited (in which category would, of course, be included any Act of the Imperial Parliament at variance with it) it is not for any court of justice to inquire further or, to enlarge constructively those conditions and restrictions.": Empress vs Burah(1). We (1) s I.A. 178. 858 have,therefore, to examine Whether the delegation of author ity made in each of the impugned enactments is contrary to the tenor of the constitution under which the enactment itself was passed. No provision is to be found in the relevant constitutions authorising or prohibiting in express terms the delegation of legislative power. Can a prohibi tion against delegation be derived inferentially from the terms of the constitution and, if so, is there anything in those terms from which such a prohibition can be implied ? Before examining the relevant constitutions to find an answer to the question, it will be useful to refer to the two main theories of constitutional law regarding what has been called delegated legislation. Though, as already explained, no question of constitutionality of such legisla tion could arise in England itself, such problems have frequently arisen in the British commonwealth countries which have written constitutions, and British Judges, trained in the tradition of parliamentary omnipotence, have evolved the doctrine that every legislature created by an Act of Parliament, though bound to act within the limits of the subject and area marked out for it, is, while acting within such limits, as supreme and sovereign as Parliament itself. Such legislatures are in no sense delegates of the Imperial Parliament and, therefore, the maxim delegatus non potest delegare is not applicable to them. A delegation of legislative functions by them, however extensive, so long as they preserve their own capacity, cannot be challenged as unconstitutional. These propositions were laid down in no uncertain terms in the leading case of Hodge vs Queen(1) decided by the Privy Council in 1883. Upholding the validity of an enactment by a Provincial Legislature in Canada where by authority was entrusted to a Boar6 of Commissioners to make regulations in the nature of bylaws or municipal regu lations for the good government of taverns and thereby to create offences and annex penalties thereto, their Lordships observed as follows: (1) 9 App. 117 859 "It was further contended that the Imperial Parliament had conferred no authority on the local legislature to delegate those powers to the Licence Commissioners, or any other persons. In other words, that the power conferred by the Imperial Parliament on the local legislature should be exercised in full by that body, and by that body alone. The maxim delegatus non potest delegare was relied on. It appears to their Lordships, however, that the objection thus raised by the appellant is founded on an entire misconcep tion of the true character and position of the provincial legislatures. They are in no sense delegates of or acting under any mandate from the Imperial Parliament. When the British North America Act enacted that there should be a legislature for Ontario, and that its legislative assembly should have exclusive authority to make laws for the Prov ince and for provincial purposes in relation to the matters enumerated in section 92, it conferred powers not in any sense to be exercised by delegation from or as agents of the Imperial Parliament, but authority as plenary and as ample within the limits prescribed by section 92 as the Imperial Parliament in the plenitude of its power possessed and could bestow. Within these limits of subjects and area the local legislature is supreme. . . It was argued at the bar that a legislature committing important regulations to agents or delegates effaces itself. That is not so. It retains its powers intact, and can, whenever it pleases, destroy the agency it has created and set up another, or take the matter directly into its own hands. How far it can seek the aid of subordinate agencies, and how long it shall continue them, are matters for each legislature, and not for courts of law, to decide. Here is a clear enunciation of the English doctrine of what may be called "supremacy within limits"; that is to say, within the circumscribed limits of its legislative power, a subordinate legislature can do what the Imperial Parliament can do, and no constitutional limit on its power to delegate can be imported (1) 9 App. Cas. 117 131, 111 860 on the strength of the maxim delegatus non potest delegare, because it is not a delegate. The last few words of the quotation are significant. They insist, as does the pas sage already quoted from Burah 's case(1), that the scope of the enquiry when such an issue is presented to the court is strictly limited to seeing whether the legislature is acting within the bounds of its legislative power. The remarks about "authority ancillary to legislation" and "abundance of precedents for this. legislation entrusting a limited des cretionary authority to others " have, obviously, reference to the particular authority delegated on the facts of that case which was to regulate taverns by issuing licences, and those remarks cannot be taken to detract from or to qualify in any way the breadth of the general principles so unmis takably laid down in the passages quoted. The same doctrine was affirmed in Powell vs Apollo Candle Co. Ltd.(2), where, after referring to Burah 's case (1) and Hodge 's case(3), their Lordships categorically stated: "These two cases have put an end to a doctrine which appears at one time to have had some currency, that a Colo nial Legislature is a delegate of the Imperial Legislature. It is a legislature restricted in the area of its powers, but within that area unrestricted, and not acting as an agent or a delegate. " An objection that the legislature of New South Wales alone had power to impose the tax in ques tion and it could not delegate that power to the Governor, was answered by saying "But the duties levied under the Order in Council are really levied by the authority of the Act under which the order is issued. The legislature has not parted with its perfect control over the Governor, and has the power, of course, at any moment, of withdrawing or altering the power which they have entrusted to him"(4). If Hodge 's ease(3) did not involve an extensive dele gation of legislative power, Shannon 's case(5) did. (1) 5 I.A. 178. (4) 10 App. 282, 291. (2) 10 App. (5) (3) 9 App. 861 A provincial legislature in Canada had passed a compulsory Marketing Act providing for the setting up of Marketing Boards but leaving it to the Government to determine what powers and functions should be given to those Boards. One of the objections raised to the legislation was that it was only a "skeleton of an Act" and that the legislature had practically "surrendered its legislative responsibility to another body." Lord Haldane 's dictum in what is known as the Referendum case(1) (to which a more detailed reference will be made presently) suggesting a doubt as to a provin cial legislature 's power to "create and endow with its own capacity a new legislative power not created by the Act to which it owes its existence" was cited in support of the objection. The objection, however, was summarily repelled without calling upon Government counsel for an answer. Their Lordships contented themselves with reiterating the English doctrine of "plenary powers of delegation within constitu tional limits" and said: "This objection appears to their Lordships subversive of the rights which the provincial legislature enjoys while dealing with matters falling within the classes of subjects in relation to which the constitu tion has granted legislative powers. Within its appointed sphere the provincial legislature is as supreme as any other parliament. . Martin C.J. appears to have disposed of this objection very satisfactorily in his judgment on the reference, and their Lordships find no occasion to add to what he there said. " What Martin C.J. said is to be found in Re Natural Products Marketing (B.C.) Act(2). He said "1 shall not, however, pursue at length this subject (delega tion of legislative powers) because, to use the language of the Privy Council in Queen vs Burah(3), 'The British Statute book abounds with examples of it ' and a consideration for several days of our early and late 'statute book ' discloses such a surprising number of delegations to various persons and bodies in all sorts of subject matters that it would (1) (3) 3 App. Cas. 889, 906. (2) , 310. 862 take several pages even to enumerate them, and it would also bring about a constitutional debacle to invalidate them. I must, therefore, content myself by selecting four statutes only." The learned Judge then proceeded to refer, among others, to a statute whereby "carte blanche powers were delegated over affected fruit lands areas to cope with a pest", and to another "whereby power was conferred upon the Lieutenant Governor in Council to make rules of the widest scope" and the first importance in our system of jurisprudence whereby our whole civil practice and proce dure, appellate and trial, are regulated and constituted to such an extent that even the sittings we hold are thereto subjected. " This recent pronouncement of the Privy Council on the Eng lish view of the delegability of legislative power is, in my opinion, of special interest for the following reasons : (1) The case involved such an extensive delegation of legislative power counsel thought the ' 'limit" had been reached that it squarely raised the question of the constitutional validity of surrender or abdication of such power and Lord Haldane 's dictum in the Referendum case(1) was relied upon. (2) Nevertheless, the objection was considered so plainly unsustainable that Government counsel was not called upon to answer, their Lordships having regarded the objection as "subversive" of well established constitutional princi ples. (3) Martin C.J. 's instances of "carte blanche delegation" were approved and were considered as disposing of the objection "very satisfactorily. " (4) All that was considered necessary to repel the objection was a plain and simple statement of the English doctrine, namely, within its appointed sphere the provin cial legislature was as supreme as any other parliament, or, in other words, as there can be no legal limit to Parliament 's power to delegate, so can there (1) 863 be none to the power of the provincial legislature to dele gate legislative authority to others. Thus, the English approach to the problem of delegation of legislative power is characterised by a refusal to regard legislation by a duly constituted legislature as exercise of a delegated power, and it emphatically repudiates the application of the maximum delegatus non potest delegate. It recognises the sovereignty of legislative bodies within the limits of the constitutions by which they are created and concedes plenary powers of delegation to them within such limits. It regards delegation as a revocable entrustment of the power to legis late to an appointed agent whose act derives its validity and legal force from the delegating statute and not as a relinquishment by the delegating body of its own capacity to legislate. On the other hand, the American courts have approached the problem along wholly different lines which are no less the outcome of their own environment and tradition. The American political scene in the eighteenth century was dominated by the ideas of Montesque and Locke that concen tration of legislative, executive and judicial powers in the hands of a single organ of the State spelt tyranny, and many State constitutions had explicitly provided that each of the great departments of State, the legislature, the executive and the judiciary, shall not exercise the powers of the others. Though the Federal Constitution contained no such explicit provision, it was construed, against the background of the separatist ideology, as embodying the principle of separation of powers, and a juristic basis for the conse quent non delegability of its power by one of the depart ments to the others was found in the old familiar maxim of the private law of agency delegatuts non potest delegare which soon established itself as a traditional dogma of American constitutional law. But the swift progress of the nation in the industrial and economic fields and the result ing complexities of administration forced the realisation on the American Judges of the unavoidable necessity for 864 large scale delegation of legislative powers to administra tive bodies, and it was soon recognised that to deny this would be "to stop the wheels of government. " The result has been that American decisions on this branch of the law consist largely of attempts to disguise delegation "by veiling words" or "by softening it by a quasi" (per Holmes J. in Springer vs Government of the Phillipine Islands(1). "This result", says a recent writer on the subject, "is well put in Prof. Cushman 's syllogism ' Major premise: Legislative power cannot be constitu tionally delegated by Congress. Minor premise: It is essential that certain powers be delegated to administrative officers and regulatory commis sions. Conclusion: Therefore the powers thus delegated are not legislative powers. " They are instead "administrative"or "quasi legisla tive" (American Administrative Law by Bernard Schwartz, p. 20). After considerable confusion and fluctuation of opin ion as to what are "essentially" legislative powers which cannot be delegated and what are mere "administrative" or "ancillary" powers, the delegation of which is permissible, the recent decisions of the Supreme Court would seem to place the dividing line between laying down a policy or establishing a standard in respect of the subject legislated upon on the one hand and implementing that policy and en forcing that standard by appropriate rules and regulations on the other: (vide Schechter Poultry Corpn. vs United States(2) and Panama Refining Co. vs Ryan(3)), a test which inevitably gives rise to considerable divergence of judicial opinion as applied to the facts of a given case. I will now turn to the questions in issue. The first question which relates to the validity of section 7 of the . has to be determined with reference to the competency of "the legislature which (1) ; (3) ; (2) ; 865 passed the said Act", that is, with reference to the consti tution then in force. It may be mentioned her, e that the , as well as the AjmerMerwara (Extension of Laws) Act, 1947, to which the second question relates, were repealed by section 4 of the Part C States (Laws) Act, 1950, but the Acts already extended under the repealed provisions have been continued in force and hence the neces sity for a pronouncement on the constitutional validity of the repealed provisions. In 1912 the Indian Legislature was the Governor General in Council, and his law making powers were derived from section 22 of the Indian Councils Act, 1861 (24 and 25 Vic. Ch. 7) which conferred power "to make laws and regulations for repealing, amending or altering any laws or regulations whatever now in force or hereafter to be in force in the Indian territories now under the dominion of Her Majesty and to make laws and regulations for all persons whether British or native, foreigners or others, and for all courts of justice whatever and for all places and things whatever within the said territories," subject to certain conditions and restrictions which do not affect the impugned provi sions. The composition and powers of the Governor General in Council were altered in other respects by the Councils Acts of 1892 and 1909, but his law making powers remained essentially the same in 1912. The question accordingly arises whether section 7 of the , was within the ambit of the legislative powers conferred on himby section 22 of the Indian Councils Act, 1861. As the power is defined in very wide terms " for all persons. . and for all places and things whatever " within the Indian territories the issue of competency reduces itself to the question whether section 7 was a "law" within the meaning of section 22 of the Indian Councils Act of 1861. This question is, in my opinion, concluded by the decision of the Privy Council in Empress vs Burah(1). (1) 5 I.A. 178. 866 That was an appeal by the Government from a judgment of the majority of a Full Bench of the Calcutta High Court holding that sections 8 and 9 of Act XXII of 1869 were ultra vires the Governor General in Council as being an unautho rised delegation of legislative power to the Lieutenant Governor of Bengal. The combined effect of those provisions was to authorise the Lieutenant Governor to extend to cer tain districts by notification in the Calcutta Gazette "any law or any portion of any law now in force in the other territories subject to his government or which may hereafter be enacted by the Council of the Governor General or of the said Lieutenant Governor, for making laws and regulations. . "Markby J., who delivered the leading judgment of the majority, held (1) that section 9 amounted to a delegation of legislative authority to the Lieutenant Governor by the Indian Legislature which, having been en trusted with such authority as a delegate of the Imperial Parliament, had no power in its turn to delegate it to another, and (2) the Indian Legislature could not "change the legislative machinery in India without affecting the provisions of the Acts of Parliament which created that machinery and if it does in any way affect them, then ex consensu omnium its Acts are void." The learned Judge referred to the argument of Government counsel, namely, "where Parliament has conferred upon a legislature the general power to make laws, the only question can be 'Is the disputed Act a law '. If it is, then it is valid unless it falls within some prohibition." The learned Judge remarked that this argument was "sound", but met it by holding that "it was clearly intended to restrict the Legislative Council to the exercise of functions which are properly legislative, that is, to the making of laws, which (to use Blackstone 's expression)are rules of action prescribed by a superior to an inferior or of laws made in furtherance of those rules. The English Parliament is not so restricted. It is not only a legislative but a paramount sovereign body. The Legislative Council, when it merely grants permission 867 to another person to legislate, does not make a law within the meaning of the Act from which it derives its authority"(1) The learned Judge rejected the argument based on previous legislative practice as the instances relied on were not "clear and undisputed instances of a transfer of legislative authority. " Garth C.J. in his dissenting opinion pointed out that "by the Act of 1833 the legislative powers which were then conferred upon the Governor General in Council were in the same language, and (for the purposes of the present case) to the same effect, as those given by the Councils Act in 1861; and from the time when that Act was passed, the Governor General in Council has constantly been in the habit of exercising those powers through the instru mentality of high officials and public bodies, in whom a large discretion has been vested for that purpose. "(2) It could not therefore be supposed that "the Imperial Parlia ment would have renewed in the Councils Act of 1861 the legislative powers which the Governor General in Council had so long exercised, if they had disapproved of the course of action which the Legislature had been pursuing. The fact that with the knowledge of the circumstances which they must be assumed to have possessed, Parliament did in the Councils Act renew the powers which were given by the Act of 1833, appears to me to amount to a statutory acknowledgment that the course of action which had been pursued by the legisla ture in the exercise of those powers was one which the Act had authorised. "(3) The learned Chief Justice accordingly came to the conclusion that Act XXII of 1869 was a law "which the legislature was justified in passing. " I have referred at some length to the reasoning and conclusions of the learned Judges in the High Court as I think they will be helpful in understanding the full import of the judgment of the Privy Council. It will be seen, in the first place, that the line of approach adopted by Government counsel in the High (1)I.L.R. at 90, 91. (3) Ibid 144. (2) Ibid, 140. 112 868 Court was endorsed by their Lordships as the correct ap proach to the problem, that is to say, the court has to see whether "what has been done is legislation within the gener al scope of affirmative words which give the power, and if it violates no express condition by which that power is limited it is not for any court to inquire further or to enlarge constructively those conditions and restrictions" (italics mine). This passage clearly lays down [what we have already seen was reiterated in Hodge 's case(1)]: (1) that the scope of judicial review in such cases is limited only to determining whether the impugned enactment is within the law making power conferred on the legislature and wheth er it violates any express condition limiting that power, and (2) that in determining the latter question the court should have regard only to express conditions and should not enlarge them inferentially by a process of interpretation. In the second place, their Lordships repudiated the doctrine [as they did also in respect of a provincial legislature in Canada in Hodge 's case(1)] that the Indian Legislature is in any sense an agent or delegate of the Imperial Parliament, and that the rule against delegation by an agent applies to the situation. Thirdly, the distinction made by Markby J. between Parliament and the Indian Legislature that the latter is "restricted to the. making of laws" in the sense defined by Blackstone, while Parliament was not so restricted, or, in other words, that while Parliament could make a "law" delegating its legislative power, the Indian Legislature could not make such a "law, ' was rejected, and the English doctrine of supremacy within limits was laid down specifically in regard to the Indian. Legislature, which, when acting within the limits circumscribing its legislative power "has and was intended to have plenary powers of legislation as large and of the same nature as those of Parliament itself" (italics mine). It must follow that it is as competent for the Indian Legislature to make a law delegating legislative power, both quantitatively and qualitatively, as it is for (1) 9 App. 117. 869 Parliament to do so, provided, of course, it acts within the circumscribed limits. Fourthly, their Lordships "agree that the Governor General in Council could not by any form of enactment create in India and arm with general legisla tive authority a new legislative power not created or autho rised by the Councils Act. Nothing of that kind has in their Lordships ' opinion been done or attempted in the present case." Mr. Chatterjee, on behalf of the opposite party, submit ted that the remark regarding the incompetency of the Gover nor General in Council to create in India a new legislative power had reference to the subordinate agency or instrumen tality to which the legislative authority was to be delegat ed and thus negatived the legislature 's right to delegate. The context, however, makes it clear that their Lordships were expressing agreement on this point with Markby J. who, as we have seen, had stated that the Indian Legislature could not "change the legislative machinery in India without affecting the provisions of the Acts of Parliament which created that machinery." This shows that their Lordships were envisaging the setting up of a new legislative machin ery not authorised by the Councils Act, that is, a new legislature in the sense in which the Central and Provincial Legislatures in the country were legislatures. While they agreed that that could not. be done (because it would be a contravention of the Act of Parliament which confers no power to create such legislatures) their Lordships proceeded to point out that that was not what was done by the impugned Act and that Markby J. fell into an error in thinking that it was. Their Lordships gave two reasons: first, because "it is a fallacy to speak of the powers thus conferred upon the Lieutenant Governor (large as they undoubtedly are) ' as if, when they were exercised, the efficacy of the acts done under them would be due to any other legislative authority than that of the Governor General in Council. Their whole operation is, directly and immediately, under and by virtue of this Act (No. XXll of 1869) itself." Here, indeed, their Lordships touch the core of the problem by indicating 870 the true nature of delegated legislation as distinct from creating a new legislative body. The point is developed to its logical consequence in later cases as will be seen presently, but here they expose to view the not uncommon "fallacy" of treating the one as of the same nature and as having constitutionally the same consequence as the other, a fallacy which perhaps accounts for much of the confusion of thought on the subject. It will be recalled that in Hodge 's case(1) it was made clear that in delegated legislation the delegating body does not efface itself but retains its legislative power intact and merely elects to exercise such power through an agency or instrumentality of its choice. There is no finality about this arrangement, the delegating body being free to "destroy the agency it has created and set up another or take the matter directly into its own hands. " In Burah 's case(2) their Lordships emphatically stated one consequence of that view, namely, that the act done by the authority to which legislative power is delegat ed derives its whole force and efficacy from the delegating legislature, that is to say, when the delegate acts under the delegated authority, it is the legislature that really acts through its appointed instrumentality. On the other hand, in the creation of a new legislative body with general legislative authority and functioning in its own right, there is no delegation of power to subordinate units, but a grant of power to an independent and co ordinate body to make laws operating of their own force. In the first case, according to English constitutional law, no express provi sion authorising delegation is required. In the absence of a constitutional inhibition, delegation of legislative power, however extensive, could be made so long as the delegating body retains its own legislative power intact. In the second case, a positive enabling provision in the constitutional document is required. The second reason why their Lordships regarded the majority view as erroneous was that Act XXII of 1869 was, in truth, nothing more than conditional legislation (1) 9 App. (2) 5 I.A. 178. 871 and there was no question of delegating legislative power. Their Lordships were of opinion that neither in fixing the time for commencement of the Act nor in enlarging the area of its operation was the Lieutenant Governor exercising "an act of legislation." "The proper legislature has exercised its judgment as to place, person, laws, powers; and the result of that judgment has been to legislate conditionally as to all these things. The conditions having been ful filled, the legislation is now absolute. Where plenary powers of legislation exist as to particular subjects, whether in an Imperial or in a Provincial Legislature, they may (in their Lordships ' judgment) be well exercised, either absolutely or conditionally. Legislation, conditional on the use of particular powers or on the exercise of a limited discretion, entrusted by the Legislature to persons in whom it places confidence, is no uncommon thing; and, in many circumstances, it may be highly convenient. The British Statute book abounds with examples of it; and it cannot be supposed that the Imperial Parliament did not, when consti tuting the Indian Legislature, contemplate this kind of conditional legislation as within the scope of the legisla tive powers which it from time to time conferred. It cer tainly used no words to exclude it. " Their Lordships finally proceeded to refer to the legis lative practice in this country of delegating to the execu tive government a discretionary power of extending enact ments to new territories subject in certain cases to such "restriction, limitation or proviso" as the Government may think proper, and they expressed their approval of the reasoning of Garth C.J. based on such practice. "If their Lordships," they said, "were to adopt the view of the major ity of the High Court they would (unless distinction were made on grounds beyond the competency of the judicial of fice) be casting doubt upon the validity of a long course of legislation appropriate, as far as they can judge to the peculiar circumstances of India. . For such doubt their Lordships are unable to discover any foundation either in the affirmative or the negative words of that Act" 872 (Indian Councils Act, 1861). The parenthetic remark (which I have italicised) is significant. It is not com petent for the court, according to their Lordships, to dis criminate between degrees of delegation. It might be extensive in some cases and slight in others. Its validity must, however, be founded "on the affirmative or the nega tive words" of the Constitution Act. Another logical consequence of the British theory of dele gation has been worked out in Co operative Committee on Japanese Canadians vs Attorney General for Canada(1), where the question arose as to whether an order made by the Governor in Council pursuant to authority delegated by the Parliament of Canada was a law made by the Parliament of Canada within the meaning of the Statute of Westminster and, if so, whether it was such a law made after the pass ing of that Statute. The delegation of authority to the Governor was made before that Statute was passed but the Governor 's order was promulgated after the Statute. Holding that the order was a "law" made by the Parliament of Canada after the Statute of Westminster their Lordships observed: "Undoubtedly, the law as embodied in an order or regulation is made at the date when the power conferred by the Parlia ment of the Dominion is exercised. Is it made after that date by the parliament of the Dominion ? That Parliament is the only legislative authority for the Dominion as a whole and it has chosen to make the law through machinery set up and continued by it for that purpose. The Governor in Council has no independent status as a law making body. The legislative activity of Parliament is still resent at the time when the orders are made, and these orders are" law". In their Lordships ' opinion they are law made by the Parlia ment at the date of their promulgation. "(2) Mr. Chatterice has urged that in Burah 's case(3) the Privy Council did no more than hold that the type of legis lation which their Lordships there called conditional legis lation was within the competence of the (1) (3) S I.A. 178. (2) Ibid 106 107. 873 Indian legislature and was valid, and that the con siderations adverted to 'by their Lordships in upholding such legislation have no relevancy in determining the validity of the provisions impugned in the present case. It is true that the kind of legislation here in question does not belong to that category, for the operation of the impugned Acts is not made to depend upon the exercise of a discretion by an external authority, but it is not correct to say that Burah 's case(1) has application only to facts involving conditional legislation. As I have endeavoured to show, it lays down general principles of far reaching importance. It was regarded in Powell 's case(2) referred to above as "laying down the general law" and as "putting an end" to the false doctrine that a subordinate legislature acts as an agent or a delegate. Mr. Chatterjee next relied on the dictum of Lord Haldane in the Referendum case. (3) In that case their Lordships held that the Initiative and Referendum Act of Manitoba (Canada) was, in so far as it compelled the Lieutenant Governor to submit a proposed law to a body of voters total ly distinct from the legislature of which he was the consti tutional head and rendered him powerless to prevent it from becoming an actual law if approved by those voters, ultra vires the Provincial Legislature, as the power to amend the Constitution of the Province conferred upon that Legislature by the British North America Act, 1867, excluded from its scope "the office of the Lieutenant Governor ". Lord Hal dane, however, proceeded to make the following observations: "Section 92 of the Act of 1867 entrusts the legislative power in a Province to its Legislature, and to that Legisla ture only. No doubt, a body, with a power of legislation on the subjects entrusted to it so ample as that enjoyed by a Provincial Legislature in Canada, could, while preserving its own capacity intact, seek the assistance of subordinate agencies, as had been done when in Hodge vs The Queen(4) the Legislature of Ontario was (1) 5 I.A. 178. (3) (2) 10 App. (4) 9 App. Cas. 117, 874 held entitled to entrust to a Board of Commissioners au thority to enact regulations relating to taverns; but it does not follow that it can create and endow with, its own capacity a new legislative power not created by the Act to which it owes its own existence. Their Lordships do no more than draw attention to the gravity of the constitutional questions which thus arise. "(1) Mr. Chatterjee submitted that the grave constitutional question, to which Lord Haldane drew attention, arose in the present case. I do not think so. The dictum, like the obser vation of Lord Selborne in Burah 's case(2) regarding the power of the Governor General in Council "to create in India and arm with general legislative authority a new legislative power," to which reference has been made, seems to envisage the unauthorised creation of a new legislature with an independent status as a law making body, which, for reasons already indicated, is quite different from delegation of legislative power, and my remarks in connection with that observation equally apply here. The only other decision of the Privy Council to which reference need be made is King Emperor vs Benoari Lal Sarma. (3) It was an appeal from a judgment of the majority of the Federal Court of India (reported in holding, inter alia, that sections 5, 10 and 16 of the Special Criminal Courts Ordinance (No. II of 1942) passed by the Governor General in exercise of his emergency powers were ultra vires and invalid. The ground of decision was that although the powers of the High Court were taken away in form by section 26 of the Ordinance, they were, in fact, taken away by the order of the executive officer to whom it was left by sections 5, 10 and 16 to direct what offences or classes of offences and what cases or classes of cases should be tried by the special courts established under the Ordinance. In so far as these sections thus purported to confer on the executive officers absolute and uncontrolled discretion without any legislative provision or direction laying down (1) , 945. (2) 5 I.A. 178. (3) 72 I.A. 57. 875 the policy or conditions with reference to which that power was to be exercised, they were beyond the competence of the Governor General. Varadachariar C.J., with whom Zafrulla Khan J. concurred, went elaborately into the whole question of delegation of legislative powers, and while conceding, in view of the Privy Council decisions already referred to, that the Governor General (whose legislative power in emer gencies was co extensive with that of the Indian Legisla ture) could not be regarded as a delegate of the Imperial Parliament and that, therefore, the maxim delegatus non potest delegare had no application, nevertheless expressed the opinion that "there is nothing in the above decisions of their Lordships that can be said to be inconsistent with the principle laid down in the passage from the American author ity which the Advocate General of India proposed to adopt as his own argument. " That principle was this: "The true distinction is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done, to the latter no valid objection can be made :" (per Judge Ranney of the Supreme Court of Ohio, often cited in American decisions). The learned Chief Justice then proceeded to examine the American decisions bearing upon the delegation of powers and the opinions expressed by writers on administrative law and came to the following conclusion : "As we have already observed, the considerations and safeguards suggested in the foregoing passages may be no more than considerations of policy or expediency under the English Constitution. But under Constitutions like the Indian and the American, where the constitutionality of legislation is examinable in a court of law, these consider ations are, in our opinion, an integral and essential part of the limitation on the extent of delegation of responsi bility by the legislature to the executive. In the present case, it is impossible to deny that the Ordinance making 113 876 authority has wholly evaded the responsibility of laying down any rules or conditions or even enunciating the policy with reference to which cases are to be assigned to the ordinary criminal courts and to the special courts respec tively and left the whole matter to the unguided and uncontrolled action of the executive authorities. This is not a criticism of the policy of the law as counsel for the Crown would make it appear but a complaint that the law has laid down no policy or principle to guide and control the exercise of the undefined powers entrusted to the execu tive authorities by sections 5, 10 and 16 of the Ordinance. "(1) I have set out at some length the reasoning and conclu sion of the learned Chief Justice because it summarises and accepts most of what has been said before us by Mr. Chatter jee in support of his contention that the American rule as to delegation of legislative powers should be followed in this country in preference to the views of English Judges on the point and that the delegation of a too wide and uncon trolled power must be held to be bad. The Privy Council, however, rejected the reasoning and conclusion of the major ity of the 'Court in a clear and emphatic pronouncement. Their Lordships scouted the idea that what might be no more than considerations of policy or expediency under the Brit ish Constitution could, in India, as in America, become. constitutional limitations on the delegation of legislative responsibility merely because the constitutionality of legislation was open to judicial review under the constitu tion of this country. They said: "With the greatest respect to these eminent Judges, their Lordships feel bound to point out that the question whether the Ordinance is intra vires or ultra vires does not depend on considerations of juris prudence or of policy. It depends simply on examining the language of the Government Of India Act and of comparing the legislative authority conferred on the Governor General with the provisions of the ordinance by which he is 'purporting to exercise that authority" the old traditional approach, "It (1) , 139 140, 877 may be that as a matter of wise and well framed legislation it is better, if circumstances permit, to frame a statute in such a way that the offender may,know in advance before what court he will be brought if he is charged with a given crime; but that is a question of policy, not of law. There is nothing of which their Lordships are aware in the Indian constitution to render invalid a statute, whether passed by the Central legislature or under the Governor General 's emergency powers, which does not accord with this principle. There is not, of course, the slightest doubt that the Parliament of Westminster could validly enact that the choice of courts should rest with an executive authori ty, and their Lordships are unable to discover any valid reason why the same discretion should not be conferred 'in India by the law making authority, whether that authority is the legislature or the Governor General, as an exercise of the discretion conferred on the authority to make laws for the peace order, ' and good government of India. "(1) The English doctrine of supremacy within limits is here asserted once again, and its corollary is applied as the determining test: "What the British Parliament could do, the Indian legislature and the Governor General legislating within their appointed sphere could also do. " There was here a 'delegation of an "unguided and uncontrolled" discretion ary power affecting the liberty of the subject. In the lan guage of an American Judge,it was "unconfined and vagrant" and was not "canalised within banks that kept it from over flowing :"(per Cardozo J. in Panama Refining Co. vs Ryan.(2) Yet, the delegation was upheld. Why? Because "their Lordships are unable to find any such constitutional limita tion is imposed. " There is, however, a passage in the judgment of their Lordships, which, torn from its context, may appear, at first blush, to accept the maxim of delegatus non potest delegare as a principle of English constitutional law, notwithstanding its consistent repudiationby the same tribu nal in the previous decisions already (1) 72 I.A. 57, 70 72. (2) ; 878 referred to, and Mr. Chatterjee was not slow to seize on it as making a veering round to the American point of view. I do not think that their Lordships meant anything so revolutionary. The passage is this: "It is undoubtedly true that the Governor General, acting under section 72 of Schedule IX, must himself discharge the duty of legislation there cast on him, and cannot transfer it to other authorities"(1) (italics mine). This was said, however, in answering the "second objection" which was that section 1 (3) of the Ordinance "amounted to what was called delegated legislation by which the Governor Gener al, without legal authority, sought to pass the decision whether an emergency existed to the Provincial Governmen tinstead of deciding it for himself. " Now, the opening words of section 72 of Schedule IX of the Government of India Act declare: "The Governor General may, in case of an emergency, make and promulgate ordinances for the peace and good government of British India or any part thereof." The ordinance was thus passed avowedly in exercise of a special power to legislate to meet an emergency, and the argument was that the very basis of this ordinance making power must be an exercise of per sonal judgment and discretion by the Governor General which he could not delegate to the Provincial Government or its officers. Their Lordships accepted the major premise of this argument but went on to point out that there was no delegation of his legislative power by the Governor General at all and that "what was done is only conditional legislation. " It was with reference to this special ordinance making power to meet emergencies that their Lordships said that the Governor General must himself exercise it and could not transfer it to other authorities. The words "acting under section 72 of Sched ule IX" and "there, cast on him" make their meaning clear, and the passage relied on by Mr. Chatterjee lends no support to his argument regarding the nondelegability of legislative power in general. In the light of the authorities discussed above and adopting the line of approach laid down there, I am 879 of opinion that section 7 of the , fell within the general scope of the affirmative words of section 22 of the Indian Councils Act, 1861, which conferred the law making power on the Governor. General in Council and that the provision did not violate any of the clauses by which, negatively, that power was restricted. The same line of approach leads me to the conclusion that section 2 of the Ajmer Merwara (Extension of Laws) Act, 1947, was also constitutional and valid. This Act was passed by the Dominion Legislature of India, and the governing constitutional provision was section 99 (1) of the Govern ment of India Act, 1935. The Indian Independence Act, 1947, authorised the removal of certain restrictions on the law making powers of the Central Legislature and section 108 of the Constitution Act was omitted; but the material words in section 99 (1) which granted the legislative power remained the same, namely, "may make laws for the whole or any part of the Dominion. " No doubt, as between the Dominion and the Provinces there was a distribution of legislative power according to the Lists in Schedule VII, but such distribu tion did not affect the power of the Dominion Legislature to make laws for what are known as Chief Commissioners ' Prov inces, of which Ajmer Merwara is one. This was made clear by section 100 (4) read with section 46. Section 2 of the impugned Act was, therefore a "law" which the Dominion Legislature was competent to make and the restrictive words "subject to the provisions of this Act" had no application to the case, as no provision was brought to our notice which affected the validity of the law. There was some discussion as to the scope and meaning of the words "restrictions" and "modifications". It was sug gested by Mr. Chatterjee that these words occurring in the impugned provisions would enable the executive authority to alter or amend any law which it had decided to apply to the territories in question and that a power of such undefined amplitude could not be validly delegated by the legislature. On 880 the other hand, the Attorney General submitted that in such context "modification" was usually taken to connote "making a change without altering the essential nature of the thing changed," and that the use of the word would make no difference to the delegability or otherwise of the legislative power. He drew attention to an instance men tioned by the Privy Council in Burah 's case, where their Lordships thought that the power given to the local govern ment by Act XXIII of 1861 to extend the Civil Procedure Code of 1859 "subject to any restriction, limitation or proviso". which it may think proper was not bad. In the view I have expressed above, however wide a meaning may be attributed to the expression, it would not affect the constitutionality of the delegating statute, because no constitutional limitation on the delegation of legislative power to a subordinate unit is ' to be found in either of the constitutions discussed above. That, I apprehend, is also the reason why the Privy Council too attached no importance to the words in section 39 of Act XXIII of 1861 referred to above. Turning next to section 2 of the Part C States (Laws) Act, 1950, it is framed on the same lines as the other two impugned provisions save for the addition of a clause empow ering repeal or amendment of any corresponding law (other than a Central Act) which is for the time being in force in the State. This additional clause, however, need not detain us, for, if there is no constitutional inhibition against delegation of legislative power under the present Constitu tion, delegation can as Well extend to the power of repeal as to the power of modification and the Court cannot hold such ' delegation to be ultra vires. The Constitutional validity of the additional clause thus stands or falls with that of the first part of the section and the only question is: What is the position in regard to delegated legislation under the present Constitution ? Here we do not have the advantage of Privy Council decisions bearing on the question as we had in Burah 's case (1) on the Indian Councils Act, 1861, and Benoari Lal (1) 5 I.A. 178. 881 Sarma 's case(1) on the Government of India Act, 1935. But the line of approach laid down in those cases and in numer ous others, to which reference has been made, must be fol lowed, not because of the binding force of those decisions, but because it is indubitably the correct approach to prob lems of this kind. Indeed, there is no difference between the English and the American decisions on this point. In both countries it is recognised that the correct way of resolving such problems is to look to the terms of the constitutional instrument, and to find out whether the impugned enactment falls within the ambit of the lawmaking power conferred on the legislature which passed the enact ment and, if so, whether it transgresses any restrictions and limitations imposed on such power. If the enactment in question satisfies this double test, then it must be held to be constitutional. We therefore begin by looking to the terms of the Con stitution and we find that article 245 confers lawmaking power on Parliament in the same general terms as in the other two cases discussed above. The article says "subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India. "Then we have the scheme of distribution of legislative powers worked out in article 246 as between Parliament and the legislatures of the States specified in Part A and Part B of the First Schedule, which, however, does not affect the question we have to determine, for article 246 (4), like section 100 (4) of the Government of India Act, 1935, provides that Parliament has power to make laws with respect to any matter for any part of the.territo ry of India not included in Part A or Part B notwithstanding that such matter is a matter enumerated in the State List. The position, therefore, is substantially similar to that under the Indian Councils Act, 1861, and the Government of India Act, 1935, so far as the words conferring law making power are concerned. Is then this impugned enact ment, which merely purports to (1) 72 I.A. 57. 882 delegate law making power to the Central Government for Part C ,States, a "law" within the meaning of article 245 (1) ? There can be no question but that the Act was passed by Parliament in accordance with the prescribed legislative procedure, and I can see no reason why it should not be regarded as a law. It will be recalled that the restricted interpretation which Markby J. (1) put on the word in sec tion 22 of the Indian Councils Act in accordance with Black stone 's definition (formulation of a binding rule of conduct for the subject) was not accepted by the Privy Council in Burah 's case. Even if a mere delegation of power to legis late were not regarded as a law ' 'with respect to" one or other of the "matters" mentioned in the three Lists, it would be a law made in exercise of the residuary powers under article 248. The question next arises whether there is anything in the Constitution which prohibits the making of such a law. The main restrictions and limitations on the legislative power of Parliament or of the States are those contained in Part III of the Constitution relating to Fundamental Rights. Our attention has not been called to any specific provision in that Part or elsewhere in the Constitution which prohib its or has the effect of prohibiting the making of a law delegating legislative power to a subordinate agency of Parliament 's choice. What Mr. Chatterjee strenuously urged was that, having regard to the Preamble to the Constitution, whereby the people of India resolved, in exercise of their sovereign right, "to adopt, enact and to give to themselves the Constitution," Parliament, which is charged with the duty of making laws for the territories of the Union, must, as in the American Constitution, be deemed to be a delegate of the people, and that this fundamental conception, which approximates to the conception ' underlying the American Constitution, attracts the application of the maxim delega tus non potest delegare, and operates as an implied prohibi tion against the delegation of legislative power by Parlia ment or, for that matter, by any other legislature (1) I.L.R. , 91, 883 in the country. It is true to say that, in a sense, the people delegated to the legislative, executive and the judicial organs of the State their respective powers while reserving to themselves the fundamental right which they made paramount by providing that the State shall not make any law which takes away or abridges the rights con ferred by that Part. To this extent the Indian Constitution may be said to have been based on the American model, but this is far from making the principle of separation of powers, as interpreted by the American courts, an essential part of the Indian Constitution or making the Indian Legis latures the delegates of the people so as to attract the application of the maxim. As already stated, the historical background and the political environment which influenced the making of the American Constitution were entirely absent here, and beyond the creation of the three organs of the State to exercise their respective functions as a matter of convenient governmental mechanism, which is a common feature of most modern civilised governments, there ' is not the least indication that the framers of the Indian Constitution made the American doctrine of separation of powers, namely, that in their absolute separation and vesting in different hands lay the basis of liberty, an integral and basic fea ture of the Indian Constitution. On the contrary, by provid ing that there shall be a Council of Ministers to aid and advise the President in the exercise of his functions and that the Council shall be collectively responsible to the House of the People, the Constitution following the British model has effected a fusion of legislative and executive powers which spells the negation of any clear cut division of governmental power into three branches which is the basic doctrine of American constitutional law. Without such a doctrine being incorporated in the Constitution and made its structural foundation, the maxim delegatus non potest dele gare could nave no constitutional status but could only have the force of a political precept to be acted upon by legis latures in a 884 democratic polity consisting of elected representatives of the people in the discharge of their function of making laws, but cannot be enforced by the court as a rule of constitutional law when such function is shirked or evaded. The American courts are able to enforce the maxim because it has been made by the process of judicial construction an integral part of the American Constitution as a necessary corollary of the doctrine of separation of powers. But the position in India, as pointed out above, is entirely differ ent, and the courts in this country cannot strike down an Act of Parliament as unconstitutional merely because Parlia ment decides in a particular instance to entrust its legis lative power to another in whom it has confidence, or, in other words to exercise such power through its appointed instrumentality, however repugnant such entrustment may be to the democratic process. What may be regarded as politi cally undesirable is constitutionally competent. Mr. Chatterjee also attempted to spell out an implied prohibition against delegation on the strength of article 357 (1) (a) which provides specifically for delegation by the President of the law making powers conferred on him by Parliament in case of failure of constitutional machinery in States. This express provision, it is claimed, shows that whenever the makers of the Constitution wanted to authorise delegation of legislative powers they have made specific provision in that behalf and, in the absence of any such provision in other cases, no delegation of such powers is permissible. I see no force in this argument. Merely be cause in a particular instance of rare and extraordinary occurrence an express provision authorising the President to delegate to another the law making powers conferred on him by Parliament is made in the Constitution, it is not reason able to infer that it was intended to prohibit the delega tion of powers in all other cases. The maxim expressio unius est exclusio alterius is not one of universal applica tion, and it is inconceivable that the framers of the Con stitution could have intended to deny to the Indian Legisla tures 885 a power which, as we have seen, has been recognised on all hands as a desirable, if not, a necessary con comitant of legislative activity in modern States America, having started with a rule against delegation as a necessary corollary of the constitutional doctrine of separation of powers, has made and is making numerous inroads on the rule, and English constitutional law has allowed, as we have seen, even to subordinate legislatures, the widest latitude to delegate their legislative powers so long as they retain their own law making capacity intact. In such circumstances, a provision for express delegation in a remote contingency is far too flimsy a ground for infer ring a general prohibition against delegation of legislative power in all other eases. In this connection, it will be useful to recall Lord Selborne 's observation in Burah 's case that all that the court has to see in adjudging an enactment constitutional is "that it violates no express condition or restriction by which the law making power conferred on the legislature is limited, and that it is not for the court to enlarge constructively those conditions and restrictions," and as recently as 1944, the Privy Council, as we have seen in Benoari Lal Sharma 's case referred to what has always been regarded as an established doctrine of English consti tutional law, namely, that the Indian legislature could do, in the matter of delegating its legislative powers, what the British Parliament could do. It would indeed be strange if, in framing the constitution of the Independent Republic of India at the present day, its makers were to ignore the experience of legislative bodies all the world over and to deny to Parliament a power which its predecessors unques tionably possessed. I have no hesitation in rejecting this argument. In the result, I hold that section 7 of the , section 2 of the Ajmer Merwara (Extension of Laws) Act, 1947, and section 2 of the Part C States (Laws) Act, 1950, are in their entirety constitutional and valid and I answer the reference accordingly. 886 MAHAJAN J. In exercise of the powers conferred by clause (1) of article 143 of the Constitution the Presi dent of India has referred the following questions to this Court for its opinion : (1) Was section 7 of the , or any of the provisions thereof and in what particular or particulars and to what extent ultra vires the legislature which passed the said Act ? (2) Was the Ajmer Merwara (Extension of Laws) Act, 1947, or any of the provisions thereof and in what particular or particulars and to what extent ultra vires the legislature which passed the said Act ? (a) Was section 2 of Part C States (Laws)Act, 1950, or any of the provisions thereof and in what particular or particulars and to what extent ultra vires the Parliament ? The reference raises questions of great importance concerning the administration of the affairs of the Republic and is the first one of the kind since the inauguration of the new constitution. The only point canvassed in the reference is as to the vires of the laws mentioned therein. It was contended by the learned Attorney General that legis lative power without authority or power to delegate is a futility and that unless legislative power includes. the power to delegate, power to administer will be ineffective. It was suggested that the true nature and scope of the legislative power of Parliament involves as part of its content power to confer law making powers upon authorities other than Parliament itself and that this is a natural consequence of the doctrine of the supremacy of Parliament. It was said that the Indian legislature when acting within the ambit of its legislative power has plenary powers of legislation as large and of the same nature as the British Parliament and unless the prescribed limits are exceeded, no question of ultra vires can possibly arise, that the proper approach to the question is "Look at the terms of the in strument by which affirmatively the legislative powers are created and by which negatively they are restricted. If what 887 has been done is legislation within the general scope of the affirmative words which give the power and if it violates no express condition or restriction by which the power is limited, it is not for any court of justice, to enquire or to enlarge constructively those conditions and restrictions. "(1) Reliance was also placed on the legisla tive practice in India and other countries of the the Com monwealth sanctioning constitutionality of statutes drawn up in the same form as the impugned enactments. The questions referred cover 'three distinct periods of legislation in the constitutional and political history of this country. The first question relates to the period when the government of this country was unitary in form and was constituted under the Indian Councils Act, 1861, as amended from time to time up to the stage of the introduction of the Morley Minto Reforms, when the Indian Legislature achieved the status of a political debating society and when as a result of the undoing of the partition of Bengal the capital of India was transferred from Calcutta to Delhi. The unitary form of government was changed after the different Round Table Conferences in London into a Federation by the Consti tution Act 'of 1935. This Act with certain adaptations remained in force till 26th January, 1950, when the new constitution was inaugurated. Under the Independence Act, 1947, India became a Dominion of the British Empire but the legislative power of the Parliament of the Dominion remained within the ambit of the Constitution Act of 1935, though the Parliament as a Constituent Assembly was conferred unlimited powers like that of a sovereign. The federal form of govern ment that had been adopted 'by the Constitution Act of 1935 was also adopted by the framers of the new constitution. The second question relates to the period when India had at tained the status of a dominion under the Indian Independ ence Act, while the last question concerns the legislative competency of Parliament under the new constitution of the Republic of India. (1) Queen vs Burah, 5 I.A. 178. 888 It is futile to ask in the year of grace 1951 whether delegated legislation is necessary or not. This kind of legislation is only a special aspect of the problem of administrative discretion. The necessity of delegating rule making power on the largest scale to administrative authorities is as much a basic fact of modern industrial society as the assumption by the State of certain obliga tions of social welfare. The problem, however, is how dele gated legislation and administrative discretion are confined and controlled so as to comply with the elementary princi ples of law in a democratic society. The answer to the problem has to be found within the ambit of the constitution of the country concerned and on the construction that a lawyer or a jurist would place on it with a constructive and not a purely legalistic approach. In this back ground it is instructive to see how the question has been solved in other countries. It was customary for the mother of Parliaments told ele gate minor legislative power to subordinate authorities and bodies. Some people took the view that such delegation was wholly unwise and should be dispensed with. Prof. Dicey, however, pointed out that it was futile for Parliament to endeavour to work out details of large legislative changes and that such anendeavour would result in cumbersome and prolix statutes. Blackstone remarked that power of this kind were essential to the effective conduct of the government. Constitutional practice grew up gradually as and when the need arose in Parliament, without a logical system, and power was delegated by Parliament for various reasons: because 'the topic required much detail, or because it was technical, or because of pressure of other demands on par liamentary time. The Parliament being supreme and its power being unlimited, it did what it thought was right. The doctrine of ultra vires has no roots whatever in a country where the doctrine of supremacy of Parliament holds the field. The sovereignty of Parliament is an idea fundamental ly inconsistent with the notions which govern inflexible and rigid constitutions existing in countries 889 which have adopted any scheme of representative government. In England supremacy of law only means the right of judges to control the executive and it has no greater constitution al value than that. The basis of power in England is the legal supremacy of Parliament and its unrestricted power to make law. In the words of Coke, "It is so transcendent and absolute as it cannot be confined either for causes or persons within any bounds," or again, as Blackstone put it, "An act of Parliament is the exercise of the highest author ity that this kingdom acknowledges upon earth. It hath power to bind every subject in the land, and the dominions there unto belonging; nay, even the King himself, if particularly named therein. And it cannot be altered amended, dispensed with, suspended or repealed, but in the same forms and by the same authority of Parliament." (1). The Parliament being a legal omnipotent despot, apart from being a legislature simpliciter, it can in exercise of its sovereign power delegate its legislative functions or even create new bodies conferring on them power to make laws. The power of delegation is not necessarily implicit in its power to make laws but it may well be implicit in its omnipotence as an absolute sovereign. Whether it exercises its power of delegation of legislative power in its capacity as a mere legislature or in its capacity as an omnipotent despot, it is not possible to test it on the touchstone of judicial precedent or judicial scrutiny as courts of justice in England cannot inquire into it. 'The assertion therefore that this power Parliament exercises in its purely legisla tive capacity has no greater value than that of an ipse dixit. For these reasons I am in respectful agreement with the view of that eminent judge and jurist, Varadachariar J., expressed in Benoari Lal arma 's case(2) that the constitu tional position in India approximates more closely to the American model than to the English model and on this subject the decisions of the United States so far as they lay down any principle are a valuable guide on this question. (1) Vide Allen "Law in the Making " 3rd Edn., p. 367. (2) 890 This view finds support also from the circumstance that the constitutions of the two countries are fundamentally different in kind and character. They fail in two distinct classes having different characteristics. England has a unitary form of ' government with a flexible constitution, while in India we have always had a rigid constitution and since 1935 it is federal in form. It is unsafe, therefore, to make any deductions from the legislative power exercised under a system of government which is basically different in kind and not merely in degree from the other on the question of its legislative competency and reach conclusions on the basis of such deductions. In my opinion, search for a solu tion of the problem referred to us in that direction is bound to produce no results. I have, therefore, no hesita tion in rejecting the contention of the learned Attorney General that the answer to the questions referred to us should be returned by reference to, the exercise of power of Parliament in the matter of delegation of legislative power to the executive. It may, however, be observed that in spite of the widest powers possessed by the British Parliament, it has adopted a policy of self abnegation in the matter of delegated legis lation. A committee was appointed to report on the Minis ters ' powers, popularly known as the Donoughmore Committee. It made its recommendations and stated the limits within which power of delegated legislation should be exercised. Means were later on adopted for keeping a watchful eye on such legislation. The Donoughmore Committee discovered a few instances of cases where delegation had gone to the extent of giving a limited power of modifying Parliamentary statutes. One of these instances was in section 20 of the Mental Treatment Act, 1930 (20 & 21 Geo. V, c. 23). It empowered the Minister of Health by order to modify the wording of an enactment so far as was necessary to bring it into conformity with the provisions of the section. The whole section related to terminology, its intention being to replace certain statutory expressions in previous use by others which at the moment were regarded less 891 offensive. The other instance was found in section 76 of the Local Government Scotland Act, 1929, (19 & 20 Geo. V, c. 25). By this section the Secretary of State was empowered between 16th May, 1929, and 31st December, 1930, by order to make any adaptation or modification in the provisions of any Act necessary to bring these provisions in conformity with the provisions of other Acts. Such a clause in a statute bore the nickname "Henry VIII clause". Concerning it the Committee made the following recommendation: "The use of the so called Henry VIII clause conferring power on a Minister to modify the provisions of Acts of Parliament (hitherto limited to such amendments as may appear to him to be neces sary for the purpose of bringing the statute into operation) should be abandoned in all but most exceptional cases and should not be permitted by Parliament except upon special grounds stated in a ministerial memorandum to the bill. Henry VIII clause should never be used except for the sole purpose of bringing the Act into operation but subject to the limit of one year. " The language in which this recommendation is couched clearly indicates that even in a country where Parliament is supreme the power of modifying Parliamentary statutes has never been exercised except in the manner indicated in the above recommendation, and even as regards that limited power the recommendation was that the exercise of it should be abandoned. It is significant that since then Henry VIII clause has not been used by Parliament. The Dominion of Canada has a written constitution, The British North Amercia Act (30 & 31 Vict., c. 31). It is not modelled on the doctrine of exclusive division of power between the departments of State, legislative, executive and judicial. It does not place them in three water tight compartments and it is somewhat similar in shape in this respect to the British constitution where the King is still a part of the legislature, the House of Lords still a part of the judicial as well as legislative and where all parts of government form 892 a mutual check upon each other. This similarity, however, does not mean that the legislature in Canada is of the same kind as the British Parliament. It falls in the class of non sovereign legislatures, like all colonial parliaments. The decisions of Canadian courts are by no means uniform on the power of the Canadian Parliament to delegate legislative power. Those cited to us of recent date seem to have been given under the pressure of the two world wars and under the provisions of the War Measures Act. With great respect and in all humility, I am constrained to observe that in these decisions, to establish the vires of the powers delegated, arguments have been pressed into service which are by no means convincing or which can be said to be based on sound juristic principles. They can only be justified on the ground that during a period of emergency and danger to the State the dominion parliament can make laws which in peace time it has no competency to enact. There are a number of Privy Council decisions which have concerned themselves with the vires of legislative enactments in Canada which purported to transfer legislative power to outside authorities and it seems to me that these decisions furnish a better guide to the solution of the problem before us than the later decisions of the Supreme Court of Canada which seemingly derive support from these Privy Council decisions for the rules stated therein. The first of these decisions is in the case of Russell vs The Queen(1) decided in 1882. Two questions were raised in the appeal. The first was as to the validity of the Canada Temperance Act, 1878. It was urged that having regard to the provisions of the British North America Act, 1867, relating to the distribution of legislative powers it was not competent for the Parliament of Canada to pass the Act in question. The second question was that even if the Dominion Parliament possessed the powers which it assumed to exercise by the Act, it had no power to delegate them (1) 7 App. Cas. 829, 893 and to give local authorities the right to say whether the provisions of the Act should be operative or not. It is the second question which is relevant to the present enquiry the mode of bringing the second part of the Act into force, stating it succinctly, was as follows: "On a petition to the Governor in Council, signed by not less than one fourth in number of the electors of any county or city in the Dominion qualified to vote at the election of a member of the House of Commons, praying that the second part of the Act should be in force and take effect in such county or city, and that the votes of all the electors be taken for or against the adoption of the petition, the GovernorGeneral, after certain prescribed notices and evi dence, may issue a proclamation, embodying such petition, with a view to a poll of the electors being taken for or against its adoption. When any petition has been adopted by the electors of the county or city named in it, the Gover nor General in Council may, after the expiration of sixty days from the day on which the petition was adopted, by Order in Council published in the Gazette, declare that the second part of the Act shall be in force and take effect in such county or city, and the same is then to become of force and take effect accordingly. " It was urged before their Lordships that assuming that the Parliament of Canada had authority to pass a law for prohibiting and regulating the sale of intoxicating liquors, it could not delegate its powers, and that it had done so by delegating the power to bring into force the prohibitory and penal provisions of the Act to a majority of the electors of counties and cities. Their Lordships ' answer to the coun sel 's contention was in these words : "The short answer to this objection is that the Act does not delegate any legislative powers whatever. It contains within itself the whole legislation on the matters with which it deals. The provision that certain parts of the Act shall come into operation only 894 on the petition of a majority of electors does not confer on these persons power to legislate. Parliament itself enacts the condition and everything which is to follow upon the condition being fulfilled. Conditional legislation of this kind is in many cases convenient, and is certainly not unusual, and the power so to legislate cannot be denied to the Parliament of Canada, when the subject of legislation is within its competency. Their Lordships entirely agree with the opinion of Chief Justice Ritchie on this objection. If authority on the point were necessary, it will be found in the case of Queen vs Burah(1), lately before this Board. " It seems to me that their Lordships acquiesced and assented in the proposition urged by the learned counsel that delegation of legislative power was not permissible when they combated his arguments with the remark that the Act does not delegate any legislative power whatever. Otherwise, the short answer to the objection was that dele gation of legislative power was implicit within the power of legislation possessed by the legislature. It was not neces sary to base the decision on the ground of conditional legislation. Though Queen vs Burgh(1) was an appeal from the High Court of Bengal, a reference was made to it and the decision therein was mentioned as laying down an apposite rule for the decision of cases arising under the British North Ameri ca Act, 1867. In order to appreciate and apprehend the rule to which their Lordships gave approval in the above men tioned case, it seems necessary to state precisely what Queen vs Burgh(1) decided. Act XXII of 1869 of the Council of the Governor General of India which is entitled "An Act to remove the Garo Hills from the jurisdiction of the tribu nals established under the General Regulations and Acts, and for other purposes" among other things provided as follows : "Sec. 4. Save as hereinafter provided, the territory known as the Garo Hills. is hereby removed from the jurisdiction of the Courts of Civil and (1) 5 I.A, 178. 895 Criminal Judicature, and from the control of the offices of revenue constituted by the Regulations of the Bengal Code and the Acts passed by any legislature now or heretofore established in British India, as well from the law pre scribed for the said courts and offices by the Regulations and Acts aforesaid. And no Act hereafter passed by the Council of the Governor General for making Laws and Regula tions shall be deemed to extend to any part of the said territory, unless the same be specially named therein. Sec. 5. The administration of civil and criminal jus tice, and the superintendence of the settlement and realiza tion of the public revenue, and of all matters relating to rent, within the said territory, are hereby vested in such officers as the said Lieutenant Governor may, for the pur pose of tribunals of first instance or of reference and appeal, from time to time appoint. The officers so appointed shall, in the matter of the administration and superin tendence aforesaid, be subject to the direction and con trol of the said Lieutenant Governor and be guided by such instructions as he may from time to time issue. Sec. 8. The said Lieutenant Governor may from time to time by notification in the Calcutta Gazette, extend to the said territory any law, or any portion of any law, now in force in the other territories subject to his Government, or which may hereafter be enacted by the Council of the Gover nor General, or of the said Lieutenant Governor, for making laws and regulations, and may on making such extension direct by whom any powers or duties incident to the provi sions so extended shall be exercised or performed, and make any order which he shall deem requisite for carrying such provisions into operation. Sec. 9. The said Lieutenant Governor may from time to time, by notification in the Calcutta Gazette extend mutatis mutandis all or any of the provisions contained in the other sections of this Act to the Jaintia Hills, the Naga Hills, and to such portion of the Khasi Hills as for the time being forms part of British India. " 896 Under the provisions of the Act the Lieutenant Governor of Bengal on the 14th October, 1871, issued a notification and in exercise of the powers conferred upon him by section 9, he extended the provisions of the said Act to the terri tory known as the Khasi and Jaintia Hills and excluded therefrom the jurisdiction of the Courts of Civil and Crimi nal Judicature, and specified in the notification the bound aries of the said territory. The notification extended all the provisions of the Act to the districts of Khasi and Jaintia Hills. The Lieutenant Governor did not exercise the power of selecting parts of these Acts for purposes of local application. Section 9 of the Act did not empower the Lieu tenant Governor to modify any of the provisions of the Act. The High Court of Bengal by a majority judgment held that the notification had no legal force or effect in removing the said territories from the jurisdiction which the High Court had previously possessed over it, inasmuch as the Council of the Governor General of India for making laws and regulations had under its constitution, by the Councils Act, 1861, no power to delegate such authority to the Lieutenant Governor as it had by Act XXII of 1869 in fact purported to delegate. The Indian Councils Act, 1861, 24 & 25 Vict. c. 67, by section 22, gave the Governor General in Council power for the purpose of making laws and regulation$, power for repealing, amending or altering any laws or regulations whatever then in force or thereafter to be in force and to make laws and regulations for all per sons, whether British or native, foreigners or others, and for all courts of justice whatever, and for all places and things whatever within the said territories, and for all servants of the Government of India within the dominions of princes and states, provided always that the said Governor General in Council shall not have the power of making any laws or regulations which shall repeal or in any way affect any of the provisions of the Act. As regards section 9 of the Act their Lordships made the following observations : 897 "The ground of the decision to that effect of the major ity of the Judges of the High Court was, that the 9th section was not legislation, but was a delegation of legis lative power. In the leading judgment of Mr. Justice Mark by, the principles of the doctrine of agency are relied on; and the Indian Legislature seems to be regarded as, in effect, an agent or delegate, acting under a mandate from the Imperial Parliament, which must in all cases be executed directly by itself. "Their Lordships cannot but observe that, if the princi ple thus suggested were correct, and justified the conclu sion drawn from it, they would be unable to follow the distinction made by the majority of the Judges between the power conferred upon the Lieutenant Governor of Bengal by the 2nd and that conferred on him by the 9th section. If, by the 9th section, it is left to the Lieutenant Governor to determine whether the Act, or any part of it, shall be applied to a certain district, by the 2nd section it is also left to him to determine at what time that Act shall take effect as law anywhere. Legislation which does not directly fix the period for its own commencement, but leaves that to be done by an external authority, may with quite as much reason be called incomplete, as that which does not itself immediately determine the whole area to which it is to be applied, but leaves this to be done by the same external authority. If it is an act of legislation on the part of the external authority so trusted to enlarge the area within which a law actually in operation is to be applied, it would seem a fortiori to be an act of legislation to bring the law originally into operation by fixing the time for its com mencement. "But their Lordships are of opinion that the doctrine of the majority of the Court is erroneous, and that it rests upon a mistaken view of the powers of the Indian Legisla ture, and indeed of the nature and principles of legisla tion. The Indian Legislature has powers expressly limited by the Act of the Imperial Parliament which created it, and it can, of course, do 898 nothing beyond the limits which circumscribe these powers. But, when acting within those limits, it is not in any sense an agent or delegate of the Imperial Parliament, but has, and was intended to have, plenary powers of legislation, as large and of the same nature as those of Parliament itself. The established courts of justice, when a question arises whether the prescribed limits have been exceeded, must of necessity determine that question; and the only way in which they can properly do so, is by looking to the terms of the instrument by which, affirmatively, the legislative powers were created, and by which, negatively, they are restricted. If what has been done is legislation, within the general scope of the affirmative words which give the power, and if it violates no express condition or restriction by which that power is limited (in which category would, of course, be included any Act of the Imperial Parliament at variance with it), it is not for any court of justice to inquire further, or to enlarge constructively those conditions and restrictions. " The learned Attorney General placed considerable reli ance on these observations in support of his proposition that if the legislation is within the ambit of the field prescribed for exercise of legislative power, then from it it follows that within that field power can be exercised to delegate to the widest extent. This quotation, however, cannot be torn off from the context and read by itself. Meaning can only be given to these observations in the light of the observations that follow the quotation cited above and which are in these terms : " "Their Lordships agree that the Governor General in Council could not, by any form of enactment, create ' in India, and arm with general legislative authority a new legislative power not created or authorised by the Councils Act. Nothing of that kind has, in their Lordships ' opinion, been done or attempted in the present case. What has been done is this. The Governor General in Council has deter mined, in the due and ordinary course of legislation, to remove a particular district from the 899 jurisdiction of the ordinary courts and offices, and to place it under new courts and offices, to be appointed by and responsible to the Lieutenant Governor of Bengal; leav ing it to the Lieutenant Governor to say at what time that change shall take place; and also enabling him, not to make what law he pleases for that or any other district, but to apply by public notification to that district any law, or part of law, which either already was, or from time to time might be, in force, by proper legislative authority, in the other territories subject to his government. The legisla ture determined that, so far, a certain change should take place; but that it was expedient to leave the time, and the manner of carrying it into effect to the discretion of the Lieutenant Governor; and also, that the laws which were or might be in force in the other territories subject to the same government were such as it might be fit and proper to apply to this district also; but that, as it was not certain that all those laws, and every part of them, could with equal convenience be so applied, it was expedient, on that point also, to entrust a discretion to the Lieutenant Gover nor. "Their Lordships think that it is a fallacy to speak of the powers thus conferred upon the Lieutenant Governor (large as they undoubtedly are) as if, when they were exercised, the efficacy of the acts done under them would be due to any other legislative authority than that of the Governor General in Council. Their whole operation is, directly and immediately, under and by virtue of this Act (XXII of 1869) itself. The proper legislature has exercised its judgment as to place, person, laws, powers; and the result of that judgment has been to legislate conditionally as to all these things. The conditions having been ful filled, the legislation is now absolute. Where plenary powers of legislation exist as to particular subjects, whether in an Imperial or in a provincial legislature, they may (in their Lordships ' judgment) be well exercised, either absolutely or conditionally. Legislation, conditional on the use of particular powers, or on the exercise of a limit ed 116 900 discretion, entrusted by the legislature to persons in whom it places confidence, is no uncommon thing; and, in many circumstances, it may be highly convenient. The British Statute book abounds with examples of it; and it cannot be supposed that the Imperial Parliament did not, when consti tuting the Indian Legislature, contemplate this kind of conditional legislation as within the scope of the legisla tive powers which it from time to time conferred. It cer tainly used no words to exclude it. " Towards the close of the judgment certain illustrations were mentioned of legislation in India described as condi tional legislation. Reference was made to the Codes of Civil and Criminal Procedure and particularly, section 39 of Act XXIII of 1861 which authorised the Local Government with the previous sanction of the Governor General in Council (not in his legislative capacity) to extend the provisions of the Act "subject to any restriction, limitation or proviso which the Local Government may think 'proper. " In my opinion, in this case their Lordships did not affirmatively assent to the proposition that the Indian Legislature had full power of delegation within the ambit of its legislative field and they did not dissent from the conclusion of Markby J. in the concluding part of the judg ment that under general principles of law in India any substantial delegation of legislative power by the legisla ture of the country was void. On the other hand, they re marked that legislation of this kind was conditional legis lation and it only becomes complete on the fulfilment of those conditions and that the determination of those condi tions could be left to an external authority. In spite of expressing their disapproval of the view of the majority of the Full Bench in applying the principles of the doctrine of agency and in treating the Indian Legislature as an agent of the Imperial Parliament, their Lordships clearly expressed the opinion that the exercise of the legislative will and judgment could not be transferred to an external authority and that it was for the proper legislature to exercise its own judgment as to the. 901 place, persons, laws and powers. It seems to me that though their Lordships were not prepared to assent to the proposi tion that the matter should be dealt with on principles deducible from the doctrine of the law of agency, they were also not prepared to depart from the rule that apart from the doctrine of the law of agency a person to whom an office or duty is assigned or entrusted by reason of a special qualification cannot lawfully devolve that duty upon another unless expressly authorised so to do. Public func tionaries charged with the performance of public duties have to execute them according to their own judgment and discre tion except to the extent that it is necessary to employ ministerial officers to effectively discharge those duties. For the reasons given above presumably the Privy Council was not prepared to lay down that delegation of legislative power was a content of the power itself. It contented itself by holding the law valid under the name and style of condi tional legislation. It is difficult to conceive that the Privy Council would have hesitated in saying so if it felt that delegation of legislative power was a content of the power itself. Reference in this connection may be made to a passage in the judgment of Markby J. which reads thus : The various Parliamentary statutes nowhere confer any express power upon the Indian Legislature to change the machinery of legislation in India. But they do confer that power subject to important restrictions upon the executive government. Mr. Kennedy boldly claimed for the Indian Legislative Council the power to transfer legislative func tions to the Lieutenant Governor of Bengal. Indeed as I understand him, the only restriction he would attempt was that the Legislative Council could not destroy its own power to legislate though I see no reason why he should stop there. The Advocate General did not go so far. There are no words in the Acts of Parliament upon which the legislative authority could be made transferable in one class of cases and not in others because I do not 902 for a moment suggest that every time a discretion is en trusted to others there is the transfer of legislative authority. Every Act of the legislature abounds with exam ples of discretion entrusted to judicial and executive officers of government, the legality of which no one would think of questioning. 'the broad question, however, is ' Can the legislature confer on the Lieutenant Governor legisla tive power? ' Answer: 'It is a general principle of law in India that any substantial delegation of legislative author ity by the legislature of this country is void '. " It was then contended that the illustration cited in the concluding part of the judgment of their Lordships suggests their approval of the proposition that the legislative power could be delegated conferring power to modify a statute passed by the legislature itself. This contention seems to be based on a misapprehension of what their Lordships decid ed. In the Full Bench decision of the Calcutta High Court in Empress vs Burgh & Book Singh(1) Markby J. made the following observations while dealing with these illustra tions : "Lastly it was argued that the Indian Legislature had done so (delegated power) for a long series of years, and a long list of Acts passed between 1845 and 1868 has been handed in to us, all of which, it is said, must be treated as instances of delegation of legislative authority and Act XXII of 1869 should be so treated. The Acts contained in the list do not appear to me to afford (as was asserted) so many clear and undisputed instances of transfer of legisla tive authority. I may observe that as to the provisions which these and many other Acts contain for the making of rules by executive government in conformity with the Act we have the highest authority in Biddie vs Tariney Churn Baner jee(2) that the power to make such rules may be conferred without delegation of legislative authority. . The list of Acts does not seem to me to show any clear practice of transferring legislative authority. " (1) I.L.R. (2) 1 Tay. & Bell, 390. 903 Ainslie J. specifically considered the provisions of section 39 of Act XXIII of 1861 and the meaning of the words "reservations ", "limitations" and "provisos" and said as follows : "The provisions of section 39, Act XXIII of 1861, do not affect my view of this matter. This section allows a local Government, with the previous sanction of the Governor General in Council, to annex any restriction, limitation, or proviso it may think proper when extending the Code of Civil Procedure to any territory not subject to the general regu lations; but this is merely another form of delaying the full extension of the Code. So far as the Code obtains operation, it is still, because the extension is pro tanto, a carrying out of the intention of the superior legislature that this shall be sooner or later the law in the particular tract of country. As I read the section, no power is given to amend the law itself; it is only a power to keep some portion in abeyance or to make its operation contingent on something external to it, which again is only another form of postponing its full operation." No doubt was cast on this construction of the language of section 39 either in the minority judgment of the High Court or in the judgment of their Lordships of the Privy Council. In view of this clear expression of opinion of Ainslie J. as to the meaning of the language used in section 39 and not disapproved by their Lordships of the Privy Council it cannot with any force be contended that their Lordships in Burahs case(1) gave approval to the proposition that the power of conditional legislation included the power of amendment or modification of the Act of the legis lature itself. In my opinion, the result of the decision in Burah 's case(1) is that it was decided that the Indian Legislature had power to conditionally legislate. This case is no authority for the proposition that it could delegate the exercise of its judgment on the question as to what the law should be to an external agency. This case does not support the (1) 5 I.A. 178. 904 proposition that amendment of a statute of the legislature itself is a matter which could form the subject of delegated legislation. The expression that Indian Legislature could not arm with legislative power a new legislative body not created by the Indian Councils Act only means that it must function itself in making laws and not confer this power on any other body. In other words, it could not create a person having co extensive power of legislation and could not clothe it with its own capacity of law making, that is in laying down principles and policies. The possession of plenary powers within the ambit laid down only means that within that particular field it can make any laws on those subjects, but it does not mean that it can shirk its duty in enacting laws within the field by making a law that it shall not itself operate on that field but somebody else will operate on its behalf. In my opinion, their Lordships ' judgment amounts to saying that though within the field prescribed it has the largest power of legislation, yet at the same time it is subject to the condition that it cannot abandon formally or virtually its high trust. Hodge vs The Queen(1) was the next Canadian case decid ed by the Privy Council in 1883. The appellant Hodge, was the holder of a liquor licence issued on 25th April, 1881, by the Board of Licence Commissioners for the City of Toron to under the Liquor Licence Act of the Province of Ontario in respect of the St. James Hotel. He was also the holder of a licence under the authority of the Municipal Act, authorising him to carry on the business or calling of a keeper of a billiard saloon with one table for hire. The appellant did on the 7th May, 1881, unlawfully permit and suffer a billiard table to be used and a game of billiards to be played thereon, in his tavern during the time prohib ited by the Liquor Licence Act for sale of liquor therein. It was urged that the Ontario Assembly was not competent to legislate in regard to licences for the sale of liquor and that even if the Ontario legislature could, it could not delegate its power to Licence Commissioners. ( 1) 9 App. 905 The local legislature had assigned to three officials the power to define offences and impose penalties. This conten tion was met with the plea that there was no delegation of legislative authority but only of the power to make by laws. The Court of the King 's Bench Division held that the local legislature had no power to delegate in the matter and that such power could be exercised by the legislature alone. The Court of Appeal reversed this decision and it was upheld by their Lordships of the Privy Council. It was found that sections 4 and 5 of the Liquor Licence Act were intra vires the constitution. In the course of their judgment their Lordships made the following observations: "It appears to their Lordships, however, that the objec tion thus raised by the appellants is founded on an entire misconception of the true character and position of the provincial legislatures. They are in no sense delegates of or acting under any mandate from the Imperial Parliament. When the British North America Act enacted that there should be a legislature for Ontario, and that its legislative assembly should have exclusive authority to make laws for the Province and for provincial purposes in relation to the matters enumerated in section 92, it conferred powers not in any sense to be exercised by delegation from or as agents of the Imperial Parliament, but authority as plenary and as ample within the limits prescribed by section 92 as the Imperial Parliament in the plenitude of its power possessed and could bestow. Within these limits of subjects and area the local legislature is supreme, and has the same authority as the Imperial Parliament, or the Parliament of the Domin ion, would have had under like circumstances to confide to a municipal institution or body of its own creation authority to make by laws or resolutions as to subjects specified in the enactment, and with the object of carrying the enactment into operation and effect. It is obvious that such an authority is ancillary to legislation, and without it an attempt for varying details and machinery to carry them out might 906 become oppressive, or absolutely fail, The very full and very elaborate judgment of the Court of Appeal con tains abundance of precedents for this legislation, entrusting a limited discretionary authority to others, and has many illustrations of its necessity and convenience. It was argued at 'the bar that a legislature committing important regulations to agents or delegates effaces itself. That is not so. It retains its powers intact, and can, whenever it pleases, destroy the agency it has created and set up another, or take the matter directly into its own hands. How far it shall seek the aid of subordinate agencies, and how long it shall continue them, are matters for each legis to decide. "lature, and not for courts of law This case, in my opinion, decided the following points : (1) Power to make by laws or regulations as to subjects specified in the enactment and with the object of carrying that enactment into operation and effect can be transferred to municipal 'institutions or local bodies. (2) Such an authority is ancillary to legislation. (3) Giving such power of making regulations to agents and delegates does not amount to an effacement of the legislature itself. The case does not sanction the proposition that power to amend or to modify a statute passed by the legislature itself can be delegated. Power of amending a statute or altering it cannot be described as ancillary to legislation, nor is such a power within the armit of the doctrine of subsidiary legis lation. It is significant, that their Lordships of the Privy Council never gave their approval to the wide propo sition that what the legislature itself can do, it can employ an agent with coextensive powers for doing the Same. They have been careful in saying to what extent and in what measure delegation was permissible. All that they sactioned was delegation of authority ancillary to legislation or delegation to municipal institutions to make regulations and by laws and no more. It was not held by their Lordships that power to declare what the law shall be could ever be delegated or that such delegation will be intra vires the Parliament of Canada or of the 907 Indian Legislature. It was contended that by implication their Lordships held in this case that short of effacing itself the legislature could delegate. In my opinion, there is no justification for placing such a construction on the language used by their Lordships while they were combat ing an argument that was placed before them by the learned counsel. In re The Initiative and Referendum Act (1) is the third Canadian case decided by the Privy Council. By the Initia tive and Referendum Act of Manitoba the Legislative Assembly sought to provide that the laws of the province will be made and repealed by the direct vote of the electors instead of only by the Legislative Assembly whose members they elect. It was held that the powers conferred on a provin cial legislature by section 92 include the power of amend ment of the constitution of the province except as regards the office of the Lieutenant Governor and that the Initia tive and Referendum Act of Manitoba excludes the Lieu tenant Governor wholly from the new legislative authority set up and that this was ultra rites the provincial legisla ture. The Act was therefore held void. Lord Haldane who delivered the opinion of the Privy Council, after having found that the Act was ultra vires the legislature, made the following observations: "Having said so much, their Lordships, following their usual practice of not deciding more than is strictly neces sary, will not deal finally with another difficulty which those who contend for the validity of this Act have to meet. But they think it right, as the point has been raised in the court below, to advert to it. Section 92 of the Act of 1867 entrusts the legislative power in a province to its legisla ture and to that legislature only. No doubt a body, with a power of legislation on the subjects entrusted to it so ample as that enjoyed by a provincial legislature in Canada, could, while preserving its own capacity intact, seek (1) 117 908 the assistance of subordinate agencies as had been done when in Hodge vs The Queen (1) the Legislature of Ontario was held entitled to entrust to a Board of Commissioners authority to enact regulations relating to taverns; but it does not follow that it can create and endow with its own capacity a new legislative power not created by the Act to which it owes its own existence. Their Lordships do no more than draw attention to the gravity of the constitutional questions which thus arise. " These observations reiterate the ratio of the decision in Hodge vs The Queen(1) and they do not amount to saying that power to amend or modify Acts of the legislature itself could be given by delegation of legislative power. It is, however, important that their Lordships in clear and unam biguous language laid it down that section 92 entrusts legislative power to its legislature and to that legisla ture only and to no other. The principle underlying Lord Haldane 's remarks is thus stated in Street 's book on the Doctrine of Ultra Vires, at page 430: "The decision in this case, that the statute was ultra vires, did not turn precisely on the ground of delegation, but these remarks suggest that a legislature will not ordi narily be permitted to shift the onus of legislation, though it may legislate as to main principles and leave details to subordinate agencies. " Reference may also be made to the case of King vs Nat Bell Liquors Ltd.(2) The Liquor Act (6 Geo. V, c. 4, Alber ta) was held intra vires the power of the province under the British North America Act, 1867, and it was found that it was not ultra vires by reason of being passed pursuant to a popular vote under the Direct Legislation Act (4 Geo. V, c. 3, Alberta). Here the law was made by the provincial legis lature itself and it was passed in accordance with the regular procedure of the Houses of Legislature. This case is no authority for the contention raised by the learned Attorney General. Il) 9 App. 117 (21 909 The next Canadian case decided by the Privy Council is reported in Croft vs Dunphy(1). Antismuggling provisions enacted operating beyond territorial limits which had long formed part of Imperial customs legislation and presumably were regarded as necessary for its efficacy were held valid and within the ambit of the constitutional powers. This case does not suggest any new line of thought, not already con sidered in Queen vs Burah(2), or Hodge vs The Queen(3). Shannon vs Lower Mainland Dairy Products Board (4) is a case in which the question arose whether Natural Products Market ing Legislation Scheme of control or regulation and imposi tion of licence fees were intra vires the provincial legis lature. It was argued that it was not within the powers of the provincial legislature to delegate legislative power to the Lieutenant Governor in Council or to give him further power of delegation. This contention was met with the fol lowing observations : "The objection seems subversive of the rights which the provincial legislature enjoys while dealing with matters within its ambit. It is unnecessary to enumerate the innu merable occasions on which legislature has entrusted similar powers to various persons and bodies. On the basis of past practice the delegation was upheld. " So far as I have been able to ascertain, the past prac tice was in respect of conferring necessary and ancillary powers to carry on the policy of a statute. Reference was also made to Powell vs Apollo Candle Co. (5) decided in the year 1885. There the question arose as to the validity of section 133 of the Customs Regulating Act of 1879 which authorizes the levy of certain duties under an Order in Council. The section was held intra vires the constitution. It was argued that the power given to the colonial legislature to impose duties was to be executed by themselves (1) (4) (2) 5 I.A. 178. (5) 10 App. (3) 9 App. 117. 910 only and could not be entrusted wholly or in part to the Governor or anybody else. This objection was answered in the following way "The duties levied under the Order in Council are really levied by authority of the Act under which the order was issued. The legislature has not parted with its perfect control of the Governor and has the power of withdrawing or altering the power entrusted. " On this construction of the power delegated, that what the delegate was doing was done under the authority of the Act no question of delegation of lawmaking power arises. Fort Frances Pulp & Power Co. vs Manitoba Free Press (1), Co operative Committee on Japanese Canadians vs Attorney General for Canada (2), and Cooperative Committee vs Attorney General of Canada (3) cited at the Bar are not helpful in giving an opinion on the present matter. Four recent Canadian cases were cited for the extreme view that short of effacing itself Parliament or a legisla ture has the widest power of delegation and that it acts intra vires the constitution in doing so. The first of these cases is In re George Edwin Gray(4). The case was under section 6 of the War Measures Act, 1914, which con ferred very wide powers on the Governor General in Council for the efficient prosecution of the war. The decision was given by a majority of four to two and in the majority judgment the following observations occur : "The practice of authorizing administrative bodies to make regulations to carry out the objectives of an act instead of setting out all details in the Act itself is well known and its legality is unquestioned but it is said that the power to make such regulations could not constitu tionally be granted to such an extent as to enable the express provisions of the statute to be amended or repealed; that under the constitution (1) (3) (2) (4) 57 S.C.R. (Canada) 150. 911 Parliament alone is to make laws, the Governor General to execute them and the court to interpret them, then it fol lows that no one of the fundamental branches of government can constitutionally either delegate or accept the function of any other branch. In view of Rex vs Halliday(1), I do not think this broad proposition can be maintained. Parliament cannot indeed abdicate its functions, within reasonable limits at any rate it can delegate its power to execute government orders. Such powers must necessarily be subject to determination at any rate by Parliament and needless to say that the acts of the executive under its delegated authority must fall within the ambit of the legislative pronouncement by which this authority is measured. It is true that Lord Dunedin in Rex vs Halliday(1) said that the British Constitution has entrusted to the two Houses of Parliament subject to assent by the King an absolute power untrammelled by any other circumstance, obedience to which may be compelled by a judicial body. That undoubtedly is not the case in this country. Nothing in the Act imposes any limitations on the authority of the Parliament. " To the proposition stated in the opening part of the quotation there can be no possible objection. But when the learned Judges proceed to lay down the rule that in the absence of any limitations in the constitution Parliament can delegate the power to amend and repeal laws made by itself to an external authority unless it amounts to an abdication of its functions does not in my humble opinion seem to be sound. In the first instance, these observations seem inconsistent with the fundamental proposition that a duty entrusted to a particular body of persons and which is to be performed according to certain procedure by that body can be entrusted to an external agency which is not con trolled by any rules of procedure in the performance of that duty and which would never have been entrusted to perform it. Moreover, abdication by a legislative body need not necessarily amount to a (1) ; 912 complete effacement of it. Abdication may be partial or complete. It would certainly amount to abdication when in respect of a subject of legislative list that body says it shall not legislate on that subject but would leave it to somebody else to legislate on it. That would be delegation of the law making power which is not authorized. There is no justification for the assumption that the expression "abdi cation" is only applicable when there is a total effacement or a legal extinction of such a body. In my opinion, it is the abdication of the power to legislate when a legislature refuses to perform its duty of legislating on a particular subject and entrusts somebody else to perform that function for it. "Abdication" according to the Oxford Dictionary means abandonment, either formal or virtual, of sovereignty or other high trust. It is virtual abandonment of the high trust when the person charged with the trust says to some body else that the functions entrusted to him in part or whole be performed by that other person. Be that as it may, the point of view contained in the above quotation cannot be supported on the decisions of their Lordships of the Privy Council discussed in the earlier part of this judgment. Duff J. stated his view in the following way : "The true view of the effect of this type of legisla tion is that the subordinate body in which a lawmaking authority is vested by it is intended to act as the agent or the organ of the legislature and that the acts of the agent take effect by virtue of the antecedent declaration that they shall have the force of law." These observations, in my opinion, and I speak with great respect cannot again be justified on any juristic principle. In the matter of making law there cannot be an anticipatory sanction of a law not yet born or even con ceived. Moreover, an organ of the legislature for making laws can only be created by the constitution and not by the legislature which is itself confided with that power by the constitution. The learned dissenting Judge in this case observed that a wholesale surrender of the will of the people to any 913 autocratic power would not be justified either in cons titutional law or by the past history of their ancestors. These observations were made in respect to the power of amendment or repeal conferred on the delegate. As I have pointed out earlier in this judgment, such a power has not even been exercised by the British Parliament and the Do noughmore Committee recommended that its exercise as far as possible should be abandoned. The decision in this case, in my opinion, is not an apposite authority for arriving at a correct conclusion on the questions involved in the refer ence. The next case to which our attention was drawn is Ref. re Regulations (Chemicals)(1). This case arose in connection with the regulations respecting chemicals made pursuant to powers conferred by the Department of Munitions and Supply Act and by the War Measures Act. The question was whether these regulations were ultra vires the constitution. It was held that except in one part the regulations were intra rites, and it was observed that the War Measures Act does not attempt to transform the executive government into a legislature in the sense in which the Parliament of Canada and the legislatures of provinces are legislatures and that the regulations derive legal force solely from the War Measures Act. Reliance was placed on Queen vs Burah(2) and Hodge vs The Queen(3). One of the learned Judges observed that the maxim delegatus non potest delegare is a rule of the law of agency and has no applica tion to Acts of a legislature, that the power of delegation being absolutely essential in the circumstances for which the War Measures Act has been enacted so as to prove a workable Act, power must be deemed to form part of the powers conferred by Parliament in that Act. Another learned Judge observed that the maxim was not confined to the law of agency alone but that it had no application to legislation. A third learned Judge, however, said that the maxim quoted above also had application to grants of legislative power but that the Parliament has not (1) [1943] S.C.R. (Canada) 1 (3) 9 App. Cas. 117, (2) 5 I.A. 178. 914 effaced itself, in the ultimate analysis it had full power to amend or repeal the War Measures Act. In my opinion, for the reasons already stated, the observations in this case also go beyond the rule laid down by their Lordships of the Privy Council in Queen vs Burah(1) and Hodge vs The Queen(s), and are not a true guide to the solution of the problem. Our attention was also drawn to Attorney General of Nova Scotia vs Attorney General of Canada(3). This case does not lend full support to the view taken in the cases cited above. Therein it was laid down that neither the Parliament of Canada nor the legislature of any province can delegate one to the other any of the legislative authority respec tively conferred upon them by the British North America Act, especially by sections 91 and 92 thereof. The legislative authority conferred upon Parliament and upon a provincial legislature is exclusive and in consequence, neither can bestow upon or accept power from the other, ' although each may delegate to subordinate agencies. On the question of delegation of legislative power, the learned Chief Justice remarked that "delegations such as were dealt with in In re George Edwin Gray(4) and in Ref. re Regulations (Chemicals)(5) under the War Measures Act were delegations to a body subordinate to Parliament and were of a character different from the delegation meant by the bill now submit ted to the courts." In this case on the general question of delegation the Supreme Court did not proceed beyond the rule enunciated in In re The Initiative and Referendum Act (6), or what was stated in Hodge vs The Queen(7). Lastly reference may also be made to the case of Oimuit vs Bazi (8). The learned Attorney General placed reliance on certain obiter dicta of Davies J. to the effect that the Parliament of Canada could delegate its legislative power and such delegation was within its power. The learned Chief Justice did not express (1) 5 I.A. 178. (5) (2) 9 App. (6) (3) (1950)4 D.L.R 369. ' (7) 9 App. 57 S.C.R. 150 (8) 46 S.C.R.L. (Canada)502. 915 any opinion on the point, while Idington J. was not prepared to subscribe to this view. The other Judges did not consid er the point at all. In my opinion, these remarks, the soundness of which was doubted by other Judges, are not of much assistance to us in this case. Having examined the Canadian cases on this subject it seems pertinent at this stage to refer to a passage from Street on the Doctrine of Ultra Vires, which states the true position of colonial legislatures and appositely brings out the meaning of the language used by the Privy Council in the cases that the legislatures are not the agents of the Imperial Parliament : "However true it may be that colonial legislatures are not mere agents of the Imperial Government, it is also true that they are not unfettered principals. Within the terms of their constitution they are limited at least as to subjects and area, and, to the extent suggested, perhaps also as to power of delegation. If an ultra vires colonial ' statute may be ratified by the Imperial Parliament, there is an implica tion of agency. To do anything outside the scope of their constitution as when the Dominion of Canada established the Province of Manitoba(1), an imperial statute is required. It would appear that a legislature cannot, as an ordinary principal, ratify acts purporting to be done under its authority (2). Taking a broad view, non sovereign legisla tures are, and so long as they do not repudiate their con stitutions must remain, delegates of the Imperial Parlia ment. They have been so regarded by the Privy Council(3). But just as in the case of the prerogative it would be impolitic to apply a formula too strictly, so also the law of agency must be accommodated to meet the solid fact that the colonies, or the most important of them, enjoy real independence. " The decisions of American courts on the constitutionality of delegation of legislative power are, as in (1) 34 Vict. c. 28. (2) Commonwealth vs Colonial Ammunition Co. ; , 221. (3) [1906] A.C. 542; , 254. 118 916 the case of other countries, by no means uniform. Judicial opinion has sometimes taken a strict view against the valid ity of such delegation and on other occasions it has liber ally upheld it as constitutional on grounds which again by no means are based on logical deductions from any juristic principle, but generally on grounds of convenience or under the doctrine of "determining conditions" and sometimes on historical considerations. The Supreme Court of America has, however, never departed from the doctrine that legislative power cannot be delegated to other branches of government or to independent bodies or even back to the people. The rule against delegation of legislative power is not based merely on the doctrine of separation of powers between the three state departments, legislative, executive and judicial, evolved by the constitution. This doctrine puts a restraint on delegation to other branches of government. Prohibition against delegation to independent bodies and commissions rests on Coke 's maxim, delegatus non potest delegare. The maxim, though usually held applicable to the law of agency embodies a sound juristic principle applicable to the case of persons entrusted with the performance of public duties and the discharge of high trusts. The restraint on delega tion back to the people is tied up with some notion of representative democracy. Reference was made to a number of decisions of, the Supreme Court during the arguments and quotations from several books on constitutional law were cited. It is not useful to refer to all of them in my opinion, but a few important ones may be mentioned. The first American case that needs mention is Waman vs Southard (1), a decision of Marshall C.J. given in the year 1825. The question concerned the validity of certain rules framed by the courts. The learned Chief Justice observed that it could not be contended that Congress could delegate to courts or to any other tribunal powers which are strictly or exclusively legislative. (1) 6 Law. Edn. 262. 917 In Killbourn vs Thompson (1), it was held that judicial power could not be exercised by the legislative department. Field vs Clark C) is one of the leading cases in America on this subject. In this case power had been delegated to the executive to impose certain duties. Delegation of power was upheld on the ground that the policy of the law having been determined by the legislature, working out of the details could be left to the President who could not be said to be exercising any legislative will but was merely authorised to execute the law as an agent of the legislature in execut ing its policy. It was asserted that it was a principle universally recognised as vital to the maintenance of the system of government that Congress could not delegate legislative power to the President. In Springer vs Phillipine Islands C), the same view was expressed. On similar lines is the decision in U.S. vs Gravenport etc. Co. (4). It was observed that after fixing a primary standard, power to fill up details could be devolved by appropriate legislation. The provision attacked there was held as not delegation of legislative power but merely giving power to make administrative rules. O 'Donouhue vs U.S. (5) concerned the question of compensation payable to Judges of the Supreme Court and it was held that it could not be lawfully diminished. It was remarked that the object of the creation of the three departments of government was not a mere matter of convenience but was basic to avoid commingling of duties so that acts of each may not be called to have been done under the coercive influence of the other departments. The decision in Hampton & Co. vs U.S.(6) is the oft quoted judgment of Taft C.J. The following extracts from that judgment may be quoted with advantage : "It is a breach of the national fundamental law if Congress gives up its legislative power and transfers it to the President, or to the judicial branch, or, if by ; (4) (2) ; (5) ; (3) (8) ; 918 law it attempts to invest itself or its members with either executive power or judicial power. This is not to say that the three branches are not co ordinate parts of one govern ment and that each in the field of duties may not invoke the action of the other two branches in so far as the action invoked shall not be an assumption of the constitu tional field of action of another branch. In determining what it may do in seeking assistance from another branch, the extent and character of that assistance must be fixed according to commonsense and the inherent necessities of governmental co ordination. The field of Congress involves all and many varieties of legislative action and Congress has found it frequently necessary to use officers of the executive branch, within defined limits, to secure the exact effect intended by its acts of legislation, by vesting direction in such officers to make public regulations inter preting a statute and directing the details of its execu tion, even to the extent of providing for penalizing a breach of such regulations. . Congress may feel itself unable conveniently to determine exactly when its exercise of the legislative power should become effective, because dependent on future conditions, and it may leave the determination of such time to the decision of an executive, or, as often happens in matters of State legislation, it may be left to a popular vote of the residents of a district to be affected by legislation. " Panama Refining Co. vs U.S. (1) is another leading decision of the Supreme Court on this subject. In Benoari Lal Sarma 's ease (2) considerable reliance was placed by Varadachariar J. on this decision for arriving at his con clusion against non delegation of power in India. The following observations from the judgment of Hughes C.J. may appositely be cited : The Congress is not permitted to abdicate, or to trans fer to others, the essential legislative functions with which it is vested. Undoubtedly, legislation must often be adapted to complex conditions involving (1) 293 U.S. a88. (2) 919 a host of details with which the national legislature cannot deal directly. The Constitution has never been regarded as denying to the Congress the necessary resources of flexibil ity and practicality, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determi nation of facts to which the policy as declared by the legislature is to apply. " Cardozo J. observed as follows :"An attempted delegation not confined to any single act nor to any class or group of acts identified or described by reference to standards is in effect a roving commission. " In Opp Cotton Mills vs Administrator (1), it was said that essential legislative power could not be delegated but fact finding agencies could be created. Yakus vs U.S. C) is to the same effect. In Lichter vs U.S. (3) it was held that a constitutional power implies a power of delegation of authority under it sufficient to effect its purpose. This power is especially significant in connection with war powers under which the exercise of discretion as to methods to be employed may be essential to an effective use of its war powers by Congress. The degree to which Congress must specify its policies and standards in order that the admin istrative authority granted may not be an unconstitutional delegation of its own legislative power is not capable of precise specification. These decisions seem to indicate that judicial opinion in America is against delegation of essential powers of legislation by the Congress to administrative bodies or even to independent commissions. It is unnecessary to refer to all the passages that were quoted from the different text books which apart from the opinions of the text book writers merely sum up (1) ; (3) ; (2) ; 920 the result of the decisions given by the various courts on this point. This result has been, in my opinion, very accurately summarized by Crawford in his book on Construc tion of Statutes at pages 215, 26 in the following words and represents the present state of constitutional law in that country on this subject : "Legislative power has been delegated, as a general rule, not so often as an effort to break down the triparte theory of the separation of powers, but from necessity and for the sake of convenience. More and more with a social system steadily becoming increasingly complex, the legisla ture has been obliged in order to legislate effectively, efficiently and expeditiously, to delegate some of its functions: not purely legislative in character, to other agencies, particularly to administrative officials and boards. Most prominent among the powers thus delegated have been the power to ascertain facts, and the power to promul gate rules and regulations. Many of the other delegated powers, upon analysis, fall within one of these two major or basic classifications. "So far, however, as the delegation of any power to an executive official or administrative board is concerned, the legislature must declare the policy of the law and fix the legal principles which are to control in given cases and must provide a standard to guide the official or the board empowered to execute the law. This standard must not be too indefinite or general. It may be laid down in broad general terms. It is sufficient if the legislature will lay down an intelligible principle to guide the executive or administra tive official. From these typical criterions, it is apparent that the courts exercise considerable liberality towards upholding legislative delegations, if a standard is established. Such delegations are not subject to the objec tion that legislative power has been unlawfully delegated. The filling in of mere matters of detail within the policy of, and according to, the legal principles and standards established by the legislature is essentially ministerial rather than legislative in character, even if considerable 921 discretion is conferred upon the delegated authority. In fact, the method and manner of enforcing a law must be left to the reasonable discretion of administrative officers, under legislative standards. " On one point, however, there is uniformity of judicial decisions in the American courts and even amongst the text book writers. Delegation of general power to make and repeal laws has uniformly been held as unconstitutional: [vide observations of Dixon J. in Victoria etc. Co. & Meakes vs Dignam(1)]. It was there pointed out that no instance could be cited of a decision of the Supreme Court of America in which Congress had allowed or empowered the executive to make regulations or ordinances which may overreach existing statutes. In Moses vs Guaranteed Mortgage Co. of New York(2) a section of the Emergency Banking Law of 1933 was held uncon stitutional delegation of power. There a banking board was given power to adapt, rescind, alter or amend rules and regulations inconsistent with and in contravention of any law. In his second edition on Administrative Law, at p. 110, Walter Gellhorn states as follows : "Delegations of power to alter or modify statutes are, in effect, nothing more than delegations of the dispensing, suspending or rule making powers, or a combination thereof. Yet the mere use of the terms 'alter ' or 'modify ' in the statute, has brought unexpected repercussions from courts and commentators. " In a number of decisions mentioned in this book the courts have held that delegation of power to alter or modify a statute is unconstitutional delegation of power. As observed by Prof. Salmond (Jurisprudence 10th Edn. p. 159), a legislative Act passed by the supreme legislature cannot be amended by any other body than the supreme legislature itself. In Rowland Burrow 's Words and Phrases, the word "modify" has been defined as meaning "vary, extend or en large, limit or restrict. " In Oxford Dictionary, one of the (1) ; (2) 239 App. 703, 922 meanings of this word is "the making of partial changes or altering without radical transformation." The same diction ary gives the following meaning to the word "modification": ' 'the result of such alteration, a modified form or varie ty. " In Stevens vs General Steam Navigation Co. Ltd.(1) it was stated that modification implies an alteration. It may narrow or enlarge the provisions of a former Act. In my opinion, the view taken in American decisions that delega tion of authority to modify an Act of the Congress is uncon stitutional is fully borne out by the meaning of the expres sion "modify", though this view is not liked by Walter Gellhorn. Before concluding, it is apposite to quote a passage from Baker 's Fundamental Law which states the prin ciple on which the American decisions are based and which coincides with my own opinion in respect of those decisions. The passage runs thus: "The division of our American government into three co ordinate branches necessarily prevents either of the three departments from delegating its authority to the other two or to either of them, but there are other reasons why the legislative power cannot be delegated. Representative government ' vests in the persons chosen to exercise the power of voting taxes and enacting laws, the most important and sacred trust known to civil government. The representa tives of the people are required to exercise wise discretion and sound judgment, having due regard for the purposes and needs of the executive and judicial departments, the ability of the tax payers to respond and the general public welfare. It follows as a self evident proposition that a representa tive legislative assembly must exercise its own judgment; that in giving its consent to a tax levied it must distinct ly and affirmatively determine the amount of the tax by fixing a definite and certain rate or by fixing an aggregate amount on the tax payers and that in enacting a law it must so far express itself that the Act when it leaves the legis lative department is a complete law. It is therefore a maxim of constitutional law that a legislative body (1) 923 cannot delegate its power. If it was competent for a repre sentative legislative body to delegate its power it would be open to make the delegation to the executive which would be destructive of representative government and a return to despotism. Not only the nature of the legislative power but the very existence of representative government depends upon the doctrine that this power cannot be transferred. " The Australian Constitution follows the American model (63 & 64, Vic., c. 12, passed in July 1900). The legislative power of the Commonwealth is vested in a Federal Parliament. The executive power is vested in the Queen, while the judicial power is vested exclusively in the courts. The extent of the legislative power is stated in sections 51 and 52 of the Constitution Act. The residuary powers vest in the States. The first Australian case cited to us is Baxter vs Ah Way(1). This was decided in the year 1909. It was held that section 52, sub section (g), of the Customs Act of 1901, which provides that all goods the importation of which shall be prohibited by proclamation shall be prohibited imports, is not a delegation of legislative power but conditional legislation and is within the power conferred on Parliament by section 51 of the Constitution. It was further held that prohibition of importation is a legislative act of the Parliament itself, the effect of sub section (g) being to confer upon the Governor General in Council the discretion to declare to what class of goods the prohibition will apply. In the course of his judgment the learned Chief Justice observed as follows : "The foundation of the argument that this power cannot be delegated by the legislature is to be found in the case of. . It is of course obvious that every legislature does in one sense delegate some of its functions. . Nor is it to the purpose to say that the legislature could have done the thing itself. Of course, it could. In one sense this is delegation of authority because it authorizes another body to do (1) ; 119 924 something which it might have done itself. It is too late in the day to contend that such a delegation,if it is a delegation is objectionable m any sense. The objection cannot be supported on the maxim delegatus non potest dele gate or on any other ground. . There being no objec tion to conditional legislation being passed, this is a case of that sort. " O 'Connor J. said as follows : "Power is given in section 51 in respect of trade and commerce with other countries on taxation and there is also power to make laws incidental to the exercise of any power vested in Parliament. It is a fundamental principle of the constitution that everything necessary to the exercise of a power is included in the grant of a power. Everything necessary to the effective exercise of the power of legisla tion must be taken to be conferred by the constitution with that power. . Exercise of such discretion cannot be said to be making of the law." Higgins J. said : "According to my view, there is not here in fact any delegation of the law making power." This case rests on the principle that legislative power cannot be delegated and it was for that reason that the impugned statute was justi fied on the ground of conditional legislation. If delega tion of legislative power was permissible, it was wholly unnecessary to justify the enactment as a form of condition al legislation. Roche vs Kronheimer(1), decided in the year 1921, was argued by Dixon (as he then was). The question in that case concerned the validity of the Treaty of Peace Act, 1919, which by section 2 authorized the making of regulations conferring the delegation of powers on certain persons. The legislation was held constitutional. In the argument by Mr. Dixon, its validity was attacked on the following grounds: "It is not conditional legislation as in the case of. Baxter vs Ah Way(2), but it bestows on the executive full ; (2) 925 legislative power upon a particular subject. Vesting of legislative power to any other hands than Parliament is prohibited. The making of a law that another body may make laws upon a particular subject matter is not making a law on that subject. " The decision was given in these terms : It was said that if Parliament had authority to legis late, it had no power to confer that authority on the Gover nor General. On this topic we were referred to Hodge vs The Queen (1) and Rex vs Halliday(2) and In re The Initiative and Referendum Act(3), and much interesting argument was devoted to the real meaning and effect of the first of those cases. It is enough to say that the validity of legislation in this form has been upheld in Farey vs Burvett(4); Pank hurst vs Kierman(5); Ferrando vs Pearce(6); and Sickerdick vs Ashton(D, and we do not propose to enter into any inquiry as to the correctness of those decisions. " This case therefore was decided on the ground of cursus curiae, and the point raised by Mr. Dixon remained unan swered. In the year 1931 two cases came before the Supreme Court, one of which was decided in February, 1931, and the other in November, 1931. The first of these is the case of Huddart Parker Ltd. vs The Commonwealth(3), in which Dixon J. was one of the presiding Judges. The question in that ease concerned the validity of section 33 of the Transport Workers Act which empowered the Governor General to make regulations in respect of transport workers. The learned Judge observed that Roche vs Kronheimer(9) had decided that a statute conferring on the executive power to legislate upon some matters, is law with respect to that subject. On this construction of the decision in Roche vs Kronheimer(9) the case was decided. (1) 9 App. (6) ; 12} ; (7) ; (3) iI919] A.C. 935. t8) ; (4) ; (9) ; (5) ; 926 So far as I have been able to see, Roche vs Kronhei mer(1) decided nothing and it was based on the rule of stare decisis. Victorian etc. Co. & Meakes vs Dignan(2) was decided in November, 1931. The question in that case was whether section 3 of the Transport Workers Act was intra rites the constitution inasmuch as it delegated power of making regu lations notwithstanding anything else contained in other Acts. The delegation was under the name and style of confer ring "regulative power. " The appellants in that case were informed that they were guilty of an offence against the Waterside Employment rights, picking up for work as a water side worker at Melbournea person not a member of the Water side Workers ' Federation, while transport workers who were members of the Federation were available for being picked up for the work at the said port. The attack on the Act itself was based on the American constitutional doctrine that no legislative body can delegate to another department of government or to any other authority the power, either generally or specially, to enact laws. The reason, it was said, was to be found in the very existence of its own powers '. This high prerogative having been entrusted to its own wisdom, judgment and patriotism and not to those of other persons, it will act ultra rites if it undertakes to delegate the trust instead of executing it. It was, however, said that this principle did not preclude conferring local powers of government upon local authorities. The defence was that the Act did not impinge upon the doctrine because in it the Parliament confined the regulating power on certain specific matters within the ambit of the trade and commerce power and accordingly merely exercised its own legislative power within that ambit, and did not delegate any part of it. Reference was made to the decision of Higgins J. in Baxter vs Ah Way(3), in which it was observed that the Federal Parliament had within its ambit full power to frame its own laws in any fashion using any agent, any agency, any machinery that in its wisdom it thinks (1) ; (2) ; (3) 927 fit for the peace, order and good government of the Common wealth. Rich 3. held that the authority of subordinate law making may be invested in the executive. Reference was made to Roche vs Kronheimer(1) The learned Attorney General placed considerable reliance on the judgment of Dixon J. The learned Judge expressed his opinion on the American decisions in these words : "But in what does the distinction lie between the law of Congress requiring compliance with direction upon some specified subject which the administration thinks proper to give and a law investing the administration with authority to legislate upon the same subject? The answer which the decisions of the Supreme Court supply to this question is formulated in the opinion of that Court delivered by Taft C.J. in Hampton & Co: v.U.S.(2). The courts in America had never had any criterion as to the validity of statutes except that of reasonableness, the common refuge of thought and expression in the face of undeveloped or unascertainable standards. " The learned Judge then reached the conclusion that no judicial power could be given or delegated, but from that it did not follow that Parliament was restrained from transfer ring any power essentially legislative to another organ or body. In an earlier decision the learned Judge had ex pressed the opinion that time had passed for assigning to the constitutional distribution of powers among.the separate organs of government, an operation which confined the legis lative power to the Parliament so as to restrain it from reposing in the executive an authority essentially legisla tive in character and he remarked that he was not prepared to change that opinion or his expression to the effect that Roche vs Kronheirner(1) did decide that a statute conferring upon the executive a power to legislate on some matters contained within one of the subjects of the legislative power of Parliament is a law with respect to that subject and the distribution of powers (1) ; (2) ; , 406. 928 does not restrain Parliament to make the law. The learned Judge then proceeded to say: "This does not mean that a law confiding authority " to the executive will be valid, however extensive or vague the subject matter may be, if it does not fall outside the boundaries of federal power. Nor does it mean that the distribution of powers can supply no considerations of weight affecting the validity. It may be acknowledged that the manner in which the constitution accomplished the separation of power does logically or theoretically make the Parliament the exclusive repository of the legislative power of the Commonwealth. The existence in Parliament of power to authorize subordinate legislation may be ascribed to a conception of that legislative power which depends less upon juristic analysis and perhaps more upon the history and usages of British legislation and the theories of English law. Such subordinate legislation remains under Parliamen tary control and is lacking in the independent and unquali fied authority which is an attribute to true legislative power. " It seems to me that in its ultimate analysis the judgment of the learned Judge proceeded, as pointed out by him, upon the history and the usages of British legislation and theories of English law and not on the strict construction of the Australian Constitution with respect to which the learned Judge frankly conceded that logically or theoretically the power of delegation of the quality held valid in that case could not be justified on the framework of the constitution. I have also not been able precisely to follow the distinction drawn by the learned Judge that delegation held justified by him did not include delegation in the fullest extent of any matter falling within the boundaries of federal power. After a careful consideration of the observations of this very learned and eminent Judge I venture to think that these are not a safe guide for deci sion of the present reference. Not only were the constitu tional limitations of the written constitution over reached, but the decision was based on the theories of British legis lation and English law which could 929 hardly be applied to a written constitution with a complete separation of power. Mr. Justice Evatt in this case stated the rule differ ently. He observed "every grant by the Parliament of author ity to make regulations is itself a grant of legislative power and the true nature and quality of legislative power of the Commonwealth Parliament involves as part of its contents power to confer law making powers upon author ities other than the Parliament itself." The theory that legislative power has a content of delegation in it, to my mind, is not based on any principles of jurisprudence or of legislation and I venture to think that it is inconsistent with the fundamental principle that when a high trust is confided to the wisdom of a particular body which has to be discharged according to the procedure prescribed, such trust must be discharged by that person in whom it is confided and by no other. This decision is moreover inconsistent with the decisions of the Privy Council above mentioned. If the mere existence of power of legislation in a legislature automati cally authorized it to delegate that power, then there was hardly any necessity for their Lordships of the Privy Coun cil to justify delegation in the cases referred to above on the ground of conditional legislation and to state affirma tively that the cases considered by them were not cases of delegation of legislative authority. This view is certainly in conflict with the observations of the Privy Council in Benoari Lal Sarma 's case (1), given under the Government of India Act, 1935, wherein their Lordships said: "It is true that the Governor General acting under section 72 of Sched ule IX himself must discharge the duty of legislation there cast on him and cannot transfer it to any other authority. " Evatt J. after enunciating the rule discussed above remarked : "It is true that the extent of the power granted will often be a material circumstance in the examination of the validity of the legislation conferring the grant. . The nature of the legislative power of the (1) 930 Commonwealth authority is plenary, but it must be possible to predicate of every law passed by the Parliament that it is a law with respect to one or other of the specific subject matters mentioned in sections 51 and 52 of the constitution." After referring to a number of circumstances considered by the learned Judge material in reaching at a result as to the constitutionality of a statute, he observed as follows: "As a final analysis the Parliament of the Commonwealth is not competent to abdicate its powers of legislation. This is not because Parliament is bound to perform all or any of its legislative functions though it may elect not to do so, or because of the doctrine of sepa ration of powers, but because each and every one of the laws passed by Parliament must answer the description of a law upon one or more of the subject matters stated in the con stitution. A law by which Parliament gave all its law making authority to another body will be bad because it will fail to pass the test last mentioned. " Frankly speaking, I have not been able to apprehend on what principles, if any, of construction, the relevancy of the matters considered by the learned Judge as material circumstances in judging the validity of an Act so far as the question of the vires of the Act is concerned could be justified. Another Australian case cited is Wishart vs Fraser(1). There the attack was on section 5 of the National Security Act, 1939 40, which empowered the making of regulations for securing public safety and defence of the Commonwealth etc. It proceeds on the same line as the earlier case discussed above. In my opinion, the decision in Baxter vs Ah Way(2) is based on a correct construction of the provisions of the Australian Constitution and the later decisions cannot be considered as any guide. in this country for a decision of the point involved m the reference. The argument pressed by Mr. Dixon, as he then was, in (1) ; (2) ; 931 Roche vs Kronheirner(1) in my opinion, states the principle correctly. The decisions of their Lordships of the Privy Council from India are not many. The first and the earliest of these is in Queen vs Burah(2), which has already been dis cussed at considerable length in the earlier part of this judgment and as stated already, it is no authority for the proposition that the Indian Legislature constituted under the Indian Councils Act, 1861, had power to delegate author ity to the executive authorising them to modify or amend the provisions of an Act passed by the legislature itself. King Emperor vs Benoari Lal Sarma(3) is the last Indian decision of the Privy Council on this subject. Conviction of fifteen individuals made by a special magistrate purporting to act under Ordinance II of 1942, promulgated by the Gover nor General on the 2nd January, 1942, was set aside by a special Bench of the High Court at Calcutta and this deci sion was affirmed by the majority of the Federal Court of India. The ground on which the conviction was set aside was that the Ordinance was ultra vires. In appeal before their Lordships of the Privy Council it was contended that the Ordinance was valid. The Ordinance did not itself set up any of the special courts but provided by sub section (3) of section 1 that the Ordinance "shall come into force in any Province only if the Provincial Government, being satisfied of the existence of an emergency arising from any disorder within the Province or from a hostile attack on India or on a country neighbour ing on India or from the imminence of such an attack, by notification in the official gazette, declare it to be in force in the Province and shall cease to be in force when such notification is rescinded." In view of this last provision it was contended that the Ordinance was invalid either because the language showed that the Governor General notwithstanding the preamble did not consider that an emergency existed but was making provi sion in case one should arise in ; (2) 5 I.A. 178, (3) 120 932 future, or else because the section amounted to what was called "delegated legislation" by which the Governor General without legal authority sought to pass the deci sion whether an emergency existed to the Provincial Govern ment instead of deciding it for himself. On this last point their Lordships observed as follows : "It is undoubtedly true that the Governor General acting under section 72 of Schedule IX, must himself discharge the duty of legislation there cast on him, and cannot trans fer it to other authorities. But the Governor General has not delegated his legislative powers at all. His powers in this respect, in cases of emergency, are as wide as the powers of the Indian legislature which, as already pointed out, in view of the proclamation under section 102, had power to make laws for a province even in respect of matters which would otherwise be reserved to the Provincial legislature. Their Lordships are unable to see that there was any valid objection, in point of legality, to the Governor General 's ordinance taking the form that the actual setting up of a special court under the terms of the ordinance should take place at the time and within the limits judged to be neces sary by the provincial government specially concerned. This is not delegated legislation at all. It is merely an exam ple of the not uncommon legislative arrangement by which the local application of the provision of a statute is deter mined by the judgment of a local administrative body as to its necessity. Their Lordships are in entire agreement with the view of the Chief Justice of Bengal and of Khundkar J. on this part of the case. The latter Judge appositely quotes a passage from the judgment of the Privy Council in the well known decision in Russell vs The Queen(1). " This case brings out the extent to which conditional legislation can go, but it is no authority justifying dele gation of legislative power authorising an external authori ty to modify the provisions of a legislative enactment. It may be pointed out that the opening part of the passage quoted above seems to approve the view (1) 7 App. 933 of the Federal Court expressed by Varadachariar J. in that case when his Lordship relying on a passage from Street on the Doctrine of Ultra Vires observed that a legislature will not ordinarily be permitted to shift the onus of legisla tion though it may legislate as to main principles and leave the details to subordinate agencies. The decision of the Federal Court in Jatindra Nath Gupta vs The Province of Bihar and Others(1) to which I was a party and wherein I was in respectful agreement with the judgment of the learned Chief Justice and my brother Mukher jea, in my opinion, correctly states the rule on the subject of delegation of legislative power. The Bihar Maintenance of Public Order Act, 1947, in sub section (3) of section 1 provided as follows : "It shall remain in force for a period of one year from the date of its commencement. Provided that the Provincial Government may, by notifi cation, on a resolution passed by the Bihar Legislative Assembly and agreed to by the Bihar Legislative Council, direct that this Act shall remain in force for a further period of one year with such modifications, if any, as may be specified in the notification. " Acting under the proviso the Provincial Government on the 11th March, 1948, extended by notification the life of the Act by one year. The validity of the proviso to sub section (3) of section 1 of the Act was attacked on the ground that it amounted to delegation of legislative power by the Provincial Legislature and this it was not competent to do. On the authority of the decision of the Privy Council in Benoari Lal Sarma 's case (2) I held the proviso void. The question was posed by me in the following way : "It may be asked what does the proviso purport to do in terms and in substance ? The answer is that it empowers the Provincial Government to issue a notification saying that the Provincial Act shall remain (1) (2) 934 in force for a further period of one year with such modifi cations, if any, as may be specified in the notification. As stated in the earlier part of this judgment, unless the power of the Provincial Government is co extensive with the power of the Provincial Legislature, it is difficult to see how it can have the power to modify a statute passed by that legislature, Modification of statute amounts to re enacting it partially. It involves the power to say that certain parts of it are no longer parts of the statute and that a statute with X sections is now enacted with Y sections. In the act of modification is involved a legislative power as a discretion has to be exercised whether certain parts of the statute are to remain law in future or not or have to be deleted from it. The power to modify may even involve a power to repeal parts of it. A modified statute is not the same original statute. It is a new Act and logically speak ing, it amounts to enacting a new law. The dictionary mean ing of the word 'modify ' is to make something existing much less severe or to tone it down or to make partial changes in it. What modifications are to be made in a statute or whether any are necessary is an exercise of law making power and cannot amount merely to an act of execution of a power already conferred by the statute. The extent of changes is left to external authority, i.e., the Provincial Government. Nothing is here being done in pursuance of any law. What is being delegated is the power to determine whether a law shall be in force after its normal life has ended and if so, what that law will be, whether what was originally enacted or something different. The body appointed as a delegate for declaring whether a penal Act of this character shall have longer life than originally contemplated by the legislature and if so, with what modification, is a new kind of legisla ture than that entrusted with the duty under the Government of India Act, 1935. " I still maintain the view that the question of the life of an Act is a matter for the judgment of the competent legislature. It is a matter of policy whether a certain enactment is to be on the statute 935 book permanently or temporarily. Such a question does not fall within conditional legislation as it concerns the extension of the life of a temporary Act. Such an Act dies a natural death when the period fixed for its duration ex pires. It automatically ceases to operate and there is no real analogy between conditional legislation which author izes a known authority to determine the commencement or termination of an Act and an act done in exercise of any power conferred by the Act itself. It was said by the learned Attorney General that this decision had created considerable difficulties and that the various High Courts in India on its authority had held certain enactments void, the validity of which had never been questioned before this decision was given. In my humble judgment, there is nothing whatever in that decision which m any way unsettled the law as settled by their Lordships of the Privy Council in Bu rah 's case(1). This decision did not lay down that the Indian legislature did not possess power of delegation necessary for effectively carrying out its legislative functions. All that it held was and I think rightly that essential legislative function could not be delegated to an external authority and that the legislature could not shirk its own duty and lay the burden of discharging that duty on others. If I was convinced that the decision laid down a wrong rule of law, I would have required no sugar coated phrases to own the error. Our attention is not drawn to a single decision of their Lordships of the Privy Council during the whole administration of this country by the British in which the highest court in the land upheld the contention urged by the learned Attorney General. On the other hand, learned Judges in this country of the eminence of Markby J. and Varadachariar J. in very clear and unambig uous terms affirmed the rule that delegation of essential legislative power was not within the competence of the Indian legislatures. Reference may also be made to the case of The State of Bombay vs Narottamdas(2), decided recently and to (1) 5 IA. (2) ; 936 which I was a party. Therein it was explained that Jatindra Nath Gupta 's case(1) was no authority prohibiting delegation of legislative power in case where the principle and policy of the law had been declared in the enactment itself and ancillary powers had been delegated to the provincial gov ernment for bringing into operation the provisions of an Act. To sum up, judicial opinion on this subject is still in a fluid state and it is impossible to reconcile all the judgments cited to us on the basis of any rigid principles of constitutional law. In England the Parliament is for the time being following the recommendations of the Donough more Committee. In America the doctrine against delegation of legislative power still holds the field. In Canada as well as.in India the rule laid down by their Lordships of the Privy Council in Burah 's case(2) has never been departed from in theory. The same view was maintained in the earlier Australian decisions. Recently Australian decisions however have gone to the length of holding that even essential legislative power can be delegated so long as the principal does not completely efface itself. In my opinion, the true solution of the problem of delegation of legislative power is to be found in the oft quoted passage from the judgment of Ranney J. of the Supreme Court of Ohio in Cincinnati W. & Z.R. Co. vs Clinton County Comrs.(3). This quotation is in these terms: "The true distinction is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made. " The decision in Locke 's Appeal(4) is also based on this rule. There it was said : (1) (3) 5 I,A. 178. (4) , 937 "To assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the legislature of the power to act wisely for the public wel fare whenever a law is passed relating to a state of affairs not yet developed, or to things future and impossi ble to fully know. " The proper distinction the court said was this: "The legislature cannot delegate its power to make a law, but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action depend. 'To deny this would be to stop the wheels of government. There are many things upon which wise and useful legislation must depend which cannot be known to the law making power, and must, therefore, be a subject of inquiry and determination outside of the halls of legislation. " The Federal Court of India in its opinion, expressed by Varadachariar J. in Benoari Lal Sarma 's case(1) considered a contention of the Advocate General of India made to it based on the above quotation of Ranney J. and observed as follows: "We are of the opinion that there is nothing in the above decisions of their Lordships that can be said to be inconsistent with the principle laid down in the passage from the American authority which the Advocate General of India proposed to adopt as his own argument. " The majority of the court approved the rule stated by Chief Justice Hughes in Panama Refining Co. vs U.S.(2), and it was stated that the rule therein held had nothing whatev er to do with maxim delegatus non potest delegate, but was only the amplification of what was referred to by the Judi cial Committee in Burah 's case(3) as "the nature and princi ples of legislation. " The question can be posed thus: Why is delegation pecul iarly a content of legislative power and not of judicial power ? In my judgment, it is a content of none of the three State powers, legislative, judicial or executive. It is, on the other hand, incidental to the (1) (2) ; (3) 5 I.A. 178. 938 exercise of all power inasmuch as it is necessary to dele gate for the proper discharge of all these three public duties. No public functionary can himself perform all the duties he is privileged to perform unaided by agents and delegates, but from this circumstance it does not follow that he can delegate the exercise of his judgment and dis cretion to others. One may well ask, why is a legislature formed with such meticulous care by all constitution makers ? Why do they take pains to lay down the procedure to be followed by an elected legislature in its function of law making ? Why do they define its different functions and lay down the methods by which it shall act ? The only answer that reasonably can be given to these queries is: "Because the constitution trusts to the judgment of the body consti tuted in the manner indicated in the constitution and to the exercise of its discretion by following the procedure pre scribed therein. " On the same principle the judges are not allowed to surrender their judgment to others. It is they and they alone who are trusted with the decision of a case. They can, however, delegate ancillary powers to others, for instance, in a suit for accounts and in a Suit for dissolu tion of partnership, commissioners can be entrusted with powers authorising them to give decisions on points of difference between parties as to items in the account. Again it may be enquired why cannot other public functionaries entrusted in the matter of appointment of public servants delegate this particular duty to others. The answer again is found in the same principle. I put this query to the learned Attorney General but I could not elicit any very satisfactory answer. He contented himself by saying that possibly there was something in the nature of the power itself which requires the personal attention of the authori ties concerned and that therefore delegation was there impliedly forbidden. To my mind, the same principle forbids delegation of essential legislative power. It is inherent in the nature of the power that has to be exercised by the legislature elected for the purpose subject to the qualifi cations already stated, It would be a breach of 939 the constitutional duty to bestow this power on someone else. In the words of Sir John Salmond, "In general, in deed, the power of legislation is far too important to be committed to any person or body of persons save the incor porate community itself. The great bulk of enacted law is promulgated by the state in its own person. But in excep tional cases it has been found possible and expedient to entrust this power to private hands. " In the words of Mr. Dixon (as he then was), the making of a law that another body may make laws upon a particular subject matter is not making a law on that subject. The quotation cited in the earlier part of this judgment from Baker 's book appositely states the rule when it says: "It is an axiom of constitu tional law that representative legislative bodies cannot delegate legislative power because representative government vests in the persons chosen to exercise the power of voting taxes and enacting laws, :the most important and sacred trust known to civil government. " In the words of another jurist, "Legislation is the formal utterance by the legisla tive organ of the society and by no others. Its words constitute the law and not the words of the delegate. " In private law the rule is well settled that an arbitra tor cannot lawfully devolve his duty on another unless so expressly authorized. The nature of the duty itself is such that it demands exercise of his own judgment and discretion. It is again well settled that fiduciary duties cannot be made the subject of delegation, though trustees in order to discharge certain functions can use machinery or subordinate agencies for effectively carrying on the duties which attach to their constitution. Delegation is permissible in cases where there is a legal or physical necessity to do so be cause without trusting some person or persons it would be impossible efficiently to discharge the duties. It cannot be denied that municipal and other corporations cannot delegate the by law making power to the executive officers. It is so because power is entrusted to them in their corporate capac ity and has to be exercised in that capacity. I am not able to apprehend 121 940 why this principle which is well settled in. private law cannot appositely be applied to the discharge of duties by public functionaries and by a legislature. It seems to me that the nature of the duty is such that it is implicit within it that it should be discharged by the person en trusted with it and by no others. In other words, the nature of the public duty itself demands it and the principles of legislation require it. For the reasons given above I cannot accept the proposi tion contended for by the learned Attorney General that in the absence of an express or implied provision in the con stitution legislative authority can be bestowed on other persons. In my opinion, the correct proposition, on the other hand, is that unless expressly or impliedly author ized, such delegation is not permissible. The exceptions to this rule fall in two classes which have been stated in the quotation from Crawford 's book earlier cited in this judg ment. It is now convenient to examine the provisions of our Constitution in order to appreciate the contention of the learned Attorney General that it has been modelled on the British system and that the Parliament of India is as omnip otent as in England and that in the matter of delegation of legislative power it is in an analogous situation. In my opinion, our Constitution is a judicious combination of the American model with the British Parliamentary system. In its main scheme it follows the Government of India Act, 1935, which provides for a federation of States and provides for an executive responsible to the legislature. As a matter of fact, the framers of the constitution, though they have borrowed ideas from other constitutions, have not rigidly adhered to any particular model. Certain provisions in our constitution are such for which there is no precedent in the constitution of any other country. It seems to ,me that they were as much alive to the doctrine of administrative convenience as to the dangers of a system which permits delegation of unfettered legislative power to the execu tive. The country had recently emerged from the bonds of a bureaucratic system which had killed 941 its very soul and they. apparently did not wish it to get engulfed again m the rigours of that system. Bureaucratic rule is a necessary corollary to the existence of unfettered delegation of legislative power. To avoid this, the consti tution makers made detailed provision in the Constitution on all matters. It has to be emphasized that no country in the world has such an elaborate and comprehensive constitution as we have in this country and it would not be proper to construe such a constitution with the help of decisions given elsewhere on the construction of constitutions shaped differently. It is only after a consideration of all the provisions of the Constitution and its whole scheme that it has to be decided whether delegation of power legislative, executive or judicial is implict in the grant of any of these powers or has been expressly provided for, to the extent it was considered necessary on grounds of administra tive convenience in peace or war time and therefore confer ment of this power by implication cannot be upheld on its true construction. It has also to be borne in mind that our Constitution is fundamentally different from the British system inasmuch as the doctrine of supremacy of Parliament has its limitations here. The courts are empowered to declare Acts of Parliament unconstitutional if they are inconsistent with Part III of the Constitu tion or when they trespass on fields demarcated for State legislatures. Obviously, it is implict in the demarcation of legislative fields that one legislature cannot by delega tion of subjects that are exclusively within its field clothe the other with legislative capacity to make laws on that subject as it will amount to an infringement of the Constitution itself. It seems clear, therefore, that dele gation of legislative power to that extent is prohibited by the Constitution. Illustratively, defence is a Union sub ject, while law and order is a State subject. Can it be argued with any reason that by delegation Parliament can arm a State legislature with the law making power on the subject of defence and that a State legislature can arm Parliament with 942 power to make law on the subject of law and order ? In my opinion, any argument on those lines has to be negatived on the ground that the delegation of such power would be contrary to the Constitution itself and that this kind of transfer of power is outside its contemplation. For a simi lar reason if such transfer of power is not possible in the case of one legislature to the other, it is difficult to justify it if the transfer is made in favour of the execu tive except to the extent allowed by the Constitution or to the extent that it had already been recognised under the designation "conditional legislation" or "rule making power", of which presumably the constitution makers were fully aware. I have again no hesitation in holding that our constitution makers accepted the American doctrine against delegation of legislative power, and on grounds of adminis trative convenience and to meet particular circumstances they carefully made express provisions within the Constitu tion for devolution of power in those eventualities. Article 53 of the Constitution concerns the executive power of the Union. It is vested in the President and in express terms it is stated in that article that it shall be exercised by him either directly or through officers subor dinate to him in accordance with this Constitution. The Parliament is authorized by law to confer functions on authorities other than the President. A careful reading of this article shows that an elaborate provision has been made in the Constitution for employing agencies and machinery for the exercise of the executive power of the Union. The President is vested with the supreme command of the Defence Forces and in addition to this power, power of delegation has been conferred on Parliament even in its executive field in article 53 (3) (b). Similar provision has been made in regard to the executive power of each State:(vide article 154). In article 77 provision has been made as to how the business of the Government of India has to be conducted. The President has been conferred the power of making rules for the more convenient transaction of the business 943 of the Government of India and for the allocation among Ministers of the said business. Such a detailed provision regarding the exercise of executive power does not exist in the other constitutions to which our attention was drawn. Article 79 provides that there shall be a Parliament for the Union. Provision has then been made in the various articles how the Parliament has to be constituted and how it has to conduct its business, what officers and secretariat it can employ and with what powers. Articles 107 to 119 relate to legislative procedure. It is implicit in these elaborate provisions that the Constitution bestowed the lawmaking powers on the body thus constituted by it, and it was this body in its corporate capacity that had to exercise its judgment and discretion in enacting laws and voting taxes and that judgment had to be arrived at by following the rules of procedure expressly laid down therein. Article 123 confers legislative power on the President when Parlia ment is not in session and this power is co extensive with the legislative power of the Parliament itself. Article 124 deals with the Union judiciary. It prescribes the number of Judges and the method of their appointment and it lays down the procedure that the President has the power in making the appointments. In article 140 provision has been made under which Parliament can confer on the Supreme Court such sup plemental powers as may appear to be necessary for the purpose of enabling the court more effectively to exercise the jurisdiction conferred upon it by or under this Consti tution. An express provision of this kind, in my opinion, very clearly negatives the proposition which the learned Attorney General has been contending for. If the power of delegation of legislative powers is implict in the power of legislation itself, the constitution makers would not have made an express provision in article 140 bestowing authority on Parliament for conferment of ancillary powers on the Supreme Court. Parliament obviously had authority to legis late on "Supreme Court" as it is one of the subjects in the Union List. Article 145 (1) (a)again very strongly 944 negatives the proposition of the learned Attorney General. The constitution has authorized the Supreme Court to make rules as to the persons practising before the court. This is one of the subjects in the Union List and this conferment of power by the Constitution on the Supreme Court is subject to the provision of any law made by the Parliament. In other words, Parliament has been given express power to take away this power or supplement it by making a law. In my judgment, such a provision is quite foreign to a constitution in which delegation of law making powers is implicit. Detailed provi sion has been made for the appointment of High Court Judges in article 217, and rule making powers have been given to the High Courts under article 227. In article 243 the Presi dent has been given the power to make regulations for the peace and good government of territories enumerated in Part D of the First Schedule and in exercise of that power he can repeal or amend any law made by Parliament or an existing law. The Constitution itself has delegated the powers of the Parliament to the President wherever it thought that such delegation was necessary. Articles 245 and 246 demarcate the field of legislation between the Parliament and the State legislature and in article 248 provision has been made that residuary powers of legislation remain in the Parliament. Article 250 makes provision for cases of emergency. Parlia ment in that event has power to make laws for the whole or any part of the territory of India with respect to any matters enumerated in the State lists. Article 252 is a somewhat peculiar provision. Under it Parliament can legis late for two or more States with their consent. This is a form of exercise of legislative power by Parliament as a delegate of the State as by its consent alone Parliament gets the power of legislation. By article 258 the President has been authorized with the consent of the Government of a State to entrust either conditionally or unconditionally to that Government or to its officers functions in relation to any matter to which the executive power of the Union ex tends. In that article provision has also been made. for 945 delegation of powers by a law made by Parliament. By article 349 the power of the Parliament to enact laws in respect of language has been restricted. Article 353 states the effect of a proclamation of emergency and provides that the execu tive power of the Union in such a case shall extend to the giving of directions to any State as to the manner in which the executive power thereof is to be exercised. Clause (2) of this article requires emphasis. It provides that the power of Parliament to make laws with respect to any matters shall include power to make laws conferring powers and imposing duties, or authorizing the conferring of powers and he imposition of duties, upon the Union, or officers and authorities of the Union, as respects that matter, notwith standing that it is one which is not enumerated in the Union List. Parliament in an emergency under article 250 has full power to make laws on subjects within the State List and is certainly entitled to delegate that power if that power is a content of legislative power but the constitution makers thought otherwise and made an express provision for delega tion of power in such a situation. Article 357 provides that where by proclamation issued under clause (1) of article 356, it has been declared that the powers of the legislature of the State shall be exercisable by or under the authority of Parliament, it shall be competent for Parliament to confer on the President the power of the legislature of the State to make laws, and to authorize the President to dele gate, subject to such conditions as he may think fit to impose, the power so conferred to any other authority to be specified by him in that behalf. This is the only article by which the Constitution has authorized the delegation of essential legislative power. Possibly it was thought that in that contingency it was necessary that Parliament should have power to confer legislative power on the executive and to clothe it with its own legislative capacity in the State field and further to authorize the President to delegate that legislative power to any other authority specified by him. A reference to the entries in the three Lists of the Seventh Schedule further 946 illustrates this point. Entry 93 of List I is Offences against laws with respect to any of the matters in this List. " Entry 94 is "Inquiries, surveys and statistics for the purpose of any of the matters in this List. ' ' Entry 96 is "Fees in respect of any of the matters in this List, but not including fees taken in any court. " Entry 95 is "Jurisdiction and powers of all courts, except the Supreme Court, with respect to any of the matters in this List. " All these entries are instances of subjects incidental and ancillary to the main subjects of legislation contained in the List. Similar entries are to be found in Lists II and III as well. The Constitution seems to have taken care to confer legislative power in express terms even regarding incidental matters and it is therefore unnecessary to read by implication and introduce by this process within such a constitution any matter not expressly provided therein. I am satisfied that the constitution makers considered all aspects of the question of delegation of power, whether executive, legislative or judicial, and expressly provided for it whenever it was thought necessary to do so in great detail. In this situation there is no scope for the applica tion of the doctrine contended for by the learned Attorney General and it must be held that in the absence of express powers of delegation allowed by the Constitution, the Par liament has no power to delegate its essential legislative functions to others, whether State legislatures or executive authorities, except, of course, functions which really in their true nature are ministerial, The scheme of the Consti tution and of the Government of India Act, 1935, is that it expressly entrusted with legislative capacity certain bodies and persons and it also authorised the creation of law making bodies wherever it thought necessary but gave no authority to create a new law making body not created by itself. It even created the executive as a legislature in certain contingencies. In these circumstances it is not possible to add to the list of legislative authorities by a process of delegation. As pointed out by Crawford on Statu tory 947 Construction, at page 333. "If a statute enumerates the things upon which it is to operate, everything else must necessarily and by implication be excluded from its opera tion and effect. So if a statute directs certain acts to be done in a specified manner by certain persons, their per formance in any other manner than{ that specified, or by any other person than is there named, is impliedly prohibited. " The ordinary rule is that if authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of the act authorised under other circumstances than those as defined. Under the Government of India Act, 1935, the executive enjoyed a larger power of legislation than is contained in the new constitution. It seems to have been cut down to a certain extent. The new constitution confers authority on Parliament to make laws for the State of Delhi. It also authorizes it to create a legislature for that State. The Constitution therefore has made ample provision indicating bodies who would be competent to make laws for the State of Delhi. In my opinion, therefore, delegation of legislative power to the executive in matters essential is unconstitutional. Any legislative practice adopted during the pre constitution period for undeveloped and excluded areas can have no rele vancy in the determination of this point. Having examined the provisions of the new constitution, the constitutional position of the Indian legislature under the Indian Councils Act of 1861 and of the Government of India Act, 1935, as subsequently adapted by the Indian Independence Act, 1947, may now be examined. As already stated, the Government of India Act, 1935, envisaged a federal constitution for India with a demarca tion of the legislative field between the Federation and the States and it is the scheme of this Act which has been adopted in the new constitution. I have already expressed my respectful agreement with the view expressed by Varadachari ar J. in Benoari Lal Sarrna 's case(1) that the constitution al (1) 122 948 position in India under this Act approximates more closely to the American model than to the English model and it seems to me that delegation of legislative power in its essenti ality is not allowed by its provisions. During a period of emergency the Governor General could himself under his own proclamation become the executive as well as the legislature and the necessities of administrative convenience were not a compelling circumstance for introducing into the scheme of the Act by implication, authority in Parliament for the delegation of legislative power. This Act also contains detailed provisions authorizing delegation of power both in the executive and legislative field wherever it was consid ered necessary to confer such power. The Indian Independence Act by section 6 conferred the power of legislation on the Dominion Parliament within the ambit of the Act of 1935. By other provisions of the Indian Independence Act it made the Dominion Parliament a Constituent Assembly for the purpose of making the new constitution for India and it also gave it authority to repeal Acts of Parliament. For the purpose of ordinary law making it had the same powers as the legisla tures in India enjoyed under the Government of India Act, 1935, and the question referred to us in regard to the Ajmer Merwara Act, 1947, has to be answered on the provi sions of the constitution contained in the Constitution Act of 1935. The constitutional position in India prior to the Act of 1935 may now be briefly stated. Before the Charter Act of 1833 there was a division of legislative power between the Governor General and the Presidencies. By that Act the power of the Presidencies as legislatures was terminated and the whole law making power was vested in the Governor General in Council. Mr. Macaulay was added as a legislative member to the executive council without a right to vote. In sub stance the executive and the legislative functions were performed by the same body, of course, with the help and advice of Mr. Macaulay. With slight modifications the situation remained the same till the Indian Councils Act, 1861. Under this Act the 949 Governor General in Council in legislative meetings could legislate for the whole of India and local legislatures could also legislate for the provinces. By section 10 of the Act the legislative power was vested in the Governor General in Council. In section 15 it was laid down how that power was to be exercised. For conduct of the legislative business power was given to the Governor General to make rules in section 18. Section 22 laid down the ambit of the legislative power. Section 23 bestowed power on the Gover nor General in emergencies to make ordinances. Section 44 empowered the Governor General to create local legislatures and confer on them legislative power. It appears that the scheme of the Councils Act was that whenever Parliament wanted the Governor General in Council to have power to create legislatures or to make rules or regulations, that power was conferred in express terms. By another statute in the year 1870 summary power to make law was conferred on the Governor General in his executive capacity in respect to less advanced areas, i.e., non regulation provinces. Another charter would not have been necessary if the Governor Gener al could arm himself with legislative power by a process of delegation from his own Council. In my opinion, the consti tution as envisaged by the Indian Councils Act, 1861, does not authorize the delegation of essential legislative power by any of the legislative authorities brought into existence by that Act to the executive and it was for this reason that their Lordships of the Privy Council in Burgh 's case(1) did not base their decision on this ground but merely upheld the enactment as intra vires on the ground of conditional legis lation. I am in respectful agreement with the opinion of Markby J. expressed in the year 1877 in these terms:" that any substantial delegation of legislative authority by the legislature of this country is void. " The Privy Council on appeal did not dissent from this view. It was argued that legislative practice in India since a long time has been such as would validate statutes (1) 5 I.A. 178. 950 designed on the model of the three statutes under reference to us. Reference was made to the following observations in U.S.v. Curriss Wright(1) : "Uniform, long continued and undisputed legislative practice resting on an admissible view of the constitution goes a long way to the direction of proving the presence of unas sailable grounds for the constitutionality of the prac tice. " In my opinion, there is no evidence in this case of any uniform, long continued and undisputed legislative practice for validating statutes which have been drafted on lines similar to the statutes in question. The material on which this argument was based is of a most meagre character and does not warrant the conclusion contended for. Annexure (A) annexed to the case stated on behalf of the President mentions two instances only before the year 1912 of this alleged long continued legislative practice, but even these instances are not analogous to the statutes which have been given in the reference, The scheme of those enact ments in vital matters is different from the enactments in question. The first instance of this legislative practice is said to be furnished by section 5(a) which was added to the Scheduled Districts Act, 1874, by Act XII of 1891. It pro vided that with the previous sanction of the Governor Gener al in Council in declaring an enactment in force in the scheduled districts or in extending an enactment to a sched uled district the Local Government may declare the applica tion of the Act subject to such restriction and modification as the Government may think fit. It is noticeable that,section 7 of the has not been drafted in the same terms as section 5(a) of the Scheduled Districts Act. Though constitutionally speaking, the Governor General discharged the executive and legislative functions in meet ings held separately for the two purposes and with the help of some additional members, for all practical purposes the Governor General was truly ; 951 speaking in both executive and legislative matters the real authority in this country, and if previous sanction of this authority was necessary before declaring the law even with modifications, this instance cannot be such as would constitute legislative practice for what has been enacted in section 7 of the . The second instance cited is of the Burma Laws Act, 1898. In section 10 of this Act it was provided that the Local Government may, with the previous sanction of the Governor General in Council by notification, with such restrictions and modifications as he thinks fit, extend certain Acts in force in any part of Upper Burma at the date of the extension to certain areas. In section 4 a schedule was given of all the Acts that were in force in Upper Burma at the time of the enactment. This instance also does not furnish evidence of legislative practice for the validation of section 7 of the in which there is no provision like the one contained in section 4 of the Burma Laws Act, 1898, and which also contains a provision similar to section 5(a) of the Scheduled Districts Act requiring the previous sanction of the Governor General in Council. Both these important things are lacking in the . Between 1861 and 1912, a period of over fifty years, two instances of this kind which occurred within seven years of each other cannot fail within the criterion laid down in the case cited above. After the year 1912 three other illustrations were men tioned. The first of these is in sections 68 and 73 of the Inland Steam Vessels Act, 1917. Section authorised modifica tion of an enactment for the purpose of adaptation. This certainly is no instance of the kind of legislation. con tained in the , section 7, or in the Ajmer Merwara Act, 1947. Section 68 authorized the extension of certain chapters to certain areas with modifications. The next instance mentioned was the . By section 9 of this Act it was provided that the Central Government may by notification exclude from the operation of any part of this Act the 952 whole or any part of a cantonment or direct that any provi sions of this Act shall in the case of any cantonment apply with such modifications as may be so specified. The third instance mentioned was in section 30 of the . Here it was provided that the Central Government may by notification apply all or any of the provisions of this Act with such modifications as it may think fit to any other dangerous inflammable substance. This is an instance of adding certain items to the schedule annexed to an Act. These three instances show that between the year 1917 and 1934, a period of seventeen years, three instances occurred of legislation, though not of the same kind as contained in the , but bearing some similarity to that kind of legislation. No conclusion from those instances of any uniform legislative practice can be drawn. The learned counsel appearing for the Government of Uttar Pradesh submitted a note in which an instance is mentioned of the Uttar Pradesh Land Revenue Act, III of 1901, which in section 1 of subsection (2) provided that the State Government may by notification extend the whole or any part of this Act to all or any of the areas so excepted subject to such exceptions or modifications as it thinks fit. This instance does not materially affect the situation. After the research of a fortnight the learned Attorney General gave us a supplementary list of instances in support of his contention. Two instances contained in this list are from sections 8 and 9 of Act XXII of 1869 discussed in Burah 's case(1). The third instance is from section 39 of Act XXIII of 1861, again considered in that case, and these have already been discussed in an earlier part of this judgment. The only new instance cited is from the Aircraft Act of 1934, which authorized modification in the specification of an aircraft. It confers no authority to modify any law. Two instances in ' this list are from the Airforce Act 1950, which was enacted subsequent to (1) 5 I.A. 178. 953 the enactment under reference to us and cannot be considered relevant on this subject. The last instance cited is from the Madras Local Boards Act, 1920, which authorizes the Governor to extend the Act with certain modifications to areas to which it originally had not been made applica ble. This instance of 1920 bears no relevancy for deter mining the validity of section 7 of the Act of 1912, enacted eight years before this instance came into existence. A seemingly similar instance to the enactment contained in section 7 of the is in section 8 of Act XXII of 1869, considered by the Privy Council in Burah 's case(1). That instance, however, when closely examined, has no real resemblance to section 7 of the . Act XXII of 1869 was enacted to remove the Garo Hills from the jurisdiction of tribunals established under the General Regulations. That was its limited purpose. By section 5 the administration of this part was vested in the officers appointed by the Lieutenant Governor of Bengal and those officers had to be under his control and were to work under his instructions. The executive administration of this territory was, therefore, vested in the Lieutenant Governor of Bengal. By section 8 of the Act, already cited, the Lieutenant Governor was authorized by notification in the Calcutta Gazette to extend to the excluded territories laws in force in the other territories subject to his government or laws which might thereafter be enacted by the Council of the Governor General or the Lieutenant Governor in respect of those territories. Both these authorities were competent to make laws for the province of Bengal. The validity of section 8 was not questioned in Burah 's case(1) and no argument was addressed about it. Regarding this section, however, the following observations occur in the judgment of their Lordships which were emphasized before us: "The Governor General in Council has determined, in the due and ordinary course of legislation, to remove (1) 5 t. A. 178 954 a particular district from the jurisdiction of the ordinary courts and offices, and to place it under new courts and offices, to be appointed by and responsible to the Lieu tenant Governor of Bengal; leaving it to the Lieutenant Governor to say at what time that change shall take place; and also enabling him, not to make what laws he pleases for that or any other district but to apply by public notifica tion to that district any law, or part of a law, which either already was, or from time to time might be, in force, by proper legislative authority, in the other territories subject to his government. ' The legislature determined that, so far, a certain change should take place; but that it was expedient to leave the time, and the manner, of carrying it into effect to the discretion of the Lieutenant Governor; and also, that the laws which were or might be in force in the other territories subject to the same Govern ment were such as it might be fit and proper to apply to this district also. " All that these observations mean is that a law 'having been made by a competent legislature for the territory under his jurisdiction could be made applicable to a district excluded for certain purposes by a notification of the LieutenantGovernor. As already pointed out, the Lieutenant Governor could make laws for the whole province of Bengal and similarly, the Governor General in Council could do so. The law having been made by a competent legislature for the territory for which it had power to legislate, the only power left in the Governor General was to extend that legis lation to an excluded area; but this is not what 'the had done. As will be shown later, the in section 7 has authorized the Governor General in his executive capacity to extend to Delhi laws made by legisla tures which had no jurisdiction or competence to make laws for Delhi. Having stated the principles on which answer has to be given to the questions referred to us, I now proceed to give my opinion on each of the three questions. 955 The first question relates to section 7 of the , and concerns its validity in whole or in part. The section as enacted in 1912 was in these terms : "The Governor General in Council may by notification in the official gazette extend with such restrictions and modifications as he thinks fit to the Province of Delhi or any part thereof any enactment which is in force in any part of British India at the date of such notification. " The section gives a carte blanche to the GovernorGeneral to extend to the newly formed province any enactment in force in any part of British India at the date of the noti fication and not necessarily any enactment in force in British India at the date of the passing of the . No schedule was annexed to the Act of the enactments that were in force in any part in British India at the date of the passing of the Act. As regards the enactments that may be in force in any part of British India at the date of any notification, there was no knowing what those laws would be. Laws that were to be made after 1912, their principle and policy could not be known to the legislature that enact ed section 7 of the . It seems obvious that the legislature could not have exercised its judgment, nor its discretion in respect of those laws. It also conferred on the Governor General power of modifying existing and future enactments passed by different legislatures in the country. The power of modification implies within it the power of amending those statutes. To use the words of a learned Judge, the section conferred a kind of a vague, wide, vagrant and uncanalised authority on the Governor General. There is no provision within the section by virtue of which the mind of the legislature could ever be applied to the amendments maple by the Governor General in the different statutes passed by different legislatures in India and extended to Delhi. 123 956 Illustratively, it may be pointed out that numerous rent control Acts have been passed by different legislatures in India, laying down basically different policies and princi ples. The Provincial Government under the is authorised to apply the policy of any one of these Acts to Delhi or the policy which it might evolve by combining different such statutes passed by different State legisla tures. Legislative policy in the matter of rent control had not been evolved by the year 1912. Another illustration may be taken from the law of prohibition. Different State gov ernments have adopted a policy of either complete prohibi tion or of local option. What policy is to be applied to Delhi and who is to decide that policy ? Obviously, under section 7 the Provincial Government can without going to the legislature adopt any policy it likes whether of partial or of complete prohibition and may apply to Delhi any law it thinks fit. It is obvious therefore that within the wide charter of delegated power given to the executive by section 7 of the it could exercise essential legisla tive functions and in effect it became the legislature for Delhi. It seems to me that by enacting section 7 the legis lature virtually abdicated its legislative power in favour of the executive. That, in my judgment, was not warranted by the Indian Councils Act, 1861, or by any decision of the Privy Council or on the basis of any legislative practice. The section therefore, in my opinion, is ultra vires the Indian Councils Act, 1861, in the following particulars: (i)inasmuch as it permits the executive to apply to Delhi laws enacted by legislatures not competent to make laws for Delhi and which these legislatures may make within their own legislative field, and (ii) inasmuch as it clothes the executive with co extensive legislative authority in the matter of modification of laws made by legislative bodies in India. If any list of the existing laws passed by the Governor General in Council in his legislative capacity and of laws adopted by it though passed by other legislatures was annexed to the Act, to that extent the delegation of power, but 957 without any power of modifications in favour of the execu tive, might have been valid, but that is not what was enact ed in section 7 of the . Power to extend laws made in the future by the GovernorGeneral in Council for the whole of India or adopted by it though passed later by other legislatures would also be intra vires, but farther than that the legislature could not go. If one may say so, sec tion 7 declares that the legislature has no policy of its own and that the Governor General in Council can declare it and can determine what laws would be in force in Delhi. The second question concerns section 2 of the Ajmer Mer wara (Extension of Laws) Act, 1947, which provides for extension of enactments to Ajmer Merwara. It says: "The Central Government may by notification in the official gazette extend to the province of AjmerMet warn with such restrictions and modifications as it thinks fit any enactment which is in force in any other province at the date of such notification. " For the reasons given for holding that section 7 of the is ultra vires the constitution in two par ticulars, this section also is ultra vires the Government of India Act, 193s, in those particulars. The section does not declare any law but gives the Central Government power to declare what the law shall be. The choice to select any enactment in force in any province at the date of such notification clearly shows that the legislature declared no principles or policies as regards the law to be made on any subject. It may be pointed out that under the Act of 1935 different provinces had the exclusive power of laying down their policies in respect to subjects within their own legiSlative field. What policy was to be adopted for Delhi, whether that adopted in the province of Punjab or of Bombay, was left to the Central Government. Illustratively, the mischief of such law making may be pointed out with refer ence to what happened in pursuance of this section in Ajmer Merwara. The Bombay Agricultural Debtors ' Relief Acco, 1947, has been 958 extended under cover of this section to Ajmer Merwara and under the power of modification by amending the definition of the word 'debtor ' the whole policy of the Bombay Act has been altered. Under the Bombay Act a person is a debtor who is indebted and whose annual income from sources other than agricultural and manly labour does not exceed 33 per cent of his total annual income or does not exceed Rs. 500, whichev er is greater. In the modified statute "debtor" means an agriculturist who owes a debt, and "agriculturist" means a person who earns his livelihood by agriculture and whose income from such source exceeds 66 per cent of his total income. The outside limit of Rs. 500 is removed. The exer cise of this power amounts to making a new law by a body which was not in the contemplation of the Constitution and was not authorized to enact any laws. Shortly stated, the question is, could the Indian legislature under the Act of 1935 enact that the executive could extend to Delhi laws that may be made hereinafter by a legislature in Timbuctoo or Soviet Russia with modifications. The answer would be in the negative because the policy of those laws could never be determined by the law making body entrusted with making laws for Delhi. The Provincial legislatures in India under the Constitution Act of 1935 qua Delhi constitutionally stood on no better footing than the legislatures of Timbuctoo and Soviet Russia though geographically and politically they were in a different situation. The third question concerns section 2 of the Part C States (Laws) Act, 1950, which provides that " The Central Government may by notification in the official gazette extend to any Part C State (other than Coorg and the Andaman and Nicobar Islands) or to any part of such State, with such restrictions or modifications as it thinks fit any enactment which is in force in a Part A State at the date of the notification and provision may be made in any enactment so extended for the repeal or amendment of any corresponding law (other than a Central Act) which is for the time being applicable to that Part C State." 959 For reasons given for answering questions 1 and 2 that the enactments mentioned therein are ultra rites the consti tution in the particulars stated, this question is also answered similarly. It might, however, be observed that in this case express power to repeal or amend laws already applicable in Part C States has been conferred on the Cen tral Government. Power to repeal or amend laws is a power which can only be exercised by an authority that has the power to enact laws. It is a power co ordinate and co exten sive with the power of the legislature itself. In bestowing on the Central Government and clothing it with the same capacity as is possessed by the legislature itself the Parliament has acted unconstitutionally. In offering my opinion on the questions mentioned in the reference I have approached this matter with great caution and patient attention and having in mind the rule that the benefit of reasonable doubt on questions on the constitu tional validity of a statute has to be resolved in favour of legislative action. The legislative action, however, in the enactments which are the subject matter of the reference has been of such a drastic and wide and indefinite nature con sidered in its full amplitude that it is not possible to hold that in every particular these enactments are constitu tional. MUKHERJEA J. This is a reference made by the President of India, under article 143 (1) of the Constitution, invit ing this Court to consider and report to him its opinion on the three following questions : (1) Was section 7 of the , or any of the provisions thereof, and in what particular or particu lars or to what extent ultra vires the Legislature which passed the said Act ? (2) Was the Ajmer Merwara (Extension of Laws) Act, 1947, or any of the provisions thereof, and in what particular or particulars or to what extent ultra vires the Legislature which passed the said Act ? (3) Is section 2 of the Part C States (Laws) Act, 1950, or any of the provisions thereof, and in what 960 particular or particulars or to what extent ultra vires the Parliament ? The necessity of seeking the advisory opinion of this Court is stated to have arisen from the fact that because of the decision of the Federal Court in Jatindra Nath Gupta vs The Province of Bihar(1), which held the proviso to sub section (3) of section 1 of the Bihar Maintenance of Public Order Act, 1947, ultra vires the Bihar Provincial Legisla ture, by reason of its amounting to a delegation of its legislative powers to an extraneous authority, doubts have arisen regarding the validity of the three legislative provisions mentioned above, the legality of the first and the second being actually called in question in certain judicial proceedings which are pending before some of the High Courts in India. The , which is the earliest of the enactments referred to above, was passed in 1912 by the Governor General in Council at its legislative meeting, that being the legislature constituted for British India at that time, under the provisions of the group of statutes known as Indian Councils Acts (1861 1909). Delhi, which up till the 17th of September, 1912, was a part of the province of the Punjab, was created a Chief Commissioner 's Province on that date and on the following date the Governor General 's Legis lative Council enacted the (Act XIII) 1912 which came into force on and from the 1st of October, 1912. Section 7 of the Act, in regard to which the controversy has arisen, provides as follows : "The Provincial Government may, by notification in the official gazette, extend with such restrictions and modifi cations as it thinks fit, to the province of Delhi or any part thereof any enactment which is in force in any part of British India at the date of such notification. " The Ajmer Merwara (Extension of Laws) Act was enacted on the 31st December, 1947, by the Dominion (1) 961 Legislature of India under the provisions of the Government of India Act, 1935 (as adapted under the Indian Independence Act of 1947). Section 2 of the Act is in the following terms : "2. 'Extension of enactments to Ajmer Merwara. The Central Government may be notification in the official gazette extend to the province of Ajmer Merwara with such restrictions and modifications as it thinks fit any enact ment which is in force in any other province at the date of such notification. " Part C States (Laws) Act, 1950, has been enacted by the Indian Parliament after the new Constitution came into force and the provision of section 2 of the Act to which the dispute relates is worded thus: "2. Power to extend enactments to certain Part C States. The Central Government may, by notification in the official gazette, extend to any Part C State (other than Coorg and the Andaman and Nicobar Islands) or to any part of such State with such ' restrictions and modifications as it thinks fit any enactment which is in force in a Part A State at the date of the notification; and provision may be made in any enactment so extended for the repeal or amendment of any corresponding law (other than a Central Act) which is for the time being applicable to that Part C State. " It will be noticed that in all the three items of legis lation, mentioned above, there has been, what may be de scribed, as conferment by the legislatures, which passed the respective enactments, to an outside authority, of some of the powers which the legislative bodies themselves could exercise; and the authority in whose favour the delegation has been made has not only been empowered to extend to particular areas the laws which are in force in other parts of India but has also been given a right to introduce into such laws, any restrictions or modifications as it thinks fit. The controversy centres round the point as to whether such delegation was or is within the competency of the particular legislature which passed these enactments, 962 The contention of the learned Attorney General, who represents the President of, India, in substance is that a legislature which is competent to legislate on a particular subject has the competence also to delegate its legislative powers in respect of that subject to any agent or external authority as it thinks proper. The extent to which such delegation should be made is entirely a matter for consider ation by the legislature itself and a court of law has no say in the matter. There could be according to the learned Attorney General, only two possible limitations upon the exercise of such right of delegation by a competent legis lative body. One is that the legislature cannot abdicate or surrender its powers altogether or bring into existence a new legislative power not authorised by the constitutional instrument. The second is that if the constitutional docu ment has provided for distribution of powers amongst differ ent legislative bodies, one legislature cannot delegate to another, powers, which are vested in it, exclusively under the Constitution. It is argued that, save and except these two limitations, the doctrine of inhibition of delegation by legislative authority has no place in a Constitution mo delled on the English system which does not recognise the principle of separation of powers as obtains in the American system. These questions are of great constitutional impor tance and require careful consideration. In America the rule of inhibition against delegation of legislative powers is based primarily upon the traditional American doctrine of "separation of powers". Another principle is also called in to aid in support of the rule, which is expressed in the wellknown maxim of Private Law, "delegatus non potest delegare", the authority for the same, being based on one of the dieta of Sir Edward Coke. The modern doctrine of , 'separation of powers" was a leading tenet in the political philosophy of the 18th century. It was elaborated by Montesquieu in his "Lesprit des lois" in explanation of the English political doctrine and was adopt ed, in theory at least, in all its fulness and 963 rigidity by the constitution makers of America. The consti tution of America provides for the separation of the govern mental powers into three basic divisions the executive, the legislative, and the judicial and the powers appertaining to each department have been vested in a separate body of public servants. It is considered to be an essential princi ple(1) underlying the constitution that powers entrusted to one department should be exercised exclusively by that department without encroaching upon the powers confided to others. As is said by Cooley,(2) "The different classes of power have been apportioned to different departments; and as all derive their authority from the same instrument, there is an implied exclusion of each department from exercising the functions conferred upon the others. " The other doctrine that is invoked in support of the anti delegation rule is the well accepted principle of municipal law, which prevents a person upon whom a power has been conferred, or to whom a mandate has been given, from delegating his powers to other people. The legislature is supposed to be a delegate deriving its powers from the 'people ' who are the ultimate repository of all powers, and hence it is considered incapable of transferring such powers to any other authority. These doctrines, though well recognised in theory, have a restricted and limited application in actual practice. Mr. Justice Story said(3) "But when we speak of a separation of the three great departments of Government and maintain that that separation is indispensable to public liberty, we are to understand this maxim in a limited sense. It is not meant to affirm that they must be kept wholly and entirely separate and distinct, and have no common link of connection or depend ence, the one upon (1) See Kilbourn vs Thomson, ; at p. 190. i2) See Cooley 's "Constitutional Limitations", 7th Edition, page 126. (3) Story 's Constitution, section 525, 124 964 the other, in the slightest degree. The true meaning is that the whole power of one of these departments should not be exercised by the same hands which possess the whole power of either of the other departments: and that such exercise of the whole would subvert the principles of free constitu tion. " As regards the maxim delegatus non potest delegare, its origin and theoretical basis are undoubtedly different from those of the doctrine of separation of powers. But, for practical purposes, both these doctrines are linked together and are used as arguments against the Congress attempting to invest any other authority with legislative powers. Accord ing to Willis, the disability of the Congress to delegate its legislative powers to the executive, purports to be based upon the doctrine of separation of powers; while its incapacity to bestow its authority upon an independent body like a Board or Commission is said to rest on the maxim delegatus non potest delegare(1). As said above, a considerable amount of flexibility was allowed in the practical application of these theories even from early times. The vast complexities of social and eco nomic conditions of the modern age, and the ever growing amount of complicated legislation that is called for by the progressive social necessities, have made it practically impossible for the legislature to provide rules of law which are complete in all their details. Delegation of some sort, therefore, has become indispensable for making the law more effective and adaptable to the varying needs of society. Thus in America, despite the theory which prohibits delegation of legislative power, one comes across numerous rules and regulations passed by non legislative bodies in exercise of authority bestowed on them by the legislature in some shape or other. The legislature has always been deemed competent to create a municipal authority and empower it to make by laws. In fact, such legislation is based upon the immemorial (1) Willis on Constitutional Law, p. 965 Anglo Saxon practice of leaving to each local community the management and control of local affairs. The Congress can authorise a public officer to make regulations, or the Judges of the Court to frame rules of procedure which are binding in the same way as laws proper. It can authorise some other body to determine the conditions or contingencies under which a statute shall become operative and can empower administrative functionaries to determine facts and apply standards. "The separation of powers between the Congress and the Executive", thus observed Cardozo, J. in his dis senting judgment in Panama Refining Company vs Ryan(1), "is not a doctrinaire concept to be made use of with pedantic rigour. There must be sensible approximation, there must be elasticity of adjustment in response to the practical neces sities of Government which cannot foresee today the develop ments of tomorrow in their nearly infinite variety". In fact, the rule of non delegation has so many exceptions engrafted upon it that a well known writer(2) of constitu tional law has tersely expressed that it is difficult to decide whether the dogma or the exceptions state the rule correctly. It does not admit of any serious dispute that the doc trine of separation of powers has, strictly speaking, no place in the system of government that India has at the present day under her own Constitution or which she had during the British rule. Unlike the American and Australian Constitutions, the Indian Constitution does not expressly vest the different sets of powers in the different organs of the State. Under article 53(1), the executive power is indeed vested in the President, but there is no similar vesting provision regarding the legislative and the judicial powers. Our Constitution, though federal in its structure, is modelled on the British Parliamentary system, the essen tial feature of which is the responsibility of the executive to the legislature. The President, as the head of the executive, is to act on the advice of the Council of (1) ; at 440. (2) See Willis on Constitutional Law, p. 137, 966 Ministers, and this Council of Ministers, like the British Cabinet, is a "hyphen which joins, a buckle which fastens, the legislative part of the State to the executive part. " There could undoubtedly be no question of 'the executive being responsible to the legislature in the year 1912, when the Delhi Act X111 of 1912 was passed, but at that time it was the executive which really dominated the legislature, and the idea of a responsible government was altogether absent. It was the Executive Council of the GovernorGeneral which together with sixty additional members, of whom 33 were nominated, constituted the GovernorGeneral 's Legisla tive Council and had powers to legislate for the whole of British India. The local legislatures in the provinces were constituted in a similar manner. The first advance in the direction of responsible government was made by the Govern ment of India Act, 1919, which introduced dyarchy in the provinces. The Government of India Act, 1935, brought in Provincial autonomy, and ministerial responsibility was established in the provinces subject to certain reserved powers of the Governor. In the Centre the responsibility was still limited and apart from the discretionary powers of the Governor General the Defence and External Affairs were kept outside the purview of ministerial and legislative control. Thus whatever might have been the relation between the legislature and the executive in the different constitu tional set ups that existed at different periods of Indian history since the advent of British rule in this country, there has never been a rigid or institutional separation of powers in the form that exists in America. The maxim delegatus non potest delegare is sometimes spoken of as laying down a rule of the law of agency; its ambit is certainly wider than that and it is made use of in various fields of law as a doctrine which prohibits a person upon whom a duty or office has devolved or a trust has been imposed from delegating his duties or powers to other per sons. The 967 introduction of this maxim into the constitutional field cannot be said to be altogether unwarranted, though its basis rests upon a doubtful political doctrine. To attract the application of this maxim, it is essential that the authority attempting to delegate its powers must itself be a delegate of some other authority. The legislature, as it exists in India at the present day, undoubtedly is the creature of the Indian Constitution, which defines its powers and lays down its duties; and the Constitution itself is a gift of the people of India to themselves. But it is not a sound political theory, that the legislature acts merely as a delegate of the people. This theory once popula rised by Locke and eulogized by early American writers is not much in favour in modern times. With regard to the Indian Legislature as it existed in British days constitut ed under the Indian Councils Act, it was definitely held by the Judicial Committee in the well known case of Queen vs Burah (1) that it was in no sense a delegate of the British Parliament. In that case the question arose as to the validity of section 9 of Act XXII of 1869 passed by the Governor General 's Legislative Council. The Act provided that certain special laws, which had the effect of excluding the jurisdiction of the High Court, should apply to a cer tain district. known as Garo Hills, and section 9 empowered the Lieutenant Governor of Bengal to extend the operation of these laws to certain other areas if and when the Lieuten ant Governor, by notification in the Calcutta Gazette, would declare that they should be so applied. The majority of the Judges of the Calcutta High Court upheld the contention of the respondent, Burah, that the authority conferred on the Lieutenant Governor to extend the Act in this way was in excess of the powers of the Governor General in Council, and in support of this view, one of the learned Judges relied inter alia upon the principles of the law of agency. This view was negatived by the Judicial Committee, and Lord Selborne, in delivering the judgment, observed as follows: (1) 5 I.A. 178. 968 "The Indian Legislature has powers expressly limited by the Act of the Imperial Parliament which created it, and it can, of course, do nothing beyond the limits which cir cumscribe these powers. But when acting within those limits, it is not in any sense an agent or delegate of the Imperial Parliament, but has, and was intended to have, plenary powers of legislation as large and of the same nature as those of parliament itself." Practically the same observations were reiterated by the Judicial Committee in the case of Hodge vs The Queen(1) while describing the position of the Provincial Legislature under the Canadian Constitution and stress was laid upon the plenitude of power which such Legislature could exercise when acting within the limits prescribed for it by the Imperial Parliament. I am quite willing to concede that the doctrine of separation of powers cannot be of any assistance to us in the solution of the problems that require consideration in the present case. In my opinion, too much importance need not also be attached to the maxim delegatus non potest delegare, although as an epigrammatic saying it embodies a general principle that it is not irrelevant for our present purpose. But even then I am unable to agree with the broad proposition enunciated by the learned Attorney General that a legislative power per se includes within its ambit a right for the legislative body to delegate the exercise of that power in any manner it likes to another person or authority. I am unable also to accept his contention that in this respect the authority of the Indian Legislature is as ple nary as that of the British Parliament, and, provided the subject matter of legislation is not one outside the field of its legislative competence, the legislature in India is able to do through an agent anything which it could do itself. It is to be noted that so far as the British Parliament is concerned, there is no constitutional limitation upon its authority or power. In the words of Sir 9 App. 969 Edward Coke (1), "the power and jurisdiction of Parliament is so transcendent and absolute that it cannot be confined, either for causes or persons, within any bounds. . . . It hath sovereign and uncon trollable authority in the making, confirming, enlarging, abrogating, repealing, reviving and expounding of laws. . . . this being the place where that absolute despotic power which must in all governments reside somewhere is entrusted by the constitution of these king doms. " The British Parliament can not only legislate on any subject it likes and alter or repeal any law it likes, but being both "a legislative and a constituent assembly", it can change and modify the so called constitutional laws and they can be changed by the same body and in the same manner as ordinary laws; and no act of the Parliament can be held to be unconstitutional in a British Court of Law. (2) This sovereign character was not, and could not be, predicated of the Legislative Council of British India as it was constituted under the Indian Councils Act, even though it had very wide powers of legislation and within the scope of its authority could pass laws as important as those passed by the British Parliament (3). It is not present also in the Indian Parliament of the present day which is a creature of the Indian Constitution and has got to exercise its legislative powers within the limits laid down by the Constitution itself. Acting in its ordinary capacity as a legislative body, the Indian Parliament cannot go beyond the Constitution or touch any of the Constitutional or fundamen tal laws, and its acts can always be questioned in a court of law. Consequences of great constitutional importance flow from this difference and they have a material bearing on the question before us. The contention of the learned Attorney General in substance is that the power of delegation of legislative authority without any limitation as to its extent is (1) See Coke 's Fourth Institute, p. 36. (2) See Dicey 's Law of the Constitution, p. 88 (9th Edi tion.) (3) See Dicey 's Law of the Constitution, p. 99 (9th Edition). 970 implicit in the exercise of the power itself, and in support of his contention he refers to the unrestricted rights of delegation which are exercised by the British Parliament. But the validity or invalidity of a delegation of legisla tive power by the British Parliament is not and cannot be a constitutional question at all in the United Kingdom, for the Parliament being the omnipotent sovereign is legally competent to do anything it likes arid no objection to the constitutionality of its acts can be raised in a court of law. Therefore, from the mere fact that the British Parlia ment exercises unfettered rights of delegation in respect of its legislative powers, the conclusion does not follow that such right of delegation is an inseparable adjunct of the legislative power itself. The position simply is this that in England, no matter, to whichever department of the powers exercisable by the British Parliament the right of delega tion of legislative authority may be attributed and there is no dispute that all the sovereign powers are vested in the Parliament no objection can be taken to the legality of the exercise of such right. But in India the position even at the present day is different. There being a written constitution which defines and limits the rights of the legislature, the question whether the right of delegation, either limited or unlimited, is included within, and forms an integral part of, the right of legislation is a question which must be answered on a proper interpretation of the terms of the Constitution itself. We need not for this purpose pay any attention to the American doctrine of sepa ration of powers; we must look to the express language of our own Constitution and our approach should be to the essential principles underlying the process of law making which our Constitution envisages. According to the Indian Constitution, the power of law making can be exercised by the Union Parliament or a State Legislature which is to be constituted in a particular manner and the process of legis lation has been described in detail in various articles(1). Powers have been given to the President (1) Vide Articles 107 and 111; 196 to 200, 971 in article 123 and to the Governor of a State under article 213 to promulgate Ordinances during recess of the respective legislatures. Specific provisions have also been made for exercise of the legislative powers by the President on proclamation of emergency and in respect of Part D territo ries. Law making undoubtedly is a task of the highest impor tance and responsibility, and, as our Constitution has entrusted this task to particular bodies of persons chosen in particular ways, and not only does it set up a machinery for law making but regulates the methods by which it is to be exercised and makes specific provisions for cases where departure from the normal procedure has been sanctioned, the prima facie presumption must be that the intention of the Constitution is that the duty of law making is to be per formed primarily by the legislative body itself. The power of the Parliament to confer on the President legislative authority to make laws and also to authorise the President to delegate the power so conferred to any other authority has been recognised only as an emergency provision in arti cle 357 of ' the Constitution. Save and except this, there is no other provision in the Constitution under which the legislature has been expressly authorised to delegate its legislative powers. "It is a well known rule of construction that if a statute directs that certain acts shall be done in a specified manner or by certain persons, then performance in any other manner than that specified or by any other persons than those named is impliedly prohibited(1). " It has been observed by Baker in his treatise on "Fundamental Laws" that quite apart from the doctrine of separation of powers, there are other cogent reasons why legislative power cannot be delegated. "Representative government," thus observes the ]earned author,(2) "vests in the persons chosen to exercise the power of voting taxes and enacting laws, the most important and sacred trust known to civil government. The representatives of the people are (1) Vide Crawford 's Statutory Construction, p. 334. (2) Baker 's Fundamental Laws, Vol. I, p. 287. 125 972 required to exercise wise discretion and a sound judgment, having due regard for the purposes and the needs of the executive and judicial department, the ability of the tax payer to respond and the general public welfare. It follows as a self evident proposition that a responsible legis lative assembly must exercise its own judgment. " In the same strain are the observations made by Cooley in his "Constitutional Law ,,(1) that the reason against delegation of power by the legislature is found in the very existence of its own powers. "This high prerogative has been entrusted to its own wisdom, judgment and patriotism, and not to those of other persons, and it will act ultra vires if it under takes to delegate the trust instead of executing it. " The same considerations are applicable with regard to the legislative bodies which exercised the powers of law making at the relevant periods when the of 1912 and the Ajmer Merwara Act of 1947 were enacted. Under the Indian Councils Act, 1861, the power of making laws and regulations was expressly vested in a distinct body consist ing of the members of the Governor General 's Council and certain additional members who were nominated by the Governor General for a period of two years. The number of such additional members which was originally from 6 to 12 was increased by the subsequent amending Acts and under the Indian Councils Act 'of 1909, it was fixed at 60, of which 27 were elected and the rest nominated by the Governor General. It was this legislative body that was empowered by the Indian Councils Act to legislate for the whole of Brit ish India and there were certain local legislatures in addition to this in some of the provinces. Section 18 of the Indian Councils Act of 1861 empowered the Governor General to make rules for the conduct of busi ness at meetings of the Council for the purpose of making laws; section 15 prescribed the quorum necessary for such. meetings and further provided that the seniormost ordinary member could preside in the absence of the Governor General. This was (1) Vide Fourth Edition, p. 138, 973 the normal process of law making as laid down by the Indian Councils Act. Special provisions were made for exceptional cases when the normal procedure could be departed from. Thus section 23 of the Act of 1861 empowered the Governor General to make ordinances having the force of law in case of urgent necessity; and later on under section 1 of the Indian Councils Act of 1870 the executive government was given the power to make regulations for certain parts of India to which the provisions of the section were declared to be applicable by the Secretary of State. Besides these exceptions for which specific provisions were made, there is nothing in the parliamentary Acts passed during this period to suggest that legislative powers could be exercised by any other person or authority except the Legislative Councils mentioned above. The Ajmer Merwara Act was passed by the Dominion Legis lature constituted under the Government of India Act, 1935, as adapted under the Indian Independence Act of 1937. The provisions of the Constitution Act of 1945 in regard to the powers and functions of the legislative bodies were similar to those that exist under the present Constitution and no detailed reference to them is necessary. The point for consideration now is that if this is the correct position with regard to exercise of powers by the legislature, then no delegation of legislative function, however small it might be, would be permissible at all. The answer is that delegation of legislative authority could be permissible but only as ancillary to, or in aid of, the exercise of law making powers by the proper legislature, and not as a means to be used by the latter to relieve itself of its own responsibility or essential duties by devolving the same on some other agent or machinery. A constitutional power may be held to imply a power of delegation of authori ty which is necessary to effect its purpose; and to this extent delegation of a power may be taken to be implicit in the exercise of that power. This is on the principle "that everything necessary to the exercise of a power 974 is implied in the grant of the power. Everything necessary to the effective exercise of legislation must, therefore be taken to be conferred by the Constitution within that power. But it is not open to the legislature to strip itself of its essential legislative function and vest the same on an extraneous authority. The primary or essential duty of law making has got to be discharged by the legisla ture itself; delegation may be resorted to only as a second ary or ancillary measure. Quite apart from the decisions of American courts, to some of which I will refer presently, the soundness of the doctrine rests, as I have said already, upon the essential principles involved in our written Constitution. The work of law making should be done primarily by the authority to which that duty is entrusted, although such authority can employ an outside agency or machinery for the purpose of enabling it to discharge its duties properly and effectively; but it can on no account throw the responsibility which the Constitution imposes upon it on the shoulders of an agent or delegate and thereby practically abdicate its own powers. The learned Attorney General in support of the position he took up placed considerable reliance on the observations of the Judicial Committee in the case of Queen vs Burah(2), which I have referred to already and which have been repeat ed almost in identical language in more than one subse quent pronouncement of the Judicial Committee. The Privy Council made those observations for the purpose of clearing up a misconception which prevailed for a time in certain quarters that the Indian or the Colonial Legislatures were mere agents or delegates of the Imperial Parliament, and being in a sense holders of mandates from the latter, were bound to execute these mandates personally. This concep tion, the Privy Council pointed out, was wrong. The Indian Legislature, or for the matter of that the Colonial Parlia ment could, of course, do nothing beyond the limits (1) Per O 'Connor J. in Baxter vs Ah Way, ; at 637. (2) 5 IA. 975 prescribed for them by the British Parliament. But acting within these limits they were in no sense agents of another body and had plenary powers of legislation as large and of the same nature as those of the Parliament itself. It should be noted that the majority of the Judges of the Calcutta High Court in Queen vs Burgh(1) proceeded on the view that the impugned provision of Act XXII of 1869 was not a legislation but amounted to delegation of legislative power and Mr. Justice Markby in his judgment relied express ly upon the doctrine of agency. This view of Mr. Justice Markby was held to be wrong by the Privy Council in the observations mentioned above and as regards the first and the main point the Judicial Committee pointed out that the majority of the Judges of the High Court laboured under a mistaken view of the nature and principles of legislation, for as a matter of fact nothing like delegation of legisla tion was attempted in the case at all. It seems to me that the observations relied on by the Attorney General do not show that in the opinion of the Privy Council the Indian, Legislative Council had the same unrestricted rights of delegation of legislative powers as are possessed by the British Parliament. If that were so there was no necessity of proceeding any further and the case could have been disposed of on the simple point that even if there was any delegation of legislative powers made by the Indian Legisla tive Council it was quite within the ambit of its authority. In my opinion, the object of making the observations was to elucidate the character in which the Indian Legislative Council exercised its legislative powers. It exercised the powers in its own right and not as an agent or delegate of the British Parliament. If the doctrine of agency is to be imported, the act of the agent would be regarded as the act of the principal, but the legislation passed by the Indian Legislature was the act of the Legislature itself acting within the ambit of its authority and not of the British Parliament, although it derived its authority from the latter. This view has been clearly 5 I.A.78. 976 expressed by Rand J. of the Supreme Court of Canada while the learned Judge was speaking about the essential character of the legislation passed by the legislative bodies in Canada (1). The observations of the learned Judge are as follows : "The essential quality of legislation enacted by these bodies is that it is deemed to be the law of legislatures of Canada as a self governing political organization and not law of Imperial Parliament. It was law within the Empire and law within the Commonwealth, but it is not law as if enacted at Westminster, though its source or authority is derived from that Parliament. " It should be noted further that in their judgment in Burah 's case(2) the Privy Council while dealing with the matter of delegated authority was fully alive to the implications of a written constitution entrusting the exercise of legislative powers to a legisla ture constituted and defined in a particular manner and imposing a disability on such legislature to go beyond the specific constitutional provisions. Just after stating that the Indian Legislature was in no sense a delegate of the Imperial Parliament the Privy Council observed: "The Gover nor General in Council could not by any form of an enactment create in India and arm with legislative authority a new legislative power not created and authorised by the Coun cils Act." Almost in the same strain were the observations of the Judicial Committee in In re The Initiative and Referendum Act, 1919 (3); and while speaking about the powers of the Provincial Legislature under the Canadian Act of 1867 Lord Haldane said : "Section 92 of the Act of 1867 entrusts the legislative power in a province to its legislature and to that legisla ture only. No doubt a body with a power of legislation on the subjects entrusted to it so ample as that enjoyed by the provincial legislature in Canada could, while preserving its own capacity intact, seek (1) See Attorney General of Nova Scotia vs Attorney General of Canada, at p. 383. (2) 5 I.A. 178. (3) at p. 945. 977 the assistance of subordinate agencies as had been done when in Hodge vs Queen(1) the legislature of Ontario was held entitled to entrust to a Board of Commissioners authority to enact regulations relating to taverns; but it does not follow that it can create and endow with its own capacity a new legislative power not created by the Act to which it owes its own existence. " It is not correct to say that what these observations contemplate is a total effacement of the legislative body on surrender of all its powers in favour of another authority not recognised by the constitution. Such a thing is almost outside the range of practical consideration. The observa tions of Lord Haldane quoted above make it quite clear that his Lordship had in mind the distinction between "seeking the assistance of a subordinate agency in the framing of rules and regulations which are to become a part of the law," and "conferring on another body the essential legisla tive function which under the constitution should be exer cised by the legislature itself. " The word "abdication" is somewhat misleading, but if the word is to be used at all, it is not necessary in my opinion to constitute legal abdi cation that the legislature should extinguish itself com pletely and efface itself out of the pages of the constitu tion bequeathing all its rights to another authority which is to step into its shoes and succeed to its rights. The abdication contemplated here is the surrender of essential legislative authority even in respect of a particular sub ject matter of legislation in favour of another person or authority which is not empowered by the constitution to exercise this function. I will now attempt to set out in some detail the limits of permissible delegation, in the matter of making laws, with reference to decided authorities. For this purpose it will be necessary to advert to some of the more important cases on the, subject decided by the highest courts of America, Canada and Australia. We have also a number of pronouncements of the Judicial Committee in appeals from India and the Colonies. I confess that no uniform view can be gathered from (1) 9 App. 978 these decisions and none could possibly be expected in view of the fact that the pronouncements emanate from Judges in different countries acting under the influence of their respective traditional theories and the weight of opinion of their own courts on the subject. None of these authorities, however, are binding on this court and it is not necessary for us to make any attempt at reconciliation. We are free to accept the view which appears to us to be well founded on principle and based on sound juridical reasoning. Broadly speaking, the question of delegated legislation has come up for consideration before courts of law in two distinct classes of cases. One of these classes comprises what is known as cases of "conditional legislation," where according to the generally accepted view, the element of delegation that is present relates not to any legislative function at all, but to the determination of a contingency or event, upon the happening of which the legislative provi sions are made to operate. The other class comprises cases of delegation proper, where admittedly some portion of the legislative power has been conferred by the legislative body upon what is described as a subordinate agent or authority. I will take up for consideration these two types of cases one after the other. In a conditional legislation, the law is full and com plete when it leaves the legislative chamber, but the opera tion of the law is made dependent upon the fulfilment of a condition, and what is delegated to an outside body is the authority to determine, by the exercise of its own judgment, whether or not the condition has been fulfilled. "The aim of all legislation", said O 'Connor J. in Baxter vs Ah Way (1) "is to project their minds as far as possible into the future and to provide in terms as general as possible for all contingencies likely to arise in the application of the law. But it is not possible to provide specifically for all cases and therefore legislation from the very earnest times, and particularly in more (1) ; at 637, 979 modern times, has taken the form of conditional legis lation, leaving it to some specified authority to deter mine the circumstances in which the law shall be applied or to what its operation shall be extended, or the particular class of persons or goods or things to which it shall be applied. " In spite of the doctrine of separation of powers, this form of legislation is well recognised in the legisla tive practice of America, and is not considered as an en croachment upon the anti delegation rule at all. As stated in a leading Pennsylvania case (1), "the legislature cannot delegate its power to make a law; but it can make a law to delegate a power to determine some fact or state of things upon which the law makes or intends to make its own action depend. To deny this would be to stop the wheels of Govern ment. There are many things upon which wise and useful legislation must depend, which cannot be known to the law making power and must, therefore, be a subject of inquiry and determination outside the halls of legislation. " One of the earliest pronouncements of the Judicial Committee on the subject of conditional legislation is to be found in Queen vs Burah(2). In that case, as said already, the Lieutenant Governor of Bengal was given the authority to extend all or any of the provisions contained in a statute to certain districts at such time he considered proper by notification in the official gazette. There was no legisla tive act to be performed by the Lieutenant Governor himself. The Judicial Committee observed in their judgment : "The proper legislature has exercised its judgment as to place, persons, laws, powers, and the result of that judg ment has been to legislate conditionally as to those things. The conditions being fulfilled, the legislation is now absolute." Just four years after this decision was given, the case of Russell vs The Queen(3) came up before the (1) Locke 's Appeal, (8) 7 App. 829 (2) 5 I.A. 178. 126 980 Judicial Committee. The subject matter of dispute in that case was the Canadian Temperance Act of 1878, the prohibito ry and penal provisions of which were to be operative in any county or city, only if upon a vote of the majority of the electors of that county or city favouring such a course the Governor General by Order in Council declared the relative part of the Act to be in force. One of the contentions raised before the Judicial Committee was that the provision was void as amounting to a delegation of legislative author ity to a majority of voters in the city or county. This contention was negatived by the Privy Council, and the decision in Queen vs Burah(1) was expressly relied upon. ', The short answer to this question," thus observed the Judi cial Committee, "is that the Act does not delegate any legislative powers whatsoever. It contains within itself the whole legislation on the matter with which it deals. The provision that certain parts of the Act shall come into operation only on the petition of a majority of electors does not confer authority or power to legislate. Parliament itself enacts the condition and everything which is to follow upon the condition being fulfilled. Conditional legislation of this kind is in many cases convenient and is certainly not unusual and the power so to legislate cannot be denied to the Parliament of Canada when the subject of legislation is within its competency. " The same principle was applied by the Judicial Commit tee in King vs Benoari Lal Sarma(2). In that case, the validity of an emergency ordinance by the Governor General of India was challenged inter alia on the ground that it provided for setting up of special criminal courts for particular kinds of offences, but the actual setting up of the courts was left to the Provincial Governments which were authorised to set them up at such time and place as they considered proper. The Judicial Committee held that "this is not delegated legislation at all. It is merely an example of the not uncommon legislative power by which the local appli cation of the provisions of a statute is determined (1) 5 I.A. 178. (2) 72 I.A. 57. 981 by the judgment of a local administrative body as to its necessity. " Thus, conditional legislation has all along been treated in judicial pronouncements not to be a species of delegated legislation at all. It comes under a separate category, and, if in a particular case all the elements of a conditional legislation exist, the question does not arise as to whether in leaving the task of determining the condition to an outside authority, the legislature acted beyond the scope of its powers. I now come to the other and more important group of cases where admittedly a. portion of the law making power of the legislature is conferred or bestowed upon a subordinate authority and the rules and regulations which are to be framed by the latter constitute an integral portion of the statute itself. As said already, it is within powers of Parliament or any competent legislative body when legislat ing within its legislative field, to confer subordinate administrative and legislative powers upon some other au thority. The question is what are the limits within which such conferment or bestowing of powers could be properly made? It is conceded by the learned Attorney General that the legislature cannot totally abdicate its functions and invest another authority with all the powers of legislation which it possesses. Subordinate legislation, it is not disputed, must operate under the control of the legislature from which it derives its authority, and on the continuing operation of which, its capacity to function rests. As was said by Dixon J. (1) "a subordinate legislation cannot have the independent and unqualified authority which is an attribute of true legislative power. " It is pointed out by this learned Judge that several legal consequences flow from this doctrine of subordinate legislation. An offence against subordinate legislation is regarded as an offence against the statute and on the repeal of the statute the regulations automatically collapse. So far, the propositions cannot, and need not, be disputed. But, (1) Vide Victoria Stevedoring and General Contracting Company vs Dignan, ; at 102. 982 according to the learned Attorney General all that is neces sary in subordinate legislation is that the legislature should not totally abdicate its powers and that it should retain its control over the subordinate agency which it can destroy later at any time it likes. If this is proved to exist in a particular case, then the character or extent of the powers delegated to or conferred upon such subordinate agent is quite immaterial and into that question the courts have no jurisdiction to enter. This argument seems plausible at first sight, but on closer examination, I find myself unable to accept it as sound. In my opinion, it is not enough that the legislature retains control over the subor dinate agent and could recall him at any time it likes, to justify its arming the delegate with all the legislative powers in regard to a particular subject. Subordinate legis lation not only connotes the subordinate or dependent char acter of the agency which is entrusted with the power to legislate, but also implies the subordinate or ancillary character of the legislation itself, the making of which such agent is entrusted with. If the legislature hands over its essential legislative powers to an outside authority, that would, in my opinion, amount to a virtual abdication of its powers and such an act would be in excess of the limits of permissible delegation. The essential legislative function consists in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of conduct. It is open to the legislature to formulate the policy as broadly and with as little or as much details as it thinks proper and it may delegate the rest of the legis lative work to a subordinate authority who will work out the details within the framework of that policy. "So long as a policy is laid down and a standard established by statute no constitutional delegation of legislative power is involved in leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determi nation of facts to which the legislation is to apply"(1). (1) Vide Schechter Poultry Corp. vs United States, 295 U.S. 495 983 The Supreme Court of America has held in more cases than one that the policy of the law making body and the standards to guide the administrative agency may be laid down in very broad and general terms. It is enough if the legislature lays down an intelligible principle which can be implemented by the subordinate authorities for specific cases or classes of cases(1). The Court has been exceedingly loath to find violation of this principle and in fact there are, only two cases, viz., Panama Refining Co. vs Ryan(2) and Schechter Poultry Corp. vs U.S.(3) where the federal legislation was held invalid on the ground that the standard laid down by the Congress for guiding administrative discretion was not sufficiently definite. In Panama Refining Co. vs Ryan(2) Chief Justice Hughes very clearly stated "that the Congress manifestly is not permitted to abdicate or transfer to others the essential legislative functions with which it is invested." "In every case" the learned Chief Justice contin ued," in which the question has been raised the court has recognised that there are limits of delegation which there is no constitutional authority to transcend. We think that section 9(c) goes beyond those limits; as to transpor tation of oil production in excess of state permission the Congress has declared no policy, has established no stand ard, has laid down no rule. There is no requirement, no definition of circumstances and conditions in which the transportation is to be allowed or prohibited." Mr. Justice Cardozo differed from the majority view m this case and held that a reference express or implied to the policy of Con gress as declared in section 1 was a sufficient definition of a standard to make the statute valid. "Discretion is not unconfined and vagrant" thus observed the learned Judge. "It is confined within banks that keep it from overflowing. " It is interesting to note that in the later case of Schechter Poultry Corporation(3), where the legislative power was held to be unconstitutionally delegated by the provision of section 3 of the National Industrial (1) Vdie J. IV. Hampton vs U.S.; , (2) ; (3) ; 184 Recovery Act of 1933 as no definite standard was set up or indicated by the legislature, Cardozo J. agreed with the opinion of the Court and held that the delegated power of legislation which had found expression in that Code was not canalised within banks but was unconfined and vagrant. "Here in the case before us" thus observed the learned Judge, "is an attempted delegation not confined to any single act nor to any class or group of acts identified or described by reference to a standard. This is delegation running riot. No such plenitude of powers is capable of transfer. " As said above, these are the only two cases up till now in which the statutes of Congress have been de clared invalid because of delegation of essential legis lative powers. In the later cases the court has invari bly found the standard established by the Congress suffi ciently definite to satisfy the prohibition against delega tion of legislative powers, and in all such cases a most liberal construction has been put upon the enactment of the legislature(1). We are not concerned with the actual decisions in these cases. The decisions are to be valued in so far as they lay down any principles. The manner of applying the principles to the facts of a particular case is not at all material. The decisions referred to above clearly lay down that the legislature cannot part with its essential legislative function which consists in declaring its policy and making it a binding rule of ' conduct. A surrender of this essen tial function would amount to abdication of legislative powers in the eye of law. 'the policy may be particularised in as few or as many words as the legislature thinks proper and it is enough if an intelligent guidance is given to the subordinate authority. The Court can interfere if no policy is discernible at all or the delegation is of such an indef inite character as to amount to abdication, but as the discretion vests with the legislature in determining wheth er there is necessity (1) See Opp Cotton Mills vs Administrator of Wages, ; ; Yakus vs United States, ; ; American Pt. & Lt. Co. vs Securities and Exchange Commission, ; 985 for delegation or not, the exercise of such discretion is not to be disturbed by the court except in clear cases of abuse. These I consider to be the fundamental principles and in respect to the powers of the legislature the constitu tional position in India approximates more to the American than to the English pattern. There is a basic difference between the Indian and the British Parliament in this re spect. There is no constitutional limitation to restrain the British Parliament from assigning its powers where it will, but the Indian Parliament qua legislative body is lettered by a written constitution and it does not possess the sover eign powers of the British Parliament. The limits of the powers of delegation in India would therefore have to be ascertained as a matter of construction from the provisions of the Constitution itself and as I have said the right of delegation may be implied in the exercise of legislative power only to the extent that it is necessary to make the exercise of the power effective and complete. It is said by Schwartz in his work on American Administrative Law "that these doctrines enable the American courts to ensure that the growth of executive power necessitated by the rise of the administrative process will not be an uncontrollable one. Delegation of powers must be limited ones limited either by legislative prescription of ends and means, or even of details or by limitations upon the area of the power delegated. The enabling legislation must, in other words, contain a framework within which the executive action must operate"(1). It would be worth while mentioning in this connection that the report of the Committee on Ministers ' Power recom mended something very much similar to this American doctrine as a proper check on delegated legislation. The report says that "the precise limits of a law making power which Parlia ment intends to confer on a Minister should always be ex pressly defined in clear language by the statute which confers it, when discretion is conferred its limits should be defined with (1) Schwartz 's American Administrative Law, p. 22. 986 equal clearness"(1). It is true that what in America is a question of vires and is subject to scrutiny by courts, in the United Kingdom it is a question of policy having a purely political significance. But the recommendation of the Committee would clearly indicate that the rules laid down and acted upon by the American Judges particularly in later years can be supported on perfectly clear and sound democratic principles. I will now advert to the leading Canadian and Australi an cases on the subject and see how far these decisions lend support to the principles set out above. Many of these Canadian cases, it may be noted, went up on appeal to the Judicial Committee. I will start with the case of Hodge vs The Queen(2) which came up before the Judicial Committee on appeal from the decision of the Court of Appeal for Ontario in the year 1883. The facts of the case are quite simple. The appellant was convicted for permitting and suffering a billiard table to be used and a game of billiard to be played thereon in violation of a resolution of the License Commissioners who were authorised by the Liquor License Act of 1877 to enact regulations regulating the use of taverns, with power to create offences and annex penalties there to. One of the questions raised was whether the Ontario Legisla ture could delegate powers to the License Commissioners to frame regulations by which new offences could be created. The Privy Council agreed with the High Court in holding that the legislature for Ontario was not in any sense exercising delegated authority from the Imperial Parliament and it had full authority to confide to a municipal institution or body of its own creation authority to make by laws or resolutions as to subjects specified in the enactment and with the object of carrying the enactment into operation and effect. It was observed : "Such an authority is ancillary to legislation;. the very full and very elaborate judgment of the (1) Vide Report, page 65. (2) 9 App, Cas, 117. 987 Court of Appeal contains abundance of precedents for the legislature entrusting a limited discretionary authority to others and as many illustrations of its necessity and con venience. " It will be seen that what was delegated by the Ontario Legislature to the License Commissioners was simply the power to regulate tavern licenses. There was no question of parting with substantial legislative powers in this case. But although the Privy Council stated clearly that the Ontario legislature was quite supreme within its own sphere and enjoyed the same authority as the Imperial or the Dominion Parliament, they described the power delegated as authority ancillary to legislation and expressly referred to the "abundance of precedents for the legislature entrusting a limited discretionary authority to others. " There was no necessity for the Privy Council to use the guarded language it used if in fact the Ontario legislature had the same right of delegating its powers as the British Parliament. It would be pertinent to note that Davey, Q.C., who appeared for the Crown in support of the judgment appealed against. did not contend before the Privy Council that the Ontario legislature had full rights of delegation like the British Parliament and consequently its acts could not be challenged as unconstitutional. His argument was that in this ease there was no delegation of legislative authority and what was delegated was only the power to make by laws. By legis lative authority the learned Counsel apparently meant the essential legislative function as distinguished from the power to make rules and regulations and the argument implied that the essential legislative powers could not be delegated at all. The case of Powell vs Appollo Candle Co. (1) is the next case in point of time which has a bearing on the question before us. That case came up on appeal from a decision of the Supreme Court of New South Wales, and the question arose whether section 133 of (1) 10 App. 127 988 the Customs Regulation Act of 1879of the Colony, was or was not ultra vires the Colonial legislature. The attack on the validity of the legislation was inter alia on the ground that it conferred upon the Government power to levy duty on certain articles which in the opinion of the Collector were substituted for other dutiable articles. The question was whether such power could be validly conferred. The Privy Council had no difficulty in holding that the provision was perfectly valid and it was quite within the competence of the Colonial legislature which was in no sense a delegate of the Imperial Parliament, to confer a discretion of this character on the executive for the purpose of making the statute properly effective. The policy of the law as well as the main principles were laid down in the Act itself. What was left to the executive was a power to enforce the provisions of the Act more properly and effectively by levying duties on articles which could be used for similar purposes as the dutiable articles mentioned in the statute. The legislature itself laid down the standard and it was sufficiently definite to guide the executive officers. I now come to the decision of the Supreme Court of Canada in In re Gray (1), which was decided during the first world war. The Dominion War Measures Act, 1914, passed by the Dominion Parliament of Canada empowered the Governor General to make "such regulations as he may, by reason of the existence of real or apprehended war. . deem necessary or advisable for the security, defence, peace, order and welfare of Canada"; and the question arose whether such transfer of power was permitted by the British North America Act. The Supreme Court decided by a majority of four to two that the Act was valid, though the Judges who adopted the majority view were not unanimous regarding the reasons upon which they purported to base their decision. The Chief Justice was of the opinion that there was nothing in the Constitutional Act which so far as material to the question (1) 57 S.C.R. 150. 989 under consideration would impose any limitation on the authority of the Parliament of Canada to which the Imperial Parliament was not subject. Anglin J. referred to the deci sion in Hodge vs The Queen(1) (supra) in the course of his judgment. He seemed to think that the British North America Act did not contemplate complete abdication of its legisla tive powers by the Dominion Parliament, but considered such abdication to be something so inconceivable that the consti tutionality of an attempt to do anything of that kind was outside the range of practical consideration. Apparently the learned Judge gave the expression "abdication" a very narrow meaning. The opinion of Duff J. was much the same, and he considered that there was no abandonment of legislative powers in this case, as the powers granted could at any time be revoked and anything done thereunder nullified by the Parliament. Idington and Brodeur JJ. dissented from this majority view. This decision was followed in the "Reference in the Matter of the Validity of the Regulations in Relation to Chemicals Enacted by the Governor General of Canada under the War Measures Act ", which is to be found reported in In this case the question raised related to the validi ty of certain regulations made by an Order in Council in terms of the powers conferred upon the Governor in Council by the War Measures Act and the Department of Munitions and Supply Act. It was held that with the, exception of para graph 4 of the Order in Council the rest of the Order was not ultra vires. It appears from the report that in this case it was not disputed before the court that powers could be delegated by the legislature to the Governor in Council under the War Measures Act. The question raised was whether the Governor in Council could further delegate his powers to subordinate agencies. The question was answered in the affirmative, the reason given being that the power of dele gation being absolutely essential in the circumstances for which the War Measures Act has been designed so as to have a workable Act, the power (1) 9 App. 990 delegated must be deemed to form part of the powers con ferred by Parliament in the Act. These are war time decisions and it is apparent that the doctrine of delegation has been pushed too far in the Chemical Reference case. In In re Gray (1) the learned Chief Justice at the conclusion of his judgment expressly stated that the security of the country was the supreme law against which no other law could prevail. I agree with the Attorney General that the competency of the Parliament to legislate could not be made dependent upon the fact as to whether the law was a war time or a peace time measure. But on the other hand, it is possible to argue that in a legis lation passed by a Parliament in times of war when the liberty and security of the country are in jeopardy, the only policy which the legislature can possibly formulate is the policy of effectively carrying on the war and this necessarily implies vesting of all war operations in the hands of the executive. There appears to be considerable substance in the observations made by Dixon J.(2) that "it may be considered that the exigencies which must be dealt with under the defence powers are so many, so great and so urgent and so much the proper concern of the executive that from its very nature the power appears by necessary intend ment to authorise delegation otherwise generally forbidden by the legislature. " It may be mentioned here that the decision in In re Gray(1) was sought t6 be distinguished in a subsequent Canadian case on the ground that in case of emergency it was possible to pass legislation of this sort by taking recourse to the residuary powers conferred on the Dominion Parliament by section 91 of the North America Act (3). In point of time, the case of In re The Initiative and Referendum Act(4) comes immediately after that of In re Gray(1). The dispute in this case related to an Act (1) 57 S.C.R. 150. (2) Vide Victoria Stevedoring and General Contracting Co. vs Dignan; , at p. 99.
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Section 7 of the law stated that the local government could announce in the official newspaper that any law in effect in British India could also apply to Delhi, or any part of it. The government could make changes or limits to the law as it saw fit. Section 2 of the Ajmer Merwara (Extension of Laws) Act of 1947 said that the central government could announce in the official newspaper that any law in effect in another area could also apply to Ajmer Merwara. The government could make changes or limits to the law as it saw fit. Section 2 of the Part C States (Laws) Act of 1950 said that the central government could announce in the official newspaper that any law in effect in a Part A State could also apply to any Part C State, or any part of it. The government could make changes or limits to the law as it saw fit. The announcement could also say that any similar law already in place in the Part C State would be canceled or changed. Because of a Federal Court decision, there was some question about whether it was legal for lawmakers to give their power to the executive branch (the President). The President asked the Supreme Court, under article 143 (1) of the Constitution, to consider whether the sections mentioned above were beyond the power of the lawmakers who passed them. The Court was asked to give its opinion on this. It was decided that: (1) According to FAZL ALl, PATANJALI SASTRI, MUKHERJEA, DAS, and Bose JJ., (but KANIA C.J., and MAHAJAN J. disagreed): Section 7 of the law and section 2 of the Ajmer Merwara (Extension of Laws) Act of 1947 were completely legal. KANIA C.J. believed that section 7 of the law and section 2 of the Ajmer Merwara (Extension of Laws) Act of 1947 were illegal to the extent that they allowed the government to extend laws other than those made by the Central Legislature to Delhi and Ajmer Merwara. This was because, in that case, the Central Legislature had given up its responsibilities and given them to the executive branch. MAHAJAN J. believed that the sections mentioned above were illegal in these ways: (i) they allowed the executive branch to apply laws to Delhi and Ajmer Merwara that were made by lawmakers who didn't have the power to make laws for those areas, and (ii) they gave the executive branch too much power to change laws made by lawmakers in India. (2) According to FAZL ALI, PATANJALI SASTRI, MUKHERJEA, DAS, and BOSE JJ.: The first part of section 2 of the Part C States (Laws) Act of 1950, which allows the Central Government to extend any law in effect in a Part A State to any Part C State with changes and limits, is legal. According to KANIA C.J., MAHAJAN, MUKHERJEA, and Boss JJ.: The second part of that section, which allows the Central Government to change or cancel any law (other than a Central Act) that applies to a Part C State when extending a law to that state, is illegal. According to FAzL ALI, PATAN JALI SASTRI, and DAS JJ.: The second part of section 2 of the Part C States (Laws) Act of 1950 is also legal. KANIA C.J. believed that section 2 of the Part C States (Laws) Act of 1950 was illegal to the extent that it allowed the Central Government to extend laws passed by any lawmaker of a Part A State to a Part C State. MAHAJAN J. believed that section 2 of the Part C States (Laws) Act of 1950 was illegal because it allowed the Central Government (i) to extend laws to a Part C State that were passed by a lawmaker who didn't have the power to make laws for that Part C State, (ii) to change laws made by lawmakers in India, and (iii) to cancel or change laws that already applied to that Part C State. KANIA C.J. believed that (i) the main parts of making laws are deciding what the law should do and writing it down as a rule of behavior. These things are what make a group a legislature. Those main parts are kept when the legislature says what facts need to be true for its law to work. It can have an agency find those facts using data. Once the legislature has made its laws, every small detail for making it work can be done by the legislature or given to a smaller agency or an executive officer. While this is sometimes called giving away lawmaking powers, it's different from actually giving away those powers because it doesn't involve giving away the power to decide what the law should do and write it down as a rule of behavior. While giving the power to make rules and regulations has been seen as part of lawmaking power, the Indian Legislature didn't have the power before 1935 to give away its lawmaking power in a true sense. Besides the British Parliament, which has complete power, no country allows the legislature to give away its lawmaking powers in general. The powers of the Indian Legislature under the Constitution Acts of 1935 and 1950 are the same in this way. (ii) A legislature doesn't have to completely disappear to "give up" its powers. It can be partial. If a legislature gives all its powers to a smaller authority, even though it can still control that authority by taking back the power or canceling the laws passed by the authority, it has still given up its power. FAzL ALl J. believed that (i) the legislature must do its main job of making laws itself, not through others. (ii) Once it has been decided that it has complete power in a certain area, it can make laws in that area in any way that seems best to achieve its goals in making a particular law. It can use any outside group to the extent it needs to do things that it can't do itself or finds inconvenient. (iii) However, it can't give up its lawmaking responsibilities. So, when it gives power to an outside group, it must make sure that the group acts as a smaller authority and doesn't become a separate legislature. (iv) Because Indian courts don't follow the idea of separation of powers and how it's understood in America, there are only two main checks on the legislature's power to give away its power in this country: its good sense and the idea that it shouldn't go too far, where giving away power becomes giving up and disappearing. (v) The power to add necessary limits and changes is part of the power to adapt or apply the law. The changes that are allowed are those that can be made within the law and don't change its identity, structure, or main purpose. PATANJALI SASTRI J. believed that (i) it's now clear that the Indian Legislature, when acting within its power, has and was meant to have complete power to make laws, as much as the British Parliament itself. There's no limit on giving lawmaking power to a smaller group in the Indian Councils Act of 1861, the Government of India Act of 1935, or the Constitution of 1950. So, the Indian Legislature has as much power to make a law giving away lawmaking power as the British Parliament does, as long as it acts within its power. (ii) Giving away lawmaking power is different from creating a new lawmaking power. In the first case, the group giving away the power doesn't disappear but keeps its lawmaking power and chooses to use that power through another group. In the second case, there's no giving away of power to smaller groups but a grant of power to a separate group to make laws that work on their own. For the first case, no express provision allowing the giving away of power is needed. If there's no constitutional limit, giving away lawmaking power, however much, can be done as long as the group giving away the power keeps its own lawmaking power. For the second case, however, a positive enabling provision in the constitution is needed. (iii) The rule that you can't give away what you've been given isn't part of Indian constitutional law and is just a political idea for lawmakers to follow when making laws. Courts can't strike down a law as unconstitutional just because the government decides to give its lawmaking power to someone it trusts, or to use its chosen group to make laws, even if that's against the democratic process. What may be seen as politically bad is still legally allowed. (iv) However wide a meaning may be given to "limits and changes," it wouldn't affect whether the law giving away power is constitutional. MAHAJAN J. believed that (i) it's a settled rule of constitutional law that a lawmaking group can't give away its power. Not only the nature of lawmaking power but the existence of representative government depends on the idea that lawmaking powers can't be transferred. The legislature can't replace its own judgment, wisdom, and patriotism with that of any other group, because the people have only trusted it with this power. The idea that a legislature has a general power to give its lawmaking responsibilities to a smaller authority unless it's specifically not allowed isn't supported by law or reason. The right view is that a legislature can't give away its main lawmaking responsibilities unless the power to do so is specifically given by the constitution. Because the Indian Constitution doesn't give that power to the legislature, it can't give its main lawmaking responsibilities to any other group. (ii) Giving up power by a lawmaking group doesn't have to mean completely disappearing. There's a giving up of power when, for a subject in the Legislative List, that group says that it won't make laws but will leave it to another group to make laws on it. MUKHERJEA J. believed that As for whether giving away lawmaking powers is constitutional, the Indian Legislature can't be in the same position as the all-powerful British Parliament. How much giving away of power is allowed has to be decided in India by looking at the specific words of the Indian Constitution. It can't be said that an unlimited right to give away power is part of the lawmaking power itself. This isn't allowed by the constitution, and whether giving away power is legal depends on it being used as a helping measure that the legislature thinks is needed to use its lawmaking powers effectively and completely. The legislature must keep the main lawmaking responsibilities in its own hands, which are stating the lawmaking policy and setting the standard that will become a rule of law. What can be given away is the job of making smaller laws, which is part of the law that gives the power to make them. If the lawmaking policy is stated clearly enough or a standard is set, the courts shouldn't interfere with the freedom that the legislature has to decide how much giving away of power is needed in a particular case. Das J. believed that (i) the idea of not giving away lawmaking powers, based on the separation of powers or the idea of an agency, doesn't apply to the British Parliament or the legislature created by an Act of the British Parliament; (ii) In the complex situations that governments have to deal with, the power to give away power is needed for, and part of, the use of lawmaking power; (iii) The effect of an act done under given power is directly and immediately under the law that gave the power, and its effectiveness comes from that earlier law; (iv) If what the legislature does is lawmaking within the general scope of the words that give the power, and if it doesn't break any specific condition or limit on that power, then the court shouldn't ask more questions or add conditions or limits; (v) While the legislature is acting within its allowed area, there's no limit to its power to give away its lawmaking power, except as stated below. It's up to the legislature to decide how much it should ask for help from smaller groups and how long it should keep them, and the court shouldn't set any limit on the legislature's power to give away power; (vi) The power to give away power is limited by the fact that the legislature can't give up or disappear, meaning it can't create a new lawmaking power with its own power without keeping its own power. (vii) The challenged laws can also be seen as examples of conditional lawmaking, as in the decision in Queen vs Burah. Bose J. believed that The Indian Parliament can make laws like in Queen vs Burgh, meaning it can leave it to another person or group to introduce or apply laws that are or may be in place at that time in any part of India that's under the Parliament's control, whether those laws are made by Parliament or by a State Legislature set up by the constitution. But giving away power like this can't go beyond that. It can't change or cancel laws that are already in place in the area in important ways.
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The circumstances which led to this Special Reference by the President and the questions referred appear from the full text of the reference dated 7th January, 1951, which is reproduced below : "WHEREAS in the year 1912 the Governor General of India in Council acting in his legislative capacity enacted the , section 7 of which conferred power on the Central Government by notification to extend to the Province of Delhi (that is to say, the present State of Delhi) or any part thereof, with such restrictions and modifications as it thought fit, any enactment which wag in force in any part of British India at the date of such notification; "AND WHEREAS in 1947 the Dominion Legislature enacted the Ajmer Merwara (Extension of Laws) Act, 1947, section 2 of which conferred power on the Central Government by notifica tion to extend to the Province of Ajmer Merwara (that is to say, the present State of Ajmer), with such restrictions and modifications as it thought fit, any enactment which was in force in any other Province at the date of such notifica tion; 753 "AND WHEREAS, by virtue of the powers conferred by the said sections of the said Acts, notifications were issued by the Central Government from time to time extending a number of Acts in force in the Governors ' Provinces to the Province of Delhi and the Province of Ajmer Merwara, sometimes with, and sometimes without, restrictions and modifications, and the Acts so extended and the orders,rules, by laws and other instruments issued under such Acts were and are re garded as valid law in force in the Province (now State) of Delhi and in the Province of Ajmer Merwara (now State of Ajmer), as the case may be, and rights and privileges have been created, obligations and liabilities have been in curred and penalties, forfeitures and punishments have been incurred or imposed under such Acts and instruments; "AND WHEREAS Parliament with the object inter alia of making a uniform provision for extension of laws with regard to all Part C States except Coorg and the Andaman and Nico bar Islands enacted the Part C States (Laws) Act, 1950, section 2, of which confers power on the Central Government by notification to extend to any Part C State (other than Coorg and the Andaman and Nicobar Islands) or to any part of such State, with such restrictions and modifications as it thinks fit, any enactment which is in force in a Part A State at the date of the notification and also confers the power on the Central Government to make provision in any enactment so extended for the repeal or amendment of any corresponding law (other than a Central Act) which is for the time being applicable to that Part C State; "AND WHEREAS section 4 of the Part C States (Laws) Act, 1950 has repealed section 7 of the , and the Ajmer Merwara (Extension of Laws)Act, 1947, but the effect of the provisos to the said section is, notwithstand ing the said repeals, to continue, inter alia in force the Acts extended to the Provinces of Delhi and Ajmer Merwara or the States of Delhi and Ajmer under the provisions repealed by the said section; "AND WHEREAS notifications have been issued by the Central (Government from time to time under section 9, of the States (Laws) Act, 1950, extending Acts in force in Part A States to various Part C States sometimes with, and sometimes without, restrictions and modifications; "AND WHEREAS the Federal Court of India in Jatindra Nath Gupta vs Province of Bihar(1) held by a majority that (1)[1949] F.C.R. VI, Article 429, it is further stated that it is for this reason that there is no law which the King in Parliament cannot make or unmake whether relating to the Constitution itself or otherwise; there is no necessity as in States whose Constitutions are drawn up in a fixed and rigid form and contained in written documents for the existence of a judicial body to determine whether any particular legislative Act is within the consti tutional powers of Parliament or not; and laws affecting the Constitution itself may be enacted with the same ease and subject to the same procedure as ordinary laws. Moreover, as the powers were conferred by an Act of the British parliament, the question whether the action of the Governor General in Council in his legislative capacity was within or without its legislative power was always capable of being raised and decided by a court of law. Governor; and also, that the laws which were or might be in force in the other territories subject to the same Government were such as it might be fit and proper to apply to this district also; but that, as it was not certain that all those laws, and every part of them, could with equal convenience be so applied, it was expedient, on that point also, to entrust a discretion to the Lieut. (6) That within the powers conferred on the Indian Legislature it was supreme and its powers were as plenary and of the same nature as the British Parliament. (7) That by the legislation the Indian Parliament had not created a legislative body with all the powers which it had. If the power of delegation was contained in the power of legislation as wide as contended by the Attorney General, there appears no reason why the Privy Council should have rejected the argument that the Act was an act of delegation and upheld its validity on the ground that it was conditional legislation. While the Judicial Committee has pointed out chat the Indian Legislature had plenary powers to legislate on the subjects falling within its powers and that those powers were of the same nature and as supreme as the British Parliament, they do not endorse the contention that the Indian Legislature, except that it could not create another body with the same powers as it has, or in other words, efface itself, had unlimited powers of delegation. This is not because Parliament is bound to perform any or all of its legislative powers or functions for it may elect not to do so and not because the doctrine of the separation of powers prevents Parliament from granting authority to other bodies to make laws or byelaws and thereby exercise legislative power for it does so in almost every statute but because each and every one of the laws passed by Parliament must answer the description of law upon one or more of the subject matters stated in the Constitution. to the conclusion that while a legislature, as a part of its legislative functions, can confer powers to make rules and regulations for carrying the enactment into operation and effect, and while a legislature has power to lay down the policy and principles providing the rule of conduct, and while it may further provide that on certain data or facts being found and ascertained by an executive authority, the operation of the Act can be extended to certain areas or may be brought into force on such determination which is de scribed as conditional legislation, the power to delegate legislative functions generally is not warranted under the Constitution of India at any stage. that the power of delegation is recognised in law as necessarily included in the power of legislation, Although 798 in the Constitution of India there is no express separation of powers, it is clear that a legislature is created by the Constitution and detailed provisions are made for making that legislature pass laws. On (1) 5 I.A. They are : (1) A legislature which is sovereign in a particular field has unlimited power of delegation and the content of its power must necessarily include the power to delegate legislative functions; (2) Delegated legislation is permissible only within certain limits; and (3) Delegated legislation is not permissible at all by reason of certain principles of law which are wellknown and well recognised. When the British North America Act enacted that there should be a Legislature for Ontario, and that its Legislative Assembly should have exclusive authority to make laws for the Province and for Provincial purposes in relation to the matters enumerated in section 92, it conferred powers, not in any sense to be exercised by delegation from or as agents of the Imperial Parliament, but authority as plenary and as ample, within the limits prescribed by section 92, as the Imperial Parliament in the plenitude of its power possessed and could bestow. is this. This is not because Parliament is bound to perform any or all of its legislative powers or functions, for it may elect not to do so; and not because the doctrine of separation of powers prevents Parliament from granting authority to other bodies to make laws or bye laws and thereby exercise legislative power, for it does so in almost every statute; but because each and every one of the laws passed by Parliament must answer the description of a law upon one or more of the subject matters.stated in the Con stitution. Each Act or enactment which was impugned before them as being delegated legislation, contained within itself the whole legislation on the matter which it dealt with, laying down the condition and everything which was to follow on the condition being fulfilled; (2) that legislative power could not be said to have been parted with if the legislature retained its power intact and could whenever it pleased destroy the agency it had created and set up another or take the matter directly into its own hands; (3) that the question as to the extent to which the aid of subordinate agencies could be sought by the legislatures and as to how long they should continue them were matters for each legislature and not for the court of law to decide; (4) that a legislature in committing important regulations to others does not efface itself; and (5) that the legislature, like the Governor General in Council, could not by any form of enactment create, and arm with legislative 828 authority, a new legislative power not created or authorised by the Councils Act to which it (the Governor General in Council) owes its existence. The Acts passed by the Governor General in Council were required to be laid before the British Parliament and they were to have the same force as an Act of Parliament. Then came the Councils Act of 1861, by which the power of legislation was restored to the Governors of Madras and Bombay in Council, and a legislative council was ap pointed for Bengal; but the Governor General in Council was still competent to exercise legislative authority over the whole of India and could make laws for "all persons and all places and things", and for legislative purposes the Council was further remodelled so as to include 6 to 12 members nominated for a period of 2 years by the Governor General, of whom not less than one half were to be non officials. Article 245 of the Constitution lays down that "subject to the provisions of this Constitution, Parliament may make laws from the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State. " Under article 357, when there is a failure of constitu tional machinery in a State, "it shall be competent (a) for Parliament to confer on the President the power of the Legislature of the State to make laws, and to autho rise the President to delegate, subject to such conditions as he may think fit to impose, the power so conferred to any other authority to be specified by him in that behalf; (b) for Parliament, or for the President or other au thority in whom such power to make laws is vested under sub clause (a), to make laws conferring powers and imposing duties, or authorising the Conferring of 108 836 powers and the imposition of duties, upon the Union or officers and authorities thereof. Act, 1947. The section runs as follows : "The said Lieutenant Governor may from time to time, by notification in the Calcutta Gazette, extend to the said territory any law, or any portion of any law, now in force in the other territories subject to his Government, or which may hereafter be enacted by the Council of the Governor General, or of the said Lieutenant Governor, for making laws and regulations, and may on making such extension direct by whom any powers or duties incident to the provi sions so extended shall be exercised or performed, and make any order which he shall deem requisite for carrying such provisions into operation. " 840 "The legislature determined that, so far, a certain change should take place; but that it was expedient to leave the time and the manner, of carrying it into effect to the discretion of the Lieutenant Governor; and also, that the laws which were or might be in force in the other territo ries subject to the same Government were such as it might be fit and proper to apply to this district also; but that,.as it was not certain that all those laws, and every part of them, could with equal convenience be so applied, it was expedient, on that point also, to entrust a discretion to the Lieutenant Governor. " It was pointed out to us that in the Acts with which we are concerned, power has been given to extend not only Acts of the Central Legislature, which is the author of the Acts in question, but also those of the Provincial Legislatures. He cited numerous decisions of the Privy (1) 857 Council and of the American, Australian and Canadian Courts and also called attention to the views expressed by various writers on the subject in support of his contention that legislative power involves as part of its content a power to delegate it to other authorities and that a legislative body empowered to make laws on certain subjects and for a certain territory is competent, while acting within its appointed limits, to delegate the whole of its legislative power to any other person or body short of divesting itself completely of such power. Act(2). The legisla ture determined that, so far, a certain change should take place; but that it was expedient to leave the time, and the manner of carrying it into effect to the discretion of the Lieutenant Governor; and also, that the laws which were or might be in force in the other territories subject to the same government were such as it might be fit and proper to apply to this district also; but that, as it was not certain that all those laws, and every part of them, could with equal convenience be so applied, it was expedient, on that point also, to entrust a discretion to the Lieutenant Gover nor. This case is no authority for the proposition that it could delegate the exercise of its judgment on the question as to what the law should be to an external agency. The expression that Indian Legislature could not arm with legislative power a new legislative body not created by the Indian Councils Act only means that it must function itself in making laws and not confer this power on any other body. When the British North America Act enacted that there should be a legislature for Ontario, and that its legislative assembly should have exclusive authority to make laws for the Province and for provincial purposes in relation to the matters enumerated in section 92, it conferred powers not in any sense to be exercised by delegation from or as agents of the Imperial Parliament, but authority as plenary and as ample within the limits prescribed by section 92 as the Imperial Parliament in the plenitude of its power possessed and could bestow. It was not held by their Lordships that power to declare what the law shall be could ever be delegated or that such delegation will be intra vires the Parliament of Canada or of the 907 Indian Legislature. It was argued that it was not within the powers of the provincial legislature to delegate legislative power to the Lieutenant Governor in Council or to give him further power of delegation. It is therefore a maxim of constitutional law that a legislative body (1) 923 cannot delegate its power. The making of a law that another body may make laws upon a particular subject matter is not making a law on that subject. " It is only after a consideration of all the provisions of the Constitution and its whole scheme that it has to be decided whether delegation of power legislative, executive or judicial is implict in the grant of any of these powers or has been expressly provided for, to the extent it was considered necessary on grounds of administra tive convenience in peace or war time and therefore confer ment of this power by implication cannot be upheld on its true construction. for 945 delegation of powers by a law made by Parliament. Article 357 provides that where by proclamation issued under clause (1) of article 356, it has been declared that the powers of the legislature of the State shall be exercisable by or under the authority of Parliament, it shall be competent for Parliament to confer on the President the power of the legislature of the State to make laws, and to authorize the President to dele gate, subject to such conditions as he may think fit to impose, the power so conferred to any other authority to be specified by him in that behalf. In this situation there is no scope for the applica tion of the doctrine contended for by the learned Attorney General and it must be held that in the absence of express powers of delegation allowed by the Constitution, the Par liament has no power to delegate its essential legislative functions to others, whether State legislatures or executive authorities, except, of course, functions which really in their true nature are ministerial, The scheme of the Consti tution and of the Government of India Act, 1935, is that it expressly entrusted with legislative capacity certain bodies and persons and it also authorised the creation of law making bodies wherever it thought necessary but gave no authority to create a new law making body not created by itself. By section 10 of the Act the legislative power was vested in the Governor General in Council. If any list of the existing laws passed by the Governor General in Council in his legislative capacity and of laws adopted by it though passed by other legislatures was annexed to the Act, to that extent the delegation of power, but 957 without any power of modifications in favour of the execu tive, might have been valid, but that is not what was enact ed in section 7 of the . It will be noticed that in all the three items of legis lation, mentioned above, there has been, what may be de scribed, as conferment by the legislatures, which passed the respective enactments, to an outside authority, of some of the powers which the legislative bodies themselves could exercise; and the authority in whose favour the delegation has been made has not only been empowered to extend to particular areas the laws which are in force in other parts of India but has also been given a right to introduce into such laws, any restrictions or modifications as it thinks fit. Thus section 23 of the Act of 1861 empowered the Governor General to make ordinances having the force of law in case of urgent necessity; and later on under section 1 of the Indian Councils Act of 1870 the executive government was given the power to make regulations for certain parts of India to which the provisions of the section were declared to be applicable by the Secretary of State. The limits of the powers of delegation in India would therefore have to be ascertained as a matter of construction from the provisions of the Constitution itself and as I have said the right of delegation may be implied in the exercise of legislative power only to the extent that it is necessary to make the exercise of the power effective and complete. His argument was that in this ease there was no delegation of legislative authority and what was delegated was only the power to make by laws.
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It was decided that: (1) According to FAZL ALl, PATANJALI SASTRI, MUKHERJEA, DAS, and Bose JJ., (but KANIA C.J., and MAHAJAN J. disagreed): Section 7 of the law and section 2 of the Ajmer Merwara (Extension of Laws) Act of 1947 were completely legal. : The first part of section 2 of the Part C States (Laws) Act of 1950, which allows the Central Government to extend any law in effect in a Part A State to any Part C State with changes and limits, is legal. MAHAJAN J. believed that section 2 of the Part C States (Laws) Act of 1950 was illegal because it allowed the Central Government (i) to extend laws to a Part C State that were passed by a lawmaker who didn't have the power to make laws for that Part C State, (ii) to change laws made by lawmakers in India, and (iii) to cancel or change laws that already applied to that Part C State. While giving the power to make rules and regulations has been seen as part of lawmaking power, the Indian Legislature didn't have the power before 1935 to give away its lawmaking power in a true sense. (iv) Because Indian courts don't follow the idea of separation of powers and how it's understood in America, there are only two main checks on the legislature's power to give away its power in this country: its good sense and the idea that it shouldn't go too far, where giving away power becomes giving up and disappearing. The changes that are allowed are those that can be made within the law and don't change its identity, structure, or main purpose. There's no limit on giving lawmaking power to a smaller group in the Indian Councils Act of 1861, the Government of India Act of 1935, or the Constitution of 1950. So, the Indian Legislature has as much power to make a law giving away lawmaking power as the British Parliament does, as long as it acts within its power. If there's no constitutional limit, giving away lawmaking power, however much, can be done as long as the group giving away the power keeps its own lawmaking power. MAHAJAN J. believed that (i) it's a settled rule of constitutional law that a lawmaking group can't give away its power. Because the Indian Constitution doesn't give that power to the legislature, it can't give its main lawmaking responsibilities to any other group. This isn't allowed by the constitution, and whether giving away power is legal depends on it being used as a helping measure that the legislature thinks is needed to use its lawmaking powers effectively and completely. What can be given away is the job of making smaller laws, which is part of the law that gives the power to make them. Das J. believed that (i) the idea of not giving away lawmaking powers, based on the separation of powers or the idea of an agency, doesn't apply to the British Parliament or the legislature created by an Act of the British Parliament; (ii) In the complex situations that governments have to deal with, the power to give away power is needed for, and part of, the use of lawmaking power; (iii) The effect of an act done under given power is directly and immediately under the law that gave the power, and its effectiveness comes from that earlier law; (iv) If what the legislature does is lawmaking within the general scope of the words that give the power, and if it doesn't break any specific condition or limit on that power, then the court shouldn't ask more questions or add conditions or limits; (v) While the legislature is acting within its allowed area, there's no limit to its power to give away its lawmaking power, except as stated below. It's up to the legislature to decide how much it should ask for help from smaller groups and how long it should keep them, and the court shouldn't set any limit on the legislature's power to give away power; (vi) The power to give away power is limited by the fact that the legislature can't give up or disappear, meaning it can't create a new lawmaking power with its own power without keeping its own power. Bose J. believed that The Indian Parliament can make laws like in Queen vs Burgh, meaning it can leave it to another person or group to introduce or apply laws that are or may be in place at that time in any part of India that's under the Parliament's control, whether those laws are made by Parliament or by a State Legislature set up by the constitution.
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vil Appeal Nos. 8530 40 of 1983. Appeals by Certificate from the Judgment and Decree dated 30.7.1983 of the Gujarat High Court in Special Civil Application Nos. 883 of 1979, 913 of 1979, 1897 of 1981, 2316 of 1982, 2384of 1982, 2445 of 1982, 2470 of 1982, 2977 of 1982, 4194 of 1982, 4520 of 1982 and 2542 of 1982. K. Parasaran, Attorney General, B. Sen, A.K. Ganguli, Dr. Y.S. Chitley, T.S. Krishnamurthy Iyer, N. Nettar, G.S. Narayana, p. Parameshwaran, T.V.S.N. Chaff and N.N. Sharma for the Appellants. Anil B. Diwan, K.J. Kazi, Dr. L.M. Singhvi, Ms. M. Arora, Mrs. B. Chib, M. Singhvi, D.A. Dave, Mrs. M. Karanja wala, R.N. Karanjawala, Mr. P.H. Parekh, Mr. C.A. Cazi and Mrs. H.S. Anand for the Respondents D.N. Misra for the Intervenor. The Judgment of the Court was delivered by RANGANATHAN, J. These are eleven appeals preferred by the Oil and Natural Gas Commission (ONGC, for short) from a judgment and order, dated 30th July, 1983, of a Division Bench of the High Court of Gujarat at Ahmedabad in a batch of writ petitions, since reported in 1983 24(2) Gujarat Law Reporter 1437. The appeals are pursuant to a certificate of fitness granted by the High Court. The ONGC was initially a Department of the Government of India but, in view of its expanding activities in the search for strategic and vital materials like oil, petroleum and its products it was set up as a body corporate. It is now a statutory corporation constituted by and under the , (Central Act 43 of 1959, hereinafter referred to as 'the Act '). The Act provides for the establishment of a Commission "for the development of petroleum and petroleum products produced by it and for matters connected therewith". Section 2(f) of the Act de fines 'petroleum ' as having the same meaning as in the (Act 30 of 1934) and as including 'natural gas '. The Commission established under the Act took over the previously existing organisation with effect from 18.9.59. Some of the provisions of the Act which are relevant for our 164 present purposes may be set out here. Chapter III which deals with the powers and functions of the Commission con sists of Sections 14 and 15. section 14 reads thus: "14. Functions of the Commission (1) Subject to the provisions of this Act, the functions of the Commission shall generally be to plan, promote, organise and implement programmes for the development of petroleum resources and the production and sale of petroleum and petroleum products produced by it and to perform such func tions as the Central Government may, from time to time, assign to the Commission. (2) In particular and without prejudice to the generality of the foregoing provision, the Commission may take such steps as it thinks fit (a) for the carrying out of geological and geophysical surveys for exploration of petroleum; (e) for the transport and disposal of natural gas and refin ery gases produced by the Commission: Provided that no industry, which will use any of these gases as a raw material, shall be set up by the Com mission without the previous approval of the Central Govern ment. (h) to perform any other function which is supplemental, incidental or consequential to any of the functions afore said or which may be prescribed. " Section 15 empowers the Commission to exercise all such powers as may be necessary or expedient for the purpose of carrying out its functions under the Act. Such powers in clude the disposal of any property, right or privilege, the original or book value of which exceeds such amount as may be prescribed, or where no such amount has been prescribed, exceeds ten lakhs of rupees and this power could be exer cised after obtaining the previous approval of the Central Government 165 [Clause (c)I. Chapter IV of the,Act deals with finance, accounts, audit and reports. Sections 16 and 17 deal with the capital of the Commission and the vesting, in the Com mission, of the previous set up in this regard. Section 23 of the Act requires the Commission to furnish to the Central Government such returns and statements and such particulars in regard to any proposed or existing programme for the development of petroleum resources and the production and sale of petroleum and petroleum products produced by the Commission as the Central Government may, from time to time, require. Section 24 in Chapter V (Miscellaneous) enacts that any land required by the Commission for carrying out its function under the Act shah be deemed to be needed for a public purpose and such land can be acquired by the Commis sion under the provisions of the Land Acquisition Act, 1894. section 31 confers rule making powers on the Central Government, in pursuance of which have been framed the Oil and Natural Gas Commission Rules, 1960. The only rule relevant for our present purposes is rule 25, dealing with contracts. It reads as follows: "25. Contracts: (1) The Commission may enter into contracts for the purpose of performing its functions under this Act; Provided that provision therefore exists in the budget ap proved by the Government. (2) Contracts made on behalf of the Commission shah not be binding on it unless they are executed by a person duly authorised by it. (3) A person authorised by the Commission to enter into any contract on its behalf shall not be personally liable for any assurance or contract made on its behalf and any liabil ity arising out of such assurance or contract shall be discharged from the Fund. " The statute, it may be observed, neither imposes a specific duty on the O.N.G.C. to supply its products to consumers at large nor contains any provisions regarding the fixation of prices for the commodities made available by the O.N.G.C. for sale. In the course of its drilling and exploration of oil, the ONGC discovered oil bearing fields in Cambay and Ankles war region in 1969 166 and 1961 respectively. In most of the oil fields situated in Gujarat, gas comes out along with crude oil and is commonly known as "associated gas". In Cambay area, gas is unaccompa nied by crude oil and is known as "free gas". This is easily combustible and can be used as domestic as well as industri al fuel. We are concerned here with both these commodities which are generally known as 'natural gas ' and we shall refer to them compendiously as 'gas '. In October, 1961 ONGC first thought of the idea of using natural gas in addition to fuel oil in industries. It had detailed discussions with the Gujarat State Electricity Board (GSEB) and it was agreed between them that gas should be supplied to the GSEB at a price related to fuel oil price on the basis of thermal value equivalence. On this basis, an agreement was entered into between them in March, 1963 whereunder the price of fuel oil was fixed at Rs.77.26 per tonne including rail frieght; and, based on this price and thermal value equivalence, the price of Cambay gas was fixed at Rs.80.14 per 1000 cubic metres (hereinafter referred to as 'the Unit ') and of Ankleshwar gas at Rs. 106.66 per unit, rounded off to Rs.80 and Rs. 100 per unit respectively. The ONGC began to supply gas from Cambay region of Dhruvan Power Station in 1964 and from Ankleshwar to Uttaran Power Station in 1965. The ONGC also entered into discussions with the Gujarat State Fertilizer Corporation (GSFC) and ultimately it was agreed, on the footing of the price of Rs.76 per tonne in respect of Koyali Naphtha, that associated gas should be supplied to the GSFC at between Rs.88 and Rs.90 per unit on the principle of thermal equivalence. This was in 1966. It may be mentioned here that the three parties concerned viz. the ONGC, GSEB and GSFC, had more or less agreed to the principle of determining the price of gas on the basis of thermal equivalence with an alternative fuel or feedstock emanating from the processing of crude oil. There was no reference to the cost of production of gas as such. Despite the above agreements, however, the concerned parties were not all very happy. The GSFC resented the fact that discount was not given to them as bulk purchasers and that the prices charged for the Trombay fertiliser factory and power house at Bombay were substantially lower than the prices that the ONGC charged them. Eventually, public dis content was expressed over the alleged high price that was being charged for gas by the ONGC to these organisations. It was felt that the ONGC was denying to them the advantage they should have obtained by the discovery of gas in the region of their operation. It was also felt that this treat ment resulted in discrimination against 167 them in comparison with advantages enjoyed by other States due to the availability of fuel resources such as coal or hydro power within their areas. In view of these expressions of public feeling, the question of fixing a proper price for the gas was taken up by the Government of Gujarat with the Government of India. Eventually, as no agreement could be arrived at, the disputes was referred to the sole arbitra tion of Dr. V.K.R.V. Rao who gave his award (hereinafter referred to as 'the award ') on 23.9.1967. He determined the price of natural gas at Rs.50 per unit ex well head, to which were added royalty, sales tax, depreciation and the transport charges. This award was to be enforced for a period of five years i.e. upto 31.3.1971. Between April 1971 and December 1975, the well head price was increased and fixed at Rs.66 per unit, we are all told, on the interven tion of the then Gujarat Governor. These prices were revised subsequently. The supply to GSEB was revised to Rs. 155 and the rate of supply to GSFC was revised to Rs.320 per unit. At that time, there were very few industries set up in and around Vadodara and these depended, besides electricity, on other forms of energy generated through coal or furnance oil. In July 1967, the supply of gas to some of these indus tries in and around Vadodara city was started, initially as a temporary measure pending the effective materialisation of the Gujarat Fertilizer Corporation demand, after which the industries were to go over to fuel oil if gas could no longer be supplied. After a series of discussions, the Federation of Gujarat Mills and Industries agreed to a price of Rs. 100 per unit of Ankleswar gas for this supply. The charging of ten rupees less per unit supplied to the Ferti liser Corporation was justified on the ground that such differentiation was consistent with general practice where a petroleum feed stock is used for chemical industry. Among the industries that thus received gas supply were the ten respondents (respondents 2 to 10 in these appeals) who have formed themselves, in September, 1978, into an association called "The Association of Natural Gas Consuming Industries of Gujarat", which is respondent No. 1. The supply to these industries extended later to a few more was based on individual contracts entered into with each one of the concerns. Initially, the ONGC entered into contracts valid for a period of five years at a time but, subsequently it is said, due to a fear of possible shortage in the avail ability of enough gas this was changed and the contracts were, generally, made annual, except in regard to certain public sector undertakings and, it is said, a few companies. The rates of supply were also slowly stepped up as can be seen from the following table: 168 Period Price of supply 1.1.1976 to 31.03.1976 Rs.322.63. 1.4.1976 to 31.12.1976 Rs.341.45 1.1.1977 to 31.03.1977 Rs.351.00 1.4.1977 to 31.12.1977 Rs.371.16 1.1.1978 to 31.03.1978 Rs.382.15 1.4.1978 to 31.03.1979 Rs.504.00 According to the ONGC, the price demanded from these industries and initially been based on alternative fuel cost i.e., the cost which these industries would have had to pay for fuel oil if no supply of gas had been available. Later, upto December 1975, the price was based on the cost of production, as determined by the award. After the expiry of the period of operation of the award, the basis for calcula tion of price was revised on the basis of the thermal equiv alence of coal price. The rates of supply from 1.4.78 as fixed above from time to time were also made subject to an automatic annual escalation at 5%. The contracts, as already mentioned, were annual and contained no term for renewal. On the expiry of each contract, a fresh contract had to be entered into and, naturally, the new contract stipulated prices for supply that were prevalent at the time of the respective contracts. It may be mentioned that the existing contracts with the various consumers had lapsed by efflux of time on 31.3.79 in some cases, 30.1.80 in some other cases and in 1982 in respect of others. Aggrieved by the steady rise in the prices, writ peti tion No. 883 of 1979 was filed by the respondents in the Bombay High Court in March 1979. In this writ petition it was prayed that the ONGC should be directed (a) to continue to supply the gas to them despite the contracts in their favour having lapsed; (b) to supply the break up and the data on the basis of which the price structure was arrived at and to fix the price after giving reasonable opportunity to the concerned industries or their associations; (c) to discuss and negotiate a fair, reasonable and just price for supply of gas; (d) to restrict the minimum guaranteed quan tity of offtake to 75 per cent of the contracted quantity (this was because the ONGC had been insisting on raising the said guarantee to 90 per cent) and; (e) to stop charging discriminatory prices for the supply to the respondents in comparison with the price charged to public sector undertak ings. Pending the hearing and final disposal of the peti tion, an interim order was sought restraining the ONGC from discontinuing the supply of gas to the petitioners on such terms as the Court may think fit and proper. 169 On 30.3.1979, the Court passed an interim order permit ting the petitioners to continue to pay "on the same terms as at present" ie. at Rs.504 in some cases and a slightly different figure in other cases. Subsequently, however, with the passage of time the price of gas was stepped up by the ONGC in the following manner: Period Amount 1.4.1981 to 31.12.1981 Rs. 741.00 01.1.1982 to 31.12.1982 Rs.2095.70 01.1.1983 Rs.2403.03 15.2.1983 Rs.2503.03 17.3.1985 Rs.2878.00 We are told that the sudden jump in prices w.e.f. 1.1.1982 was consequent on the decision of the ONGC to change the basis of fixation of price, once again, to furnace oil equivalence. In view of this increase in the prices demanded by it from other parties, who according to the ONGC were willing to pay the price asked for, an application was made to vacate or modify the interim order dated 30.3.1979. On 5.11.1982, the Division Bench of the High Court, after pointing out the various difficulties and questions raised by the case thought it would be fit and proper to direct the ONGC not to discontinue the supply of gas but to continue to supply it at the rate of Rs. 1,000 per unit till November 30, 1983 (unless the petition was disposed of in the mean while), subject to adjustment being made in case this Court or the machinery evolved at the time of final disposal of the petition determined the price of gas at a different rate. In other words, if, ultimately, the price of gas should be determined at a higher rate, the writ petitioners would be obliged to make good the difference. In case a lower rate should be determined, the ONGC would be obliged to refund the excess amount collected or adjust it against future supplies, as the Court may direct at the time of disposing of the matter finally. A similar order was passed on 29.12.1982 in another batch of cases. When these appeals were filed a Bench of this Court, on 6.10.1983, continued the interim price of Rs. 1,000 per unit without prejudice to the rights and contentions of the parties and directed the appeals to be expedited. It has taken six years since then for these petitions to come up for heating and till now the respondents have continued to pay at the rate of Rs. 1,000 per unit. It has been stated before us that some of the respondents have failed to pay even at the rate of Rs. 1,000 as directed 170 by this Court and that this Court had to direct, by its orders dated 15.4.87 and 30.10.87, that the respondents "will not charge, encumber or alienate, except with the leave of this Court, any of their immovable assets included in the respective undertakings and that they will make their immovable assets available for discharging the respective liabilities on account of the difference in the price of (all) the gas supplied to them (and) further during the pendency of the appeals as determined by the orders made by the Court while disposing of the appeals. " In order to complete the narration of relevant facts, it may be mentioned here that, though natural gas, being a "petroleum product" falls within the scope of the Essential Commodities Act and though control orders have been issued under the said Act regulating the supply and distribution of several petroleum products, it is only by an order dated 30.1.1987 that the price of gas has been fixed by the Gov ernment at Rs. 1400 per unit which, together with taxes, comes to about Rs. 1848 per unit. It may also be mentioned that, while on the one hand the said fixation of price has been challenged by the petitioners and certain other indus tries before the Gujarat High Court, the Government, on the other hand, is in the process of revising the prices, per haps to a higher figure, in consultation with the Bureau of Industrial Costs and Prices. In the petitions which are pending before the Gujarat High Court an interim price of Rs. 1,000 has been fixed following the orders in the matters now before us. The result is that, ever since January 1983 and till today, most of the petitioners have been paying for the gas supplied only at the rate of Rs. 1,000 per unit and some of the industries have defaulted even in doing this. A prayer was made by the Union of India to transfer to this Court the writ petition subsequently filed challenging the price fixation of 30.1.87 but this request was declined on 4th August, 1988. This court observed that, after these appeals are disposed of, the High Court can proceed to dispose of the said writ petitions in accordance with the judgment. The position, therefore, is that we are not con cerned in these appeals with the period beyond 30.1.1987 when the jurisdiction to fix prices came to be vested in the Central Government. We are concerned in these matters only with the period from the date of expiry of the contracts in favour of each of the respondents to 30.1.1987 and with the following questions: (a) whether the O.N.G.C. is at liberty to fix its own price for the gas or should be directed to fix the price in any particular manner; (b) whether the O.N.G.C. can be directed to supply data and the break up for the price charged and to negotiate the price with the par ties concerned; (c) whether the 171 O.N.G.C. can be compelled to continue to supply gas to the various petitioners at the interim prices fixed by the court subject to adjustment on fixation of prices determined in accordance with the directions of the court; and (d) whether the minimum guarantee of off take could be raised by the O.N.G.C. to 90 per cent instead of 75 per cent. It is unnecessary at this stage to set out the various contentions raised by the parties before the High Court as they will have to be discussed in some detail later. Here it may be sufficient to summarise the effect of the High Court 's judgment in disposing of these writ petitions. The High Court held: (i) The O.N.G.C. is a public utility undertaking and has a duty to supply gas to anyone who requires it so long as there is enough supply available; (ii) Price fixation is generally a legislative func tion. But the O.N.G.C., being a State instrumentality, is bound to act reasonably in the matter of fixation of price; such price is bound to be determined by following any one of the modalities suggested in the judgment of the High Court; (iii) There was no discrimination by the O.N.G.C. between the public sector undertakings on the one hand and the respondents ' undertakings on the other in charging differential prices; (iv) The clause regarding minimum guarantee was valid and enforceable. However, in view of its finding that the ONGC is a public utility undertaking, the Court took the view that it should supply gas to the respondents subject to the availability of gas supply and also that such supply should be made at a price which was to be determined in one of the four differ ent methods set out in paragraph 36 of the judgment. It was also observed by the Court that, the respondents were agree able to price fixation by anyone of three of the said meth ods. The concluding portion of the judgment, reads thus: "36. Now we come to the last part of this judgment. It is regarding what relief should be granted in this group of petitions. We have already said above that the action of the ONGC in charging the rate in the respective cases is 172 ex facie unreasonable and to that extent their demand for the said price is set. aside. The ONGC however, shall be at liberty to get the price for that period and subsequent period fixed according to the reasonable and rational norms and for that purpose it is open to the ONGC to follow any one of the following three courses: (i) They may request the Central Government to appoint a Commission for the purpose of deciding the prices of gas from time to time, including the time for which we have set aside their demand of price, invoking the provisions of the Commission of Inquiry Act or any other law; (ii) They may invoke the arbitration of some eminent econo mist in consultation with the petitioners; or (iii) They may themselves decide the price, after bringing to their consideration all relevant factors and for that purpose they may hear fully and effectively the petitioners and other persons likely to be affected thereby: If the last of the above three courses is adopted by the ONGC for deciding the price structure afresh, it would be in their interest to give hearing to the persons likely to be affected so that the possibility of a new round of litiga tion is avoided. We reiterate that as far as the petitioners are concerned, they are amenable to any of the three modes which the ONGC may choose to adopt. We accordingly set aside the prices demanded by the ONGC from these petitioners in this group of petitions, leaving it open to the ONGC to deal with the question of price fixation in any one of the three modes suggested by us. The petitions are accordingly partly allowed. Rule is accordingly made absolute in all these petitions with costs. The civil applications, in view of the final decision, do not survive and stand disposed of and till the new price fixation is had, the price charged last from these petition ers under the respective contracts with them shall continue to operate between the parties, subject to adjustments in future after prices are fixed as stated above." 173 Shri B. Sen, who appeared for the ONGC, made R clear at the outset that he was not disputing the propositions (a) that the ONGC is 'State ' within the meaning of Article 12 of the Constitution; and (b) that it has a duty to act reasona bly and fairly so as not to infringe the provisions of Articles 14 and 19 and also in consonance with the directive principles of State policy set out, inter alia, in Articles 38 and 39 (b) of the Constitution. His challenge is, pri marily, to the finding of the High Court that the ONGC is a 'public utility undertaking ' which was bound to supply gas at the request of any member of the public at large and to its direction that it should continue to supply gas to the respondents at an uncertain price till the price is fixed in accordance with the procedure outlined by it, notwithstand ing that the contracts under which the respondents procured such supplies have expired long ago. He also contests the correctness of the High Court 's conclusion that the price of gas must be determined on the basis of cost of production plus a reasonable return for the investments made, (herinaf ter referred to broadly as the "cost plus" basis). He sub mits that the prices under the contracts entered into with the respondents have been determined on the basis of a well known principle viz. the ruling prices for an alternate fuel and this cannot be said to be either arbitrary or unreasonable particularly when a large number of industries are even today willing to take the supply of gas at the prices fixed on that basis. He also complains that the High Court overlooked that the respondents are not domestic but industrial consumers. If the ONGC were to be treated as a public utility bound to supply an essential commodity of this nature to any one for the asking subject to availabili ty, it may be that the price for such supply should be fixed on a cost plus basis. But where the supply is limited to certain industries and other similarly placed industries have to produce similar goods by consuming furnance oil or other equivalent alternate fuel, it is quite reasonable for the O.N.G.C. to stipulate indeed, it would be discriminato ry, were it not to stipulate that its prices would be based on the cost of alternate fuel which would have to be in curred by these industries otherwise and which is in fact being incurred by other industries engaged in the production of similar goods to which the O.N.G.C. is not making any supplies at all. Sri Sen urges that while public sector units and State instrumentalities should not be allowed to exploit the consumers, it is equally necessary to ensure that such units and instrumentalities are enabled to make reasonable profits and made good as commercial enterprises by charging prices which the "traffic can bear" so that they can also contribute substantially to national development. It is submitted that, as against the respondents who are receiving supplies at the rate of Rs. 1,000 per unit, there are 29 industries paying the Govern 174 ment fixed price of Rs. 1840 (since 1987), 12 other parties who have earlier signed contracts at the furnace oil equiva lent rate and 65 industries which are willing to sign con tracts at the aforesaid Government rates. It should not also be overlooked that, even if the cost plus basis were to be contemplated, the prices would require substantial revision considering the huge expenditure incurred by the Government of India in recent years in prospecting for oil and the need for heavy capital investment for meeting which the Govern ment has had to obtain huge loans from the World Bank and other organisations. In the context of this integrated activity, it is almost impossible to work out the costs in respect of any particular area or of the particular bye product with which we are here concerned. The cost plus basis was fixed by the award several years ago and that too in the context of supply to certain State undertakings which, in turn, supplied essential commodities like elec tricity and fertilisers. Subsequent enquiry commissions (such as the Damle award) do not price commodities on the basis of cost. The ONGC, if it is to function effectively and make reasonable profit on the supply of this commodity, should be allowed the latitude atleast to fix its own prin ciple of pricing. So long as such principle is a recognised one and is not per se unfair or unreasonable the court should not interfere. Else, Sri Sen submits, a controversy regarding fixation of price will be raging eternally as the industries would raise some objection or other to the price fixation, whatever it be, and the interests of the public will suffer if the ONGC is constrained to stick to the throw away prices fixed in outdated contracts until prices can be fixed on a basis agreeable to the consumer indus tries, as has indeed happened in this case during the past ten years. Sri Sen concluded by urging that the onus of showing that the price charged was unreasonable or arbitrary was on the respondents and they had done nothing to dis charge this onus, except saying that the prices have been stepped up from time to time and that the increase in prices has been steep. Rather they have, in their pleadings, sought to throw the onus on the ONGC to prove that the prices charged by it are fair and reasonable. Even this, says Sri Sen, the ONGC has done. The discussions in the judgment of the High Court and, to some extent, the discussions before us have touched several aspects of the principles to be kept in mind for price fixation of essential commodities basic to public need and, in doing so, have, in our opinion, travelled beyond the framework and scope of the questions that arises for consid eration in this case. It is necessary to remember that the writ petitioners are a few industrial houses which had entered into con 175 tracts with the ONGC for supply of natural or associated gas. These were ordinary commercial contracts entered into by private treaty between the ONGC and these respondents to sell and buy certain goods produced by the ONGC at the prices stipulated in the contracts. Looked at purely from the contractual angle, the ONGC was perfectly at liberty to stop the supply on the expiry of the relevant contract and refuse to supply further unless a fresh contract could be entered into agreeing upon a price for such supply. Assuming that the ONGC is a State instrumentality and the price demanded by it is susceptible to judicial review, the court may, where a contract has been entered into, consider the sustainability of the price agreed upon or where no contract has been entered into, injunct the ONGC from demanding a price for supply which is found unreasonable. But we doubt whether it is open to the Court to direct the ONGC to con tinue the supply indefinitely without a contract and without any price fixation. It is clear that, in giving directions as above, the Court was considerably weighed by its conclusion that the ONGC is a public utility undertaking which is bound to supply gas to all who demand such supply subject only to the availability of enough gas. Dr. Chitale, for the respond ents, strongly supported this viewpoint. He urged that it is well settled law that a public utility cannot arbitrarily discontinue its supply or services merely because the cus tomer is unwilling to pay the price asked for as unconscion able and unreasonable. He submitted that this, indeed, is not a modern rule of constitutional law but an ancient rule of public law. He referred in this context to the early decisions of the King 's Bench Division in Bolt vs Stennett, CI E.R. Revised p. 1572 followed in Allnutt vs Inglis, CIV E.R. Revised p. 206 as laying down the basic principle in this regard. This principle, he said, has also been applied by the American Courts in Ira Y. Munn vs People, 24 L.Ed. 77; United Fuel Gas Co. vs Railroad Commission, 73 L.Ed. 390; Los Angeles Gas & Electric Corporation vs Railroad Commission, ; ; Leo Nebbia vs People, 78 L.Ed. 940; Harold E. West vs Chesapeake & Potomac Telephone Co., ; and Federal Power Commission vs Hope Natural Gas Co., ; These decisions clearly lay down, according to him, that the price fixed must be reasonable and fair, that the price should be so fixed as to give the undertaking a reasonable return on the capital employed and that there cannot be any discrimination against industrial consumers. These principles, he argued, are applicable with greater force in the context of the Constitutional disci pline over State Instrumentalities under Articles 38 and 39 of the Constitution which mandate the State to direct their policy towards securing "that the 176 ownership and control of material resources of the community are so distributed as to subserve the common good. " As already stated, the ONGC does not dispute the propo sition that it is a State instrumentality and that its actions are subject to review under Articles 14 and 19 of the Constitution; it only refutes the suggestion that it has become a public utility undertaking with an obligation to supply gas to any consumer on reasonable conditions as to price etc. It is contended by Sri K. Parasaran and Sri B. Sen that the ONGC is not a 'public utility ' under a duty to supply gas to members of the public. It is argued that in English common law, the expression has a specific connota tion; it refers to an entity dealing in a commodity which is commonly used by the members of the public and under a duty, in terms of a statute, licence or franchise obliging it to supply the commodity to the public at large. Thus, for example, in England the Public Health Act, 1936, the Elec tricity Act, 1947 and the Gas Act, 1948 provide examples of a duty cast on suppliers of water, electricity or gas. So also, in India, the Indian Electricity Act spells out a duty on the part of the licensee to supply electricity to members of the public. There are also other public utility undertak ings providing for water, sewage connections, transport and the like which are under a statutory obligation to supply goods and services to members of the society at large, subject to the fulfilment of reasonable conditions pre scribed therefore. The supply of gas by the ONGC, it is urged, has not attained this "status" yet. As far as we have been able to see, there is no statuto ry definition of 'public utility ' in the context of any Indian enactment that may be relevant for our present pro pose. There is a definition of "public utility service" in section 2(n) of the which, inter alia, covers "any industry which supplies power, light or water to the public" and certain notified industries. It is arguable whether supply of natural gas is included in this definition for, though 'power ' connotes generally any form of energy available for doing work, it is normally related to such energy made available by mechanical or electrical means (vide, Webster Comprehensive, Vol. 2, p. 990). It is also a moot question whether that definition can be appro priate in the context with which we are concerned. Dr. Chitale cited profusely from American Jurisprudence (2nd Edition, Vol. 64) on the subject of public utilities. Some of these passages may be usefully quoted. At page 549, it discusses the definition and nature of a public utility. The passage runs thus: 177 1. Definition and nature A "public utility" is a business or service which is engaged in regularly supplying the public with some commodi ty or service of public consequence, such as electricity, gas, water, transportation, or telephone or telegraph serv ice. Publicly owned utilities are those owned by public corporations such as municipal public utility districts and public utility districts. Apart from statutes which define the public utilities which are within the purview of such statutes, it would be difficult to construct a definition of a public utility which would fit every conceivable case, but there are certain considerations that are of aid in deter mining whether a specific organization or business is a public utility. As its name indicates, the term "public utility" implies a public use and service to the public, and indeed, the principal determinative characteristic of a public utility is that of service to, or readiness to serve, an indefinite public (or portion of the public as such) which has a legal right to demand and receive its services or commodities. " There must be a dedication or holding out, either express or implied, of produce or services to the public as a class. The term precludes the idea of service which is private in its nature and is not to be obtained by the public, although a public utility may perform acts in its private, as distinguished from the public, capacity, in which case it is subject to the same rules as any other private person so acting. Some courts, however, reject the notion that in order to be a public utility subject to governmental regulation the nature of the service must be such that all members of the public have an enforceable right to demand it, and declare that business to be a public utility which in fact serves such a substantial part of the public as to make its operations a matter of public concern. This view is in close accord with what has been termed the historic basis of classification of some businesses as public callings, that is, economic conditions, or the impor tance of the business to the public. While the terms "public service corporation" and "quasipublic corporation" are used to describe public utility corporations, and the term "public service commission" to describe the body regulating such utilities, some courts distinguish between a public sector corporation and a public utility on the basis that the latter is required to serve the 178 public generally, whereas the former may be required to serve members only. The mere fact that a corporation declares itself to be a public utility does not make it such. In determining whether or not a company is a public utility, the law looks at what is being done, not what it asserts it is doing. Nor will the legislative declaration that a certain business shall be deemed a public utility make it such if, in fact, the business as conducted is not impressed with a public use or carried on for the public benefit, since it is beyond the power of the state by legislative edict to make that a public utility which in fact is not, and to take private property for public use by its fiat that the property is being devoted to public use. Furthermore, a dedication of private property to public utility service will not be presumed from the fact that the product and service of the use of such property is the usual subject matter of utility service; neither does such presumption arise from the sale by private contract of such product and service to utility corporations for purposes of resale. Such dedication is never presumed without evidence of unequivocal intention. A business affected with a public interest is not necessarily a public utility or public service commission. The fact that a business is affected with a public interest means that it may be regulated for the public good but does not imply that is under a duty to service the public. " Black 's Law Dictionary (Fifth Edition) defines a "public utility" thus at p. 1108: "Public Utility: A privately owned and operated business whose services are so essential to the general public as to justify the grant of special franchises for the use of public property or of the right of eminent domain, in con sideration of which the owners must serve all persons who apply, without discrimination. It is always a virtual monop oly. A business or service which is engaged in regularly supply ing the public with some commodity or service which is of public consequence and need, such as electricity, gas, water, transportation or telephone or telegraph service. 179 Gulf States Utilities Co. vs State, Tex. App., 46 S.W. 2d 1018, 1021. Any agency, instrumentality, business, indus try or service which is used or conducted in such manner as to affect the community at large, that is, which is not limited or restricted to any particular class of the commu nity. The test for determining if a concern is a public utility is whether it has held itself out as ready, able and willing to serve the public. A term implies a public use of an article, product, or service, carrying with it the duty of the producer or manufacturer, or one attempting to fur nish the service, to serve the public and treat all persons alike, without discrimination. It is synonymous with "public use", and refers to persons or corporations charged with the duty to supply the public with the use of property or facil ities owned or furnished by them. Euder vs First Nat. Bank in St. Louis, C.C.A. Mo., , 992. To constitute a true "public utility", the devotion to public use must be of such character that the public generally, or that part of it which has been served and which has accepted the service, has the legal right to demand that that service shall be conducted, so long as it is continued, with reasonable efficiency under reasonable charges. The devotion to public use must be of such character that the product and service is available to the public generally and indiscriminately, or there must be the acceptance by the utility of public franchises or calling to its aid the police power of the State ' ' The Corpus Juris Secundum (Vol. 73, p 990) also carries like definitions. Once a concern is found to be a public utility, at least two consequences follow. One is a general duty to serve which is described in American Jurisprudence thus: "16. General duty to serve The primary duty of a public utility is to serve on reasona ble terms all those who desire the service it renders, and it may not choose to serve only the portion of the territory covered by its franchise which is presently profitable for it to serve. Upon the dedication of a public utility to a public use and in return for the grant to it of a public franchise, 180 the public utility is under a legal obligation to render adequate and reasonably efficient service impartially, without unjust discrimination, and at reasonable rates, to all members of the public to whom its public use and scope of operation extend who apply for such service and comply with the reasonable rules and regulations of the public utility. This obligation is one implied at common law and need not be expressed by statute or contract, or in the charter of the public utility. The fact that the franchises granted to the company do not expressly impose upon it the obligation to serve all persons in the locality does not relieve the company, nor does the fact that the person applying for gas is already supplied with gas by another company. The fact that a pipe laid by a water company along a street in the exercise of its franchise was laid under an agreement, with certain persons who paid the expenses, that they should have the exclusive use of water, and that the company should not tap the pipe without their consent unless it first repaid them for the pipe, does not relieve the company from its obligation to supply water, on reasonable terms, to all persons living on such street who may apply for it. A provision in an ordinance granting a franchise to an electric light company, that the city should not require the company to make "extensions" except upon certain condi tions does not affect the right of a resident in an estab lished service zone to invoke the aid of the courts to compel the company to connect his premises with its line. This duty to serve all applicants without discrimination cannot be evaded by a natural gas company on the ground that the gas pressure has fallen so low that existing customers cannot be adequately supplied, new applicants are entitled to share equally in such supply as can be furnished. Fur thermore, the obligation of a public utility, such as a gas, water, or electric company, to supply a given district is inclusive of the duty, under reasonable limitations, to carry the mains or lines of the utility to a point on the consumer 's premises where use can be made of the service. However, neither by common law nor by statute is a public utility required to serve all; the conduct prohibited on the part of a public utility is unjust discrimination, unfair rates or practices, or unreasonable rules. " The second constraint is in regard to the rates that can be charged by such an undertaking: 181 A public utility may, in the absence of a legislative pre scription or limitation of rates, fix and exact reasonable rates for services furnished, in which respect the reasona bleness of the rate is to be considered in relation to the value of the property used by the utility in the public service. Thus, in the absence of legislation, carriers are ordinarily entitled to establish such rates and to adopt such policy of ratemaking as they may deem best. They may voluntarily render service for less than they could be compelled to accept. The right of a public utility or carrier to set its own rates is subject to the limitation that such rates must be nondiscriminatory and reasonable. xxx xxx xxx This obligation to furnish service at a reasonable price is implied by law and is incurred by acceptance of the fran chise and privilege to serve the public. Furthermore, there is authority to the effect that a public utility must give a consumer the benefit of the most favourable rate which he is entitled to receive. " We do not think that ONGC satisfies the primary condi tions enunciated above for being a public utility undertak ing as it has not so far held itself out or undertaken or been obliged by any law to provide gas supply to the public in general or to any particular cross section of the public. The proviso to sec. 14(1)(e) of the Act which lays down that the setting up of industries to be run with the aid of gas was not to be undertaken by the ONGC without the Central Government 's approval also gives an indication that the supply of gas to various industries on a general basis was not in the immediate contemplation of the Act but was envis aged as a further expansion to be initiated with Central Government 's approval. Perhaps a stage in the developmental activities of the ONGC will soon come when such an obliga tion can be inferred but, at present, the O.N.G.C. supplies gas only to certain selected contractees. It does not supply gas to the public either in the sense that any individual member of the public or any identifiable cross section of the public is entitled to demand and receive such supply due to various limitations we shah now touch upon. The main activity of the ONGC is that of exploration and 182 prospecting for petroleum and petroleum products. So tar as gas, which is a bye product, is concerned the ONGC has not so far been able voluntarily or constrained statutorily to harness and utilise its production for consumption by the public. Even as per the information placed on record by the respondents about 3,000 million cubic metres of gas were burnt in 1985 86 due to the inability of the ONGC to harness it for industrial or domestic use. Such large scale utilisa tion will involve capital outlay to a considerable extent particularly for the laying of pipe lines to convey the gas to sites of its user. The quantity of gas which is put to such use at present is an insignificant part of the gas that is being produced and so far the Government does not appear to have called upon the ONGC to draw up or submit to the Government under section 23 of the Act any programme of sale of natural gas to the public generally or even to some catego ries of public consumers. There is no doubt that the expan sion of the oil sector in recent years, including the recent construction of the HBJ pipeline, will eventually require the ONGC to set up and devise a rational and equitable scheme of distribution and supply of gas to various types of consumers situate over various parts of India. But, as yet, the ONGC has not embarked on any such scheme. It has been supplying gas to certain consumers on the basis of individu al contracts and it is in regard to these consumers alone that the question of price has been raised before us. We do not, however, think that it is at all necessary for us to delve further into the above concept or express any final opinion as to whether the ONGC is a public utility or not because the claim of the respondents is for a contin uance of the present system followed by the ONGC of supply ing gas to select customers on the basis of contracts en tered into with them. They only want the price to be regu lated by the court; they do not challenge, for obvious reasons, the system of distribution thus far adopted by the ONGC. If the argument that the ONGC is a public utility is accepted, then the first consequence to follow will be that gas should be made available by it to all persons who need it for use. It cannot be supplied by the ONGC to only a few public sector undertakings like the GSEB and GSFC or only to a few industries like those of the respondents or only to a few municipalities like the Vadodara Municipality for domes tic supply, at its sweet will and pleasure. It would then be open to all undertakings, industries and domestic consumers in Bombay, Gujarat and perhaps elsewhere in the country to demand that steps should be taken for the supply of gas to them also. We are unable to agree with the observation of the High Court that, even if the ONGC is treated as a public utility, the respon 183 dents, merely because they had entered into temporary con tracts for supply of gas with the ONGC, could still insist on continued supply to themselves on "the first come, first served" basis, to the exclusion of later arrivals on the scene. If, as suggested by the respondents, the ONGC is to be treated as a public utility and the price of gas is bound to be on cost plus basis, it may be that quite a few other industries would like to avail themselves of such supply. They have perhaps kept out so far only because the supply price based on alternative fuel price is not acceptable to them. They are keeping out only because they are under the impression that the ONGC is entitled to supply gas to per sons with whom it has entered into commercial contracts and on the terms of supply envisaged in those contracts. The treatment of the ONGC as a public utility undertaking for the supply of gas will raise innumerable basic questions totally inconsistent with the present system of selective supply which the respondents want to be continued. It will transpose the area of controversy to a totally different and wider plane. We cannot say that the ONGC is a public utility undertaking and yet direct that it should supply gas to the respondents and a few other industries with which it has entered into contracts. The court would then be constrained to hold that the present system of supply is inconsistent with public law and the constitutional requirements of a public utility undertaking and direct the ONGC to completely overhaul its system of public distribution on sound lines qua types of consumers to be catered to, areas of supply to be covered, price for supply and all other matters. That is not the relief sought by the respondents. All that they want is a declaration that they are entitled to the supply of gas at a reasonable price. It is sufficient, for disposing of this claim, to deal with this aspect of the matter and the larger aspect of ONGC being a public utility undertaking should be left out of account. We, therefore, do not express any final opinion on the issue except to say, prima facie, that it cannot be placed on par with a public utility under taking. In this context, we should like to point out once again that the ONGC does not dispute that the price to be charged by it for gas supply should have some basis and not be arbitrary or unconscionable. Their stand before the High Court (vide para 29 of the judgment) and before us has been that the prices are fixed by them from time to time on a well recognised principle viz. on the basis of the alterna tive fuel cost which the consumers may have to incur had they not been in receipt of gas supply. Assuming this to be correct, is there any illegality in the procedure adopted by them? that is the question. The respondents contend, and the High Court has held, that there is. 184 According to them, a public sector undertaking must supply its goods at a price which will cover their cost and leave them a reasonable margin of profit and no more. Dr. Chitale says that this is the only reasonable way of price fixation and refers to the award in support of this proposition. He points out that this is the basis incorporated in several statutory instruments, such as the Sugarcane Price Control order or the Drug Prices Control order or other orders passed under the Essential Commodities Act. He cites the following decisions of this Court in. relation to the fixation of such prices: Premier Automobiles vs Union, ; ; Panipat Cooperative Sugar Mills vs Union, [1973] 2 SCR 860; Shree Meenakshi Mills vs Union, ; Saraswati Industrial Syndicate vs Union, ; ; Prag Ice and Oil Mills vs Union, [1978] 3 S.C.R. 293 and Union of India vs Cynamide India Ltd., [1987] 2 S.C.C. 720. He urges that, to allow the ONGC to sell gas at a higher price than this merely because, otherwise, but for the availability of gas, the consumers would nave to spend more for their sources of energy, will really amount to introducing an irrelevant element i the process of price fixation and result in allowing the ONGC to make unreasona ble profits at the expense of unhappy consumers. The ques tion for consideration is whether this argument is correct. Is the ONGC bound to adopt only the cost plus basis in fixing its prices or can it also invoke any other well known and reasonable, if commercial, formula in fixing its prices? We shall first consider the findings in the award. Dr. V.K.R.V. Rao was arbitrating on a dispute between the ONGC and the Gujarat State Government as to the price at which gas was to be supplied by the ONGC. Though the dispute arose as a result of the dissatisfaction of the GSEB and the GSFC with the prices charged by the ONGC, the terms of reference to Dr. Rao were very much wider. They read: "The point at issue is the price that should be charged by the ONGC for gas that may be supplied after taking into consideration the volume and pressure of gas supplied to any particular party and the distance to which it has to be carried. You may also indicate if ONGC should offer any differential rates in respect of gas supplied to: (a) Undertakings for the generation of power (b) Fertiliser plants (c) State projects 185 (d) Private sector industries (e) Domestic fuel" The contentions urged by the two parties arrayed before the arbitrator and set out in sections IV and V of the award also covered a very wide ground. The award starts with a discussion of certain general considerations and while doing so, dealing with a contention comparing the price fixation in Assam and Gujarat, the award says: "The Gujarat contention that in fixing the price of gas in Gujarat, note should be taken of the price fixed by Oil India for the sale of Assam gas to the Assam Electricity Board at 25 paise per cubic foot cannot be dismissed as lightly as the O.N.G.C. seem to have done. Nor can it be contended by Gujarat that if a mistake has been made once in one area, that therefore it should be extended to other areas. It must be added also that the price of gas in Assam and in Gujarat is not on all fours for the reasons that I shall mention later. All the same, one cannot ignore the relevance of the Assam gas price, even though the remedical action required is perhaps more on the Assam side than on the ONGC attitude in Gujarat. I shall have something to say on the question later on in this report, though it is not strictly within the terms of reference given to the arbitra tor. I am not prepared to accept the ONGC contention that because they are All India agency expected to function as a commercial undertaking in the public sector, they are entitled to take no account of the fact that the cost of power generation is high in Gujarat, that this has hampered the possible development of some industries for which Guja rat has natural resources and that public opinion in Gujarat has a natural expectation of a reduction in the cost of power production on account of the discovery of gas in their area. After all the ONGC is an enterprise in the public sector and is expected to take public interest into account and not be exclusively concerned with commercial considera tions that would be more appropriate to a private enter prise. Moreover, there, as in the United States, the gas industry is in the private sector, there is also governmen tal regulation through the Federal Power Authority in the public interest. I believe that Gujarat has a valid point in 186 urging that advantages that accrue to the coal bearing provinces by way of low cost in fuel or power generation should also apply to Gujarat because of the discovery of gas in its area and its protected use for power generation. I propose therefore to take into account the pit head price of Bengal coal and its thermal equivalence with Gujarat gas in determining my award on the price of gas. I must add that this will not be the primary basis for my award, though it will certainly be treated as a relevant consideration. At p. 16 the report deals with the contention that the price of gas should be based on the price of substitute products in the following words: "As regards the ONGC contention that the price of gas should be based on the price of substitute products and that this is the practice generally followed in the oil industry, I am not prepared to accept the ONGC constention. While the price of substitutes undoubtedly would determine the demand price for gas, the position becomes different when prices are sought to be fixed and not left to market forces; and prices have to be fixed because the ONGC is virtually a monopoly at least as far as Gujarat is concerned; there is no market price in the normally understood sense of the term as emerg ing from sales by competing sellers; the ONGC is a public sector enterprise, and considerations of public policy cannot be considered irrelevant in the fixation of prices. Above all it has always been the practice in India, when prices are fixed. to base it on the cost of production plus a reasonable profit and this has been what the Tariff Com mission has been doing all these yeas in regard to other commodities. Under the circumstances, while the price of substitutes is undoubtedly a relevant (factor?) in the fixation of the price of gas, I have no doubt that it cannot be treated as the primary factor under the Indian circum stances referred to earlier." Again, at p. 18, the basic formula is expounded as follows: "I have already indicated my thinking on the question of . . prices of substitute materials on the basis of thermal equivalence in the concluding para of the previous section. Gas pricing in relation to the prices of substitute materials 187 understandable in foreign countries, where gas has been deliberately pushed into the fuel market by pipe line compa nies which have constructed long and expensive pipe lines and sold gas at a price lower than that of alternative fuels in order to capture and retain the market. In fact, the price of gas in the initial stage was much less than that of competing alternative fuels and not on par with their prices. With the growing recognition of the special advan tages obtained by the use of gas in manufacturing operation where close control of heat and cleanliness of operation are essential and worth paying for or in commercial and residen tial cooking, water heating and space heating, gas prices have been steadily rising over the last few years. Thus while crude oil wholesale prices have moved downward since 1957, gas prices have recorded a steady rise throughout the post war period. At the same time, drilling of gas wells is increasing and so is the place of gas in world energy con sumption. It is therefore not correct to suggest that the oil companies were selling gas on the basis of the price and thermal equivalence of alternative fuels. Gas was sold at the price which it could fetch and not on the basis of either cost of production or parity with substitute fuels. As regard the price of gas in the field, Prof. Adleman has pointed out that it is not correct to expect any particular ceiling for this price. He adds "if the special advantage uses could generate enough effective demand, the field price of gas in the United States or elsewhere could conceivably equal or surpass the thermal equivalent of the crude oil; otherwise it will not". In actualfact, the principal use of gas is till not (now?) in its field of special advantages. There is validity therefore for his view that "Since gas costs roughly three times to deliver, per BTU as oil the price of gas in the producing area could not possibly equal the price of oil. Scarce resources are best used of this fuel expensive to transport, is used to the maximum, nearest its source of supply, whiles the transport cheap oil moves greater distances". Thermal equivalence with substitute fuels and a price based thereon could therefore only be a ceiling on the price of gas rather than a parity basis for its price fixation. Moreover, in the case of Gujarat, the substitute fuel comes from long distance and bears heavy frieght charges, while the gas is found within the State. It must also be remembered that unlike in the case of foreign oil companies, cost 188 data are more readily available in the case of ONGC, as it is a public sector enterprise and subject to the control of Parliament and the scrutiny of its Public Accounts Commit tee. All cost data have been made available to the Arbitra tor by the ONGC. Under the circumstances, it is my consid ered judgment that formula of fixing the price of gas on the basis of the thermal equivalence and price of substitute fuel or feedstock should not be accepted, though the price resulting from such a formula certainly is a relevant con sideration as indicating the ceiling below which the price of gas should be fixed by the Arbitrator. I would therefore reject the ONGC proposal that "the formula to be used for the price of gas should be based on the price of the avail able alternative fuels or feedstock. " The only other basic formula is the one advanced by the Gujarat Government, namely, "that the only rational approach to the pricing of gas is via the cost plus profits formula". And it is the cost plus profit formula that I propose to adopt as the primary base for determining my award on the price of gas in Gujarat. Having said this, I must hasten to add that this does not mean my acceptance either of the connotation that the Gujarat Government gives to this formula in terms of the content postulated for the cost of production and profit or the figures they have put forward for the price of gas on the basis of their interpre tation of the content of cost of production and profit. What I accept is the principle of cost of production plus reason able profit and not the interpretation that is sought to be given to this principle by the Gujarat Government". The second part of the issue referred to the arbitration was disposed of summarily by the award, in a few words: "Finally, on the question whether there should be any dif ferentiation between the prices to be charged for power generation, fertilisers, and other industries, I am not in favour of any such differentiation, as it would only intro duce an unnecessary complication in the pricing machinery and my award is primarily based on estimated cost of produc tion plus reasonable profit. If, however, in order to regu late supplies in adjustment to different intensities of demand from the different users of gas, some premium or 189 discount becomes necessary on the price suggested by me, this would not be inconsistent with my award provided the total receipts do not exceed the amount that would accrue from the application of my award on the price of gas. Dr. Chitale naturally placed considerable reliance on this award. He contended that the reasoning of the award is impeccable and that the considerations that impelled Dr. Rao to adopt the cost plus basis are more weighty in today 's context and in the background of the State 's duties under Articles 38 and 39(b) of the Constitution. There is no doubt that Dr. Rao made the cost plus method the basis of his award in preference to the basis of thermal equivalence of alternate fuel (which we shall refer to as thermal equivalence basis). But at least two important aspects have to be kept in mind in assessing the applicabil ity of the same principle in the present context. In the first place, as explained earlier, Dr. Rao was concerned primarily with an issue raised by the public of Gujarat as against the ONGC. He was really adjudicating upon the price which the ONGC should charge to public sector undertaking catering to the essential needs of the State. In the con text, his objective was, understandably, to fix the price as low as possible. The consumers under consideration by him represented the public need of the State of Gujarat and, as against such public interest, the ONGC 's profit requirements paled into insignificance. He proceeded, more or less, on the footing that the ONGC was obliged to supply gas for meeting those essential purposes. Secondly, Dr. Rao also agrees that the thermal equivalence basis is a recognised method for fixation of price, that it has a relevance and that it has to be taken into account in determining the price for gas supply. We also wonder whether, in the present set up of the ONGC with a vast expansion of its exploratory activities, enough data are available to work out a price on the cost plus basis. Any such computation will have to provide adequately for future explorations, infructuous expenditure, expenditure on modern uptodate machinery and research and above all expenditure that will be necessary to reach the gas to the consumers. In these circumstances, the cost plus basis fixed by Shri Rao in the background of the real nature of the dispute before him three decades ago cannot be taken as conclusive in the present situation. Here we are dealing with a price to be fixed under a contract between the ONGC and one set of industries in the State who wish to make a change over from the furnace oil system to that of gas supply with a view to increase their own prof itability and gain an advantage, if possible, over other industries in the State. In this context, we think, ONGC is entitled to a 190 larger latitude and charge a price which the market can bear. The only restrictions is that, being a State instru mentality, it should not be a whimsical or capricious price but should be one based on relevant considerations and on some recognised basis. While the cost plus basis is a recognised basis for fixation of prices of essential commodities or for the services rendered by a public utility undertaking, it would not, in our view, be correct to treat it as the only permis sible basis in all situations. On behalf of the ONGC it has been pointed out that even in the fixation of prices of essential commodities like levy sugar, the concept of cost plus is not necessarily the only method of fixing the price for the commodity. In considering the question whether the price fixation in that case was based on proper principles and by following correct methods in accordance with section 3(3C) of the Essential Commodities Act, this Court observed in the Anakapallee case; , at p. 899: "While examining question No. 3 learned Solicitor General has reminded us that 'cost plus ' cannot always be the proper basis for price fixation. Even if there is no price control each unit will have to compete in the market and those units which are uneconomic and whose cost is unduly high will have to compete with others which are more efficient and the cost of which is much lower. It may be that uneconomic units may suffer losses but what they cannot achieve in the open market they cannot insist on where price has to be fixed by the government. The Sugar Enquiry Commission in its 1965 report expressed the view that 'cost plus ' basis for price fixation perpetuates inefficiency in the industry and is, therefore, against the longterm interest of the country. The Court quoted from a study prepared in collaboration with the Institute of Chartered Accountants of India. "Costs alone do not determine the prices. Cost is only one of the many complex factors which together determine prices. The only general principle that can be stated is that in the end there must be some margin in prices over total costs, if capital is to be unimpaired and production maximised by the utilisation of internal surpluses . . while the cost plus pricing method is the most common, it may be argued that it is not the best available method 191 because it ignores 'demand or fails to adequately reflect competition or is based upon a concept of cost which is not solely relevant for pricing decision in all cases. What is essential is not so much of current of past costs but fore cast of future cost with accuracy . . Generally pricing should be such as to increase production and sales and secure an adequate return on capital employed. " Again, in a somewhat different context in relation K, a State transport undertaking, this Court observed, in Venka tachalam vs Deputy Transport Commissioner; , " . . the special status of a Government owned transport undertaking is obvious . . Its functional motto is not more profits at any cost but service to citizens first and, in a far larger measure than private companies and individu als, although profitability is also a factor even in public utilities. (emphasis added) These passages indicate that cost plus is not a satis factory basis in all situations. The basis may need to be made more stringent in some situations and more broad based in others. May be the cost plus is an ideal basis where the commodity supplied is the product of a monopoly vital ' to human needs. In that context the price fixed should be minimum possible as the customer or consumer must have the commodity for his survival and cannot afford more than the minimum. The producer should not, therefore, be allowed to get back more than a minimum profit. Indeed, in certain situations, it may even be inequitable to fix varying prices on the basis of the cost of each individual manufacturer and thus encourage inefficiency; it may be necessary to base it uniformly for a whole industry on the cost of the most efficient manufacturer as has been done in the case of drugs (vide: Cynamide case, [1987] 2 S.C.C. 720. It was so vital that the goods should be available to the common man that the prices were statutorily fixed so low as to drive away inefficient producers and so as to make it possible only for the most efficient manufacturers to survive. Per contra, there can be situations where the need of the consumer is not so vital and the requirements of the economic scene are such that the needs of the producer should be given greater consideration. In such situations, the "plus" element in the cost plus basis (namely, the allowable profit margin, should not be confined to "a reasonable return on the capital" but should be allowed to have a much larger content depending on the circumstances. 192 The notion that the cost plus basis can be the only criterion for fixation of prices in the case of public enterprises stems basically from a concept that such enter prises should function either on a no profit no loss basis or on a minimum profit basis. This is not a correct ap proach. In the case of vital commodities or services, while private concerns must be allowed a minimial return on capi tal invested, public undertakings or utilities may even have to run at losses, if need be and even a minimal return may not be assured. In the case of less vital, but still basic, commodities, they may be required to cater to needs with a minimal profit margin for themselves. But given a favourable area of operation, "commercial profits" need not be either anathema or forbidden fruit even to public sector enter prises. A publication on "Public Enterprises" by the Indian Institute of Public Administration, produced before us elaborates on the above aspects. It also gives an interest ing analysis of pricing policies adopted in respect of various commodities. It is unnecessary to touch upon all the details. It is sufficient, for our present purposes, to say that the monograph points out, a propos such pricing policy, that several state undertakings are already earning profits and the general policy has been accepted that the maximum economic returns should be secured from all public enter prises, whether these are operated by the Central or State Governments directly or through corporation or companies and that the surplus of public enterprises will have to play an increasing part in financing economic development under the various National Plans. It proceeds to say (at p. 173): "A growing source of governmental revenue in many countries is the profits of public undertaking. In under developed countries public enterprises fostered on public revenues are expected to play a more positive role in financing the countries ' development than similar enterprises do in de veloped economies. In determining the price policies of these undertakings considerations of maximising revenue will not play as important a part as profits do in private enter prises, but within the limits set by the necessity to foster economic development, their price policies are designed to bring in some profits to the countries ' general revenues. Public enterprises in the under developed areas are to break ground in projects which are the core of development. If such projects are to be financed on an increasing scale, the price policies have to be so designed that significant surpluses are left with the projects 193 to be employed either for their own expansion or for financing the expansion of other projects. In other words, there should be an element of profit in the prices of their products or in the cost of their services to the public." The Krishna Menon Committee on State undertakings (November 1959), the booklet proceeds. to point out, enunci ated the following pricing policy for public enterprises: "We have stressed in these pages the importance of incentive and healthy competition and emphasised that concerns must be able to stand on their own legs for efficient and proper conduct of business . . The considerations that should govern prices appear to be the following. Consumer prices nave to be based upon general market prices and other fac tors as well. The decision as to what economy in cost has to be passed on to the consumer on the one hand or should benefit the taxpayer on the other and the likelihood of non availabilities and, therefore, of scarcities in the near future has also to be considered. The principle of 'what the traffic can bear ' has also to be taken into account. ' ' Dr. V.K.R.V. Rao has been quoted again as saying: "As regards profits, it should be pointed out that contrary to some popular notions on the subject, profits have an important place in a socialist society, the difference between the economic price and the social price would be what may be called the planned profit and this would largely correspond to the excise duties and sales tax and other indirect taxes that are imposed in a capitalist society. These planned profits being no more than a way of mobilising resources and making them available to the community for purposes both of investment and maintenance expenditure. Profits also have another important role to play in so far as they relate to the economic price itself. The economic price fixed at any particular moment of time is obviously based on the capital, technique and productivity of the given base period when this price is fixed; any improvement in productivity is bound to lead to a decrease in the cost production and in turn this would lead to the emergence of a surplus within the economic price itself and that would be a 194 surplus which will represent a measure of the nation 's increase in productivity this surplus would not be the result of the policies laid down at national level as in the case of difference between the economic price and the social price. On the contrary, it would represent the result of the motivations and efforts of a larger number of persons en gaged in productive activity. Hence the importance of ar ranging for proper incentive to stimulate the creation of this kind of surplus. That is the reason why in socialist societies now adays, individual enterprises are permitted to retain a larger share of such surpluses as they may create by an increase in productivity, this larger share to be used by them partly for increasing individual incomes of those engaged in the enterprises and partly for giving an opportu nity to the enterprises in question to build up the finan cial resources needed to following their own independent investment policies. Public enterprise must be carried on a profitmaking basis, not only in the sense that public enter prise must yield an economic price in the terms described in a previous section but must also get for the community sufficient resources for financing a part of the investment and maintenance expenditure of government. Increasingly, the share of the profits of public enterprises in financing the investment and maintenance expenditure of government must keep on increasing. It is not only the expenditure on the public sector as such that will indicate the march of the economy towards its socialist goal. Even more important is the increasing role that the public sector must play for finding the resources needed for meeting both the mainte nance and investment expenditure of government. This in volves a price and profit policy in regard to public enter prise which goes against accepted opinion so far in regard to public enterprise. The theory 'no profit, no loss ' in public enterprise is particularly inconsistent with a so cialist economy, and if pursued in a mixed economy it will hamper the evolution of the mixed economy into a socialist society. The sooner, therefore, this theory of 'no profit no loss ' in public enterprise is given up and the policy ac cepted of having a price and profit policy for public enter prise such as will make the State increasingly reliant on its own resources (as distinguished from taxing the personal incomes of its citizens), the quicker will be the evolution of a socialist society". 195 In another article on "The Public sector in India", quoted in "Issues in Public Enterprise" by Sri K.R. Gupta, Dr. Rao is quoted as saying (at p. 84): " . . the pricing policy should be such as to promote the growth of national income and the rate of this growth . .public enterprises must make profits and the larger the share of public enterprises in all enterprises, the greater is their need for making profits. Profits con stitute the surplus available for savings and investment on the one hand and contribution to national social welfare programme on the other; and if public enterprises do not make profits the national surplus available for stepping up the rate of investment and the increase of social welfare will suffer a corresponding reduction; . Hence the need for giving up the irrational belief that public enterprise should, by definition, be run on a no profit basis. " In the light of the foregoing discussion, we are of opinion that it would not be right to insist that the ONGC should fix oil prices only on cost plus basis. Indeed, its policy of pricing should be based on the several factors peculiar to the industry and its current situation and so long as such a policy is not irrational or whimsical, the court may not interfere. The question of fixation of a fair and reasonable price for goods placed on the market has come up for consideration of Parliament and Courts in different contexts. Price fixa tion, it is common ground, is generally a legislative func tion. But Parliament generally provides for interference only at a stage where in pursuance of social and economic objectives or to discharge duties under the Directive Prin ciples of State Policy, control has to be exercised over the distribution and consumption of the material resources of the community. Thus while Parliament has enacted the Essen tial Commodities Act, it has left it to the discretion of the Executive to take concrete steps for fixing the prices of essential commodities as and when necessity arises, by promulgating Control Orders in exercise of the powers vested in the Act. Various types of foodgrains, sugarcane and drugs have come under the purview of such control orders and the modalities of fixation of fair prices thereunder have also come up for consideration of the Courts. There has also been such fixation of price under the Industries (Development & Regulation) Act, 1951, vide: Premier Automobiles vs Union, In all these cases, the primary concern of 196 Government and Parliament has been that the articles in question should be available to the members of the consumer public at the minimum prices possible and, in that context, these legislations no doubt adopt the "cost plus reasonable return on investment" test in the fixation of prices. That, even in respect of such commodities, the "cost plus" method is not the only reasonable method has been recognised in judicial decisions. The cases on this topic have been re viewed and the limitations on judicial review of price fixations fully discussed recently by a Constitution Bench of this Court in M/s Shri Sitaram Sugar Company Ltd. & Another vs Union, JT 19901 SC 462. It is, however, not necessary here to enter into a discussion of this and the earlier cases because those cases were primarily concerned with the question whether the price fixation had been made in consonance with the requirements of the relevant legisla tion fixing prices of essential commodities in the interests of the general public and also because ONGC does not deny that, as a State instrumentality, its price fixation should be based on relevant material and should be fair and reason able. None of these decisions hold that the cost plus method is the only relevant method for fixation of prices. On the contrary, there are indications in some judgments to indi cate that not a minimum but a reasonable profit margin is permissible. Even in relation to a public utility undertak ing like the State Electricity Boards where the duty not to make undue profits by abusing its monopoly position is clear (vide: Jagadamba Paper Industries vs Haryana State Electric ity Board; , , this Court said, in Kerala State Electricity Board etc. vs M/s. S.N. Govinda Prabhu & Bros. and Ors. etc, "Now, a State Electricity Board created under the provisions of the Electricity Supply Act is an instrumentality of the State subject to the same constitutional and public law limitations as are applicable to the government including the principle of law which inhibits arbitrary action by the government (See Rohtas Industries vs Bihar State Electricity Board, ; It is a public utility monopoly undertaking which may not be driven by pure profit motive not that profit is to be shunned but that service and not profit should inform its actions. It is not the function of the Board to so manage its affairs as to earn the maximum profit; even as a private corporate body may be inspired to earn huge profits with a view to paying large dividends to its shareholders. But it does not follow that the Board may not and need not earn profits for the 197 purpose of performing its duties and discharging its obliga tions under the statute. It stands to common sense that the Board must manage its affairs on sound economic principles. Having ventured into the field of commerce, no public serv ice undertaking can afford to say it will ignore business principles which are an essential to public service under takings as to commercial ventures. (See Lord Scarman in Bromely vs Greater London Council, ; If the Board borrows sums either from the government or from other sources or by the issue of debentures and bonds, surely the Board must of necessity make provision year after year for the payment of interest on the loans taken by it and for the repayment of the capital amounts of the loans. If the Board is unable to pay interest in any year for want of sufficient revenue receipts, the Board must make provi sion for payment of such arrears of interest in succeeding years. The Board is not expected to run on a bare year to year survival basis. It must have its feet firmly planted on the earth. It must be able to pay the interest on the loans taken by it must be able to discharge its debts; it must be able to give efficient and economic service; it must be able to continue the due performance of its services by providing for depreciation etc.; it must provide for the expansion of its services, for no one can pretend the country is already well supplied with electricity. Sufficient surplus has to be generated for this purpose. That we take it is what the Board would necessarily do if it was an ordinary commercial undertaking properly and prudently managed on sound commer cial lines. Is the position any different because the Board is a public utility undertakings or because of the provi sions of the Electricity Supply Act? We do not think that either the character of Electricity Board as a Public Utili ty Undertaking or the provisions of the Electricity Supply Act preclude the Board from managing its affairs on sound commercial lines though not with a profit thirst. A plain reading of Section 59 (as amended in 1978) plain ly indicates that it is the mandate of Parliament that the Board should adjust its tariffs so that after meeting the various expenses properly required to be met a surplus is 198 left. The original negative approach of functioning so as not to suffer a loss is replaced by the positive approach of requiring a surplus to be created. Under the above provision, the Board is under a statutory obligation to carry on its operations and adjust its tariffs in such a way to ensure that the total revenues earned in any year of account shall, after meeting all expenses chargeable to revenue leave such surplus as the State Government may, from time to time, specify. The tariff fixation has, therefore, to be so made as to raise suffi cient revenue which will not merely avoid any net loss being incurred during the financial year but will ensure a profit being earned, the rate of minimum profit to be earned being such as may be specified by the State Government. Shri Potti, learned counsel for the consumers placed great reliance on the observations of this Court in Kerala State Electricity Board vs Indian Aluminium Co., [1976] 1 SCR 552; Bihar State Electricity Board vs Workmen, ; and P. Nalla Thampy Thera vs Union of India to con tend that the Electricity Board was barred from conducting its operations on commercial lines so as to earn a profit. We do not think that any of these observations is in con flict with what we have said. Pure profit motive, unjusti fiable according to us even in the case of a private trading concern, can never be the sole guiding factor in the case of a public enterprise. If profit is made not for profit 's sake but for the purpose of fulfilling, better and more exten sively, the obligation of the services expected of it cannot be said that the public enterprise acted beyond its authority. The observations in the first case which were refined to us merely emphasised the fact that the Electrici ty Board is not an ordinary trading corporation and that as a public utility 199 undertaking its emphasis should be on service and not prof it. In the second case, for example, the Court said that it is not expected to make any profit and proceeded to explain why it is not expected to make a profit by saying that it is expected to extend the supply of electricity to unserved areas without reference to considerations of loss. It is of interest that in the second case, dealing with the question whether interest cannot be taken into account in working out profits, the Court observed, (SCC p. 235, para 5): 'The facile assumption by the Tribunal that the interest should not be taken into account in working out the profits is not borne out by the provisions of the statute '. In the third case, the court appeared to take the view that the railway rate and fares should cover operational ex penses, interest on investment, depreciation and payment of public obligations. It was stated more than once that the total operational cost would include the interest on the capital outlay out of the national exchequer. While the court expressed the view that there was no justification to run a public utility monopoly service undertaking merely as a commercial venture with a view to make profits, the court did not rule out but refrained from expressing any opinion on the question whether a public utility monopoly service undertaking should ever be geared to earn profits to support the general revenue of the State. We are of the view that the failure of the government to specify the surplus which may be generated by the Board cannot prevent the Board from generating a surplus after meeting the expenses required to be met. Perhaps, the quan tum of surplus may not exceed what a prudent public service undertaking may be expected to generate without sacrificing the interests it is expected to serve and without being obsessed by the pure profit motive of the private enterpre neur. The Board may not allow its character as a public utility undertaking to be changed into that of a profit motivated private trading or manufacturing house. Neither the tariffs nor the resulting surplus may reach such heights as to lead to the inevitable conclusion that the Bard has shed its public utility character. When that happens the court may strike down the revision of tariffs as plainly 200 arbitrary. But not until then. Not merely because a surplus has been generated, a surplus which can by no means be said to be extravagant. The court will then refrain from touching the tariffs. After all, as has been said by this Court often enough "price fixation" is neither the forte nor the func tion of the court. " We are not called upon here, in the view we take, to decide whether the cost plus basis or the thermal equiva lence basis is more appropriate. All that we wish to say is that, having regard to the basis on which the claims of the respondents have proceeded thus far, our task is a very limited one. We cannot say, for reasons set out below, that the ONGC has acted arbitrarily in fixing the prices on the thermal equivalence basis; the fact that it has not done it on cost plus basis does not vitiate the price fixation. The only question we have to address ourselves to is as to whether the O.N.G.C. has fixed a price based on relevant materials and on some known principle. At the outset, one must notice that the price is not directly and specifically related to or based on any unreasonable margin of profit. There is nothing to indicate that the ONGC was prompted, in fixing its prices, on the one and only consideration of deriving maximum profits for itself. On the other hand, it appears to have been guided by the needs of the situation and the nature of the distribution system that is in opera tion. As we said earlier, the manufacture, distribution and consumption of gas has yet not attained the status of an essential commodity till recently. It is still at a stage where the goods are being distributed under private con tracts. Whether this is any longer justified and whether there should not be a greater amount of control over the modes of, as well as price for such, distribution is a larger question with which we are not now concerned. At present, we are in the penumbral region where the commodity is free to be distributed at the manufacturer 's choice, but yet where such manufacturer being a State instrumentality, has to conform to Articles 14 and 19 of the Constitution. At this stage of development of the industry, we think a much wider latitude is permissible in the fixation of prices than the imposition of a "no profit, no loss" basis or a "cost plus" basis on the producer. In fixing the prices, it is legitimate for the O.N.G.C. to take into account the fact that its supplies are restricted only to a few industries that have entered into contracts with it. Like industries, producing the same or similar commodities, are carrying on business with other sources of energy such as coal or fur nace oil and the supply of gas is intended to supplement that source of energy. The supply of 201 gas to a few chosen industries at a much lower rate than what the companies may have to pay for an alternative fuel may indeed lead to cries of discrimination as the O.N.G.C. is scarcely in a position to supply gas to all industries and replace furnace oil as a source of energy altogether. Also, it must be kept in mind that exploration of oil is capital intensive and money consuming and the ONGC would be well justified in supplying gas to voluntary contractors at a price which several parties are willing to accept and which will enable the ONGC to build up a surplus to meet its manifold requirements The surpluses, it should be remem bered, are not to fatten the coffers of a private individual but only to strengthen the backbone of the public enter prise. To fix its prices on the basis of alternative fuel cannot, therefore, be described, in the present situation, as irrational or arbitrary. Our attention has been drawn to a passage from Joan Mitchell on "Price Determination and Price Policy" where, dealing with the basis of fixation of gas price by negotiation between the British Gas Commission and companies producing North Sea gas, it is pointed out hat the price is set by the nearest alternative fuel, usually fuel oil. This was also the basis, it will be remembered, on which initially the GSEB and GSFC had agreed to receive supplies from the ONGC. Thus this is a basis of fixation of price that is recognised in this field. Fixation of price on this basis is, therefore, a logical and appropriate one in the circumstances We should once again like to emphasise that different considerations may perhaps have to prevail if the treatment of ONGC as a public utility is taken to its logical conclu sion but that is not the basis on which the present writ petitions can be decided. Even at present the ONGC is sup plying to public sector undertakings at a much lower price. That has not been challenged by those organisations and the differentiation has also been upheld, in principle, by the High Court, rightly in our opinion. Fortunately, with the discovery of more and more oil wells in various parts of the country the economy of the country is booming and gas supply may also become more plentifully available in course of time. The time will perhaps soon come for the evolution of proper schemes of distribution and price control. We are now concerned, however, with the price fixation regarding supply to a few parties who considered it all right to enter into contractual agreements for supply of gas to them on the basis of the price fixed by the ONGC. So far as the scheme of supply is concerned; the respondents also stand by the existing contract scheme as they want the supply to contin ue It is certainly not their prayer that the existing supply of gas, such as it is, should be considered a public utility and rationed to meet the needs of all industries and consumers in Bombay or Vadodara or 202 elsewhere. Nor is there any complaint today from any indus try not receiving gas supply that they are being discrimi nated against and that the supply to selective industries should stop. There is, therefore, no justification to strike down the scheme of supply on the basis of contracts. The only objection that survives, therefore, is that the price for the supply should be reasonable and fair. It should be based on principle, not caprice. We have pointed out that, though the ONGC has stepped up the prices considerably, it has claimed to have done so on a principle and the correct ness of this has not been challenged. The claim of the respondents only is that prices should not be fixed on that basis but should, instead, be fixed on the basis of "cost plus". For reasons indicated earlier, we do not think that the respondents are justified in challenging this basis of fixation. The basis on which the ONGC has fixed the prices is a known basis and, as pointed out by us, also a basis permissible at this stage of the industry where a certain amount of freedom is permitted to the organisation in sup plying the gas produced by it. The situation really is one where the choice is between making the limited supply of gas available to a few chosen individuals at rock bottom prices so that they can make huge profits and making the price higher but competitive so that it subserves the common good and does not benefit only a chosen few. The ONGC has rightly chosen the second alternative. We would, therefore, hold that the respondents can insist on a supply only if they agree to pay the prices fixed by the ONGC. They are also not entitled to demand supply as of right, without contracts. But, as they have in fact had the benefit of the supplies under interim orders of the Court, this question does not survive and all that we can declare is that the prices demanded by the ONGC are not unreasonable or capricious and are binding on the respondents. Having dealt with the principal issue, we may now refer to certain subsidiary matters touched upon in the course of arguments: (i) A point was made about the ONGC 's right to insist on a minimum offtake guarantee to the extent of 90%. This has been upheld by the High Court and there is no appeal (the crossappeals having been dismissed as time barred) by the respondents. There can, however, be no doubt that the High Court was right in its conclusion on this issue. If any authority regarding the rationale of such a clause is needed, it is to be found in the decision of this Court in Amalgamated Electricity Co. Ltd. vs Jalgaon Borough Munici pality; , 203 (ii) A statement was filed before us to show that if the prices had been determined on the basis of the thermal equivalence of coal, they would have been much smaller. This statement has been filed before us for the first time and its correctness would need verification. It is, however, unnecessary to go into this question. The acceptability of this argument may depend, inter alia on how far the coal basis is relevant for the industries located in Vadodara where the principal alternate fuel is fuel oil. It is possi ble that this is one alternative that may be available and it was open to the petitioners to have had discuss and mediations with the ONGC for alteration of the prices on that footing. The ONGC has fixed prices on the basis of the thermal equivalence of furnance oil which, by an large, was the source of energy tapped by the local industries. There being no irrationality in adopting this basis, it is not open to us to say that the basis of thermal equivalence of coal should be adopted rather than that of furnance oil, particularly in the absence of fuller material and discus sion. (iii) A point was made that the ONGC is charging differ ent prices to different industries. The answer of the ONGC is that, save in the case of certain public sector enter prises, their prices are fixed on the basis of the prices prevalent on the thermal equivalence of fuel oil basis as on the date the relevant contract is entered into. This has not been shown to be wrong. The only discrimination urged at the stage of the High Court was in regard to the disparities in prices between supply to public sector undertakings and private industries. Though the award, towards the end, suggested that there should be no such differentiation, it is now well settled that a favourable treatment of public sector organisations, particularly ones dealing in essential commodities or services, would not be discriminatory. Also, this differentiation, as already pointed out, has been upheld by the High Court, we think rightly. No tangible material has been brought to our notice which would support the plea of unfair discrimination. (iv) A point has been made that the ONGC had entered into a contract for a ten year period with the Amul dairy for supply of gas at Rs.741 per unit which demonstrates the unreasonableness of the prices charged to the respondents. We do not agree. We have already pointed out that the ONGC is supplying gas, to certain public sector undertakings at much lower rates and that this differentiation has been upheld. Though the Amul Dairy is a cooperative society it deals with a basic need of society and 204 stands on no different footing from Electricity Boards or Fertiliser Corporations or Municipal Corporations. The instance of the Amul Dairy cannot, therefore, be treated as an index of the unreasonableness of the price charged from the respondents, particularly when the basis of fixation has been explained and is an intelligible and rational one. (v) Reference has been made to the price of gas in Assam and U.S.A. So far as the former is concerned, the High Court has, rightly in our view, discarded the comparison. So far as the latter is concerned, the point made by the ONGC was that Dr. Rao had fixed the price of gas in India in 1967 at 15% below the then U.S. price and that on the same basis the price of Rs.2000 per unit today could not be said to be unreasonable as prices in U.S.A. have also shot up about thirty fold in the meantime. We find no effective reply to this argument. The High Court has just brushed it aside by reiterating that the well head prices alone would be the reasonable basis for fixation of price. (vi) The High Court in its judgment has observed: "if the ONGC were acting fairly and reasonably, there was nothing to prevent them from placing all their cards on the table of the court. They did not put the price structure that possibly be worked out on the lines similar or akin to those suggested by Dr. V.K.R.V. Rao in his award. Nor did they put forward any other reasonable criteria for price fixation. All throughout they harped on the thermal equiva lence and furnace oil equivalance and the prices in U.S.A. and the prices of crude, but did not allow the Court to have the bare glimpse of what could possibly be the well head price of gas, by making allowances for amortisation and all other conceivable factors, having their sway in the ultimate price fixation. This also is indicative of the unreasonable ness on their part and we would say that Mr. Singhvi was justified in complaining that the return filed by the ONGC in this group of petitions was far from being satisfactory and, therefore, was liable to be brandished as no real return at all" We think this criticism is not justified. The stand of the ONGC was that it had fixed the prices on the thermal equiva lence basis and this has not been controverted or found against. It was the 205 respondents ' case that the cost plus price would work out much cheaper and the onus was on them to prove it. We fail to see how the blame for not allowing the court to have a glimpse of what could possibly be the well head price of gas can be put at the doors of the ONGC. However, this aspect is irrelevant as the case throughout has proceeded on the assumption that the cost plus basis would yield lower fig ures and the question debated was whether the ONGC could discard this and adopt the thermal equivalence basis. (vii) Turning now to para 36 of the judgment of the High Court, we may observe that these directions do not survive in view of the conclusion we have reached that the prices demanded by ONGC are based on proper and relevant criteria. However, we may observe that directions (i) and (ii) in this paragraph virtually throw open the entire issue for fresh discussion. It may have been helpful if such a direction had been given before the hearing of the writ petitions but the exercises would not be futile. Having reached the conclusion that the cost plus was the only proper basis of fixation of price, the High Court should perhaps have directed the ONGC to charge prices on that basis and given a reasonable time to work out the said price and implement the direction. Instead, the High Court appears to have, by its directions in para 36, left the matter at large for it asks the ONGC to get the price fixed "according to the reasonable and ration al norms". We do not also see any justification for provid ing that the price fixation should be done in consultation with, or after giving an opportunity to the respondents. It is for the ONGC to fix the prices and there can be no re quirement of a prior consultation with the present respond ents or with prospective customers. In such cases of price fixation, as in the case of price fixations by Government (see Cynamide case, [1987] 2 SCC 720), the only remedy of aggrieved consumers can perhaps be to have some sort of post decisional reconsideration by the ONGC after heating the view points of those affected. But this question does not arise now in the view we have taken to the ONGC 's obli gations in this regard. We should also like to add that, now that the prices have been fixed by the Government since 30.1.1987 and gas has already been supplied to the respond ents till then on the basis of interim prices, the implemen tation of the directions contained in this paragraph would be a prolonged and unmeaningful exercise and it would have been much better to fix some ad hoc price, for this period, after heating both parties. In fact, Sri B. 206 Sen who appeared for the ONGC very fairly stated before us that, so far as this period was concerned, the ONGC was prepared to leave it to this Court to fix the price of supply at any figure that the Court might consider reasona ble. We also suggested to the respondents, keeping the price fixed by the order dated 30.3.1987 in mind, a figure which we thought was reasonable but the respondents were not agreeable to the course suggested. They put forward certain alternative proposals which were not acceptable to the ONGC. In these circumstances, we have been constrained to hear the appeals on merits. (viii) On behalf of the ONGC, it has been pointed out that a sum of Rs. 14.35 crores is outstanding for the period from December 1982 to August 1989 from eighteen concerns, even on the basis of the interim prices at which the ONGC has been supplying them gas under the orders of this Court, primarily due to shortfalls in the guaranteed off take and that four concerns, who have stopped taking supply of gas, are in arrears to the tune of about Rs. 12 lakhs. We need hardly say that the ONGC will be at liberty to take immediate steps to recover the charges due from the respondents in the light of this judgment. (ix) We wish to add that we are not called upon to, and do not, express any opinion regarding the notification dated 30.1.87 of the Government issued subsequently fixing the price at Rs. 1,400 plus. We do not know the circumstances or the statutory authority or the basis on which the said price fixation was made and that is totally outside the purview of these appeals. This concludes a discussion of all the points urged before us. For the reasons detailed above, we allow these appeals and uphold the prices charged by the ONGC for supply of gas to the various respondents. We, however, make no order regarding costs. R.S.S. Appeals allowed.
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The Oil & Natural Gas Commission (ONGC) is a company created by the government under the Oil and Natural Gas Commission Act of 1959. In most of its oil fields in Gujarat, gas comes out with the oil. This is called "free gas." ONGC agreed to sell this gas to the Gujarat State Electricity Board (GSEB) and the Gujarat State Fertiliser Corporation (GSFC). The price was based on the price of fuel oil, using a comparison of their heating values. The actual cost to produce the gas was not considered. People complained that the price was too high. The disagreement was sent to Dr. V.K.R.V. Rao to make a decision. Dr. Rao decided that the price should be based on the "cost plus" method. This means the cost of production plus a profit. He thought this was better than basing it on the comparison to fuel oil prices. In 1967, ONGC started selling gas to some industries near Vadodara. This was done using yearly contracts. The industries did not like the rising prices. In 1979, the Association of Natural Gas Consuming Industries asked the Bombay High Court to order ONGC to: (i) keep supplying gas even after the contracts ended; (ii) discuss a fair price for the gas; (iii) stop charging them more than public companies; and (iv) lower the minimum amount of gas they had to buy. The High Court ordered ONGC to keep supplying gas at the current price of Rs. 504 per unit. Later, the Court raised the price to Rs. 1000 per unit. The High Court also said: (i) ONGC is a public utility, so it must supply gas to anyone who needs it, as long as it has enough gas; (ii) Setting prices is usually a job for the government. But since ONGC is part of the government, it must be fair when setting prices and use a method suggested by the High Court; (iii) ONGC was not unfairly charging different prices to public and private companies; and (iv) The requirement to buy a minimum amount of gas was valid. ONGC appealed to the Supreme Court. ONGC argued that the High Court was wrong to say it was a "public utility." ONGC said it should not be forced to supply gas to anyone who asks. ONGC also said the High Court was wrong to say the price of gas must be based on the cost of production plus a reasonable profit. ONGC argued that: (i) the prices in the contracts were based on the price of other fuels, which was a fair way to set prices, especially since many industries were willing to pay those prices; (ii) public companies should not take advantage of customers, but they also need to make a reasonable profit; (iii) it is very hard to figure out the cost of gas because it is produced along with oil; (iv) the "cost plus" method was decided on many years ago for sales to public companies that supply important things like electricity and fertilizer; and (v) the industries had to prove that the prices were unfair, but they did not. The industries argued that a public utility cannot stop providing service just because a customer does not want to pay a price that is too high. They also said the price must be fair and allow ONGC to make a reasonable profit. They said they should not be charged more just because they would have to pay even more for other energy sources. The industries also said that the Constitution requires government companies to be fair. The Supreme Court allowed ONGC's appeal and said the prices ONGC charged were okay. The Court said: (1) ONGC is not a public utility because it has not offered to supply gas to the general public or been required by law to do so. A part of the law says that ONGC needs the government's permission to set up industries that use gas. This suggests that the law did not originally intend for ONGC to supply gas to all industries, but only as a future expansion with the government's approval. Maybe ONGC will become a public utility in the future, but right now, it only supplies gas to certain companies it has contracts with. (2) The Court did not make a final decision on whether ONGC was a public utility. The industries only wanted a statement that they were entitled to a reasonable price. It was enough to address this issue without deciding if ONGC was a public utility. (3) Treating ONGC as a public utility would create many problems because the current system is to only supply gas to certain companies. This would change the argument to a different issue. The Court might have to say that the current system is against the law for public utilities. (4) ONGC's main job is to find and explore for oil and oil products. Gas is a byproduct. ONGC has not been required to use the gas it produces for the public. (5) Dr. Rao used the "cost plus" method instead of comparing gas to other fuels. But the "cost plus" method that Dr. Rao decided on a long time ago cannot be considered final now. Dr. Rao was mainly concerned with complaints from the public in Gujarat against ONGC. He was deciding the price that ONGC should charge to public companies that provide important services. His goal was to set the price as low as possible. He was focused on the needs of the public in Gujarat, and ONGC's profits were not as important. (6) In this case, the Court is dealing with a price in a contract between ONGC and a group of industries that want to switch from fuel oil to gas to increase their profits. In this situation, ONGC has more freedom to charge a price that the market can handle. The price should not be unfair, but it should be based on relevant factors and some recognized method. (7) "Cost plus" is not always the best method. It might be best when the product is essential for human needs and the company has a monopoly. In that case, the price should be as low as possible because people need the product to survive and cannot afford to pay more. But in other situations, the consumer's need is not as important, and the company's needs should be considered more. In those situations, the profit part of "cost plus" should not be limited to a "reasonable return on capital" but should be larger depending on the circumstances. Public companies should be allowed to make commercial profits. (8) ONGC should not be forced to only use "cost plus." Its pricing should be based on different factors specific to the industries and its current situation. As long as the pricing is not unfair, the Court should not interfere. (9) Setting prices is usually a job for the government. But the government usually only gets involved when it needs to control the distribution and use of resources for social and economic reasons. (10) ONGC was not unfair to use the comparison to fuel oil prices. It does not have to use "cost plus." The only question is whether ONGC used relevant information and a known method to set the price. (11) Gas is not yet considered an essential product. The gas industry is in a middle ground where the company can choose how to distribute the gas, but ONGC, as a government company, must follow the Constitution. At this stage, ONGC has more freedom to set prices than if it was required to use a "no profit, no loss" or "cost plus" method. (12) It is acceptable to treat public companies, especially those that provide essential products or services, more favorably. There was no evidence of unfair discrimination in this case. (13) The High Court was correct to say that ONGC could require a minimum amount of gas to be purchased.
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On this basis, an agreement was entered into between them in March, 1963 whereunder the price of fuel oil was fixed at Rs.77.26 per tonne including rail frieght; and, based on this price and thermal value equivalence, the price of Cambay gas was fixed at Rs.80.14 per 1000 cubic metres (hereinafter referred to as 'the Unit ') and of Ankleshwar gas at Rs. The ONGC also entered into discussions with the Gujarat State Fertilizer Corporation (GSFC) and ultimately it was agreed, on the footing of the price of Rs.76 per tonne in respect of Koyali Naphtha, that associated gas should be supplied to the GSFC at between Rs.88 and Rs.90 per unit on the principle of thermal equivalence. This was in 1966. 1.4.1976 to 31.12.1976 Rs.341.45 1.1.1977 to 31.03.1977 Rs.351.00 1.4.1977 to 31.12.1977 Rs.371.16 1.1.1978 to 31.03.1978 Rs.382.15 1.4.1978 to 31.03.1979 Rs.504.00 According to the ONGC, the price demanded from these industries and initially been based on alternative fuel cost i.e., the cost which these industries would have had to pay for fuel oil if no supply of gas had been available. In this writ petition it was prayed that the ONGC should be directed (a) to continue to supply the gas to them despite the contracts in their favour having lapsed; (b) to supply the break up and the data on the basis of which the price structure was arrived at and to fix the price after giving reasonable opportunity to the concerned industries or their associations; (c) to discuss and negotiate a fair, reasonable and just price for supply of gas; (d) to restrict the minimum guaranteed quan tity of offtake to 75 per cent of the contracted quantity (this was because the ONGC had been insisting on raising the said guarantee to 90 per cent) and; (e) to stop charging discriminatory prices for the supply to the respondents in comparison with the price charged to public sector undertak ings. When these appeals were filed a Bench of this Court, on 6.10.1983, continued the interim price of Rs. In the petitions which are pending before the Gujarat High Court an interim price of Rs. But the O.N.G.C., being a State instrumentality, is bound to act reasonably in the matter of fixation of price; such price is bound to be determined by following any one of the modalities suggested in the judgment of the High Court; (iii) There was no discrimination by the O.N.G.C. However, in view of its finding that the ONGC is a public utility undertaking, the Court took the view that it should supply gas to the respondents subject to the availability of gas supply and also that such supply should be made at a price which was to be determined in one of the four differ ent methods set out in paragraph 36 of the judgment. The ONGC however, shall be at liberty to get the price for that period and subsequent period fixed according to the reasonable and rational norms and for that purpose it is open to the ONGC to follow any one of the following three courses: (i) They may request the Central Government to appoint a Commission for the purpose of deciding the prices of gas from time to time, including the time for which we have set aside their demand of price, invoking the provisions of the Commission of Inquiry Act or any other law; (ii) They may invoke the arbitration of some eminent econo mist in consultation with the petitioners; or (iii) They may themselves decide the price, after bringing to their consideration all relevant factors and for that purpose they may hear fully and effectively the petitioners and other persons likely to be affected thereby: If the last of the above three courses is adopted by the ONGC for deciding the price structure afresh, it would be in their interest to give hearing to the persons likely to be affected so that the possibility of a new round of litiga tion is avoided. His challenge is, pri marily, to the finding of the High Court that the ONGC is a 'public utility undertaking ' which was bound to supply gas at the request of any member of the public at large and to its direction that it should continue to supply gas to the respondents at an uncertain price till the price is fixed in accordance with the procedure outlined by it, notwithstand ing that the contracts under which the respondents procured such supplies have expired long ago. the ruling prices for an alternate fuel and this cannot be said to be either arbitrary or unreasonable particularly when a large number of industries are even today willing to take the supply of gas at the prices fixed on that basis. If the ONGC were to be treated as a public utility bound to supply an essential commodity of this nature to any one for the asking subject to availabili ty, it may be that the price for such supply should be fixed on a cost plus basis. As its name indicates, the term "public utility" implies a public use and service to the public, and indeed, the principal determinative characteristic of a public utility is that of service to, or readiness to serve, an indefinite public (or portion of the public as such) which has a legal right to demand and receive its services or commodities. " Some courts, however, reject the notion that in order to be a public utility subject to governmental regulation the nature of the service must be such that all members of the public have an enforceable right to demand it, and declare that business to be a public utility which in fact serves such a substantial part of the public as to make its operations a matter of public concern. In determining whether or not a company is a public utility, the law looks at what is being done, not what it asserts it is doing. Nor will the legislative declaration that a certain business shall be deemed a public utility make it such if, in fact, the business as conducted is not impressed with a public use or carried on for the public benefit, since it is beyond the power of the state by legislative edict to make that a public utility which in fact is not, and to take private property for public use by its fiat that the property is being devoted to public use. A business affected with a public interest is not necessarily a public utility or public service commission. To constitute a true "public utility", the devotion to public use must be of such character that the public generally, or that part of it which has been served and which has accepted the service, has the legal right to demand that that service shall be conducted, so long as it is continued, with reasonable efficiency under reasonable charges. Upon the dedication of a public utility to a public use and in return for the grant to it of a public franchise, 180 the public utility is under a legal obligation to render adequate and reasonably efficient service impartially, without unjust discrimination, and at reasonable rates, to all members of the public to whom its public use and scope of operation extend who apply for such service and comply with the reasonable rules and regulations of the public utility. We do not think that ONGC satisfies the primary condi tions enunciated above for being a public utility undertak ing as it has not so far held itself out or undertaken or been obliged by any law to provide gas supply to the public in general or to any particular cross section of the public. The quantity of gas which is put to such use at present is an insignificant part of the gas that is being produced and so far the Government does not appear to have called upon the ONGC to draw up or submit to the Government under section 23 of the Act any programme of sale of natural gas to the public generally or even to some catego ries of public consumers. It has been supplying gas to certain consumers on the basis of individu al contracts and it is in regard to these consumers alone that the question of price has been raised before us. We do not, however, think that it is at all necessary for us to delve further into the above concept or express any final opinion as to whether the ONGC is a public utility or not because the claim of the respondents is for a contin uance of the present system followed by the ONGC of supply ing gas to select customers on the basis of contracts en tered into with them. If the argument that the ONGC is a public utility is accepted, then the first consequence to follow will be that gas should be made available by it to all persons who need it for use. If, as suggested by the respondents, the ONGC is to be treated as a public utility and the price of gas is bound to be on cost plus basis, it may be that quite a few other industries would like to avail themselves of such supply. They have perhaps kept out so far only because the supply price based on alternative fuel price is not acceptable to them. They are keeping out only because they are under the impression that the ONGC is entitled to supply gas to per sons with whom it has entered into commercial contracts and on the terms of supply envisaged in those contracts. We cannot say that the ONGC is a public utility undertaking and yet direct that it should supply gas to the respondents and a few other industries with which it has entered into contracts. All that they want is a declaration that they are entitled to the supply of gas at a reasonable price. In this context, we should like to point out once again that the ONGC does not dispute that the price to be charged by it for gas supply should have some basis and not be arbitrary or unconscionable. Their stand before the High Court (vide para 29 of the judgment) and before us has been that the prices are fixed by them from time to time on a well recognised principle viz. 184 According to them, a public sector undertaking must supply its goods at a price which will cover their cost and leave them a reasonable margin of profit and no more. Rao was arbitrating on a dispute between the ONGC and the Gujarat State Government as to the price at which gas was to be supplied by the ONGC. I am not prepared to accept the ONGC contention that because they are All India agency expected to function as a commercial undertaking in the public sector, they are entitled to take no account of the fact that the cost of power generation is high in Gujarat, that this has hampered the possible development of some industries for which Guja rat has natural resources and that public opinion in Gujarat has a natural expectation of a reduction in the cost of power production on account of the discovery of gas in their area. While the price of substitutes undoubtedly would determine the demand price for gas, the position becomes different when prices are sought to be fixed and not left to market forces; and prices have to be fixed because the ONGC is virtually a monopoly at least as far as Gujarat is concerned; there is no market price in the normally understood sense of the term as emerg ing from sales by competing sellers; the ONGC is a public sector enterprise, and considerations of public policy cannot be considered irrelevant in the fixation of prices. to base it on the cost of production plus a reasonable profit and this has been what the Tariff Com mission has been doing all these yeas in regard to other commodities. There is no doubt that Dr. Rao made the cost plus method the basis of his award in preference to the basis of thermal equivalence of alternate fuel (which we shall refer to as thermal equivalence basis). Secondly, Dr. Rao also agrees that the thermal equivalence basis is a recognised method for fixation of price, that it has a relevance and that it has to be taken into account in determining the price for gas supply. Here we are dealing with a price to be fixed under a contract between the ONGC and one set of industries in the State who wish to make a change over from the furnace oil system to that of gas supply with a view to increase their own prof itability and gain an advantage, if possible, over other industries in the State. While the cost plus basis is a recognised basis for fixation of prices of essential commodities or for the services rendered by a public utility undertaking, it would not, in our view, be correct to treat it as the only permis sible basis in all situations. On behalf of the ONGC it has been pointed out that even in the fixation of prices of essential commodities like levy sugar, the concept of cost plus is not necessarily the only method of fixing the price for the commodity. 192 The notion that the cost plus basis can be the only criterion for fixation of prices in the case of public enterprises stems basically from a concept that such enter prises should function either on a no profit no loss basis or on a minimum profit basis. It is sufficient, for our present purposes, to say that the monograph points out, a propos such pricing policy, that several state undertakings are already earning profits and the general policy has been accepted that the maximum economic returns should be secured from all public enter prises, whether these are operated by the Central or State Governments directly or through corporation or companies and that the surplus of public enterprises will have to play an increasing part in financing economic development under the various National Plans. The economic price fixed at any particular moment of time is obviously based on the capital, technique and productivity of the given base period when this price is fixed; any improvement in productivity is bound to lead to a decrease in the cost production and in turn this would lead to the emergence of a surplus within the economic price itself and that would be a 194 surplus which will represent a measure of the nation 's increase in productivity this surplus would not be the result of the policies laid down at national level as in the case of difference between the economic price and the social price. In the light of the foregoing discussion, we are of opinion that it would not be right to insist that the ONGC should fix oil prices only on cost plus basis. There has also been such fixation of price under the Industries (Development & Regulation) Act, 1951, vide: Premier Automobiles vs Union, In all these cases, the primary concern of 196 Government and Parliament has been that the articles in question should be available to the members of the consumer public at the minimum prices possible and, in that context, these legislations no doubt adopt the "cost plus reasonable return on investment" test in the fixation of prices. It is, however, not necessary here to enter into a discussion of this and the earlier cases because those cases were primarily concerned with the question whether the price fixation had been made in consonance with the requirements of the relevant legisla tion fixing prices of essential commodities in the interests of the general public and also because ONGC does not deny that, as a State instrumentality, its price fixation should be based on relevant material and should be fair and reason able. etc, "Now, a State Electricity Board created under the provisions of the Electricity Supply Act is an instrumentality of the State subject to the same constitutional and public law limitations as are applicable to the government including the principle of law which inhibits arbitrary action by the government (See Rohtas Industries vs Bihar State Electricity Board, ; It is a public utility monopoly undertaking which may not be driven by pure profit motive not that profit is to be shunned but that service and not profit should inform its actions. While the court expressed the view that there was no justification to run a public utility monopoly service undertaking merely as a commercial venture with a view to make profits, the court did not rule out but refrained from expressing any opinion on the question whether a public utility monopoly service undertaking should ever be geared to earn profits to support the general revenue of the State. We cannot say, for reasons set out below, that the ONGC has acted arbitrarily in fixing the prices on the thermal equivalence basis; the fact that it has not done it on cost plus basis does not vitiate the price fixation. Whether this is any longer justified and whether there should not be a greater amount of control over the modes of, as well as price for such, distribution is a larger question with which we are not now concerned. At this stage of development of the industry, we think a much wider latitude is permissible in the fixation of prices than the imposition of a "no profit, no loss" basis or a "cost plus" basis on the producer. We are now concerned, however, with the price fixation regarding supply to a few parties who considered it all right to enter into contractual agreements for supply of gas to them on the basis of the price fixed by the ONGC. So far as the scheme of supply is concerned; the respondents also stand by the existing contract scheme as they want the supply to contin ue It is certainly not their prayer that the existing supply of gas, such as it is, should be considered a public utility and rationed to meet the needs of all industries and consumers in Bombay or Vadodara or 202 elsewhere. We have pointed out that, though the ONGC has stepped up the prices considerably, it has claimed to have done so on a principle and the correct ness of this has not been challenged. The claim of the respondents only is that prices should not be fixed on that basis but should, instead, be fixed on the basis of "cost plus". The basis on which the ONGC has fixed the prices is a known basis and, as pointed out by us, also a basis permissible at this stage of the industry where a certain amount of freedom is permitted to the organisation in sup plying the gas produced by it. But, as they have in fact had the benefit of the supplies under interim orders of the Court, this question does not survive and all that we can declare is that the prices demanded by the ONGC are not unreasonable or capricious and are binding on the respondents. (iv) A point has been made that the ONGC had entered into a contract for a ten year period with the Amul dairy for supply of gas at Rs.741 per unit which demonstrates the unreasonableness of the prices charged to the respondents. So far as the latter is concerned, the point made by the ONGC was that Dr. Rao had fixed the price of gas in India in 1967 at 15% below the then U.S. price and that on the same basis the price of Rs.2000 per unit today could not be said to be unreasonable as prices in U.S.A. have also shot up about thirty fold in the meantime. Having reached the conclusion that the cost plus was the only proper basis of fixation of price, the High Court should perhaps have directed the ONGC to charge prices on that basis and given a reasonable time to work out the said price and implement the direction. We should also like to add that, now that the prices have been fixed by the Government since 30.1.1987 and gas has already been supplied to the respond ents till then on the basis of interim prices, the implemen tation of the directions contained in this paragraph would be a prolonged and unmeaningful exercise and it would have been much better to fix some ad hoc price, for this period, after heating both parties.
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In most of its oil fields in Gujarat, gas comes out with the oil. The price was based on the price of fuel oil, using a comparison of their heating values. The disagreement was sent to Dr. V.K.R.V. Dr. Rao decided that the price should be based on the "cost plus" method. In 1979, the Association of Natural Gas Consuming Industries asked the Bombay High Court to order ONGC to: (i) keep supplying gas even after the contracts ended; (ii) discuss a fair price for the gas; (iii) stop charging them more than public companies; and (iv) lower the minimum amount of gas they had to buy. The High Court ordered ONGC to keep supplying gas at the current price of Rs. 504 per unit. 1000 per unit. The High Court also said: (i) ONGC is a public utility, so it must supply gas to anyone who needs it, as long as it has enough gas; (ii) Setting prices is usually a job for the government. But since ONGC is part of the government, it must be fair when setting prices and use a method suggested by the High Court; (iii) ONGC was not unfairly charging different prices to public and private companies; and (iv) The requirement to buy a minimum amount of gas was valid. ONGC argued that the High Court was wrong to say it was a "public utility." ONGC also said the High Court was wrong to say the price of gas must be based on the cost of production plus a reasonable profit. ONGC argued that: (i) the prices in the contracts were based on the price of other fuels, which was a fair way to set prices, especially since many industries were willing to pay those prices; (ii) public companies should not take advantage of customers, but they also need to make a reasonable profit; (iii) it is very hard to figure out the cost of gas because it is produced along with oil; (iv) the "cost plus" method was decided on many years ago for sales to public companies that supply important things like electricity and fertilizer; and (v) the industries had to prove that the prices were unfair, but they did not. The industries argued that a public utility cannot stop providing service just because a customer does not want to pay a price that is too high. They also said the price must be fair and allow ONGC to make a reasonable profit. The Supreme Court allowed ONGC's appeal and said the prices ONGC charged were okay. The Court said: (1) ONGC is not a public utility because it has not offered to supply gas to the general public or been required by law to do so. This suggests that the law did not originally intend for ONGC to supply gas to all industries, but only as a future expansion with the government's approval. (2) The Court did not make a final decision on whether ONGC was a public utility. (3) Treating ONGC as a public utility would create many problems because the current system is to only supply gas to certain companies. The Court might have to say that the current system is against the law for public utilities. But the "cost plus" method that Dr. Rao decided on a long time ago cannot be considered final now. He was deciding the price that ONGC should charge to public companies that provide important services. He was focused on the needs of the public in Gujarat, and ONGC's profits were not as important. (6) In this case, the Court is dealing with a price in a contract between ONGC and a group of industries that want to switch from fuel oil to gas to increase their profits. The price should not be unfair, but it should be based on relevant factors and some recognized method. It might be best when the product is essential for human needs and the company has a monopoly. In that case, the price should be as low as possible because people need the product to survive and cannot afford to pay more. But in other situations, the consumer's need is not as important, and the company's needs should be considered more. In those situations, the profit part of "cost plus" should not be limited to a "reasonable return on capital" but should be larger depending on the circumstances. Public companies should be allowed to make commercial profits. (8) ONGC should not be forced to only use "cost plus." (10) ONGC was not unfair to use the comparison to fuel oil prices. It does not have to use "cost plus." At this stage, ONGC has more freedom to set prices than if it was required to use a "no profit, no loss" or "cost plus" method.
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L JURISDICTION: Writ Petitions NOS. 1297 98, 1407 of 1979, 4995 97 of 1980 and 402 of 1981. 375 (Under Article 32 of the Constitution of India.) F.S. Nariman, K.N. Bhat, B. Veerbhadrappa, H.S. Renuka Prasad, Vijay Kumar Verma, Nanjappa Ganpathy and P.K Manohar for the Petitioners in W.P. Nos. 1297 98, of 1979. K Chennabasappa, S.S. Javali and B.R. Agarwal for the Petitioners in W.P. No. 1407 of 1979. K.K Venugopal and C.S. Vaidyanathan for the Petitioners in W.P. Nos. 4995 97180 & 402 of 1981. R.K. Garg and A.V. Rangam, for the Respondents in W.P. Nos. 4995 97180 and 402 of 1981. P.H. Parekh and Gautam Philip, for the Intervener Akhil Bharat Anusuchit Jati in W.P. Nos. 1297 98 of 1979. L3 L.G. Havenur, K.M.K. Nair and Narayana Nettar for the Intervener President Karnataka Legislative in W.P. No. 1407 of 1979. K Rajendra Chaudhury for the Intervener Dravida Kazhagam in W.P. No. 402 of 1981. KM.K. Nair for the Intervener All India Nayaka Sangh in W.P. No. 1297 98 and 1407 of 1979. The following Judgments were delivered: CHANDRACHUD, C.J. : My learned Brethren have expressed their respective points of view on the policy of reservations which, alas, is even figuratively, a burning issue to day. We were invited by the counsel not so much as to deliver judgments but to express our opinion on the issue of reservations; which may serve as a guideline to the Commission with the Government of Karnataka proposes to appoint, for examining the question of affording better employment and educational opportunities to Scheduled Castes, Scheduled Tribes and other Backward Classes. A somewhat unusual exercise is being undertaken by the Court in giving expression to its views without reference to specific facts. But, institutions profit by well meaning innovations. The facts will appear before the Commission and it 376 will evolve suitable tests in the matter of reservations. I cannot resist expressing the hope that the deep thinking and sincerity which has gone into the formulation of the opinions expressed by my learned Brethren will not go waste. The proposed Commission should give its close application to their weighty opinions. Mine is only a skeletal effort. I reserve the right to elaborate upon it, but the chances of doing so are not too bright. I would state my opinion in the shape of the following pro positions: 1 The reservation in favour of scheduled castes and scheduled tribes must continue as at present, there is, without the application of a means test, for a further period not exceeding fifteen years. Another fifteen years will make it fifty years after the advent of the Constitution, a period reasonably long for the upper crust of the oppressed classes to overcome the baneful effects of social oppression, isolation and humiliation. The means test, that is to say, the test of economic backwardness ought to be made applicable even to the Scheduled Castes and Scheduled Tribes after the period mentioned in (1) above. It is essential that the privileged section of the underprivileged society should not be permitted to monopolise preferential benefits for an indefinite period of time. In so far as the Other Backward Classes are concerned, two tests should be conjunctively applied for identifying them for the purpose of reservations in employment and education: One, that they should be comparable to the Scheduled Castes and Scheduled Tribes in the matter of their backwardness; and two, that they should satisfy the means test such as a State Government may lay down in the context of prevailing economic conditions. The policy of reservations in employment, education and legislative institutions should be reviewed every five years or so. That will at once afford an oppor 377 tunity (i) to the State to rectify distortions arising out of particular facets of the reservation policy and (ii) to the people, both backward and non backward, to ventilate their views in a public debate on the practical impact of the policy of reservations. DESAI, J `India embraced equality as a cardinal value against a background of elaborate, valued, and clearly perceived inequalities. '(l) 'article 14 guaranteed equality but the awareness of deep rooted inequality in the society reflected in article 15 and 16. Fifteen months of the working of the Constitution necessitated amplification of article 15(3) so as to ensure that any special provisions that the State may make for the educational, economic or social advancement of any backward class citizen, may not be challenged on the ground of being discriminatory. '(`2) Sec. 2 thereof provided for addition to sub Art (4) of article 15 For a period of three and a half decades, the unending search for identifying socially and educationally backward classes of citizens has defied the policy makers, the interpreters of the policy as reflected in statutes or executive/administrative orders and has added a spurt in the reverse direction, namely, those who attempted to move upward/(Pratilom) in the social hierarchy have put the movement in reverse gear so as to move downwards (Anulom) in order to be identified as a group or class of citizens socially and educationally backward. As the awareness of concessions and benefits grows with consequent frustration on account of their non availability confrontation develops amongst various classes of society. The Constitution promised an egalitarian society. At the dawn of independence Indian Society was a compartmentalised society comprising groups having distinct and diverse life styles. It was a caste ridden stratified hierarchical society. Though this is well accepted, the concept of caste has defied a coherent definition at the hands of jurists or sociologists. Tn the early stages of the functioning of the Constitution, it was accepted without dissent or dialogue that caste furnishes a working criterion for identifying socially and educationally backward class of citizens for the purpose of article 15(4). 'This was predicated on a realistic appraisal that caste as a principle of social order has persisted over millennia if much more (1) Marc Galanter Competing Equalities 1980. (2) Objects and Reasons Statement of the Constitution (First Amendment) Act, 1951. 378 disorderly and asymmetrical in practice than classical Hindu socio legal theory depicted it '.(1) Language of article 15(4) refers to 'class ' and not caste. Preferential treatment which cannot be struck down as discriminatory was to be accorded/to a class, shown to be socially and educationally backward and not to the members of a caste who may be presumed to be socially and educationally backward. How do we define, ignoring the caste label, class of citizens socially and educationally backward. As we are not writing on a clean slate, let us look at judicial intervention to give shape and form to this concept of a class of citizens who are socially and educationally backward so as to merit preferred treatment or compensatory discrimination or affirmative action. A brief survey of decisions bearing on the subject would reveal the confusion and the present state of malaise. This review is necessary because a serious doubt is now nagging the jurists, the sociologists and the administrators whether caste should be the basis for recognising the backwardness. There has been some vacillation on the part of the Judiciary on the question whether the caste should be the basis for recognising the backwardness. Therefore, a bird 's eye view of the decisions of the Court may first be taken to arrive at a starting point as to whether the Judiciary has univocally recognised caste as the basis for recognition of the backwardness, In State of Madras vs Srimathi Champakam Dorairajan & Anr. ,(2) this Court struck down the classification in the Communal G.O. founded on the basis of religion and caste on the ground that it is opposed to the Constitution and constitutes a clear violation of the fundamental rights guaranteed to the citizen. The decision was in the hey day of supremacy of fundamental rights over Directive Principles of State Policy. The Court held that article 46 cannot override the provisions of article 29(2) because the Directive Principles of State Policy have to conform to and run as subsidiary to the Chapter of Fundamental Rights. In M.R. Balji & Ors. vs State of Mysore(3) it was observed that though caste in relation to Hindus may be a relevant factor to (1) Hutton Caste in India: Its nature, function and Origin 1961. (2) ; (3) [1963] Supp. I S.C.R. 439. 379 consider in determining the social backwardness of groups or classes of citizens, it cannot be made the sole or dominant test. Social A backwardness is in the ultimate analysis the result of poverty to a very large extent. The classes of citizens who are deplorably poor automatically become socially backward. The problem of determining who are socially backward classes, is undoubtedly very complex, but the classification of socially backward citizens on the basis of their castes alone is not permissible under article 15(4). The Court could foresee the danger in treating caste as the sole criterion for determining social and educational backwardness. The importance of the judgment lies in realistically appraising the situation when it uttered the harsh but unquestionable truth that economic backwardness would provide a much more reliable yardstick for determining social backwardness because more often educational backwardness is the outcome of social backwardness. The Court drew clear distinction between 'caste ' and 'class '. The attempt at finding a new basis for ascertaining social and educational backwardness in place of caste reflected in this decision. Clairvoyance in this behalf displayed in our opinion is praiseworthy. In T. Devadesan vs The Union of India & Anr.(l) the petitioner challenged the carry forward rule in the matter of reserved seats in the Central Secretariat Service as being violative of article 14 and 16 of the Constitution. The majority accepting the petition observed that the problem of giving adequate representation to members of the backward class enjoined by article 16(4) of the Constitution is not adequate by framing a general rule without bearing in mind its reflections from year to year. What precise method should be adopted for this purpose is a matter for the Government to decide. The Court observed that any method to be evolved by the Government must strike a reasonable balance between the claims of the backwardness and claims of other employees as pointed out in Balaji s case. In R. Chitralekha & Anr. vs State of Mysore & Ors.(2) the majority held valid the orders made by the Government of Mysore in respect of admissions to engineering and Medical Colleges, and observed that a classification of backward classes based on economic conditions and occupations is not bad and does not offend article 15(4). (1) ; (2) ; 380 The caste of a group of citizens may be a relevant circumstance in A ascertaining their social backwardness and though it is a relevant factor to determine social backwardness of a class, it cannot be the sole or dominant test in that behalf. If in a given situation caste is excluded in ascertaining a class within the meaning of article 15(4) it does not vitiate the classification if it satisfied other tests. The Court observed that various provisions of the Constitution which recognised the factual existence of backwardness in the country and which make a sincere attempt to promote the welfare of the weaker sections thereof should be construed to effectuate that policy and not to give weightage to progressive sections of the society under the false colour of caste to which they happen to belong. Under no circumstances a 'caste ' though the caste of an individual or group of individuals may be a relevant factor in putting him in a particular class. In Triloki Nath & Anr. vs State Or Jammu & Kashmir & Ors.(1) reservation of 5() per cent of the Gazetted posts to be filled by promotion was in favour of Muslims of Jammu & Kashmir. The Court held that inadequate representation in State services would not be decisive for determining the backwardness of the section. The Court accordingly, gave directions for collecting further material relevant to be subject. After the material as directed earlier was collected the matter was placed before the court and the decision is reported in Triloki Nath & Anr. vs State of Jammu & Kashmir & Ors.(1) The Court observed that the expression 'backward class ' is not used as synonymous with 'backward caste ' or 'backward community '. The members of an entire caste or community may, in the social, economic and educational scale of values at a given time, be backward and may, on that account be treated as a backward class, but that is not because they are members of a caste or community, but because they form a class. In its ordinary connotation, the expression 'class ' may mean a homogeneous section of the people grouped together because of certain likenesses or common traits, and who are identifiable by some common attributes such as status, rank, occupation, residence in a locality, race, religion and the like, but for purpose of article 16(4) in determining whether a section forms a class, a test solely based on caste, community, race, religion, sex, descent, place of birth or residence cannot be adopted because it would directly offend the Constitution. The caste as the basis for determining backwardness received a rude jolt. (1) ; (2) ; 381 In A. Peeriakaruppan etc. vs State of Tamil Nadu(1) this Court after referrening to earlier decisions especially in Balaji 's case and Chitralekha 's case observed that there is no gain saying the fact that there are numerous castes in this country which are socially and educationally backward. To ignore their existence is to ignore the realities of life. It is difficult to make out whether the court accepted caste as the sole basis for determining social and educational backwardness. In State of Andhra Pradesh & Ors. vs U.S.V. Balram etc.(2) a list of backward classes which was under challenge prima facie appeared to have been drawn up on the basis of caste. The Court on closer examination found that the caste mark is merely a description of the group following the particular occupations or professions exhaustively referred to by the commission. Even on the assumption that the list is based exclusively on caste, it was clear from the materials before the Commission and the reasons given by it in its report that the entire caste is socially and educationally backward and therefore, the inclusion of sub caste in the list of Backward Classes is warranted by article 15(4). The caste remained the criterion for determining social and educational backwardness. The assumption that all the members of a given caste are socially and educationally backward is wholly unfounded and lacks factual support obtained by survey. In Janki Prased Parimoo & Ors etc. vs State of Jammu & Kashmir & Ors. (8) it was observed that mere poverty cannot be a test of backwardness because in this country except for a small percentage of the population, the people are generally poor some being more poor, others less poor. In the rural areas some sectors of the population are advancing socially and educationally while other sectors are apathetic, Applying this yardstick, priestly classes following a traditional profession was held not to be socially and educationally backward. Cultivators of land designated as backward measured by the size of the holding was held to be impermissible on the ground that placing economic consideration alone above other considerations, is erroneous to determine social and educational backwardness. (1) [1971] 2 S.C.R. 430. (2) ; (3) ; 382 In State of Uttar Pradesh vs Pradip Tandon & Ors.(1) reservations in favour of rural areas was held to be unsustainable on the ground that it cannot be said as a general proposition that rural areas represents socially and educationally backward classes of citizens. Poverty in rural areas cannot be the basis of classification to support reservation for rural areas. In State of Kerala & Anr. vs N.M. Thomas & Ors.(2) the constitutional validity of Rule 13A giving further exemption of two years to members belonging to Scheduled Tribes and Scheduled Castes in the service from passing the tests referred to in r. 13 or r. 13A, was questioned. The High Court struck down the rule. Allowing the State appeal, Mathew, J. in his concurring judgment held that to give equality of opportunity for employment to the members of Scheduled Castes and Scheduled Tribes, it is necessary to take note of their social, educational and economic backwardness. Not only is the Directive principles embodied in article 46 binding On the law makers as ordinarily understood, but it should equally inform and illuminate the approach of the court when it makes a decision as the court also is State within the meaning of article 12 and makes law even though interstitially. Existence of equality depends not merely on the absence of disabilities but on the presence of disabilities. To achieve it differential treatment of persons who are unequal is permissible. This is what is styled as compensatory discrimination or affirmative action. In a concurring judgment, Krishna lyer, J. Observed that the genius of Arts 14 and 16 consists not in literal equality but in progressive elimination of pronounced inequality. To treat sharply dissimilar persons equally is subtle injustice. Equal opportunity is a hope, not a menace. In Kumari K.S. Jayasree & Anr. vs The State kerala & Anr.(3) it was held that the problem of determining who are socially and educationally backward classes is undoubtedly not simple. Dealing with the question whether caste can by itself be a basis for determining social and educational backwardness, the court observed that it may not be irrelevant to consider the caste of group of citizens claiming to be socially and educationally backward. Occupations, place of habitation may also be relevant factors in determining who are socially and educationally backward classes. (1) ; , (2) ; (3) ; 383 In Akhil Bharatiya Soshit Karamchari Sangh (Railway) represented by its Assistant General Secretary on behalf of the Association vs A Union of India & Ors.(l) this Court upheld reservation of posts at various levels and making of various concessions in favour of the members of the Scheduled Castes and Scheduled Tribes. Krishna Iyer, J. extensively quoting from the final address to the Constituent Assembly by Dr. Ambedkar held that the political democracy was not the end in view of the struggle for freedom but a social democracy was to be Set up by which it was meant the social fabric resting on the principle of one man one value. Translated functionally, it means 'total abolition of social and economic inequalities. ' This brief review would clearly put into focus, the dithering and the vacillation on the part of the Judiciary in dealing with the question of reservation in favour of Scheduled Castes, Scheduled Tribes as well as other socially and educationally backward classes. Judiciary retained its traditional blindfold on its eyes and thereby ignored perceived realities. A perceptive viewer of judicial intervention observed that the courts turned out to be more limited as a vantage point then I naively assumed at the outset. They act as a balance wheel channelling compensatory policies and accommodating them to other commitments, but it is the political process that shapes the larger contour of these policies and gives them their motive force. Official doctrine judicial pronouncements or administrative regulations proved insufficient guide to the shape of the policies in action and the result they produced. '(2) The Indian social scene apart from being disturbing presented the picture of stratified society hierarchically fragmented. At the lowest rung of the ladder stand Scheduled Castes and Scheduled Tribes and any preferential treatment in their favour has more or less ment with judicial approval. But when it came to preferential treatment or affirmative action or what is also called compensatory discrimination in favour of socially and educationally backward classes of citizens, the caste ridden society raised its ugly face. By its existence over thousands of years, more or less it was assumed that caste should be the criterion for deter mining social and educational backwardness. In other words, it was said, look at the caste, its traditional functions, it position in relation to upper castes by the standard of purity and pollution, pure and not so pure occupation, once these questions are satisfactorily answered without anything more, those who belong to that (1) ; (2) Marc Galanter Compoting Equalities, 1980 p. XVIII. 384 caste must be labelled socially and educationally backward. This A over simplified approach ignored a very realistic situation existing in each caste that in every such caste whose members claim to be socially and educationally backward, had an economically well placed segments. But that may wait. We are at present concerned with the judicial response to the attempt of the Executive to accord preferential treatment to socially and educationally backward classes of citizens. The litigation which came to the court was more often by those who relied on meritocracy and complained that the merit is crucified at the altar of the mirage of equality. The outcome of judicial intervention against preferred treatment is summed up as under: "Summing up, we may surmise that the gross effect of litigation on the compensatory discrimination policy has been to curtail and confine it. Those who have attacked compensatory discrimination schemes in court have compiled a remarkable record of success, while those seeking to extend compensatory discrimination have been less successful. ' '(1) The controversy now has shifted to identifying socially and educationally backward classes of citizens. The expression 'back ward classes ' is not defined. Courts have more or loss in the absence of well defined criteria not based on caste label has veered round to the view that in order to be socially and educationally backward classes, the group must have the same indicia as Scheduled Castes and Scheduled Tribes. The narrow question that the being examined here is whether cast label should be sufficient to identify social and educational backwardness? Number of Commissions have attempted to tackle this complex problem. However, both Mandal Commission of Karnataka and Bakshi Commission of Gujrat have finally accepted caste as the identifying criterion for determining social and educational backwardness, thought will be presently pointed out that Mandal Commission had serious reservations about caste criterion. Most of these Commissions and the Government orders based their recommendations used communal units to discriminate the backward class. Rane Commission of Gujrat has chalked out a different path, rejecting caste as the basis for ascertaining social and educational backwardness. The question we must pose and (1) Marc Gallanter , Competing Equalities, p. 511. 385 answer is whether caste should be the basis for determining social and educational backwardness. In other words, by what yardstick, groups which are to be treated as socially and educationally backward are to be identified? To simplify the question: should membership of caste signify a class of citizens as being socially and educationally backward ? If 'caste ' is adopted as the criterion for determining social and educational backwardness does it provide a valid test or it would violate article 15(1) which prohibits discrimination against any citizen on grounds of religion, race, caste, sex, place of birth or any of them. What then is a caste ? Though caste has been discussed by scholars and jurists, no precise definition of the expression has emerged. A caste is a horizontal segmental division of society spread over a district or a region or the whole State and also sometimes outside it. ( ') Homo Hierarchicus is expected to be the central and substantive element of the caste system with differentiate it from other social systems. The concept of purity and impurity conceptualises the caste system. Louis Dumont asserts that the principle of the opposition of the pure and the impure underlies hierarchy, which is the superiority of the pure to the impure, underlies separation because pure and the impure must be kept separate and underlies the division of labour because pure and impure occupations must likewise, be kept separate.(2) There are four essential features of the caste system which maintained its homo hierarchicus character: (1) hierarchy (2) commensality: (3) restrictions on marriages; and (4) hereditary occupation.(3) Most of the caste are endogamous groups. Intermarriage between two groups is impermissible. But 'Pratilom ' marriages are not wholly unknown. Similarly with the onward movement of urbanisation, members of various castes are slowly giving up, traditional occupations and the pure and impure avocations is being frowned upon by developing notion of dignity of labour As the fruits of independence were unequally distributed amongst various segments of the society, in each caste there came into existence a triple division based on economic resurgence amongst the members of the caste. Those who have become economically well off have acquired an upper class status (class consciousness) and the one on the step below is the middle class and the third one belongs to poorer section (1) I.P. Desai: Should 'caste ' be the Basis for Recognising Backwardness [1985]. (2) Louise Dumont Home Hierachicus [1970] (3) Caste in Contemporary India: G. Shah [1985]. 386 of the caste. This led to the realisation that caste culture does not help economic interest. In fact the upper crust of the same caste is verily accused of exploiting the lower strata of the same caste. It is therefore, rightly argued that the basis of the caste system namely, purity and pollution is slowly being displaced by the economic condition of the various segments of the same caste. It is recognised on almost all hands that the important feature of the caste structure are progressively suffering erosion. The new organisation, the so called caste organisation, is substantially different from the traditional structure and caste councils. Economic differentiation amongst the members of the caste has become sharp, but not so sharp as to bury caste sentiments and ties. If the transformation of the caste structure as herein indicated is realistically accepted, should the caste label be still accepted as the basis for determining social and educational backwardness. In a recent paper by the noted sociologist Shri I.P. Desai (Alas, he is no more), it has been ably argued that not a caste but the class or the social group should be examined with a view to determining their social and educational backwardness. Caste in rural society is more often than not mirrored in the economic power wielded by it and vice versa. Social hierarchy and economic position exhibit an undisputable mutuality. The lower the caste, the poorer its members. The poorer the members of a caste, the lower the caste. Caste and economic situation, reflecting each other as they do arc the Deus exMachina of the social status occupied and the economic power wielded by an individual or class in rural society. Social status and economic power are so woven and fused into the caste system in Indian rural society that one may without hesitation, say that if poverty be the cause, caste is the primary index of social backwardness, so that social backwardness is often readily identifiable with reference to a person 's caste. Such we must recognize is the primeval force and omnipresence of caste in Indian Society, however, much we may like to wish it away. So Sadly and oppressively deep rooted is caste in our country that it has cut across even the barriers of religion. The caste system has penetrated other religious and dissentient Hindu sects to whom the practice of caste should be anathema and today we fined that practitioner of other religious faiths and Hindu dissentients are some times as rigid adherents to the system of caste as the conservative Hindus . We find Christian harijans, Christian 387 Madars, Christian Reddys, Christian Kammas, Mujbi Sikhs, etc. In Andhra Pradesh there is a community known as Pinjaras or Dudekulas (known in the North as 'Rui Pinjane Wala '): (Professional cotton beaters) who are really Muslims, but are treated in rural society, for all practical purposes, as a Hindu caste. Several other instances may be given. Shared situation in the economic hierarchy, caste gradation, occupation, habitation, style of consumption, standard of literacy and a variety of such other factors appear to go to make towards social and educational backwardness. In some situations and indeed quite often, social investigator may easily be able to identify a whole caste group as a socially and educationally backward class; he may readily recognise people living in certain areas, say mountainous, desert a fresh lease of life. In fact there is a mad rush for being recognised as belonging to a caste which by its nomenclature would be included in the list of socially and educationally backward classes. To illustrate: Bakshi Commission in Gujrat recognised as many as 82 castes as being socially and educationally backward. On the publication of its report, Government of Gujrat received representations by members of those castes who had not made any representation to the Bakshi Commission for treating them as socially and educationally backward. This phenomenon was noticed by Mandal Commission when it observed: "whereas the Commission has tried to make the State wise lists of OBCS as comprehensive as possible, it is quite likely that severally synonymy of the castes listed backward have been left out. Certain castes are known by a number of synonymy which vary from one region to the other and their complete coverage is almost impossible. Mandal Commission found a p way out by recommending that if a particular caste has been treated as backward then all its synonyms whether mentioned in the State lists or not should also be treated as backward.(1) Gujrat Government was forced to appoint a second commission known as Rane Commission Rane Commission took note of the fact that there was an organised effort for being considered socially and educationally backward castes. Rane Commission recalled the observations in Balaji 's case that 'Social backwardness is on the ultimate analysis the result of poverty to a very large extent. ' The Commission noticed that some of the castes just for the sake of being considered as socially and educationally backward, have degraded (1) Mandal Commission Report Vol. XII p. 55. 388 themselves to such an extent that, they had no hesitation in attributing different types of vices to and associating other factors indicative of backwardness, with their castes. The Commission noted that the malaise requires to be remedied. The Commission therefore, devised a method for determining socially and educationally backward classes without reference to caste, beneficial to all sections of people irrespective of the caste to which they belong. The Commission came to an irrefutable conclusion that amongst certain castes and communities or class of people, only lower income groups amongst them are socially and educationally backward. We may recall here a trite observation in case of N.M.Thomas which reads as under: "A word of sociological caution. In the light of experience, here and elsewhere, the danger of 'reservation ', it seems to me, is three fold. Its benefits, by and large, are snatched away by the top creamy layer of the 'backward ' caste or class, thus keeping the weakest among the week always weak and leaving the fortunate layers to consume the whole cake. Secondly, this claim is over played extravagntly in democracy by large and vocal groups whole burden of backwardness has been substantially lightened by the march of time and measures of better education and more opportunities of employment, but wish to weak the 'weaker section ' label as a means to score over their near equals formally categorised as the upper brackets. " A few other aspects for rejecting caste as the basis for identifying social and educational backwardness may be briefly noted. If State patronage for preferred treatment accepts caste as the only insignia for determining social and educational backwardness, the danger looms large that this approach alone would legitimise and perpetuate caste system. lt does not go well with our proclaimed secular character as enshrined in the Preamble to the Constitution. The assumption that all members of some caste are equally socially and educationally backward is not well founded. Such an approach provides an oversimplification of a complex problem of identifying the social and educational backwardness. The Chairman of the Backward Classes Commission, set up in 1953, after having finalised the report, concluded that 'it would have been better if we could determine the criteria of backwardness on principles other than 389 caste. '(1) Lastly it is recognised without dissent that the caste based reservation has been usurped by the economically well placed section in the same caste. To illustrate, it may be pointed that some years ago, I came across a petition for special leave against the decision of the Punjab and Haryana High Court in which the reservation of 2 1/2" for admission to Medical and Engineering College in favour of Majhabi Sikhs was challenged by none other than the upper crust of the members of the Scheduled Castes amongst Sikhs in Punjab, proving that the labelled weak exploits the really weaker. Add to this, the findings of the Research Planning Scheme of Sociologists assisting the Mandal Commission when it observed: 'while determining the criteria of socially and educationally backward classes, social backwardness should be considered to be the critical element and educational backwardness to be the linked element though not necessarily derived from the former. '(2) The team ultimately concluded that 'social backwardness refers to ascribed status and educational backwardness to achieved status, and it considered social backwardness as the critical element and educational backwardness to be the linked though not derived element. ' 'The attempt is to identify socially and educationally backward classes of citizens. The caste, as is understood in Hindu Society, is unknown to Muslims, Christians, Parsis, Jews etc Caste criterion would not furnish a reliable yardstick to identify socially and educationally backward group in the aforementioned communities though economic backwardness would. Therefore, a time has come to review the criterion for identifying socially and educationally backward classes ignoring the caste label. The only criterion which can be realistically devised is the one of economic backwardness. To this may be added some relevant criteria such as the secular character of the group, its opportunity for earning livelihood etc. but by and large economic backwardness must be the load star. Why I say this ? Chronic poverty is the bane of Indian Society. Market economic and money spinning culture has transformed the general behavior of the Society towards its members. Upper caste does net enjoy the status or respect, traditional, voluntary or forced any more even in rural areas what to speak of highly westernised urban society. (1) Backward Classes Commission Report Vol. (2) Part 3 Appendix XIII, p. 99 of the Report of the Team. 390 The bank balance, the property holding and the money power deter mine the social status of the individual and guarantee the opportunity to rise to the top echelon. How the wealth is acquired has lost significance. Purity of means disappeared with Mahatama Gandhi and we have reached a stage where ends determine the means. This is the present disturbing situation whether one likes it or not. Rane Commission on the evidence before it and after applying the relevant tests and criteria observed as under: "We have found on applying relevant tests and on the basis of the evidence on record, that there()re certain castes/communities or classes of people which are backward, but, only lower income groups amongst them are socially and educationally backward. In order to ensure that, no ambiguity remains in regard to the above aspect, we may add that, the above observations hold good even in respect of those classes which are identified as socially and educationally backward without reference to any caste. "(1) Reservation in one or other form has been there for decades. If a survey is made with reference to families in various castes considered to be socially and educationally backward, about the benefits of preferred treatment, it would unmistakably show that the benefits of reservations are snatched away by the top creamy layer of the backward castes. This has to be avoided at any cost. If poverty is to be the criterion for determining social and educational backwardness, we must deal with a fear expressed by sociologists. It is better to recapitulate these aspects in the words of a sociologist: "Now, if the government changes the criteria of reservation from caste to class, persons from the upper strata of the lower castes who are otherwise not able to compete with the upper strata of the upper castes despite the reservations will be excluded from the white collar jobs. And the persons from the lower strata of lower castes will not be able to compete with their counterpart of the upper castes. They too will be excluded. This (1) Report of Rane Commission Chapter XII prge 12.1. 391 will bridge the gap which is otherwise widening between the rich and the poor of the upper castes and it will strengthen their caste identity. It will wipe out the small poor strata of the upper castes at the cost of the poor strata of lower castes, and in the name of secularism. In course of time the upper caste will also become the upper class. Such a process would hamper the growth of secular forces. "(1) This fear psychosis is effectively answered by an eminent academic. He says that 'if the poor can be operationally defined, categorised and sub categorised and reservation benefits be stratified accordingly, would the scenario still haunt use? I think not. He recognised that this point is valuable in terms of alerting everyone to the need for further refinement of the notions of poor strata. He recognised that the State is, with all its limitations and resources, to direct and plan social transformation. (The non revolutionary) choice is between reinforcing 'caste ' or reinforcing the extant constitutional values ' (2) Let me conclude. If economic criterion for compensatory discrimination or affirmative action is accepted, it would strike at the root cause of social and educational backwardness, and simultaneously take a vital step in the direction of destruction of destruction of caste structure which in turn would advance the secular character of the Nation. This approach seeks to translate into reality the twin constitutional goals: one, to strike at the perpetuation of the caste stratification of the Indian Society so as to arrest progressive movement and to take a firm step towards establishing a casteless society; and two, to progressively eliminate poverty by giving an opportunity to the disadvantaged sections of the society to raise their position and be part of the mainstream of life which means eradication of poverty. Let me make abundantly clear that this approach does not deal with reservation in favour of Scheduled Castes and Scheduled Tribes. Thousands of years of discrimination and exploitation cannot be wiped out in one generation. But even here economic criterion is worth applying by refusing preferred treatment to those amongst (1) G. Shah IPW January 17, 1983. (2) Upendra Baxi, Vice Chanceller, South Gujarat University, in 'Caste, Class and Reservations: A Rejoinder to Ghansham Shah. 392 them who have already benefitted by it and improved their position. And finally reservation must have a time span otherwise concessions tend to become vested interests. This is not a judgment in a lis in adversary system. When the arguments concluded, a statement was made that the Government of State of Karanataka would appoint a Commission to determine constitutionally sound and nationally acceptable criteria for identifying socially ar d educationally backward classes of citizens for whose benefit the State action would be taken. This does not purport to be an exhaustive essay on guidelines but may point to some extent, the direction in which the proposed Commission should move. CHINNAPA REDDY, J. Over three decades have passed since we promised ourselves "justice, social, economic and political" and "equality of status and opportunity". Yet, even today, we find members of castes, communities, classes or by whatever name you may describe them, jockeying for position, trying to elbow each other out, and, viewing with one another to be named and recognised as 'socially and educationally backward classes ', to quality for the 'privilege ' of the special provision for advancement and the provision for reservation that may be made under article 15(4) & 16(4) of the Constitution. The paradox of the system of reservation is that it has engendered a spirit of self denigration among the people. Now here else in the world do castes, classes or communities queue up for the sake of gaining the backward statue. Nowhere else in the world is there competition to assert backwardness and to claim 'we are more backward than you '. This is an unhappy and disquieting situation, but it is stark reality. Whatever gloss one may like to put upon it, it is clear from the rival claims in these appeals and writ petitions that the real contest here is between certain members of two premier (population wise) caste community classes of Karnataka, the Lingayats and the Vokkaligas, each claiming that the other is not a socially and educationally backward class and each keen to be included in the list of socially and educationally backward classes. To them, to be dubbed a member of the socially and educationally back ward classes is a passport for entry into professional colleges and State services; so they jostle with each other and in tho bargain, some time they keep out and some times they usher in some of those entitled to legitimate entry, by competition or by reservation. Commissions have been appointed in the past to identify the backward classes, Governments have considered the reports of the commissions, and Courts have scrutinised the decisions of Governments, Case s have reached the Court too, then and now again. Once more we are told 393 that the State of Karnataka is ready to appoint another commission and they have asked us will you kindly lay down some guidelines?" Ours is a country of great economic, social and cultural diversity. Often we take great pride in the country 's cultural diversity. While cultural diversity adds to the splendor of India, the others add to our sorrow and shame. The social and economic disparties are indeed despairingly vast. The Scheduled Castes, the Scheduled Tribes and the other socially and educationally backward classes, all of whom have been compendiously described as 'the weaker sections of the people ' have long journeys to make society. They need aid; they need facility; they need launching; they need propulsion. Their needs are their demands. The demands are matters of right and not of philanthropy. They ask for parity, and not charity. The days of Dronacharya and Ekalavya are over. They claim their constitutional right to equality of status and of opportunity and economic and social justice. Several bridges have to be erected so that they may cross the Rubicon. Professional education and employment under the State are thought to be two such bridges. Hence the special provision for advancement and for reservation under articles 15(4) and 16(4) of the Constitution. Before we attempt to lay down any guidelines for the benefit of the Commission proposed to be appointed by the Karnataka Government, will do well to warn ourselves and the proposed Commission against the pitfalls of the traditional ' approach towards the question of reservation for Scheduled Castes, Scheduled Tribes and other backward classes which has generally been superior, elitist and, therefore, ambivalent. A duty to undo an evil which had been perpetrated through the generations is thought 'to betoken a generosity and farsightedness that are rare among nations '. So a superior and patronising attitude is adopted. The result is that the claim of the Scheduled Castes and Scheduled Tribes and other backward classes to equality as a matter of human and constitutional right is forgotten and their rights are submerged in what is described as the 'proferential principle ' or 'protective or compensatory discrimination ', expression borrowed from American jurisprudence Unless we get rid of these superior, patronising and paternalist attitudes, what the French Call Le mentalite hierarchique, it is difficult to truly appreciate the problems involved in the claim of the Scheduled Castes, Scheduled Tribes and other backward classes for their legitimate share of the benefits arising out of their belonging to humanity and to a country 394 whose constitution preaches justice, social, economic and political and equality of status and opportunity for all. One of the results of the superior, elitist approach is that the question of reservation is invariably viewed as the conflict between the meritarian principle and the compensatory principle. No, it is not so. The real conflict is between the class of people, who have never been in or who have already moved out of the desert of poverty, illiteracy and backwardness and are entrenched in the oasis of convenient living and those who are still in the desert and want to reach the oasis. There is not enough fruit in the garden and so those who are in, want to keep out those who are out. The disastrous consequences of the so called meritarian principle to the vast majority of the under nourished, povetity stricken, barely literate and vulnerable people of our country are too obvious to be stated And, what is merit ? There is no merit in a system which brings about such consequences. Is not a child of the Scheduled Castes, Scheduled Tribes or other backward classes who has been brought up in an atmosphere of penury, illiteracy and anti culture, who is looked down upon by tradition and society, who has no books and magazines to read at home, no radio to listen, no T.V. to watch, no one to help him with his home work, who goes to the nearest local board school and college, whose parents are either illiterate or so ignorant and informed that he cannot even hope to seek their advice on any matter of importance, a child who must perforce trudge to the nearest public reading room to read a newspaper to know what is happening in the world, has not this child got merit if he, with all his disadvantages is able to secure the qualifying 40% or 50% of the marks at a competitive examination where the children of the upper classes who have all the advantages, who go to St. Paul 's High School and St. Stephen 's College, and who have perhaps been specially coached for the examination may secure 70, 80 or even 90% of the marks? Surely, a child who has been able to jump so many hurdles may be expected to do better and better as he progresses in life. If spring flower he cannot be, autumn flower he may be. Why than, should he be stopped at the threshold on an alleged meritarian principle? The requirements of efficiency may always be safeguarded by the prescription of minimum standards. Mediocrity has always triumphed in the past in the case of the upper classes. But why should the so called meritarian principle be put against mediocrity when we come to Scheduled Castes, Scheduled Tribes and backward classes? 395 Efficiency is very much on the lips of the privileged whenever reservation is mentioned. Efficiency, it seems, will be impaired if the total reservation exceeds 50 per cent; efficiency, it seems, will suffer if the 'carry forward ' rule is adopted; efficiency, it seems, will be injured if the rule of reservation is extended to promotional posts. from the protests against reservation exceeding 50 per cent or extending to promotional posts and against the carry forward rule, one would think that the civil service is a Heavenly Paradise into which only the archangels, the chosen of the elite, the very best may enter and may be allowed to go higher up the ladder. But the truth is otherwise. The truth is that the civil service is no paradise and the upper echelons belonging to the chosen classes are not necessarily models of efficiency. The underlying assumption that those belonging to the upper castes and classes, who are appointed to the non reserved castes will, because of their presumed merit, 'naturally ' perform better than those who have been appointed to the reserved posts and that the clear stream of efficiency will be polluted by the infiltration of the latter into the sacred precincts is a vicious assumption, typical of the superior approach of the elitist classes. There is neither statistical basis nor expert evidence to support these assumptions that efficiency will necessarily be impaired if reservation exceeds 50 per cent, if reservation is carried forward or if reservation is extended to promotional posts. Arguments are advanced and opinions are expressed entirely on an ad hoc presumptive basis. The age long contempt with which the 'superior ' or 'forward ' castes have treated the 'inferior ' or 'backward ' casts is now transforming and crystalising itself into an unfair prejudice, conscious and sub conscious, ever since the 'inferior ' casts and classes started claiming their legitimate share of the cake, which naturally means, for the 'superior ' castes parting with a bit of it. Although in actual practice their virtual monopoly on elite occupations and posts is hardly threatened, the forward castes are nevertheless increasingly afraid that they might lose this monopoly in the higher ranks of Government service and the profession. It is so difficult for the 'superior ' castes to understand and rise above their prejudice and it is so difficult for the inferior castes and classes to overcome the bitter prejudice and opposition which they are forced to face at every stage. Always one hears the word efficiency as if it is sacrosanct and the sanctorum has to be fiercely guarded. 'Efficiency ' is not a mantra which is whispered by the Guru in the Sishya 's ear. The mere securing of high marks at an examination may not necessarily mark out a good 396 administrator. An efficient administrator, one takes it, must be one A who possesses among other qualities the capacity to understand with sympathy and, therefore, to tackle bravely the problems of a large segment of populating constituting the weaker sections of the people. And, who better than the ones belonging to those very sections? Why not ask ourselves why 35 years after independence, the position of the Scheduled Castes, etc. has not greatly improved? Is it not a legitimate question to ask whether things might have been different, had the District Administrators and the State and Central Bureaucrats been drawn in larger numbers from these classes? Courts are not equipped to answer these questions, but the courts may not interfere with the honest endeavours of the Government to find answers and solutions. We do not mean to say that efficiency in the civil service is necessary or that it is a myth. All that we mean to say is that one need not make a fastidious fetish of it. It may be that for certain posts, only the best may be appointed and for certain courses ! of study only the best may be admitted [f so, rules may provide for reservations for appointment to such posts and for admission to such courses. The rules may provide for no appropriate method of selection. It may be that certain posts require a very high degree of skill or efficiency and certain courses of study require a high degree of industry and intelligence. If so, the rules may prescribe a high minimum qualifying standard and an appropriate method of selection. Different minimum standards and different modes of selection may be prescribed for different posts and for admission to different courses of study having regard to the requirements of the posts and the courses of study. No one will suggest that the degree t of efficiency required a cardiac or a neuro surgeon is the same as the degree of efficiency required of a general medical practitioner. Similarly no will suggest that the degree of industry and intelligence expected of a candidate seeking admission to a research degree course need be the same as that of a candidate seeking admission to an ordinary arts degree course. We do not, therefore, mean to say that efficiency is to be altogether discounted. All that we mean to say is that it cannot be permitted to be used as a camouflage to let that upper classes take advantage of the backward classes in its name and to monopolise the services, particularly the higher posts and the professional institutions. We are afraid we have to rid our minds of many cobwebs before we arrive at the core of the problem. The quest for equality is self elusive, we must lose our illusions, though not our faith. It is the dignity of man to pursue the quest for equality. It will be advantageous to quote at this juncture R.H. Tawney in his classic work equality where he says. 397 "The truth is that it is absurd and degrading for me to make much of their intellectual and moral superiority to each other and still more of their superiority in the arts which bring wealth and power, because, judged by their place in any universal scheme, they are infinitely great or infinitely small . The equality which all these thinkers emphasise as desirable is not equality of capacity or attainment, but of circumstances, and institutions, and j manner of life. The equality which they deplore is not the inequality of personal gifts, but of the social and economic environment. Their views, in short, is that, because men are men, social institutions property rights, and the organisation of industry, and the system of public health and education should be planned, as far as is possible to emphasise and strengthen, not the class differences which divide but the common humanity which unite, them. " But the controversy between the meritarian and the compensatory principals cannot be allowed to cloud the issues before us. An intelligible consequence of the fundamental rights of equality before the law, equal protection of the laws, equality of opportunity, etc., guaranteed to all citizens under our Constitution is the right of the weaker sections of the people to special provision for their admission into educational institutions and representation in the services. Appreciating the realities of the situation. and least there by any misapprehension, the Constitution has taken particular care to specially mention this right of the weaker sections of the people in articles 15(4) and 16(4) of the Constitution. In view of articles 15(4) and 16(4) the so called controversy between the meritarian and compensatory principles is not of any great significance, though, of course, we do not suggest efficiency should be sacrificed. The question really is, who are the scheduled castes, scheduled tribes and backward classes, who are entitled to special provision and reservation in regard to admission into educational institutions and representation in the services. So far as Scheduled Castes and Scheduled Tribes are concerned, the question of their identification stands resolved by the notifications issued by the President under Part XVI of the Constitution. The problem is only in regard to the identification of the other socially and educationally backward classes. The question really is how to identify these backward classes to entitle them to entry through the doors of articles 15(4) and 16(4). And, the further question, naturally, is about the limits of reservation. 398 We are afraid the courts are not necessarily the most competent to identify the backward classes or to lay down guidelines for their identification except in broad and very general way. We are not equipped for that; we have no legal barometers to measure social backwardness. We are truly removed from the people, particularly those of the backward classes, by layer upon layer of gradation and degradation. And, India is such a vast country that conditions vary from State to State, region to region, district to district and from one ethnic religious, linguistic or caste group to another. A test to identify backward classes which may appear appropriate when applied to one group of people may be wholly inappropriate and unreasonable if applied to another group of people. There can be no universal test; there can be no exclusive test; there can be no conclusive test. In fact, it may be futile to apply any rigid tests. One may have to look at the generality and the totality of the situation. We do generally understand what we mean when we talk of the richer classes, the poorer classes, the upper middle class, the lower middle classes, the ruling class, the privileged class, the working class, the exploited classes, etc. In what senses the word 'classes ' used in article 15(4) and in article 16(4) of the Constitution? What is the meaning of the expression 'socially ' and 'educationally backward classes '? What does backwardness consist in? To have a clear understanding of what is meant by 'backwardness ', 'backward classes ' and 'socially and educationally backward classes ', we must have an idea of what social inequality is about. Max Weber gives us a three dimensional picture of social inequality. According to Weber, the three dimensions are class, status and power. A person 's class situation, in the Weber sense, is what he shares with others, similarly placed in the process of production, distribution and exchange, a definition of class which is very near to that of the Marxist conception The inequality of class depends primarily on inequality of income and to some extent on an equal opportunity for upward mobility. persons class, according this definition, is his shared situation in the economic hierarchy. Status, the second of Weber 's three dimensions is generally determined by the style of consumption, though not necessarily by the source or amount of income. An impoverised aristocrat is sometimes sought after by the nouveau riche. A desk worker considers himself superior to a manual worker. A professional like a doctor or a lawyer is thought to be of superior status than those belonging to several other walks of life. Status seems to 399 depend on social attributes and styless of life, including dress, speech, I occupation, etc., on what R.H. Tawney describes as 'the tedious A vulgarities of income and social position. ' Similarly, class and status are not contemporeaneous with power, though power and class can often be sen to be closely connected. Power is participation in the decision making process but those who wield power are not necessarily the best paid nor the most respected. But, it is now obvious even to the most superficial observer that social and political power is wielded in innumerable unseen ways by those who control economic power. Political power is remorselessly manipulated by economic power. We, therefore, see that everyone of the three dimensions propounded by Weber is intimately and inextricably connected with economic position. However, we look at the question of 'backwardness ', whether from the angle of class, status or power, we find the economic factor at the bottom of it all and we find poverty, the culprit cause and the dominant characteristic Poverty, the economic factor brands all backwardness just as the erect posture brands the homosapiens and distinguishes him from all other animals, in the eyes of the beholder from Mars. But, whether his racial stock is Caucasian, Mongoloid, Negroid, etc., further investigation will have to be made. So too the further question of social and educational backwardness requires further scrutiny. In India, the matter is further aggravated, complicated and pitilessly tyrannised by the ubiquitous caste system, a unique and devastating system of gradation and degradation which has divided the entire Indian and particularly Hindu society horizontally into such distinct layers as to be v destructive of mobility, a system which has penetrated and corrupted the mind and soul of every Indian citizen. It is a notorious fact that there is an upper crust of rural society consisting of the superior castes, generally the priestla, the landlord and the merchant castes, there is a bottom strata consisting of the 'out castes ' of Indian Rural Society, namely the Scheduled Castes, and, in between the highest and the lowest, there are large segments of population who because of the law gradation of The caste to which they belong in the rural society hierarchy, because of the humble occupation which they pursue , because of their poverty and ignorance are also condemned to backwardness, social and educational, backwardness which prevents them from competing on equal terms to catch up with the upper crust Any view of the caste system, class or cursory, will at once reveal the firm links which the caste system has with economic power. Land and learning, two of the primary sources of economic power in 400 India have till recently been the monopoly of the superior castes. Occupational skills were practised by the middle castes and in the economic system prevailing till now they could rank in the system next only to the castes constituting the landed and the learned gentry. The lowest in the hierarchy where those who were assigned the meanest task, the out castes who wielded no economic power. The position of a caste in rural society is more often than not mirroned in the economic power wielded by it and vice versa. Social hierarchy and economic position exhibit an undisputable mutuality. The lower the caste, the poorer its members. The poorer the members of a caste lower the caste. Caste and economic situation, reflecting each other as they do are the Deus ex Machina of the social status occupied and the economic power wielded by an individual or class in rural society. Social status and economic power are so woven and fused into the caste system in Indian rural society that one may without hesitation, say that if poverty be the cause, caste is the primary index of social backwardness, so that social backwardness is often readily identifiable with reference to a person 's caste. Such we must recognised is the primeval force and omnipresence of caste in Indian Society, however, much we may like to wish it away. So Sadly and oppressively deep rooted is caste in our country that it has out across even the barriers of religion. The caste system has penetrated other religious and dissentient Hindu sects to whom the practice of caste should be anathema and today we find that practitioner of other religious faiths and Hindu dissentients are some times as rigid adherents to the system of caste as the conservative Hindus. We find Christian harijans, Christian Madars, Christian Reddys, Christian Kammas, Mujbi Sikhs, etc. In Andhra Pradesh there is a community known as Pinjaras or Dudekulas (known in the North as 'Rui Pinjane Wala '): Professional cotton beaters) who are really Muslims, but are trated in rural society, for all practical purposes, as a Hindu. caste Several other instances may be given. Shared situation in the economic hierarchy, caste gradation, occupation, habitation, style of consumption, standard of literacy and a variety of such other factors appear to go to made towards social and educational backwardness. In some situations and indeed quite often, social investigator may easily be able to identify a whole caste group as a socially and educationally backward class; he may readily recognise people living in certain areas, say mountainous, desert or forest regions, as socially and educationally backward classes; he may freely perceive those pursuing certain 'Lowly ' accusations as socially and educationally backward classes: he may, without difficulty, distinguish the very poor and the destitute as socially and educationally 401 backward classes. The social investigator may be able to do all this by field reasearch. study, observation, collection and interpretation of data, application of common though not rigid standards. We will refer to these aspects of the question later in our judgment. With these prefatory, general observations, we may now refer to the relevant Constitutional provisions. Part XVI of the Constitution concerns itself with "Special provisions relating to certain classes". The classes in regard to which the constitution makers thought fit to make special provision are the Scheduled Caste, the Scheduled Tribes, the Anglo Indian community and the socially and educationally backwardness classes Articles 330 and 332 provide for reservation of seats for Scheduled Castes and Scheduled Tribes in the House of the People and the Legislative Assembles of the State. Articles 331 and 333 provide for representation of the Anglo Indian Community in the House of the People and the Legislative Assemblies of the States. Article 334 provides that the reservation and special representation are to cease after 30 years. There is no reservation or special representation for socially and educationally backward classes either in the House of the People or in the Legislative Assemblies of the State. Article 335 imposes a constituently obligation to take into consideration the claims of members of the Scheduled Castes and Scheduled Tribes, in the making of appointments to the services and posts in connection with the affairs of the Union or of the States, consistently with the maintenance of efficiency of administration. Articles 336 and 337 make certain special provisions for the Anglo Indian Community in certain services and with respect to educational grants for the benefit of that community. Article 341 empowers the President, with respect to any State (after consultation with the Governor) or Union Territory, to specify, by public notification, the castes, the races or tribes or parts or groups within castes, races or tribes which shall, for the purposes of the Constitution, be deemed to be Scheduled Castes in relation to that State or Union Territory as the case may be. A notification so issued by the President is not to be varied by any subsequent notification, but may only be varied by law, made, by Parliament. Article 342 makes a similar provisions with respect to Scheduled Tribes. Article 340 empowers the President to appoint a commission to investigate the conditions of socially and educational 402 ly backward classes within the territory of Indian and the difficulties under which they labour and to make recommendations as to the steps that should be taken by the Union to remove such difficulties and to improve their conditions and as to the grants that should be made for that purpose by the Union or by the State. The report of the Commission which is to set out the facts and make recommendations is required to be laid before each House of Parliament, together with a memorandum explaining the action taken thereon. Article 338 enjoins the appointment of a special officer for the Scheduled Tribes by the President whose duty is to investigate all matters relating to the safeguards provided for the Scheduled Castes and Schedule Tribes under the Constitution and to report to the President upon the working of those safeguards at such intervals as may be directed by the President. The reports are to be laid before each House of Parliament. Article 338(3) expressly provides that n under article 338 references to the Scheduled Castes Scheduled Tribes shall be construed as in including references to such other backward classes as the President may on receipt of the report of a Commission appointed under article 34a(1). specify and also the Anglo Indian community. Thus, while there is a special provision for reservation of seats for Scheduled Castes and Scheduled Tribes in the House of the People and the Legislative Assemblies of the States and a provision for the representation of the Anglo Indian Community in the House of the People and the Legislative Assemblies of the States, there is no such provision for reservation of seats for or reservation socially and educationally backward classes in the House of the People or the Legislative Assemblies of the States. Again, while under article 335, there is a constitutional obligation to consider the claims of the members of the Scheduled Castes and Scheduled Tribes in the making of appointments to services and posts in connection with the affairs of the Union and the States and there is a special provision for the Anglo Indian Community in certain services for a limited period. There is no corresponding provision for the socially and educationally backward classes. But there is a provision under article 340 of the Constitution for the appointment of a Commission to investigate the conditions of socially and educationally backward classes and to recommend the steps to be taken to ameliorate such conditions. 403 Article 14 of the Constitution, stated in positive language, guarantees to every person equality before the law and equal protection of the laws, Article 15(1) prohibits the State from discriminating against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them. Article 22(2) similarly prohibits the denial of admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them. While article 15(3) States that nothing in article 15 shall prevent the State from making any special provision for women and children, article 15(4) provides, "Nothing in this Article or in clause (2) of article 29 shall prevent the State from making and special provision for the advancement of any socially, educationally backward classes of citizens or for the Scheduled Castes or Scheduled Tribes. " article 16 deals with equality of opportunity in matters of public employment. article 16(1) provides that there shall be equality of opportunity in matters relating employment or appointment to any office under the State, and article 16(2) prohibits discrimination on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them. article 16(4) States, "nothing in this Article shall prevent the State from making any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the "that, is not adequately represented in the services under the State. We are primarily concerned in this case with the question as to who are socially and educationally backward classes of citizens mentioned in article 15(4) and the backward class of citizens, not adequately represented in the services under the State mentioned in article 16(4). We see that while article l 5(4) contemplates "special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes", article 16(4) speaks of 'provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State is not adequately represented in services under the State" Now, it is not suggested that the socially and educationally backward classes of citizens and the Scheduled Castes and the Scheduled Tribes from whom special provision for advancement is contemplated by Art 15(4) are distinct and separate from the backward classes of citizens who are adequately represents in the services under the State for whom reservation of posts and appointments is contemplated by article 16(4). 'The backward classes of citizens ' referred to in article 16(4), despite the short description, are the same 404 as the socially and educationally backward classes of citizens and the A scheduled castes and the Scheduled Tribe ', 90 fully described in article 15(4): Vide Trilokinath Tiku vs State of Jammu and Kashmir and other cases. However, for the purposes of article 16(4) it is further necessary that the Backward classes should not be adequate in the services. Again, and quite obviously, 'special provision for advancement ' is a wide expression and may include many more things besides 'mere reservation of seats in colleges. ' It may be by way of financial assistance, free medical, educational and hostel facilities, scholarships, free transport, concessional or free housing, exemption from requirements insisted upon in the case of other classes al so on. We are not, for the time being, concerned with the mode advancement, other than reservation of seats in college, we observe that under article 16(4), reservation is to be made to benefit those backward classes, who in the opinion of the Government are not adequately represented, in the services. Reservation must, therefore, be aimed at securing adequate representation. It must follow that the extent of reservation must match the inadequacy of representation. There is no reason why this guideline furnished by the Constitution itself should not also be adopted for the purposes Or article 15(4) too. For example, the extent of reservation of seats in professional colleges may conveniently be determined with reference to the inadequacy of representation in the various profession. Similarly, the extent of reservation in other colleges may be determined with reference to the inadequacy in the number of graduates, etc. Naturally, if the lost ground is to be gained. the extent of reservation may even have to be slightly higher than the percentage of population of the backward classes. Since these questions are not altogether res integra, it will be useful to refer to a few of the earlier opinions of this Court touching upon this question. Until Thomas(1) came on the scene, Balaji(2) was considered by many as the magnum opus on reservations. Balaji was also a case from Karnataka. The very first sentence of the judgment of a Gajendragadkar, J. is a revelation of the frustrating task that the Government of Karnataka has been undertaking these several years. The first sentence says: "Since 1958, the State of Mysore has been (l) ; (2) [1963] Suppl. I S.C.R,4 39 405 endeavouring to make a special provision for the advancement of the socially and educationally backward classes af citizens in the State A of Mysore under article 15(4) of the Constitution and every time when an order is passed in that behalf, its validity has been challenged by writ proceedings. Four previous orders passed in that behalf were challenged by writ proceedings taken against the State under article 226". Balaji was concerned with the question of the validity of the reservation made under article 15(4) of the Constitution in regard to admission to the medical colleges of the Mysore and Karnataka Universities. 28 per cent of the seats were reserved for Backward Classes so called, 20 percent for more Backward classes, 15 per cent for Scheduled Castes and 3 per cent for Scheduled Tribes, making a total of 68 per cent of the seats available for the reserved category only and 32 per cent for the general category, described in the judgment as "merit pool". The reservation was generally made on the basis of the report of the Nagan Gowda Committee appointed by the State Government. The court found that the Committee approached the problem of enumerating and classifying these socially and educationally backward communities on the basis that social backwardness depended substantially on the caste to which the community belonged, though it recognised that economic condition may be a contributing factor. according to the court, the Committee virtually equated 'classes ' with castes '. The court observed that in dealing with the question as to whether any class of citizens were socially backward or not, it might not be irrelevant to consider the caste of the said citizens but the importance of caste should not be exaggerated. rt was observed that caste could not be made the sole or dominant test to determine the social backwardness of group or classes of citizens. It was noted that social backwardness was in the ultimate analysis the result of poverty, to a very large extent. It was also noticed that the occupation of citizens might also contribute to make classes of citizens socially backwardness. As the Nagam Gowda Committee had adopted the caste test as the predominant test, if not the sole test, without regard to the other factor which were undoubtedly relevant, the court expressed the vice the classification made by the Committee of socially backward communities was invalid. In passing, at one place, it was remarked that the Backward Classes of citizens for whom special provision was authorised to be made, were treated by article 15(4) itself, as being similar to the Scheduled Castes and Tribes. It was observed that the Backward Classes were in the matters of their backwardness comparable to Scheduled Castes and Tribes. Based on these observations and the juxta 406 position of the expressions Scheduled Castes, Scheduled Tribes and A socially and educationally backward classes in article 15 and article 338, it was suggested by the learned counsel for the petitioner that the socially backward classes of people were those whose status and standard of living was very much the same as those of the Scheduled Castes and Scheduled Tribes. We do not think that these observations were meant to lay down any proposition that the socially Backward Classes were those classes of people, whose conditions of life were very nearly the same as those of the Scheduled Castes and Tribes. We say so first because of the inappropriateness of applying the ordinary rules of statutory interpretations to interpret constitutional instruments which are sui generies and which deal with situations of significance and consequence. It is not enough to exhibit a Marshallian awareness that we are expounding a Constitution; we must also remember that we are expounding a Constitution born in the mid twentieth century, but of an anti imperialist struggle, influenced by Constitutional instruments, events and revolutions elsewhere, in search of a better world, and winded to the idea of justice, economic, social and political to all. such a Constitution must be given a generous interpretation so as to give all its citizens the full measure of justice promised by it. The expositors of the Constitution are to concern themselves less with mere words and arrangement of words than with the philosophy and the prevading 'spirit and sense ' of the Constitution, so elaborately exposed for our guidance in the Directive Principles of State Policy and other provisions of the Constitution. Now, anyone acquainted with the rural scene in India would at once recognise the position that the Scheduled Castes occupy a peculiarly degraded position and are treated, not as persons of caste at all, but as outcastes. Even the other admittedly backward classes shun them and treat them as inferior beings. It was because of the special degradation to which they had been subjected that the Constitution itself had to come forward to make special provision for them. There is no point in attempting to determine the social backwardness of other classes by applying the test of nearness to the conditions of existence of the Scheduled Castes. Such a test would practically nullify the provision for reservation for socially and educationally Backward Classes other than Scheduled Castes and Tribes. Such a test would perpetuate the dominance of the existing upper classes. Such a test would take a substantial majority of the classes who are between the upper classes and the Scheduled Castes and Tribes out of the category of backward classes and put them at a permanent disadvantage. Only the 'enlightened ' classes of body will capture all the 'open ' posts and seats and the reserved posts and 407 seats will go to the Scheduled Castes and Tribes and those very near the Scheduled Castes and Tribes. The bulk of those behind the 'enlightened ' classes and ahead of the near Scheduled Castes and Tribes would be left high and dry, with never a chance of imposing themselves . Earlier we mentioned that poverty was regarded by the Court as the prime cause of social backwardness. It was said at page 460, "Social backwardness is on the ultimate analysis the result of poverty, to a very large extent. The classes of citizens who are deplorably poor automatically become socially backward. They do not enjoy a status in society and have, therefore, to be content to take a backward seat. It is true that social backwardness which results from poverty is likely to be aggravated by considerations of caste to which the poor citizens may belong, but that only shows the relevance of both caste and poverty in determining the backwardness of citizens". We only add that there is an overpowering mutuality between poverty and caste on the Indian scene. Again, referring to some scheme formulated by the Maharashtra Government for financial assistance the Court observed, "However, we may observe that if any State adopts such a measure, it may afford relief to and assist the advancement of the Backward Classes in the State, because backwardness social and educational, in ultimately and primarily duties for proverty". Recognising poverty as the true source of the evil of social and economic backwardness and caste as a relevant factor in determining backwardness, the Court also noticed occupation and habitation as two other important contributing factors and finally stressed the need for a penetrating investigation. It was said, "The occupations of citizens may also contribute to make classes of citizens socially backward. There are some occupations which are treated as inferior according to conventional beliefs and classes of citizens who follow these occupations are apt to become socially backward. The place of habitation also plays not a minor part in determining the backwardness of a community of persons. In a sense, the problem of social backwardness is the problem of Rural India and in that behalf, classes of citizens occupying a socially backward position in rural area fall within the purview of article 15(4). The problem of deter mining who are socially backward classes is undoubtedly very complex. Sociological, social and economic considerations come into play in solving the problem and 408 evolving proper criteria for determining which classes are A socially backward is obviously a very difficult task. It will need an elaborate investigation and collection of data and examining the said data in a rational and scientific way". The Balaji Court then proceeded to consider the question of educational backwardness. The Nagan Gowda Committee had dealt with the question on the basis of the average of the student population in the last three High school classes of all High Schools in the State in relation to a thousand citizens of that community. The Committee was of the view that all castes whose average was less than the State average should be regarded as Backward communities and those whose average was less than 50 per cent of the State average should be regarded as More Backward. The Court took the view that the adoption of the test of the last three High School classes might be a little high. but even if it was not considered high, it was not right to treat communities which were just below the State average as backward. There can be divergence of views on this question. Where the State average itself is abysmally low, there is no reason why classes of people whose average was slightly above, or very near, or just below the State average, should be excluded from the list of Backward Classes. The adoption of the State average or the 50 per cent of the State average test might lead to quite arbitrary results and This surely cannot be a matter in which the court should try to impose its views. In fact while observing: "if the test has to be applied by a reference to the State average of student population, the legitimate view to take would be that the classes of citizens, whose average is well or substantially below the State average, can be treated as educationally backward," the court also observed, ' On this point again we do not propose to lay down any hard and fast rule; it is for the State to consider the matter and decide in a manner which is consistent with the requirements of article 15(4)". It was also observed in Balaji that the sub classification made by the reservation order between Backward Classes and More Back ward Classes did not appear to be justified under article 15(4) as it appeared to be a measure devised to benefit all the classes of citizens who were less advanced when compared with the most advanced classes in the State, and that was not the scope of article 15(4). A result of the sub classification was that nearly 90 per cent of the 409 population of the State was treated as backward. The propriety of such a course may be open to question on the facts of each case, but A we do not see why on principle there cannot be :3 classification into Backward Classes and More Backward Classes, if both Classes are not merely a little behind, but far far behind the most advanced classes In fact such a classification would be necessary to help the More Backward Classes; otherwise those of the Backward Classes who might be a little more advanced than the More Backward Classes might walk away with all the seats, just as, if reservation was confined to the More Backward Classes and no reservation was made to the slightly more advanced Backward Classes the most advanced Classes would walk away with all the seats available for the general category leaving none for the Backward Classes. All that we can say is that sub classification may be permissible if there are classes of people who are definitely far behind the advanced classes but ahead of the very backward classes. One may say the same thing about the adoption of the average of the student population in the last three High School Classes of all High Schools in the State in relation to a thousand citizens of that community as the basis for assessing relative Backwardness. Balaji thought it was a little high but surely other views are possible. In fact considering the wide spread of elementary education, one would think the basis should be pushed up higher. Having regard to the availability of elementary schools in rural areas, more and more boys of the backward Classes may become literate. But it is a long way from ceasing to be educationally backward. As one goes up class by class it as a notorious fact that there are more 'drop outs ' from the boys of the backward classes than from the boy of the forward classes. The adoption of a lower basis to assess educational backwardness may give a wholly false picture. After all, if one is considering the question of admission to professional colleges or of appointment to posts, the basis possibly should be the average number of students of that community who have passed the examination prescribed as the minimum qualification for admission to professional colleges, say in the last three years, and perhaps the average number of persons of that community who have graduated is the last three years, since graduation is generally the minimum qualification for most posts possibly, the extent of reservation may even vary with reference to the class of post. This is a matter for evaluation by experts. 410 The Balaji Court then considered the question of the extent of the special provision which the State would be competent to make under article 15(4). Here the Court brought in the so called meritarian principle and thought that large reservation would inevitably affect efficiency. We may perhaps, mention here what a noted sociologist had to say: "So the leading anti reservationists by hand to find nationalizations for their campaigns. A favourite one is to conjure up the image of a phoney juxtaposition; on one side is 'merit ' shown up by candidates on the open list, on the other side is 'incompetence ', represented b those on the reserved list Hence so the argument runs if reservations are maintained, standards in the medical professions (or in other professions and senior Government posts) will be deleted. Indeed (it is claimed) there is serious risk that patients will die if they are treated by (backward ' doctors who have reached their positions through reservations. (Such allegations are constantly repeated although they are patently false; in the final at the postgraduate level, the minimum qualifying marks are identical for all candidates, irrespective of their origin.)"( ') We should think that is a matter for experts in management and administration. There might be posts or technical courses for which only the best can be admitted and others might be posts and technical courses for which minimum qualification would also serve. The percentage of reservations is not a matter upon which a court may pronounce with no 1 material at hand. For a court to say that reservations should not exceed 40 per cent, 50 per cent or 60 per cent, would be arbitrary and the Constitution does not, permit us to be arbitrary. Though in the Balaji case, the court thought that generally and in a broad way a special provision should be less than 50 per cent, and how much less than 50 per cent would depend upon the relevant prevailing circumstances in each case, the court confessed. "In this matter again, we are reluctant to say definitely what would be a proper provision to make. " All that the court would finally say was that in the circumstances of the case before them, a reservation of 68 per cent was inconsistent with article 15(4) of the Constitution. We are not prepared to read Balaji as arbitrarily laying down 50 per cent as the outer limit of reservation. What precisely was decided by Balaji has been summed up by the Court itself at page 471 of the S.C.R. in the following words: (1) Ruth Glass: Divided and degraded: the downtrodden people of India, (Monthly Review July August) 1982. 411 "We have already noticed that the impugned order in the present case has categorised the Backward Classes on the sole basis of caste A which, in our opinion, is not permitted by article 15(4): and we have also held that the reservation of 68 per cent made by the impugned order is plainly inconsistent with the concept of the special provision authorised by article 15(4). therefore, it follows that the impugned order is a fraud on the Constitutional power conferred on the State by article 15(4)". We must repeat here, what we have said earlier, that there is no scientific statistical data or evidence of expert administrators who have made any study of the problem to support the opinion that reservation in excess Or 5() percent may impair efficiency. It is a rule of thumb and rules of the thumb are not for judges to lay down to solve complicated sociological and administrative problems. Sometimes, it is obliquely suggested that excessive reservation is indulged in as a mere votecatching device. Perhaps so, perhaps not. One can only say 'out of evil cometh good ' and quicker the redemption of the oppressed classes, so much the better for the nation. Our observations are not intended to show the door to genuine efficiency. Efficiency must be a guiding factor but not a smokes cream. All that a Court may legitimately say is that reservation may h not be excessive. It may not be so excessive as to be oppressive; it may not be so high as to lead to a necessary presumption of unfair exclusion of everyone else. In R. Chiralekha vs State of Mysore,( ') the Supreme Court upheld that classification of socially and educationally backward classes made on the basis of economic condition and occupation, without reference to caste. According to the Government order, a family whose income was Rs. 1200 per annum or less and persons or classes following occupations of agriculture petty business, inferior services crafts or other occupations involving manual labour, were in general, socially and educationally backward. The Government listed the following occupations as contributing to social backwardness; (1) actual cultivators; (2) artisan; (3) inferior services (i.e. Class IV in Government Services and corresponding class or service in private employment) including casual labour; and (4) any other occupation involving manual labour. Th is criteria was adopted by the Government as a temporary measure pending further detailed study. The order did not take into consideration as a criterion for backwardness the caste of an applicant. Relying heavily on Balaji, (1) [1964] 6 S.C.R.368. 412 the Mysore High Court held that the scheme adopted by the Government was most imperfect as in their opinion in addition to the occupation and poverty tests, the study should have adopted the caste test as well as the "residence" test in making the classification. It also observed that the decision in the Balaji case said that the caste basis was undoubtedly a relevant, nay an important basis in deter mining the classes of backward Hindus but it should not be made the sole basis. Subba Rao, J., speaking for this Court, explained how the Mysore High Court had misunderstood Balaji and observed: "While this Court said that caste is only a relevant circumstance and that it cannot be the dominant test in ascertaining the backwardness of a class of citizens, the High Court said that it is an important basis in determining the class of backward Hindus and that the Government should have adopted caste as one of the test. As the said observations made by the High Court may lead to some confusion in the mind of the authority concerned who may be entrusted with the duty of prescribing the rules for ascertaining the backwardness of classes of citizens within the meaning of article 15(4) of the Constitution, we would hasten to make it clear that caste is only a relevant circumstance in ascertaining the backwardness of a class and there is nothing in the judgment of this Court which precludes the authority concerned from determining the social backwardness of a group of citizens if it can do so without reference to caste. While this Court has not included caste from ascertaining the backwardness of a class of citizens, it has not made it one of the compelling circumstances affording a basis for the ascertaining of backwardness of a class. To put it differently, the au thority concerned may take caste into consideration in ascertaining the backwardness of a group of persons; but, if it does not, its order will not be bad on that account, if it can ascertain the backwardness of a group of person on the basis of other relevant criteria. " Later he further proceeded to explain: "This interpretation will carry out the intention of the Constitution expressed in the aforesaid Article. It helps the really backward classes instead of promoting the interests of individuals or groups who, though they 413 belong to a particular caste a majority where of si socially and educationally backward, really belong to a class A which is socially and educationally advanced. To illust rate, take a caste in a State which is numerically the largest therein. It may be that though a majority of the people in that caste are socially and educationally backward, an effective minority may be socially and edu cationally for more advanced than another small sub caste the total number of which is far less than the said minority. If we interpret the expression "Classes" as "caster ', the object of the Constitution will be frustrated and the people who do not deserve any advertitious aid may get it to the exclusion of those who really deserve. This anomaly will not arise if, without equating caste with class, caste is taken as only one of the considerations to ascertain whether a person belongs to a backward class or not. On the other hand, if the entire sub caste, by and large, is backwardness, it may be included in the Scheduled Castes by following the appropriate procedure laid down by the Constitution". Evidently recognising the difficulty be setting any attempt by a Court to lay down inflexible criteria, he pointed out: 'We do not intend to lay down any inflexible rule for the Government to follow. The laying down of criteria for ascertainment of social and educational backwardness of a class is a complex problem depending upon many circumstances which may vary from State to State and even from place to place in a State. But what we l? intend to emphasize is that under no circumstances a "class" can be equated to a "caste", though the caste of an individual or a group of individual may be considered along with other relevant factors in putting him in a particular class. We would also like to make it clear that if in a given situation caste is excluded in ascertaining a class within the meaning of article 15(4) of the Constitution, it does not vitiate the classification if it satisfied other tests. " In Rajendran vs State of Madras(l) Ramaswami, J. took care to say, (1) [1968] I S.C.R. 721. 414 ". if the reservation in question had been based A only on caste and had not taken into account the social and educational backwardness of the caste in question, it would be violative of article 15(1) But it must not be for gotten that a caste is also a class of citizens and if the caste as a whole is socially and educationally backward reservation can be made in favour of such a caste on the ground that it is a socially and educationally backward class of citizens within the meaning of article 15(4) . It is true that in the present cases the list of socially and educationally backward classes has been specified by caste. But that does not necessarily means that caste was the sole consideration and that person belonging to these castes are also not a class of socially and educationally backward citizens. " In State of Andhra Pradesh vs P. Sagar,(l) Shah, J. Observed, "In the context in which it occurs the expression "class" means a homogeneous section of the people ground together because of certain likeness or common traits and who are identifiable by some common attributes such as status, rank, occupation, residence in a locality, race, religion and the like. In determining whether a particular section forms a class, caste cannot be excluded altogether. But in the determination of a class a test solely based upon the caste or community cannot also be accepted . . . . . . . . . . Reservation may be adopted to advance the interests of weaker sections of society, but in doing so, case must be taken to see that deserving and qualified candidates are not excluded from admission to higher educational institutions. The criterion for determining the backwardness must not be based solely on religion, race, caste, sex or place of birth, and the backwardness being social and educational must be similar to the backwardness from which the Scheduled Castes and the Scheduled Tribes suffer". (1) 415 In Tirloki Nath vs State of Jammu & Kashmir,(l) the Court held that while it was open to the State to make a provision for reservation of appointments or posts in favour of socially and educationally backward classes, it could not distribute the number of posts or appointments on the basis of community or place or residence. An order of the Government of Jammu and Kashmir reserving 50 per cent of the vacancies for the Muslims of Kashmir (entire State), 40 per cent for the Jammu Hindus and 10 per cent for the Kashmiri Hindus was struck down. It was pointed out that the expression "backward class" was not used as synonymous with backward caste or backward community but it was noticed, "The members of an entire caste or community may in the social, economic and educational scale of values at a given time be backward and may on that account be treated as a backward class, but that is not because they are members of a caste or community, but because they form a class". The Court further said: In its ordinary connotation the expression "class" means a homogeneous section of the people grouped together because of certain likenesses or common traits, and who are identifiable by some common attributes such as status, rank, occupation, residence in a locality, race, religion and the like. But for the purpose of article 16(4) in determining whether a section forms a class, a test 1 solely based on caste, community, race, religion, sex descent, place of birth or residence cannot be adopted, because it would directly offend the Constitution". In A. Peeriakatuppan vs State of Tamil Nadu,( ') the Court observed: "A caste has always been recognised as a class. there is no gain saying the fact that there are numerous castes in this country which are socially and educationally backward. To ignore their existence is to ignore the facts of life. " In State of Andhra Pradesh vs Balaram(3), the order of the Government of Andhra Pradesh enumerating the socially and (1) ; (2) [1971] 1 S.C.C.38. (3) A.l. R. 416 educationally backward classes for the purpose of admission into the A medical colleges of the State had been struck down by the High Court on the ground that the Government Order was based on the report of the Backward Classes Commission which had adopted caste as the main basis to determine who were backward classes and this was contrary to the decision of the Court in Balaji. It had also been held by the High Court that the Commission had committed a mistake in adopting the average of student population per thousand of a particular class or community in the 10th or 11th classes with reference to the State average for the purpose of determining educational backwardness. Even so the percentage of literacy of some groups included in the list of backward classes was well above the State average. The High Court had further held that the Commission had ignored the principle that the social and educational backwardness of persons classified in the list should be comparable or similar to the Scheduled Castes and Scheduled Tribes The Commission had committed a further mistake in subdividing the groups into more backward and less backward classes. It was urged before this Court that the principles thought to have been laid down in Balaji, Chitralekha and Sagar that article 15(4) was to be read as a proviso to articles 15(1) and 29(2) and that in the matter of backwardness that backward classes must be comparable to Scheduled Castes and Scheduled Tribes, were wrong and required to be re considered. The Court found that it was not necessary for them to consider this aspect of the matter as in the particular case before them, they were factually satisfied that classes enumerated as backward, were really socially and educationally backward. The Court however took care to say: "It must be pointed out that none of the above decisions lay down that social and educational backwardness must be exactly similar in all respects to that of Scheduled Castes and Scheduled Tribes. " The contention that backward classes were classified on the basis of caste was met with the following observation: "No doubt, we are aware that that any provision {I made under this clause must be within the well defined limits and should not be on the basis of caste alone. But it should not also be missed that a caste as such may be socially and educationally backward. If after collecting 417 the necessary data, it is found that the caste as a whole is socially and educationally backward, in our opinion, A the reservation made of such persons will have to be up held notwithstanding the fact that a few individuals in that group may be both socially and educationally above the general average. There is no gain saying the fact that there are numerous castes in the Country, which are socially and educationally backward and therefore a suitable provision will have to be made by the State as charge in Article 15(4) to safeguard their interest. . . . . . . . . . . . . . . . the members of an entire caste or community may in the social economic, and educational scale of values, at a given time be backward and may on that account be treated as backward classes, but that is not because they are members of a caste of community but because they form a class. Therefore, it is clear that there may be instances of an entire caste or a community being socially and educationally backward for being considered to be given protection under article 15(4). . . . . . . . . . . . . . To conclude, though prima facie the list of Backward Classes which is under attack before us may be considered to be on the basis of caste, a closer examination will clearly show that it only a description of the group following the particular occupations or professions, exhaustively referred to by the Commission. " The Court then proceeded to observe that the question before them was whether the Backward Classes Commission had relevant data and material before it for enumerating the classes of persons to be included in the list of backward classes was a real question and not whether the Commission was scientifically accurate in conclusion. The Court expressed its satisfaction that there was sufficient relevant material to justify the Commission 's conclusion and added: "No doubt there are a few instances where the educational average is slightly above the State average, but that circumstance by itself is not enough to strike down the entire list. In fact, even there it is seen that when the whole class in which that particular group is included, is considered the average works out to be less 418 than the State average. Even assuming there are a few A categories which are a little above the State average, in literacy, that is a matter for the State to be taken note of and review the position of such categories of persons and take a suitable decision. " Referring to the observations in Balaji regarding the test of average student population in the last three High Court School classes it was said: "These observations made by this Court in the above decisions have, in our opinion, been misapplied by the High Court to the case in hand. lt has proceeded on the basis that it is axiomatic that the educational average of the class should not be calculated on the basis of the student population in the last three high school classes and that only those classes whose average is below the State average, that can be treated as educationally back ward. This Court has only indicated the broad principles to be kept in view when making the provision under article 15(4)." In Janki Prasad Parimoo vs State of Jammu & Kashmir the Court noticed the link between economic backwardness and social and educational backwardness and observed "In India, social and educational backwardness is further associated with economic backwardness and it is observed in Balaji 's case referred to above that backwardness, socially and educationally is ultimately and primarily due to poverty." Having said this the Court was not prepared to lay down poverty as the exclusive test on the ground that a large proportion of the population in India was poverty stricken and if poverty was made the sole test for reservation, a resourceless situation might arise. It was said, "But if poverty is the exclusive test, a very large proportion of the population in India would have to be regarded as socially and educationally backward and if reservations are made only on the ground of economic 419 considerations, an untenable situation may arise because even in sectors which are recognised as socially and educationally advanced, there are large pockets of poverty. In this country except for a small percentage of the population, the people are generally poor some being more poor, others less poor. Therefore, when a social investigator tries to identify socially and educationally backward classes he may do it with confidence that they are bound to be poor. Though the two wards, 'Socially ' and 'educationally ' are used cumulatively for the purpose of describing the backwardness class, one may find that if a class as a whole is educationally advanced, it is generally also socially advanced because of the reformative effect of education on that class. The words "advanced" and "backward" are only relative terms there being several layers or strata of classes, hovering between "advanced" and "backward", and the difficult task is which class can be recognised out of these several layers as being socially and educationally backward. " The State of Jammu & Kashmir had declared six classes of citizens as socially and educationally backward. They were (1) persons whose traditional occupation was one of the sixty two mentioned; (2) persons belonging to 23 social castes; (3) small cultivators (4) low paid pensioners; (5) residents in areas adjoining the cease fire line; (6) persons belonging to "bad pockets". The court found that some of the sixty two enumerated occupations were not traditional occupations at all and that that list required review. The court also found that 19 out of the 23 castes had been identified by the Committee as suffering from social disabilities and also educationally and economically backward. In the case of the remaining four castes, there was nothing to indicate that they were backward classes. Referring to the third category of small cultivators, it was observed that they could not be said to be 'a homogeneous social section of the people with common trades and identifiable by some common attributes '. All that could be said about them was that they cultivated or lived on land. Similarly in regard to the fourth category, it was observed that they also do not belong to a homogeneous section of the people, the only thing common between them being that they had retired from Government service. In regard to the fifth and sixth category the court observed that lack of communication, inaccessibility, lack 420 of material resources, primitive living conditions and such considerations made the people living in those areas socially and educationally backward. In State of Uttar Pradesh vs Pradeep Tandon,(1) the Court recognised poverty as a relevant factor but observed that it was not the determining factor discovering poor socially and educationally backward classes. Even so the backwardness of the hill and Uttrakhand areas in Uttar Pradesh was sustained on economic basis. It was said, "The Hill and Uttrakhand areas in Uttar Pradesh are instances of socially and educationally backward classes of citizens for those reasons. Backwardness is judged by economic basis that each region has its own measurable possibilities for the maintenance of human numbers, standards of living and fixed property. From an economic point of view the classes of citizens are backward when they do not make effective use of resources. When large areas of land maintain a sparse, disorderly and illiterate population whose property is small and negligible the element of social backwardness is observed. When effective territorial specialisation is not possible in the absence Of means of communication and technical processes as in the hill and Uttrakhand areas the people are socially backward classes of citizens. Neglected opportunities and people in remote places raise walls of social backwardness of people." "Educational backwardness is ascertained with reference to those factors. Where people have traditional apathy for education on account of social and environ mental conditions or occupational handicaps, it is an illustration of educational backwardness. The hill and Uttrakhand areas are inaccessible. There is lack of educational institutions and educational aids. People in the hill and Uttrakhand areas illustrate the educationally backward classes of citizens because lack of educational facilities keep them stagnant and they have neither meaning and values nor awareness for education." (1) , 421 The Court struck down the reservation for candidates from rural areas on the ground that rural population which constituted 80% of A the population of the State could not be a homogeneous class. Some people in the rural areas might be educationally backward, some might be socially backward, there may be few who were both socially and educationally backward but it could not be said that all citizens residing in rural areas were socially and educationally backward. The Court while noticing the difficulty of defining the expression 'socially ' and 'educationally ' backward classes of citizens allowed itself to make the observation, "the traditional unchanging occupations of citizens may contribute to social and educational backwardness. The place of habitation and its environment is also a determining factor in judging the social and educational backwardness. " In K.S. Jayasree vs State of Kerala,(l) what was in question was a Government Order specifying that only citizens who were members of families which had an aggregate income of less than Rs. 6,000 per annum and which belonged to the caste and community mentioned in the annexures to the Government Order would constitute socially and educationally backward classes for the purposes of article 15(4). The Court upheld the order and held: "In ascertaining social backwardness of a class of citizens it may not be irrelevant to consider the caste of the group of citizens. Caste cannot however be made the sole or dominant test. Social backwardness is in the ultimate analysis the result of poverty to a large extent. Social backwardness which results from poverty is likely to be aggravated by considerations of their caste. This shows the relevance of both caste and poverty in determining the backwardness of citizens. Poverty by itself is not the determining factor of social backwardness. Poverty is relevant in the context of social backwardness. The commission found that the lower income group constitutes socially and educationally backward classes. The basis of the reservation is not income but social and educational backwardness determined on the basis of relevant criteria. If any classification of backward classes of (1) ; 422 citizens is based solely on the caste of the citizen, it will A perpetuate the vice of caste system. Again, if the classification is based solely on poverty, it will not be logical. . . . . . . . . . . . . . Social backwardness which results from poverty is likely to be magnified by caste considerations. Occupations, place to habitation may also be relevant factors in determining who are socially and educationally backward classes. Social and economic considerations came into operation in solving the problem and evolving the proper criteria of determining which classes are socially and educationally backward. . . . . . . . . . . . . . . . . . The problem of determining who are socially and educationally backward classes is undoubtedly not simple. Sociological and economic considerations come into play in evolving proper criteria for its determination. This is the function of the State. The Court 's jurisdiction is to decide whether the tests applied are valid. . . . . . . . . . . . . . . . . . . . .If the classification is based solely on caste of the citizen, it may not be logical. Social backwardness is the result of poverty to a very large extent. Caste and Poverty are both relevant for determining the backwardness. But neither caste alone nor poverty alone will be the determining tests . . . . . . . . . . . . . . . . . . . . . . Therefore, socially and educationally backward classes of citizens in Article 15(4) cannot be equated with castes. In R. Chitralekha vs State of Mysore ; this Court said that the classification of backward classes based on economic conditions and occupations does not offend Article 15(4). " State of Kerala vs N.M. Thomas(1) is a very important case decided by a bench of seven judges consisting of Ray, C.J., Khanna, Mathew, Beg. Krishna Iyer, Gupta and Murtaza Fazal Ali, JJ.). The question was about the exemption given to members of the Scheduled Caste and Scheduled Tribes, for a limited period, from passing a (1) ; 423 certain departmental test to qualify for promotion from the post of Lower Division Clerk to the post of Upper Division Clerk. The rule A providing for the exemption was attacked on the ground that it was violative of article 16(1). One of the arguments in support of the attack was that the result of application of the rule would be to enable the members of the Scheduled Castes and Scheduled Tribes to claim more than 50% of the posts immediately available for promotion. The rule was upheld by Ray, C.J., Mathew, Beg, Krishna Iyer and Murtaza Fazal Ali, JJ. and struck down by Khanna and Gupta, JJ. Ray, C.J. Observed that the equality of opportunity took within its fold "all stages of service from initial appointment to its , termination including promotion". Articles 14 and 16(1) would not be violated by the rule which would ensure equality of representation in the services for unrepresented classes, after satisfying the basic needs of efficiency of administration. A rule giving preference to an underrepresented backward community would not contravene articles ]4, 61(1) and 16(2). Article 16(4) merely removed any doubt in that respect. The classification of employees belonging to Scheduled Castes and Scheduled Tribes for allowing them an extended period of two years for passing the special tests for promotion was a just and reasonable classification having rational nexus to the object of providing equal opportunity for all citizens in matters relating to employment or appointment to public office. All legitimate methods were available to strive for equality of opportunity in service under article 16(1). Article 16(4) enacted one of the methods for achieving equality embodied in article 16(1). Dealing with the arguments that the rule exceeded the permissible limits of the resulting preference shown to Scheduled Castes. Ray, C.J. Observed: "The High Court was wrong in basing its conclusion that the result of application of the impeached Rule and the orders are excessive and exorbitant namely that out of 51 posts, 34 were given to the members of the Schedule led Castes and Scheduled Tribes. The promotions made in the service as a whole are no where near 50 per cent of the total number of posts. The Scheduled Castes and Scheduled Tribes constitute 10 per cent of the State 's population. Their share in the gazetted service of the State is said to be 2 per cent 184 out of 8,700. Their share in the non gazetted appointments is only 7 per cent namely 11,437 out of 1,62,784. It is, therefore, correct that Rule 13A and the orders are meant to implement 424 not only the direction under article 335, but also the Directive principal under article 46." One other important statement in Ray, CJ. 's judgment is worth noticing. He said, "Scheduled Castes and Scheduled Tribes are not a caste within the ordinary meaning of caste". He referred Bhaiyalal vs Harikishan Singh were it had been held that an enquiry was not permissible into the question whether a particular caste was a Scheduled Caste or not in view of the provision of article 341. Mathew, J. who agreed with the conclusions of Ray, CJ., observed that resort to some sort of proportionate equality was necessary in many spheres to achieve justice. Equality of opportunity was not simply a matter of legal equally, it depended not merely on the absence of disability but on the presence of abilities. The Government has an affirmative duty to eliminate inequalities and to provide opportunities for the exercise of human rights and claims. The Government has an affirmative responsibility for elimination of inequalities, social, economic or otherwise. There was no reason for the court not to require the State to adopt a standard of proportional equality which took account of the differing conditions and circumstances of a class of citizens whenever those conditions and circumstances stood in the way of their equal access to the enjoyment of basic rights and claims. article 16(4) was not an exception of article 16(1). It was an emphatic way of putting the extent to which the equality of opportunity could be carried, viz., even up to the point of making reservation. The state was entitled to adopt by measure which would ensure an adequate representation of the members of the Scheduled Castes and Scheduled Tribes and justify it as a compensatory measure to ensure equality of opportunity provided the measure did not dispense with the acquisition of the minimum basic qualification necessary for the efficiency of administration. Beg, J. expressly agreeing with the conclusions of Ray, CJ., Mathew, Krishna Iyer and section M. Fazal Ali, JJ, added that the protection of article 16 continued through out the period of service. He distinguished Devasana and Balaji on the ground that if the overall position and picture was taken into account by taking the number of employees in all Government departments, the so called favoured class of employees would be less than 50 per cent of the number of posts. Beg, J., however, thought that article 16(4) was designed 'to reconcile the conflicting pulls of article 16(1) representing the dynamics 425 of justice, conceived of as equality in conditions under which candidates actually compete for posts in Government service, and of articles A 46 and 335 embodying the duties of the State to promote the interest of the economically, educationally and socially backward so as to release them from the clutches of social injustice '. According to Beg, J. the encroachments on the field of article 16(1) could only be permitted to the extent they were warranted by article 16(4) and to read broader concept of social justice and equality into article 16(1) might stultify the provision itself and make article 16(4) otiose. We must straight away demur. There is no reason whatever to narrow the concept of equality in article 16(1) and refuse to read into it broader concepts of social justice and equality. In fact, it is necessary to read article 16(1) so as not to come into any conflict with articles 46 and 335. A constitutional document must be read as to synthesis its provisions and avoid disharmony. To say that equality also means that unequals cannot be treated equally is merely to say what is self evident and common place. article 14 implies it and we do not see why it is not implied in article 16(1) also. True, on a first glance, article 16(4) appears to save the power of the State to make provision for the reservation of appointments and posts in favour of any backward class of citizens, but a second look shows that it really recognises a pre existing power and expresses the recognition in an emphatic way lest there should be any doubt caste upon that power. Such a device is not unknown to legislatures and constitution making bodies. article 16(4) is more in the nature of a rule of interpretation to guide the construction of Aft. 16(1). The possibility of interpreting Art 16(1) so as to promote the narrower equality rather than the greater equality is excluded by article 16(4). Krishna Iyer, J., while upholding the validity of Rule 13AA made it quite clear that article 16(4) was to be viewed not as a saving clause but as a clause inserted in article 16 due to the over anxiety of the draftsman to make matters clear beyond possibility of doubt. He was emphatic that article 16 applied to appointments and pro motions as well. He expressed his agreement with Fazal Ali, J. that arithmetical limit of 50 per cent in one year set by some earlier rulings could not be pressed too far and that overall representation in a department did not depend on the recruitment in a particular year, but the total strength of a cadre He also agreed with Fazal Ali, J 's construction of article 16(4) and his view about the 'carry forward ' rule. But we must point out that Krishna Iyer, J. also made certain observations indicating that he too fell into the elitist 426 trap of viewing the question as one of 'protective discrimination '. A The question to which he addressed himself was 'Is Rule (13AA) valid as protective discrimination to the Heartiness '. Viewing the question in that light, he proceeded to utter some words of purported caution about the fills of reservation. He aid, A word of sociological caution. In the light of experience, here and elsewhere the danger of 'reservation ', it seems to me, is three fold. TLC benefits, by and large, are snatched away by the top creamy layer of the 'back ward ' caste or class, thus keeping the weakest among the weak always weak and leaving the fortunate layers to consume the whole cake. Secondly, this claim is over played extravagantly in democracy by large and vocal groups whose burden of backwardness has been substantially lightened by the march of time and measures of better education and more opportunities of employment but wish to wear the 'weaker section ' label as a means to score over their near equals formally categorised as the upper brackets. Lastly, a lasting solution to the problem comes only from improvement of social environment, added educational facilities and cross fertilisation of castes by inter caste and inter class marriages sponsored as a massive State programme, and this solution is calculatedly hidden from view by the higher 'backward ' groups with a vested interest in the plums of backwardness. But social science research, not judicial impressionism, will alone tell the whole truth and a constant process of objective re evaluation of a progress registered by the 'under dog ' categories is essential lest a once deserving 'reservation ' should be degraded into 'reverse discrimination '. " One cannot quarrel with the statement that social science research and not judicial impressionism should form the basis of examination, by Courts, of the sensitive question of reservation for backward classes. Earlier we mentioned how the assumption that efficiency will be impaired if reservation exceeds 50 per cent, if reservation is extended to promotional posts or if the carry forward rule is adopted, is not based on any scientific data. One must, however, enter a caveat to the criticism that the benefits of reservation are often snatched away by the top creamy layer of backward class or caste. That a few of the seats and posts reserved for backward classes are 427 snatched away by the more fortunate among them is not to say that reservation is not necessary. This is bound to happen in a competitive society such as ours. Are not the unreserved seats and posts snatched away, in the same say, by the top creamy layer on society itself ? Seats reserved for the backward classes are taken away by the top layers amongst them on the same principle of merit it on which the unreserved seats are taken away by the top layers of society. How can it be bad if reserved seats and posts are snatched away by the creamy layer of backward classes, if such snatching away of unreserved posts by the top creamy layer of society it self not bad? This is a necessary concomitant of the very economic and social system under which we are functioning. The privileged in the whole of society snatch away the unreserved prizes and the privileged among the backward classes snatch away the reserved prizes, This does not render reservation itself bad. But it does emphasis that mere reservation of a percentage of seats in colleges and a percentage of posts in the services is not enough to solve the problem of backwardness. Developmental facility and opportunity must be created to enable the really backward to take full advantage of reservations. It indicates that the ultimate solution lies in measures aimed firmly at all round economic and social development. There is, of course, the danger that it engenders self denigration and backwardness may become a vested interest. The further real danger is not reservation but reservation without general all round social and economic development. The result of such reservation is that all the young men of merit belonging to the Scheduled Castes and Backward classes are literally 'gobbled up ' by the civil services leaving very few educated young men of those classes to make their cause on the social, economic and political fronts. The very constraints of office restrain those who have become civil servants from championing the cause of their brethern. There is also the historical truth that oppressed persons who improve their lot, in an effort to forget an unhappy past, often, rush to join the elite and imitate their ways, habits and thoughts. In the process they tend to forget their less fortunate brethern. Fazal Ali, J. expressed his satisfaction that the classification made by the Government by Rule 13(AA) was fully justified by article 16 of the Constitution He held that article 16(4) was not to be read in isolation or as an exception to Art 16(1), but was to be read as part and parcel of Art 16(1) and (2). Dealing with the question of the COCKADED excessive reservation, he emphatically observed, 428 "This means that the reservation should be within A the permissible limits and should not be a cloak to till all the posts belonging to a particular class of citizens and thus violate article 16(1) of the Constitution indirectly. At the same time clause (4) of article 16 does not fix any limit on the power of the Government to make reservation. Since clause (4) is a part of article 16 of the Constitution it is manifest that the State cannot be allowed to indulge in excessive reservation so as to defeat the policy contained in article 16(1). As to what would be a suitable reservation within permissible limits will depend upon the facts and circumstances of each case and no hard and fast rule can be laid down, nor can this matter be reduced to a mathematical formula so as to be adhered to in all cases. Decided cases of this Court have no doubt laid down that the percentage of reservation should not exceed 50 per cent. As t read the authorities, this, is, however, a rule of caution and does not exhaust all categories. Suppose for instance a State has a large number of back ward classes of citizens which constitute 80 per cent of the jobs for them, can it be said that the percentage of reservation is bad and violates the permissible limits of clause (4) of article 16 ? The answer must necessarily be in the negative. The dominant object of this provision is to take steps to make inadequate representation adquate. " Fazal Ali, J. mext considered the validity of the 'carry forward ' rule and upheld that rule also. He said that if in fact the carry forward rule was not allowed to be adopted, it might result in inequality to the backward classes of citizen. Thus, we see that all five judges who constituted the majority were clear that article 16 applied to all stages of the service of a civil servant, from appointment to retirement, including promotion. Four out of seven judges Ray C.J., Beg, Krishna Iyer and Fazal Ali JJ., were also of the clear view that the so called fifty percent rule would apply to the total number of posts in the service and not to the number of posts filled up at different times on different occasions. The reservation in appointments made on any single occasion might well exceed 50 per cent. Four out of seven judges, Ray, CJ., Mathew, Krishna Iyer and Fazal Ali, JJ., further expressed the view that article 429 16(4) was not an exception to article 16(1) and it was merely an emphatic way of stating that reservation was one of the modes of A achieving equality for the backward class of citizens. In Akhil Bharativa Soshit Karamchari Sangh vs Union of India & Ors. ,(l) the Court had to consider the question of reservation of posts under the State in favour of Scheduled Castes and Scheduled Tribes and the 'carry forward rule. The reservation and the rule were upheld by the court. One of the arguments vigorously advanced was the usual plea that efficiency would suffer. Krishna Iyer, J. meeting the argument observed: "The sting of the argument against reservation is that it promotes inefficiency in administration, by choosing sub standards candidates in preference to those with better mettle. Competitive skill is more relevant in higher posts, especially those where selection is made by competitive examinations. Lesser classes of posts, where promotion is secured mechanically by virtue of seniority except where the candidate is unfit. do not require a high degree of skill as in the case of selection posts. (See [1968] I SCR p. 721 at 734). It is obvious that as between selection and non selection posts the role of merit is functionally more relevant in the former than in the latter. And if in Rangachari reservation has been held valid in the case of selection posts, such reservation in non selection posts is an afortiori case. If, in selecting top officers you may reserve posts for SC/ST with lesser merit, how can you rationally argue that for the posts of peons or lower division clerks reservation will spell calamity? The part that efficiency plays is far more in the case of higher posts than in the appointments of the lower posts. On this approach Annexure K is beyond reproach." "Trite arguments about efficiency and inefficiency are a trifle phoney because, after all, at the higher levels the heartiness harijans girijan appointees are a microscopic percentage and even in the case of Classes III and II posts they are negligible. The preponderant majority coming from unreserved communities are presumably efficient and the dilution of efficiency caused by the minimal induction of (1) 430 a small percentage of 'reserved ' candidates, cannot affect the over all administrative efficiency significantly. Indeed, it will be gross exaggeration to visualise a collapse of the Administration because 5 to 10 per cent of the total number of officials in the various classes happen to be sub standard. Moreover, care has been taken to give in service training and coaching to correct the deficiency. " While we agree that competitive skill is relevant in higher posts, we do not think it is necessary to be apologetic about reservations in posts, higher or lower so long as the minimum requirements are satisfied. On the other hand, we have to be apologetic that there still exists a need for reservation. Earlier we extracted a passage from Tawney 's Equality where he bemoaned how degrading it was for humanity to make much of their intellectual and moral superiority to each other. Krishna Iyer, J. Once again emphasised that article l 6(4) was one facet of the multi faceted character of the central concept of equality. One of us (Chinnappa Reddy, J.), in the same case, explained how necessary it was to translate the constitutional guarantees given to the Scheduled Castes, Scheduled Tribes and other backward classes in to reality by necessary State action to protect and nuture those classes of citizens so as to enable them to shake off the heart crushing burden of a thousand years ' deprivation from their shoulders and to claim a fair proportion of participation in the administration. It was pointed out that article 16(4) in truth flowed out of article 16(1). It was said, "article 16(4) is not in the nature of an exception to article 16(1). It is a facet of article 16(1) which fosters and furthers the idea of equality of opportunity with special reference to an under privileged and deprived class of citizens to when egalite do droit (formal or legal equality) is not egalite de fait (practical or factual equality). It is illustrative of what the State must do to wipe out the distinction between egalite de droit and egalite de fait, It recognises that the right to equality of opportunity includes the right of the under privileged to conditions comparable to or compensatory of those enjoyed by the privileged Equality of opportunity must be such as to yield 'Equality of Results ' and not that which simply enables people, socially and economically better placed, to win against the less fortunate, even when the competition is itself otherwise equitable. John Rawls in 'A, 431 Theory of Justice ' demands the priority of equality in a distributive sense and the setting up of the Social System "so that no one gains or loses from his arbitrary place in the distribution of natural assets or his own initial position in society without giving or receiving compensatory advantages in return. " His basic principle of social justice is: "All social primary goods liberty and opportunity, income and wealth, and the bases of self respect are to be distributed equally unless an unequal distribution of any or all these goods is to the advantage of the least favoured." One of the essential elements of his conception of social justice is what he calls the principle of redress: "This is the principle that undeserved inequalities call for redress, and since inequalities of birth and natural endowment are underserved, these inequalities are somehow to be compensated for". Society must, therefore, treat more favorably those with fewer native assets and those born into less favorable social positions. " The statement that equality of opportunity must yield equality of results was the philosophical foundation of the fulfillment of article 16(1) in article 16(4). So we have now noticed the historical and sociological background of Class and Caste, the philosophy, the reason and the rhetoric behind reservation and anti reservation, the Constitutional provisions and the varying judicial stances. What emerges from these three decades of Parliamentary, Executive, Judicial, Political, and practical wisdom? Clearly there exist large sections of people who are socially and educationally backward, who stand midway between the such as forward classes the landed, the learned, the priestly and the trading classes on the one side and the out caste and depressed classes, i.e. the Scheduled Castes and the Scheduled Tribes on the other. Poverty, Caste, occupation and habitation are the principal factors which contribute to brand a class as socially backward. The customs which they honour and observe, the rituals which they fear and practice the habits to which they adapt and conform, the festivals which they enjoy and celebrate and even the Gods that they revere and worship are enlightening elements in recognising their social gradation and backwardness For instance, it may be possible 432 to demonstrate that amongst very many classes, castes or communities, considered socially inferior, Child marriage persists to this day despite the Child Marriage Restraint Act and the Hindu Marriage Act. Despite the wisdom of legal pandits and learned text books on Hindu Laws proclaiming that Saptapadi is essential to a vaid Hindu Marriage, most of the socially inferior classes rarely follow the rule; they have their own customs and rituals. Long before the Hindu Widows ' Re marriage Act permitted widows to remarry, long before the Hindu Marriage Act permitted divorce, the custom of the several so called socially inferior classes or communities permitted re marriage of widows and divorce. The divorce was not by decree of a Court of Law but was granted by a Caste Panchayat. The Caste Panchayat divorce was impermissible and remarriage of widows was also impermissible among the socially superior classes who used to look down upon these customs as primitive. The socalled inferior classes did not and do not have recourse either to Purohits to perform marriages or the Courts to dissolve them. Dress habits also throw light, while it is difficult to imagine, persons belonging to upper caste or occupational groups going about their daily work bare lacked it is not an uncommon right to see persons belonging to lower caste or occupational groups so going about, Work habits also given an indication. Women belonging to higher social groups would not generally care to serve in other people 's homes or fields. Again children of lower social groups take to domestic and field work quite early in their lives. There are certainly good economic reasons for all these factors. As we said economic situation and social situation often reflect each others. We mentioned earlier that even the Gods that they worship give occasional clues. While the Hindu Gods proper, Rama, Krishna, Siva etc. are worshipped by all Hindus generally there are several local Gods and Goddesses in each village worshipped only by the inferior castes. In Andhra Pradesh, for example, in every village the socalled inferior castes worship the goddesses Sunkalamma, Gangamma, Polimeramma (the Goddess guarding the village boundary), Yellamma (another Goddess guarding the vi11age limits). They celebrate Hindu festivals like Dasara, Deepawali etc. but also other festivals in which the upper classes do not participate. There are many other customs, rituals or habits of significance which if one only cares to study them mark out the socially back ward classes. The weight to be attached to these factors depends 433 upon the circumstances of the case which can only be revealed by thoughtful, penetrating investigation and analysis. It cannot be done A by means of mathematical formulae but only by looking in the round or taking a look at the entire situation. Sometimes it may be possible to readily identify certain castes or social groups as a whole as socially forward or socially backward classes. Poverty, of course, is basic, being the root cause as well as the rueful result of social and educational backwardness. But mere poverty it seems is not enough to invite the Constitutional branding, because of the vast majority of the people of our country are poverty struck but some among them are socially and educationally forward and others backward. In a country like India where 80% of the people live below the bread line, even the majority of the so called socially forward classes may be poor. For example no one will think of describing Brahmins anywhere in the land as socially and educationally backward however, poor they might be. The idea that poor Brahmins may also be eligible for the benefits of Articles 15(4) and 16(4) is too grotesque even to be considered. Similarly no one can possibly claim that the patels of Gujarat, the Kayasthas of Bengal, the Reddys and Kammas of Andhra Pradesh are socially backward classes, despite the fact that the majority of them may be poor farmers and agricultural laborers. In the rural, social ladder they are indeed high up and despite the economic backwardness of sizeable sections of them, they can not be branded as socially backward. On the other hand, there are several castes or other social groups who have only to be named to be immediately identified as socially and economically backward classes, identified as socially backward classes. Again illustrating from rural Andhra Pradesh, one can easily identify caste groups, such as, Kommaras (who traditionally carry on the occupation of black smiths), Kummaris (who traditionally carry on the occupation of potters), Vadderas (who traditionally carry on the occupation of Stone breaking), Mangalis (who traditionally carry on the occupation of Barbers) and Besthas (who traditionally carry on the occupation of Fisher folk), etc. as backward classes by the mere mention of their castes. True, a few members of those caste or social groups may have progressed far enough and forged ahead so as to compare favourably with the leading forward classes economically, socially and educationally. In such cases, perhaps an upper income ceiling would secure the benefit of reservation to such of those members of the class who really deserve it. But one is entitled to ask what is to happen to the poorer sections of the forward classes? The State will have to and it is the duty of the State so to do to 434 discover other means of assisting them, means other than reservations A under articles 15(4) and 16(4). All this only emphasises that in the ultimate analysis, attainment of economic equality is the final and the only solution to the besetting problems. There is also one danger in adopting individual poverty as the criterion to identify a member of the backward classes, which needs to be pointed out. How is one n to identify the individuals who are economically backward and, therefore, to be classified as socially and educationally backward? Are all those who produce certificates from an official or a legislator or some other authority that their family incomes are less than a certain figure to be so classified? It should be easy to visualise who will obtain such certificates? Of course, the rural elite, the upper classes of the rural areas who don 't pay any income tax because agricultural income is not taxed. Who will find it difficult or impossible to obtain such certificates? Of course, the truly lower classes who need them most. Class poverty, not individual poverty, is therefore the primary test. Other ancillary tests are the way of life, the standard of living, the place in the social hierarchy, the habits and customs, etc. etc. Despite individual exceptions, it may be possible and easy to identify socially backwardness with reference to caste, with reference to residence, with reference to occupation or some other dominant feature. Notwithstanding our antipathy to caste and sub regionalism, these are facts of life which cannot be wished away. If they reflect poverty which is the primary source of social and educational backwardness, they must be recognised for what they are along with other less primary sources There is and there can be nothing wrong in recognising poverty wherever it is reflected as an identifiable group phenomena whether you see it as a caste group, a sub regional group, an occupational group or some other class. Once the relevant conditions are taken into consideration, how and where to draw the line is a question for each State to consider since the economic and social conditions differ from area. Once the relevant conditions are taken into consideration and the backwardness of a class of people is determined, it will not be for the court to interfere in the matter. But, lest there be any misunderstanding, judicial review will rot stand excluded . SEN, J. In view of the importance of the question involved, would like to add a few words of my own. 435 The real question raised is not of excessive reservation for the advancement of socially and educationally backward classes of citizens or for the Scheduled Castes and Scheduled Tribes under article 15(4) or for reservation of appointments or posts in favour of any backward classes of citizens under article 16(4) which, in the opinion of the State, is not adequately represented in the services under the State but the question is as to the identification of the socially and educationally backward classes of citizens for whose advancement the State may make special provisions under article 1 '(4) like those for the Scheduled Castes and Scheduled Tribes. Conceptually, the making of special provisions for the advancement of backward classes of citizens under article 15(4) and the system of reservation of appointments or posts as envisaged by article 16(4) as guaranteed in the Constitution, is a national commitment and a historical need to eradicate age old social disparities in our country. But unfortunately the policy of reservation hitherto formulated by the Government for the upliftment of such socially and educationally backward classes of citizens is caste oriented while the policy should be based on economic criteria. Then alone the element of caste in making such special provisions or reservations under articles 15(4) and 16(4) can be removed. At present only the privileged groups within the backward classes i.e. the forwards among the backward classes reap all the benefits of such reservation with the result that the lowest of the low are stricken with poverty and therefore socially and economically backward remain deprived though these constitutional provisions under articles (15(4) and 16(4) are meant for their advancement. After 37 years of attainment of independence it cannot be seriously disputed that poverty is the root cause of social and economic backwardness. The problem is about identification of the backward classes for whose benefit the State may make special provisions under article 15(4). Or for reservation of appointments or posts under article 16(4). In view of the widespread public unrest in the State of Madhya Pradesh and Gujarat in recent days, the Government at the Centre must have a second look at the whole system of reservation. It is true that mere economic backwardness would not satisfy the test of educational and social backwardness under article IS(4) but the question is as to the criteria to be adopted. Economic backwardness is only one of the tests to determine social and educational backwardness. If that test were to be the sole criterion of social and educational backwardness, the reservation for the advancement of such classes to special treatment under article 15(4) would fail. 436 In retrospect, the answer to the question as to who are the A members of socially and educationally backward classes for whose advancement the State may make special provisions under article 15(4) still eludes us. Why should not the expression 'backward classes ' be treated as synonymous with the weaker sections of the society? Does the word 'class ' denote a caste or sub caste among Hindus so far as Hindus are concerned, or a section or a group so far as Muslim, Christian or other religious communities and denomination are concerned? In my considered opinion. the predominant and the only factor for making special provisions under article 15(4) or for reservations of posts and appointments under article 16(4) should be poverty, and caste or a sub caste or a group should be used only for purposes of identification of persons comparable to Scheduled Castes or Scheduled Tribes, till such members of backward classes attain a state of enlightment and there is eradication of poverty amongst them and they become equal partners in 8 new social order in our national life. In this context, I must point out that the adequacy or otherwise of representation of the backward classes in the services has to be determined with reference to the percentage of that class in the population and the total strength of the service as a whole. The representation does not have to exactly correspond to the percentage of that class in the population; it just to be adequate. Moreover, in the case of services the extent of representation has to be considered by taking into account the number of members of that class in the service, whether they are holding reserved or unreserved posts. I cannot overemphasize the need for a rational examination of the 17 whole question of reservation in the light of the observation made by us. The State should give due importance and effect to the dual constitutional mandates of maintenance of efficiency and the equality of opportunity for all persons. The nature and extent of reservations must be rational and reasonable. It may be, and often is difficult for the Court to draw the line in advance which the State ought not to cross, but it is never difficult for the Court to know that an invasion across the border, however ill defined, has taken place. The Courts have neither the expertise nor the sociological knowledge to define or lay down the criteria for determining what are 'socially and educationally backward classes of citizens ' within the meaning of Art 15(4) which enables the State to make 'special provisions for the advancement ' of such classes notwithstanding the command of article 15(2) that the State shall not discriminate against and citizens on the 437 ground only of religion, race, caste, descent, place of birth, residence or any of them. article 340 provides for the appointment of a Commission to 'investigate the conditions of socially and educationally backward classes within the territory of India and the difficulties under which they labour and to make recommendations as to the steps that should be taken by the Union or any State to remove such difficulties and to improve their condition. The state of backwardness of any class of citizens is a fact situation which needs investigation and determination by a fact finding body which has the expertise and the machinery for collecting relevant data. The Constitution has provided for the appointment of such a Commission for Backward Classes by the President under article 340 to make recommendations and left it to the State to make special provisions for the advancement of such backward classes. The Court is ill equipped to perform the task of determining whether a class of citizens is socially and educationally backward. This Court has, however, a duty to interpret the Constitution and to see what it means and intends when it makes provision for the advancement of socially and educationally back ward classes. In considering this situation then, we must never forget that it is the Constitution we are expounding. Except for this the Court has very little or no function. Questions as to the validity or otherwise of reservations have been agitated several times before this Court and resolved. The frequency and vigour with which these questions are raised is a disturbing indication of the tension and unease in society in regard to the manner in which article 15(4) and article 16(4) are operated by the State. The Preamble to our Constitution shows the nation 's resolve to secure to all its citizens: Justice Social, economic and political. The State 's objective of bringing about and maintaining social justice must be achieved reasonably having regard to the interests of all. Irrational and unreasonable moves by the State will slowly but surely tear apart the fabric of society. It is primarily the duty and function of the State to inject moderation into the decisions taken under articles 15(4) and 16(4), because justice lives in the hearts of men and growing sense of injustice and reverse discrimination, fuelled by unwise State action, will destroy, not advance, social justice. If the State contravenes the constitutional mandates of article 16(1) and article 335, this Court will of course, have to perform its duty. The extent of reservation under article 15(4) and article 16(4) must necessarily vary from State to State and from region to region within 438 a State, depending upon the conditions prevailing in a particular A State or region, of the Backward Classes. r do feel that the Central Government should consider the feasibility of appointing a permanent National Commission for Backward Classes which must constantly carry out sociological and economic study from State to State and from region to region within a State. The framers of the Constitution by enacting article 340 clearly envisaged the setting up of such a high powered National Commission for Backward classes at the Centre. These problems can never be resolved through litigation in the Courts. I wish to add that the doctrine of protective discrimination embodied in articles 15(4) and 16(4) and the mandate of article 29(2) cannot be stretched beyond a particular limit. The State exists to serve its people. There are some services where expertise and skill are of the essence. For example, a hospital run by the State serves the ailing members of the public who need medical aid. Medical services directly affect and deal with the health and life of the populace. Professional expertise, term of knowledge and experience, of a high degree of technical knowledge and operational skill is required of pilots and aviation engineers. The lives of citizens depend on such persons. There are other similar fields of governmental activity where professional, technological, scientific or other special skill is called for. In such services or posts under the Union or States, we think there can be no room for reservation of posts; merit alone must be the sole and decisive consideration for appointments. Reasons for this decision will follow. VENKATARAMIAH, J. The constitutional validity of certain Government orders issued by the Government of the State of Karnataka making provisions for reservation of some seats in technical institutions and some posts in the Government services respectively under Article 15(4) and Article 16(4) of the Constitution of India for being filled up by students, `candidates, as the case may be, belonging to certain castes, tribes and communities which in the opinion of the State Government constituted backward classes (other than the Scheduled Castes and the Scheduled Tribes) is questioned in these petitions. The questions involved in these cases fare delicate ones and have, therefore, to be tackled with great caution. The issues raised here and the decision rendered on them are bound to have a great 439 impact on society. They are indeed highly sensitive issues. A superficial approach to the problem has, therefore, to be avoided. A The questions have to be tackled with sympathy for persons who are really in need of the benign assistance at the hands of the State and with due regard to the interests of the general public. "India 's vast and unparalleled experiment with 'protective ' or 'compensatory ' discrimination in favour of 'backward sections ' of her population betokens a generosity and farsightedness that are rare among nations. The operation of such a preferential principle involves formidable burdens of policy making and administration in a developing nation. It also places upon the judiciary tasks of great complexity and delicacy. The courts must guard against abuses of the preferential principle while at the same time insuring that the government has sufficient leeway to devise effective use of the broad powers which the Constitution places at its disposal". These are the wise words of Marc Galanter, a member of the faculty on social Sciences, University of Chicago, who has made a special study of the problem of the Indian backward classes. The very fact that the governmental agencies and 'above all the courts have been obliged to examine the constitutional principles in the light of the egalitarian pressures has in its turn opened up hardly foreseen complexities that had lain buried in the doctrine of equality '. The society which cherishes the ideal of equality has to define the meaning and content of the concept of equality and the choices open to it to bring about an egalitarian society would always be political. But the courts have been forced to scrutinise a variety of choices, while the society for which they have to answer has been issuing a proliferation of demands. What is 'coming about, in short, is a transformation of consciousness which is tinged with sensations of in justice and exploitation '. Many inequalities in the past seemed almost to have been part of the order of nature. 'The categories of equality can thus in a sense be seen to correspond to levels of awareness. Perhaps not all inequalities can ever be rectified and it is certain that some can be rectified only by creating new inequalities and new grievances. It is this that has made the judiciary the fulcrum of such continuous tension for it is the judiciary and above all the Supreme Court which has the duty of mediating these conflicting demands back to society through the prism of constitutional interpretation '. The courts, however, deal with the problems that society presents. 'Levels of awareness and corresponding senses of grievance have arisen at different times for particular historical reasons often tend 440 ing to differentiate among the categories of equality rather than unifying them. Inequalities of class, race, religion and sex have presented themselves at different periods as primary grievances '. Equality of opportunity revolves around two dominant principles (1) the traditional value of equality of opportunity and (2) the newly appreciated not newly conceived idea of equality of results. 'Social justice may demand and political interests may make expedient a policy of correction in favour of individual members of minorities or communities. But at this point whenever any action was taken the principle of individual equality of opportunity lost its direction. Such affirmative action played off not one individual of one group against another of another group, but the present against the past. In past many privileged persons of mediocre ability had benefited from the indulgence of a system that unquestionably biased in favour of higher castes. ' 'Individual aspirations claim the protection of society 's rules. But they are not always in harmony and sometimes conflict with the same society 's broad interest in achieving certain kinds of racial or group balance. ' But rectification of imbalance also sometimes tends towards inequality. 'Societies do not work on absolute rationality, excess of rationality often tends to dehumanise human relations '. The courts are also reminded that for those who are suffering from deprivation of inalienable rights, gradualism can never be a sufficient remedy because as Ralph Buoche observed 'inalienable rights cannot be enjoyed posthumously '. Ours is a 'struggle for status, a struggle to take democracy off parchment and give it life '. 'Social injustice always balances its books with red ink '. Neither the caprice of personal taste nor the protection of vested interests can be stand as reasons for restricting opportunities of any appropriately qualified person. These are the considerations which sometimes may be conflicting that should weigh with the courts dealing with cases arising out of the doctrine of equality. It should, however, be remembered that the courts by themselves are not in a position to bring the concept of equality into fruitful action. They should be supported by the will of the people, of the Government and of the legislators. There should be an emergence of united action on the part of all segments of human society. This is not all. Mere will to bring about equality under the existing economic level might worsen the situation. There should be at the same time a united action to increase the national resources so that the operation of equality will be less burdensome 441 and every member of the society is carried to a higher social and economic level leaving nobody below a minimum which guarantees all the basic human needs to every member of the society. If there is no united action the pronouncements by courts would become empty words as many of the high principles adumberated in the chapter on the Directive Principles of State Policy in the Constitution have turned out to be owing to several factors which need not be detailed here. We shall proceed to consider this case against this background. In this case, the Court is called upon to resolve the conflict between 'the meritarian principle and the compensatory principle ' in the matter of admissions into institutions imparting higher education and of entry into Government service in the State of Karnataka. All the contestants depend upon one or the other clauses of the Constitution in support of their case. Hence the problem is rendered more difficult. Those who argue in support of merit contend that the State should remove all man made obstacles which are in the way of an Individual and allow him to attain his goal in an atmosphere of free competition relying upon his own natural skill and intelligence. Those who argue for compensatory principle contend that in order that the competition may be 'fair and not just free ' it is the duty of the State to take note of the unequal situation of the individuals concerned which has led to unequal capacities amongst them and to reduce the rigours of free competition which may, unless looked into by the State, lead to perpetual denial of equality of opportunity to the weak and the neglected sections of society. This argument is based on the well founded assumption that unequal conditions of cultural life at home cause unequal cultural development of children belonging to different strata of society. The need for social action is necessitated by the environment factors and living conditions of the individuals concerned. The application of the principle of individual merit, unmitigated by other considerations, may quite often lead to inhuman results. The following illustration given by Bernard Williams establishes the above statement: "Suppose that in a certain society great prestige is attached to membership of a warrior class, the duties of which require great physical strength. This class has in the past been recruited from certain wealthy families 442 only ; but egalitarian reforms achieve a change in the rules, by which warriors are recruited from all sections of the society, on the results of a suitable competition, The effect of this, however, is that the wealthy families still provide virtually all the warriors, because the rest of the populage is so under nourished by reason of poverty that their physical strength is inferior to that of the weal thy and well no nourished. The reformers protest that equality of opportunity has not really been achieved; the wealthy reply that in fact it has, and that the poor now have the opportunity of becoming warriors it is just bad luck that their characteristics are such that they do not pass the test. 'We are not, ' they might say, 'excluding anyone for being poor, we exclude people for being weak, and it is unfortunate that those who are poor are also weak. ' This answer would seem to most people feeble and even cynical This is for reasons similar to those discused before in connection with equality before the law; that the supposed equality of opportunity is quite empty indeed, one may say any that it does not really exist unless it is made more effective than this. For one knows that it could be made more effective: one knows that there is a casual connection between being poor and being under nourished, and between being undernourished and being physically weak. One suppose further that something could be done subject to whatever economic conditions obtain in the imagined society to alter the distribution of wealth. All this being so, the appeal by the wealthy to the 'bad luck ' of the poor must appear as disingenuous. " The former princely State of Mysore which now forms part of the State of Karnataka is one of the earliest States in the country in which the system of reservation for backward classes in public ser vices was introduced. In 1918, the Government of His Highness the Maharaja of Mysore appointed a committee under the chairmanship of Sir Leslie C. Miller, Chief Justice of the Chief Court of Mysore to investigate and report on the problem of backward classes. The questions referred to that Committee were (i) changes needed in the then existing rules of recruitment to public services; (ii) special 443 facilities to encourage higher and professional education among the members of backward classes and (iii) any other special measures which might be taken to increase the representation of backward communities in the public services without materially affecting the efficiency, due regard being paid also to the general good accruing to the State by a wider diffusion of education and feeling of increased status which will thereby be produced in the backward communities. It is significant that the expression 'backward classes ' and 'backward communities ' were used almost interchangeably and that the idea contained in Article 335 of the Constitution that any reservation made should not impair efficiency was anticipated more than three decades before the Constitution was enacted. The Committee submitted its report in 1921 containing its opinion that all communities in the State other than Brahmins should be understood as backward communities regarding whom it made certain recommendations. The Government orders issued on the basis of that Report continued to be in force till 1956 i.e. the reorganisation of States which brought together five integrating units the former State of Maysore (including Bellary District), Coorg, four districts of Bombay, certain portions of the State of Hyderabad and the district of South Kanara and the Kollegal Taluk which formerly formed part of the State of Madras. There were different lists of backward communities in the five integrating units and they were allowed to continue for sometime even after the reorganisation of States In order to bring about uniformity the State Government issued a notification containing the list of backward classes for the purpose of Article 15(4) of the Constitution at the beginning of 1959. The validity of that notification and of another notification issued thereafter on the same topic which according to the State Government had treated all persons except Brahmins. Banias and Kayasthas as backward communities was challenged before the High Court of Mysore in Rama Krishna Singh vs State of Maysore.(l) The two notifications were struck down by the HighCourt. The High Court held that inasmuch as the impugned notifications contained a list of backward classes including 95% of the population of the State and all Hindu communities other than Brahmins, Banias and Kayasthas and all other non Hindu communities in the State except Anglo Indians and Parsees had been treated as backward classes it resulted more in a discrimination against the few excluded communities consisting of about 5% of the total population rather than making provision for socially and (1) A.I.R. 1960 Mys. 444 educationally backward classes. The High Court held that making A provision for communities which were slightly backward to the so called forward communities did not amount to making provision for the communities which really needed protection under Article 15(4) of the Constitution. The argument of the petitioners in that case that socially and educationally backward classes can in no case be determined on the basis of caste was, however, rejected. After the above decision was rendered by the High Court, the State Government constituted a Committee OD January 8, 1960 under the Chairmanship of Dr. R. Nagan Gowda for the purpose of determining the criteria for the classification of backward classes in the State with the following terms of reference: ( I) to suggest the criteria to be adopted in determining which sections of the people in the State should be treated as socially and educationally backward and (2) to suggest the exact manner in which the criteria thus indicated should be followed to enable the State Government to determine the persons who should secure such preference as may be determined by Government in respect of admissions to technical institutions and appointment to Government services. The said committee submitted its Interim Report on February 19, 1960. On the basis of the Interim Report of the Committee, the State Government passed an order dated June 9, 1960 regarding admissions to professional and technical institutions reserving 22% of seats for backward classes, 15% for Scheduled Castes and 2% for Scheduled Tribes and the remaining 60% of seats were allowed to be filled upon the basis of merit. The above Government order was, challenged before the High Court of Mysore in S.A. Partha & Ors. vs The State of Mysore & Ors.(l) The High Court found that the direction contained in the Government order to the effect that if any seat or seats reserved for candidates belonging to the Scheduled Castes and Scheduled Tribes remained unfilled, the same shall be filled by candidates of other backward classes was unconstitutional. It also gave some directions regarding the manner in which the calculation of the quota of reservation should be made. Thereafter the Final Report was submitted by the Nagan Gowda Committee on May 16, 1961 After taking into consideration the recommendations made in the said Report, the State Government issued an order for the purpose of Article 15 (4) of the Constitution on July 10, 1961. By that order, the State Government specified 81 classes of people as backward classes and 13 S classes of people as more backward classes and reserved 30% of (1) A.I.R. 1961 Mys. 445 seats in the professional and technical institutions for backward and more backward classes. 15% and 3% of the seats were reserved for Scheduled Castes and Scheduled Tribes respectively and the remaining 52% of the seats were allowed to be filled up on merit. The above order was superseded by a fresh Government order made on July 31, 1962 for the purpose of Article 15 (4). By this new order, 28% of the seats were reserved for the backward classes, 22% for the more backward classes, 15 per cent for the Scheduled Castes and 3 per cent for the Scheduled Tribes. Thus 68 per cent of the seats were reserved under Article 15 (4) of the Constitution and only 32 per cent of the seats became available for being filled up on the basis of merit. This order was challenged before this Court under Article 32 of the Constitution in M.R. Balaji and Ors. vs State of Mysore.(1) In the decision rendered in that case which is considered to be land mark in the constitutional pronouncement made by this Court, Gajendragadkar, J. (as he then was) explained the meaning of the term 'socially and educationally backward classes ' appearing in Article 15 (4) of the Constitution at pages 459 461 thus: "The backwardness under article 15 (4) must be social and educational. It is not either social or educational but it is both social and educational; and that takes us to the question as to how social and educational backwardness has to be determined. Let us take the question of social backwardness first. By what test should it be decided whether a particular class is socially backward or not ? The group of citizens to whom Article 15 (4) applies are described as 'classes of citizens ', not as castes of citizens. A class, according to the dictionary meaning, shows division of society according to status, rank or caste. In the Hindu social structure, caste, unfortunately plays an important part in determining the status of the citizen. Though according to sociologists and Vedic scholars, the caste system may have originally begun on occupational or functional basis, in course of time, it became rigid and inflexible. The history of the growth of caste system shows that its original functional and occupational basis was later over burdened with considerations of purity based on ritual (1) [1963] Supp. S.C.R. 439, 446 concepts and that led to its ramifications which introduced inflexibility and rigidity. This artificial growth inevitably tended to create a feeling of superiority and inferiority and to foster narrow caste loyalties. Therefore, in dealing with the question as to whether any class of citizens is socially backward or not, it may not be 13 irrelevant to consider the caste of the said group of citizens. In this connection, it is, however, necessary to bear in mind that the special provision is contemplated for classes of citizens and not for individual citizens as such, and so, though the caste of the group of citizens may be relevant, its importance should not be exaggerated. If the classification of backward classes of citizens was based solely on the caste of the citizen, it may not always be logical and may perhaps contain the vice of perpetuating the castes themselves. Besides, if the caste of the group of citizens was made the sole basis for determining the social backwardness of the said group, that test would inevitably break down in relation to many sections of Indian Society which do not recognise castes in the conventional sense known to Hindu Society. How is one going to decide whether Muslims, Christians or Jains, or even Lingayats are socially, backward or not ? The test of castes would be inapplicable to those groups, but that would hardly justify the exclusion of these groups in to from the operation of article 15 (4). It is not unlikely that in some States some Muslims or Christians or Jains forming groups may be socially backward. That is why we think that though castes in relation to Hindus may be a relevant factor to consider in determining the social backwardness of groups or classes of citizens, it cannot be made the sole or the dominant test in that behalf. Social backwardness is on the ultimate analysis the result of poverty, to a very large extent. The classes of citizens who are deplorably poor automatically became socially backward. They do not enjoy a status in society and have, therefore, to be content to take a backward seat. It is true that social backwardness which results from poverty is likely lo be aggravated by considerations of caste to which the poor citizens may belong, but that 447 only shows the relevance of both caste and poverty in determining the backwardness of citizens. A The occupations of citizens may also contribute to make classes of citizens Socially backward. There are some occupations which are treated as inferior according to conventional beliefs and classes of citizens who follow these occupations are apt to become socially backward. The place of habitation also plays not a minor part in determining the backwardness of a community of persons. In a sense, the problem of social backwardness is the problem of Rural India and in that behalf, classes of citizens occupying a socially backward position in rural area fall within the purview of article 15 (4) The problem of determining who are socially backward classes is undoubtedly very compleat Sociological, social and economic considerations come into play in solving the problem and evolving proper criteria for determining which classes are socially backward is obviously a very difficult task; it will need an elaborate investigation and collection of data and examining the said data in a rational and scientific way. That is the function of the State which purports to act under Art 15 (4). All that this Court is called upon to do in dealing which the present petitions is to decide whether the tests applied by the impugned order are valid under article 15 (4). If it appears that the test applied by the order in that behalf is improper and invalid, then the classification of socially back ward classes based on that test will have to be held to be inconsistent with the requirements of article 15 (4). " Dealing with the question of determination of the classes which were educationally backward, Gajendragadkar, J. (as he then was) observed in the same case at pages 463 464 thus: "It may be conceded that in determining the educational backwardness of a class of citizens the literacy test supplied by the Census Reports may not be adequate; but it is doubtful if the test of the average of student population in the last three High School classes is appropriate in determining the educational backwardness. Having regard to the fact that the test is intended to determine who are educationally backward classes, it may 448 not be necessary or proper to put the test as high as has been done by the Committee. But even assuming that the test applied is rational and permissible under article 15 (4), the question still remains as to whether it would be legitimate to treat castes or communities which are just below the State average as educationally backward classes. If the State average is 6.9 per thousand, a community which satisfies the said test or is just below the said test cannot be regarded as backward. It is only communities which are well below the State average that can properly be regarded as educationally backward classes of citizens. Classes of citizens whose average of student population works below 50 per cent of the State average are obviously educationally backward classes of citizens. Therefore, in our opinion, the State was not justified in including in the list of Backward Classes, castes or communities whose average of student population per thousand was slightly above or very near, or just below the State average." (underlining by us) Applying the above rule the Court held that the inclusion of members of the Lingayat community in the list of backward classes was erroneous. On the question of extent of reservation that can be made, this Court observed in the aforesaid case at pages 469 471 thus: "The learned Advocate General has suggested that reservation of a large number of seats for the weaker sections of the society would not affect either the depth or efficiency of scholarship at all, and in support of this argument, he has relied on the observations made by the Backward Classes Commission that it found no complaint in the States of Madras, Andhra, Travancore Cochin and Mysore where the system of recruiting candidates from other Backward Classes to the reserve quota has been in vogue for several decades. The Committee further observed that the representatives of the upper classes did not complain about any lack of efficiency in the offices recruited by reservation (p. 135). This opinion, however, is plainly inconsistent with what is bound to be the inevitable consequence of reservation in higher university education. If admission to professional and technical colleges is unduly liberalist it would be idle to contend 449 that the quality of our graduates will not suffer. That is not to say that reservation should not be adopted; A reservation should and must be adopted to advance the prospects of the weaker sections of society, but in providing for special measures in that behalf care should be taken not to exclude admission to higher educational centres to deserving and qualified candidates of other communities. A special provision contemplated by article 15 (4) like reservation of posts and appointments contemplated by article 16 (4) must be within reasonable limits. The interests of weaker sections of society which are a first charge on the States and the Center have to be adjusted with the interests of the community as a whole. The adjustment of these competing claims is undoubtedly a difficult matter, but if under the guise of making a special provision, a State reserves practically all tho seats available in all the colleges, that clearly would be subverting the object of article 15 (4). In this matter again, we are reluctant to say definitely what would be a proper provision to make. Speaking generally and in a broad way, a special provision should be less than 50 per cent; how much less than 50 per cent would depend upon the relevant prevailing circumstances in each case. In this particular case, it is remarkable that when the State issued its order on July 10, 1961, it emphatically expressed its opinion that the reservation of 68 per cent recommended by the `Nagging Gowada Committee would not be in the larger interests of the State. What happened between July 10, 1961 and July 31, 1962, does not appear on the record. But the State changed its mind and adopted the recommendation of the Committee ignoring its earlier decision that the said recommendation was contrary to the larger interests of the State. In our opinion, when the State makes a special provision for the advancement of the weaker sections of society specified in article 15 (4), it has to approach its task objectively and in a rational manner. Undoubtedly, it has to take reasonable and even generous steps to help the advancement of weaker elements; the extent of the problem must be weighed, the requirements of the community at large must be borne in mind and a formula must be evolved which would strike a reasonable balance between the several relevant considerations. Therefore, 450 we are satisfied that the reservation of 68 per cent directed by the impugned order is plainly inconsistent with article 15 (4). " (Emphasis added) The petition was thus allowed by this Court. Then came the Government order dated July 26, 1963 which directed that 30 per cent of the seats in professional and technical colleges and institutions should be reserved for backward classes as defined in that order and that 18 per cent of the seats should be reserved for the Scheduled Castes and Scheduled Tribes. The criteria laid down in that order for determining social and economic backwardness were two fold income and occupation. It stated that those who followed occupations of agriculture, petty business, inferior service, crafts or other occupations involving manual labour and whose family income was less than Rs. 1,2001 per annum were to be treated as belonging to backward classes. This order was questioned before the High Court in G. Viswanath vs Govt. of Mysore and Ors.(l) by some petitioners on various grounds. While dismissing the said petitions, the High Court observed that the determination of the backward classes without reference to caste altogether was not correct and it expressed the hope that the State would make a more appropriate classification lest its bonafides should be questioned. In the appeal filed against this judgment in R. Chitralekha and Anr. vs State of Mysore and Ors. ,(2) the correctness of the above observation was questioned. Dealing with that question Subba Rao, J. (as he then was), who spoke for the majority, said that the observations of the High Court referred to above were inconsistent with the decision in Balaji 's case (supra). After referring to the relevant observations made by this Court in Balaji ' case (supra), Subba Rao, J. (as he then was) observed at pages 386 387 thus: "Two principles stand out prominently from the said observations, namely, (i) the caste of a group of citizens may be a relevant circumstance in ascertaining their social backwardness; and (ii) though it is a relevant factor to determine the social backwardness of a class of citizens, it cannot be the sole or dominant test in that behalf. (1) A.I.R. 1964 Mys. 132. (2) ; 451 The observations extracted in the judgment of the High Court appear to be in conflict with the observations Of A this Court. While this Court said that caste is only a relevant circumstance and that it cannot be the dominant test in ascertaining the backwardness of a class of citizens, the High Court said that it is an important basis in determining the class of backward Hindus and that the Government should have adopted caste as one of the tests As the said observations made by the High Court may lead to some confusion in the mind of the authority concerned who may be entrusted with the duty of prescribing the rules for ascertaining the backwardness of classes of citizens within the meaning of article 15 (4) of the Constitution, we would hasten to make it clear that caste is only a relevant circumstance in ascertaining the backwardness of a class and there is nothing in the judgment of this Court which precludes the authority concerned from determining the social backwardness of a group of citizens if it can do so without reference to caste. While this Court has not excluded caste from ascertaining the backwardness of a class of citizens, it has not made it one of the compelling circumstances according a basis for the ascertainment of backwardness of a class. To put it differently, the authority concerned may take caste into consideration in ascertaining the backwardness of a group of persons; but, if it does not, its order will not be bad on that account, if it can ascertain the backwardness of a group of persons on the basis of other relevant criteria." (Underlining by us) Proceeding further, Subba Rao, J. (as he then was) observed at pages 388 389 thus: "The important factor to be noticed in article 5(4) is that it does not speak of castes, but only speaks Or classes. If the makers of the Constitution intended to take castes also as units of social and educational backwardness, they would have said so as they have said in the case of the Scheduled Castes and the Scheduled Tribes. Though it may be suggested that the wider expression "classes" is used in cl. (4) of article 15 as there are communities without castes, if take intention was to equate classes with castes, 452 nothing prevented the marks of the Constitution from A using the empression "backwarded classes or castes". The juxtaposition of the expression "backward classes" and "Scheduled Castes" in article 15(4) leads to a reasonable inference that the empression "classes" is not synonymous with castes. It may be that for ascertaining whether a particular citizen or a group of citizens belong to a backward class or not, his or their caste may have some relevance, but it can not be either the sole or the dominant criterion for ascertaining the class to which he or they belong. This interpretation will carry out the intention of the Constitution expressed in the aforesaid Articles. It helps the really backward classes instead or promoting the interests of individuals or groups who, though they belong to a particular caste a majority whereof is socially and educationally backward, really belong to a class which is socially and educationally advanced. To illustrate, take a caste in a State which is numerically the largest therein. It may be that though a majority of the people in that caste are socially and educationally backward, an effective minority may be socially and educationally far more advanced than another small sub caste the total number of which is far less then the said minority. If we interpret the empression "classes" as "castes" the object of the Constitution will be frustrated and the people who do not deserve any adventitious aid may get it to the exclusion of those who really deserve. This anomally will not arise if, without equating caste with class, caste is taken as only one of the considerations to ascertain whether a person belongs to a backward class or not. On the other hand, if the entire sub caste, by and large, is backward, it may be included in the Scheduled Castes by following the appropriate procedure laid down by the Constitution". In 1972, tho State Government appointed the Karnataka Backward Classes Commission under the chairmanship of Shri L. G. Havanur which after an elaborate enquiry submitted its Report on November 19, 1975 in four massive volumes, the first volume containing two parts. rt is stated that the commission counted a socio economic survey of 378 villages and town/city blocks in their entirety covering more than 3,55,000 individuals belonging to 453 171 castes and communities with the help of more than 425 investigators and supervisors. About 365 witnesses were examined by A the Commission. The Report of the Commission is full of tabular statements and it refer to a number of writings by sociologists, demographers, jurists and persons will versed in social sciences. The work of the Commission deserves to be commended as such an extensive investigation into the conditions of backward classes had not been conducted in the State so far Perhaps till than in no other part of India, such on elaborate investigation had been carried out with reference to so many minute details. The commission recommended that persons belonging to backward classes for purpose of Article 15(4) of the Constitution should be divided into three groups (a) backward communities consisting of 15 castes, (b) backward castes consisting of 128 castes and (c) backward tribes consisting of 62 tribes. For purposes Or Article 16(4) of the Constitution, the Commission divided the backward classes into (a) backward communities consisting of 9 castes. (b) backward castes consisting of 115 castes and (c) backward tribes consisting of 61 tribes. According to the Commission, backward communities were those castes whose student average of students passing section section L. C. examination in 1972 per thousand of population was below the State average (which was 1.69 per thousand) but above 50 per cent of the State average and backward castes and backward tribes were those castes and tribes whose student average was below 50 per sent of the State average except in the case of Dombars and Voddars and those who were Nomadic and de notified tribes. The total population of these backward classes (other then Scheduled Castes and Scheduled Tribes, according to the Commission, was about 45 per cent of the total population of the State. The difference between the two lists one under Article 15(4) and the other under Article 16(4) of the Constitution was due to the exclusion of certain communities, castes and tribes which were socially and educationally backward but which had adequate representation in the services from the list prepared for the purpose of Article 16(4). The Commission recommended both for purpose of Article 15(4) and Article 16 4) the following percentage of reservations: (i) Backward communities 16 percent (ii) Backward castes 10 percent (iii) Backward tribes 6 percent Total: 32 percent 454 The above reservation of 32 per cent along with 18 per cent reserved for Scheduled Castes and Scheduled Tribes together amounted to 50 per cent of the total seats or posts, as the case may be. The Commission further recommended that if seats/posts remained unfilled in the quota allotted to backward tribes, they should be made over to backward communities and backward castes. Similarly if seats/posts remain unfilled in the quota allotted to backward castes, they should be made over to backward communities and backward tribes. If, however, seats/posts remain unfilled in the quota allotted to any of those three categories, they should be made over to Scheduled Castes and Scheduled Tribes. In the event of seats/posts remaining unfilled by any of these categories, they should be transferred to the general pool. After considering the Report of the Backward Classes Commission, the State Government issued an order dated February 22, 1977 the material part of which read as follows: "1 After careful consideration of the various recommendations made by the Commission, Government are pleased to direct as follows: I. The Backward Communities, Backward Castes and Backward Tribes as mentioned in the list appended to this Order shall be treated as Backward Classes for purposes of Article 15(4) and Article 16(4) of the Constitution of India. Only such citizens of these Backward Classes whose family income per annum from all sources is Rs. 8,000 , (Rupees eight thousand only) and below shall be entitled to special treatment under these Articles. The following five categories of citizens shall be considered as a special group and such citizens of this Special Group whose family income is Rs. 4,800 (Rupees Four Thousand eight Hundred only) and below per annum shall be eligible for special treatment under these Articles: (i) an actual cultivator; (ii) an artisan; (iii) a petty businessman; 455 (iv) one holding an appointment either in Government service or corresponding services under A private employment including casual labour; and (v) any person self employed or engaged in any occupation involving manual labour. Note : Family income under sub paras I and II above means income of the citizen and his parents and if either of the Parents is dead, his legal guardian. To fix the reservation for purposes of Articles ] 5(4) and 16(4) of the Constitution in respect of the Backward Classes and the Special Group of citizens at 40 per cent, the allocation being as follows: (a) Backward Communities 20 (twenty per cent) (b) Backward Castes 10 (ten per cent) (c) Backward Tribes 5(five per cent) (d) Special Group 5(five per cent) E In the list of Backward communities mentioned in the Government order, the State Government included 'Muslims ' thus making a total of 16 backward communities In the list of backward castes, there were 129 castes including converts into Christianity from Scheduled Castes/Scheduled Tribes up to second generation and 62 Schedules Tribes. The reservation for backward classes was 40 per cent and taken along with 18 per cent for Scheduled Castes and Scheduled Tribes, the total reservation of seats/posts came to 58 per cent leaving only 42 per cent for merit pool. By an order dated May 1, 1979, the reservation for backward communities was reduced to 18 per cent for purposes of Article 16(4). By an order dated June 27, 1979, the State Government modified the Government order dated February 22, 1977 by increasing the reservation for 'Special Group ' from 5 per cent to 15 per cent both for purposes of Article 15(4) and Article 16(4) of the Constitution. Thus as on date, the total reservation for purposes of Article 15(4) in 68 per cent and tor purposes of Article 16(4) is 66 per cent. There are only 32 per 456 cent seats in professional and technical colleges and 34 per cent posts in Government services which can be filled up on the basis of merits. In these writ petitions filed under Article 32 of the Constitution the above Government orders dated February 22, 1977 as modified by the Government orders dated May 1, 1979 and June 27, 1979 are challenged. It should be stated here that the Government orders dated February 22, 1977 and another notification dated March 4, 1977 issued for purposes of Article 16(4) had also been challenged in a number of writ petitions filed under Article 226 of the Constitution before the High Court of Karnataka in S.C. Somashekarappa & Ors. vs State of Karnataka & Ors.(l) The High Court allowed the writ petitions in part. It quashed the inclusion of 'Arasu ' community in the list of 'Backward Communities ' both for purposes of Article 15(4) and Article 16(4). It also quashed inclusion of the (i) Balaji,(ii) Devadiga, (iii) Gangia, (iv) Nayiada, (v) Rajput and (vi) Satani in the list of backward communities and the inclusion of (1) Banha, (2) Gurkha, (3) Jat, (4) Konga, (5) Kotari, (6) Koyava, (7) Malayali, (&) Maniyanani or (Muniyani), (9) Padarti, ( 10) Padiyar, (11) Pandavakulam, (12) Raval and (13) Rawat in the list of Backward Castes for purposes of Article 16(4) of the Constitution. Reservation of 20 per cent made for Backward Communities in the State Civil Services under Article 16(4) was quashed reserving liberty to the State Government to determine the extent of reservation in accordance with law. The classification and reservation in other respects was upheld. S.L.P. (Civil) No. 6656 of 1979 is filed against the said judgment of the High Court under Article ] 36 of the Constitution. The two Government orders dated May 1, 1979 and June 27, 1979 referred to above modifying the earlier Government orders were passed after the judgment of the High Court was pronounced, as stated above. Volumes have been written on the caste system prevailing in India. The caste (varna) has its origin in antiquity. We find reference to it in the vedic lore and in the great epics, in the Smritis and in the Puranas. Purusha Sukta refers to the prevalence of the four Varnas (caste) (See Rig Veda X 90 12). The Lord says in the (1) Writ Petition No. 4371 of 1977 and connected writ petitions disposed of on April 9, 1979. 457 Bhagavadgita (lV 13) that the fourfold caste was created by him by the varying distribution of guna and karma. Varna Dharma is extold in many ancient treaties. However laudable the division of society into different castes at the commencement might have been, during the several centuries that followed these castes became petrified making mobility from one caste to another almost impossible. The caste of a person was known by his birth. There arose in course of time a social hierarchy built upon the caste system. The stigma of low caste was attached to a person during his whole life with all the attendant disadvantages. Karua, the tragic hero of the Mahabharata though born of a Kshatriya princess had to suffer ignominy during his entire life time as he came to be known as the son of a charioteer (Suta) belonging to a low caste. He was made to say 'I may be a charioteer or a charioteer 's son. I may be anybody. What does it matter ? Being born in a (high) caste is God 's will but valour belongs to me. ' (See Veni Samhara by Bhatta Narayana). There were many sub castes of different degrees in the hierarchy. Some were even treated as untouchables. People of low castes became socially backward and they in their turn neglected studies. Thus they became socially and educationally backward. This part of the Indian history is dismal indeed. A page of history is worth a volume of logic. We are aware of the meanings of the words caste, race, or tribe or religious minorities in India. A caste is an association of families which practice the custom of endogamy i.e which permits marriages amongst the member. belonging to such families only. Caste rules prohibit its members from marrying outside their caste. There are subgroups amongst the castes which sometimes inter marry and sometimes do not. A caste is based on various factors, sometimes it may be a class, a race or a racial unit. A caste has nothing to do with wealth. The caste of a person is governed by his birth in a family. Certain ideas of ceremonial purity are peculiar to each caste. Sometimes caste practices even led to segregation of same castes in the villages Even the choice of occupation of members of castes was predetermined in many cases, and the members of a particular caste were prohibited from engaging themselves in other types of callings, professions or occupations Certain occupations were considered to be degrading or impure. A certain amount of rigidity developed in several matters and many who 458 belonged to castes which were lower in social order were made to A suffer many restrictions, privations and humiliations. Untouchability was practised against members belonging to certain castes. Inter dining was prohibited in some cases. None of these rules governing a caste had anything to do with either the individual merit of a person or his capacity. The wealth owned by him would not save him from many social discriminations practised by members belonging to higher castes. Children who grew in this caste ridden atmosphere naturally suffered from many social disadvantages apart from the denial of opportunity to live in the same kind of environment in which persons of higher castes lived. Many social reformers have tried in the last two centuries to remove the stigma of caste from which people born in lower castes were suffering. Many laws were also passed prohibiting some of the inhuman caste practices. Article 15 (2) of the Constitution provides that no citizen shall on grounds only of religion, race, caste, sex, place of birth or any of them be subject to any disability, liability, restriction, or condition with regard to (a) access to shops, public restaurants, hotels and places of public entertainment or (b) use of wells, tanks, bathing ghats, roads and places of public resort maintained wholly or partly out of State funds or dedicated to the use of the general public. Article 16 (2) declared that no person shall be ineligible to hold any civil post on grounds of religion, race, caste or descent. Article 17 abolished 'untouchability ' and its practice in any form. Yet the disadvantages from which many of the persons who belonged to various lower castes were suffering are still persisting notwithstanding the fact that some of them have progressed economically. socially and educationally. Pandit Jawaharlal Nehru writes on the social problems created by tho caste system which is peculiar to India in those terms: "The conception and practice of caste embodied the aristocratic ideal and was obviously opposed to democratic conceptions. It had its strong sense of noblesse oblige, provided people kept to their hereditary stations and did not challenge the established order. India 's success and achievements were on the whole confined to the upper classes; those lower down in the scale had very few chances and their opportunities were strictly limited. These upper classes were not small limited groups but large in numbers and there was a difusion of power, authority and influence. Hence they carried on successfully 459 for a very long period. But the ultimate weakness and failing of the caste system and the Indian social structure were that they degraded a mass of human beings and gave them no opportunities lo get out of that condition educationally, culturally, or economically. That degradation brought deterioration, all along the line including in its scope even the upper classes. It led to the petrification which became a dominant feature of India 's economy and life. The contrasts between this social structure and those existing elsewhere in the past were not great, but with the changes that have taken place all over the world during the past few generations they have become far more pronounced. In the context of society today, the caste system and much that goes with it are wholly incompatible, reactionary, restrictive and barriers to progress. There can be no equality in status and opportunity within its framework nor can there be political democracy and much less economic democracy. Between these two conceptions conflict is inherent and only one of them can survive." (Jawaharlal Nehru: 'The Discovery of India ' 1974 Edn. Chapter VI at pp. 256 257). An examination of the question in the background of the Indian social conditions shows that the expression 'backward classes used in the Constitution referred only to those who were born in particular castes, or who belonged to particular races or tribes or religious minorities which were backward. It is now necessary to ascertain the true meaning of the expression 'backward classes ' found in Articles 15, Article 16, Article 338 (3) and Article 340 of the Constitution. Article 338 and Article 340 are in Part XVI of the Constitution entitled 'special provisions relating to certain classes '. The corresponding part in the Draft Constitution was Part XIV entitled special provisions relating to minorities which contained nine Articles, Articles 292 to 301. Article 292 of the Draft Constitution referred to reservation of seats for minorities in the House of the People, the minorities being, the Muslim community and the Scheduled Castes, certain Scheduled Tribes and the Indian Christian community. Article 293 of the Draft Constitution made special provision regarding the representation of the Anglo Indian community in the House of the People. Article 294 of the Draft Constitution dealt with reservation 460 of seats for the Muslim community, Scheduled Castes, certain A Scheduled Tribes and the Indian Christian community in the State Legislatures. Article 295 of the Draft Constitution authorised the Governor to nominate a representative of the Anglo lndian community to a State Legislature in certain cases. Article 296 of the Draft Constitution required the Union and the States to appoint members belonging to all minority communities in the State services consistently with the maintenance of efficiency of administration. Article 297 of the Draft Constitution required the Union to appoint members of the Anglo lndian community in certain services as stated therein and Article 298 of the Draft Constitution provided for certain educational concessions to the Anglo Indian community over a certain specified period. Article 299 of the Draft Constitution required the President to appoint a Special Officer for minorities for the Union and the Governor to appoint a Special Officer for minorities for a State. Administration of Scheduled areas and welfare of certain Scheduled Tribes were entrusted to the President by Article 300 of the Draft Constitution and it made provision for appointment of a commission for that purpose. Article 301 of the Draft Constitution authorised the President to appoint a commission to investigate the conditions of socially and educationally backward classes. It read as follows: "301. (1) The President may by order appoint a Commission consisting of such persons as he thinks fit to investigate the conditions ' of socially and educationally backward classes within the territory of India and the difficulties under which they labour and to make recommendations as to the steps that should be taken by the Union or any State to remove such difficulties and to improve their condition and as to the grants that should be given for the purpose by the Union or any State and the conditions subject to which such grants should be given, and the order appointing such Commission shall define the procedure to be followed by the Commission. (2) A Commission so appointed shall investigate the matters referred to them and present to the President a report setting out the facts as found by them and making such recommendations as they think proper. 461 (3) The President shall cause a copy of the report so presented, together with a memorandum explaining the A action taken thereon to be laid before Parliament. " The Constituent Assembly after considering the report of the Advisory Committee appointed on July 24, 1947 for the purpose of making its recommendations on the provisions contained in Part XIV of the Draft Constitution referred to above adopted a resolution moved by Sardar Vallabhbhai Patel which read as follows: "Resolved that the Constituent Assembly do proceed to take into consideration the Report dated the 11th May 1949 on the subject of certain political safeguards for minorities submitted by the Advisory Committee appointed by the resolution of the Assembly on 24th January 1 47. Resolved further (i) that notwithstanding any decisions already taken by the Constituent Assembly in this behalf, the provisions of Part X[V of the Draft Constitution of India be so amended as to give effect to the recommendations of the Advisory Committee contained in the said report; and E (ii) that the following classes in East Punjab, namely, Mazhbis, Ramdasias, Kabirpanthis and Sikligars be included in the list of Scheduled Castes for the Province so that they would be entitled to the benefit of representation in the Legislatures given to the Scheduled Castes". (Vide 'the Framing of India 's Constitution by B. Shiva Rao, Vol. IV p. 606). In the Revised Draft Constitution which was introduced in the Constituent Assembly on November 3, 1949, the provisions relating t minorities were incorporated in Part XVI and the title of that Part read as 'Special Provisions Relating to Minorities ' and it contained thirteen Articles, Article 330 to Article 342. Article 330 provided for reservation of seats for Scheduled Castes and certain Scheduled Tribes in the Lok Sabha and Article 332 provided for reservation for them in the Legislative Assemblies of States. Article 331 and Article 333 dealt with domination of representatives of the 462 Anglo Indian community respectively to the Lok Sabha and the A Legislative Assemblies of States. Article 334 fixed the period during which reservations and nominations could be made under the above said Articles. Article 335 required the Union and the States to recognise the claims of members of the Scheduled Castes and the Scheduled Tribes consistently with the maintenance of efficiency of administration in the making of appointments by the Union or the States, as the case may be. Article 336 contained special provision for the Anglo Indian community in certain services during the first two years after the commencement of the Constitution and Article 337 contained special provision with respect to educational grants for the benefit of the Anglo lndian community during a certain period after the commencement of the Constitution. Article 338 required the President to appoint a Special Officer for Scheduled Castes and Scheduled Tribes. Article 338(3) stated that references to Scheduled Castes and Scheduled Tribes in Article 338 should be construed as references to such other backward classes as the President might on receipt of the report of the Commission appointed under Article 340 by order specify and also to the Anglo Indian community. Article 340 provided for the appointment of a Commission by the President to investigate the conditions of socially and educationally backward classes and the difficulties under which they labour, Article 341 and Article 342 explained what the terms 'Scheduled Castes ' and 'Scheduled Tribes ' meant. The above Articles (article 330 to article 342 of the Revised Draft of the Constitution) were finally passed by the Constituent Assembly with the amendment that for the word 'minorities ' wherever it occurred in Part XVI, the words 'certain classes ' be substituted The heading of the Part was, therefore, changed to 'Special Provisions Relating to certain Classes '. It is significant that the expression 'backward classes used in Part XVI of the Constitution and the particular in Article 338(3) is used along with the Scheduled Castes, the Scheduled Tribes and the Anglo Indian Community. In the original Draft Constitution, the Muslim community and the Indian Christian community also had been referred to in Part XVI. In the course of the debates, the question of the members of the Sikh community was along considered along with these communities. The meaning of backward classes has, therefore, to be deduced having regard to the other words preceding it. It is a rule of statutory construction that where there are general words following particular and specific words, the general words must be confined to things of the same kind as those specified. It is true that this rule which is called as the ejusdem generies rule or 463 the rule noscitur a socis cannot be carried too far. But it is reasonable to apply that rule where the specific words refer to a distinct A genus or category. The Scheduled Castes are those castes, races and tribes or parts of or groups within the castes, races and tribes which are specified in the Public Notification issued by the President under Article 341(1). Similarly Scheduled Tribes are those tribes or tribal communities or parts of or groups of within tribes or tribal communities which are specified in the Public Notification issued by the President under Article 342(1). This is clear from the definitions of 'Scheduled Castes ' and 'Scheduled Tribes ' in Article 366(24) and Article 366(25). The notifications issued under Article 341 and Article 342 can be modified only by a law made by the Parliament (Vide Article 341(2) and Article 342(2). It is thus seen that Part XVI of the Constitution deals with certain concessions extended to certain castes, tribes and races which are Scheduled Castes and Scheduled Tribes and to the Anglo Indian community. In the above context if Article 338(3) and Article 340 are construed, the expression 'backward classes ' can only refer to certain castes, races, tribes or communities or parts thereof other than Scheduled Castes, Scheduled Tribes and the Anglo Indian community, which are backward. Thus view also gains support from the resolution regarding the aims and objects of the Constitution moved by Pandit Jawaharlal Nehru in the Constituent Assembly on December 13, 1946. He sid: E "I beg to move: (1) This Constituent Assembly declares its firm and solemn resolve to proclaim India as an Independent Sovereign Republic and to draw up for her future governance a Constitution; (2) Where in the territories that now comprise British India, the territories that now form the Indian States. and such other parts of India as are outside British India at the States as well as such other territories as are willing to be constituted into the Independent Sovereign India, shall be a Union of them all; and (3) Where in the said territories, whether with their pre sent boundaries or with such others as may be determined by the Constituent Assembly and there after according to the Law of the Constitution, shall 464 possess and retain the status of autonomous Units, together with residuary powers, and exercise all powers, and exercise all powers and functions as are vested in or assigned to the Union, or as are inherent or implied in the Union or resulting therefrom; and (4) Wherein all power and authority of the Sovereign Independent India, its constituent parts and organs of government, are derived from the people; and (5) Wherein shall be guaranteed and secured to all the people of India justice, social, economic and political; equality of status, of opportunity, and before the law, freedom of thought, expression, belief, faith, worship, vocation, association and action, subject to law and public morality; and (6) Wherein adequate safeguards shall be provided for minorities, Backward and tribal areas, and depressed and other backward classes; and (7) Wherein shall be maintained the integrity of the territory of the Republic and its sovereign rights on land, sea, and air according to Justice and the law of civilised nations: and (8) this ancient land attains its rightful and honoured place in the world and make its full and willing contribution to the promotion of world peace and the welfare of mankind." (Underlining by us) Clause (6) of the above resolution which was later adopted by the Constituent Assembly pledged to make adequate safeguards in the Constitution for 'minorities, backward and tribal areas and depressed and other backward classes ' The above resolution and the history of the enactment of Part XVI of the Constitution by the Constituent Assembly lead to the conclusion that backward classes are only those castes, races, tribes or communities, which are identified by birth, which are backward. It is, therefore, difficult to hold that persons or groups of persons who are backward merely on account of poverty which is traceable to economic reasons can also be considered as backward classes for purposes of Article 16(4) and Part XVI of the Constitution. 465 The word 'backward ' was not there before the words 'class of citizens ' in Article 10(3) of the original draft of the Constitution (the personal Article 16(4)). The Drafting Committee presided over by Dr. B.R. Ambedkar deliberately introduced it. Dr. Ambedkar gave the reason for introducing that term as follows: "Supposing, for instance, reservations were made for a community or a collection of communities, the total of which came to something like 70 per cent of the total posts under the State and only 30 per cent are retained as the unreserved, could anybody say that the reservation of 30 per cent as open to general competition would be satisfactory from the point of view of giving effect to the first principle, namely that there shall be equality of opportunity? It cannot be in my judgment. Therefore the seats to be reserved, if the reservation is to be consistent with sub clause (1) of Article 10, must be confined to a minority of seats. It is then only that the first principle could find its place in the Constitution and effective (sic) in operation. If Honourable Member under stand this position then we have to safeguard two things, namely, the principle of equality of opportunity and at the same time satisfy the demand of communities which have not had so far representation in the state, then, I am sure they will agree that unless you use some such qualifying phrase as "backward ' the exception made in favour of reservation will ultimately eat up the rule altogether Nothing of the rule will remain." (Vide Constituent Assembly Debates, 1948 1949, Vol. VII, pp. 701 702). F The Drafting Committee by qualifying the expression classes of citizens ' by 'backward ' in Article 16(4) of the Constitution tried to reconcile three different points of view and produced a workable proposition which was acceptable to all, the three points of view being (1) that there should be equality of opportunity for all citizens and that every individual qualified for a particular post should be free to apply for that post, to sit for examinations and to have his qualifications tested so as to determine whether he was fit for the post or not and that there ought to be no limitations, there ought to be no hindrance in the operation of the principle of equality of opportunity; (2) that if the principle of equality of opportunity was to be operative the Ought to b no reservations of any sort for any class or 466 community at all and that all citizens if they are qualified should be A placed on the same footing of equality as far as public services were concerned and (3) that though the principle of equality of opportunity was theoritically good there must at the same time be a provision made for the entry of certain communities which have so far been outside the administration. The whole tenor of discussion in the Constituent Assembly pointed to making reservation for a minority of the population including Scheduled Castes and Scheduled Tribes which were socially backward. During the discussion, the Constitution (first Amendment) Bill by which Article 15(4) was introduced, Dr. Ambedkar referred to Article 16(4) and said that backward classes are 'nothing else but a collection of certain castes ' (Parliamentary Debates 1951, Third Session, Part Ir Vol. Xll at p. 9007). This statement leads to a reasonable inference that this was the meaning which the Constituent Assembly assigned to classes ' at any rate so far as Hindus were concerned. In Balaji 's case (supra) and in Chifralekha 's case (supra) this Court exhibited a lot of hesitation in equating the expression 'class ' with 'caste ' for purposes of Articles 15(4) and Article 16(4) of the Constitution. It observed, as stated earlier, that while caste might be a relevant circumstance to determine a backward class, it could not, however, be dominant test. One of the reasons given for not accepting caste insofar as Hindu community in which caste system was prevalent was concerned as a dominant test for determining a backward class was that as there were communities without castes, nothing prevented the makers of the Constitution to use the expression 'backward classes or castes '. The juxtaposition of the expression 'backward classes ' and 'Scheduled Castes ' in Article 15 of the Constitution, according to the above two decisions, led to a reasonable inference that expression 'classes ' was not synonymous with 'caste '. The Court while making these observations did not give adequate importance to the evils of caste system which had led to the backwardness of people belonging to certain castes and the debates that preceded the enactment of Part XVI and Article 15(4) and Article 16(4) of the Constitution What was in fact overlooked ! was the history of the Indian social institutions. The makers of the Il Indian Constitution very well knew that there were a number of i castes the conditions of whose members were almost similar to the conditions of members belonging to the Scheduled Castes and to the Scheduled Tribes and that they also needed to be given adequate protection in order tide over the difficulties in the way of their 467 progress which were not so much due to poverty but due to their birth in a particular caste. As mentioned elsewhere in the course of this judgement. the word 'classes ' was substituted in the place of the word 'communities ' by the Constituent Assembly just at the last moment. The word community meant a caste amongst Hindus or Muslims, or Indian Christians or Anglo Indians. Part XVI was not enacted for the purpose of alleviating the conditions of poorer classes as such which was taken care of by the provisions of Part IV of the Constitution and in particular by Article 46 and by Article 14, article 15(1) and article 16(1) of the Constitution which permitted classification of persons on economic grounds for special treatment in order to ensure equality of opportunity to all person. It is of significance that the views expressed by this Court, however, stood modified by the decisions of this Court in Minor P. Rajendran vs State of Madras & Ors. ,(l) State of Andhra Pradesh & Anr. vs P. Sagar,(2) Triloki Nath & anr. vs State of Jammu Kashmir & Ors.(s) A. Peeriakaruppan etc. vs State of Tamil Nadu & Ors.(4) and State of Andhra Pradesh & Ors. vs U.S.V. Balram etc.(5) In Rajendran 's case (supra) while holding that the allocation of seats in Medical Colleges on the basis of the district to which a candidate belonged was not warranted by article 15(4), the Court observed that a caste was also a class of citizens and if the caste as a whole was socially and educationally backward reservation could be made in favour of such caste under article 1 5(4) In Sagar 's case (supra) reservation of seats was done solely on the basis of caste or community. There appeared to be no determination of the fact whether members belonging to such castes or communities were in fact socially and educationally backward. The court struck down the reservation as being outside Article I C(4) of the Constitution. The Court. however, observed at page 600 thus: ' In the context in which it occurs the expression "class" means a homogeneous section of the people grouped together because of certain likeness or common traits and who are identifiable by some common attributes such as status, rank, occupation residence in a locality, race, (1) ; (2) [1968] 3 S.C.R.595 (3) ; (4) [1971] 2 S.C.R. 430. (5) ; , 468 religion and the like, In determining whether a particular section forms a class, caste cannot be excluded altogether. But the determination of a class a test solely based upon the caste or community cannot also be accepted. By cl. (1), article 15 prohibits the State from discriminating against any citizens on grounds only of religion, race, caste, sex, place of birth or any of them. By cl. (3) Of article 15 the State is, notwithstanding the provisions contained in Cl. (1), permitted to make special provision for women and children. By cl. (4) a special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and Scheduled Tribes is outside the purview of cl. But cl. (4) is an exception to cl. Being an exception, it cannot be extended so as in effect to destroy the guarantee of cl. The Parliament has by enacting cl. (4) attempted to balance as against the right of equality of citizens the special necessites of the weaker sections of the people by allowing a provision to be made for their advancement. In order that effect may be given to cl. (4), it must appear that the beneficaries of the special provision are classes which are backward socially and educationally and they are other than the Scheduled Castes and Scheduled Tribes, and that the provision made is for their advancement. Reservation may be adopted to advance the interests of weaker sections of society, but in doing so, care must be taken to see that deserving and qualified candidates are not excluded from admission to higher educational institutions. The criterion for determining the backwardness must not be based solely on religion, race, caste, sex, or place of birth, and the backwardness being social and educational must be similar to the backwardness from which the Scheduled Castes and the Scheduled Tribes suffer." (emphasis added) In Triloki Nath 's case (supra) which was a case in which Article 16(4) came up for consideration, a Constitution Bench of this Court observed at page 105 thus "Article 16 in the first instance by cl. (2) prohibits discrimination on the ground, inter alia, of religion, race, caste, place of birth, residence and permits an exception to be 469 made in the matter of reservation in favour of backward classes of citizens. The expression "backward class" is not used as synonymous with "backward caste" or "back ward community". The members of an entire caste or community may in the social, economic and educational scale of values at a given time be backward and may on that account be treated as a backward class, but that is not because they are members of a caste or community, but because they form a class In its ordinary connotation the expression "class" means a homogenous section of the people grouped together because of certain likenesses or common traits, and who are identifiable by some common attributes such as status, rank, occupation, residence in a locality, race religion and the like. But for the purpose or article 16(41 in determining whether a section forms a class, a test solely based on caste, community, race, religion, sex, descent, place of birth or residence cannot be adopted, because it would directly offend the Constitution. " (emphasis added) In Peeriokaruppan 's case (supra) Hegde. J. Observed at page 443 thus; "A caste has always been recognised as a class. In construing the expression "classes of His Majesty 's subjects" found in section 153 A Or the Indian Penal Code, Wassoodew, J. Observed in Narayan Vasudev vs Emperor A I.R. "In my opinion ' the expression 'classes of His Majesty 's subjects ' in Section 153 A of the Code is used in restrictive sense as denoting a collection of individuals or groups bearing a common and exclusive designation and also possessing common and exclusive characteristics which may be associated with their origin, race or religion, and that the term 'class ' within that section carries with it the idea of numerical strength so large as could be grouped in a single homogeneous community," In Paragraph 10, Chapter V of the backward Classes Commission 's Report, it is observed: 470 "We tried to avoid caste but we find it difficult to A ignore caste in the present prevailing conditions. We wish it were easy to dissociate from social backwardness at the present juncture. In modern times anybody can take to any profession. The Brahman taking to tailoring, does not become a tailor by caste, nor is his social status lowered as a Brahman. A Brahman may be a seller of boots and shoes, and yet his social status is not lowered thereby. Social backwardness, therefore, is not today due to the particular profession of a person, but we cannot escape caste in considering the social backwardness in India" Paragraph 11 of that Report it is stated: "It is not wrong to assume that social backwardness has largely contributed to the educational backwardness of a large number of social groups. " Finally in Paragraph 13, the Committee concludes with following observations: "All this goes to prove that social backwardness is mainly based on racial, tribal, caste and denominationals differences. " The learned Judge then proceeded to state at page 444: "There is no gainsaying the fact that there are numerous castes in this country which are socially and educationally backward. To ignore their existence is to ignore the facts of life. Hence we are enable to uphold the contention that impugned reservation is not in accordance with article 15(4). But all the same the Government should not proceed on the basis that once a class is considered as a backward class it should continue to be backward class for all times. Such an approach would defeat the very purpose of the reservation because once a class reaches a stage of progress which some modern writers call as take off stage then competition is necessary for their future progress. The Government should always keep under review the question of reservation of seats and only the classes which 471 are really socially and educationally backward should be allowed to have the benefit of reservation. Reservation of A seats should not be allowed to become a vested interest. The fact that candidates of backward classes have secured about 50 per cent of the seats in the general pool does show that the time has come for a de novo comprehensive examination of the question. It must be remembered that g the Government 's decision in this regard is open to judical review. " In Balaram 's case (supra) the State was the appellant. it had come up in appeal against the judgment of the High Court of Andhra Pradesh which had struck down its order making reservation of seats of seats under Article 15(4). This Court allowed the appeal upholding the Government order, Vaidialingam, J. in the course of his judgment observed at page 280 thus: "article 15(4) will have to be given effect to in order to assist the weaker sections of the citizens, as the State has been charged with such duty. No doubt, we are aware that any provision made under this clause must be within the well defined limits and should not be on the basis of caste alone. But it should not also be missed that a caste is also a class of citizens and that a caste as such may be socially and educationally backward. If after collecting the necessary date, it is found that the caste as a whole is socially and educationally backward, in our opinion, the reservation made of such persons will have to be upheld notwithstanding the fact that a few individuals in that group may be both socially and educationally above the general average. There ii no gainsaying the fact that there are numerous castes in the country, which are socially and educationally backward and therefore a suitable provision will have to be made by the State as charged in article 15(4) to safeguard their interest. " The learned Judge felt that the Backward Classes Commission on the basis of whose Report the Government order had been passed had given good reasons in support of its recommendations. Accordingly the Government order was upheld. 472 If we depart from the view that caste or community is an important relevant factor in determining social and educational backwardness for purposes of Article 15 (4) and Article 16 (4) of the Constitution, several distortions are likely to follow and may take us away from the sole purpose for which those constitutional provisions were enacted. Several factors such as physical disability, poverty, place of habitation, the fact of belonging to a freedom fighter 's family, the fact of belonging to the family of a member of the armed forces might each become a sole factor for the purpose of Article 15 (4) or Article 16 (4) which were not at all intended to be resorted to by the State for the purpose of granting relief in such cases. While relief may be given in such cases under Article 14, Article 15 (1) and Article 16 (1) by adopting a rational principle of classification, Article 15 (4) and Article 16 (4) cannot be applied to then. Article 15 (4) and Article 16 (4) are intended for the benefit of those who belong to castes/communities which are 'traditionally disfavoured and which have suffered societal discrimination ' in the past. The other factors mentioned above were never in the contemplation of the makers of the Constitution while enacting these clauses. In D.N. Chanchala vs State of Mysore and Ors. etc.(1) a classification based on some of these factors was upheld but not under Article 1 5 (4). The observation made in State of Kerala vs Kumari T.P. Roshana and Anr.(2) that 'the principle of reservation with weightage for the geographical area of Malabar District has our approval in endorsement of the view of the High Court ' is outside the scope of Article 15 (4) even though it may be sustained under Article 14. While caste or community is a relevant factor in determining the social and educational backwardness, it cannot be said that all members of a caste need be treated as backward and entitled to reservation under Article 15 (4) or Article 16 (4). Caste cum means test would be a rational test in identifying persons who are entitled to the benefit of those provisions. This principle has received acceptance at the hands of this Court in Kumari K.S. Jayasree and Anr. vs The State of Kerala and Anr. ,(2) In that case a Commission appointed by the Government of the State of Kerala to enquire into the social and economic conditions of the people of that State and (1) [1971] Supp. S.C.R. 60 (2) ; (3) ; 473 to recommend as to what sections of the people should be extended the benefits under Article 15 (4) of the Constitution found that only the rich amongst certain castes or communities were enjoying the benefit of reservations made earlier. It, therefore, recommended adoption of a means cum caste/community test for determining the sections of the people who should be given the benefit under the relevant constitutional provisions. The State Government accordingly stipulated that applicants who were members of certain castes or communities and whose family income was less than Rs. 1(),000 per year were only entitled to reservation under Article 15 (4). The petitioner in the above case who belonged to one such community but whose family income was above Rs. 10,000 per year questioned the order before the Kerala High Court on the ground that the imposition of the ceiling of family income was unconstitutional. The learned Single Judge who heard the ' petition allowed it. The Division Bench of the Kerala High Court, however, reversed the decision of the learned Single Judge and dismissed the petition. On appeal, the Court while affirming the decision of the Division Bench in the above case on the question of social backwardness observed at pages 199 200 thus: "In ascertaining social backwardness of a class of citizens it may not be irrelevant to consider the caste of the group of citizens. Caste cannot however be made the sole or dominant test. Social backwardness is in the ultimate analysis the result of poverty to a large extent. Social backwardness which results from poverty is likely to be aggravated by considerations of their caste. This shows the relevance of both caste and poverty in deter mining the backwardness of citizens. Poverty by itself is not the determining factor of social backwardness. Poverty is relevant in the context of social backwardness. The Commission found that the lower income group constitutes socially and educationally backward classes. The basis of the reservation is not income but social and educational backwardness determined on the basis of relevant criteria. If any classification of backward classes of citizens is based solely on the caste of the citizens it will perpetuate the vice of caste system. Again, if the classification is based solely on poverty it will not be logical. The society is taking steps for uplift of the people. In such a task groups or classes who are socially and 474 educationally backward are helped by the society. That A is the philosophy of our Constitution. It is in this context that social backwardness which results from poverty is likely to be magnified by caste considerations. Occupations, place of habitation may also be relevant factors in determining who are socially and educationally backward classes. Social and economic considerations come into operation in solving the problem and evolving the proper criteria of determining which classes are socially and educationally backward. That is why our Constitution provided for special consideration socially and educa tionally backward classes of citizens as also Scheduled Castes and Tribes. It is only by directing the society and the State to offer them all facilities for social and educational uplift that the problem is solved. It is in that context that the Commission in the present case found that income of the classes of citizens mentioned in Appendix VIII was a relevant factor in determining their social and educational backwardness. " When once the relevance of caste is not adhered to several difficulties might arise as can be seen from the decision in the State of Uttar Pradesh vs Pradip Tandon and Ors. ,(1) In that case the Court had to examine the validity of a Government order which had made reservation of seats under Article 15 (4) in favour of two classes of students (1) those who came from rural areas and (2) those who came from hill areas and Uttrakhand. The High Court of Allahabad upheld the said reservations in Subhash Chandra vs The State of U.P. and ors.(2) but struck them down in a later case in Dilip Kumar vs The Government of U.P. and Ors.(3) without noticing its earlier decision in Subash Chandra 's case (supra) When the same question came before this Court in an appeal preferred by the State Government, the State Government attempted to justify the classification of students for admission into medical colleges as stated above on the ground that it was a notorious fact that rural, hill and Uttrakhand areas were socially backward because of extreme poverty; that those areas were backward educationally because the (1) ; (2) A.l.R. 1973 All. (3) A.I.R. 1973 All. 475 standard of literacy was poor and there was lack of educational facilities and that there was dearth of doctors in the said areas. A The geographical, territorial, historical and the economic conditions in the said areas were emphasised to support the classification. In the State of Uttar Pradesh vs Pradip Tandon 's case (supra) Court first rejected the plea that party could be a basis of classification for purposes of article I (4) in these terms at page 7 "In Balaji 's case (supra) the Court said that social backwardness is on the ultimate analysis the result of poverty to a large extent and that the problem of back ward classes is in substance the problem of rural India. Extracting these observations the Attorney General contended that poverty is not only relevant but is one, of the elements in determining the social backwardness. We are unable to accept the test of poverty as the determining factor of social backwardness. " D Then it held that reservation for rural areas on the ground of poverty was unconstitutional. In doing so it observed at page 769 thus: "The reservation for rural areas cannot be sustained on the ground that the rural areas represent socially and educationally backward classes of citizens. This reservation appears to be made for the majority population of the State. 80 per cent of the population of the State cannot be a homogeneous class. Poverty in rural areas cannot be the basis of classification to support reservation for rural areas. Poverty is found in all parts of India. In the instructions for reservation of seats it is provided that in the application form a candidate for reserved seats from rural areas must submit a certificate of the District Magistrate of the District to which he belonged that he was born in rural area and had a permanent home there, and is residing there or that he was born in India and his parents and guardians are still living there and earn their livelihood there. The incident of birth in rural areas is made the basic qualification. No reservation can be made on the basis of place of birth, as this would offend Article 15. " 476 But it upheld the reservations made in favour of the hill and A Uttrakhand areas with these observations at page 767: "The hill and Uttrakhand areas in Uttar Pradesh are instance of socially and educationally backward classes for these reasons. Backwardness is judged by economic basis that each region has its own measurable possibilities for the maintenance of human numbers, standards of living and fixed property. From an economic point of view the classes of citizens are back ward when they do not make effective use of resources. When large areas of land maintain a sparse, disorderly and illiterate population whose property is small and negligible the element of social backwardness is observed. When effective territorial specialisation is not possible in the absence of means of communication and technical processes as in the hill and Uttrakhand areas the people are socially backward classes of citizens. Neglected opportunities and people in remote places raise walls of social backwardness of people. Educational backwardness is ascertained with reference to these factors. Where people have traditional apathy for education on account of social and environ mental conditions or occupational handicaps, it is an illustration of educational backwardness. The hill and Uttrakhand areas are inaccessible. There is lack of educational institutions and educational aids People in the hill and Uttrakhand areas illustrate the educationally backward classes of citizens because lack of educational facilities keep them stagnant and they have neither meaning and values nor awareness for education. " The reading of the above passages shows that there is inherent inconsistency between one part of the decision and the other. The Court could not have arrived at the two divergent conclusions set out above since many of the reasons urged by the State Government were almost identical. This is due to the earlier approach adopted by the Court to the question. If caste had been taken into consideration as a relevant test which could not be ignored in determining the classes entitled to the benefit of Article 15 (4) and article 16 (4), there would have been no room for the above inconsistency. 477 Article 14 of the Constitution consists of two parts. It asks the State not to deny to any person equality before law. It also asks A the State not to deny the equal protection of the laws. Equality before law connotes absence of any discrimination in law. The concept of equal protection required the State to meet out differential treatment to persons in different situations in order to establish an equilibrium amongst all. This is the basis of the rule that equals should be treated equally and unequals must be treated unequally if the doctrine of equality which is one of the corner stones of our Constitution is to be duly implemented. In order to do justice amongst unequals, the State has to resort to compensatory or protective discrimination, Article 15 (4) and Article 16 (4) of the Constitution were enacted as measures of compensatory or protective discriminations to grant relief to persons belonging to socially oppressed castes and minorities. Under them, it is possible to provide for reservation of seats in educational institutions and of posts in Government services to such persons only. But if there are persons who do not belong to socially oppressed castes and minorities but who otherwise belong to weaker sections, due to poverty, place of habitation, want of equal opportunity etc. the question arises whether such reservation can be made in their favour under any other provision of the Constitution such as Article 14, Article 15 (1), Article 16 (1) or Article 46. The decision in State of Kerala and Anr. vs N.M. Thomas and Ors.(l) which was rendered by 15 a Bench of seven learned Judges of this Court attempted to deal with the above question. The facts of that case were these: Rule 13 (a) of the Kerala State Subordinate Service Rules, 1958 provided that no person would be eligible for appointment to any service or any post unless he possessed such special qualifications and had passed such special tests as might be prescribed in that behalf in the Ir Special Rules. For promotion of a lower division clerk to the next higher post of upper division clerk, the Government prescribed certain departmental tests. By Rule 13A which was introduced later on temporary exemption was given for a period of two years. That Rule also provided that an employee who did not pass the unified departmental tests within the period of two years from the date of introduction of the tests would be reverted to the lower post and further stated that he would not be eligible for appointment under that Rule. Proviso (2) to this Rule gave temporary exemption for an extended period of two years in the case of candidates belonging (1) [1976] I S.C.R 906. 478 to Scheduled Castes and Scheduled Tribes. When the Government A found that a large number of candidates belonging to Scheduled Castes and Scheduled Tribes were facing reversion under that Rule, on a representation made on their behalf, it gave exemption to them for a further period of two years by promulgating Rule 13A. As a result of this Rule, respondent No. I in the above case who had passed the special test in 1971 was not promoted but some candidates belonging to Scheduled Castes or Scheduled Tribes who had not passed the tests were promoted. Respondent No. I there fore challenged the validity of Rule 13A before the High Court of Kerala on the ground that it violated Article 16 (1) of the Constitution. The High Court struck down the Rule holding that it was outside the scope of Article 16 (4) and therefore was violative of Article 16 (1) of the Constitution The State Government questioned in the above case before this Court the correctness of the decision of tho High Court. From the facts narrated above, it is obvious that the case did not concern itself with reservation of posts in the higher cadre as such but only involved the classification of employees of Government into two groups those belonging to Scheduled Castes and Scheduled Tribes and those who did not belong to Scheduled Castes and Scheduled Tribes for purposes of given exemption from possessing one of the minimum qualifications i.e. from passing the prescribed tests during a further period of two years 13 Ray, C.J. upheld the Rule by upholding the classification under Article 14 and Article 16 (1). The learned Chief Justice observed at page 933 thus: "All legitimate methods are available for equality of opportunity in services under Article 16 (1). Article 16 (4) is affirmative whereas Article 14 is negative in language. Article 16 (4) indicates one of the methods of achieving equality embodied in Article 16 (1). Article 16 (1) using the expression "equality" makes it relatable to all matters of employment from appointment through promotion and termination to payment of pension and gratuity. Article 16 (1) permits classification on the basis of object and purpose of law or State action except classification involving discrimination prohibited by Article 16 (2). Equal protection of laws necessarily involves classification. The validity of the classification must be adjudged with reference to the purpose of law. The classification in the present case is justified because 479 the purpose of classification is to enable members of Scheduled Castes and Tribes to find representation by A promotion to a limited extent. From the point of view of time a differential treatment is given to members of Scheduled Castes and Tribes for the purpose of giving them equality consistent with efficiency". Khanna, J. who upheld the judgment of the High Court was of the view that since the impugned Rule did not get the protection of Article 16 (4) which was the only provision under which preferential treatment could be given to members belonging to backward classes, Scheduled Castes and Scheduled Tribes, the Rule could not be upheld on the basis of classification under Article 14 and Article 16 (1) of the Constitution. The learned Judge observed at pages 939 940 thus; "It has been argued on behalf of the appellants that equality of treatment does not forbid reasonable classification. Reference in this context is made to the well accepted principle that Article 14 of the Constitution forbids class legislation but does not forbid classification. Permissible classification, it is equally well established, must be founded on an intelligible differential which distinguishes persons or things that arc grouped together from others left out of the group and the differential must have a rational relation to the object sought to be achieved by the statute in question. It is urged that the same principle should apply when the court is concerned with the equality of opportunity for all citizens in matters P relating to employment or appointment to any office under the State. In this respect I may observe that this Court has recognised the principle of classification in the context of clause (1) of article 16 in matters where appointments are from two different sources, e.g. guards and station masters, promotees and direct recruits, degree holder and diploma holder engineers. [See All India Station Masters and Asstt. station Masters ' Assn. and Ors. vs General Manager, Central Railway and Ors. [1960) 2 S.C.R. 311, S.G. Jaisinghani vs Union of India and Ors. [1967] 2 S.C.R. 703 and State of Jammu & Kashmir vs Triloki Nath Khesa and Ors. [1974] I S.C.R. 771.) The question with which we are concerned, however, is 480 whether we can extend the above principle of classification so as to allow preferential treatment to employees on the ground that they are members of the scheduled castes and scheduled tribes. So far as this question is concerned I am of the view that the provision of preferential treatment for members of backward classes, including scheduled castes and scheduled tribes, is that contained in clause (4) of article 16 which permits reservation of posts for them. There is no scope for spelling out such preferential treatment from the language of clause (1) of article 16 because the language of that clause does not warrant any preference to any citizen against another citizen. The opening words of clause (4) of article 16 that "nothing in this article shall prevent the State from making any provision for the reservation of appointments or posts in favour of backward class of citizens ' indicate that but for clause (4) it would not have been permissible to make any reservation of appointments or posts in favour of any backward class of citizens. " Khanna, J. proceeded to observe at page 944 thus: "The matter can also be locked at from another angle. If it was permissible to accord favoured treatment to members of backward classes under clause (1) of article 16, there would have been no necessity of inserting clause (4) in article 16. Clause (4) in Article 16 in such an event would have to be treated as wholly superfluous and redundant. The normal rule of interpretation is that no provision of the Constitution to be treated as redundant and superfluous. The Court would, therefore, be reluctant to accept a view which would have the effect of rendering clause (4) of Article 16 redundant and superfluous". Mathew, J. more or less agreed with Ray, C.J. He said at pages 954 955 thus: "It is said that Article 16 (4) specifically provides for reservation of posts in favour of backward classes which according to the decision of this Court would include the power of the State to make reservation at the 481 stage of promotion also and therefore Article 16 (1) cannot include within its compass the power to give any adventitious aids by legislation or otherwise to the back ward classes which would derogate from strict numerical equality. If reservation is necessary either at the initial stage or at the stage of promotion or at both to ensure for the members of the Scheduled Castes and Scheduled Tribes equality of opportunity in the matter of employment, l see no reason why that is not permissible under Article 16 (1) as that alone might put them on a parity with the forward communities in the matter of achieving the result which equality of opportunity would produce. Whether there is equality of opportunity can be gauged only by the equality attained in the result. Formal equality of opportunity simply enables people with more education and intelligence to capture all the posts and to win over the less fortunate in education and talent even when the competition is fair. Equality of result is the test of equality of opportunity". Beg, J. (as he then was) agreed with the view of Khanna, J. that the principle of classification could not be extended to cases of this nature but upheld the Rule as squarely falling within the scope of Article 16 (4) itself. He observed at page 959: "Strictly speaking, the view adopted by my learned brother Khanna, that the ambit of the special protection of "equality of opportunity in matters relating to public service", which can be made available to members of backward classes of citizens, is exhausted by Article 16 (4) of the Constitution, seems inescapable. Article 16 is, after all, a facet of the grand principles embraced by Article 14 of our Constitution. It guarantees: "Equality of opportunity in matters of public appointment". It does so in absolute terms. It is a necessary consequence and a special application of Article 14 in an important field where denial of equality of opportunity cannot be permit ted. While Article 16 (1) sets out the positive aspect of equality of opportunity in matters relating to employment by the State, Article 16 (2) negatively prohibits discrimination on the grounds given in Article 16 (2) in the area covered by Article 16 (1) of the Constitution. If 482 Scheduled Castes do not fall within the ambit of Article 16 (2), but as a "backward class" of citizens, escape the direct prohibition it is because the provisions of Article 16 (4) make such an escape possible for them. They could also avoid the necessary consequences of the positive mandate of Article 16 (1) if they come within the only exception contained in Article 16 (4) of the Constitution. I respectfully concur with my learned brother Khanna and Gupta that it would be dangerous to extend the limits of protection against the operation of the principle of equality of opportunity in this field beyond its express constitutional authorisation by Article 16 (4) '. Beg, J. (as he then was) proceeded to hold at page 961 thus: "Members of a backward class could be said to be discriminated against if severer tests were prescribed for them. But, this is not the position in the case before us. All promotees, belonging to any class, caste, or creed, are equally subjected to efficiency tests of the same type and standard. The impugned rules do not dispense with these tests for any class or group. Indeed, such tests could not be dispensed with for employees from Scheduled Castes, even as a backward class, keeping in view the provisions of Article 335 of the Constitution. All that happens here is that the backward class of employees is given a longer period of time to pass the efficiency tests and prove their merits as determined by such tests. It has been, therefore, argued that, in this respect, there is substantial equality. In other words, the argument is that if Article 16 (1) could be interpreted a little less rigidly and more liberally the discrimination involved here will not fall outside it. Even if this was a tenable view, I would, for all the reasons given here, prefer to find the justification, if this is possible, in the express provisions of Article 16 (4) because this is where such a justification should really lie." Krishna Iyer, J. after recording the statement of the Advocate General for Kerala that the Rule could not be sustained under Article 16 (4) upheld it under article 14 and Article 16 (1) as it 483 related to members belonging to the Scheduled Castes and Scheduled Tribes. Perhaps he would have struck down the Rule if the benefit A of the Rule had been extended to other backward classes as can be seen from the following passage occurring at page 981: "If article 14 admits of reasonable classification, so does article 16(1) and this Court has held so. In the present case, the economic advancement and promotion of the claims of the grossly under represented and pathetically neglected classes, otherwise described as Scheduled Castes and Scheduled Tribes, consistently with the maintenance of administrative efficiency, is the object, constitutionally sanctioned by articles 46 and 335 and reasonably accommodated in article 16(1). The differentia so loudly obtrusive, is the dismal social milieu of harijans. Certainly this has a rational relation to the object set out above. I must repeat the note of caution earlier struck. Not all caste backwardness is recognised in this formula. To do so is subversive of both article 16(1) and (2). The social disparity must be so grim and substantial as to serve as a foundation for benign discrimination. If we search for such a class, we cannot find any large segment other than the Scheduled Castes and Scheduled Tribes. Any other caste, securing exemption from article 16(1) and (2), by exerting political pressure or other influence, will run the high risk of unconstitutional discrimination. If the real basis of classification is caste masked as backward class, the Court must strike at such communal manipulation. Secondly, the Constitution recognizes the claims of only harijans (article 335) and not of every backward class. The profile of article 46 is more or less the same. So, we may readily hold that casteism cannot come back by the back door and, except in exceptionally rare cases, no class other than Harijans can jump the gauntlet of 'equal opportunity ' guarantee. Their only hope is in article 16(4)". (Emphasis supplied). Gupta, J. agreed generally with Khanna, J. and upheld the judgment of the High Court. Gupta, 1. after referring to Article 335 observed at page 986 thus: H "This Article does not create any right in the members of the Scheduled Castes and the Scheduled Tribes which 484 they might claim in the matter of appointments to services A and posts; one has to look elsewhere, Article 16(4) for instance, to find out the claims conceded to them. Article 335 says that such claims shall be considered consistently with administrative efficiency, thus is a provision which does not enlarge but qualify such claims as they may have as members of the Scheduled Castes or Scheduled Tribes. Article 335, it seems clear, cannot furnish any clue to the understanding of Article 16(1)". Fazal Ali, J. also upheld the impugned Rule under Article 16(1). The learned Judge said at page 1001 thus: " "Article 335 of the Constitution contains a mandate to the State for considering the claims of the members of tho Scheduled Castes and the scheduled tribes consistently with the maintenance of efficiency of administration. By giving the special concessions to the promotees this man date is sought to be obeyed by the Government. Mr. T.S. Krishnamoorthy Iyer, counsel for the respondent No. I submitted that the mandate given in article 335 is violated because by granting exemption to the members of the scheduled castes and tribes the standard of efficiency of the services would be impaired. We are, however, unable to agree with the argument. Both the respondent No. I and the promotees were members of the same service and had been working as Lower Division Clerks for a pretty long time. The promotees were members of the scheduled castes and tribes are admittedly senior to respondent No. I and have gained more experience. Further the rule does not grant complete exemption to the promotees from passing the test; it only provides for grant of extension of time to enable them to clear the test. In these circumstances it cannot be held that the State 's action in incorporating r. 13 AA in any way violates the mandate contained in article 335. In these circumstances, therefore, I am clearly satisfied that the concesion given in r. 13 AA amounts to a reasonable classification which can be made under article 16(1) of the Constitution and does not amount to the selection of the respondent No. 1 for hostile discrimination so as to be violative of article 16(1) of the Constitution of India" 485 But Fazal Ali, J. was, however, of the view that Article 16(4) of the Constitution was a complete code so far as reservation of posts A was concerned. The learned Judge observed at page 1002 thus: "Clause (4) of article 16 of the Constitution cannot be read in isolation but has to be read as part and parcel of article 16(1) & (2). Suppose there are a number of backward classes who form a sizable section of the population of the country but are not properly or adequately represented in the services under the State the question that arises is that can be done to enable them to join the services and have a sense of equal participation. One course is to make a reasonable classification under article 16(1) in the manner to which I have already adverted in great detail. The other method to achieve the end may be to make suitable reservation for the backward classes in such a way so that the inadequate representation of the backward classes in the services is made adequate. This form of classification which is referred to as reservation, is, in my opinion, clearly covered by article 16(4) of the Constitution which is completely exhaustive on this point. That is to say clause (4) of article 16 is not an exception to article 14 in the sense that whatever classification can be made can be done only through clause (4) of article 16. Clause (4) of article 16, however, is an explanation containing an exhaustive and exclusive provision regarding reservation which is one of the forms of classification. Thus clause (4) of article 16 deals exclusively with reservation and not other forms of classifiable which can be made under article 16(1) itself. Since clause (4) is a special provision regarding reservation, it can safely be held that it overrides article 16(1) to that extent and no reservation can be made under article 16(1)". (Emphasis added) The result is that at least according to four learned Judges Khanna; Beg, Gupta and Fazal Ali, JJ. no reservation of posts can be made in Government services for backward classes including Scheduled Castes and Scheduled Tribes under Article 14 or Article 16(1). According to Krishna Iyer, J. preferential treatment as was done in this case on the basis of classification ordinarily could be given under Article 16(1) to the Scheduled Castes and Scheduled Tribes only. Other backward classes could not, except in exceptionally rare cases be extended the same benefit and their only hope was Article 16(4) of the constitution, 486 Now reverting to the power of the Government to make reservations under Article 15(4) and Article 16(4) of the Constitution, we may state thus: The determination of the question whether the members belonging to a caste or a group or a community are backward for the purpose of Article 15(4) and Article 16(4) of the Constitution is no doubt left to the Government. But it is not open to the Government to call any caste or group or community as backward according to its sweet will and pleasure and extend the benefits that may be granted under those provisions to such caste or group or community. The exercise of uncontrolled power by the Government in this regard may lead to political favouritism leading to denial of the just requirements of classes which are truly backward. The power of the Government to classify any caste or group or community as backward has to be exercised in accordance with the guidelines that can be easily gathered from the Constitution. It is now accepted that the expressions 'socially and educationally backward classes of citizens ' and 'the Scheduled Castes and the Scheduled Tribes ' in Article 15(4) of the Constitution together are equivalent to backward classes of citizens ' in Article 16(4). Dealing with the question whether any particular caste or group or community could be treated as socially and educationally backward for purposes of Article 15(4), the Court observed in Balaji 's case (supra) at page 465 thus: "Therefore, we are not satisfied that the State was justified in taking the view that communities or castes whose ave rage of student population was the same as, or just below, the State average, should be treated as educationally back ward classes of citizens. If the test has to be applied be a reference to the State average of student population, the legitimate view to take would be that the classes of citizens whose average is well or substantially below the State average can be treated as educationally backward. " This was further explained by Shah, J. (as he then was) in Sagar 's case (supra) when he observed that the criterion for deter mining the backwardness must not be based solely on religion, race, caste, sex or place of birth and the backwardness being social and educational must be similar to the backwardness from which the Scheduled Castes and the Scheduled Tribes suffered. A Constitution, Bench of this Court reiterated the above principle in Janki Prasad Parimoo & Ors. vs State of Jammu & Kashmir & Ors. in which it was observed at page 252 thus: (1) ; 487 "That accounts for the raison d 'etre of the principle explained in Balaji 's case which pointed out that backward classes for whose improvement special provision was contemplated by Article 15(4) must be comparable to Scheduled Castes and Scheduled Tribes who are standing examples of backwardness socially and educationally". This view is in conformity with the intention underlying clause (6) of the resolution regarding the aims and objects of the Constitution moved by Jawaharlal Nehru on December 13, 1946 which asked the Constituent Assembly to frame a Constitution providing adequate safeguards for minorities, backward and tribal areas and depressed and other backward classes and also with the provisions of Article 338 and Article 340 of the Constitution. Unless the above restriction is imposed on the Government, it would become possible for the Government to call any caste or group or community which constitutes a powerful political lobby in the State as backward even though in fact it may be an advanced caste or group or community but just below some other forward community. There is another important reason why such advanced castes or groups or communities should not be included in the list of backward classes and that is that if castes or groups and communities which are fairly well advanced and castes and groups and communities which are really backward being at the rock bottom level are classified together as backward classes, the benefit of reservation would invariably be eaten up by the more advanced sections and the really deserving sections would practically go without any benefit as more number of children of the more advanced castes or groups or communities amongst them would have scored higher marks than the children of more backward castes or groups or communities. In that event the whole object of reservation would become frustrated. It is stated that it was with a view to avoiding this anomalous situation, the Government of Devaraj Urs had to appoint the Havanur Commission to make recommendations for the purpose of effectively implementing the objects of Article 15(4) and Article 16(4). Hence as far as possible while preparing the list of backward classes, the State Government has to bear in mind the above principle as a guiding factor. The adoption of the above principle will not unduly reduce the number of persons who will be eligible for the benefits under Article 15(4) and Article 16(4) of the Constitution since over the years the level of the Scheduled Castes and Scheduled Tribes is also going up by reason of several remedial 488 measure taken in regard to them by the State and Central Government. At the same time, it will also release the really backward castes, groups and communities from the strangle hold of many advanced groups which have had the advantage of reservation along with the really backward classes for nearly three decades. It is time that more attention is given to those castes, and groups communities who have been at the lowest level suffering from all the disadvantages and disabilities (except perhaps untouchability) to which many of the Scheduled Castes and Scheduled Tribes have been exposed but without the same or similar advantages that flow from being included in the list of the Scheduled Castes and the Scheduled Tribes. Since economic condition is also a relevant criterion, it would be appropriate to incorporate a 'means test ' as one of the tests in determining the backwardness as was done by the Kerala Government in Jayasree 's case (supra). These two tests namely, that the conditions of caste or group or community should be more or less similar to the conditions in which the Scheduled Castes or Scheduled Tribes are situated and that the income of the family to which the candidate belongs does not exceed the specified limit would serve as useful criteria in determining beneficiaries of any reservation to be made under Article 15(4). For the purpose of Article 16(4) however, it should also be shown that the backward class in question is in the opinion of the Government not adequately represented in the Government services. There is one other basis on which a classification made for purposes of Article 15 (4) or Article 16 (4) of the Constitution has received the approval of this Court in Chitralekha 's case (supra). In that case the Court was concerned with a list of backward classes prepared on the basis of economic condition and occupation. According to that Government order, persons whose family income was Rs. 1,200 per annum or less and who were engaged in occupations such as agriculture. petty business, inferior services, crafts or other occupations involving manual labour were treated as belonging to backward classes. The petitioner who had filed the petition in the High Court did not challenge the validity of the said classification. But on a submission made on behalf of the State Government, the Court expressed its general approval to the method of classification. Even in the case before us now, there is a reservation of 15 per cent of seats of posts in favour of members falling under a classification styled as 'special group ' which is based on similar 489 occupation cum income considerations. Even here no serious objection is taken by any party to the said classification treating A persons who satisfied the prescribed tests as being eligible for reservation. It is apparent that this 'special group ' is a creature of social, economic and political necessity. Since a classification made on the above said basis has received the approval of a Constitution Bench of equal strength and its correctness is not challenged before us, we treat this classification as a valid one even though a criticism of this kind of classification was made, not unjustifiably as we now see, by the Mysore High Court in D.G. Viswanath 's case.(1) This classification would include persons of all castes, groups and communities provided the two tests namely, occupation test and income test are satisfied. Next comes the vexed question relating to the extent of reservation that can be made under article 15 (4) and article 16 (4) of the Constitution. In Balaji 's case (supra) this Court took the view that since Article 15 (4) is an exception to Article 15 (1) and Article 16 (4) is an exception to Article 16 (1) and (2) any reservation made under Article 15 (4) and Article 16 (4) should not exceed 50 per cent of the total number of seats or posts, as the case may be. The Court held that reservation of 68 per cent of seats under Article 15 (4) which was a special provision was invalid. The Court further held that 'speaking generally and in a broad way a special ID provision should be less than 50 per cent, how much less than 50 per cent would depend upon the relevant prevailing circumstances in each case '. This statement was understood by a Constitution Bench of this Court in T. Devadasan vs The Union of India and Anr.(2) as laying down the rule that reservation under Article 15 (4) or Article 16 (4) could not be more than 50 per cent of seats or posts. In that case Mudholkar, J. speaking for the majority said at page 698: "Even if the Government had provided for the reservation of posts for Scheduled Castes and Tribes a cent per cent reservation of vacancies to be filled in a particular year or reservation of vacancies in excess of 50 per cent would, according to the decision in Balaji 's case, not be constitutional". (1) A.I.R. 1964 Mys. 132. (2) ; 490 But in the State of Kerala and Anr. vs N.M. Thomas and Ors. (supra) the question relating to the permissible extent of reservation arose for consideration. Ray, C.J. came to the conclusion that taking into consideration the entire Government service, there was no excessive concession shown to the employees belonging to the Scheduled Castes and Scheduled Tribes. Beg, J. (as he then was) was also of the same view. Fazal Ali, J. Observed at page 1005 thus: "This means that the reservation should be within the permissible limits and should not be a cloak to fill all the posts belonging to a particular class of citizens and thus violate article 16 (1) of the Constitution indirectly. At the same time clause (4) of article 16 does not fix any limit on the power of the Government to make reservation. Since clause (4) is a part of article 16 of the Constitution it is manifest that the State cannot be allowed to indulge in excessive reservation so as to defeat the policy contained in article 16 (1). As to what would be a suitable reservation within permissible limits will depend upon the facts and circumstances of each case and no hard and fast rule can be laid down, nor can this matter be reduced to a mathematical formula so as to be adhered to in all cases. Decided cases of this Court have no doubt laid down that the percentage of reservation should not exceed 50 per cent. As I read the authorities, this is, however, a rule of caution and does not exhaust all categories. Suppose for instance a State has a large number of backward classes of citizens which constitute 80 per cent of the population and the Government, in order to give them proper representation, reserves 80 per cent of the jobs for them, can it be said that the percent age of reservation is bad and violates the permissible limits of clause (4) of article 16 ? The answer must necessarily be in the negative. The dominant object of this provision is to take steps to make inadequate representation adequate. " Krishna Iyer, J. in the same case observed at page 981 thus: "I agree with my learned brother Fazal Ali, J. in the view that the arithmetical limit of 50 per cent in any one 491 year set by some earlier rulings cannot perhaps be pressed too far. Overall representation in a department does not depend on recruitment in a particular year, but the total strength of a cadre. I agree with his construction of article 16 (4) and his view about the 'carry forward ' rule. " After carefully going through all the seven opinions in the above case, it is difficult to held that the settled view of this Court that the reservation under Article 15 (4) or Article 16 (4) could not be more than 50 per cent has been unsettled by a majority of the Bench which decided this case. I do not propose to pursue this point further in this case because if reservation is made only in favour of those backward castes or classes which are comparable to the Scheduled Castes and Scheduled Tribes, it may not exceed 5() per cent (including 18 per cent reserved for the Scheduled Castes and Scheduled Tribes and 15 per cent reserved for 'special group ') in view of the total population of such backward classes in the State of Karnataka. The Havanur Commission has taken the number of students passing at S S.L.C. examination in the year 1972 as the basis for determining the backwardness. The average passes per thousand of the total population of the State of Karnataka was 1.69 in 1972. The average in the case of the Scheduled Castes was 0 56 and in the case of Scheduled Tribes was 0.51. Even if we take all the castes, tribes and communities whose average is below 50 per cent of the State average i.e. below .85 per cent for classifying them as backward, large chunks of population which are now treated as backward would have to go out of the list of backward classes. Consequently the necessity for reservation which would take the total reservation under Article 15 (4) and Article 16 (4) beyond 50 per cent of the total number of seats/posts would cases to exist. The present arrangement has been worked for more than five years already. It is now necessary to redetermine the question of backwardness of the various castes, tribes and communities for purposes of Article 15 (4) and Article 16 (4) in the light of the latest figures to be collected on the various relevant factors and to refix the extent of reservation for backward classes. The reservation of 15 per cent now made under Article 15 (4) and Article 16 (4) but which may be traced to Article 14 and Article 16 (1) to 'special group ' based on occupation cum income can in any event be availed of by members of all communities and castes. At this stage it should be made clear that if on a fresh determination some castes or communities have to go out of the list of 492 Backward classes prepared for Article 15 (4) and Article 16 (4), the Government may still pursue the policy of amelioration of weaker sections of the population amongst them in accordance with the directive principle contained in Article 46 of the Constitution. There are in all castes and communities poor people who if they are given adequate opportunity and training may be able to compete success fully with persons belonging to richer classes The Government may provide for them liberal grants of scholarships, free studentship, free boarding and lodging facilities, free uniforms, free mid day meals etc. to make the life of poor students comfortable. The Government may also provide extra tutorial facilities, stationery and books free of cost and library facilities. These and other steps should be taken in the lower classes so that by the time a student appears for the qualifying examination he may be able to attain a high degree of proficiency in his studies. The State Government shall now proceed to redetermine the whole question of reservation of seats/posts under Article 15 (4) and Article 16 (4) of the Constitution in this judgment.
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Before India became independent, the State of Mysore (now part of Karnataka) started a system to help backward classes get jobs in government. It was one of the first states in India to do this. In 1918, the Maharaja of Mysore created a committee. Sir Leslie C. Miller, a judge, led the committee. The goal was to study and report on the problems of backward classes. The committee looked at these questions: (i) Should the rules for hiring people for government jobs be changed? (ii) What special help could be given to backward classes to encourage them to get more education? (iii) What other steps could be taken to increase the number of people from backward communities in government jobs, without lowering the quality of work? The committee also considered the idea that spreading education and increasing the status of backward communities would benefit the State. The terms "backward classes" and "backward communities" were used to mean almost the same thing. The idea in the Constitution that reservations should not hurt the quality of work was thought about over 30 years before the Constitution was written. In 1921, the committee said that all communities in the State, except Brahmins, should be seen as backward communities. They made some suggestions to help these communities. The government orders based on this report were used until 1956. That's when the States were reorganized, bringing together the old State of Mysore, Coorg, some districts of Bombay, parts of Hyderabad, South Kanara, and Kollegal Taluk (which used to be part of Madras). The five areas that came together had different lists of backward communities. These lists were allowed to continue for a while after the States were reorganized. In 1959, the State Government created a single list of backward classes for the whole State, based on Article 15(4) of the Constitution. This was done to make things consistent. The list and another one that followed were challenged in court. In the case of Rama Krishna Singh vs State of Mysore, the High Court of Mysore struck down the lists. The court said that because the lists included 55% of the State's population and treated almost everyone except Brahmins, Banias, and Kayasthas as backward, it discriminated against the 5% who were not included. The court also said that helping communities that were only slightly behind the forward communities didn't really help those who needed protection under Article 15(4) of the Constitution. The court added that sometimes, caste could be used to determine who was socially and educationally backward. So, on January 8, 1960, the State Government created a new committee led by Dr. R. Nagan Gowda. This committee was asked to: (i) Suggest how to decide which people in the State should be considered socially and educationally backward. (ii) Suggest how to use these guidelines to help the State Government decide who should get preference for getting into technical schools and government jobs. The committee gave its first report on February 19, 1960. Based on this report, the State Government made an order on June 9, 1960, about admissions to professional and technical schools. They set aside 22% of the seats for backward classes, 15% for Scheduled Castes, and 3% for Scheduled Tribes. The other 60% of the seats were filled based on merit. This order was challenged in the High Court of Mysore in the case of S.A. Partha & Ors. vs The State of Mysore & Ors. The High Court decided that it was against the Constitution to say that if any seats reserved for Scheduled Castes and Scheduled Tribes were not filled, they should be given to candidates from other backward classes. The court also gave some instructions on how to calculate the number of reservations to be made. The Nagan Gowda Committee gave its final report on May 16, 1961. After considering the report, the State Government issued an order on July 10, 1961, for the purpose of Article 15 (4) of the Constitution. This order listed 81 classes of people as backward classes and 135 classes as more backward classes. It reserved 30% of the seats in professional and technical schools for backward and more backward classes. 15% and 3% of the seats were reserved for Scheduled Castes and Scheduled Tribes, respectively. The remaining 52% of the seats were filled based on merit. This order was challenged in the Supreme Court in the case of M. R. Balaji & Ors vs State of Mysore. In this important case, the Supreme Court explained what "socially and educationally backward classes" meant in Article 15(4). The Court said that backwardness must be both social and educational, not just one or the other. The Court also explained how to determine social and educational backwardness and said that including members of the Lingayat community in the list of backward classes was a mistake. On the question of how many reservations could be made, the Court said that generally, it should be less than 50%. How much less than 50% would depend on the specific situation in each case. After this decision, the Government made another order on July 26, 1963. This order said that 30% of the seats in professional and technical colleges should be reserved for backward classes, as defined in that order. It also said that 18% of the seats should be reserved for Scheduled Castes and Scheduled Tribes. The order said that social and economic backwardness would be determined based on two things: income and occupation. People who worked in agriculture, small businesses, low-level service jobs, crafts, or other manual labor jobs, and whose family income was less than Rs. 1,200 per year, would be considered to belong to backward classes. This order was challenged in the High Court in the case of D.G. Viswanath vs Government of Mysore & Ors. The High Court dismissed the challenges, saying that it was not correct to determine backward classes without considering caste at all. The court hoped that the State would create a better system, or its good intentions might be questioned. In the appeal filed against this judgment in R. Chitralekha & H. Anr. v State of Mysore & Ors, the Supreme Court explained how the High Court's judgment was inconsistent with the decision in the Balaji case. The Supreme Court said that caste could be considered when deciding social backwardness, but it should not be the only or main factor. The Court said that the government could determine social backwardness without considering caste if it could. The Court also said that it had not made caste a required factor for determining backwardness. After this, the State Government appointed the Karnataka Backward Classes Commission, led by Sri L.G. Havanur. The commission did a detailed study and gave its report in four large volumes on November 19, 1975. The Commission suggested that people belonging to backward classes for the purpose of Article 15(4) of the Constitution should be divided into three groups: (a) backward communities (15 castes), (b) backward castes (128 castes), and (c) backward tribes (62 tribes). For the purpose of Article 16(4) of the Constitution, the Commission divided the backward classes into: (a) backward communities (9 castes), (b) backward castes (115 castes), and (c) backward tribes (61 tribes). According to the Commission, backward communities were those castes whose average number of students passing the SSLC (high school) exam in 1972 per thousand people was below the State average (1.69 per thousand) but above 50% of the State average. Backward castes and backward tribes were those whose student average was below 50% of the State average, except for certain nomadic tribes. The total population of these backward classes (other than Scheduled Castes and Scheduled Tribes), according to the Commission, was about 45% of the State's total population. The difference between the lists for Article 15(4) and Article 16(4) was because some communities, castes, and tribes that were socially and educationally backward but had enough representation in government jobs were not included in the list for Article 16(4). The Commission recommended the following percentages of reservations for both Article 15(4) and Article 16(4): (i) Backward communities: 16%, (ii) Backward Castes: 10%, and (iii) Backward Tribes: 6%, for a total of 32%. Adding the 32% reservation for backward classes to the 18% reserved for Scheduled Castes and Scheduled Tribes made a total of 50% of the seats or jobs. The Commission also said that if seats/jobs were not filled in the quota for backward tribes, they should be given to backward communities and backward castes. Similarly, if seats/jobs were not filled in the quota for backward castes, they should be given to backward communities and backward tribes. If seats/jobs were still not filled in any of these three categories, they should be given to Scheduled Castes and Scheduled Tribes. If seats/jobs remained unfilled by any of these categories, they should be transferred to the general pool. After considering the report, the State Government issued an order on February 22, 1977, listing the Backward communities, Backward Castes, and Backward Tribes who would be treated as Backward classes for the purposes of Articles 15(4) and 16(4) of the Constitution. The order said that: (a) Only citizens of these Backward Classes whose family income from all sources was Rs. 8,000 or less per year would be eligible for special treatment under these Articles. (b) Five categories of citizens would be considered a special group: actual cultivators, artisans, small business owners, those employed by the government or in similar private jobs (including casual labor), and self-employed people or those engaged in manual labor. Citizens in this special group whose family income was Rs. 4,800 or less per year would be eligible for special treatment under the two Articles. The order also said that: (i) Family income meant the income of the citizen and their parents, and if either parent was dead, their legal guardian. (ii) The reservation for Backward classes and the special group of citizens would be set at 40%, divided as follows: Backward Communities (20%), Backward castes (10%), Backward Tribes (5%), and special group (5%). In the list of backward communities, the State Government included "Muslims," making a total of 16 backward communities. The list of backward castes included 129 castes, including people who had converted to Christianity from Scheduled Castes/Scheduled Tribes up to the second generation, and 62 Scheduled Tribes. The reservation for backward classes was 40%. Adding this to the 18% for Scheduled Castes and Scheduled Tribes meant that a total of 58% of seats/jobs were reserved, leaving only 42% for the general pool. The government order dated February 22, 1977, and another order dated March 4, 1977, were challenged in court. A number of petitions were filed in the High Court of Karnataka in the case of S Somashekarappa & Ors. v State of Karnataka & Ors. The High Court allowed the petitions and struck down: (i) the inclusion of the "Arasu" community in the list of "Backward Communities" for both Articles 15(4) and 16(4); (ii) the inclusion of certain castes (Balija, Devadiga, Ganiga, Nayinda, Rajput, and Satani) in the list of backward communities and the inclusion of other castes in the list of backward classes for Article 16(4); and (iii) the 20% reservation made for Backward communities in State Civil Services under Article 16(4). The High Court allowed the State Government to determine the extent of reservation according to the law. The classification and reservation in other respects was upheld. Special Leave Petitions were filed against the High Court's Judgment. After the High Court's judgment, the reservation for backward communities was reduced to 18% for Article 16(4). By an order dated June 27, 1979, the State Government changed the order of February 22, 1977, by increasing the reservation for the "Special Group" from 5% to 15% for both Articles 15(4) and 16(4) of the Constitution. So, the total reservation for Article 15(4) was 68%, and for Article 16(4) it was 66%. Only 32% of the seats in professional and technical colleges and 34% of the posts in Government services could be filled based on merit. These petitions were filed to challenge the validity of the State Government orders dated February 22, 1977, as changed by the orders dated May 1, 1979, and June 27, 1979. In deciding on the petitions and appeals, the Court said the following: Chief Justice Chandrachud said that the following points on reservation could help the Commission that the Government of Karnataka planned to appoint. The goal of the commission would be to look at how to give better job and education chances to Scheduled Castes, Scheduled Tribes, and other Backward Classes. This issue is very important today. 1. The reservation for Scheduled Castes and Scheduled Tribes must continue as it is, without requiring proof of financial need, for another 15 years. 2. Another 15 years will make it 50 years after the Constitution. This is a long enough time for the upper levels of these groups to overcome the negative effects of social problems. 3. Proof of financial need should be required for Scheduled Castes and Scheduled Tribes after the 15-year period mentioned above. 4. The privileged members of these groups should not be allowed to control the benefits forever. 5. For Other Backward Classes, two things should be considered together to decide who should get reservations in jobs and education: First, they should be as backward as Scheduled Castes and Scheduled Tribes. Second, they should meet the financial need test set by the State Government. 6. The policy of reservations in jobs, education, and government should be reviewed every five years. 7. This will allow the State to fix any problems with the reservation policy and allow people to share their views on the policy. Justice Desai said that for 35 years, people have been trying to find socially and educationally backward classes. This has affected policy makers and those who interpret the policies. It has also caused people to try to move backward in society in order to be identified as a backward class. The Constitution promised a society where everyone is equal. But society was divided by caste. So, it was accepted that caste could be used to identify socially and educationally backward classes for Article 15(4). Article 15(4) talks about "class" and not caste. Preferential treatment should be given to a class that is socially and educationally backward, not just to members of a caste who are thought to be backward. The Supreme Court has changed its views on whether caste should be the basis for recognizing backwardness. The Court has sometimes ignored the reality of the situation. The term "backward classes" is not defined. So, without clear guidelines, courts have generally said that to be considered a socially and educationally backward class, the group must have the same characteristics as Scheduled Castes and Scheduled Tribes. A caste is a division of society that spreads across a region or the whole State. The caste system is based on ideas of purity and impurity. There are four main features of the caste system: (i) hierarchy, (ii) restrictions on eating together, (iii) restrictions on marriage, and (iv) hereditary occupation. Most castes are endogamous, meaning people within the caste must marry each other. Inter-caste marriages are not allowed. But sometimes, these marriages do happen. Also, as cities grow, people from different castes are giving up traditional jobs. The idea of "pure" and "impure" jobs is becoming less important. Because the benefits of independence were not shared equally, each caste has become divided into three groups based on economic status: upper class, middle class, and poorer section. This has led to the realization that caste culture does not help economic interests. The upper class of a caste is often accused of taking advantage of the lower class of the same caste. So, the idea of purity and pollution is slowly being replaced by the economic condition of different groups within the same caste. It is generally agreed that the important features of the caste structure are weakening. The new caste organizations are very different from the traditional caste structures. Economic differences among members of the same caste have become more obvious, but caste feelings and ties still exist. Because of these changes, caste should not be the only basis for determining social and educational backwardness. Instead, the class or social group should be examined. In rural society, caste is often related to economic power. Social status and economic position are closely linked. The lower the caste, the poorer its members. Caste and economic situation reflect each other. They are key factors in determining a person's social status and economic power in rural society. Poverty is the cause, and caste is a primary sign of social backwardness. Caste is deeply rooted in India, even affecting religions that should not practice it. Shared economic situations, caste rankings, jobs, living conditions, literacy levels, and other factors all contribute to social and educational backwardness. So, there is a rush to be recognized as belonging to a caste that is included in the list of socially and educationally backward classes. Some castes are known by different names in different regions, making it hard to cover them all. In these cases, if a particular caste has been treated as backward, all its synonyms should also be treated as backward. Also, some castes have degraded themselves in order to be considered socially and educationally backward, attributing negative qualities to their castes. The solution is to find a way to determine socially and educationally backward classes without considering caste. This would benefit everyone, no matter their caste. Here are a few other reasons to reject caste as the basis for identifying social and educational backwardness: (i) If the State only uses caste to determine backwardness, it could legitimize and continue the caste system. This does not align with the secular nature of India as stated in the Constitution. The idea that all members of a caste are equally backward is not correct. (ii) Reservation has been taken advantage of by the wealthy within the same caste. (iii) Caste is not part of Muslim, Parsi, or Jewish societies. So, caste cannot be used to identify socially and educationally backward groups in those communities, although economic backwardness could. The best way to determine backwardness is to use economic status. Other factors, like the secular nature of the group and its job opportunities, can be added, but economic backwardness should be the main focus. Poverty is a major problem in Indian society. The focus on money has changed how society treats its members. Upper castes no longer have the same status or respect, even in rural areas. Money and property determine social status and provide opportunities. How wealth is acquired is no longer important. Reservations have existed for a long time. A survey of families in castes considered socially and educationally backward would show that the benefits of reservations are mostly taken by the wealthy members of those castes. This must be avoided. Using economic criteria for affirmative action would address the root causes of social and educational backwardness. It would also help to break down the caste structure and promote the secular nature of the Nation. This approach would help to create a society without caste and eliminate poverty. However, this does not address reservation for Scheduled Castes and Scheduled Tribes. Thousands of years of discrimination cannot be erased in one generation. But even here, economic criteria should be used to deny benefits to those who have already improved their position. Finally, reservations should have a time limit, or they will become permanent rights. Justice Chinnappa Reddy said that the problem with the reservation system is that it has caused people to want to be seen as backward. Nowhere else do people compete to prove that they are more backward than others. This is not good, but it is the reality. Scheduled Castes, Scheduled Tribes, and other socially and educationally backward classes have a long way to go in society. They need help and support. Their needs are their rights, not charity. They want equality, not handouts. They claim their right to equal status, opportunity, and justice. Bridges need to be built to help them succeed. Education and jobs are two such bridges. That's why there are special provisions for advancement and reservation under the Constitution. Courts are not always the best to identify backward classes or to set guidelines. Courts are not equipped for that. They have no way to measure social backwardness and are too far removed from the people. India is a vast country, and conditions vary greatly. A test for identifying backward classes that is good for one group may not be good for another. There can be no one test that works for everyone. It may be pointless to apply strict tests. We need to look at the situation as a whole. Before trying to set guidelines for identifying socially and educationally backward classes, we must avoid the traditional, superior, and ambivalent approach. The result is that the rights of Scheduled Castes, Scheduled Tribes, and other backward classes are forgotten. We must get rid of these attitudes to truly understand the problems these groups face. There is no proof that efficiency will be impaired if reservation is more than 50%, if reservation is carried forward, or if reservation is extended to promotions. Efficiency is not sacred. Just getting high marks in an exam does not make a good administrator. A good administrator must understand and address the problems of the weaker sections of the population. This does not mean that efficiency is not important. But we should not make too much of it. For certain jobs, only the best should be appointed. Rules may provide for reservation for these jobs. The rules may provide for a way to select the best candidates. Certain posts require a high degree of skill, and certain courses require hard work and intelligence. The rules may set a high standard and a way to select candidates. Different standards and selection methods may be used for different posts and courses. But efficiency cannot be used to let the upper classes control the services and institutions. The debate between different principles of reservation is not important. The three dimensions of social inequality are class, status, and power. These are all connected to economic position. Poverty is the cause of backwardness. Economic power is linked to the caste system. Land and learning have been controlled by the upper castes. Social status and economic power are connected in rural society. Poverty is the cause, and caste is a primary sign of social backwardness. Shared economic situations, caste, jobs, living conditions, literacy, and other factors contribute to social and educational backwardness. The "backward classes" in Article 16(4) are the same as the "socially and educationally backward classes" and the Scheduled Castes and Scheduled Tribes in Article 15(4). The "special provision for advancement" can include financial aid, free medical, educational, and housing facilities, scholarships, free transport, and exemptions. Under Article 16(4), reservation is to help those backward classes who are not adequately represented in government jobs. Reservation must aim to secure adequate representation. The amount of reservation should match the lack of representation. This guideline should also be used for Article 15(4). The reservation of seats in colleges may be based on the lack of representation in different professions. The amount of reservation in other colleges may be based on the lack of graduates. To make up for past disadvantages, the amount of reservation may need to be slightly higher than the percentage of the population of the backward classes. The usual rules for interpreting laws cannot be used to interpret constitutional documents. The Constitution must be interpreted generously to give all citizens the justice it promises. There is no reason to narrow the concept of equality in Article 16(1) and refuse to include social justice and equality. Article 16(1) should be read to avoid conflict with Articles 46 and 335. A constitutional document must be read to harmonize its provisions. It is obvious that unequals cannot be treated equally. Article 16(4) recognizes a pre-existing power to make provision for reservation, to avoid any doubt. Article 16(4) is a rule of interpretation to guide the understanding of Article 16(1). It excludes the possibility of interpreting Article 16(1) to promote a narrower equality. The test of closeness to the conditions of Scheduled Castes would practically cancel the provision for reservation for socially and educationally Backward Classes other than Scheduled Castes and Tribes. It would favor existing upper classes and put a large majority of classes between the upper classes and the Scheduled Castes and Tribes at a permanent disadvantage. Only the "enlightened" classes will capture all the "open" posts and seats, and the reserved posts and seats will go to the Scheduled Castes and Tribes. Those behind the "enlightened" classes and ahead of the Scheduled Castes and Tribes would be left with no chance of improving themselves. There can be a classification into Backward Classes and More Backward Classes if both classes are far behind the most advanced classes. This classification is needed to help the More Backward Classes. Otherwise, the slightly more advanced Backward Classes might take all the seats. Similarly, if reservation was only for the More Backward Classes, the most advanced Classes would take all the seats available for the general category, leaving none for the Backward Classes. Using the average number of students in the last three years of high school as the basis for assessing relative backwardness may give a false picture. The basis should be the average number of students who have passed the exam required for college admission, or the average number of graduates. The extent of reservation may even vary with the class of post. The percentage of reservation is not something a Court can decide without materials. It would be arbitrary to say that reservations should not exceed 40%, 50%, or 60%. From the background of caste and class, the reason for reservation, the Constitution, and court decisions, the following emerges: (a) There are large sections of people who are socially and educationally backward. They stand between the forward classes and the Scheduled Castes and Tribes. (b) Poverty, caste, occupation, and living conditions contribute to a class being socially backward. The customs they follow, the rituals they practice, and the habits they have are all elements in recognizing their social backwardness. (c) Among many classes considered socially inferior, child marriage continues, and divorces are granted by a caste council. (d) Dress and work habits also show that economic and social situations often reflect each other. (e) Other customs or habits mark out the socially backward class. (f) The importance of these factors depends on the situation, which can only be revealed by careful investigation. It cannot be done with formulas, but by looking at the entire situation. Sometimes, certain castes or social groups can be easily identified as socially forward or backward. Poverty is basic, being the cause and result of social and educational backwardness. But poverty alone is not enough, because most people in the country are poor, but some are socially and educationally forward and others backward. Even the majority of the so-called socially forward classes may be poor. In the rural social ladder, they are high up, and cannot be branded as socially backward. On the other hand, there are several castes or social groups who can be immediately identified as socially and economically backward. (g) Some members of those castes or social groups may have progressed and compare favorably with the leading forward classes economically, socially, and educationally. In such cases, an upper income limit would secure the benefit of reservation to those who really deserve it. (h) The State must find ways to help the poorest sections of the forward classes, other than reservations under Article 15(4) and 16(4). In the end, achieving economic equality is the only solution. There is also a danger in using individual property as the criterion to identify a member of the backward classes. The truly poor, who need the certificate to prove their poverty, will find it hard to get the certificate. Class poverty, not individual poverty, is the main test. Other tests are the way of life, the standard of living, the place in the social hierarchy, and the habits and customs. Despite individual exceptions, it may be possible to identify social backwardness by caste, residence, occupation, or some other feature. These are facts of life that cannot be ignored. If they reflect poverty, they must be recognized. There is nothing wrong in recognizing poverty as an identifiable group phenomenon, whether it is a caste group, a regional group, an occupational group, or some other class. Once the relevant factors are considered, each State must decide how and where to draw the line. Once the backwardness of a class of people is determined, the court will not interfere. But judicial review will not be excluded. Justice A.P. Sen said: The making of special provisions for the advancement of backward classes and the reservation of jobs, as guaranteed in the Constitution, is a national commitment to end old social disparities in our country. But the policy of reservation should be based on economic criteria. Then the element of caste can be removed. Economic backwardness alone is not enough to satisfy the requirement of educational and social backwardness. Poverty should be the main factor, and caste should only be used to identify people comparable to Scheduled Castes or Scheduled Tribes, until they become equal partners in society. The representation of backward classes in government jobs has to be determined by the percentage of that class in the population and the total number of jobs. The representation does not have to exactly match the percentage of the population. The State should give importance to maintaining efficiency and equality of opportunity. The nature and extent of reservations must be rational. The state of backwardness needs investigation by a fact-finding body. The Constitution provided for a Commission for Backward Classes to make recommendations and left it to the States to make special provisions. It may be difficult for the Court to define in advance what the State should not do, but it is never difficult for the Court to know that a boundary has been crossed. The Courts do not have the expertise to define what are "socially and educationally backward classes." However, the Court has a duty to interpret the Constitution. The Preamble to our Constitution shows the nation's resolve to secure justice for all citizens. The State's objective of social justice must be achieved reasonably. Irrational moves will tear apart society. It is the State's duty to inject moderation into decisions under the Constitution. The extent of reservation must vary from State to State and region to region. Since the problems of reservation cannot be resolved through lawsuits, the Central Government should consider appointing a permanent National Commission for Backward Classes to study the issue. The doctrine of protective discrimination cannot be stretched too far. The State exists to serve its people. There are some services where expertise is essential. Medical services affect people's health and lives. Pilots and aviation engineers need professional expertise. The lives of citizens depend on these people. In these fields, there can be no reservation of posts. Justice Venkataramiah said: Equality of opportunity involves the traditional value of equality and the idea of equality of results. A society that values equality must define the meaning of equality. The choices to create an equal society are political. But the Courts have had to examine a variety of choices. Many inequalities seemed natural in the past. Courts deal with the problems that society presents. Awareness of inequalities has arisen at different times for historical reasons. The Courts must remember that gradualism is not enough for those suffering from denial of rights. This is a struggle for status. Personal taste or the protection of interests cannot restrict opportunities for any qualified person. These considerations should weigh with the courts. However, the courts cannot bring the concept of equality into action by themselves. They need the support of the people, the Government, and the legislators. There should be united action. There should also be united action to increase national resources so that equality is less difficult and everyone is carried to a higher level. If there is no united action, court pronouncements will be empty words. The need for social action is caused by the environmental factors and living conditions of individuals. Applying the principle of individual merit can lead to unfair results. The expression "backward classes" in the Constitution refers to those who were born in particular castes, races, tribes, or religious minorities that were backward. A caste is based on various factors, and a person's caste is determined by their birth. The expression "backward classes" is used along with Scheduled Castes, Scheduled Tribes, and the Anglo Indian Community. The meaning of "backward classes" has to be understood along with the other words. When general words follow specific words, the general words must be confined to things of the same kind. This rule cannot be carried too far, but it is reasonable where the specific words refer to a distinct category. The Constitution deals with concessions extended to certain castes, tribes, and races. The expression "backward classes" can only refer to certain castes, races, tribes, or communities other than Scheduled Castes, Scheduled Tribes, and the Anglo Indian community, which are backward. The history of the Constitution shows that backward classes are only those castes, races, tribes, or communities that are identified by birth, which are backward. People who are backward merely because of poverty cannot be considered as backward classes for the purposes of the Constitution. The Drafting Committee tried to reconcile three different points of view: (i) that there should be equality of opportunity for all citizens; (ii) that there should be no reservations for any class; and (iii) that there must be a provision for the entry of certain communities that have been outside the administration. The discussion in the Constituent Assembly pointed to making reservation for a minority of the population including Scheduled Castes and Scheduled Tribes which were socially backward. In past cases, the Supreme Court hesitated in equating "class" with "caste." The Court did not give enough importance to the evils of the caste system and the debates that preceded the enactment of the relevant parts of the Constitution. The makers of the Indian Constitution knew that there were castes whose members were almost similar to the conditions of members belonging to the Scheduled Castes and Scheduled Tribes. They also needed to be given protection because of their birth in a particular caste. The Constitution was not enacted to help poorer classes as such, which was taken care of by other provisions. If caste is departed from as an important factor, several distortions are likely to follow. Factors such as physical disability, poverty, or belonging to a freedom fighter's family might become the sole factor for providing relief. The Constitution is intended for the benefit of those who belong to castes/communities that have suffered societal discrimination. The Constitution consists of two parts: It asks the State not to deny equality before law. It also asks the State not to deny equal protection of the laws. Equality before law means absence of discrimination. Equal protection means the State must treat people in different situations differently. To do justice among unequals, the State has to resort to compensatory or protective discrimination. The Constitution was enacted to grant relief to persons belonging to socially oppressed castes and minorities. It is possible to provide for reservation of seats in institutions and of posts in government services to such persons only. If there are people who do not belong to socially oppressed castes and minorities but who belong to weaker sections due to poverty or lack of opportunity, the question is whether reservation can be made in their favor. The power of the Government to make reservations is not open to the Government to call any caste backward according to its sweet will. The exercise of uncontrolled power may lead to political favoritism. The power of the Government must be exercised according to the guidelines gathered from the Constitution. The criterion for determining backwardness must not be based solely on religion, race, caste, sex, or place of birth. The backwardness must be similar to the backwardness from which the Scheduled Castes and Scheduled Tribes suffered. The above restriction must be imposed on the Government. Otherwise, it would be possible to call any caste a powerful political lobby even though it may be an advanced caste. Also, if advanced castes and really backward castes are classified together, the benefit of reservation would be eaten up by the more advanced sections. As far as possible, the State Government has to bear in mind the above principle. The adoption of the above principle will not reduce the number of people who will be eligible for benefits. At the same time, it will release the really backward castes from the stranglehold of many advanced groups. Since economic condition is also relevant, a "means test" should be used. These two tests would serve as useful criteria in determining beneficiaries. For the purpose of government jobs, it should also be shown that the backward class is not adequately represented in the government services. The classification styled as "special" group, which is based on occupation and income, is a valid test. The settled view of the Supreme Court that reservation could not be more than 50% has not been changed. If reservation is made only in favor of those backward castes that are comparable to the Scheduled Castes and Scheduled Tribes, it may not exceed 50%. It is now necessary to redetermine the question of backwardness of the various castes, tribes, and communities and to refix the extent of reservation for backward classes. If some castes have to go out of the list of backward classes, the Government may still help the weaker sections among them. The Government may provide liberal grants of scholarships, free studentships, free boarding and lodging, free uniforms, free meals, extra tutorial facilities, stationery, books, and library facilities.
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375 (Under Article 32 of the Constitution of India.) In so far as the Other Backward Classes are concerned, two tests should be conjunctively applied for identifying them for the purpose of reservations in employment and education: One, that they should be comparable to the Scheduled Castes and Scheduled Tribes in the matter of their backwardness; and two, that they should satisfy the means test such as a State Government may lay down in the context of prevailing economic conditions. Preferential treatment which cannot be struck down as discriminatory was to be accorded/to a class, shown to be socially and educationally backward and not to the members of a caste who may be presumed to be socially and educationally backward. (1) ; (2) ; 380 The caste of a group of citizens may be a relevant circumstance in A ascertaining their social backwardness and though it is a relevant factor to determine social backwardness of a class, it cannot be the sole or dominant test in that behalf. The members of an entire caste or community may, in the social, economic and educational scale of values at a given time, be backward and may, on that account be treated as a backward class, but that is not because they are members of a caste or community, but because they form a class. Dealing with the question whether caste can by itself be a basis for determining social and educational backwardness, the court observed that it may not be irrelevant to consider the caste of group of citizens claiming to be socially and educationally backward. 386 of the caste. No, it is not so. The question really is, who are the scheduled castes, scheduled tribes and backward classes, who are entitled to special provision and reservation in regard to admission into educational institutions and representation in the services. It is a notorious fact that there is an upper crust of rural society consisting of the superior castes, generally the priestla, the landlord and the merchant castes, there is a bottom strata consisting of the 'out castes ' of Indian Rural Society, namely the Scheduled Castes, and, in between the highest and the lowest, there are large segments of population who because of the law gradation of The caste to which they belong in the rural society hierarchy, because of the humble occupation which they pursue , because of their poverty and ignorance are also condemned to backwardness, social and educational, backwardness which prevents them from competing on equal terms to catch up with the upper crust Any view of the caste system, class or cursory, will at once reveal the firm links which the caste system has with economic power. We are primarily concerned in this case with the question as to who are socially and educationally backward classes of citizens mentioned in article 15(4) and the backward class of citizens, not adequately represented in the services under the State mentioned in article 16(4). We see that while article l 5(4) contemplates "special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes", article 16(4) speaks of 'provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State is not adequately represented in services under the State" Now, it is not suggested that the socially and educationally backward classes of citizens and the Scheduled Castes and the Scheduled Tribes from whom special provision for advancement is contemplated by Art 15(4) are distinct and separate from the backward classes of citizens who are adequately represents in the services under the State for whom reservation of posts and appointments is contemplated by article 16(4). The propriety of such a course may be open to question on the facts of each case, but A we do not see why on principle there cannot be :3 classification into Backward Classes and More Backward Classes, if both Classes are not merely a little behind, but far far behind the most advanced classes In fact such a classification would be necessary to help the More Backward Classes; otherwise those of the Backward Classes who might be a little more advanced than the More Backward Classes might walk away with all the seats, just as, if reservation was confined to the More Backward Classes and no reservation was made to the slightly more advanced Backward Classes the most advanced Classes would walk away with all the seats available for the general category leaving none for the Backward Classes. Subba Rao, J., speaking for this Court, explained how the Mysore High Court had misunderstood Balaji and observed: "While this Court said that caste is only a relevant circumstance and that it cannot be the dominant test in ascertaining the backwardness of a class of citizens, the High Court said that it is an important basis in determining the class of backward Hindus and that the Government should have adopted caste as one of the test. As the said observations made by the High Court may lead to some confusion in the mind of the authority concerned who may be entrusted with the duty of prescribing the rules for ascertaining the backwardness of classes of citizens within the meaning of article 15(4) of the Constitution, we would hasten to make it clear that caste is only a relevant circumstance in ascertaining the backwardness of a class and there is nothing in the judgment of this Court which precludes the authority concerned from determining the social backwardness of a group of citizens if it can do so without reference to caste. if the reservation in question had been based A only on caste and had not taken into account the social and educational backwardness of the caste in question, it would be violative of article 15(1) But it must not be for gotten that a caste is also a class of citizens and if the caste as a whole is socially and educationally backward reservation can be made in favour of such a caste on the ground that it is a socially and educationally backward class of citizens within the meaning of article 15(4) . But that does not necessarily means that caste was the sole consideration and that person belonging to these castes are also not a class of socially and educationally backward citizens. " The criterion for determining the backwardness must not be based solely on religion, race, caste, sex or place of birth, and the backwardness being social and educational must be similar to the backwardness from which the Scheduled Castes and the Scheduled Tribes suffer". It was pointed out that the expression "backward class" was not used as synonymous with backward caste or backward community but it was noticed, "The members of an entire caste or community may in the social, economic and educational scale of values at a given time be backward and may on that account be treated as a backward class, but that is not because they are members of a caste or community, but because they form a class". R. 416 educationally backward classes for the purpose of admission into the A medical colleges of the State had been struck down by the High Court on the ground that the Government Order was based on the report of the Backward Classes Commission which had adopted caste as the main basis to determine who were backward classes and this was contrary to the decision of the Court in Balaji. It was urged before this Court that the principles thought to have been laid down in Balaji, Chitralekha and Sagar that article 15(4) was to be read as a proviso to articles 15(1) and 29(2) and that in the matter of backwardness that backward classes must be comparable to Scheduled Castes and Scheduled Tribes, were wrong and required to be re considered. But it should not also be missed that a caste as such may be socially and educationally backward. If after collecting 417 the necessary data, it is found that the caste as a whole is socially and educationally backward, in our opinion, A the reservation made of such persons will have to be up held notwithstanding the fact that a few individuals in that group may be both socially and educationally above the general average. the members of an entire caste or community may in the social economic, and educational scale of values, at a given time be backward and may on that account be treated as backward classes, but that is not because they are members of a caste of community but because they form a class. Some people in the rural areas might be educationally backward, some might be socially backward, there may be few who were both socially and educationally backward but it could not be said that all citizens residing in rural areas were socially and educationally backward. 435 The real question raised is not of excessive reservation for the advancement of socially and educationally backward classes of citizens or for the Scheduled Castes and Scheduled Tribes under article 15(4) or for reservation of appointments or posts in favour of any backward classes of citizens under article 16(4) which, in the opinion of the State, is not adequately represented in the services under the State but the question is as to the identification of the socially and educationally backward classes of citizens for whose advancement the State may make special provisions under article 1 '(4) like those for the Scheduled Castes and Scheduled Tribes. It is true that mere economic backwardness would not satisfy the test of educational and social backwardness under article IS(4) but the question is as to the criteria to be adopted. Economic backwardness is only one of the tests to determine social and educational backwardness. the predominant and the only factor for making special provisions under article 15(4) or for reservations of posts and appointments under article 16(4) should be poverty, and caste or a sub caste or a group should be used only for purposes of identification of persons comparable to Scheduled Castes or Scheduled Tribes, till such members of backward classes attain a state of enlightment and there is eradication of poverty amongst them and they become equal partners in 8 new social order in our national life. The Constitution has provided for the appointment of such a Commission for Backward Classes by the President under article 340 to make recommendations and left it to the State to make special provisions for the advancement of such backward classes. The constitutional validity of certain Government orders issued by the Government of the State of Karnataka making provisions for reservation of some seats in technical institutions and some posts in the Government services respectively under Article 15(4) and Article 16(4) of the Constitution of India for being filled up by students, `candidates, as the case may be, belonging to certain castes, tribes and communities which in the opinion of the State Government constituted backward classes (other than the Scheduled Castes and the Scheduled Tribes) is questioned in these petitions. This is not all. After the above decision was rendered by the High Court, the State Government constituted a Committee OD January 8, 1960 under the Chairmanship of Dr. R. Nagan Gowda for the purpose of determining the criteria for the classification of backward classes in the State with the following terms of reference: ( I) to suggest the criteria to be adopted in determining which sections of the people in the State should be treated as socially and educationally backward and (2) to suggest the exact manner in which the criteria thus indicated should be followed to enable the State Government to determine the persons who should secure such preference as may be determined by Government in respect of admissions to technical institutions and appointment to Government services. While this Court said that caste is only a relevant circumstance and that it cannot be the dominant test in ascertaining the backwardness of a class of citizens, the High Court said that it is an important basis in determining the class of backward Hindus and that the Government should have adopted caste as one of the tests As the said observations made by the High Court may lead to some confusion in the mind of the authority concerned who may be entrusted with the duty of prescribing the rules for ascertaining the backwardness of classes of citizens within the meaning of article 15 (4) of the Constitution, we would hasten to make it clear that caste is only a relevant circumstance in ascertaining the backwardness of a class and there is nothing in the judgment of this Court which precludes the authority concerned from determining the social backwardness of a group of citizens if it can do so without reference to caste. While this Court has not excluded caste from ascertaining the backwardness of a class of citizens, it has not made it one of the compelling circumstances according a basis for the ascertainment of backwardness of a class. If the makers of the Constitution intended to take castes also as units of social and educational backwardness, they would have said so as they have said in the case of the Scheduled Castes and the Scheduled Tribes. It may be that for ascertaining whether a particular citizen or a group of citizens belong to a backward class or not, his or their caste may have some relevance, but it can not be either the sole or the dominant criterion for ascertaining the class to which he or they belong. The difference between the two lists one under Article 15(4) and the other under Article 16(4) of the Constitution was due to the exclusion of certain communities, castes and tribes which were socially and educationally backward but which had adequate representation in the services from the list prepared for the purpose of Article 16(4). F The Drafting Committee by qualifying the expression classes of citizens ' by 'backward ' in Article 16(4) of the Constitution tried to reconcile three different points of view and produced a workable proposition which was acceptable to all, the three points of view being (1) that there should be equality of opportunity for all citizens and that every individual qualified for a particular post should be free to apply for that post, to sit for examinations and to have his qualifications tested so as to determine whether he was fit for the post or not and that there ought to be no limitations, there ought to be no hindrance in the operation of the principle of equality of opportunity; (2) that if the principle of equality of opportunity was to be operative the Ought to b no reservations of any sort for any class or 466 community at all and that all citizens if they are qualified should be A placed on the same footing of equality as far as public services were concerned and (3) that though the principle of equality of opportunity was theoritically good there must at the same time be a provision made for the entry of certain communities which have so far been outside the administration. Part XVI was not enacted for the purpose of alleviating the conditions of poorer classes as such which was taken care of by the provisions of Part IV of the Constitution and in particular by Article 46 and by Article 14, article 15(1) and article 16(1) of the Constitution which permitted classification of persons on economic grounds for special treatment in order to ensure equality of opportunity to all person. (5) In Rajendran 's case (supra) while holding that the allocation of seats in Medical Colleges on the basis of the district to which a candidate belonged was not warranted by article 15(4), the Court observed that a caste was also a class of citizens and if the caste as a whole was socially and educationally backward reservation could be made in favour of such caste under article 1 5(4) In Sagar 's case (supra) reservation of seats was done solely on the basis of caste or community. (4) a special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and Scheduled Tribes is outside the purview of cl. (4), it must appear that the beneficaries of the special provision are classes which are backward socially and educationally and they are other than the Scheduled Castes and Scheduled Tribes, and that the provision made is for their advancement. The criterion for determining the backwardness must not be based solely on religion, race, caste, sex, or place of birth, and the backwardness being social and educational must be similar to the backwardness from which the Scheduled Castes and the Scheduled Tribes suffer." But it should not also be missed that a caste is also a class of citizens and that a caste as such may be socially and educationally backward. If after collecting the necessary date, it is found that the caste as a whole is socially and educationally backward, in our opinion, the reservation made of such persons will have to be upheld notwithstanding the fact that a few individuals in that group may be both socially and educationally above the general average. While caste or community is a relevant factor in determining the social and educational backwardness, it cannot be said that all members of a caste need be treated as backward and entitled to reservation under Article 15 (4) or Article 16 (4). 1973 All. 1973 All. the question arises whether such reservation can be made in their favour under any other provision of the Constitution such as Article 14, Article 15 (1), Article 16 (1) or Article 46. Khanna, J. who upheld the judgment of the High Court was of the view that since the impugned Rule did not get the protection of Article 16 (4) which was the only provision under which preferential treatment could be given to members belonging to backward classes, Scheduled Castes and Scheduled Tribes, the Rule could not be upheld on the basis of classification under Article 14 and Article 16 (1) of the Constitution. Equality of result is the test of equality of opportunity". no reservation of posts can be made in Government services for backward classes including Scheduled Castes and Scheduled Tribes under Article 14 or Article 16(1). Other backward classes could not, except in exceptionally rare cases be extended the same benefit and their only hope was Article 16(4) of the constitution, 486 Now reverting to the power of the Government to make reservations under Article 15(4) and Article 16(4) of the Constitution, we may state thus: The determination of the question whether the members belonging to a caste or a group or a community are backward for the purpose of Article 15(4) and Article 16(4) of the Constitution is no doubt left to the Government. It is now accepted that the expressions 'socially and educationally backward classes of citizens ' and 'the Scheduled Castes and the Scheduled Tribes ' in Article 15(4) of the Constitution together are equivalent to backward classes of citizens ' in Article 16(4). Dealing with the question whether any particular caste or group or community could be treated as socially and educationally backward for purposes of Article 15(4), the Court observed in Balaji 's case (supra) at page 465 thus: "Therefore, we are not satisfied that the State was justified in taking the view that communities or castes whose ave rage of student population was the same as, or just below, the State average, should be treated as educationally back ward classes of citizens. In Balaji 's case (supra) this Court took the view that since Article 15 (4) is an exception to Article 15 (1) and Article 16 (4) is an exception to Article 16 (1) and (2) any reservation made under Article 15 (4) and Article 16 (4) should not exceed 50 per cent of the total number of seats or posts, as the case may be. I do not propose to pursue this point further in this case because if reservation is made only in favour of those backward castes or classes which are comparable to the Scheduled Castes and Scheduled Tribes, it may not exceed 5() per cent (including 18 per cent reserved for the Scheduled Castes and Scheduled Tribes and 15 per cent reserved for 'special group ') in view of the total population of such backward classes in the State of Karnataka.
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Before India became independent, the State of Mysore (now part of Karnataka) started a system to help backward classes get jobs in government. In 1959, the State Government created a single list of backward classes for the whole State, based on Article 15(4) of the Constitution. The High Court decided that it was against the Constitution to say that if any seats reserved for Scheduled Castes and Scheduled Tribes were not filled, they should be given to candidates from other backward classes. This order listed 81 classes of people as backward classes and 135 classes as more backward classes. The Court also explained how to determine social and educational backwardness and said that including members of the Lingayat community in the list of backward classes was a mistake. On the question of how many reservations could be made, the Court said that generally, it should be less than 50%. It also said that 18% of the seats should be reserved for Scheduled Castes and Scheduled Tribes. The order said that social and economic backwardness would be determined based on two things: income and occupation. The Commission suggested that people belonging to backward classes for the purpose of Article 15(4) of the Constitution should be divided into three groups: (a) backward communities (15 castes), (b) backward castes (128 castes), and (c) backward tribes (62 tribes). For the purpose of Article 16(4) of the Constitution, the Commission divided the backward classes into: (a) backward communities (9 castes), (b) backward castes (115 castes), and (c) backward tribes (61 tribes). The difference between the lists for Article 15(4) and Article 16(4) was because some communities, castes, and tribes that were socially and educationally backward but had enough representation in government jobs were not included in the list for Article 16(4). The Commission also said that if seats/jobs were not filled in the quota for backward tribes, they should be given to backward communities and backward castes. After considering the report, the State Government issued an order on February 22, 1977, listing the Backward communities, Backward Castes, and Backward Tribes who would be treated as Backward classes for the purposes of Articles 15(4) and 16(4) of the Constitution. (ii) The reservation for Backward classes and the special group of citizens would be set at 40%, divided as follows: Backward Communities (20%), Backward castes (10%), Backward Tribes (5%), and special group (5%). The reservation for backward classes was 40%. By an order dated June 27, 1979, the State Government changed the order of February 22, 1977, by increasing the reservation for the "Special Group" from 5% to 15% for both Articles 15(4) and 16(4) of the Constitution. For Other Backward Classes, two things should be considered together to decide who should get reservations in jobs and education: First, they should be as backward as Scheduled Castes and Scheduled Tribes. But society was divided by caste. Preferential treatment should be given to a class that is socially and educationally backward, not just to members of a caste who are thought to be backward. So, without clear guidelines, courts have generally said that to be considered a socially and educationally backward class, the group must have the same characteristics as Scheduled Castes and Scheduled Tribes. So, there is a rush to be recognized as belonging to a caste that is included in the list of socially and educationally backward classes. So, caste cannot be used to identify socially and educationally backward groups in those communities, although economic backwardness could. This is not good, but it is the reality. Scheduled Castes, Scheduled Tribes, and other socially and educationally backward classes have a long way to go in society. The "backward classes" in Article 16(4) are the same as the "socially and educationally backward classes" and the Scheduled Castes and Scheduled Tribes in Article 15(4). Under Article 16(4), reservation is to help those backward classes who are not adequately represented in government jobs. There can be a classification into Backward Classes and More Backward Classes if both classes are far behind the most advanced classes. Poverty should be the main factor, and caste should only be used to identify people comparable to Scheduled Castes or Scheduled Tribes, until they become equal partners in society. The representation of backward classes in government jobs has to be determined by the percentage of that class in the population and the total number of jobs. The Drafting Committee tried to reconcile three different points of view: (i) that there should be equality of opportunity for all citizens; (ii) that there should be no reservations for any class; and (iii) that there must be a provision for the entry of certain communities that have been outside the administration.
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iminal Appeals Nos. 41 and 77 of 1973. Appeals under Section 19 of the from the, Judgment and Order dated the 5th February, 1973 of the Orissa High Court at Cuttack in Criminal Miscellaneous Case No. 8 of 1972. A.K. Ser, G. L. Mukhoty and C. section section Rao, for the appellant (in Cr.A. 41./73). G. Rath, and B. Parthasarathy, for the appellant (In Cr. A. 77/73). F. section Nariman, Additional Solicitor General, B. M. Patnaik and Vinoo Bhagat, for respondent No. 1 (in Cr. A. 41/73) and respondent NO. 2 (in Or. A. 77/73). G. Rath and U. P. Singh,for respondent No. 2 (in Cr. A. 41/73), A. K. Sen and C. section section Rao, for respondent No. 1 (in Cr. A. 77/73). The judgment of the Court were delivered by PALEKAR J. This is (Criminal Appeal No. 41 of 1973) an appeal by one Baradakanta Mishra from his conviction and sentence under the by a Full Bench of fiVe of the. Orissa High Court. The Judgment is reported in I.L.R. [1913] Cuttack, 134 (Registrar of the Orissa High Court vs Baradakanta Mishra and Ors.). The appellant started his career as a Munsif in 1947. His career as a Judicial Officer was far from satisfactory. In 1956 he was promoted on trial basis to the rank of a sub Judge with the observation 28 7 that if he was found incompetent, suitable action would be, taken. In due course, he, was confirmed as a Subordinate Judge. On April, 2, 1962 he was promoted, again on trial basis, to the rank of Additional District Magistrate (Judicial) which is a post in the cadre of the orissa Superior Judicial Service (Junior Branch). As his work was for unsatisfactory, he wag reverted to his substantive post of a Subordinate Judge on January 4, 1963. The order of reversion was challenged by him in a Writ Petition which was dismissible by a Bench of C.J. and , J. The case is reported in [I.L.R.] 1966, Cutback, 503. An appeal to the Supreme Court was dismissed on February 6,he 1967. While working as a Subordinate Judge, after reversion, ' was suspended from service from 15th May, 1964 to 9th April, 1967 during the pendency of a disciplinary proceeding against him. that proceeding ended in a light punishment of two of his increments being stopped. From the. above order of punishment, the appellant filed on 10 10 1967 an appeal to the State Government. The State Government by its order dated 15 7 1970 allowed tie appeal on the ground that the Public Service Commission had not heed consulted by the High Court before imposing the punishment, and that the Charge Sheet served on the appellant having indicated the proposed punishment vitiated the disciplinary proceedings. After the case, Was sent back to the High Court the charges which had been earlier established, were framed again and served on him on 13 2 1971 and we are informed that the proceeding is still pending. In the meantime, it appears, he was promoted to the post of the Additional District Maggistrate in February, 1968 though the High Court was of opinion that he was unbalanced, quarrelsome, reflect and undisciplined. The High Court specifically observed that though the appellant suffered from these defects, It was sincere and working and the other officers who had superseded him as Additional Districting Magistratres were not much better. The promotion was made on trial basis for a period of one year with the. observation that if during that period his work was found to be unsatisfactory, he 'would be reverted to the rank of Sub Judge. In that year the High Court had to face an abnormal situation by the retirement of many District Judges on account of the decision of the Government reducing the age of retirement from 58 to '55 years Many, vacancies occurred and the appellant was then promoted as an Additional District and Sessions Judge on trial basis for six months in July, 1968. In January, 1969 he was allowed to continue on a temporary basis till further orders subject to further review of his work at the time of confirmation. It is worthy of note that this decision to continue was taken on the report of the present Chief. Justice O. K. Mishra who was at that time the Administrative Judge. On May 12, 1969 his services were placed at the disposal of the Government in the Law Department, who appointed him as Joint Secretary. Law, till October 12, 1969. From October 13, 1960 to December 4, 1970 he was appointed by the Government as the Commissioner of Endowments. The Government was thoroughly dissatisfied with his work and on December 5, 1970 his services were replaced at the disposal of the High Court. The appellant went on leave. 288 On his return to the Judicial cadre, he functioned as Addison District and Sessions Judge, Cuttack till July 14, 1971 when he was ,posted to act as District and Sessions Judge for 12 days in the temporary leave vacancy of the permanent District Judge Mr. P. K Mohanty. When he was thus acting as District and Sessions Judge for a short period by way of stop gap arrangement, the High Court placed several restrictions on his administrative powers,. In the brief period that he was working as Additional District and Sessions Judge, Cuttack, the appellant showed gross indiscretion by defying a request made by the Distr ict, Judge in due course of administration. He also committed a avejuiudicial misdemeanors. He heard an appeal and posted it for judgment on June 22, 1971. The judgment was delivered on that date and the, appeal was dismissed. The Order Sheets of the judgment were signed by the appellant and the judgment was duly sealed. Later in the day, however, the appellant scored through his signatures both in the Order Sheet and in the judgment and returned the record of the appeal to the District Judge for disposal by making a false statement that the judgment had not been delivered and that the parties being known to him it was not desirable that he should further hear the appeal, after taking additional evidence for which a petition had been filed. This was something quite extraordinary from a Judge of the appellant 's standing. When these matters were brought to the notice of the High Court the Registrar by Order of the High Court recommended to the Government that the appellant be reverted to the post of the Additional District Magistrate (Judicial). There were already three departmental proceedings pending against the appellant and he had also been convicted in a contempt case. The High Court expressly informed the Government that these four matters had not been taken into consideration in recommending his reversion and that his reversion was solely due to the fact that his work was found unsatisfactory. The recommendation was accepted by the Government who on September 1, 1971 reverted the appellant to the post of the Additional District Magistrate. On September 10, 1971 the appellant made a representation to the Chief Minister praying for the withdrawal of the order of reversion and, if necessary, to suspend him after drawing up a regular depart7 mental proceeding. The representation was forwarded to the Government with the comments of the High Court. Something unusual happened. Without any further consultation with the High Court, the Governor cancelled the reversion order by notification dated March 21, 1972 And on the same day the Chief Minister wrote a confidential D.O. to the Chief Justice by name explaining the circumstances under which the reversion. order was cancelled. The Chief Minister appeared. to rely upon a decision of the Orissa High Court which had no application to the facts of this particular case. But any way. it would appear that by reason of the Order dated March 21, 1972: the reversion of the appellant to the post of the Additional District Magistrate stood cancelled and he continued to act in the post of the Additional District & Sessions Judge, Cuttack. 289 The D.O. letter of the Chief Minister remained unopened till the return of the Chief Justice from New Delhi where he had gone to attend the Chief Justices Conference. It was opened by the Chief Justice on return on March 26, 1972. But in the meantime, the appellant, who had gone on leave, having known about the order passed on March 21, 1972 asked for his posting. The rules required that on return from leave he should produce, a medical certificate and he was, accordingly directed to produce one. On March 28, 1972 the Chief Justice placed the letter of the Chief Minister for consideration before the Full Court. The Full Court took the decision to start a disciplinary proceeding against the appellant and, pending the same, to place him under suspension in exercise of their powers under Article 235 of the Constitution. Accordingly on March 30 1972 the appellant was placed under suspension and his headquarters were fixed at Cuttack. The present contempt proceedings arise out of events which took place after the suspension order. On receiving the suspension order the appellant addressed by letter an appeal to the Governor of Orissal for cancelling the order of suspension and for posting him directly under the Government. That is Annexure 8. As the High Court was of the view that no appeal lay from an order of suspension pending disciplinary charges, it did not forward the appeal to the. Governor. In fact on April 28, 1972 the Registrar of the High Court intimated the State Government that the appeal filed by the appellant to the Governor had been withheld by the High Court as no such appeal lies against the order of suspension pending disciplinary proceedings. The appellant was also intimated accordingly. On April 29, 1972 charges in 'the disciplinary proceeding were, framed by the High Court and communicated to the appellant and the appellant was directed to file his reply to the charges by a certain date. On May 14, 1972 the appellant wrote three letters. One was to the Registrar and is Annexure 13. By this letter the appellant intimated that he had moved the Governor to transfer the disciplinary proceedings to the Administrative Tribunal and that he would take all other alternative steps administrative and judicial to avoid the proceeding being dealt with by the High Court. The second letter was addressed to the Governor and is Annexure 15. It purports to be a representation with a prayer to direct the High Court to forward the appeal withheld by it. There was a third letter of the same date addressed directly to the Governor purporting to be a representation. That is Annexure 16. The prayer was that the departmental pro . seedings be reference to the Administrative Tribunal. A copy of this letter was sent to the Registrar of the High Court with the following . remark "As the Honourable Court are likely to withhold such petitions, this is submitted direct with copy to the Honourable Court for information. Honourable Court may be,, pleased to send their comments on this petition to the Governor." 29 0 On May 22, 1972 the appellant addressed a letter (Annexure 14) to the Registrar intimating him that he would not submit any explanation to the charges framed against him until his representation to the Governor was disposed of. He also stated therein that he may file a writ application for the purpose and would take the matter to the Supreme Court, if necessary. He also stated that he cannot wait for the permission of the High Court for leaving the Headquarters. It is the contents of these letters on which a show cause notice for contempt was issued to the appellant under the orders of the Full Court on July 3, 1972. On 27 7 1972 the appellant filed his preliminary objection to the show cause notice challenging its maintainability on the ground that whatever he had said had no reference to the judicial functions of any Judge of the High Court and, therefore, no contempt proceedings would lie. He pressed for a decision on the point. When the matter came before a Division Bench on 3 8 1972 the appellant was directed to file his full reply to the show cause notice. Accordingly, it was filed on 7 8 1972 and the appellant again pressed for a decision on his preliminary objection. The Division Bench refused to deal with the preliminary objection and so on 30 8 1972 the appellant filed Criminal Appeal NO. 174 of 1972 in this Court praying for cancellation of the contempt proceedings challenging therein the maintainability of the proceeding and complaining of bias and prejudice of the High Court particularly the Honourable the Chief Justice and Mr. Justice R.N. Mishra. He said apprehended that he would not get a fair deal if the matter is disposed of by the High court On 21 11 1972 the Supreme Court appeal was withdrawn. At the instance of the Division Bench, a PM Bench of five Judges was constituted by the Chief Justice, and the case came on for hearing before the Full Bench on 4 12 1972. In the meantime the appeal memo filed by the appellant in the Supreme Court was available and since it contained matter which amounted to contempt, additional, charges were framed and a show cause notice was issued to the aPPellant in respect of these additional charges. A copy of, the appeal memo containing the statements amounting to contempt is Annexure 20. The Annexures were examined by the court with a view to consider whether the statements therein amount to a criminal contempt. On a full and prolonged consideration the Fall Bench came to, the unanimous conclusion that Annexures 8,13,14,16, and 20 contain matters which accounted to gross contempt of court and since the appellant had not even offered an apology, this was a matter in Which serious notice ought to be taken, especially, in view of previous convictions for contempt, and, accordingly sentenced the appellant to two months simple imprisonment though in their opinion he deserved the maximum sentence of six months. The several Annexures referred to above have been extracted by the Fall Bench in its judgment and it as not necessary to reproduce them here. It will be sufficient to reproduce only those portions 29 1 which were regarded as grossly contemptuous and had been under lined in the judgment. Annexure 8. As already stated this is a letter in the, form of an appeal addressed to the Governor of Orissa complaining against the suspension and praying for stay of operation of the suspension order on the basis. of the advance copy sent to the Governor for its cancellation and for posting the appellant directly under the Government. it is dated 10 4 1972. The appeal had been routed through the High Court but the High Court did not forward the same. In this annexure reference is made to the previous appeal filed by him against the order of the High Court stopping his two increments after a departmental proceeding and how the Governor in appeal had cancelled even the very departmental proceeding in the appeal. An interpretation was, put on that order which it did not bear and it was made out, though falsely, that the punishment had been set aside on the basis of the allegations made by the appellant that some Honourable Judges of the High Court had been biased and prejudiced against him. The appellant also asked the Governor to appreciate that by the said departmental proceedings the High Court had put the Exchequer to a very heavy loss "all on accounts of the palpable incorrect views of the High Court. " Then the appellant says that the present action,. namely , the order of suspension clearly disclosed mala fides. He suggested that there were several "embarrassing events" which he could offer for consideration of the Governor but he was content at this stage to refer to only one of them. In this connection he referred to the fact that when he intimated to the High Court that he desired to join duties after his leave on March 20, 1972 he was informed by the High Court on March 23, 1972 that his re posting after leave would be decided after the medical board reported as to his fitness. to join after leave. This, according to the appellant, showed that the High Court had already taken a decision in the absence of the Chief Justice that the appellant should be re posted. But on the return of the Chief Justice from New; Delhi there was a sudden change. , He clearly suggested that after the Chief Justice 's return, the court took the decision to suspend him and in this connection he made the following observations : "This decision of the High Court, reached at before the Honourable the Chief Justice attended the High Court on the 27th March after his 10 days of absence, clearly indi cates that no proceeding, much less suspension, against the appellant was under contemplation till that day, but on the other hand, the appellant 's place of posting was under consideration of the High Court. Circumstances clearly disclose that after the return of the Honourable Chief Justice, the Government 's order, disapproving the High Court 's views about the appellants demotion, was not accepted gracefully by the High Court, and so subterfuge was adopted to counteract the said decision of. the Government by a novel step, thus to deprive the appellant of the result of the said decision. In view of this patent mala fide alone, such an action 292 is liable to be quashed, by any competent Court of law. " Then at a later stage the appellant says "The appellant happens to be the senior most judicial officer in the State as regards length of service, and he has already 20 more months before attaining the age of superan nuation. Hence, he may not deserve the present unwarranted, sudden and mysterious suspension. giving rise to speculations, touching his integrity. " Then again he says ". . the treatment of the High Court may require that after cancellation of this order of suspension, he be brought under the direct control of the Government in a special post for the rest of his service career of hardly 20 months more. " The High Court at para 61 of the judgment has observed as follows : "In the appeal memo (Annexure 8) the condemner attributed mala fides, bias and prejudice to the High Court. He made false insinuations that the Governor cancelled the previous disciplinary proceeding against the condemner on the ground that the same was vitiated as the High Court had prejudged the matter and the Government set aside the punishment on the ground that three of the Honourable Judges were biased and prejudiced against him. He alleged that the disciplinary proceeding involved the Government in heavy expenses on account of the palpably incorrect views of the High Court. He asserted that the order of suspension as per Annexure 6 was mala fide. He stated that he would produce more facts relating to the mala fides of the High Court before the Governor. He alleged that the High Court did not gracefully accept the Government 's order cancelling his demotion, and the High Court resorted to a subterfuge to counter act the said decision of the Government by taking a novel step, and that the High Court 's action suffered from patent mala fide. He stated that there was a turn of event after return of the Chief Justice from the Chief Justices ' Conference and that the High Court did not accept Government 's decision. gracefully and that the other Judges had no independent judgment of their own, and were influenced by the Chief Justice to take a view, different from what they had already taken, to give a posting order to the contemner, and that the High Court resorted to a subterfuge. He wanted protection of the Govern against the High Court which he insinuates as an engine of oppression. He characterised the High Court 's order of suspension as mysterious and prayed that the Government should post him directly under it. " We have no doubt that the Full Bench has correctly summarized the effect of Annexure 8, and we have nothing more, to add. 29 3 Annexures 13 and 14 should go together. Annexure 13 is a letter by the appellant to the Registrar dated May 14, 1972 in which he told him that he had moved the Governor, Orissa with a prayer to refer his matter to the Tribunal under the provisions of the Disciplinary Proceedings Rules, 1951 and also that he would take all other alternative steps "administrative and judicial" to avoid this proceeding being dealt with by the High Court and for this purpose would have to consult some prominent Advocates of Calcutta and Delhi. Annexure 14 is a further letter dated May 22, 1972 to the Registrar intimating him that he would not submit any explanation to the charges framed until his representation to the Governor was disposed of. In this letter he further pointed out that it would not be possible for him to wait for the permission of the High Court to leave headquarters, because he may be called by his legal advisers at any moment and in those circumstances he said "I hereby inform the Honourable Court that I may be absent during the entire period mentioned in my letter dated the 14th May, 1972 and the Honourable Court may kindly approve of the same. " The effect of Annexares 13 and 14 has been summarised by the Full Bench in these words : "Thus, in Annexures 13 and 14, the contemner exhibited a contemptuous defiance of the Court 's order, by declaring that he would not obey the order. and would leave the station without waiting for permission from the High Court, as his first consideration was to "go out in connection with legal advice and filing applications and appeals in the Supreme Court" in matters connocted with his suspension, and to take all steps to avoid the proceeding being dealt with by the High Court. These passages depict, in unequivocal terms, that the dispensation of justice by the Judges of the High Court on its administrative side, is most atrocious and vindictive and it is on that ground. the contemner would not obey the Court 's order, could not submit any explana tions, and would take all possible measures before the Supreme Court, the Governor and the Chief Minister not to surrender to the jurisdiction of the High Court. His entire attempt has been to present a lurid picture of the administration of justice, by the High Court. " In the context, we are not prepared to say that this summary of the effect of Annexures 13 and 14 is far wrong. Annexure 16. That brings us to Annexure 16. It Is dated May 14, 1972 and purports to be a representation made by the appellant direct to the Governor without routing it through the High Court. The following passages have been underlined by the Full Bench as being grossly contemptuous. ". the High Court have already contemplated in this departmental proceedings, a very heavy punishment for the petitioner. " 294 "If on two such allegations, bias and prejudice of the High Court was disclosed by strongly pleading for demotion of the petitioner, the multiple number of such charges may naturally make the petitioner, apprehensive of the result of the proceedings, if conducted by the High Court." ". . the High Court even without any authority or jurisdiction in this regard and on the face of the directions of the Government in Political and Servoes Department communicated in the Government 's Memo No. 3559 Gen., dated the 15th March 1958, have placed the petitioner under suspension " "The High Court have also taken unusual move in placing the petitioner under suspension in a 'contemplated proceeding ' " ". the High Court on the administrative side, is seriously prejudiced and biased against him, and they act, as if the charges stand established, requiring extreme punish ment and as such, justice, may not be meted out to the petitioner by the High Court, if they conduct this departmental inquiry." ". . the petitioner considers it risky to submit his explanation to the High Court." ". . the High Court in the best interest of justice,should not enquire into these charges. " A copy of the above representation was sent to the Registrar and the following endorsement appears thereon. As the Honourable Court are likely to withhold petitions this is submitted direct with copy to the Honourable Court for information. The Honourable Court may be pleased to send their comments on this petition to the Governor. " The summary of the effect of Annexure 16 is given by the Full Bench in para 70 of the judgment which is as follows : "In Annexure 16 the contemner has suggested that the Court has already prejudged the matter and has taken a previous decision to impose a heavy punishment. Bias and prejudice on the part of the Court were also alleged by the contemner. He suggested that the Court is not in a position to weigh the evidence. and consider the materials on record and to impose a sentence commensurate with his delinquency. The action taken by the High Court has been branded as unusual. . ." "A copy of this Annexure 16 was sent to the High Court with a contemptuous remark that since the High Court was likely to withhold the representation it was submitted direct to the Governor. Not being satisfied with that, he issued a further directive to the court to send their comments on his representation to the Governor. 295 The above summary of the effect of Annexure 16 is, in our view, correct. Annexure 20. This annexure is the memo of appeal filed by the appellant in the Supreme Court in Criminal Appeal No. 174 of 1972. The appeal had been filed because the Division Bench had refused to consider his preliminary objection with regard to the maintainability of the present contempt proceedings. The grievance before the Supreme Court was that the, Orissa High Court had taken. six contempt proceedings against him and in view. of what happened in some of those proceedings, the appellant entertained apprehension that the court may impose substantive punishment and may refuse bail or time to the appellant for getting redress from the Supreme Court if the present contempt proceedings were also to go on before the same High Court. In the first contempt proceeding though the proceedings were dropped, Adverse comments were made against his conduct thus depriving him of an opportunity to go in appeal and have the adverse comments exnged. in one of the other cases he says. . the appellant was brought down to the Court hall, and the Honourable Judges convicted and sentenced the appellant and without affording him an opportunity to obtain stay of the sentence from this Honourable Court, executed the sentence by administering admonition in the, open court and sounding warning that, if at any time such contumacious conduct of his was noticed, a very serious view would be taken about punishment. " In the other contempt matter, he alleged, a Judge wanted to add a new charge. The appellant objected to the same and went in appeal to the Suprerac, Court. The appellant says that when the appellant filed his appeal in this Court and brought this fact to the notice of the Honourable Judges,, they dropped the additional charge. In another proceeding, he says, the Honourable Judges while dropping the proceeding found out a very innocent and inconsequential mistake in the sworn counter affidavit of the appellant and on that account ordered the filing of a criminal complaint for an offence under section 199 of the I.P.C. In ground (1) the appellant alleged that the appellant fears bias of the Honourable High Court against him in view of the facts and circumstances stated above. The Full Bench in its judgment has considered each one of them allegations in the appeal memo and shows how the insinuations were false and how plain facts were distorted, They are entirely right in ,ummarising these facts of Annexure 20 in these words: "Thus in Annexure 20 the contemner has, in clearest terms, alleged bias and prejudice against the High Court and its Chief Justice. He has taken the plea that the court itself has become disqualified to deal with the case In his view the Judges of this Court have fallen from the path of rectitude, and are vindictive, and have already decided to impose substantive sentence and refuse bail, and they are not in a position to mete out even handed justice. , 522SCI/74 296 disrespectful fulminations of an angry insubordinate officer, there is hardly any doubt that Annexures 8, 16 and 20 contain statements which are deliberately made to grossly scandalize the High Court. The Judges of the High Court and especially the Chief Justice are charged with mala fides, improper motives, bias and prejudice. It is insinuated that they are oppressing the appellant, have become vindictive and are incapable of doing him justice. It is also suggested that they do not administer justice fearlessly because in one matter affecting the appellant, they dropped a charge against him for fear of the Supreme Court. All this, prima facie, amounts to gross scandalization of the High Court. The law applicable to this case is the law as contained in the No. 17 of 1971. Section 2 defines "Contempt of Court", as either "civil contempt" or "criminal contempt". Clause (c) defines "criminal contempt" as follows : (c) "criminal contempt" means the publication (whether by words, spoken or written, or by signs, or by visible repre sentations, or otherwise) of any matter or the doing of any other act whatsoever which (i) scandalises or tends to scandalise, or lowers or tends to lower the authority of, any court; or (ii) prejudices, or interferes or tends to interfere with, the due course of any judicial proceeding; or (iii) interferes or tends to interfere with, or obstructs or tends to obstruct, the administration of justice in any other manner;" It will be seen that the terminology used in the definition is borrowed from the English law of Contempt and embodies concepts which are familiar to that law which, by and large, was applied in India. The expressions "scandalize", "lowering the authority of the court", "interference", "obstruction" and "administration of justice" have all gone into the legal currency of our sub continent and have to be understood in the sense in which they have been so far understood by our courts with the aid of the English law, where necessary. The first sub clause generally deals with what is known as the scandalization of the court discussed by Halsbury 3rd Edition in Volume 8, page 7 at para 9 : "Scandalous attacks upon Judges are punished by attachment or committal upon the principle that they are, as against the public, not the judge, an obstruction to public justice; and a libel on a judge, in order to constitute a contempt of court, must have been calculated to cause such an obstruction. The punishment is inflicted, not for the purpose of protecting either the court as a whole, or the individual judges of the court from a repetition of the attack, but of protecting the public, and especially those who either voluntarily or by compulsion are subject to the jurisdiction of the court, from the mischief they will incur if the authority of the tribunal is undermined or impaired. " Sub clause (1) embodies the above concept and takes in cases when by the publication or the fact the 29 7 administration. of justice is held to ridicule and contempt. This is regarded as an "obstruction" of public justice whereby the authority of the court is undermined. Sub clause (1) refers to one species of contempt of which "obstruction" is an important element. Sub clause (ii) speaks of, interference with due course of judicial proceedings and is directly connected with administration of justice in its common acceptance. While clauses (i) and (ii) deal with obstruction and interference respectively in the particular way described therein, clause (iii) is a residuary Provision by which any other type of obstruction or interference with the administration of justice is regarded as a criminal contempt. In other words, all the three sub clauses referred to above define contempt in terms of obstruction of or interference with administration of justice. Broadly speaking our statute, accepts what was laid down by the Privy Council and other English authorities that proceedings in contempt are always with reference to the administration of justice. It is enough for our purpose to refer to Debi Prasad Sharma vs The Kin.g Emperor(1) in which Lord Atkin delivering the judgment of the Judicial Committee observed at page 223 as follows : "In 1899 this Board pronounced proceedings for this species of contempt (scandalization) to be obsolete in this country ' though surviving in other parts of the Empire, but they added that it is a weapon to be used sparingly and always with reference to the administration of Justice : McLeod vs St. Aubyn (1) In In,re a Special Referewe from the Bahama Islands [1893] A.C. 1 38) the test applied by the, ve strong Board which heard the reference was whether the words complain of were in the circumstances calculated to obstruct or interfere with the course of justice and the due administration of. the law. In Oueen vs GraY [1900](2) Q. B. 36 it was show that the offence of scandalizing the, court itself was not obsolete in this country. A very scandal us attack had been made on a fudge for his judicial utterances while sitting in a criminalase on circuit and it was with the foregoing opinions on record that lord Russell of Killowen, C.J., adopting the expression of Wilmot, C.J. in his opinion in Rex. vs Almon (1765 Wilmot 's Notes of Opinions, 243 ; ,which is the source of much of the present law on the subject, spoke of the article complained of as calculated to lower the authority of the judge. It is, therefore, clear that scandalization within the meaning of subclause (1) must be in respect of the court or the Judge with reference to admims tration of justice. The contention of Mr. Sen on behalf of the appellant is that, in the first place ', it must be remembered that the publication or acts complained of are in the course of the appellant challenging his suspension and holding of disciplinary proceedings in an appeal or representation to the Governor from the orders passed by the High Court. In Anexure 20 he was challenging the order of the High Court before (1) 70 Indian Appeals, 216. 298 the Supreme Court. The appellant in his submission, bona fide believed that he had a right to appeal and, in pursuance of the right he thus claimed he had given expression to his grievance or had otherwise acted, not with a view to malign the court or in defiance of it, but with the sole object of obtaining the reversal of the orders passed by the High Court against him. In the second place, Mr. Sen contended, the passages about which the complaint was made did not amount to contempt of court since they did not purport to criticize any judicial ' acts of the judges sitting in the seat of justice. It may be that in some places disrespectful references have been made to the Judges which Mr. Sen assures us, he should have, never done. At the same time, in his submission, criticism of administrative acts of the High Court even in vilification terms did not amount to contempt of court. So far as the first part of the argument is concerned, the same must be dismissed as unsubstantial because if, in fact the language used amounts to contempt. of court it will become punishable as criminal contempt. The right of appeal does not give the right to commit contempt of court, nor can it be used as a cover to bring the authority of the High Court into disrespect and disregard. It has been held by this Court in Jugal Kishore vs Sitamarhi Central Co op. Bank() that allegations of mala fides in the grounds of appeal to the Joint Registrar of Cooperative Societies from the Order of the Assistant Registrar would constitute gross contempt. A point of some substance is in the second part of Mr. Sen 's argument and it will be necessary to decide in the present case whether contemptuous imputations made with reference to "the administrative acts" of the High Court do not amount to contempt of Court. The answer to the point raised by Mr. Sen will depend upon whether the amputations referred to above do or do not affect administration of Justice. That is the basis on which contempt is punished and must afford the necessary test. We have not been referred to any comprehensive definition of the expression "administration of justice". But historically, and in the minds of the people, administration of justice is exclusively associated with the Courts of justice constitutionally established. Such courts have been established throughout the land by several statutes. The Presiding Judge of a court embodies in himself the court, and when engaged in the task of administering justice is assisted by a complement of clerks and ministerial officers( Whose duty it is to protect and maintain the records, prepare the writs, serve the processes etc. The acts in which they are engaged are acts in aid of administration of justice by the Presiding Judge. The power of appointment of clerks and ministerial officers involves administrative control by the Presiding Judge over them and though such control is described as administrative to distinguish it from the duties of a Judge sitting in the seat of justice such control is exercised by the Judge as a Judge, in the course of judicial administration. Judicial administration is an integrated function of the judge and cannot suffer any dissection so far as maintenance of high standards of rectitude in judicial administration is con (1) A.I.R. 1967 S.C. 14 94 299 cerned. The whole set up of a court is for the purpose of administration of justice, and the control which the Judge, exercises over his assistants has also the object of maintaining the purity of administration of justice. These observations apply to all courts of justice in the land whether they are regarded as superior or inferior courts of justice. Courts of justice have, in accordance with their constitutions. to perform multifarious functions for due administration of 'justice. Any lapse from the strict standards of rectitude in performing these functions is bound to affect administration of justice which is a term of wider import than mere adjudication of causes from the seat of justice. In a country which has a hierarchy of courts one above the other, it is usual to find that the one which is above is entrusted with disciplinary control over the one below it. Such control is devised with a view to ensure that the lower court functions properly in its judicial administration. A Judge can foul judicial administration by misdemeanors while engaged in the exercise of the functions of a Judge. It is therefore as important for the superior court to be vigilant about the conduct and behavior of the Subordinate Judge as a Judge, as it is to administer the law, because both functions are essential for administration of justice. The Judge of the superior court in whom this disciplinary control is vested functions as much as a Judge in such matters as when he hears and disposes of cases before him. The procedures may be different. The place where he sits may be different. But the powers are exercised in both instances in due course of judicial administration. If superior courts neglect to discipline subordinate courts, they will fail in an essential function of judicial administration and bring the whole administration of justice into contempt and disrepute. The mere function of adjudication between parties is not the whole of administration of justice for any court. It is important to remember that disciplinary control is vested in the court and not in a Judge as a private individual. Control, therefore, is a function as conducive to proper administration of justice as laying down the law or doing justice between the parties. What is commonly described as an administrative function has been, when vested in the High Court, consistently regarded by the statutes as a function in the administration ' of justice. Take for example the Letters Patent for the High Court of Calcutta. Bombay and Madras. Clause 8 thereof authorises and empowers the Chief Justice from time to time as occasion may require "to appoint so many and such clerks and other ministerial officers it shall be found necessary for the administration of justice End the due execution of all the powers and authorities granted and committed to the said High Court by these Letters Patent. " It is obvious that this authority of the Chief Justice to appoint clerks and ministerial officers for the administration of justice implies an authority to control them in the interest of administration of justice. This Controlling function which is commonly described as an administrative function is designed with the primary object of securing administration of justice. Therefore, 300 when the Chief Justice appoints ministerial officers and assumes disciplinary control over them, that is a function which though described a administrative is really in the course of administration of justice. , Similarly section 9 of the High Courts Act, 1861 while conferring on the High Courts several types of jurisdictions and powers says that all such jurisdiction and powers are "for and in relation to the administration of justice in the Presidency for which it is established. " Section 106 of the Government of India Act, 1915 similarly shows that the, several jurisdictions of the High Court and all their powers and authority are "in relation to the administration of justice including power to appoint clerks and other ministerial officers of the court. " Section 223 of the Government of India Act, 1935 preserves the jurisdictions of the. existing High Courts and, the respective powers of the Judges thereof in relation to the administration of justice in the court. Section 224 of that Act declares that the High Court shall have superintendence over all courts in India for the time being subject to its appellate jurisdiction and this superintendence, it is now settled, extends both to administrative and judicial functions of the subordinate courts. When we come to our constitution we find that whereas Articles 225 and 227 preserve and to some extent extend these powers in relation to administration of justice, Article 235 vests in the High Court the control over District Courts and Courts Subordinate thereto. In the State of west Bengal vs Nripendra Nath Bagchi(1) this Court has pointed out that control under Article 235 is control over the conduct and discipline of the Judges. That is a function which, as we have already seen, is undoubtedly connected with administration of justice. The disciplinary control over the misdemeanours of the subordinate judiciary in their judicial administration is a function which the High Court must exercise in the interest of administration of justice. It is a function which is essential for the administration of justice in the wide connotation it has received and, therefore, when the High Court functions in a disciplinary capacity, it only does so in furtherance of administration of justice. We thus reach the conclusion that the courts of justice in a State from the highest to the lowest are by their constitution entrusted with functions directly connected with the administration of justice, and it is the expectation and confidence of all those who have or likely to have business therein that the courts perform all their functions on a high level. of rectitude without fear or favour, affection or ill will. And it is this traditional confidence in the courts that justice will be administered in them which is sought to be, protected by proceedings in contempt. The object, as already stated, is not to vindicate the Judge personally but to protect the public against any undermining of their accustomed confidence in the Judges ' authority. Wilmot C.J. in his opinoin in the case of Rex vs Almon alreadly referred to says : "The arraignment of the justice of the Judges, is arraigning the King 's justice, it is an impeachment of his wisdom and goodness in the choice of his Judges, and excites in the minds of the people a general dissatisfaction with all judicial determination, and indisposes their minds to obey them; and whenever men 's allegiance to the laws is so fundamen (1) ; 301 tally shaken, it is the most fatal and most dangerous obstruction of justice, and in my opinion, calls out for a more rapid and immediate redress than any other obstructing whatsover; not for the sake of. the Judges, as private individuals, but because they are the channels by which the King 's justice is conveyed to the people. To be, impartial, and to be universally thought so, are both absolutely necessary for the giving justice that free, open, and uninterrupted current, which it has, for many ages, ' found all over this kingdom. . Further explaining what be meant by the words "authority of the court", he observed "the word "authority" is frequently used to express both the right of declaring the law, which is properly called jurisdiction, and of enforcing obedience to it, in which sense it is equivalent to the word power : but by the word "authority", I do not mean that coercive power of the Judges, but the deference and respect which is paid to them. and their Acts, from an opinion of their justice and integrity. " Scandalization of the court is a species of contempt and may take several forms. A common form is the vilification of the Judge. When proceedings in contempt are taken for such vilification the question which the court has to ask is whether the vilification is of the Judge, as a Judge. See Queen vs Gray(1) or it is the vilification of the Judge as an individual. If the latter, the Judge, is left to his private remedies and the court has no power to commit for contempt. If the former, the court will proceed to exercise the jurisdiction with scrupulous care and in cases which are clear and beyond reasonable doubt. Secondly, the court will have also to consider the degree of harm caused as affecting administration of justice and, if it is slight and beneath notice, courts will not punish for contempt. This salutary practice, is adopted by section 13 of the . The jurisdiction is not intended to uphold the personal dignity of the Judges. That must rest on surer foundations. Judges rely on their conduct itself to be its own vindication. But if the attack on the Judge functioning as a Judge substantially affects administration of justice it becomes a public mischief punishable for contempt, and it matters not whether such an attack is based on what a judge is alleged to have, done in the exercise of his administrative responsibilities. A Judge 's functions may be divisible, but his integrity and authority are not divisible in the context of administration of justice. An unwarranted attack on him for corrupt administration is as potent in doing public harm as an attack on his adjudicatory function. The Full Bench has considered a very large number of cases and come to the conclusion that there is no foundation. for the view that an attack on the court in its exercise of administrative functions does not amount to contempt. In Brahma prakash Sharma and others vs The State of Uttar pradesh(2) it is pointed out that the object of contempt proceedings is not to afford protection to judges personally from nations to which they may be exposed as individuals but intended,as protection to the public those interest would be very much affected, (1) [1900] (2) Queen 's 13 36 at page 40. (2 ) 302 if by the act or by the conduct of any party the authority of the court is lowered and thee sense of confidence which the people have in the administration of justice by it is weakened. The case is no authority to the proposition put forward by Mr. Sen. In Gobind Ram vs 'State of Maharashtra(1) some observations of Jagannadhadas, C.J. (as he then was) in the State vs The Editors and Publishers of Eastern Times and Prajatantra(2) were quoted by this Court with approval. These observations are : " 'A review of the cases in which a contempt committed by way of scandalization of the court has been taken notice of for punishment shows clearly that the exercise of the punitive jurisdiction is confined to cases of very grave and scurrilous attack on the court or on the Judges in their judicial capacity. the ignoring of which could only result encouraging a repetition of the same with the sense of in unity which would thereby result in lowering the prestige and authority of the court." Mr. Sen has particularly emphasised the words "judicial capacity" and argued that this only refers to the Judge functioning in the seat of justice. It does not appear from the report of the Orissa case that the High Court was in any way, concerned with the alleged dichotomy between the Judge 's administration functions and his ad judicatory functions. "Judicial capacity" is an ambivalent term which means " capacity of or proper to a Judge" and is capable of taking in all functional capacities of a Judge whether administrative, adjudicatory or any other, necessary for the administration of justice. There is no sufficient warrant to hold that the Orissa High Court used the words "judicial capacity" with a view to exclude all other capacities of the Judges except the capacity to adjudicate, nor for holding that this Court approved the use of the expression as limited to the. Judges ' adjudicatory function. On the other hand, there is high. authority for the proposition that vilificatory criticism of a Judge functioning as a Judge even in purely administrative or non adjudicatory matters amounts to criminal contempt. The case of Rex vs Almon already referred to is a case of this kind. Almon published a pamphlet in which the Chief Justice and, impliedly, all the Judges of the court of King 's Bench Were accused of deliberately delaying or defeating the issue of the process of Habeas corpus by introducing a new rule that a petition praying for the issue of that process should be accompanied by an affidavit. It was held that this constituted contempt of court. The Chief Justice and the Judges were not criticized for what they were doing in a judicial proceeding from the "seat of justice" but for making a rule which, 'in the opinion of the writer was deliberately designed to delay or defeat the process of habeas corpus. Apparently. the rule had been made by the court under its power to regulate proceedings in court and not in any judicial proceeding between parties to a cause. The rule Was Made Under the rule making function of the court and not in exercise of any adjudicatory function as narrowly interpreted now, and still it was held that the court was scandalized and its authority lowered. In Mott Lal Ghose and others(3) a strong special bench of five Judges held that an imputation made against the Chief Justice of the Calcutta High Court suggesting that he was improperly motivated in constituting a packed bench (1) [1971] 1.S.C.C. 740. (2) A I.R. 1952 orissa, 318. (3) XLV Calcutta 169. 303 to hear a particular class of appeals was held to amount to contempt. Sanderson, C. J. observed at page 180 : "I have no doubt that this article, read by itself, constitutes a very serious reflection upon the administration of the court, which everyone knows is in the hands of the Chief Justice. " Woodroffe, J. at page 199 observed : "The Court, however, in such cases does not seek to vindicate any, personal interests of the Judges, but the general administration of justice, which is a public concern. " Mookerjee, J at page, 231 observed : "it seems to me indisputably plain that the implication of the second article, whether taken along with or independently of the first, is that, at the instance of person$ interested in the Calcutta Improvement Trust, the Chief Justice has constituted a Special Bench to ensure a decision favorable to the Trust in the appeals against the judgment of Mr. Justice Greece." Proceeding further he held "an imputation of this character constitutes a contempt of court. " It was the function of the Chief Justice as Chief Justice of the Court to administratively form, front time to time, benches for the disposal of the business of the court. To attribute improper motives to him in the exercise of this function was held to be a contempt because that was bound to undermine the confidence of the people in the High Court and its Judges in relation to administration of justice. Similarly, in The state of Bombay vs Mr. P.(1)" "a scurrilous attack on. the court receiver for alleged misbehavior in his official duties and a charge against the Chief Justice and the administrative judges for deliberately conniving at it were held to constitute contempt. The same argument as is now put forward was made in that case. (See para 14 of the report), but was rejected in these words : "By making these foul attacks upon the Judges, the respondent has tried to create an apprehension in the mind of the public regarding the integrity of these Judges and has done a wrong to the public. He has attempted to shake the confidence of the public in the Judges of this Court and in the justice that is being administered by these judges of this Court. " There is no such thing as a denigration of a Judge function wise. This is brought out clearly in the judgment of the Judicial Committee in Debi Prasad Sharma vs The King Emperor(2) referred to earlier. In that case the appellant had suggested falsely that the Chief Justice of the Allahabad High Court had in his administrative capacity, issued a circular to the Judicial Officers under his jurisdiction enjoining on them to raise contributions to the warfares which, it was said, would lower the prestige of the court in the eyes of the people. In holding that the imputation did not constitute contempt of court but at the most, a personal defamation of the Chief Justice in his individual capacity, Lord Atkins said at page 224, "When the comment in question in the present case is examined it is found that there is no criticism of any judiciaries of the Chief Justice, or any imputation on him for anything done or omitted to be done by him in the administration of justice. it can hardly be said that there is any criticism of him in his administrative capacity, for, as far as their Lordships have been informed, the administrative control of the subordinate courts of the. Province, whatever it is, is exercised, not by the Chief Justice, but by the. court over, which he presides. " (1) A.I.R. 1959 Bombay 182. (2) 70 Indian Appeals 216. 304 The words underlined above are important. In holding that only ordinary remedies for defamation were open to the Chief Justice, their Lordships had to ask the substantial question, as suggested by Lord Watson during the course of the arguments in Re : Special Reference from the Bahama Islands(1) "whether the letter complained of referred to him in his official capacity. " With that case obviously in mind and the case was referred to earlier in the judgment lord Atkin showed in the words quoted above that the criticism did not refer (i) to any judicial act, meaning thereby any adjudicatory act and (ii) to any administrative act, because the Chief Justice alone had no administrative control over the subordinate courts but only the High Court as a whole. The plain implication is that if the circular had been alleged to have been issued by the Chief Justice under the authority of the High Court, then the imputation having the effect of lowering the prestige and authority of the High Court could conceivably have been regarded as contempt. Their Lordships of the Privy Council are not known to waste their words over matters not relevant to the issue. It was absolutely necessary for their Lordships to eliminate the possibility of the alleged action of the Chief Justice being connected in any manner with any adjudicatory or administrative function of the High Court by pointing out that it did not refer to any official act in the administration of justice or, as stated in Queen vs Gray already refer , red to, "the act of a Judge as a Judge", in which case alone the imputation would have amounted to scandalization of the court. The above authorities are sufficient to show that there is no warrant for the narrow view that the offence of scandalization of the court takes place only when the imputation has reference to the adjudicatory functions, of a Judge in the seat of justice. We are unable, therefore, to accept the submission of Mr. Sen on this aspect of the case. We have already shown that the, imputations in Annexures 8, 16 and 20 have grossly, vilified the Hugh Court tending to affect substantially administration of justice and, therefore, the appellant was rightly convicted of the offence of criminal contempt. As regards the sentence, it is enough to say that the Full Bench has considered the question at great length. There were six contempt proceedings against the appellant and the court had treated him generously. In two proceedings he was let off with a fine. Even in the present case the Full Bench was of the opinion that the maximum sentence under the law was deserved by the appellant but imposed on him only a sentence of simple imprisonment for two months. The appellant, throughout, took a defiant attitude and did not even think it necessary to offer an apology. Ordinarily we would be most reluctant to interfere with the sentence imposed by the High Court, but for the fact that we notice that he has almost come to the end of his judicial career and during the last few years has been gripped by a sort of mania against the High Court which clouded his reason. We think the object of punishment will be served by directing him to pay (1) at 14. 30 5 a fine of Rs. 1,000/ or in default to suffer simple imprisonment for 3. months in substitution of the sentence inflicted by the High Court. It remains now to point out that when dealing principally with the contempt of the appellant, the court also thought it fit to hear the: parties including the Advocate General on some subsidiary but important questions on the relative position of the Government of Orissa and the High Court in the matter of disciplinary control over Subordinate Judges. It appears that the State Government. framed what are known as the Orissa Civil Services (Classification and Control) Rules, 1962 and they appear to apply to all Government servants under the State. The Full Bench held that some of the rules, in their application to the Subordinate judiciary of the State, contravened Articles 235 which vested control over, the Subordinate Judiciary in, the High Court. From these findings the State of Orissa has come in appeal and that appeal is numbered Criminal Appeal No. 77/1973 In our opinion, the principal matter before the Full Bench was in, relation to the contempt committed by the appellant. The constitutional issue between the State Government and the High Court came in only by way of a side wind. In fact it would appear from the judgment that the learned Advocate General had requested the court not to. express any opinion on these constitutional matters, and the court also seems to have thought that the constitutionality of the rules had ' no relation to the commission of the contempt. However, the court thought that the issue became relevant, especially, on the question of sentence and hence applied its mind to the Constitutionality of some of the rules. It has struck down those rules which, in the opinion of the court, contravened Article 235 in their application to the Subordinate Judiciary. We have considered whether it is necessary for us to dear with those questions here, but are inclined to think that we should express no opinion on the constitutionality of the impugned rules. Accordingly, appeal No. 41 is dismissed with the modification in, the sentence as suggested above and criminal appeal No. 77 of 1973 is permitted to be withdrawn without prejudice to the contentions raised by the State in regard to the constitutionality of the rules struck down by the High Court. KRISHNA IYER, J. We have had the advantage of reading the leading opinion of our learned brother, Palekar, J., and, concurring as we do in the ultimate conclusion, to depart from the ' option of silenceneeds a word of explanation. Graver issues bearing on free speech raised in these proceedings and the correct approach to be made to what in substance is a criminal charge, bring to the fore our diver gence in legal reasoning and constitutional perspective which we proceed to set out in a separate opinion. The facts of the present case, fully laid bare in the judgment of Palekar, J., are in a sense peculiar. The contest is himself a senior district judge. The alleged multiple contempt relates partly to (i) an administrative act of the High Court preliminary to disciplinary proceedings and is stated to be contained in a representation filed 306 by him before the Governor, under a rule which apparently authorizes such appeals, against the suspension order of the High Court, and (ii) averments in a special leave petition filed by him in this Court, aggrieved by the refusal of the High Court to decide a preliminary objection in these very contempt proceedings on the judicial side. A: full Bench of the High Court convicted the appellant for contempt, the action itself having been initiated by an administrative full court. The questions we are called upon to decide are (a) whether criticism of an administrative act of the High Court or of any court could at all amount to contempt of court; (b) whether pejorative imputations about a court or judge, however offensive, true or honestly held even if contained in. an appeal to a higher court or in a remedial representation to a correctional authority, constitute contempt. The legal touchstone adopted by the High Court is that any statement which in some manner may shake the confidence of the community in a judge or in the judicial system, is straightaway contempt, regardless of context or purpose or degree of publication or absence of any clear land present danger of disaffection or its being a bona fide plea for orderly change in the judicature and its, process. On the facts, we agree that the spirit of defiance, extenuated partly by a sense of despair, is writ large in the writings of the appellant but wish to warn ourselves that his reported past violations should not prejudice a judicial appraisal of his alleged present criminal contempt. And the benefit of doubt, if any, belongs to the condemner in this jurisdiction. The dilemma of the law of contempt arises because of the constitutional need to balance two great but occasionally conflicting principles freedom of expression and fair and fearless justice remembering the brooding presence of articles 19(1) (a), 19(2), 129 and 215 of the Constitution. In a sense, the Indian approach is a little different from the English and its orientating on is more akin to American jurisprudence, although there is much,that is common to all the three. The pronouncement of Wilmot, C.J., posthumously published, has influenced the law of contempt in the Unite d States and the Commonwealth countries, but it is a moot point whether we should still be bound to the regal moorings of th e law in Rex vs Almon(1) ". by our constitution the King is the fountain of justice and . he delegates the power to the judges . arraignment of the justice of the judges is arraigning the King 's justice. It is an impeachment of his wisdom in the choice of his judges. it excites dissatisfaction with judicial determination and indisposes the minds of people to obey them". Maybe we are nearer the republican justification suggested in the American system(2) (1) Wilmot 's notes 243 (Wilmot ed. 1802 =97 ER 94. as cited in Fox,Contempt of Court (1927). (2) 18 U.S.C.A. 3691 (formerly , 389. 30 7 "In this country, all courts derive their authority from the people, and hold it in trust for their security and benefit. In this state, all judges are elected by the people, and hold their authority, in a double, sense, directly from them; the power they exercise is but the authority of the people themselves, exercised through courts as their agents. It is the authority and laws emanating from the people, which the judges sit to exercise and enforce. Contempt against these courts, the administration of their laws, are insults offered to the authority of the people themselves, and not to the humble agents of the law, whom they employ in the conduct of their government. " This shift in legal philosophy will broaden the base of the citizen 's right to criticize and render the judicial power more socially valid. We are not subjects of a king but citizens of a republic and a blanket ban through the contempt power, stifling namely, Administration of justice, thus criticism of a strategic institution, forbidding the right to argue for reform of the judicial process and to comment on the performance of the judicial personnel through outspoken or marginally excessive criticism of the instrumentalities of law. and justice, may be a tall order. For, change through free speech is basic to our democracy, and to prevent change through criticism is to petrify the organs of democratic government. The judicial instrument is no exception. To cite vintage rulings of English courts and to bow to decisions of British Indian days as absolutes is to ignore the law of all laws that the rule of law must keep pace with the rule of life. To make our point, we cannot resist quoting McWhinney(1),who wrote "The dominant theme in American philosophy of law today must be the concept of change or revolution in law. In Mr. Justice Oliver Wendell Hoimes ' own aphorism, it is revolting to have no better reason for a rule of law than that it was laid down in the time of Henry IV. The prestige argument, from age alone, that because a claimed legal rule has lasted a certain length of time it must automatically be valid and binding at the present day, regardless of changes in basic societal conditions and expectations, is no longer very persuasive. According to the basic teachings of the Legal Realist and policy schools of law, society itself is in continuing state of flux at the present day '; and the positive law, therefore, if it is to continue to be useful in the resolution of contemporary major social conflicts and social problems, must change in measure with the society. What we have, therefore, concomitantly with our conception of society in revolution is a conception of law itself, as being in a condition of flux, of movement. On this view, law is not a frozen, static body of rules but rules in a continuous process of change and adaptation and the judge, at the final appellate level anyway, is a part determinant part of this dynamic process of legal evolution." Canadian Bar Review (Vol. 45) 1967, 582 583. 308 This approach must inform Indian law, including contempt law. It is very necessary to remember the legal transformation in our Devalue system on the inauguration of the Constitution, and the dogmas of the quiet past must change with the challenges of the stormy present. The great words of Justice Homles uttered in a different context bear repetition in this context : "But when men have realized that time has upset many fighting faiths, they may come to believe even more than they believe the, very foundations of their own conduct that the ultimate good desired is better reached by free trade in ideas that the best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out. That, at any rate, is the theory of our Constitution. It is an experiment, as all life is an experiment. Every year, if not every day, we have to wager our salvation upon some prophecy based upon imperfect knowledge. While that experiment is part of our system I think that we should be eternally vigilant it against attempts to check the expression of opinions that we loathe and believe to be fraught with death, unless they so imminently threaten immediate interference with the lawful and pressing purposes of the law that an immediate check is required to save the country. "(1) Before, stating the principles of law bearing on the facets of contempt of court raised in this case we would like to underscore the need to ,draw the lines clear enough to create confidence in the people that this ancient and inherent power, intended to preserve the faith of the public in public justice, will not be so used as to provoke public hostility as overtook the Star Chamber. A vague and wandering jurisdiction with uncertain frontiers, a sensitive and suspect power to punish vested in the prosecutor, a law which makes it a crime to publish regardless of truth and public good and permits a process of brevity conviction, may unwittingly trendiness upon civil liberties and so the special jurisdiction and jurisprudence bearing on contempt power must be delineated with deliberation and operated with serious circus section by the higher judicial echelons. So it is that as the palladium ,of our freedoms, the Supreme Court and the High Courts, must vigilantly protect free speech even against judicial umbrage a delicate but sacred duty whose discharge demands tolerance and detachment of a high order. The present proceedings challenge, the projection of the power to punish for contempt into administrative domains of the Court and its extension to statements in remedial proceedings. One recalls the observations of the American Supreme Court:(2) "Contempt of Court is the Proteus of the Legal World,. assuming an almost infinite diversity of forms. (1) The Suprem Court and Civil Liberties by 03m 3nd K. Fracknel Published for the American Civil Liberties Union in its 40th anniversaries year Pornea Publications, Inc. New York (1960)page 40, (2) Moskovitz, Contempt of Injunctions, Criminal and Civil, (1943). 309 Considerations such as we have silhouetted led to the enactment of the Contempt of Court Act, 1971, which makes some restrictive departures from the traditional law and implies some wholesome principles which serve as unspoken guidelines in this branch of law. Section 5 protects fair comment on the merits of, cases finally decided, and section 13 absolves from sentence all contempt which do not substan tially interfere or tend substantially to interfere with the due course of justice. Statements which disparage a subordinate judicial officer presiding over a court are not contempt if made in good faith to the High Court or any other lower Court to which the offended judge is subordinate. The emphasis in section 2(o), section 3 and section 13 to the interference with the course of justice or obstruction of the administration of justice or scandalising or lowering the authority of the Court not the judge highlights the judicial area as entitled to inviolability. and suggests a functional rather than a personal or 'institutional ' 'immunity. The unique power to punish for contempt of itself inheres in a Court qua Court in its essential role of dispenser of public justice. The phraseological image projected by the catenate of expressions like court, course of justice administration of justice, civil and criminal proceedings, judicial proceedings, merits of any case, presiding officer of the Court, judicial proceeding before a court sitting in chamber or in camera undertaking given to a court, substantial interference with the due course of justice, etc., occurring in the various sections of the Act, the very conspirator of the statutory provisions and the ethos and raison d 'etre of the jurisdiction persuade us to the conclusion that the text of the Act must take its colour from the general context and confine the, contempt power to the judicial cum para judicial areas including those administrative functions as are intimately associated with the exercise of judicial power. What then is a Court ? It is "an agency of the sovereign created by it directly or indirectly under its authority, consisting of. one or more officers, established and maintained for the purposes of hearing and determining issues of law and fact regarding legal rights and alleged violations thereof, and of applying the sanctions of the law, authorised to exercise its powers in due course of law at times and places previously determined by lawful authority. Isbill vs Stovall, Rex. App. , 1070." ". An organised body with defined powers, meeting at certain times and places for the, hearing and decision of causes and other matters brought before it, and aided in this, its proper business, by its proper officers, viz., attorneys and counsel to present and manage the business, clerks to record and attest its acts and decisions, and ministerial officers to execute its commands, and secure due order in its proceedings. Ex parte Gardner,, , 39 p. 570: Hertman vs Hertman , , 582."(1). In short the accent is on the functional personality which is pivotal to securing justice to the people. Purely administrative acts, Black 's Law Dictionary, Fourth Edu. 310 like recruitments, transfers and postings, routine disciplinary action against subordinate staff, executive acts in running the establishment and ministerial business ancillary to office keeping these are common to all departments in the public sector and merely because they relate to the judicial wing of government cannot enjoy a higher immunity from criticism. The quintessence of the contempt power is protection of the public, not judicial personnel. Excerpts from a few Anglo American authorities will attest our standpoint "The object of the discipline enforced by the Court in, case of contempt of Court is not to vindicate the dignity of the Court or the person of the Judge, but to prevent undue interference with the administration of justice." [Bowen, L.J.Helmore vs Smith , 455] "The law of contempt is not made for the protection of judges who may be sensitive to the winds of public opinion. Judges are supposed to be men of fortitude, able to thrive in a hardy climate. "[Douglas, J. Craig vs Harney ; , 376 (1947)]. Judges as persons, or courts as institutions, are entitled to no greater immunity from criticism than other persons or institutions. Just because the holders of judicial office are identified with the interests of justice they may forget their common human frailties and fallibilities. There have sometimes been martinets upon the bench as there have also been pompous wielders of authority who have used the paraphernalia of power in support of what they called their dignity. Therefore, judges must I be kept mindful of their limitations and their ultimate public responsibility by a vigorous stream of criticism expressed_with candor however blunt., [Frankfurter, J., Bridges vs California ; , 289 (1941)] If we accept this slant on judicialisation as a functional limitation on the contempt jurisdiction we mutt exclude from its ambit interference with purely administrative acts of courts and non judicial functions of judges. This dichotomy is implicit in the decided cases although the twilight of the law blurs the dividing lines now and then. To cast the net wider is unreasonable and unwarranted by precedent. To treat, as the High Court has done, "the image and personality of the High Court as an integrated one and to hold that every shadow that darkness it is contempt is to forget life, reason and political progress. For, if a judge has an integrated personality and his *He openly accuses him of neglect or worse, she would certainly reduce the confidence of the public in him as judge Will her accusation be personalised contempt? If a judge expresses on a platform crude views on moral lapses and is severely criticized in public for it, it will undoubtedly debunk him as a judge. Will such censure be branded contempt? 311 As early as 1892, the Privy Council in The matter of a Special Reference from the Bahama Islands() bad to upset a sentence of indefinite imprisonment imposed by the Chief Justice of Bahmas on one Mr. Moseley for two 'letters to the editor ' fun of snub and sarcasm about Yelverton, Esq., Chief Justice. In these there was cynical reference to the Chief Justice 's incompetence and imprudence, couched in stinging satire. The Judicial Committee held : "(a) That the letter signed "Colonist" in The Nassau Guardian though it might have been made the subject of proceedings for libel was not, in the circumstances, calculated to obstruct or interfere with the course of justice or the due administration of the law, and therefore did not constitute a contempt of Court." The Attorney General struck a sound note when in the course of the arguments he summed up the law thus "A libel upon a judge, holding him up to contempt and ridicule in his character as a judge, so as to lower him in the estimation of the public amongst whom be exercises office is a contempt of court." (emphasis supplied) Lord Atkin, in the celebrated case of Debi Prasad Sharma vs The King Emperor(2) where the printer, publisher and editor of the: Hindustan Times were found guilty of contempt by the Allahabad High Court for criticising the Chief Justice by falsely imputing to him a circular communication to the subordinate judiciary to raise collections for the war fund, set asida the conviction holding that the proceedings in contempt were misconceived, The learned Law Lord observed "When the comment in question in the present case is examined it is found that there is no criticism of any judicial act of the Chief Justice, or any imptitation on him for any thing done or omitted to be done by him in the administration of justice. It can hardly be said that there is any criticism of him in his administrative capacity, for, as far as their Lordships have been informed, the administrative control of the subordinate courts of ' the Province, whatever is, is exercised, not by the Chief Justice, but by the court over which he presides. The appellants are not charged with saying anything in contempt of the subordinate courts or the administration of justice by them. In truth, the, Chief Justice is alleged, unruly, as Is now admitted, to have committed an ill advised act in writing to his subordinate, judges asking (as the news item says), enjoining (as the comment says) them to collect fog the War Fund. If the facts were as alleged they admitted, of criticism. No doubt it is galling for any judicial personato be criticised publicly as having done something outsidethis judicial proceedings which was ill advised or indiscreet. But judicial personages can afford not to be too sensitive.simple denial in public (1) ,.149. (2) (1942) 70 I.A. 216. 8 522SCI)74 31 2 of the alleged request would at once have allayed the trouble. If a judge is defamed in such a way as not to affect the administration of justice he has the ordinary remedies for defamation if he should feel impelled to use them. " The whole emphasis and ratio of the decision consists in the impugned editorial not being an attack on the administration of justice and, therefore, not amounting to contempt of court. The learned Additional Solicitor General, however, stressed the significance of the passing observation made in the judgment that the administrative control of the subordinate judiciary vested in the whole court and not only in the Chief Justice, and argued that by implication their Lordships must be deemed to have regarded animadversion on even acts of administrative control as potential prey to the contempt law. An obscure reference to the Chief Justice not being even the exclusive administrative authority over the lower judiciary, meant perhaps to bring into bold relief the irrelevance of the criticism as reflecting even on the executive functions of the Chief Justice, cannot be considered to reach a reverse result, ignoring the setting and the thrust of the whole dictum. A Division Bench of the Kerala High Court, in Kaviath Damodaran vs Induchoodan(1), has relied on this Privy Council ruling for the proposition that administrative acts of the court in that case the transfer of a Magistrate criticised as promoted by extraneous pressure was not a fit subject for punitive action. (In that case, of course, the contemnor was convicted for another publication). The deep concern of the law of contempt is to inhibit sullying essays on the administration of justice in which the public have a vital interest and not to warn off or victimise criticisms, just or unjust, of judges as citizens, administrators, non judicial authorities, etc. K.L. Gauba 'S(2) case was naturally pressed into service at the Bar against the contemnor but such an extreme case of wild and vicious attacks on the Chief Justice rarely serves in the search for any abiding principle in an excited setting. That ruling reminds us that, whatever the provocation, a Judge by reason of his office, has to halt at the gates of controversy but as enlightenment spreads and public opinion ripens this judicial self abbegation will ' be appreciated better. and not "embolden the licentious to trample upon everything sacred in society and to overthrow those institutions which 'have hitherto been deemed the best guardians of civil liberty. " Again, while Young, C.J., in that case rules out the tenability of truth as a valid defence against contempt, action, we observe, not without pertinence in the constitutional context of restrictions on free expression having to be reasonable, that in most of the reported cases courts have hastened to hold the imputations false before proceeding to punish. Contempt is no cover for a guilty judge to get away with it but a shield against attacks on public. justice. Gauba 's case, on the facts, was a mud slinging episode on the judicial target as such and the conviction accords with the policy of the law we have set out. (1) A.I.R. 1961 Kerala 321. (2) I.L.R. , 419. 313 A Division Bench of the Allahabad High Court, in Rex. vs D. section Nayyar,(1) had to deal with a representation by a litigant against a magistrate with reference to a case adversely decided, and Kidwai, J. cleared the confused ground right in the beginning by observing : "The first thing to be remembered is that Courts are not concerned with contempt of any authority except Courts of law in the exercise of their judicial functions. Thus, any speech, writing or act which does not have the, effect of interfering with the exercise of their judicial functions by the Courts cannot be the subject of proceedings in contempt. In India very often the same officers exercise executive. as well as judicial functions. Sometimes it becomes difficult to draw a distinction between their two capacities but nevertheless a distinction must be drawn and it is only if the criticism is of judicial acts that action by way of proceedings in contempt may be taken. " A letter to the President of the Congress party complaining about the appointment of. a judicial officer who was the brothirin law of the, Private Secretary of a 'Minister (belonging to that party) and of the transfer of cases to his Court where in Congressmen were involved, was sought to be punished as contempt of court. Kidwai, J, made the following useful remarks exonerating the contemnor : "In this passage also the attack is on the appointment of the judicial officer and the transfer of, cases to him but there is no attack upon the officer himself. Both these attacks are upon the system and not upon any Magistrate in respect of the performance by him of his judicial functions. They wish to see, laid down a salutary principle by which Justice should not only be done but should also appear to be done. There is no contempt of Court in this rather it is an endeavor to free Courts from all extraneous shackles and proceedings to contempt are wholly unc alled for ' The Judicial Committee in In re. section B. Sarbadhicary (2) considered the misconduct of a barrister for publishing an article where he cast reflections upon judges of the Allahabad, High Court. The merits of the case apart, the Judicial Committee emphasized the judicial capacity of the judges which attracted the contempt jurisdiction. Sir Andrew Seoble observed : "There is no doubt that the article in question was a libel reflecting not only upon Richards J. but other judges of the High Court in their judicial capacity and in reference to their conduct in the discharge of their public duties." (emphasis added) "The public duty" in their "judicial capacity" was obviously in contradistinction to merely personal activities or administrative function It is not as if a judge doing some non judicial public duty is protected from criticism in which case, any action by him as of Law or Vice chancellor in a University or as Acting Governor or President (1)A.I.R.1950 All. 549 ,551,555. (2) (1906) 34 XX I A. 14. 314 or Member of the Law or Finance Commission would also be punishable, as contempt. The basic public duty of a judge in his judicial capacity is to dispense public justice in court and anyone who obstructs or interferes in this area does so at his peril. Likewise, personal behaviour of judicial personnel, if criticized severely or even sinisterly, cannot be countered by the weapon of contempt of court, for to use the language of Mukherjee, J. in Brahma Prakash Sharma vs State of Uttar Pradesh,(1) "the object of contempt proceedings is not to afford protection to Judges personally from imputations to which they may be exposed as individuals" (emphasis added). Otherwise, a grocer who sues a judge for price of goods with an imputation that the defendant has falsely and maliciously refused to honour the claim, or a servant of a judge who makes personal allegations of misconduct against his master may be hauled up for contempt. This is no amulet worn by judges for all purposes. "The punishment is inflicted not for the, purpose of protecting either the Court as a whole or the individual judges of the Court from a repetition of the attack, but of protecting the public, and especially those who either voluntarily or by compulsion are subject to the jurisdiction of the Court, from the mischief they will incur if the authority of the Tribunal is undermined or impaired." (Vide para 9, Halsbury 's Laws of England, 3rd Edn. Vol. VIII). Indeed, if we peer through the mists of English Judicial history, Courts of record were not qua such courts, acting in any administrative capacities. How then could contempt action, going by genesis, be warranted purely administrative matters of courts. Of course, there have 'been cases sounding a different note. In State vs H. Nagamani, (2) one Mr. Nagamani, an impetuous I.A.S. officer, wrote a letter making critical I remarks couched in disrespectful and improper language about the inspection report of his court by a Judge of the High Court of Patna. However, Mr. Nagamani tendered an unqualified apology and the court discharged the rule for contempt since in their view the contempt was purged by the apology. Of course, there was no need to consider in detail whether the letter reflecting upon the Judge who held the inspection was contempt; it Was treated as such and the apology accepted. And the High Court 's inspection of the judicial work of the sub ordinate judiciary is a judicial function or is at least para judicial. The Allahabad High Court punished the late Shri C. Y. Chintamani and, Shri K D. Malaviya for publishing a criticism to the effect that comparatively undeserving lawyers were being frequently raised to the Bench. The Court held them guilty of contempt holding the criticism of the judges as a vicious reflection and a case of Contempt. [sea In the matter of an Advocate of Allahabad(3), Borderline cases draw up to the pneumbra of law and cannot light up dark comers. The learned Additional Solicitor General, in an endeavour to expand the meaning of "administration of justice" so to rope in criticisms of executive acts of judges, drew out attention to articles '225, 227 and 235, and the provisions of earlier Government of India Acts (c.f. sec. 224(1) 1935 Act) which vest the Power to appoint the staff and do (1) (2) A.I.R. 1959 Pat. 373 (3) A.I.R. 1935 AU. 1. 315 other incidental management functions, in the High Court as part of the administration of justice. Several High Court Acts clothe Chief Justices with administrative powers and Civil Courts Acts and Letters Patents charge judges with administrative duties the,, goal being effective administration of justice. If the appointment of clerks is part of the administration of justice, denunciation of the judges in these acts interferes with the administration of justice, liable to be visited with punishment. This means that if a judge in charge of appointments chooses relations or unqualified men or takes other consideration, the public must hold its tongue on pain of contempt. The paramount but restrictive jurisdiction to protect the public against substantial interference with the stream of justice cannot be polluted or diffused into an intimidator power for the judges to strike at adverse comments on administrative, legislative (as under articles 225, 226 and 227) and extra judicial acts. Commonsense and principle can certainly accept a valid administrative area so closely integrated with court work as to be stamped with judicial character such as constitution of benches, transfer of cases, issue of administrative directions regarding submission of findings or disposal of cases by subordinate courts, supervision of judicial work of subordinate courts and the like. Not everything covered by article 225, 227 and 235 will be of this texture. To overkill is to undermine in the long run. We may now sum up. Judges and Courts have diverse duties. But functionally, historically and jurisprudentially, the value which is dear to the community and the function which deserves to be cordoned off from public molestation, is judicial. Vicious criticism of 'personal and administrative acts of judges may indirectly mar their image and weaken the confidence of the public in the judiciary but the countervailing good, not merely of free speech but also of greater faith generated by exposure to the acting light of bona fide, even if marginally overzealous, criticism cannot be overlooked. Justice is no cloistered virtue. The first part of the present case directly raises the question whether statements made in an appeal to the Governor against an order of the High Court on the administrative side attracts the contempt law. To our mind the answer arises from another question. Is the suspension of the District Judge so woven into and integrally connected with the administration of justice that it can be regarded as not purely an administrative act but a para judicial function ? The answer must, on the facts here, be in the affirmative. "he appeal was against the suspension which was a preliminary to contemplated disciplinary action. What was that action about ? Against the appellant in his judicial capacity, for acts of judicial misconduct. The control was. therefore, judicial and. hence the unbridled attack on the High Court for the step was punishable as contempt. A large margin must be allowed for allegations in remedial representations but extravagance forfeits ' the protection of good faith. In this case reckless excess has vitiated what otherwise could have been legitimate grievance at least in one flagrant instance, the others being less clear. One of the 316 grounds for taking disciplinary action ' was based on the disposal of a civil appeal by the contemnor as Additional District Judge. lie heard it, delivered judgment dismissing the appeal signed the order sheet and judgment and sealed the judgment. Later in the day, the contemnor scored off his signatures in the order sheet and judgment, and returned the record to the principal District Judge for disposal falsely stating that the judgment had not been delivered. The High took the view that this action was without jurisdiction and revealed utter disregard of truth and procedure deserving disciplinary action. Obviously, the impugned conduct of the contemnor was qua judge and the evil criticism was of a supervisory act of the High Court and the critic would and should necessarily 'court contempt action. And in his memorandum of appeal the contemnor used expressions like 'mala fides ' and 'subterfuge ' without good faith, and in such a case no shelter can be sought in the alibi of 'administrative act. ' The second part of the charge relates to objectionable statements in the special leave petition to this Court. Ordinarily they must be out of bounds for, the contempt power; for, fearless seeking of justice will otherwise be stifled. In State ' of Uttar Pradesh vs Shyam Sunder Lal (1) a complaint about the conduct of a judicial officer in a petition to the Prime Minister was held not to constitute contempt. The representation was forwarded by the Prime Minister 's office to the Chief Secretary from whom it reached the District Magistrate. Certainly there was there fore sufficient, publication in the law of libel but the Court held "A letter sent to the Prime Minister and not intended to be broadcast to the public or any section of the public cannot create an apprehension in the mind of public . regarding the integrity, ability or fairness of the judge " Similarly, in Rex. vs R. section Nayyar, "(2) the court considered a representation made to the Premier of the State about a judicial officer and also to the President of the All India Congress Committee. The Court took the view that such complaints may be addressed to the Premier about judicial officers since Government had to consider under the then rules the conduct of judicial personnel. "If these complaints are genuine and are made in a proper manner with the object of obtaining redress, and are not made mala fide with a view either to exert pressure upon the Court in the exercise of its judicial functions or to diminish the authority of the Court by lvilifying it, it would not be in furtherance of justice to stifle them by means of summary action for contempt, but rather the reverse" _(emphasis added). A pregnant observation made by the Court deserves mention "It would indeed be extraordinary if the law should provide a remedy the conduct of eve ' a member of the highest Judicial Tribunal in the exercise of his judicial office may be the subject of enquiry with a view to see whether he is fit to continue to hold that office and yet no one should be able to initiate proceedings for an enquiry by a complaint (1) A.I.R. 1954 All 308. (2) A.I.R. 1950 All. 549: 554. 317 to the appropriate authority by reason of a fear of being punished for contempt, and I can find no justification for this view. " At this stage it must be noticed that in the State of Madhya Pradesh vs Ravi Shanker(1) this Court ruled that aspersions of a serious nature made against a Magistrate in a transfer petition could be punishable as a contempt if made without good faith. However, in Govind Ram vs State of Maharashtra,(2) this Court reviewed the decisions on the point and ruled that if in the garb of a transfer application scurrilous attacks were made on a court imputing improper motives to the Judge there may still be contempt of court, although the court referred with approval to the ruling in Swarnamayi Panigrahi vs B. Nayak(3) that a latitudinarian approach was permissible in transfer applications. The core of the pronouncement is that permission remedial process like a transfer application cannot be a mask to malign a judge, a certain generosity or indulgence is justified in evaluating the allegations against the judge. Eventually, Grover J., held that the allegations made in the proceeding in question were not sufficiently serious to constitute contempt. A liberal margin is permissible in such cases but batting within the crease and observing the rules of the game are still necessary. Irrelevant or unvarnished imputations under the pretext of grounds of appeal amount to foul play and perversion of legal process. Here, the author, a senior judicial officer who professionally weighs his thoughts and words, has no justification for the immoderate abuse he has resorted to. In this sector even truth is no defence, as in the case of criminal insult in the latter because it May Produce violent breaches and is forbidden in the name of public peace, and in the former because it may demoralise, the community about courts and is forbidden in the interests of public justice as contempt of court. Even so, if judges have frailities after all they are human they need to be corrected by independent criticism. If the judicature has serious shortcomings which demand systemic correction through socially oriented reforms initiated through constructive criticism, the contempt power should not be an interdict. AR this, far from undermining the confidence of the public in courts, enhances it and, in the last analysis, cannot be recessed by indiscriminate resort to contempt power. Even bodies like the Law Commission or the ' Law Institute and researchers, legal and sociological may run risks because their professional work sometimes involves unpastoral criticism of judges, judicial processes and the system itself and thus hover perilously around the periphery of the law it widely construed. Creative legal journalism and activist statesmanship for judicial reform cannot be jeopardised by an undefined apprehension of contempt action. Even in England a refreshingly pro free speech approach has been latterly adopted. Any episode in the administration of justice may be publicly or privately criti cised, provided that the criticism is fair and (1) (2) ; , (3) A.I.R. 1959 Orissa 89. 318 temperate and made in good faith. Lord Denning, in the famous Quintin Hogg case() laid down remarkable guidelines in the matter of, actions for contempt. The learned Law Lord said : "It is a jurisdiction which undoubtedly belongs to us but which we will most sparingly exercise; more particularly as we ourselves have an interest in the matter. Let me say at once that we will never use this jurisdiction as a means to uphold our own dignity. That must rest on surer foundations. Nor will we use it to suppress those who speak against us. We do not fear criticism, nor do we resent it. For there is something far more important at stake. It is no less than freedom of speech itself. It is the right of every man, in Parliament or out of it, in the Press or over the broadcast, to make fair comment, even outspoken comment, on matters of public interest. Those who comment can deal faithfully with all that is, done in a court of justice. They can say that we are mistaken, and our decisions erroneous, whether they are subject to appeal or not. All we would ask is that those who criticise us will remember that, from the nature of our office, we cannot reply to their criticisms We cannot enter into public controversy. Still less into political controversy. We must rely on our conduct itself to be its own vindication. Exposed as we are to the winds of criticism, nothing which is said by this person or that, nothing which is written by this person or that, nothing which is written by this pen or that will deter us from doing what we believe is right; nor, I would add, from saying what the occasion requires, provided that it is pertinent to the matter in hand. Silence is not an option when things are ill done." This Court has held that the law of contempt is valid notwithstanding article 19(1). The Contention was persisted in C. K. Daphtay vs O. P. Gupta. (2) This Court came to the conclusion that the existing law of contempt imposes reasonable restrictions within the meaning or article 19(2). "Apart from this, the 'Constitution makes this Court a gudian of fundamental rights conferred by the Constitution and it would not desire to enforce any law which imposes unreasonable restrictions on the precious right of freedom of speech and expression guaranteed by the Constitution." (Sikri C.J.) The Court being the guardian of people 's rights, it has been held repeatedly that the contempt jurisdiction should be exercised "with, scrupulous care and only when the cage is clear and beyond reasonable doubt. (vide R. vs Gray) (s) (1) :1206 07. (2) All. R. , Para 52. (3) [1900] 2 O.B. 36. 319 The policy directive can be gleaned from the ruling in Special Reference No. 1 of 1964(1) where Gajendragadkar, C.J., speaking for the Court, observed : "We ought never to forget that the power to punish for contempt large as it is, must always be exercised cautiously wisely, and with circumspection. Frequent or indiscriminate use of this power in anger or irritation would not help to sustain the dignity or status of the court, but may sometimes affect it adversely. Wise Judges never forget that the best way to sustain the dignity and status of their office is to deserve respect from the public at large by the quality of their judgments, the fearlessness, fairness and objectivity of their approach, and by the restraint, dignity and decorum which they observe in their judicial conduct. " If judges decay the contempt power will not save them and so the other side of the coin is that judges, like Caesar 's wife, must be above suspicion. To wind up, the key word is "justice", not "judge"; the key note thought is unobstructed public justice, not the self defence of a judge; the corner stone of the contempt law is the accommodation of two constitutional values the right of free speech and the right to independent justice. The ignition of contempt action should be substantial land mala fide interference with fearless judicial action, not fair comment or trivial reflections on the judicial process and personnel. We have sought to set our legal sights in line with the now constitutional order and endeavoured so to draw the grey contours of the contempt law that it fulfils its high purpose but the more. We have tried to avoid subjectivism in the law, recognising by a re statement, the truth that "the great tides and currents which engulf the rest of men do not turn aside in their course and pass the judges by. (2) " The facts of the present case disclose that an incorrigible contemnor, who had made it almost his latter ,day professional occupation to cross the High Courts path, has come to this Court in appeal. He has been reckless, persistent and guilty of undermining the High Court 's authority in his intemperate averments in both petitions. But having regard to the fact that he is a senior judicial officer who has at some stage in his career displayed zeal and industry and is now in the (1) ; ; 501. (2) Benjamin N. Cardozo The Nature of the Judicial Process New Haven : Yale University Press Page 163. 320 sombre evening of an official career, a punishment short of imprisonment would have met the ends of justice and inspired in the public mind confidence in the justice administration by showing that even delinquent judges will be punished if they play with or pervert the due course of justice, as the contemnor here has done. A heavy hand is wasted severity where a lighter sentence may serve as well. A fine of Rs. 1000/ with three months ' imprisonment in default of payment will meet the ends of justice and we impose this sentence in substitution of the infliction of imprisonment by the High Court. this modification Civil Appeal No. 41 of 1973 is dismissed. On the appeal by the State the course adopted in the leading judgment of Palekar J. has our concurrence. Appeal No. 41 dismissed. P.B.R. Appeal No. 77 allowed to be withdrawn.
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The person appealing this case, a judge, was found guilty and given a punishment by the Orissa High Court. This judge's career was not going well. When he was working as a district judge, he acted very carelessly and made big mistakes. The charges of disrespecting the court came about because he wrote to the Governor asking to cancel his suspension. The High Court had suspended him. He also made claims in a legal paper he had filed with the Supreme Court. In his letter to the Governor, the judge falsely suggested that the Governor had canceled earlier disciplinary actions against him because the High Court was unfair. He said the government stopped the punishment because three judges were prejudiced against him. He claimed the proceedings cost the government a lot of money because the High Court's views were "obviously wrong." He also said the High Court didn't accept the government's decision to cancel his demotion and used "trickery" to go against it. He stated that the High Court's actions were clearly done in bad faith. He claimed other judges didn't have their own opinions and were influenced by the Chief Justice to disagree with what they had already decided. He called the High Court an "engine of oppression" and his suspension "mysterious." In another letter to the Governor, the judge claimed the High Court was very prejudiced against him and acted as if the charges were proven, demanding a severe punishment. He thought the High Court might not be fair if it investigated the charges against him. He said it was risky to give his explanation to the High Court and that it shouldn't investigate the charges again in the interest of justice. He suggested the Court couldn't properly weigh the evidence and give a fair punishment. He called the High Court's actions "unusual." He sent a copy of this letter to the High Court, saying he sent it directly to the Governor because the High Court might not forward it. In the legal paper filed with the Supreme Court, the judge claimed the High Court and its Chief Justice were biased. He argued the High Court wasn't qualified to handle the case and said the judges had become unfair, were seeking revenge, and had decided to give him a harsh punishment. He said they couldn't give fair justice. In the appeal to the Supreme Court, it was argued that: (i) the statements made weren't disrespectful to the court because they didn't criticize any judicial actions of the judges. Criticizing the High Court's administrative actions, even harshly, wasn't disrespect; and (ii) the actions were taken while the judge was challenging his suspension and disciplinary proceedings, in an appeal or letter to the Governor. He was expressing his complaints, not trying to harm or defy the court, but only to get the High Court's orders against him reversed. The court HELD: The accusations greatly insulted the High Court, likely affecting the administration of justice. Therefore, the judge was correctly found guilty of criminal disrespect. (i) Disrespect cases always relate to the administration of justice. The law defines disrespect as interfering with the administration of justice. Insulting the court must be about the court or judge in relation to the administration of justice. (a) Whether insulting claims about the High Court's administrative actions are disrespect depends on whether the claims affect the administration of justice. This is why disrespect is punished and must be the test. (b) A court's job isn't just to decide between parties. The judge represents the court and is helped by clerks and officers. Their actions support the administration of justice. So, when the Chief Justice appoints officers and controls them, it's an administrative function that's part of the administration of justice. Judicial administration is an integrated function of the judge. High standards of fairness must be maintained. The court setup is for the administration of justice, and the judge's control over assistants aims to keep the administration of justice pure. (c) The High Court must control the misconduct of lower judges to maintain the administration of justice. This is important for the administration of justice and when the High Court acts in a disciplinary way, it furthers the administration of justice. It's as important to watch the behavior of lower judges as it is to administer the law, because both are needed for the administration of justice. The superior court judge in charge of this control acts as a judge when dealing with these matters, just like when hearing cases. (d) What's called an administrative function, when given to the High Court, has always been seen by laws as part of the administration of justice. (e) The courts in a State, from highest to lowest, are trusted with functions directly related to the administration of justice. Everyone expects the courts to perform all functions fairly, without bias. This trust in the courts to administer justice is what disrespect proceedings aim to protect. (f) Insulting the court is a type of disrespect and can take different forms. A common form is insulting the judge. When this happens, the court must ask if the insult is aimed at the judge as a judge or as an individual. If it's the latter, the judge must use their own legal options and the court can't punish for disrespect. If it's the former, the court will act carefully in clear cases. The court must also consider the harm caused to the administration of justice. If it's minor, the court won't punish for disrespect. If the attack on the judge affects the administration of justice, it's a public problem punishable as disrespect. It doesn't matter if the attack is based on the judge's administrative actions. A judge's functions can be divided, but their integrity and authority can't be divided in the context of the administration of justice. (g) "Judicial capacity" means "related to a judge" and covers all functions of a judge, whether administrative, adjudicatory, or any other needed for the administration of justice. There's no reason to think that insulting the court only happens when the insult relates to a judge's decision-making functions in court. If the language used is disrespect, it's punishable as criminal disrespect. The right to appeal doesn't give the right to disrespect the court or use it to disregard the High Court's authority. Per Bhagwati & Krishna Iyer, JJ : (Agreeing with the final decision): The difficulty with disrespect law is balancing freedom of speech and fair justice. It's debatable whether we should still follow old legal principles. (i) The emphasis on interfering with justice, obstructing the administration of justice, or insulting the court highlights the judicial area as needing protection. It suggests a functional rather than personal immunity. The power to punish for disrespect belongs to a court because it's essential for providing public justice. The law's words and purpose show that the power of disrespect should be limited to judicial areas, including administrative functions closely tied to judicial power. The focus is on the functional role needed to secure justice for the people. Purely administrative acts like hiring, transfers, routine discipline, and executive acts in running the office are common in all public sectors. Just because they relate to the judicial branch doesn't give them more immunity from criticism. The main point of disrespect power is to protect the public, not judges. If this focus on judicial function is accepted, it excludes interfering with administrative acts of courts and non-judicial functions of judges. This separation is implied in past cases. To treat the High Court's image as a single unit and say that any criticism is disrespect is wrong. A judge's main duty is to provide public justice in court, and anyone who interferes with this does so at their own risk. Personal behavior of judges, even if criticized harshly, can't be countered with disrespect law. The power to protect the public from interference with justice shouldn't be used to intimidate judges from criticizing administrative, legislative, and extra-judicial acts. Common sense accepts that some administrative areas are closely tied to court work and have a judicial character, like forming panels, transferring cases, and issuing directions to lower courts. Not everything is like this. So, even though judges and courts have different duties, the value and function that deserves protection is judicial. Criticism of personal and administrative acts of judges may hurt their image, but the benefit of free speech and greater faith from open criticism can't be ignored. In this case, the District Judge's suspension was tied to the administration of justice, so it wasn't purely administrative but quasi-judicial. The appeal was against the suspension, which was preliminary to disciplinary action against the judge for judicial misconduct. The control was judicial, so the unrestrained attack on the High Court was punishable because it was against a supervisory act of the High Court. (ii) A large allowance must be made for claims in appeals, but exaggeration loses protection. Appeals can't be used to insult a judge. Irrelevant claims under the guise of appeal grounds are foul play. In this case, the judge, a senior officer who carefully chooses his words, had no reason for the excessive abuse. In this area, even truth isn't a defense, because it can cause problems and is forbidden in the name of public peace. It can also demoralize the community about courts and is forbidden in the interest of public justice as disrespect. The Court is the guardian of people's rights, so disrespect power should be used carefully and only when the case is clear. (iii) In short, the key word is 'justice,' not 'judge.' The main idea is unobstructed public justice, not self-defense. The foundation of disrespect law is balancing free speech and independent justice. Disrespect action should be taken for real interference with judicial action, not fair comment or minor reflections on the judicial process.
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41 and 77 of 1973. Appeals under Section 19 of the from the, Judgment and Order dated the 5th February, 1973 of the Orissa High Court at Cuttack in Criminal Miscellaneous Case No. 8 of 1972. A. A. 2 (in Or. A. A. A. This is (Criminal Appeal No. From the. above order of punishment, the appellant filed on 10 10 1967 an appeal to the State Government. Later in the day, however, the appellant scored through his signatures both in the Order Sheet and in the judgment and returned the record of the appeal to the District Judge for disposal by making a false statement that the judgment had not been delivered and that the parties being known to him it was not desirable that he should further hear the appeal, after taking additional evidence for which a petition had been filed. When these matters were brought to the notice of the High Court the Registrar by Order of the High Court recommended to the Government that the appellant be reverted to the post of the Additional District Magistrate (Judicial). The Full Court took the decision to start a disciplinary proceeding against the appellant and, pending the same, to place him under suspension in exercise of their powers under Article 235 of the Constitution. As the High Court was of the view that no appeal lay from an order of suspension pending disciplinary charges, it did not forward the appeal to the. In fact on April 28, 1972 the Registrar of the High Court intimated the State Government that the appeal filed by the appellant to the Governor had been withheld by the High Court as no such appeal lies against the order of suspension pending disciplinary proceedings. By this letter the appellant intimated that he had moved the Governor to transfer the disciplinary proceedings to the Administrative Tribunal and that he would take all other alternative steps administrative and judicial to avoid the proceeding being dealt with by the High Court. 29 0 On May 22, 1972 the appellant addressed a letter (Annexure 14) to the Registrar intimating him that he would not submit any explanation to the charges framed against him until his representation to the Governor was disposed of. In this annexure reference is made to the previous appeal filed by him against the order of the High Court stopping his two increments after a departmental proceeding and how the Governor in appeal had cancelled even the very departmental proceeding in the appeal. An interpretation was, put on that order which it did not bear and it was made out, though falsely, that the punishment had been set aside on the basis of the allegations made by the appellant that some Honourable Judges of the High Court had been biased and prejudiced against him. In this connection he referred to the fact that when he intimated to the High Court that he desired to join duties after his leave on March 20, 1972 he was informed by the High Court on March 23, 1972 that his re posting after leave would be decided after the medical board reported as to his fitness. , He clearly suggested that after the Chief Justice 's return, the court took the decision to suspend him and in this connection he made the following observations : "This decision of the High Court, reached at before the Honourable the Chief Justice attended the High Court on the 27th March after his 10 days of absence, clearly indi cates that no proceeding, much less suspension, against the appellant was under contemplation till that day, but on the other hand, the appellant 's place of posting was under consideration of the High Court. He alleged that the High Court did not gracefully accept the Government 's order cancelling his demotion, and the High Court resorted to a subterfuge to counter act the said decision of the Government by taking a novel step, and that the High Court 's action suffered from patent mala fide. gracefully and that the other Judges had no independent judgment of their own, and were influenced by the Chief Justice to take a view, different from what they had already taken, to give a posting order to the contemner, and that the High Court resorted to a subterfuge. Annexure 13 is a letter by the appellant to the Registrar dated May 14, 1972 in which he told him that he had moved the Governor, Orissa with a prayer to refer his matter to the Tribunal under the provisions of the Disciplinary Proceedings Rules, 1951 and also that he would take all other alternative steps "administrative and judicial" to avoid this proceeding being dealt with by the High Court and for this purpose would have to consult some prominent Advocates of Calcutta and Delhi. In this letter he further pointed out that it would not be possible for him to wait for the permission of the High Court to leave headquarters, because he may be called by his legal advisers at any moment and in those circumstances he said "I hereby inform the Honourable Court that I may be absent during the entire period mentioned in my letter dated the 14th May, 1972 and the Honourable Court may kindly approve of the same. " The summary of the effect of Annexure 16 is given by the Full Bench in para 70 of the judgment which is as follows : "In Annexure 16 the contemner has suggested that the Court has already prejudged the matter and has taken a previous decision to impose a heavy punishment. "A copy of this Annexure 16 was sent to the High Court with a contemptuous remark that since the High Court was likely to withhold the representation it was submitted direct to the Governor. This annexure is the memo of appeal filed by the appellant in the Supreme Court in Criminal Appeal No. 174 of 1972. of what happened in some of those proceedings, the appellant entertained apprehension that the court may impose substantive punishment and may refuse bail or time to the appellant for getting redress from the Supreme Court if the present contempt proceedings were also to go on before the same High Court. The appellant says that when the appellant filed his appeal in this Court and brought this fact to the notice of the Honourable Judges,, they dropped the additional charge. The law applicable to this case is the law as contained in the No. 17 of 1971. Clause (c) defines "criminal contempt" as follows : (c) "criminal contempt" means the publication (whether by words, spoken or written, or by signs, or by visible repre sentations, or otherwise) of any matter or the doing of any other act whatsoever which (i) scandalises or tends to scandalise, or lowers or tends to lower the authority of, any court; or (ii) prejudices, or interferes or tends to interfere with, the due course of any judicial proceeding; or (iii) interferes or tends to interfere with, or obstructs or tends to obstruct, the administration of justice in any other manner;" It will be seen that the terminology used in the definition is borrowed from the English law of Contempt and embodies concepts which are familiar to that law which, by and large, was applied in India. The first sub clause generally deals with what is known as the scandalization of the court discussed by Halsbury 3rd Edition in Volume 8, page 7 at para 9 : "Scandalous attacks upon Judges are punished by attachment or committal upon the principle that they are, as against the public, not the judge, an obstruction to public justice; and a libel on a judge, in order to constitute a contempt of court, must have been calculated to cause such an obstruction. It is enough for our purpose to refer to Debi Prasad Sharma vs The Kin.g Emperor(1) in which Lord Atkin delivering the judgment of the Judicial Committee observed at page 223 as follows : "In 1899 this Board pronounced proceedings for this species of contempt (scandalization) to be obsolete in this country ' though surviving in other parts of the Empire, but they added that it is a weapon to be used sparingly and always with reference to the administration of Justice : McLeod vs St. Aubyn (1) In In,re a Special Referewe from the Bahama Islands [1893] A.C. 1 38) the test applied by the, ve strong Board which heard the reference was whether the words complain of were in the circumstances calculated to obstruct or interfere with the course of justice and the due administration of. the law. The contention of Mr. Sen on behalf of the appellant is that, in the first place ', it must be remembered that the publication or acts complained of are in the course of the appellant challenging his suspension and holding of disciplinary proceedings in an appeal or representation to the Governor from the orders passed by the High Court. A point of some substance is in the second part of Mr. Sen 's argument and it will be necessary to decide in the present case whether contemptuous imputations made with reference to "the administrative acts" of the High Court do not amount to contempt of Court. The power of appointment of clerks and ministerial officers involves administrative control by the Presiding Judge over them and though such control is described as administrative to distinguish it from the duties of a Judge sitting in the seat of justice such control is exercised by the Judge as a Judge, in the course of judicial administration. It is therefore as important for the superior court to be vigilant about the conduct and behavior of the Subordinate Judge as a Judge, as it is to administer the law, because both functions are essential for administration of justice. It is obvious that this authority of the Chief Justice to appoint clerks and ministerial officers for the administration of justice implies an authority to control them in the interest of administration of justice. Section 106 of the Government of India Act, 1915 similarly shows that the, several jurisdictions of the High Court and all their powers and authority are "in relation to the administration of justice including power to appoint clerks and other ministerial officers of the court. " The disciplinary control over the misdemeanours of the subordinate judiciary in their judicial administration is a function which the High Court must exercise in the interest of administration of justice. It is a function which is essential for the administration of justice in the wide connotation it has received and, therefore, when the High Court functions in a disciplinary capacity, it only does so in furtherance of administration of justice. We thus reach the conclusion that the courts of justice in a State from the highest to the lowest are by their constitution entrusted with functions directly connected with the administration of justice, and it is the expectation and confidence of all those who have or likely to have business therein that the courts perform all their functions on a high level. And it is this traditional confidence in the courts that justice will be administered in them which is sought to be, protected by proceedings in contempt. and their Acts, from an opinion of their justice and integrity. " But if the attack on the Judge functioning as a Judge substantially affects administration of justice it becomes a public mischief punishable for contempt, and it matters not whether such an attack is based on what a judge is alleged to have, done in the exercise of his administrative responsibilities. for the view that an attack on the court in its exercise of administrative functions does not amount to contempt. (2 ) 302 if by the act or by the conduct of any party the authority of the court is lowered and thee sense of confidence which the people have in the administration of justice by it is weakened. These observations are : " 'A review of the cases in which a contempt committed by way of scandalization of the court has been taken notice of for punishment shows clearly that the exercise of the punitive jurisdiction is confined to cases of very grave and scurrilous attack on the court or on the Judges in their judicial capacity. "Judicial capacity" is an ambivalent term which means " capacity of or proper to a Judge" and is capable of taking in all functional capacities of a Judge whether administrative, adjudicatory or any other, necessary for the administration of justice. (2) A I.R. To attribute improper motives to him in the exercise of this function was held to be a contempt because that was bound to undermine the confidence of the people in the High Court and its Judges in relation to administration of justice. Similarly, in The state of Bombay vs Mr. P.(1)" "a scurrilous attack on. He has attempted to shake the confidence of the public in the Judges of this Court and in the justice that is being administered by these judges of this Court. " In that case the appellant had suggested falsely that the Chief Justice of the Allahabad High Court had in his administrative capacity, issued a circular to the Judicial Officers under his jurisdiction enjoining on them to raise contributions to the warfares which, it was said, would lower the prestige of the court in the eyes of the people. In holding that the imputation did not constitute contempt of court but at the most, a personal defamation of the Chief Justice in his individual capacity, Lord Atkins said at page 224, "When the comment in question in the present case is examined it is found that there is no criticism of any judiciaries of the Chief Justice, or any imputation on him for anything done or omitted to be done by him in the administration of justice. it can hardly be said that there is any criticism of him in his administrative capacity, for, as far as their Lordships have been informed, the administrative control of the subordinate courts of the. With that case obviously in mind and the case was referred to earlier in the judgment lord Atkin showed in the words quoted above that the criticism did not refer (i) to any judicial act, meaning thereby any adjudicatory act and (ii) to any administrative act, because the Chief Justice alone had no administrative control over the subordinate courts but only the High Court as a whole. It was absolutely necessary for their Lordships to eliminate the possibility of the alleged action of the Chief Justice being connected in any manner with any adjudicatory or administrative function of the High Court by pointing out that it did not refer to any official act in the administration of justice or, as stated in Queen vs Gray already refer , red to, "the act of a Judge as a Judge", in which case alone the imputation would have amounted to scandalization of the court. The alleged multiple contempt relates partly to (i) an administrative act of the High Court preliminary to disciplinary proceedings and is stated to be contained in a representation filed 306 by him before the Governor, under a rule which apparently authorizes such appeals, against the suspension order of the High Court, and (ii) averments in a special leave petition filed by him in this Court, aggrieved by the refusal of the High Court to decide a preliminary objection in these very contempt proceedings on the judicial side. The questions we are called upon to decide are (a) whether criticism of an administrative act of the High Court or of any court could at all amount to contempt of court; (b) whether pejorative imputations about a court or judge, however offensive, true or honestly held even if contained in. In this state, all judges are elected by the people, and hold their authority, in a double, sense, directly from them; the power they exercise is but the authority of the people themselves, exercised through courts as their agents. Statements which disparage a subordinate judicial officer presiding over a court are not contempt if made in good faith to the High Court or any other lower Court to which the offended judge is subordinate. The emphasis in section 2(o), section 3 and section 13 to the interference with the course of justice or obstruction of the administration of justice or scandalising or lowering the authority of the Court not the judge highlights the judicial area as entitled to inviolability. The phraseological image projected by the catenate of expressions like court, course of justice administration of justice, civil and criminal proceedings, judicial proceedings, merits of any case, presiding officer of the Court, judicial proceeding before a court sitting in chamber or in camera undertaking given to a court, substantial interference with the due course of justice, etc., occurring in the various sections of the Act, the very conspirator of the statutory provisions and the ethos and raison d 'etre of the jurisdiction persuade us to the conclusion that the text of the Act must take its colour from the general context and confine the, contempt power to the judicial cum para judicial areas including those administrative functions as are intimately associated with the exercise of judicial power. The Judicial Committee held : "(a) That the letter signed "Colonist" in The Nassau Guardian though it might have been made the subject of proceedings for libel was not, in the circumstances, calculated to obstruct or interfere with the course of justice or the due administration of the law, and therefore did not constitute a contempt of Court." (emphasis supplied) Lord Atkin, in the celebrated case of Debi Prasad Sharma vs The King Emperor(2) where the printer, publisher and editor of the: Hindustan Times were found guilty of contempt by the Allahabad High Court for criticising the Chief Justice by falsely imputing to him a circular communication to the subordinate judiciary to raise collections for the war fund, set asida the conviction holding that the proceedings in contempt were misconceived, The learned Law Lord observed "When the comment in question in the present case is examined it is found that there is no criticism of any judicial act of the Chief Justice, or any imptitation on him for any thing done or omitted to be done by him in the administration of justice. It can hardly be said that there is any criticism of him in his administrative capacity, for, as far as their Lordships have been informed, the administrative control of the subordinate courts of ' the Province, whatever is, is exercised, not by the Chief Justice, but by the court over which he presides. justice. Thus, any speech, writing or act which does not have the, effect of interfering with the exercise of their judicial functions by the Courts cannot be the subject of proceedings in contempt. (emphasis added) "The public duty" in their "judicial capacity" was obviously in contradistinction to merely personal activities or administrative function It is not as if a judge doing some non judicial public duty is protected from criticism in which case, any action by him as of Law or Vice chancellor in a University or as Acting Governor or President (1)A.I.R.1950 All. Is the suspension of the District Judge so woven into and integrally connected with the administration of justice that it can be regarded as not purely an administrative act but a para judicial function ? Certainly there was there fore sufficient, publication in the law of libel but the Court held "A letter sent to the Prime Minister and not intended to be broadcast to the public or any section of the public cannot create an apprehension in the mind of public . "If these complaints are genuine and are made in a proper manner with the object of obtaining redress, and are not made mala fide with a view either to exert pressure upon the Court in the exercise of its judicial functions or to diminish the authority of the Court by lvilifying it, it would not be in furtherance of justice to stifle them by means of summary action for contempt, but rather the reverse" _(emphasis added). All we would ask is that those who criticise us will remember that, from the nature of our office, we cannot reply to their criticisms We cannot enter into public controversy. Appeal No. Appeal No.
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The person appealing this case, a judge, was found guilty and given a punishment by the Orissa High Court. He also made claims in a legal paper he had filed with the Supreme Court. In his letter to the Governor, the judge falsely suggested that the Governor had canceled earlier disciplinary actions against him because the High Court was unfair. He said the government stopped the punishment because three judges were prejudiced against him. He also said the High Court didn't accept the government's decision to cancel his demotion and used "trickery" to go against it. In another letter to the Governor, the judge claimed the High Court was very prejudiced against him and acted as if the charges were proven, demanding a severe punishment. He thought the High Court might not be fair if it investigated the charges against him. He said it was risky to give his explanation to the High Court and that it shouldn't investigate the charges again in the interest of justice. He sent a copy of this letter to the High Court, saying he sent it directly to the Governor because the High Court might not forward it. He argued the High Court wasn't qualified to handle the case and said the judges had become unfair, were seeking revenge, and had decided to give him a harsh punishment. In the appeal to the Supreme Court, it was argued that: (i) the statements made weren't disrespectful to the court because they didn't criticize any judicial actions of the judges. Criticizing the High Court's administrative actions, even harshly, wasn't disrespect; and (ii) the actions were taken while the judge was challenging his suspension and disciplinary proceedings, in an appeal or letter to the Governor. The law defines disrespect as interfering with the administration of justice. Insulting the court must be about the court or judge in relation to the administration of justice. (a) Whether insulting claims about the High Court's administrative actions are disrespect depends on whether the claims affect the administration of justice. Their actions support the administration of justice. So, when the Chief Justice appoints officers and controls them, it's an administrative function that's part of the administration of justice. The court setup is for the administration of justice, and the judge's control over assistants aims to keep the administration of justice pure. This is important for the administration of justice and when the High Court acts in a disciplinary way, it furthers the administration of justice. It's as important to watch the behavior of lower judges as it is to administer the law, because both are needed for the administration of justice. When this happens, the court must ask if the insult is aimed at the judge as a judge or as an individual. If it's the latter, the judge must use their own legal options and the court can't punish for disrespect. If the attack on the judge affects the administration of justice, it's a public problem punishable as disrespect. It doesn't matter if the attack is based on the judge's administrative actions. (g) "Judicial capacity" means "related to a judge" and covers all functions of a judge, whether administrative, adjudicatory, or any other needed for the administration of justice. If the language used is disrespect, it's punishable as criminal disrespect. Just because they relate to the judicial branch doesn't give them more immunity from criticism. The main point of disrespect power is to protect the public, not judges. If this focus on judicial function is accepted, it excludes interfering with administrative acts of courts and non-judicial functions of judges. A judge's main duty is to provide public justice in court, and anyone who interferes with this does so at their own risk. Personal behavior of judges, even if criticized harshly, can't be countered with disrespect law. The power to protect the public from interference with justice shouldn't be used to intimidate judges from criticizing administrative, legislative, and extra-judicial acts. Not everything is like this. In this case, the District Judge's suspension was tied to the administration of justice, so it wasn't purely administrative but quasi-judicial. The control was judicial, so the unrestrained attack on the High Court was punishable because it was against a supervisory act of the High Court. It can also demoralize the community about courts and is forbidden in the interest of public justice as disrespect. The Court is the guardian of people's rights, so disrespect power should be used carefully and only when the case is clear.
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Appeals Nos. 901 to 903 of 1971. Appeals by special leave from the judgment and order dated May 13, 1971 of the Andhra Pradesh High Court in Writ Petitions Nos. 6090 of 1970, 221 of 1971 and 543 of 1971 respectively. section V. Gupte, P. section Shankar and P. P. Rao, for the appellants (in C.A. No. 901 of 1971). P. section Shankar and P. P. Rao, for the appellants (in C.A. Nos. 902 and 903 of 1971). V. M. Tarkunde and K. Rajendra Chowdhary, for the respon dents (in C.A. No. 901 of 1971). G. Narasimhulu and P. A. Chowdhry, for the respondent (in C.A. No. 902 of 1971). A. Subba Rao, for the respondent (in C.A. No. 903 of 1971). The Judgment of the Court was delivered by Vaidialingam, J. These three appeals, in which the State of Andhra Pradesh is the first appellant, by special leave, are directed against the judgment and order dated May 13, 1971 of the Andhra Pradesh High Court in a batch of writ petitions, striking down Rule 9, in the Rules relating to the selection of candidates for admission to the Integrated M.B.B.S. Course in the Government Medical College in the Andhra Pradesh area, issued G.O. No. 1.648/Health dated July 23, 1970 as also under G.O. No. 1793,/Education dated September 23, 1970, regarding reservation of seats, in professional colleges for Backward Classes together with the annexure to the said notification containing the 250 list of Socially and Educationally Backward Classes. The Addl. Director of Medical and Health Services, Hyderabad and Principal, Government Medical College, Guntur, are also appellants Nos. 2 and 3 respectively in the appeals. The Government of Andhra Pradesh by G.O. No. 1648/ Health dated July 23, 1970 announced Rules for the selection and admission of students to the Integrated M.B.B.S. Course in the Government Medical Colleges, in the Andhra area. The rules provided a pattern of allotment of seats by reference to certain. qualifying examinations. The candidates eligible for admission to the Integrated M.B.B.S. Course, being largely taken from the students who had passed the qualifying examination for the Pre University Course and those who had passed the Higher Secondary Course (Multipurpose), the rules provided for a pattern of earmarking seats for the students according to the qualifying examinations taken by them. It may be mentioned at this stage that the H.S.C. Course (Multipurpose) students are called Multipurpose candidates since they pass their examinations from Multipurpose Schools. Rule 8 dealt with the pattern of allotment of seats in respect of qualifying examination. Rule 9 outlined the procedure for selection. Rule 10 provided that all the reservations would be subject to the order of merit of marks obtained in the entrance test by the students in the relevant category of reservations, namely, P.U.C. and H.S.C. Rule 24 provided that the selections made under the Rules will be subject to any rules or orders that may be made in regard to the reservation of seats for Socially and Educationally Backward Classes of students, having regard to the recommendations made by the Andhra Pradesh Backward Classes Commission. But there was a condition that such Rules or Orders should have been made by the Government before the finalisation and communication of the selection of candidates. On June 20, 1970, the Backward Classes Commission appointed by the State, 'a couple of years back, made its report re garding the various categories of persons who are to be treated as belonging to Backward Classes and recommended reservation of 30% of seats to persons belonging to the Backward Classes. The State by G.O. No. 1793/Education, dated September 23, 1970 announced reservation of 25% of the seats in the M.B.B.S. Course for candidates belonging to the various Backward Classes enumerated therein on the basis of the report of the Backward Classes Commission. In or about August, 1970, the validity of the entrance test provided under the Rules issued by the G.O. ' No. 1648 of 1970 was challenged before the High Court of Andhra Pradesh in a batch of writ petitions Nos. 3859, 3881, 3955 and 4052 of 1970. The challenge was on the ground that 251 the State had no power or authority to determine admission by reference only to the result of the entrance test there by ignoring the results of the qualifying examinations taken by a candidates These writ petitions were dismissed by a learned Single Judge of the High Court on September 5, 1970. But on Letters Patent Appeals by the candidates, a Division Bench of the High Court on September 18, 1970 reversed the order of the Single Judge and struck down the provisions regarding holding of entrance test for admission to Government Colleges as illegal. The State came to this Court in Civil Appeal Nos. 2161A and 2162B of 1970. This Court by its judgment dated February 11, 1971 allowed the appeals holding that the Government could hold an entrance test for selection eligible candidates for admission to the medical course in the colleges run by the Government. The said decision is State of Andhra Pradesh and another vs Narendranath and others (1). On the basis of the decision of this Court in the above appeals the Government on February 12, 1971, published an additional list of candidates selected on the basis of the entrance test for admission to the Integrated M.B.B.S. Course. On December 27, 1970, the respondent in Civil Appeal No. 901 of 1971, who was a P.U.C. candidate filed in the High Court Writ Petition No. 6090 of 1970 challenging the validity of the classification of candidates into two categories as P.U.C. and H.S.C. (M.P.) and reserving 40% of seats to the latter as also the G.O. No. 1793/Education dated September 23, 1970 specifying certain classes as being Socially and Educationally backward and providing for them a reservation of 25% of seats in the colleges. Certain other candidates belonging to the H.S.C. (M.P.) category had filed writ petitions challenging G.O. No. 1793 of 1970 regarding the reservation made for the Backward Classes. The P.U.C. candidate contended that the classification and reservation of 40% of seats for the H.S.C. (M.P.) candidates was vio lative of article 14 of the Constitution and that it was arbitrary and illegal. In particular he contended that he has obtained more marks than some of the H.S.C(M.P.) candidates at the entrance test and that he was entitled to admission in preference to such candidates. Both the P.U.C. as well as the H.S.C.(M.P.) writ petitioners attacked G.O. No. 1793 of 1970 regarding reservation of 25% of seats for the Socially and Educationally Backward Classes as violative of article 15(1) read with article 29 and that it has not been saved by article 15 (4). According to them the classification of Backward Classes was not made on any reliable material and in the enumeration of such classes, the, various principles laid down by this Court have not been given due regard. (1) 252 The State contested the writ petitions on various grounds. Regarding rule 9 of G.O. No. 1648 of 1970, the stand taken by the State was that the P.U.C. and H.S.C. (M.P.) candidates formed two distinct categories and they did not form part of the same class. It was further contended that the State was entitled to lay down the principles regarding the source from which the candidates are to be selected to the medical colleges which are run by the Government and that in providing for equal distribution of seats to the P.U.C. and H.S.C. (M.P.) candidates, no discrimination has been made and there has been no violation of article 14. Regarding G.O. No. 1793 of 1970, the State referred to the appointment of a high powered commission to exhaustively in vestigate and report as to the persons who are to be considered as Backward Classes for the purpose of reservation being made in their favour. The Commission had gone into the matter and after considering the educational and social backwardness of the various classes of citizens in the State in the light of the various principles and tests laid down by this Court, had submitted its report on June 26, 1970 enumerating the various classes of persons who are to be treated as Backward Classes. The report accepted by the Government had also given the reasons for such classes being treated as backward. The High Court by its judgment, under attack, allowed the writ petitions and also directed the State to give admissions to the writ petitioners to the 1st Year Integrated M.B.B.S, Course. The High Court has held that the only basis for selection for the 1st Year Integrated M.B.B.S. Course in relation to the H.S.C. and P.U.C. candidates is the marks obtained by them at the entrance test provided by the, rules framed under G.O. No. 1648 of 1970. According to the High Court when once rules have been framed in that manner, the selection of candidates from these categories must only be of those who have obtained the highest number of marks in the said test irrespective of the fact as to which category they belonged. In view of the fact that the selection is sought to be made by earmarking 40% of seats to the H.S.C. (M.P.), the latter are having an unfair advantage over the P.U.C. candidates, who will be denied admission, though they have obtained higher number of marks. In this view the High Court held that rule 9 providing for reservation of 40% to the H.S.C. (M.P.) framed under G.O. No. 1648 of 1970 was illegal as being discriminatory and as such offends article 14 of the Constitution. The said rule was struck down in consequence. Regarding the enumeration of Backward Classes by the Backward Class Commission, and the order of the Government, G.O. No. 1795 of 1970, reserving 25% of seats in the Colleges, 253 the High Court held that the Government order violate& article 15 (1) read with article 29 and that the reservation was not saved by article 15 (4). It is the view of the High Court that, proper investigation and collection of data have not been done by the Commission in accordance with the principles laid down by this Court in its various decisions. On the other hand, the High Court has held that the Commission has merely enumerated the various persons belonging to a particular caste as Backward Classes, which is contrary to the decisions of this Court. We will deal further with this aspect when we advert to the validity of G.O. No. 1739 of 1970. Suffice it to say that the High Court struck down the said Government Order as violative of article 15(1) and that it was not saved by article of the Constitution. The High Court declared that the writ petitioners were entitled to be admitted to the Integrated M.B.B.S. Course in the Medical Colleges in the Andhra area. Before us, on behalf of the appellants Mr. S.V. Gupte, learned counsel has attacked the findings of the High Court striking down Rule 9, issued under G.O. No. 1648 of 1970, as well as the reservation of seats made in the Professional Colleges for the Backward Classes by G.O. No. 1793 of 1970. We will first deal with the validity of Rule 9 issued under G.O. No. 1648 of 1970 reserving 40% of seats for the H.S.C. (M.P.) candidates. Before we consider the contentions urged in that regard by Mr. Gupte, on behalf of the State and Mr. Tarkunde, on behalf of the respondents, it is necessary to broadly refer to some of the material rules issued under G.O. No. 1648 of 1970. The rules were issued as annexure to this Government Order. It was specifically stated in the said Government Order that the rules specified in the annexure have to be followed in respect of admissions of students to the Integrated M.B.B.S. Course in the Government Medical Colleges in the Andhra area including Bhadrachalam Division of Khammam District and Mungala Division of Nalgonda District from the academic year 1970 71. Rule I referred to the availability of 550 seats in the 1st Year Integrated M.B.B.S. Course in the four Government Medical Colleges, referred to therein the Andhra area. Rule 2 dealt with reservation of seats (viz.) for candidates outside the State, candidates distinguished in N.C.C., Presidents ' Scouts and Guides and children of exhibit Servicemen and Armed personnel; and candidates belonging to Scheduled Caste and Scheduled Tribes, women candidates etc. Rule 3 deals with the age and educational qualifications. Regarding educational qualifications it is provided that candidates possessing the minimum qualifications of H.S.C. 254 (M.P.), I.S.C., P.U.C. and A.I.H.S.C. or equivalent qualifications are eligible to appear in the Entrance Test. But there was a .proviso to the effect that in the qualifying examination the candidates should have taken up physical sciences and biological sciences and must have obtained not less than 50% of marks in ,.those subjects put together. But in respect of candidates belonging to Scheduled Castes and Scheduled Tribes, the provision is that they should obtain not, less than 40% of marks in those Subjects put together in their qualifying examination. Rule 4 dealt with basis and method of admission. Clause (i) of this rule provides that all candidates who, have applied for admission and are found eligible will be required to take Entrance Test to be conducted by the Director of Medical and Health Services. The said rule also dealt with the holding of the Entrance Test at the centres specified therein. Clause (v) specifically provided that the Entrance Test will consist of four papers of 50 marks each in (a) subject of Physical Science (Chemistry and Physics), (b) subject of Biological Science, (Zoology and Botany). ,Clause (vi) provided for the examinations in Chemistry and Physics being held in 'the morning and the remaining two i.e. Zoology and Botany, in the evening session and that answers will be written in separate answer books and that the Entrance Test will be conducted in a single day. The said rule also provided for the standard of test, type of the test and the medium of the test. Rule 6 deals with the method of admission. It provides that based on the result of the Entrance Test, a separate Master List of eligible candidates will be prepared in order of merit and that the selection will be made keeping in view the various reservations mentioned therein. It may be mentioned at this stage that the reservations refered to therein are for Scheduled Castes and Schedule Tribes, Women candidates, children of exhibit Servicemen etc. There is no reservation referred to therein either of H.S.C. or P.U.C. candidates. Rule 7 deals with the distribution of seats. The total number of seats available is stated to be 550. But the actual number of seats available to be filled up on the basis of merit at the Entrance Test is given as 532. The said rule also provides for the distribution of seats to certain reserved groups such as Scheduled Castes and Scheduled Tribes, women candidates etc. Here again there is no reservation for H.S.C. or P.U.C. candidates. Rule 8 deals with the pattern of allotment of seats in respect of qualifying examination. The seats are distributed as follows : 40% each to Multipurpose and P.U.C. candidates; 5% to M.Sc. 255 and B.Sc. candidates; 4% for N.C.C., President 's Scouts and Guides and exhibit Servicemen and 11% strictly in the order of merit in the Entrance Test from the general pool. Rule 9 deals with the procedure for selection. Clause (D) dealing with the Multipurpose and P.U.C. candidates, refers to the fact that the total seats available are 545 and that according to the pattern of distribution, 40% of the seats are reserved for Multipurpose and 40% for P.U.C. (including I.S.C.)". The said clause further provides that the rate of seats to be filled up by the candidates from the P.U.C./Multipurpose and allied qualification holders should be done so as to keep the number of seats according to the ceiling, i.e., 40% as per the pattern of allotment for each group. It is this provision that was really struck down by the High Court. Rule 10 specifies that all reservations would be subject to the order of merit of marks obtained in the Entrance List. The other rules are not material. From a perusal of the rules, referred to above, two aspects underlying the scheme of selection broadly emerge : (1) that there is to be an Entrance Test for all the applicants for the admission to the 1st Year Integrated M.B., B.S. Course; and (2) that the result of the Entrance Test is to form the basis for admission to the medical course. Under rule 3 (2) candidates possessing the minimum qualification of H.S.C. (M.P.), I.S.C., P.U.C. ,and A.I.H.S.C. or equivalent qualification are eligible to appear in the Entrance Test. Therefore, it is clear that all the candidates possessing these qualifications are to be put on a par and are qualified to take the Entrance Test. We have already referred to the fact that there is a proviso that the candidates excepting those belonging to the Scheduled Castes and Scheduled Tribes should have obtained in their qualifying examination not less than 50% of marks in Physical and Biological Sciences put together in their qualifying examination. There is no distinction made between a P.U.C. or Multipurpose candidate. Both of them, in order to become eligible to appear in the Entrance Test, must have secured not less than 50% marks in their qualifying examinations in the two Physical and Biological Sciences put together. The only relaxation, or exception, if it may be so called, is regarding the candidates, belonging to the Scheduled Castes and Scheduled Tribes. These candidates should have secured not less than 40% of the marks in those subjects in their qualifying examination. Rule 4 emphasises that all eligible candidates who have applied for admission are bound to take the Entrance Test conducted by 87 Sup. Cl/72 256 the Director of Medical and Health Services. All the candidates, who take the Entrance Test, must take all the, four papers, referred to therein. Here again, it will be seen that there is no distinction made between a P.U.C. and a Multipurpose candidate. Both of them must have obtained not less than 50% marks under rule 3 in Physical and Biological Sciences in their qualifying examinations, and both of them will have to appear for those subjects in the Entrance Test, which is common to all the candidates. Rule 6 specifically provides for the admission being made on the bases of the results of the Entrance Test. Rule 7 regarding distribution of seats specifically refers to 532 seats being available to be filled up on the basis of merit in the Entrance Test. But when we come to rules 8 and 9, it is stated in the former that 40% each is to be allotted on the basis of qualifying examination to Multipurpose and P.U.C. students and the latter refers to distribution in the same proportion to the two sets of candidates on the basis of the result of the Entrance Test. This is so, notwithstanding the fact that rule 10 provides even in respect of candidates for whom reservations have been made, their selection will be in the order of merit of marks obtained in the Entrance Test. When the scheme of the rules clearly shows that the basis of selection for the 1st Year Integrated M.B., B.S. Course is according to the result of the Entrance Test, the question is whether the reservation of 40% of seats for the H.S.C. candidates under rule 9 is valid ? Under this rule though a P.U.C. candidate may have got higher marks than a H.S.C. candidate, he may not be able to get admission because 40% of the seats allotted to the P.U.C. candidates would have been filled up; whereas a H.S.C. candidate who may have got lesser number of marks than a P.U.C. candidate may be eligible to got a seat because of 40% quota allotted to the H.S.C. candidates has not yet been completed. Does this amount to an arbitrary discrimination violative of article 14 ? Prima facie having due regard to the scheme of the rules and the object sought to be achieved, namely, of getting the best students for the Medical Colleges, the provision is discriminatory and it has no reasonable relation to the object, sought to be achieved. Mr. Gupte, learned counsel for the State urged that the P.U.C. and H.S.C. candidates form two separate categories and that unless such reservation of seats is made, the H.S.C. candidates may not be able to get adequate number of seats in the Medical Colleges. He further contended that the Medical Colleges being run by the Government, it is open to the State to specify the sources from which the candidates will have to be selected for admission to those Colleges. He also pointed out that such a categorisation of students into two separate groups as P.U.C. and H.S.C. has been held to be valid by the High Court. 257 Mr. Tarkunde, learned counsel for the respondents, on the other hand, urged that whatever may have been the circumstances that originally existed when the High Court then upheld the division into separate groups of P.U.C. and H.S.C. students, when once the rules clearly specify that there is to be a common Entrance Test and that selections are to be made only on the basis of the results of such a test, the reservation of 40% in favour of the H.S.C. candidates is arbitrary, unjust and discriminatory and as such it violates article 14 of the Constitution. We are in agreement with the contention of Mr. Tarkunde regarding this aspect and, in our opinion, the High Court was justified in striking down the provision regarding reservation of 40% of seats to the H.S.C. candidates under rule 9. We have already indicated the scheme of the Rules as well as the basis for selection, as could be gathered fro in these rules. We will now briefly advert to the decisions referred to by the learned counsel on both sides. Mr. Gupte drew our attention to the following decisions, In Gullapalli Nageswara Rao and others vs Principal Medical College, Guntur and others,(1) the High Court had considered the provision made in a rule by the Government regarding reservation of 1/3rd of total number of seats in favour of Multipurpose candidates in the Pre Professional Course in medicine. The rule, no doubt, provided that admission for the said course should be both from the category of Multipurpose and P.U.C. students on the basis of merit. Nevertheless a reservation of 1/3rd of the total number to be admitted was made in favour of H.S.C. This reservation was attacked as being arbitrary and unjust. On behalf of the State it was urged that the said reservation is not hit by article 14 as it was necessary to afford equal opportunities to Multipurpose candidates. The High Court considered in this connection the syllabus for study prescribed for the P.U.C. and H.S.C. candidates in their respective courses. The High Court held that the Multipurpose candidates have to study more subjects than the P.U.C. candidates and that their examinations also covers a course extending over a period of four years. In this view the High Court held that, the H.S.C. candidates are at a disadvantage in the matter of securing higher percentage of marks in their optional subjects, whereas a P.U.C. candidate had a distinct advantage over them. It was further held that in such a situation there are possibilities of P.U.C. candidates securing higher percentage of marks in their optional subjects than the Multipurpose candidates and securing on the basis of the result of their qualifying examination a larger number of seats in the Pre Professional Course in medicine. Ultimately, the reservation of 1/3rd number (1) A.I.R. 1962 A.P. 212. 258 of seats in favour of the H.S.C. candidates was held by the High Court. It must be noted that at the time when the High Court deal(. with the matter, there was no uniform Entrance Test to be taken, by both the P.U.C. and the H.S.C. candidates as is the position at present. On the other hand, the selection to the Pre Professional Course in medicine was then made on the basis of the marks obtained in the optional subjects by the respective students in their previous course of study. The above decision, in our opinion, has no application to the facts of the present case. The fact that the High Court approved of reservation in the circumstances then existing will not help the State in the case before us. The next decision to which our attention was drawn by Mr. Gupte is P. Sagar and others vs State of Andhra Pradesh, represented by Health Department, Hyderabad and others(1). To this decision we will have to revert when we deal with the validity of reservation made for the Backward Classes under G.O. No. 1793 of 1970. But so far as the question of reservation for the P.U.C. and H.S.C. students is concerned, it is seen that certain rules provided for reservation of percentage of seats for the candidates belonging to the H.S.C. and P.U.C. Here again the rule was that 1/3rd of the total number of seats in all categories put together should be given to the H.S.C., Multipurpose and I.S.C. candidates and that at least 50% of the seats should be given to the P.U.C. candidates. It appears that the reservation of 50% of seats for P.U.C. candidates was challenged as being unjust. It was urged before the High Court that the H.S.C. (Multipurpose) Examination is very difficult and as such those candidates will not be able to secure higher marks as compared to the P.U.C. candidates and in support of this contention the earlier decision in Gullapalli Nageswara Rao and others vs Principal Medical College, Guntur and others(, ') was relied on. But we find that during the course of the hearing the Advocate General intimated the High Court that the Government was aware that the reservation of 50% seats to the P.U.C. candidates was working a hardship on the Multipurpose candidates and that the rules were being amended. It was later on represented that rules had also been amended. Therefore, the High Court ultimately held that in view of the amendment to the rules, it was not necessary to consider the challenge with respect to the reservations made for the Multipurpose and the P.U.C. candidates. Here again, it is to be stated that there was common Entrance test for all the candidates belonging to the P.U.C. and H.S.C. categories. On the other hand, the selections were made on the basis of the marks obtained by them in their qualifying examinations. It was further held in the said decision that even (1) A.I.R. 1968 A.P. 165. (2) A.I.R. 1962 A.P. 212. 259 in the basis that the qualifying examinations taken by the P.U.C. and H.S.C. candidates were equal, still the reservation is not invalid as discreminatory under article 14 of the Constitution. But hereagain it is to be noted that selection were made on the basis of the marks obtained in the qualifying examinations and not on the basis of marks obtained in a common Entrance Test held for all the candidates uniformly. This decision is also, more or less similar to the one in Gullapalli Nageswara Rao and others vs Principal Medical College, Guntur and others.(1) The decision in Sagar and others vs State of Andhra Pradesh (2 ) had also to deal with the reservation of seat in the Professional Colleges for the Backward Classes on the basis of the G.O. which was then in force. It was held that the said reservation was not saved by article 15 (4). The decision of the High Court striking down the reservation for the Backward Classes alone was challenged by the State in this Court in State of Andhra Pradesh and another vs P. Sagar. (3) This Court upheld the decision of the High Court. We will have to refer to the above sections of the High Court Rs well as of this Court when we deal with the second aspect which arises for consideration before us regarding the reservation made for the Backward Classes under G.O. No. 1793 of 1970. Mr. Gupte then referred us to the decision in Chitra Ghosh and another vs Union of India and others. (4) That decision related to a challenge made by certain students who were denied admission to the Maulana Azad Medical College, New Delhi. The said college was established by the Government of India. Of the 125 students, who are to be admitted annually, 15% of the seats are reserved for Scheduled Caste candidates and 5% for candidates belonging to the Scheduled Tribes, 25 % of the seats (excluding the seats reserved for Government of India nominees) were reserved for girl students. In particular 23 seats were reserved to certain categories and they were to be filled up by the candidates who were nominated by the Central Government. The categories to which the said nomination had to be so made were as follows (1) Sons/daughters of residents of Union Territories specified below including displaced persons registered therein and sponsored by their respective Administration of Territory : (a) Himachal Pradesh, (b) Tripura, (c) Mani pur, (d) Naga Hills, (e) N.E.F.A. and (f) Andaman. (1) A.I.R. 1962 A.P. 212. (2) A.I.R. 1968 A.P. 165. (3) (4) ; 260 (2) Sons/daughters of Central Government servants posted in Indian Missions abroad. (3) Cultural Scholars. (4) Colombo Plan Scholars. (5) Thailand Scholars. (6) Jammu & Kashmir State Scholars. The appellants therein had obtained about 62.5% marks and were domiciled in Delhi. According to them, they were entitled to admission on the basis of merit and would have been so admitted but for the reservations, which were filled by the nominations made by the Central Government. It was their further contention that the students who had been so nominated by the Central Government and got admission had obtained less percentage of marks than the appellants. Mainly the power of the Central Government to make the nominations was challenged on the ground that the provision for reservation in favour of such nominees of Central Government was not based on any reasonable classification and suffered from the vice of discrimination and hence the reservation was hit by article 14 read with cls. (A) and f (iv) of article 15 and Cl. (ii) of article 29. This Court rejected the contention and held that neither cls. (i) and (iv) of article 15 nor cl. (ii) of article 29 violated. In support of the challenge of discrimination under article 14, it was claimed by the appellants that merit being the sole criteria for admission, the provisions made for reservation for candi dates to be nominated by the Central Government, introduced discrimination, or it had no reasonable nexus to the object sought to be achieved. After a reference to the provisions made in respect of each of the categories to be nominated by the Central Government on merits, it was held that the classification in all those cases was based on intelligible differentia, which distinguished them from the group to which the appellants belonged. In particular, Mr. Gupte relied on the following observations in the said decision "It is the Central Government which bears the financial burden of running the medical college. It is for it to lay down the criteria for eligibility. From the very nature of things it is not possible to throw the admission open to students from all over the country. The Government cannot be denied the right to decide from what courses the admission will be made. That essentially is a question of policy and depends inter alia on all overall assessment and survey of the requirements of residents of particular territories and other categories of persons for whom it is essential to provide facilities for medical 261 education. If the sources are properly classified whether on territorial, geographical or other reasonable basis, it is not for the courts to interfere with the manner and method of making the classification. The next question that has to be determined is whether the differentia on which classification has been made has rational relation with the object to be achieved. The main purpose of admission to a medical college is to impart education in the theory and practice of medicine. As noticed before the sources from which students have to be drawn are primarily determined by the authorities who maintain and run the institution e.g., the Central Government in the present case. In Minor P. Rajendran vs State of Madras(1) it has been stated that the object of selection for admission is to secure the best possible material. This can surely be achieved by making proper rules in the matter of selection but there can be no doubt that such selection has to be confined to the sources that are intended to supply the material. If the sources have been classified in the manner done in the present case it is difficult to see how that classification has no rational nexus with the object of imparting medical education and also of selection for the purpose. " Based upon these observations, Mr. Gupte, contended that the sources for selecting candidates as well as the reservation made in respect of admission to the Maulana Azad Medical College have both been approved by this Court as valid and not violative of Art, 14. On this analogy, the counsel urged, the present classification of P.U.C. and H.S.C. into two categories and the reservation of 40% for H.S.C. candidates are valid. In our opinion, the above decision does not lead to the result contended on behalf of the State. The special circumstances and the reasons for making the reservation to enable the Central Government to make nominations so that candidates belonging to those categories can get adequate representation by way of admission in the Medical Colleges have been elaborately adverted to by this Court and it is on that basis that this Court accepted the classification as valid. It was further held that the said classification has got a rational relation to the object sought to be achieved. The object was stated to he to impart medical education to the candidates belonging to those groups or area where adequate facilities for imparting such education were not available. But the point to be noted in the said decision is that in respect of other candidates, who are not governed by any reservation, the selection on the basis of merit, namely, the marks obtained by them. On the other hand, in the (1) ; 262 case before us, though a uniform Entrance Test has been prescribed for both the P.U.C. and H.S.C. candidates, still the selection is not made on the basis of the marks obtained in the Entrance Test. On the other hand, the selections are made after disregarding those marks. At any rate, so far as some P.U.C. candidates are concerned it shows a preference to the H.S.C. candidates, who may have got lesser number of marks and would not have got admission, but for the reservation of 40% made for the group to which they belonged. It is no doubt true that it is open to the State to prescribe the sources from which candidates will be selected and also prescribe the criteria for eligibility. In fact, in the case before us, as we have already pointed out, the rules provide for the qualifications which have to be satisfied to enable a candidate to apply and the sources from which selections will have to be made, have also been prescribed. We have also pointed out that in respect of eligibility for applying for admission to the 1st Year Integrated M.B.B.S. Course, no distinction has been drawn between P.U.C. and H.S.C. candidates, both of whom have to get at least 50% marks in Physical and Biological Sciences. So that clearly shows that they have been put on a par so far as eligibility is concerned. But the discrimination is made only after the Entrance Test is over by denying admission to the P.U.C. candidates who may have got higher marks than some of the H.S.C. candidates who get admission because of the 40% reservation. Mr. Gupte then referred us to the decision in Ganga Ram and Others V. The Union of India and others(1), wherein the classification of direct recruits and promotees into two different categories in the Accounts Department of the Railway Establishment was hold to be a reasonable classification not attracting the vice of article 14 or 16. In that case this Court was considering a claim for promotion based upon the test of Seniority cum suitability. After considering the background of the service concerned, it was held that the State which encounters diverse problems arising from a variety of circumstances is entitled to Jay down the conditions of efficiency and other qualifications for securing best service for being eligible for promotion in its different departments. It was emphasised that the object sought to be achieved by the relevant provisions which were under attack was the requisite efficiency in the Accounts Department of the Railway Establishment. It was in that connection held that the direct recruits and promotees constitute different classes or categories and such a classification is sustainable on intelligible differentia, which has a reasonable connection with the object of efficiency in the Department. This decision also does not help the appellants as there was no distinction made inter se between the promotees and the direct (1) ; 263 recruits. On the other hand, the same criteria was adopted for purposes of promotion to the persons forming the class of direct recruits. Similarly, the same test was applied to the persons coming under the group of promotees. It was under such circumstances that this Court held the classification to be valid, and the situation which this Court had to consider in that connection was entirely different, from the one before us where all the candidates belonging to both the P.U.C. and H.S.C. merge under the Rules when they take the Entrance Test. In D. N. Chanchala etc. vs The State of Mysore and others(1), one of the questions this Court had to consider was the validity of the university distribution of seats in the medical colleges run by the State of Mysore. There were three Universities in Mysore State, namely, Karnatak, Mysore and Bangalore Universities. The challenge to such distribution of seats was that candidates having lesser marks might obtain admission at the cost of another having higher marks from another university. This Court after a reference to the different standards of examinations held in the three universities, rejected the challenge of discrimination as follows "Further, the Government which bears the financial burden of running the Government colleges is entitled to lay down criteria for admission in its own colleges and to decide the sources from which admission would be made, provided of course, such classification is not arbitrary and has a rational basis and a reasonable connection with the object of the rules. So long as there is no discrimination within each of such sources, the validity of the rules laying down such sources cannot be successfully challenged. . In our view the rules lay down a valid classification. Candidates passing through the qualifying examination held by a university form a class by themselves as distinguished from those passing through such examination from the other two universities. Such a classification has a reasonable nexus with the object of the rules, namely, to cater to the needs of candidates who would naturally look to their own university to advance their training in technical studies, such as medical studies. In our opinion, the rules can. not j ustly be attacked on the ground of hostile discrimi nation or as being otherwise in breach of Article 14. " It will be seen that the above decision has empbasised that the selection which was made on the basis of the marks obtained in the qualifying examination held by each of the universities was valid and the distribution of seats in the medical colleges universitywise was also valid in view of the different standards adopted by each (1) ; 264 university. Again it is to be noted in the said decision, there was no question of all the students of the three universities taking a common Entrance Test on the basis of which a selection was made. This decision also does not help the appellants. The decision in The State of Maharashtra and another vs Lok Shikshan Sansatha and others(1) which has laid down that in the matter of permitting colleges to be started in particular areas having due regard to the need of the area concerned, is essentially a matter of policy for the State which has to take a decision on overall assessment and summary of the requirements of a particular area, so long as the decision is not arbitrary or mala fide, it was further held that the courts will not interfere with the assessment made by the State in pursuance of its policy. This decision is also of no avail to the appellants. Mr. Tarkunde, apart from distinguishing the above decisions, for the reasons mentioned by us earlier pointed, out that in Gullapalli Nageswara Rao and others vs Principal Medical College, Guntur and others (2), the basis of classification of P.U.C. and H.S.C. was not challenged as there was no necessity for those students to take a common test as in the case before us. He referred us to the averments in the counter affidavit filed by the Assistant Secretary to the Government in Writ Petition No. 3859 of 1970 in which conducting of Entrance Test was then challenged. The Assistant Secretary in paragraph 9 of the said counter affidavit in respect of holding of the Entrance Test has stated that the selection of candidates for the 1st Year Integrated M.B.B.S. Course is made on the basis of marks obtained at the Entrance Examination, as such a method of selection ensures fair play and affords equal opportunity to all candidates. He has again referred us to the fact that by introducing the method of selection by the Entrance Test the Government had done away with the reservations originally made for the P.U.C. and H.S.C. candidates and thus has offered equal opportunity to all candidates. He has further stated that both the P.U.C. and the H.S.C. students apart from having obtained not less than 50% of marks in Physical and Biological Sciences to be eligible to apply for admission to the medical colleges, have also take the Entrance Test in the subjects mentioned in the rules. According to the State, the result of the Entrance Test is a method of making selection to the medical colleges, thus ensuring fair play and justice. In the same Writ Petition the Add]. Director of Medical and Health Services, (Professional Education) has referred to the necessity of holding an Entrance Test. In this connection he refers (1) ; (2) A.I.R. 1962 A.P. 212. 265 to the marks obtained by certain P.U.C. and H.S.C. students in their qualifying examinations and also to their marks in the Entrance Test. The Officer has stated that the marks obtained by the candidates in their qualifying examinations are not a reliable guide to assess their merits as the marks obtained by those candidates in the Entrance Test were very poor. Therefore, it has been emphasised that the marks obtained in the Entrance Test is the guiding factor to assess the merits of both the sets of candidates for admission to the Medical College. We have referred to the avernments contained in the counter affidavit of the two officers above as they form part of the present record and they have also been relied on for one purpose or other by both the State and the respondents. The above averments clearly establish that even according to the State the marks obtained in the Entrance Test according to the rules is the decisive test for the purpose of considering the merits of the candidates, who seek admission to the Medical College. These averments clearly show that there is absolutely no jurisdiction for making of special reservation of 40% in favour of H.S.C. candidates, when once a common Entrance Test is held for all the candidates and selection is made on an assessment of merit of marks obtained at the said examination. Mr. Tarkunde referred us to Minor P. Rajendran vs State of Madras and others(1) where the validity of the scheme of districtwise distribution of seats as per the rules framed by the State of Madras, to the Medical Colleges, was challenged as violative of article 14. The State attempted to justify the said method of districtwise distribution on the ground that if districtwise distribution is not made, the candidates from Madras City would have an advantage and would secure the largest number of seats in the Medical Colleges, which will not be justified on the basis of the proportion of population of the Madras City. The challenge based on discrimination under article 14 was accepted by this Court and it was held that the allocation of seats districtwise results in discrimination and there is no nexus between the districtwise distribution and the object to be achieved, namely, admission of the best talent from the sources indicated in the rules. On this ground, the allo cation of seats on districtwise basis was struck down as violative of article 14. Similarly unitwise distribution of seats in the Medical Colleges in Tamil, Nadu was declared by this Court in Minor A. Periakeruppan and another vs State of Tamil Nadu and others(2) as violative of articles 14 and 15. (1) ; (2) ; 266 These two decisions clearly establish that a classification which has no rational basis and has no relation to the object sought to be achieved is violative of article 14. It is not necessary for us to refer to the various decisions laying down the contents of article 14. Suffice it to say that it does not forbid reasonable classification. In order to pass the test of permissible classification, two conditions must be fulfilled : (1) The classification is founded on an intelligible differentia which distinguishes persons or things that are grouped together from those left out of the group, and (2) the differentia must have a rational relation to the object sought to be achieved. It is no doubt open to the State to prescribe the sources from which the candidates are declared eligible for applying for admission to the Medical College; but when once a common Entrance Test has been prescribed for all the candidates on the basis of which selection is to be made, the rule providing further that 40% of the seats will have to be reserved for the H.S.C. candidates is arbitrary. In the first place, after a common test has been prescribed there cannot be a valid classification of the P.U.C. and H.S.C. candidates. Even assuming that such a classification is valid, the said classification has no reasonable relation to the object sought to be achieved. namely, selecting the best candidates for admission to the Medical Colleges. The reservation of 40% to the H.S.C. candidates has .no reasonable relation or nexus to the said object.1. Hence we agree with the High Court, when it struck down this reservation under rule 9 contained in G. No. 1648 of 1970 as violative of article 14. The next question that arises for consideration is the correctness ,of the order of the High Court striking down the reservation of seats made for Backward Classes in the Professional Colleges under G.O. No. 1793 of 1970. The said reservation has been struck down on the ground that it violates article 15(1) and falls outside article 15(4) of the Constitution. The view of the High Court is very strenuously challenged by 'Mr. section V. Gupte, learned counsel for the appellants. Mr. V. M. Tarkunde, learned counsel for the respondents, supported the various, reasons given by the High Court for striking down the said reservation. Before we deal with the reasons given by the High Court for striking down the reservation made for the Backward Classes under the said G.O., we will refer to the circumstances under which the Backward Classes Commission was appointed and whose report has formed the basis for providing the reservation for the various ,persons mentioned therein. 267 The State of Andhra was formed on October 1, 1953 and the Andhra Pradesh State came into existence with effect from November 1, 1956. The State of Andhra originally formed part of the Composite Madras State. The Composite Madras State had maintained a list of Backward Classes (other than the Scheduled Castes Tribes), in that State and had made special provisions with regard to admission to educational institutions, reservation of posts in Government Service, grant of scholarships and other concessions to assist those Backward Classes. After the formation of the Andhra State on October 1, 1953, the list maintained by the Composite Madras State was continued in the Andhra area with some modifications. The former Princely State of Hyderabad was also maintaining a list of Backward Classes in that State, and this was also continued after the formation of Andhra Pradesh, which included Telangana area. Thus with effect from November 1, 1956, there were two lists of Backward Classes in the State of Andhra Pradesh one for Andhra area and the other for Telangana area. Both the lists together comprised about 146 communities 86 and 60 in the Andhra and Telangana areas respectively. The President of India appointed in January, 1953, a Backward Classes Commission under article 341 nf the Constitution headed by Sri Kaka Kalelkar, to determine the criteria to be adopted for treating any section of the people, other than Scheduled Castes and Scheduled Tribes, as socially and educationally Backward Classes. The said commission was also to draw up a list of such Classes on. the basis of the criteria laid down by it. The report of this Commission was considered by the Central Government, which issued a memorandum pointing out that some of the tests applied by the Commission were very vague. It was further pointed out that if those tests were applied, a large majority of the Country 's population will have to be considered backward. The Central Government decided to undertake further investigation to draw some positive and workable criteria for this purpose. The State Governments were desired in the meanwhile to render every assistance possible to those persons who, in the opinion of the State Governments were backward. Further attempts by the Central Government to draw up a list of Backward Classes on an All India basis did not meet with much of a success. Even here some State Governments were in favour of adopting economic backwardness as a criteria while others were inclined to stick on to the list prepared by them on the basis of caste. The Central Government conveyed to the State Governments on August 14, 1961 expressing its view that while the State Governments have the discretion to choose their own criteria for defining backwardness it would be better to apply economic tests rather than classifying people by their castes. 268 The State of Andhra Pradesh issued G.O. No. 1886 dated June 21, 1963 specifying a list of certain persons as belonging to Backward Classes. The list was prepared for the purpose of selecting candidates to the seats reserved for backward communities in the Medical Colleges in Andhra Pradesh. Under the said G.O., 25% of the seats were reserved for Backward Classes in accordance with the list contained therein. The reservation for the Backward Classes was challenged before the Andhra Pradesh High Court by ,certain applicants on the ground that the Government order offends articles 15 and 29(2) of the Constitution. It was alleged that the State Government acting in fraud of its powers listed more than 139 castes as socially and educationally backward. It was the further allegation that the list had been prepared exclusively on the basis of caste. The State Government contested the writ petitions on the ground that the Government was maintaining a list of Backward Classes based on socially and educationally backwardness of the caste and to such people 25 % of the seats had been reserved. It was further averred that such reservation had 'been going on for a long time and the list was also being suitably revised by making additions or deletions whenever found necessary. A learned Single Judge of the High Court in P. Sukhadev The Government of Andhra Pradesh(1) considered the validity of the impugned G.O. No. 1886 of 1.963 from two points of view: (1) whether the list of backward classes was based solely on consideration of caste; and (2) whether the Government had adopted any standard or method of determining the social and educational backwardness of the classes specified and, if so, the material upon which the Government has so acted. The High Court held that the State on which lay the onus of supporting the classification as valid had placed no materials before the Court as to the economic condition of the various classes, their occupation and habitation and social status and their educational backwardness. The High Court is also of the view that the enumeration of persons as B ackward Classes in the Government Order has been made almost exclusively on the basis of caste. On these grounds the Government Order was struck down as violative of article 15 (1) and 29(2.) as being in fraud of powers conferred on the State. After the G.O. No. 1886 of 1963 was struck down by the High Court, the State Government decided that the criteria for determining backwardness should be only economic factors and should be applied to individual family rather than to a whole caste. The Government issued a G.O. No. 301/Education dated February 3. 1964 scrapping the then existing list of Backward Classes with (1) 269 effect from April 1, 1964 and directed that financial assistance be given to the economically poorer sections of the population, whose family income was below Rs. 1,500 / per annum. The State Government again took up the question of drawing up a list of Backward Classes in consonance with the provisions of the Constitution. For this purpose a Cabinet Sub Committee was constituted to draw up a list of persons who could be considered backward. The Cabinet Sub Committee obtained information from other States and as per the advice of its Law Secretary, it was decided that certain criteria is to be adopted for determining the backwardness of the people. The criteria included Poverty Low standard of education, Low standing of living, Place of habitation; Inferiority of occupation and caste. The Cabinet Sub Committee having taken a decision regarding the criteria to be applied, directed the State Director of Social Welfare to check up the lists of Backward Classes which had been scrapped on February 3, 1964 and to select from those lists the castes or communities which could be considered backward on the basis of the above criteria. The Director of Social Welfare, in consultation with the Law Secretary drew up a list of persons who could be included in the list of Backward Classes. The said Cabinet Sub Committee considered the recommendations made by the Director of Social Welfare and accordingly drew up a Est of 112 communities which were considered as backward. Accordingly, G.O. No. 1880/Education dated July 29, 1966 was issued with a list showing 112 communities as backward as being eligible for scholarships and reservation of seats to Professional Colleges and Government Services. The validity of the above Government Order was again chal lenged before the High Court of Andhra Pradesh on the ground that the list was prepared solely on the basis of caste and violated the provisions of the Constitution. Here again the students who filed the writ petitions in the High Court urged that there was no material difference between the list drawn up under this G.O. and the list which was struck down by the High Court as per G.O. No. 1886 of 1963. The attack was that the list of 1966 was also prepared exclusively on the basis of caste. The State attempted to justify the preparation of the list of Backward Classes as having been properly done after investigation by the Director of Social Welfare in consultation with the Law Secretary. The State further urged that all relevant factors had been taken into account by the Director of Social Welfare before preparing the list. The Division Bench of the Andhra Pradesh High Court in its decision in P. Sagar and others vs State of Andhra Pradesh(1) upheld the challenge leveled against the reservation made in the G.O. for Backward Classes on the ground that the State has not (1) A.I.R. 1968 A P. 165. 270 placed materials which were available before the Cabinet SubCommittee or the Council of Ministers. The High Court is of the view that the list has been drawn up by the Director of Social Welfare and the Law Secretary, who cannot be considered in any sense to be experts and that they had made no investigation; nor collected material data for classifying the persons mentioned in the G.O. as backward. It was further emphasised that neither the Director of Social Welfare nor the Cabinet Sub Committee had before them the population of the various classes, their economic conditions, percentage of literacy or their social and economic status. It is the view of the High Court that no substantial change had been made from the list prepared under G.O. No. 1886 of 1963 And which had already been struck down by the High Court. Ultimately, the High Court held that the preparation of the list of Backward Classes under G.O. No. 1880 of 1966 had been made without any material and as such the list was struck down as not being saved by article 15 (4). We have referred rather elaborately to the list prepared by the State Government under Government Orders Nos 1986 of 1963 and 1880 of 1966 as well as the decisions of the High Court striking down those lists. Even at the time when the earlier decision was given by the Andhra Pradesh High Court in P. Sukhadev vs The Government of Andhra Pradesh(1), the decision of this Court in M. R. Balaji and others vs State of Mysore(2) had been pronounced. It is really on the basis of the said decision, that the High Court, on the former two occasions struck.down the reservations made under the two Government Orders on the ground that the preparation of the two lists of Backward Classes had not been made in accordance with the principles laid down by this Court. In fact, in both the decisions the High Court has emphasised that there has been no investigation whatsoever regarding the various factors that are necessary to he obtained as laid down by this Court for the Purpose of making special provisions for the advancement of any socially and educationally Backward Classes of citizens as envisaged in article 15(4). The sole reason given in the two decisions by the High Court for striking down the reservation is the fact that the necessary data or material, as laid down by this Court, had not been collected by the State Government. We are again emphasising this aspect because the High Court in the decision, which is under attack before us, has relied on the above two earlier decisions, to a large extent for coming to the Conclusion that the present list of Backward Classes suffers from the same infirmity, as pointed out on the former occasion. The High Court has further held that the same persons who had been included in the original list, as belonging to Backward Classes and which list was struck down twice, have again been included in the present G.O. No. 1793 (1) (2) [1963] Supp. 1 S.C.R. 439 271 of 1970. In the course of the judgment, we will be pointing out that the High Court has committed a basic error in proceeding on the basis that the present lists suffers from the same vice, pointed out in he earlier decisions by the High Court. The State of Andhra Pradesh challenged before this Court the decision of the High Court striking down the reservations made for Backward Classes as well as the preparation of list under G.O. No. 1880 of1966. This Court in State of Andhra Pradesh and another vs P. Sagar(1) upheld the decision of the High Court striking down 'the reservation. This Court agreed with the view of the High Court that no enquiry or investigation had been made by the State Government before preparing the list of Backward Classes enumerated in the said Government Order. It was further held that the State had placed no materials before the Court, on the basis of which the list of Backward Classes was prepared, excepting relying on the fact that it was prepared by the Director of Social Welfare with the assistance of the Law Secretary. It is to be noted that this Court upheld the decision of the Andhra Pradesh High Court in view of the fact that the State had made no investigation of enquiry, nor had it collected the necessary materials to ascertain the socially and educationally backwardness of the persons mentioned in the list. The decision of this Court was rendered on March 27, 1968. On April 12, 1968, the State Government by G.O. No. 870, appointed a Commission to determine the criteria to be adopted in considering whether any sections of the citizens of India in the State of Andhra Pradesh are to be treated as socially and educationally Backward Classes. The Commission was also desired to prepare a list of such Backward Classes in accordance with the criteria to be adopted. The Commission consisted of nine members, presided over by the retired Chief Justice of the Andhra Pradesh High Court. The other members of the Commission included the members of the State legislature. The terms of Reference have been printed as Appendix 1 in the report Submitted by the Backward Classes Commission. A perusal of the terms of Reference shows that the Commission was desired to investigate and determine the various matters regarding the preparation of list of Backward Classes for providing a reservation in educational Institutions and also for appointments for posts in Government service. The Commission was authorised to obtain any information that it considered necessary from the Government Departments, Collectors, Organisations, Individuals and from such other persons as it considered necessary. It was also authorised to visit any part of the State for the purpose of investigation and enquiry. Later on, it is seen that the retired Chief Justice of the High Court, Who was originally the Chairman of the 'Commission, resigned and (1) 87Sup Cl/72 272 the Commission was headed by a retired I.C.S. Officer. The terms of Reference were as follows "The Commission shall (i) determine the criteria to be adopted in considering whether any sections of citizens of India in the State of Andhra Pradesh (other than the Scheduled Castes and Scheduled Tribes specified by notifications issued by the President of India under article 341 & 342 of the Constitution of India) may be treated as socially and educationally Backward Classes and in accordance with such criteria prepare a list of such backward classes setting out also their approximate numbers and their territorial distribution; (ii) investigate the conditions of all such socially and educationally backward classes and the difficulties under which they labour; and make recommendations as to the special provisions which may be made by the Government for their advancement and for prom otion of their educational and economic interests, generally and with particular reference to (1) th e reservation in educational institutions maintained by the State or receiving aid out of State funds; (2) the concessions, such as scholarships, which may be given by way of assistance; (3) the percentage or proportion of such reservation the quantum of such assistance and the period during which such reservation or assistance may be made or given; and (iii) advise the Government as to the backward classes of citizens (other than the Scheduled Castes and the Scheduled Tribes) which are not ,adequately represented in the services under the State and prepare a list of all such backward classes and make recommendation as to: (1) the reservation of appointments or posts in favour of such backward Classes, and (2) the percentage or proportion of such reservation and the period during which such reservation may be made. 273 The Commission submitted its report to the Government on June 20, 1970. The report was placed before the State legislature as also the Andhra Pradesh Regional Committee. The Commission in its report had drawn up a list of 92 classes, which according to it, are socially and educationally backward and have to be classified as Backward Classes and for whom reservations have to be made. After having regard to the views expressed by the Legislature as well as the Regional Committee and after an examination of the Report, the Government issued G.O. No. 1793 of 1970. The Government accepted the criteria adopted by the Commission for determining the social and educational backwardness of the citizens, namely, (i) the general poverty of the class or community as a whole; (ii) Occupations pursued by the classes of citizens, the nature of which must be inferior or unclean or undignified and unremunerative or one which does not carry influence or power; (iii) Caste in relation to Hindus; and (iv) Educational backwardness. The Government also accepted the list drawn up by the Com mission in toto and declared that the castes and communities specified in the annexure to the G.O. are socially and educationally, Backward Classes for the purpose of article 15(4) of the Constitution. Though the Commission had recommended reservation of 30% of seats for the Backward Classes in the Professional College, ,, the Government in the Order decided that only 25% of seats in the Professional Colleges should be reserved for Backward Classes, The Government also agreed to the recommendations of the Commission to the classification of the Backward classes into four groups, and directed that on the basis of the population of those four groups, the 25% reservation of seats in the Professional Colleges was to be apportioned amongst the said four groups in the proportion mentioned in the Government Order. The Government made it clear that the acceptance of the recommendations of the Commission regarding reservations shall be in force for a period of 10 years in the first instance and the positions will be reviewed thereafter. We have referred to the circumstances leading up to the passing of the impugned G.O. No. 1793 of 1970. In order to appreciate the criticism made by the High Court regarding the approach made by the Commission, it is necessary to refer to the salient feature. , , of the report of the Backward Classes Commission. The report of the Backward Classes Commission is Annexure B before us. As soon as the Commission was appointed, the Commission issued a questionnaire and circulated it very widely to the various authorities and organisations mentioned in its report. The questionnaire refers to various matters regarding the criteria to be adopted for 274 ascertaining the backwardness of persons as well as the information on matters relating to the social and educational backwardness of the persons. Apart from the distribution of the questionnaire, the Commission called for information from the Heads of all Government Departments regarding the number of persons belonging to each class or community employed in their Departments. Information was, also asked from the Principals of Colleges, including the Professional and_Technical Colleges regarding the number of students belonging to each class or community in the, academic year 1967 68. Similarly, the Head Masters of all the High Schools and Multipurpose High Schools in the State were also requested to furnish information regarding the total number of students belonging to each community who studied in those schools during the last 10 years as well as the number of students classwise and community wise who studied in classes VI to XI in 1968 69. The Commission toured all the districts in the State and recorded oral evidence on oath from the representatives of a number of communities. During the tour of the districts, the Commission visited the houses and huts belonging to different communities of the people and also made oral enquiries from the inmates about their conditions of living, their customs, relations _with other communities and their problems. The names of places visited by the Commission together with the dates of such visits are given in Appendix IV of its Report. The Commission also visited the neighboring States of Madras, Mysore and Kerala with a view to have discussion with the officers of those Governments, which were connected with the welfare of Backward Classes. The report says that about 820 persons were examined at various places and that about 480 persons submitted written memoranda. A large number of replies were received from the public to the questionnaire issued by the Commission. The Commission has stated that it had an opportunity, during its tour and visit of the villages, of studying the living conditions and standard of life of the various communities. The Commission has, no doubt, referred to the fact that upto date statistical information with regard to population of the several communities as well as the percentage of literacy was not available. The difficulty was enhanced by the fact that no caste wise statistic had been collected after 1931 census. So far as Andhra area is concerned, the figures of 1921 census were available, a$ it had been prepared on caste wise basis. Regarding Telangana area, the 1931 census of caste wise statistic was available. It had to estimate the 1968 population in the two areas on the basis of the respective census datas available. The population figures for 1968 for each caste was fixed by the Commission by the percentage of the increase of the total population. The estimate so made by the Commission is given in Appendix V of the Report. 275 Regarding literacy, the Commission adopted the percentage of student population per thousand of particular class or community in standards X and XI with reference to the average student population in the whole State. The reasons for adopting this, procedure have been given in Chapter VI. Though information was called for regarding the student population community wise in standards X and XI from about 2224 High Schools and Higher Secondary Schools in the State, only about 50% of the institutions sent the information regarding the student population community wise, in those two classes. The Commission worked out an average on the basis of the replies received from the 50% of the institutions which itself comes to nearly more than 100 schools. It is not necessary to refer to the employment statistics collected by the Commission. The Commission itself has indicated the difficult problems it had to tackle. Chapters IV and V deal with the constitutional provisions regarding the Backward Class as well as the general principles laid down by the High Court and this Court for ascertainment of their social and educational backwardness. Chapter VI deals with the tests of criteria adopted by the Commission for ascertaining the social and educational backwardness of versions. Regarding social backwardness, after a very exhaustive survey of the trade or occupations carried on by the persons concerned and other allied matters, the Commission has indicated that only such persons belonging to a caste or community who have traditionally followed unclean and undignified occupation, can be grouped under the classification of Backward Classes. In this connection the Commission has adverted to the general poverty of the class or community as a whole, the occupation pursued by the class of citizens, the nature of which is considered inferior and unclean, undignified or unremunerative or one which does not carry influence or power, and caste in relation to Hindus. Regarding educational backwardness, the Commission has adverted to the fact that during the past 10 years, the State has introduced many measures for the general educational advancement of its people by introducing com pulsory primary education for children and free education for boys upto Vlllth class and for (,Iris upto Xllth class. 'It has taken note of the fact that in 1968 69, free education for boys was also extended upto High School stage. Having regard to the fact that because of literacy and educational advancement, passing in the School Final Class (XI Class) is taken as the minimum qualification for appointment in Public Service as also for admission to University and Technical Education, the Commission is of the view that it is proper to take the last two classes, 276 namely, Classes X and XI as standard for ascertaining the educational backwardness. In this connection it has referred to the Report of the Backward Classes Committee, appointed by the Jammu and Kashmir Government, presided over by Dr. P. B. Gajendragadkar, former Chief Justice of India. This Committee has expressed the view that the number of students on the rolls of IX and X classes should be ascertained for determining educational backwardness. The reasons given by the said Committee for this view are quoted by the Commission in its report. The Commission then has adverted to the fact that the average student population in classes X and XI in the State works out to about 4.55 per thousand. On this basis, it has proceeded to apply the principle that communities whose student population in these standards is well below the State average, have to be considered as educationally backward. Here again the Commission has referred to the fact that as only 50% of the schools had furnished figure$ with reference to the student population, it had to work out an average based on those figures applicable to the entire State. Though the figures received from the schools show that certain groups showed a slightly higher level of education, the Commission felt in the light of their having personally seen their living conditions, the percentage supplied by the schools may not be accurate. In view of this, the Commission has held even those persons as really backward from the educational point of view. Chapter VII gives the list of socially and educationally Backward Classes and there is a very exhaustive note attached to each of these groups as to why the Commission regards them as socially and educationally backward. In that Chapter the Commission has also exhaustively dealt with the names of the groups, the subdivisions in those groups, their traditional occupation and various other matters having a bearing on their social, economic and educational set up. Appendix VI which enumerates the list of socially and educationally Backward Classes item by item gives a tabular statement containing information about the name of the community, its traditional occupation as well as its population in 1968. Appendix VII contains a note about each of the classes enumerated by the Commission as Backwardness Classes. Appendix VII contains information regarding the principal occupation, approximate family income, percentage of school going students in the particular groups and various other information regarding the persons mentioned in the list. A perusal of the Appendix VII and VII shows that the traditional occupations of he persons enumerated as backward were of a very low order such as beggars, washermen, fishermen, watchmen at burial grounds etc. The Commission had made certain recommendations regarding reservation in the Government Service and it had also made recommendations regarding other 277 assistance to be given to the Backward Classes. In these appeals it is not necessary to refer to those recommendations. For the purposes of these appeals it is only necessary to state that the observations made by this Court in Triloki Nath Tiku and another vs State of Jammu & Kashmir and others(1) that the principles laid down in M. R. Balaji and others vs State of Mysore (2) will equally apply for consideration on a question arising under article 16(4). We have fairly elaborately dealt with the manner in which the Backward Classes Commission conducted its enquiries and investigation before submitting the report because that gives an idea of the complexity of the problem that it had to face as well as the volume of materials collected by it. The main grounds on which the High Court has held invalid the enumeration of the Backward Classes as well as the reservation made for them are as follows : The Commission has classified the groups as Backward Classes mainly on the basis of caste, which is contrary to the principles laid down by this Court beginning from M. R. Balaji and others vs State of Mysore(2). The Commission has not collected the necessary data and particulars for the purpose of ascertaining the social and educational backwardness of the groups. The Commission has committed a very serious error in taking census figures of 1921 and 1931 for the Telangana and Andhra areas respectively and projecting those figures and arriving at a conclusion for enumeration of Backward Classes in 1968. Certain communities whose inclusion in the list of. Backward Classes by Government Orders Nos. 1886 and 1880 of 1963 and 1966 respectively and which had been struck down as invalid by the High Court have again been included in the list of Backward Classes. This, according to the High Court, shows that no proper investigation has been made by the Commission, The Commission committed a mistake in adopting the average of student population per thousand of a particular class or community in the X and XI Classes with reference to the State average for the purpose of deter mining educational backwardness. The Commission, and the Government through the vast machinery at their command should have collected more particulars on the various criteria which have been laid down by this Court for ascertaining the backwardness of a particular group or class. The Commission has ignored the principle laid down by this Court that the social and educational backwardness of persons classified in the list should be comparable or similar to the Schedule Castes and Scheduled Tribes. The groups in which the percentage of literacy is well above the State average have been included in the list of Backward Classes. The Commission has further sub divided the groups into more backward and less backward classes. (1) ; (2) [1963] SLIPP. I S.C.R. 439. 278 We have thus indicating broadly the reasons given by the High Court for striking down the reservation made for the Backward Classes. Mr. Gupte, learned counsel for the appellants, urged that the High Court has grossly erred in striking down the list of Backward Classes prepared by the Commission as well as the reservation made by the State. Mr. Gupte, at one stage even urged that the view of the High Court that before a group can be included in the list of Backward Class, its social and educational backwardness must be similar or comparable to that of Scheduled Castes and Scheduled Tribes, is erroneous. According to the learned counsel, there is no warrant for any such assumption on a clear reading of article 15 (4). Counsel further urged that to treat article 15(4) as an "exception is also equally erroneous. We are not inclined to accept these two contentions of Mr. Gupte because the said two principles have been laid down by this Court in M. R. Balaji and others vs State of Mysore(1), R. Chitralekha and another vs State of Mysore and others(2) and in Stale of Andhra Pradesh and another vs P. Sagar(3). In all these decisions it has been held that article 15 (4) has to be read as a proviso or exception to articles 15(1) and 29(2). The said decisions have also laid down that the Backward Classes for whose improvement special provision is contemplated by article 15 (4) must in the matter of their backwardness be comparable to Scheduled Castes and Scheduled Tribes. In fact the attempt of Mr. Gupte was that the principles laid down in the above decisions require reconsideration. It is not necessary for us to consider that aspect in this particular case because as we will be indicating later, factually the classes enumerated as Backward Classes are really socially and educationally backward, on the application of the principles laid down by this Court. It must be pointed out that none of the above decisions lay down that social and educational backwardness must be exactly similar in all respects to that of the Scheduled Castes and Scheduled Tribes. Those decisions also lay down that article 15(4) being in the nature of an exception, the conditions which justify the departure from article 15 (1) must be strictly shown to exist. Therefore, we have to consider the correctness of the decision of the High Court taking into consideration also the above principles laid down by this Court. By article 15 of the Constitution, as originally enacted, it was provided that : "(1) The State shall not discriminate, against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them. (2) . . . . . . (1) [1963] Supp. I.S.C.R. 439. (2) ; (3) 279 (3) Nothing in this article shall prevent the State from making any special provisions for women and children. " Article 29(2) provided that " No citizen shall be denied admission into any educational institution maintained by the State or receiving out of State funds on grounds only of religion, race, caste, language or any of them." In Article 46, which occurs in Part IV of the Constitution relating to the Directive Principles of State Policy, the State has been enjoined to promote with special care the educational and economic interest of the weaker sections of the people and in particular of the Scheduled Castes and Scheduled Tribes and to protect them from social injustice and all forms of exploitation. Articles 15 and 29, as originally framed, prohibited the making of any discrimination against any citizen on the ground only of religion. race, caste, sex, place of birth or any of them. In State of Madras vs Shrimati Champakam Dorajrajan(1), this Court had to consider the validity of an order issued by the Government of Madras fixing the number of students for particular communities for selection of candidates for admis sion to the Engineering and Medical Colleges in the State. The challenge was on the ground that it violated the guarantee against discrimination under article 29(2). This Court held that the Government Order constitutes a violation of the fundamental right guaranteed to the citizens of all by article 29(2) of the Constitution, notwithstanding the Directive Principles laid down in part IV of the Constitution. This led to Parliament addin Cl. (iv) in article 15 by the Constitution (First Amendment) Act, 1951. Article 15(4) is as follows : "15(4) Nothing in this article, or in clause (2) of article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Sche duled Castes and the Scheduled Tribes. " This clause contained a special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes or Scheduled Tribes. The reservation has to be adopted to advance the interest of weaker sections of Society, but in doing so it is necessary also to see that deserving and qualified candidates are not excluded from admission to higher educational institutions. In the determination of a class to be grouped as backward, a test solely based upon caste or community cannot be accepted as valid. But, in our opinion, though Directive Principles contained in article 46 cannot be enforced by courts, (1) ; 280 Art, 15(4) will have to be given effect to in order to assist the weaker sections of the citizens, as the State has been charged with such a duty. No doubt, we are aware that any provision made under this clause must be within the well defined limits and should not be on the basis of caste alone. But it should not also be missed that a caste is also a class of citizens and that a caste as such may be socially and educationally backward. If after collecting the necessary data, it is found that the caste as a whole is socially and educationally backward, in our opinion, the reservation made of such persons will have to be upheld notwithstanding the fact that a few individuals in that group may be both socially and educationally above the general average. There is no gainsaying the fact that there are numerous castes in 'the country, which are socially and educationally backward and therefore a suitable provision will have to be made by the State as charged in article 15 (4) to safeguard their interest. The question before us is whether the Backward Classes Com mission had before it the relevant data and materials for enumerating the persons included in the list as Backward Classes. Various factors or criteria to be adopted for such enumeration have been laid down in several decisions by this Court. In particular there is a very exhaustive discussion on all aspects bearing on this matter in M. R. Balaji, and others vs State of Mysore(1) regarding the factors to be taken into account. for the purpose of ascertaining whether a particular class of persons are socially and educationally backward. Though Mr. Tarkunde, learned counsel for the respondents, supported the various reasons given by the High Court for striking down the reservations made for the Backward Classes, we are of the opinion that the criticisms leveled against the report of the Backward Classes Commission by the High Court are not justified. It may 'be that something more could have been done and some further investigation could have been carried out. But, in our opinion, the question is whether on the materials collected by the Commission and referred to in its report, can it be stated that those materials are not adequate or sufficient to support its conclusion that the persons mentioned in the list as Backward Classes are socially and educationally backward. We may mention in passing that we have not been able to find any definite averment in the affidavits filed by the writ petitioners that any particular group or class included in the list by the Commission is not really socially and educationally backward. In our opinion, the Commission has taken considerable pains to collect as much relevant material as possible to judge the social and educational backwardness of the persons concerned. When, for instance, it had called for information regarding the student population in classes X and XI from (1) [1963] Supp. I. section C. R. 439. 281 nearly 2224 institutions, if only 50% of the institutions sent replies, it is not the fault of the Commission for they could not get more particulars. If the Commission has only to go on doing the work of collecting particulars and materials, it will be a never ending matter. In spite of best efforts that any commission may make in collecting materials and datas, its conclusions cannot be always scientifically accurate in such matters. Therefore, the proper approach, in our opinion, should be to see whether the relevant data and materials referred to in the report of the Commission justify its conclusions. In our opinion, there was sufficient material to enable the Commission to be satisfied that the persons included in the list are really socially and educationally backward. No doubt there are few instances where the educational average is slightly above the State average, but that circumstances by itself is not enough to strike down the entire list. In fact, even there, it is seen that when the whole class in which that particular group is included, is considered the average works out to be less than the State average. Even assuming there are few categories which are little above the State average, in literacy, that is a matter for the State to take note of and review the position of such categories of persons and take a suitable decision. We have been referred to various decisions particularly of this Court where reservations for Backward Classes made by the concerned State have been either accepted as valid or struck down. But it is not necessary for us to refer to those decisions because each case will have to be considered on its own merits, after finding out the nature of the materials collected by a commission or by the State when it enumerated certain persons as forming the Backward Classes. But one thing is clear that if an entire caste, is as a fact.found to be socially and educationally backward, their inclusion in the list of Backward Classes by their caste name is not violative of article 15 (4). In M. R. Balaji and others vs State Of Mysore(1) it was held that caste in relation to Hindus may be a relevant factor to consider in determining social backwardness of a group or class of citizens: but it cannot be made the sole or dominant basis in that behalf. In the said decision enumeration of persons as Backward Classes on the basis solely of caste was struck down. In State of Andhra Pradesh and another vs P. Sagar(2) a similar list prepared by the State of Andhra Pradesh solely on the basis of caste was struck down. In Triloki Nath and another vs State of Jammu & Kashmir and others(3), the Constitution Bench of this Court held that the members of an entire caste or community may in the social, economic and educational scale of values, at a given time be backward and may on that account be (1) [1963] Supp. I.S.C.R. 419. (2) (3) 282 treated as backward classes, but that is not because they are members of a caste or community but because they form a class. Therefore, it is clear that there may be instances of an entire cast, or a community being socially and educationally backward for being considered to be given protection under article 15(4). In M. R. Balaji and others vs State of Mysore(1), it was ob served that it is doubtful if the test of average student population in the last, three High School Classes as appropriate in determining the educational backwardness and that it may not be necessary or proper to put the test as high. Even in respect of educational State average it was observed in the said decision that the legitimate view to take would be that classes of citizens whose average is well below the State average can be treated as educationally backward. But here again it was emphasised that the court does not propose to lay down any hard and fast rule as it is for the State to consider the matter and decide it in a manner which is consistent with the requirements of article _ 15 (4). These observations made by this ,Court in the above decisions have, in our opinion, been misapplied by the High Court to the case on hand. It has proceeded on the basis that it is axiomatic that the educational average of the class should not be calculated on the basis of the student population in the last three high school classes and that only those classes whose average is below the State average, that can be treated as educationally backward. This Court has only indicated the broad principles to be kept in view when making the provision under article 15(4). The High Court has committed another error in that it has proceeded on the basis that the groups whose inclusion as backward classes in the 1963 and 1966 lists, prepared by the State, which were struck down by the High Court, have again been included in the present list by the Commission. The High Court has missed the fundamental fact that those two lists were struck down by the High Court on the ground that the State had made no investigation whatsoever, nor had the State collected the relevant materials before classifying the groups as Back ward Classes. It was on that ground that those lists were struck down by the High Court. In fact this Court also affirmed the latter decision of the Andhra Pradesh High Court striking down the 1966 list in its decision in State of Andhra Pradesh and another vs P. Sagar(2). Though we are not inclined to agree with the decision of the High Court that the enumeration of groups as Backward Classes by the Commission is solely on the basis of caste, we will assume that the High Court is right in that view. There are two decisions of this Court where the list prepared of Back ward Classes, on the basis of caste had been accepted as valid. No doubt, this Court was satisfied on (1) [1963] Supp. I S.C.R. 439. (2) 283 the materials that the classification of caste as Backward Classes was justified. The first decision is Minor P. Rajendran vs State of Madras. (1) A Constitution Bench of this Court had to consider certain rules framed by the State of Madras for selection of candidates for admission to the last Year Integrated M.B.B.S. Course. One of the rules, the validity of which had to be considered, was rule 5 providing for reservation for socially and educationally Backward Classes, referred to in the Government Order No. 839/Education, dated April 6, 195 1, as subsequently amended. The challenge was that the said rule violated Article 15 of the Constitution as the list prepared by the State was exclusively on the basis of caste. The State of Madras, after giving the history as to how the list of Backward Classes was made starting from the year 1906, had referred to the fact that the list was made upto date by making necessary amendments thereto. It was further pointed out on behalf of the State that the main criteria for inclusion in the list was the social and educational backwardness of the caste based on occupations pursued by those castes. It was further pleaded that as the members of the caste as a whole were found to be socially and educationally back ward, they were put in the list. The, State further pointed out that after the Constitution came into force, the list was examined in the light of article 15 (4) and the same list which continued from 1906 was adopted for purposes of article 15 (4) as the entire caste was socially and educationally backward. This Court accepted the explanation given by the State of Madras and held that though the list shows certain castes, members of those castes were really a class of socially and educationally backward citizens. This Court held as a fact that the list prepared by the State was caste wise, nevertheless, as the castes included in the list were as a whole socially and educationally backward, the list was not violative of article 15. In this view rule 5 was well as the lists of Backward Classes were held to be valid. The following observations of this Court are apposite "The contention is that the list of socially and educationally backward classes for whom rese rvation is made r. 5 nothing but a list of certain castes. Therefore, reservation in favour of certain castes, based only on caste considerations violates article 15(1), which prohibits discrimination on the ground of caste only. Now if the reservation in question had been based only on caste and had not taken into account the social and educational backwardness of the caste in question, it would be violative of article 15(1). But it must not be (1) ; 284 forgotten that a caste is also a class of citizens and if the caste as a whole is socially and educationally backward reservation can be made in favour of such a caste on the ground that it is socially and educationally backward class of citizens within the meaning of article 15 (4). . . It is true that in the present cases the list of socially and educationally backward classes has been specified by caste. But that does not necessarily mean that caste was the sole consideration and that persons belonging to these castes are also not a class of socially and educationally backward citizens. . " The above decision has been quoted with approval in State of Andhra Pradesh and another vs P. Sagar,(1) and it was empha sised that the principles laid down therein do not make any departure from those laid down in the previous decision The next decision of this Court where a list prepared on the basis of caste, on the ground that the entire caste was socially and educationally backward was approved as valid under article 15(4) is Minor A. Pertakaruppan vs State of Tamil Nadu and others. (2) In this decision unit wise distribution of seats for the Medical Colleges was struck down by this Court as violative of articles 14 and 15, nevertheless the list of Backward Classes, which was challenged, as having been framed on the basis exclusively of caste, was held to be valid. This Court after referring to the decisions in M. R. Balaji and others vs State of Mysore(1) and R. Chitralekha and others vs State of Mysore(1) held ' that caste is a relevant factor in ascertaining a class for the purpose of article 15(4). The decision in Minor P. Rajendran vs State of Madras and others(5) was also quoted with approval and the said decision was relied on as an authority for the proposition that the classification of Backward Classes on the basis of caste is within the purview of article 15 (4), if those castes are shown to be socially and educationally backward. After a perusal of the list of Backward Classes, which was under challenge, this Court held that though the list has been framed on the basis of caste, it does not suffer from any infirmity because the entire caste was substantially socially and educationally backward. On this basis the list of Backward Classes was held on to be valid. It may be mentioned that the list which was under challenge was more or less substantially the same as this Court held to be valid in Minor P. Rajendran vs State of Madras and others(5). At this stage it may be recalled that the State of Andhra Pradesh originally formed part of the composite State of Madras. We (1) [1968] 39.C.R. 595. (2) ; (3) [1963] Supp. I.S.C.R. 439. (4) ; (5) ; 285 sent for the paper book in Writ Petition No. 285 of 1970, the decision of which is reported in Minor P. Rajendran vs State of Madras and others.(1) On a comparison of the list, which was under challenge in the said decision, but accepted as correct by this Court, with the list which is under attack before us, we find that most of the groups whose inclusion in the list by the State of Madras was held to be valid are also found in the list prepare by the Backward Classes Commission appointed by the Andhra Pradesh State. To conclude, though prima facie the list of Backward Classes which is under attack before us may be considered to be on the basis of caste, a closer examination will clearly show that it is only a description of the group following the particular occupations or professions, exhaustively referred to by the Commission. Even on the assumption that the list is based exclusively on caste, it is clear from the materials before the Commission and the reasons given by it in its report that the entire caste is socially and educa tionally backward and therefore their inclusion in the list of Backward Classes is warranted by article 15(4). The groups mentioned therein have been included in the list of Backward Classes as they satisfy the various tests, which have been laid down by this Court for ascertaining the social and educational backwardness of a class. The Commission has given very good reasons as to why it had to take into account the population figures based upon the 1921 and 1931 censuses. It was also justified in taking the average student population of Classes X and XI, especially as the said procedure has been accepted by the Committee appointed by the Jammu and Kashmir Governments, presided by Dr. P. B. Gajendragadkar, former Chief Justice of India. That Committee took into account IX and X standards average. The decided cases have laid down the principles for ascertaining the social and educational backwardness of a class. The Backward Classes Commission in this case has taken considerable pains in collecting data regarding the various aspects before including a particular group as Backward Class in the list. There is a criticism levelled that the Commission has used its personal knowledge for the purpose of characterising a particular group as backward. That, in the circumstances of the case, is inevitable and there is nothing improper or illegal. The very object of the Commission in touring the various areas and visiting the huts and habitations of people is to find out their actual living conditions. After all that information has been gathered by the Commission not secretly but openly. In fact the actual living conditions of habitation can be very satisfactorily judged (1) ; 286 and found out only on a personal visit to the areas, which will give a more accurate picture of their living conditions and their surroundings. If the personal impressions gathered by the members of the Commission have also been utilised to augment the various other materials gathered as a result of detailed investigation, it cannot be said that the report of the Commission suffers from any vice merely on the ground that they imported personal knowledge. In our opinion, the High Court has not been fair to the Commission when it says that whenever the Commission found the figures obtained in respect of certain groups as relating to their educational standard being higher than the State average, it adopted an ingenious method of getting over that obstacle by importing personal knowledge. In fact the Commission has categorically stated that the information received from the various schools showed that the percentage of education was slightly higher than the State average in respect of certain small groups; but in view of the fact that their living conditions were deplorably poor, the slight higher percentage of literacy should not operate to their disadvantage. Regarding the criticism that the Commission has divided classes into more backward and less backward, in our opinion, this is not also well founded. On the other hand, what the Commission has recommended was the distribution of seats amongst the reserved classes in proportion to their population. This is not a division of the Backward Classes as more backward and less backward as was the case which was dealt with by this Court in M. R. Balaji and others vs State of Mysore.(1) There was a contention raised by Mr. Tarkunde, learned coun sel for the respondents, that the total number of seats that could be given to the candidates belonging to the Backward Classes cannot exceed the percentage of reservation made in their favour. That is, according to the learned counsel, if more than the reserved quota amongst the Backward Classes candidates, have secured seats on merit, there can be no further selection of candidates from the reserved group. No doubt our attention was drawn to a decision of the Kerala High Court, which has held that the reservation is irrespective of some of the candidates belongings to the Backward Classes, getting admission on their own merit. The Andhra Pradesh High Court has taken a slightly different view. If a situation arises wherein the candidates belonging to the groups included in the list of Backward Classes, are able to obtain more seats on the basis of their own merits, we can only state that it is the duty of the Government to review the question of further reservation of seats for such groups. This has to be emphasised because the (1) [1963] Supp. I S.C.R. 439. 287 Government should not act on the basis that once a class is considered as a backward class, it should continue to be backward for all time. If once a class appears to have reached a stage of progress, from which it could be safely inferred that no further protection is necessary, the State will do well to review such instances and suitably revise the list of Backward Classes. In fact it was noticed by this Court in Minor A. Periakarauppan vs State of Tamil Nadu and others(1) that candidates of Backward Classes had secured nearly 50% of seats in the general pool. On that ground this Court did not hold that the further reservation made for the Backward Classes is invalid. On the other hand it was held The fact that candidates of backward classes have secured about 50% of the seats. in the general pool does show that the time has come for a de novo comprehensive examination of the question. It must be remembered that the Government 's decision in this regard is open to judicial review. " The only other aspect that has to be dealt with is the quantum of reservation made for the Backward Classes. It was held in M. R. Balaji and others vs State of Mysore(2) that the total of reservation for Backward Classes, Scheduled Castes and Scheduled Tribes should not ordinarily exceed 50% of the available seats. In the case before us, under G.O. No. 1793 of 1970, the total reservation is only 43%. The break up of that percentage is 25%, 4% and 14%, for the Backward Classes, Scheduled Tribes and Scheduled Castes respectively. The quantum of reservation is thus well within the limits mentioned in the decision, referred to above. For the reasons given above, we are of the opinion that the list of Backward Classes, as well as the reservation of 25% of seats in Professional Colleges for the persons mentioned in the said list is valid and is saved by article 15(4) of the Constitution. We are not inclined to agree with the reasons given by the High Court that the said G.O. offends article 15 (4) of the Constitution. To conclude, we agree with the Wings of the High Court that reservation of 40% of seats to the H.S.C. candidates to the 1st Year Integrated M.B.B.S. Course under rule 9 of G.O. No. 1648 of 1970 is invalid. That provision has been rightly struck down by the High Court. To that extent the judgment and orders of the High Court are confirmed. We, however, differ from the decision of the High Court regarding the invalidity of G.O. No. 1793 of 1970. On the (1) ; 6 L8879upCI/72 (2) [1963] Supp. I section C.R. 439. 288 other hand we hold that the said G.O. is valid and is saved by article 15(4) of the Constitution. The judgment and orders of the High Court to the extent of striking down the said G.O., in consequence set aside. In the result, the judgment and orders of the High Court striking down G.O. No. 1793 of 1970 are set aside and the appeals allowed in part to that txtent. In other respects the appeals will stand dismissed. There will be no order as to costs in the appeals. It has been represented on behalf of the State that the admissions already given to the writ petitioners will not be disturbed. G.C. Appeals allowed in part.
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In Andhra Pradesh, to get into the M.B.B.S. (medical) program at government colleges, students had to pass either the pre-University course or the Higher Secondary Course. Everyone had to take the same entrance exam. However, the government made some rules about who got seats. A rule called G.O. No. 1648/Health, dated July 23, 1970, said that 40% of the seats were only for students who passed the Higher Secondary Course. Seats were also set aside for certain groups, like Scheduled Tribes and Scheduled Castes. Plus, another rule, G.O. No. 1793/Education, dated September 23, 1970, reserved 25% of the seats for people from "Backward Classes," as decided by a special committee. Some students who took the entrance exam didn't get in because of these rules about reserved seats. So, they went to the High Court and argued that rule 9 (the one about the 40% reservation) and the rule about the 25% reservation for Backward Classes were unfair. The High Court agreed with the students. They said the students should be admitted to the M.B.B.S. program. The High Court said that the only thing that should matter for getting in is how well someone did on the entrance exam. It shouldn't matter if they took the pre-University course or the Higher Secondary Course. So, the High Court threw out rule 9, saying it violated Article 14 of the Constitution (which is about equality). As for the 25% of seats for Backward Classes, the High Court said that rule broke Article 15(1) and Article 29 of the Constitution. They also said it wasn't allowed under Article 15(4), which makes exceptions for helping disadvantaged groups. The State of Andhra Pradesh appealed the High Court's decision. Here's what the appeals court said: (1) The state can decide where students can come from (like which courses they need to have taken) to apply to medical school. But once everyone takes the same entrance exam, it's not fair to then reserve 40% of the seats for one specific group of students. It's not right to treat students from different courses differently after they all take the same test. Even if it was okay to divide students this way, it doesn't really help to pick the best students for medical school. Giving 40% of the seats to students from one course doesn't make sense. So, the High Court was right to strike down this 40% reservation because it violated Article 14. (2) (a) At first glance, the list of Backward Classes might seem based on people's castes (social groups). But if you look closer, it's really just describing groups of people who do certain jobs or have certain careers, as the special committee explained. Even if the list was based only on caste, the committee had reasons and information to show that the whole caste was disadvantaged in terms of social status and education. So, it was okay to include these groups in the list of Backward Classes under Article 15(4). The groups on the list were included because they met the standards the court had set for deciding who is socially and educationally disadvantaged. So, the list of Backward Classes and the 25% reservation for them was valid and allowed under Article 15(4). The High Court was wrong to say otherwise. (b) To really understand how these groups live, you have to visit them and see their living conditions in person. It's okay for the people on the committee to use what they saw and learned during these visits to add to the other information they gathered. The committee's report isn't bad just because they used their personal knowledge. (c) Someone claimed that the committee was dividing Backward Classes into "more backward" and "less backward." But that's not true. The committee just suggested dividing the seats among the reserved groups based on how many people were in each group. That's not the same as saying some groups are more or less backward. (d) If it turns out that students from a Backward Class are getting more seats than expected based on their own merit (how well they do), the government should think about whether they still need to reserve as many seats for that group. If a group has improved enough that they don't need special protection anymore, the state should update the list of Backward Classes. (e) In this case, the total reservation was only 43%. That's because 25% was for Backward Classes, 4% was for Scheduled Tribes, and 14% was for Scheduled Castes. This amount of reservation is fine, according to a previous court case called *Balaji's case*. *(List of court cases mentioned)*
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901 to 903 of 1971. These three appeals, in which the State of Andhra Pradesh is the first appellant, by special leave, are directed against the judgment and order dated May 13, 1971 of the Andhra Pradesh High Court in a batch of writ petitions, striking down Rule 9, in the Rules relating to the selection of candidates for admission to the Integrated M.B.B.S. Rule 24 provided that the selections made under the Rules will be subject to any rules or orders that may be made in regard to the reservation of seats for Socially and Educationally Backward Classes of students, having regard to the recommendations made by the Andhra Pradesh Backward Classes Commission. The State by G.O. Course for candidates belonging to the various Backward Classes enumerated therein on the basis of the report of the Backward Classes Commission. This Court by its judgment dated February 11, 1971 allowed the appeals holding that the Government could hold an entrance test for selection eligible candidates for admission to the medical course in the colleges run by the Government. On the basis of the decision of this Court in the above appeals the Government on February 12, 1971, published an additional list of candidates selected on the basis of the entrance test for admission to the Integrated M.B.B.S. 1793 of 1970 regarding the reservation made for the Backward Classes. 1793 of 1970 regarding reservation of 25% of seats for the Socially and Educationally Backward Classes as violative of article 15(1) read with article 29 and that it has not been saved by article 15 (4). It was further contended that the State was entitled to lay down the principles regarding the source from which the candidates are to be selected to the medical colleges which are run by the Government and that in providing for equal distribution of seats to the P.U.C. 1793 of 1970, the State referred to the appointment of a high powered commission to exhaustively in vestigate and report as to the persons who are to be considered as Backward Classes for the purpose of reservation being made in their favour. The Commission had gone into the matter and after considering the educational and social backwardness of the various classes of citizens in the State in the light of the various principles and tests laid down by this Court, had submitted its report on June 26, 1970 enumerating the various classes of persons who are to be treated as Backward Classes. According to the High Court when once rules have been framed in that manner, the selection of candidates from these categories must only be of those who have obtained the highest number of marks in the said test irrespective of the fact as to which category they belonged. In this view the High Court held that rule 9 providing for reservation of 40% to the H.S.C. Regarding the enumeration of Backward Classes by the Backward Class Commission, and the order of the Government, G.O. On the other hand, the High Court has held that the Commission has merely enumerated the various persons belonging to a particular caste as Backward Classes, which is contrary to the decisions of this Court. 1648 of 1970, as well as the reservation of seats made in the Professional Colleges for the Backward Classes by G.O. Clause (i) of this rule provides that all candidates who, have applied for admission and are found eligible will be required to take Entrance Test to be conducted by the Director of Medical and Health Services. candidates, refers to the fact that the total seats available are 545 and that according to the pattern of distribution, 40% of the seats are reserved for Multipurpose and 40% for P.U.C. This is so, notwithstanding the fact that rule 10 provides even in respect of candidates for whom reservations have been made, their selection will be in the order of merit of marks obtained in the Entrance Test. Course is according to the result of the Entrance Test, the question is whether the reservation of 40% of seats for the H.S.C. students, when once the rules clearly specify that there is to be a common Entrance Test and that selections are to be made only on the basis of the results of such a test, the reservation of 40% in favour of the H.S.C. The rule, no doubt, provided that admission for the said course should be both from the category of Multipurpose and P.U.C. candidates was held by the High Court. students is concerned, it is seen that certain rules provided for reservation of percentage of seats for the candidates belonging to the H.S.C. (1) The decision in Sagar and others vs State of Andhra Pradesh (2 ) had also to deal with the reservation of seat in the Professional Colleges for the Backward Classes on the basis of the G.O. The decision of the High Court striking down the reservation for the Backward Classes alone was challenged by the State in this Court in State of Andhra Pradesh and another vs P. Sagar. Mainly the power of the Central Government to make the nominations was challenged on the ground that the provision for reservation in favour of such nominees of Central Government was not based on any reasonable classification and suffered from the vice of discrimination and hence the reservation was hit by article 14 read with cls. The special circumstances and the reasons for making the reservation to enable the Central Government to make nominations so that candidates belonging to those categories can get adequate representation by way of admission in the Medical Colleges have been elaborately adverted to by this Court and it is on that basis that this Court accepted the classification as valid. In fact, in the case before us, as we have already pointed out, the rules provide for the qualifications which have to be satisfied to enable a candidate to apply and the sources from which selections will have to be made, have also been prescribed. It was under such circumstances that this Court held the classification to be valid, and the situation which this Court had to consider in that connection was entirely different, from the one before us where all the candidates belonging to both the P.U.C. This Court after a reference to the different standards of examinations held in the three universities, rejected the challenge of discrimination as follows "Further, the Government which bears the financial burden of running the Government colleges is entitled to lay down criteria for admission in its own colleges and to decide the sources from which admission would be made, provided of course, such classification is not arbitrary and has a rational basis and a reasonable connection with the object of the rules. It will be seen that the above decision has empbasised that the selection which was made on the basis of the marks obtained in the qualifying examination held by each of the universities was valid and the distribution of seats in the medical colleges universitywise was also valid in view of the different standards adopted by each (1) ; 264 university. Again it is to be noted in the said decision, there was no question of all the students of the three universities taking a common Entrance Test on the basis of which a selection was made. was not challenged as there was no necessity for those students to take a common test as in the case before us. The Officer has stated that the marks obtained by the candidates in their qualifying examinations are not a reliable guide to assess their merits as the marks obtained by those candidates in the Entrance Test were very poor. It is no doubt open to the State to prescribe the sources from which the candidates are declared eligible for applying for admission to the Medical College; but when once a common Entrance Test has been prescribed for all the candidates on the basis of which selection is to be made, the rule providing further that 40% of the seats will have to be reserved for the H.S.C. Before we deal with the reasons given by the High Court for striking down the reservation made for the Backward Classes under the said G.O., we will refer to the circumstances under which the Backward Classes Commission was appointed and whose report has formed the basis for providing the reservation for the various ,persons mentioned therein. The State Government contested the writ petitions on the ground that the Government was maintaining a list of Backward Classes based on socially and educationally backwardness of the caste and to such people 25 % of the seats had been reserved. 1886 of 1.963 from two points of view: (1) whether the list of backward classes was based solely on consideration of caste; and (2) whether the Government had adopted any standard or method of determining the social and educational backwardness of the classes specified and, if so, the material upon which the Government has so acted. The High Court held that the State on which lay the onus of supporting the classification as valid had placed no materials before the Court as to the economic condition of the various classes, their occupation and habitation and social status and their educational backwardness. for Backward Classes on the ground that the State has not (1) A.I.R. We have referred rather elaborately to the list prepared by the State Government under Government Orders Nos 1986 of 1963 and 1880 of 1966 as well as the decisions of the High Court striking down those lists. It is really on the basis of the said decision, that the High Court, on the former two occasions struck.down the reservations made under the two Government Orders on the ground that the preparation of the two lists of Backward Classes had not been made in accordance with the principles laid down by this Court. In fact, in both the decisions the High Court has emphasised that there has been no investigation whatsoever regarding the various factors that are necessary to he obtained as laid down by this Court for the Purpose of making special provisions for the advancement of any socially and educationally Backward Classes of citizens as envisaged in article 15(4). The sole reason given in the two decisions by the High Court for striking down the reservation is the fact that the necessary data or material, as laid down by this Court, had not been collected by the State Government. The State of Andhra Pradesh challenged before this Court the decision of the High Court striking down the reservations made for Backward Classes as well as the preparation of list under G.O. This Court agreed with the view of the High Court that no enquiry or investigation had been made by the State Government before preparing the list of Backward Classes enumerated in the said Government Order. It was further held that the State had placed no materials before the Court, on the basis of which the list of Backward Classes was prepared, excepting relying on the fact that it was prepared by the Director of Social Welfare with the assistance of the Law Secretary. It is to be noted that this Court upheld the decision of the Andhra Pradesh High Court in view of the fact that the State had made no investigation of enquiry, nor had it collected the necessary materials to ascertain the socially and educationally backwardness of the persons mentioned in the list. The terms of Reference were as follows "The Commission shall (i) determine the criteria to be adopted in considering whether any sections of citizens of India in the State of Andhra Pradesh (other than the Scheduled Castes and Scheduled Tribes specified by notifications issued by the President of India under article 341 & 342 of the Constitution of India) may be treated as socially and educationally Backward Classes and in accordance with such criteria prepare a list of such backward classes setting out also their approximate numbers and their territorial distribution; (ii) investigate the conditions of all such socially and educationally backward classes and the difficulties under which they labour; and make recommendations as to the special provisions which may be made by the Government for their advancement and for prom otion of their educational and economic interests, generally and with particular reference to (1) th e reservation in educational institutions maintained by the State or receiving aid out of State funds; (2) the concessions, such as scholarships, which may be given by way of assistance; (3) the percentage or proportion of such reservation the quantum of such assistance and the period during which such reservation or assistance may be made or given; and (iii) advise the Government as to the backward classes of citizens (other than the Scheduled Castes and the Scheduled Tribes) which are not ,adequately represented in the services under the State and prepare a list of all such backward classes and make recommendation as to: (1) the reservation of appointments or posts in favour of such backward Classes, and (2) the percentage or proportion of such reservation and the period during which such reservation may be made. The Commission in its report had drawn up a list of 92 classes, which according to it, are socially and educationally backward and have to be classified as Backward Classes and for whom reservations have to be made. are socially and educationally, Backward Classes for the purpose of article 15(4) of the Constitution. Though the Commission had recommended reservation of 30% of seats for the Backward Classes in the Professional College, ,, the Government in the Order decided that only 25% of seats in the Professional Colleges should be reserved for Backward Classes, The Government also agreed to the recommendations of the Commission to the classification of the Backward classes into four groups, and directed that on the basis of the population of those four groups, the 25% reservation of seats in the Professional Colleges was to be apportioned amongst the said four groups in the proportion mentioned in the Government Order. The main grounds on which the High Court has held invalid the enumeration of the Backward Classes as well as the reservation made for them are as follows : The Commission has classified the groups as Backward Classes mainly on the basis of caste, which is contrary to the principles laid down by this Court beginning from M. R. Balaji and others vs State of Mysore(2). 1886 and 1880 of 1963 and 1966 respectively and which had been struck down as invalid by the High Court have again been included in the list of Backward Classes. Mr. Gupte, learned counsel for the appellants, urged that the High Court has grossly erred in striking down the list of Backward Classes prepared by the Commission as well as the reservation made by the State. But it should not also be missed that a caste is also a class of citizens and that a caste as such may be socially and educationally backward. But, in our opinion, the question is whether on the materials collected by the Commission and referred to in its report, can it be stated that those materials are not adequate or sufficient to support its conclusion that the persons mentioned in the list as Backward Classes are socially and educationally backward. But it is not necessary for us to refer to those decisions because each case will have to be considered on its own merits, after finding out the nature of the materials collected by a commission or by the State when it enumerated certain persons as forming the Backward Classes. In M. R. Balaji and others vs State Of Mysore(1) it was held that caste in relation to Hindus may be a relevant factor to consider in determining social backwardness of a group or class of citizens: but it cannot be made the sole or dominant basis in that behalf. In Triloki Nath and another vs State of Jammu & Kashmir and others(3), the Constitution Bench of this Court held that the members of an entire caste or community may in the social, economic and educational scale of values, at a given time be backward and may on that account be (1) [1963] Supp. The High Court has committed another error in that it has proceeded on the basis that the groups whose inclusion as backward classes in the 1963 and 1966 lists, prepared by the State, which were struck down by the High Court, have again been included in the present list by the Commission. Though we are not inclined to agree with the decision of the High Court that the enumeration of groups as Backward Classes by the Commission is solely on the basis of caste, we will assume that the High Court is right in that view. One of the rules, the validity of which had to be considered, was rule 5 providing for reservation for socially and educationally Backward Classes, referred to in the Government Order No. This Court held as a fact that the list prepared by the State was caste wise, nevertheless, as the castes included in the list were as a whole socially and educationally backward, the list was not violative of article 15. Now if the reservation in question had been based only on caste and had not taken into account the social and educational backwardness of the caste in question, it would be violative of article 15(1). But it must not be (1) ; 284 forgotten that a caste is also a class of citizens and if the caste as a whole is socially and educationally backward reservation can be made in favour of such a caste on the ground that it is socially and educationally backward class of citizens within the meaning of article 15 (4). The above decision has been quoted with approval in State of Andhra Pradesh and another vs P. Sagar,(1) and it was empha sised that the principles laid down therein do not make any departure from those laid down in the previous decision The next decision of this Court where a list prepared on the basis of caste, on the ground that the entire caste was socially and educationally backward was approved as valid under article 15(4) is Minor A. Pertakaruppan vs State of Tamil Nadu and others. (2) In this decision unit wise distribution of seats for the Medical Colleges was struck down by this Court as violative of articles 14 and 15, nevertheless the list of Backward Classes, which was challenged, as having been framed on the basis exclusively of caste, was held to be valid. The decision in Minor P. Rajendran vs State of Madras and others(5) was also quoted with approval and the said decision was relied on as an authority for the proposition that the classification of Backward Classes on the basis of caste is within the purview of article 15 (4), if those castes are shown to be socially and educationally backward. On this basis the list of Backward Classes was held on to be valid. (1) On a comparison of the list, which was under challenge in the said decision, but accepted as correct by this Court, with the list which is under attack before us, we find that most of the groups whose inclusion in the list by the State of Madras was held to be valid are also found in the list prepare by the Backward Classes Commission appointed by the Andhra Pradesh State. Even on the assumption that the list is based exclusively on caste, it is clear from the materials before the Commission and the reasons given by it in its report that the entire caste is socially and educa tionally backward and therefore their inclusion in the list of Backward Classes is warranted by article 15(4). This is not a division of the Backward Classes as more backward and less backward as was the case which was dealt with by this Court in M. R. Balaji and others vs State of Mysore. That is, according to the learned counsel, if more than the reserved quota amongst the Backward Classes candidates, have secured seats on merit, there can be no further selection of candidates from the reserved group. If a situation arises wherein the candidates belonging to the groups included in the list of Backward Classes, are able to obtain more seats on the basis of their own merits, we can only state that it is the duty of the Government to review the question of further reservation of seats for such groups. For the reasons given above, we are of the opinion that the list of Backward Classes, as well as the reservation of 25% of seats in Professional Colleges for the persons mentioned in the said list is valid and is saved by article 15(4) of the Constitution.
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In Andhra Pradesh, to get into the M.B.B.S. (medical) program at government colleges, students had to pass either the pre-University course or the Higher Secondary Course. Everyone had to take the same entrance exam. However, the government made some rules about who got seats. A rule called G.O. No. 1648/Health, dated July 23, 1970, said that 40% of the seats were only for students who passed the Higher Secondary Course. Seats were also set aside for certain groups, like Scheduled Tribes and Scheduled Castes. Plus, another rule, G.O. No. 1793/Education, dated September 23, 1970, reserved 25% of the seats for people from "Backward Classes," as decided by a special committee. Some students who took the entrance exam didn't get in because of these rules about reserved seats. So, they went to the High Court and argued that rule 9 (the one about the 40% reservation) and the rule about the 25% reservation for Backward Classes were unfair. The High Court agreed with the students. They said the students should be admitted to the M.B.B.S. program. The High Court said that the only thing that should matter for getting in is how well someone did on the entrance exam. It shouldn't matter if they took the pre-University course or the Higher Secondary Course. So, the High Court threw out rule 9, saying it violated Article 14 of the Constitution (which is about equality). As for the 25% of seats for Backward Classes, the High Court said that rule broke Article 15(1) and Article 29 of the Constitution. They also said it wasn't allowed under Article 15(4), which makes exceptions for helping disadvantaged groups. The State of Andhra Pradesh appealed the High Court's decision. Here's what the appeals court said: (1) The state can decide where students can come from (like which courses they need to have taken) to apply to medical school. But once everyone takes the same entrance exam, it's not fair to then reserve 40% of the seats for one specific group of students. It's not right to treat students from different courses differently after they all take the same test. Even if it was okay to divide students this way, it doesn't really help to pick the best students for medical school. Giving 40% of the seats to students from one course doesn't make sense. So, the High Court was right to strike down this 40% reservation because it violated Article 14. (2) (a) At first glance, the list of Backward Classes might seem based on people's castes (social groups). But if you look closer, it's really just describing groups of people who do certain jobs or have certain careers, as the special committee explained. Even if the list was based only on caste, the committee had reasons and information to show that the whole caste was disadvantaged in terms of social status and education. So, it was okay to include these groups in the list of Backward Classes under Article 15(4). The groups on the list were included because they met the standards the court had set for deciding who is socially and educationally disadvantaged. So, the list of Backward Classes and the 25% reservation for them was valid and allowed under Article 15(4). The High Court was wrong to say otherwise. (b) To really understand how these groups live, you have to visit them and see their living conditions in person. It's okay for the people on the committee to use what they saw and learned during these visits to add to the other information they gathered. The committee's report isn't bad just because they used their personal knowledge. (c) Someone claimed that the committee was dividing Backward Classes into "more backward" and "less backward." But that's not true. The committee just suggested dividing the seats among the reserved groups based on how many people were in each group. That's not the same as saying some groups are more or less backward. (d) If it turns out that students from a Backward Class are getting more seats than expected based on their own merit (how well they do), the government should think about whether they still need to reserve as many seats for that group. If a group has improved enough that they don't need special protection anymore, the state should update the list of Backward Classes. (e) In this case, the total reservation was only 43%. That's because 25% was for Backward Classes, 4% was for Scheduled Tribes, and 14% was for Scheduled Castes. This amount of reservation is fine, according to a previous court case called *Balaji's case*. *(List of court cases mentioned)*
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AL JURISDICTION: Civil Appeal No. 1528 of 1968. Appeal by special leave from the order of March 18, 1968 of the Gujart High Court in Special Civil Application No. 365 of 1968 and Civil Appeals Nos. 1900 and 2118 of 1968. Appeals from the judgment and order dated May 14, 1968 of the Delhi High Court in Civil Writ Petitions Nos. 343 and 294 259 of 1968 and Petitions under article 32 of the Constitution of India for the enforcement of the fundamental rights. I. N. Shroff, for the appellant (in C.A. No. 1528 of 1968). A. section Bobde, G. L. Sanghi, V. K. Sanghi and section section Khanduja, for the appellant (in C.A. No. 1900 of 1968). C. B. Agarwala, Virendra Kumar, section section Pareikh, Uma Mehta and section section Khanduja, for the appellant (in C.A. No. 211 '8 of 1968). The petitioner appeared in person (in W.P. No. 109 of 1968). The petitioner appeared in person (in W.P. No. 234 of 1968). The petitioner appeared in person (in W.P. No. 402 of 1968). C. B. Agarwala, B. N. Antani and R. K. Bhatt, for the petitioner (in W.P. No. 403 of 1968). A. section Bobde and section section Khanduja, for the petitioner (in W.P. No. 409 of 1968). C. K. Daphtary, B. Sen, R. H. Dhebar and section P. Nayar, for the Union of India (in C.A. Nos. 1528, 1900 and 2118 of 1968 and W.P. Nos. 234, 402 and 403 of 1968). G. R. Rajagopal; R. H. Dhebar and section P. Nayar, for the Union of India (in. W.P. No. 109 of 1968). C. K. Daphtary, B. Sen, A. Sreedharan Nambiar, R. H. Dhebar and section P. Nayar, for the Union of India (in W.P. No. 409 of 1968). R. H. Dhebar and section P. Nayar, for the State of Gujarat. The Judgment of HIDAYATULLAH, C.J., RAMASWAMI, MITTER and GROVER, JJ. was delivered by HIDAYATULLAH, C.J. SHAH, J. delivered a separate Opinion. Hidayatallah, C.J. These are five writ petitions under article 32 of the Constitution and three appeals against the decisions of, the ' High Courts of Gujarat and Delhi. The writ petitions have been filed by Mr. Manikant Tiwari (W.P. No. 109/68), Mr. Shiv Kumar Sharma (W.P. No. 234/68), Mr. Madhu Limaye (W.P. No. 402/68), Mr. Gulabshankar Amritlal Dholakia (W.P. No. 403/68) and Mr. Node Sadi Rau (W.P. No. 409/68). The appeals from the Delhi High Court 's common judgment, 14 May, 1968 on certificate are by Mr. Shiv Kumar Sharma (C.A. No. 2118/68) and Major Ranjit Singh (C.A. 1900/68) and the appeal from the decision of the Gujarat High Court is in a writ petition filed by Mt. Maganbhai lshwarbhai Patel (C.A. No. 1528/68). The Gujarat High Court, 18 March, 1968, dismissed 260 the petition summarily and the appeal is by special leave of this Court. This judgment will dispose of all of them. The several petitioners seek a writ of mandamus or any other appropriate writ or order or direction under Article 32 of the Constitution to restrain the Government of India from coding without the approval of Parliament the areas in the Rann of Kutch known as Kanjarkot, Chhadbet, Dharabanni, Priol Valo Kun and two inlets on either side of Tharparkar to Pakistan as awarded to ' it in the award, 19 February, 1968, of the Indo Pakistan Western Bombay case Tribunal. Mr. 1. N. Shroff (C.A. No. 1528/68), Mr. A. section Bobde (C.A. No. 1900/68) and Mr. C. B. Agarwal (W.P. No. 403/68) represented three such petitioners. Mr. Shiv Kumar Sharma, Mr. Madhu Limaye and Mr. Manikant Tiwari argued their own matters. The Union of India was represented by Mr. C. K. Daphtary, former Attorney General of India, who had also conducted the case for India before the Tribunal. The Indian Independence Act of July 18, 1947, (an Act of the British Parliament) created from August 15, 1947 two domi nions known as India and Pakistan. By the same statute the paramountcy of the British Crown over the States of Kutch Santalpur, Tharad, Suigam, Way and Jodhpur lapsed and they soon acceded to and merged with India. The former British Indian Province of Sind was included in Pakistan while the Presidency of Bombay was part of India. Between these two lies the Great Rann of Kutch, Sind shutting on the North and West and the Indian mainland on the South and East. The Rann is a vast expanse of water and desert. For part of the year even the desert is covered by water. At other times it is either soft mud or land with grass. No one ordinarily lives in that area which the onagers roam at large. It appears that from July 1948 Diplomatic Notes were ex changed between the two Governments with regard to the boundary 'between the areas known as Gujarat and West Pakistan. The difference led to open hostilities in April 1965. On June 30, 1965 the two Governments reached an agreement which read "Constitution of the Tribunal, Proceedings. On 30 June, 1965, the Government of India and the Government of Pakistan concluded an Agreement, reading as follows : Whereas both, the Governments of India and Pakistan have agreed to a cease fire and to restoration of the status quo as at 1 January, 1965, in the area of the Gujarat West Pakistan border in the confidence that this will also contribute to a reduction of the present tension along the entire Indo Pakistan border; 261 Whereas it is necessary that after the status quo has been established in the aforesaid Gujarat West Pakistan border area, arrangements should be made for determination and demarcation of the border in that area; NOW, THEREFORE, the two Governments agree that the following action shall be taken in regard to the said area Article 1: There shall be an immediate cease fire with effect from 0030 hours GMT on 1 July 1965. Article 2 On the cease fire (i) All troops on both sides will immediately begin to withdraw; (ii) This process will be completed within seven days; (iii) Indian police may then, reoccupy the post at Chhad Bet in strength no greater than that employed at the post on 31 December 1964; (iv) Indian and Pakistan police may patrol on the tracks on which they were patrolling prior to 1 January 1965, provided that their patrolling win not exceed in intensity that which they were doing prior to 1 January 1965 and during the monsoon period will not exceed in intensity that done during the monsoon period of 1964; (v) If patrols of Indian and Pakistan police should come into contact they will not interfere with each other, and in particular will act in accordance with West Pakistan India border ground rules agreed to in January 1960; (vi) Officials of the two Governments will meet immediately after the cease fire and from time to time thereafter as may prove desirable in order to consider whether any problems arise in the implementation of the provisions of paragraphs (iii)to (v) above and to agree on the settle ment of any such problems. 262 Article 3 (i) In view of the fact that (a) India claims that there is no territorial dispute as there is a well established boundary running roughly along the northern edge of the Rann of Kutch as shown in the pre partition maps, which needs to be demarcated.on the ground. (b) Pakistan claims that the border between India and Pakistan in the Rann of Kutch runs roughly along the 24th parallel as is clear from several pre partition and post partition documents and therefore the dispute involves some 3,500. square miles of territory. (c) At discussions in January 1960, it was agreed by Ministers of the two Governments that they would each collect further data regarding the Kutch Sind boundary and that further discussions would be held later, with a view to arriving at a settlement of this dispute; as soon as officials have finished the task referred to in article 2 (vi), which in any case will not be later than one month after the cease fire, Ministers of the two Governments will meet in order to agree on the determination of the border in the light of their respective claims, and the arrangements for its demarcation. At this meeting and at any proceedings before the Tribunal referred to in article 3(ii) and (iv) below, each Government will be free to present and develop their case in full. (ii) In the event of no agreement between the Ministers of the two Governments on the determination of the border being reached within two months of the cease fire, the. two Governments shall, as contemplated, in the Joint Communique of 24 October, 1959, have recourse to the Tribunal referred to in (iii) below for determination of the border, in the light of their respective claims and evidence produced before it and the decision of the Tribunal shall be final and binding on both the parties. (iii) For this purpose there shall be constituted, within four months of the cease fire a Tribunal consisting of three persons, none of whom would be a national of either India or Pakistan. One member shall be nominated by each Govern and the third member, who will be the Chairman, shall be jointly selected by the two Governments. In the event of the two Govern ments failing to agree on the selection of the Chairman within three months of the cease fire, they shall request the Secretary General of the United Nations to nominate the Chairman. (iv) The decision of the Tribunal referred to in (iii)above shall be binding on both Govern ments and shall not be questioned on any ground whatsoever. Both Governments undertake to implement the findings of the Tribunal in full as quickly as possible and shall refer to the Tribunal for decision any difficulties which may arise between them in the implementation of these findings. For that purpose the Tribunal shall remain in being until its findings have been implemented in full. The cease fire came into effect as provided in Article 1 of the Agreement. As a result of this agreement the Government of India nomi nated Ambassador Ales Bebler, Judge of the Constitutional Court of Yugoslavia, the Government of Pakistan nominated ' Ambassador Nasrollah Entezam,of Iran and former President of the General Assembly of the United Nations. The two Govern ments having failed to agree on the selection of the Chairman of the Tribunal, the Secretary General of the United Nations, under the power reserved by sub paragraph (iii) of Article 3 of the Agreement, nominated Judge Gunnar Lagergren, now President of the Court of Appeal for Western Sweden. In the course of the hearing a compromise on the procedure for the demarcations of the boundary was settled. Memorials, Counter Memorials and Final Memorials were submitted along with numerous Maps, and documents. The oral hearings began on September 15, 1966 and continued with some breaks till July 14, 1967. During the hearing about 10,000 pages of minutes and Verbatim Records were made and about 350 maps were exhibited. At an early stage in the hearing Pakistan raised the ques tion that the dispute be decided ex aequo et bono which request was opposed by India. The Tribunal did not find that the Agreement of June 30, 1965 authorised it 'clearly and beyond doubt to adjudicate ex aequo et bono '. The parties did not confer this power by a Special Compromis even thereafter. The case on the part of India was pro pounded with the aid of map A which was a mosaic of Indian Maps B 44, B 37, B 19, 264 and B 20. Pakistan claimed the boundary as marked on Map B. The award has delineated the boundary in Map C. Maps A and B and C form part of the Award. In describing the matter in dispute the Tribunal observed: India claimed that "the Tribunal determine the alignment of the entire boundary between West Pakistan and Gujarat from the point at which the blue dotted line meets the purple line in Indian Map B 44 in the west to the North Eastern Trijunction in the east as it appears in the Indian Maps B 44, B 37, B 19 and B 20 where the correct alignment is shown by appropriate boundary symbols." The Government of Pakistan claimed that "The Tribunal determine that the border between India and Pakistan is that which is marked with green yellow, thick broken line in the Pakistan Claim Map It is common ground that the Gujarat West "Pakistan boundary stretches from the, mouth of the Sir Creek in the west to a point on the Jodhpur boundary in the east. The Parties agree that the Western Terminus of the boundary to be determined by the Tribunal is the point at which the blue dotted line meets the purple line as depicted in Indian Map B 44 and the Pakistan Resolution Map, and that the Eastern Terminus of the same boundary is a point situated 825.8 metres below pillar 920 on the Jodhpur boundary as depicted in Pakistan Map 137." "This agreement leaves out of the matters submitted to the Tribunal the portion of the boundary along the blue dotted line, as depicted in Indian Map B 44 and the Pakistan Resolution Map, as well as the boundary in the Sir Creek. The blue dotted line is agreed by both Parties to form the boundary between India and Pakistan. In view of the aforesaid agreement, the question concerning the Sir Creek part of the boundary is left out of consideration. " The dispute thus remained with regard to the boundary outside these agreements. The Tribunal described this dispute in the following words "From the Western Terminus, the boundary claimed by India takes off to the north and that claimed by 265 Pakistan to the south; and from the Eastern Terminus, the boundary claimed by India takes off to the south west while the boundry claimed by Pakistan turns south east. Both parties agree that before Independence the boundaries between the Province of Sind, on the one hand, and one or more of the Indian States on the other hand, were conterminous. Therefore, in the disputed region, apart from India and Pakistan there is no other State that does or could have sovereignty. There is between India and Pakistan a conterminous boundary today, whether or not there was at all times a conterminous boundary between Sind and the Indian States. Pakistan contends that, should the Tribunal find that the Province of Sind and the Indian States were not fully conterminous, then the area between Sind and these States would be an "undefined area", falling outside the scope of the Indian Independence Act, 1947. In such an event, the conterminous boundary between India and Pakistan would have to be determined by the Tribunal on the basis of rules and principles applicable in such circumstances. Pakistan adds that the evidence produced by it in this case is in support of its principal submission, although some of it could also be used in support of its alternative submission. Both parties agree that the Rann was not a "tribal area" as defined in Section 311 of the Government of India Act, 1935. Each party states that the boundary claimed by it is the traditional, well established and well recognised boundary. " Pakistan thus claimed in addition to the establishment of a median line roughly along the 24th parallel, what it called the upper lands in dispute and the northwestern part of it which it called 'the jutting triangle '. These included Dhara Banni, Chhadbet, Pirol Valo Kun, Kanjarkot, Vighokot and Sarifbela and these were said to be not part of the Rann. India on the other hand stated that the Rann means the Rann lying to the east of the vertical line and to the south of the horizontal line as depicted in Map A. Pakistan maintained that the Rann lay to the east of what was once known as the Khori river and that the lands were part of Sind and referred to the same as 'the delta lands '. L7sup. CI/69 18 265 266 The above in brief is the, outline of the dispute as presented to the Tribunal. Although the AWard of the Tribunal it before us it was necessary to make this brief mention because we are required t"o reach a decision whether this was a clear case of cession of territory following the, award, which it is claimed makes it incumbent for the executive authority in India to obtain the approval of Parliament by suitable amendment of our Constitution, before effectuating the Award. The Tribunal was not unanimous in its decision. Judge Ales Bebler accepted almost in its entirety the claim of India. Ambassador Nosrollah Entezam upheld the Pakistani claim. The Chairman then delivered his opinion. On the propounding of his opinion Ambassador Entezam gave his opinion as follows Opinion of Mr. Entezam "In an early stage I considered that Pakistani had made out a clear title to the northern half of the am shown in the survey maps as Rann. I have now had the advantage of reading the opinion of the learned Chairman, and in the light of it I concur in and endorse the judgment of the learned chairman. The Tribunal thereupon ruled thus : " The alignment of the boundry described in the opinion of the chairman and endorsed by Mr. Entezam has obtained the required majority. It is therefore the boundary determined by the Tribunal. The Chairman prefaced his conclusions by observing "For the reasons now given, and with due regard to what is fair and reasonable as to details I conclude oft the great issue before me that the boundary between India and Pakistan lies as follows. Reference is made here to the Award Map (Map C). Because of the imprecise topographical features in the region and the impossibility of exactly delimiting many acts of State authority,, the boundary must sometimes be represented by approximate straight lines. " The Chairman then indicated the exact location of the boun dary determined by him which was also delineated by him on the Map C. The new boundary begins at the northern tip of the Khori Creek and after going straight up north reaches the mainland of Sind and then follows roughly the configuration of the land till it comes south of Rahim ke bazar. It thus follows Erskines Survey. Thereafter instead of following the mainland it dips to the South East just South of Sadariajagot and then 267 goes up North West to join the maintained and to follow the boundary symbols. In the triangle, so formed is situated the Kanjarkot area which is the first limb of the disputed territory brought to the fore before us. After following the line of the mainland and the existing boundary symbols the new boundary again dips to the 'South East to a point a little north of the 24th parallel and runs parallel to it thus embracing Dharabani and Chhadbet to Pakistan. Thereafter it goes north to join the main land of Sind again and follows the boundary symbols which it follows till it reaches the Nagar Parkar area. This is a kind of a peninsula jutting to the South. On the West and East sides of Nagar Parkar there are two narrow but deep inlets. The new boundary instead of running along the banks of the inlets jumps across the two inlets at their southern extremities, thus including them in Pakistan. The inlets, therefore, are the fourth and fifth limbs of the disputed territory of India which the petitioners claim has been lost to India by the Award. The new boundary thence proceeds along the mainland till it reaches the demarcated boundary at the Jodhpur and from where the boundary is not in dispute just as the boundary from Sit Creek to Khori Creek has not been, in dispute. In drawing up the border the Tribunal based itself on much historical matter and old maps. In the opinions of Judge Ales Bebler and the Chairman (Ambassador Entezam concurring with the Chairman) this historical material has been differently interpreted but we are not concerned with it. The reference was also not decidedas a cartographic dispute. It was settled by an ad hoc award. No special reasons were given by the Chairman why he included 350 sq. miles in pakistan when he dipped:the boundary to the South into the Rann of Kutch except when he came to consider the question of, the two inlets on the two sets of Nagar Parkar. In this connection he observed: "The two deep inlets on either side of Naga Parkar will constitute the territory of Pakistan. ready in. 1855, the Deputy Commissioner of Thar Parkar pointed out that if these inlets were to be considered Kutch territory. (a)glance at the map will show that Parkar would be a peninsula almost entirely surrounded by Kutch territory. The Kutch State could erect fortifications and establish Custom houses at places situated many miles within the district for instance close to Verrawah, or on some of the roads which, crossing inlets of the Rann, lead from one part of this district to another. Doc. D. 9). 268 In my opinion it would be inequitable to recognise these inlets as foreign territory. it would be conducive to friction and conflict. The paramount consideration of promoting peace and stability in this region compels the recognition and confirmation that this territory, also be regarded as such. The points, where the boundary will thus cut off the two inlets are these : At the westerns inlet, the boundary will leave the boundary symbols indicated on Indian Map B 34 at the point marked thereon as "26", more precisely where the cart track is indicated as departing from the edge of the Rann in a southeasterly direction. This point is indicated as Point "L" on Map C. on the other side of the inlet, the point will be that where the camel track is indicated on Indian Map B 34 to reach the edge of the Rann; that point is indicated as point "M" on Map C. Between Points "L" and "M", the boundary shall be a straight line. The boundary will cross the eastern inlet at its nar rowest point in a straight line between Points 'N" and "O" marked on Map C." In straightening the line to avoid a jagged boundary the Chairman gave the following reason "The boundary marked by symbols along the outer edges of the peninsula of Nagar Parkar and up to the Eastern Terminus is a jagged one. As such it is unsuitable and impracticable as an international boundary. The boundary shall accordingly lie in conformity with the depiction on Map C between the outer points on jutting out tongues of land from Point "M" and until the Eastern Terminus, marked as "ET" on Map C. At no point. between the two Terminii shall the alignment of the boundary as above described be such as to include in India territory not claimed by India, as defined by the depiction of India 's claim line on Map A. It might be added that the boundary proposed by me for the greater part of its length roughly coincides with the boundary proposed by my learned colleague, Mr. Bebler. " This in brief is the decision of the Tribunal. We now pro ceed to the consideration of the 'Matters before us. There are seven parties before us seeking to restrain the Government of India from making over the areas of Kanjarkot, 269 Dharabanni Chhadbet and the two inlets to Pakistan by sheer executive act and insist that the necessary change can only be effected by a constitutional amendment of the territories of India as indicated in the Constitution. It may be Pointed Out that none of the petitioners contends that the Award should be rejected. This is as it should be, India was voluntarily a party to an agreement pledging its honour to respect the Award. According to J. H. Rolston (International Arbitrations from Athens to Locarno) pacific settlement of international disputes through a binding award on the basis of an undertaking voluntarily accepted is founded on the same principles as are to be found in the concept of Arbitrations in Municipal Law. The history of such arbitrations begins in modem times from the Jay Treaty between Great Britain and the United States of America of November 19, 1794 to settle the boundary disputes after Independence in 1776) through Mixed Commissions. The Commissions settled the exact position of the Sainte Croix River and the decision was regarded by both sides "as final and conclusive so that the same shall never thereafter be called in question or made the subject of dispute or difference between them. " The rules of such arbitrations were settled by the Alabama Arbitrations in 1871 and the basis of the rules is the maxim Pacta Sunt Servanda. Indeed the Hague Convention of 1907 (article 37) contained the rule "Recourse to arbitration implies an engagement to submit loyally to Awards. " There have been innumerable arbitrations between nations. Several books contain Surveys of these arbitrations and awards. Stuyt lists 407 between 1794 and 1938 and writers like Moore, La Fontaine, Lapradelle, Darby etc. have made other compilations, the most complete being by Moore. Nantwi brings the list down to 1967 and also lists separately the awards which were not complied with. An examination of such awards only reveals that generally an award is not accepted when the terms of submission are departed from or there are fatal omissions, contradictions or obscurities or the arbitrators substantially exceed their jurisdiction. None of these factors obtains here. Since the award has been accepted by our Government it is binding. The parties also do not want that it be rejected. The only question raised in these matters is how it is to be implemented. Before we deal with the problem we wish to say something about the standing of the petitioners since it appears to us that most of them have no direct interest to question the action of Government or to raise any controversy regarding the implementation of the Award. Before the hearing commenced we questioned each petitioner as to the foundation of his claim. We discovered that ,most of the petitioners had no real or apparent stake in the areas 270 now declared to be Pakistan territory. These persons claim that they had and still have the fundamental rights guaranteed to them by article 19 (1) (d) (e) and (f), that is to say, the right to travel, to reside or settle down, or to acquire, and hold property in these areas. None of them has so far made any move in this direction but their apprehension is that they will be deprived of these rights in the future. This our judgment, is too tenuous a right to be noticed by the court in administering the law and still less in enforcing fundamental rights. When we communicated our view at an earlier hearing, some more petitioners came forward Mr. Madhu Limaye puts forward the supporting plea that he had attempted to penetrate this area to reconnoiter possibilities for settlement, but was turned back. In this way he claims that he had attempted to exercise his fundamental rights and they were infringed. Another party claims to have had a lease of grass lands some ten years ago in this area and he is now to be deprived of the right to obtain a similar lease. Lastly one of the parties put forward the plea that he lives in the adjoining territory and thus has interest in the territories proposed to be ceded to Pakistan. These petitioners too have very slender rights if at all. The only person who can claim deprivation of fundamental rights isMr. Madhu Limaye, although in his case also the connectionwas temporary and almost ephemeral. However, Wedecided to hear him and as we were to decide the question we heard supplementary arguments from the others also to have as much assistance as possible. But we are not to be taken as establishing a precedent for this Court which declines to issue a writ of mandamus except at the instance of a party whose fundamental rights are directly and substantially invaded or are in imminent danger of being so invaded. From this point of view we would have been justified in dismissing all petitions except perhaps that of Mr. Madhu Limaye. We may now proceed to the consideration of the rival contentions. The petitioners attempt to establish that this territory is a part of India and has always been so from the establishment of the two dominions, that India has exercised effective administrative control over it and that. giving up, a claim to it involves a cession of Indian territory which can only be effected by a constitutional amendment. As to the details of the steps which, in the, petitioners ' view establish these facts, we shall come later. This in very brief is the gist of the petitioners ' case. The reply on behalf of the government of India is equally brief. It is that no, cession of territory is involved, since the boundary was always uncertain owing to the shifting nature of the sea and sands and that the effective administrative control amounted to no more than establishing a police outpost with a personnel of 171 persons for watch and ward and that too after the exchange of 271 Diplomat Notes began and that the dispute concerns the settlement of boundary which was uncertain. It is thus contended that the true areas of Pakistan and India have now been demarcated without cession of what may be called undisputed Indian territory. According to the Government of India the Award itself is the operative treaty and after demarcation of the boundary it will only be necessary to exchange letters recognising the established border. The case lies within this narrow compass. Before we deal with the points in dispute and them relied upon by the rival parties in support thereof we wish to say a few words on the implementation of treaties in general and arbitration awards in boundary disputes in particular. The practice of countries is different but the diverse possible approaches to the question appear from an examination of the practice obtaining in the United States, France, the United Kingdom and in British India. An examination of these practices will enable us to see how the, matter is to be viewed in this case and in context of our Constitution and the existing rulings of court. A treaty really concerns the political rather than the judicial wing of the State. When a treaty or an award after arbitration comes into existence, it has to be implemented and this can only be if all the three branches of Government, to wit, the Legislature, the Executive and the Judiciary, or any of them, possess the power to implement it. if there is any deficiency in the constitutional system it has to be removed and the State must equip itself with the, 'necessary power. in some jurisdictions the treaty or the compromis read with the Award acquires fun effect auto matically in the, Municipal Law, the other body of Municipal Law notwithstanding. Such treaties and awards are self exe cuting '. Legislation may nevertheless be passed in aid of implementation but is usually not necessary. In the United States of America a treaty concluded with a foreign State by the, President of the United States alone, without the consent of the Senate,, is not, according to their Constitution, binding upon the Nation and the foreign power derives no rights under it (See Mc Nair Law of Treaties p. 80 quoting from Crandall : Treaties, Making and Enforcement chapter XIV). As Chief Justice Taft puts it : a treaty is the supreme law and a treaty may repeal a statute and vice versa. It is only when the terms of a treaty require that a law must be passed that it has to be so passed : Foster vs Nielsen ; See also Dickinson : Law of Nations 1057. The position regarding the United States is quite clear. In other nations different practices exist. In the French Constitution of the 4th October, 1958 (Title VI) Article 52 enables the 272 President to negotiate and ratify treaties and he is informed of the negotiation of any international agreement not subject to ratification. Article 53 names the treaties that require ratification by law. They, inter alia involve the cession, exchange or addition of territory. They take effect only after having been ratified or approved. No cession, exchange or addition of territory is valid without the consent of the populations concerned. However it is not laid down how consent is to be obtained. Treaties or agreements regularly ratified or approved have, from the time of publication, an authority superior to that of laws, provided, in the case of each agreement or treaty, that it is applied also by the other party (Article 55). If the Constitutional Council consulted by the President of the Republic, the Prime Minister or the President of either assembly, has declared that an international obligation includes a clause contrary to the constitution, authorisation to ratify or approve it may be accorded only after revision of the Constitution (Article 54). The Constitution thus makes provision for all contingencies. Even though the Kings of France had power expressly conferred by the Constitutional Charter of 1830, the French Jurists denied the jurisdiction and power to the King to code territory. The English practice, has like all other British Institutions, :grown with time. Blackstone has the following remark : "Whatever contracts he (the sovereign) engages in, no other power in the kingdom can legally delay, resist or annul. " Kent in his Commentaries (Vol. 1 p. 175, 10th Edn.) says "the power competent to bind the nation by treaty may alienate the public domain and property by treaty. " Forsyth in his Opinions gives the reason that if the Nation has conferred upon its supreme executive without reserve the right of making treaties, the alienation is valid because it is then made by the reputed will of the Nation. England, however,, soon began to make a distinction between territory ceded as a free gift in time of peace without a treaty and that ceded as a result of a war. Forsyth asked the question whether the Crown had the ,power to alienate British territory by treaty, not following the dose of a war as for instance, by a commercial treaty and answered that the proposition seemed questionable. He observed: "I should doubt very much whether the Crown, without the authority of Parliament, would have the legal power to cede by treaty the Channel Islands to France, there having been no war, and the cession not being made as part of the adjustment of a quarrel between the two countries." 273 Without a treaty the power to cede territory in time of peace was always denied. Forsyth cites Grotius (de jure Belli et Pacis Vol. 11 c. 6. sections 3 8) Puffendorf Vol. viii C. 12, Vattel Vol. 1 C. 20 section 224, c. 21 section 260, Livy Vol. IV c. 2 section 1 1 and Phillimore Part III c. 14 sections 261, 262. At the, time of the cession of East Florida to Spain Lord Loughborough maintained that the Crown possessed no preroga tive to cede British Territory to a foreign State without authority of Parliament but Lord Thurlow (Lord Chancellor) said that this was based on 'the lucubrations and fancies ' of foreign writers which he rejected. However Britain was then at war with Spain and the cession was under a treaty of peace. In 1863 the House of Commons debated the transfer of Ionian Islands. Lord Palmerston. observed "But with regard to cases of territory acquired by conquest during war, and not ceded by treaty, and which are not therefore British freehold, and all possessions that have been ceded by treaty and held as possessions of British Crown, there is no question that the Crown may make a treaty alienating such possession without the consent of Parliament." Lord Palmerston cited the examples of Senegal, Minorce, Florida and Isles of Banca. (See Hansard Part: Debates Vol. CLXIX p. 230 231). These were however cessions made by treaties of peace at the end of wars. Lord Mc Nair gives the settled law of modem times. Accord ing to him in the United Kingdom the concurrence of Parliament must always be obtained except in a very small number of cases. He opines that if the courts are required to assist in the implementation, a law must obviously be found for courts act only in accordance with law. If a law is obligatory obviously Parliament must have a say because no law can be passed except by Parliament. However, even if a law be required, and yet the Crown enters into a treaty, the courts take the act as final unless a law stands in the way. In other words unless there be a law conflicting with the treaty, the treaty must stand. In this connection it is profitable to read what Lord Phillimore (then Sir Robert Phillimore) said in the Parliament Belge case(1). That case was reversed on appeal in but on another point. See also Walker vs Baird(2) .As was observed by Lord Atkin in Attorney General for Canada vs Attorney General for Ontario(3) the position may be summed up thus : there is a distinction between (1) the formation and(2) the performance of the obligation. The first is an executive act the second a legal act if a law is required. (1) (3) at 347. (2) 274 The performance then has no force apart from a law that is to say unless Parliament assents to it and Parliament then accords its approval to the, first executive act. The treaties created by executive action bind the, contracting parties and, therefore, means must be found for their implementation within the law. This is illustrated by a few examples. The Executive authority in the State cannot.acquire new rights against the citizens by making treaties with foreign powers. Therefore whenever peace treaties involved municipal execution many statutes had to be passed. Again new offences cannot be created by the, more fact of conventions on entered into with other powers. Both principles obtain in India. The Indian statute book contains numerous examples of conventions which have led to the passing of Municipal Laws. The Civil Court Manual devotes many pages to such statutes, too numerous to be mentioned here and the penal law of India also affords examples One such is the law against obscenity in India which was the direct result of 4 convention. In the United Kingdom there is almost a binding convention that cession of British territory requires approval of Parliament in the form of a statute but it must clearly have been the freehold of Britain. But even here Parliamentary sanction is not required for cession or abandonment of territory acquired previously by conquest or cession or otherwise wrongly in British possession. The cases of abandonment by the Crown of sovereignty over the various mandated territories are in point. Many of them were given up without an Act of Parliament. The protocol respecting the boundary between Tanganiyika territory and the Belgian mandated territory of Ruonda ulandi, on August 5, 1924 involving a small territory was never enacted as a law. In 1925 it was ruled that cession of. territory which never formed part of a self governing dominion was a royal prerogative although it was desirable that approval of Parliament be obtained. A giving up of doubtful claims to territory is not considered to be of the same standing as a cession of territory known to be that of the Crown. The tendency however is to have parliamentary sanction when British territory is ceded. This is provided in the very treaty itself and it is made subject to Parliament 's ;approval. The present practice of Crown is to obtain either prior sanction of Parliament or to seek ratification after it. This is done by laying the treaty on the, table of both Houses for 21 days, after which time it is treated as ratified. Although the practice since 1924 is to submit treaties to Parliament by laying them on the table of the two Houses (known as the Ponsonby rule), there have been in the past numerous instances of treaties implemented by the Crown without reference to Parliament. These exceptions were connected with circumstances of convenience and public policy that is to say to avert a war, for consideration of territory or for rectification of boun 275 daries. A few examples of such action in time of peace may be given. In 1824 in treaty with Netherlands, Great Britain ceded Sumatra and the settlement of Bencollen. In 1859 60 the Bay Islands were transferred to Honduras. In 1867 in treaty with Netherlands an exchange of territory took place. The Orange River Territory was transferred by an order in Council. In 1697 by the Treaty of Reyswick Hudson Bay territory was given back to the French. In 1813 by the Treaties of Stockholm the Island of Guadelope was ceded to Spain. A cession of Mosquito Shore was made to Nicaragua. All those were in time of peace and without Any reference to Parliament Hertslett 's Treaties. In British India section 113 of the Indian Evidence Act of 1872 created a presumption in favour of such transfer which on the issue of a notification was to be held by courts to be valid. In 1872 Scidia was given the pergannah of Broach. In 1803 Pudokottah State was ceded the Districts of Kullanelly in Tanjore. In 1806 Sambalpur was given to the Mahara a of Nagpur and in 1871 Scidia was given certain villages in Jhansi. [See Aitchoson 's tre es Vol. 3 (p. 331), Vol. 4 (p. 214) and (99)]. All these were without intervention of Parliament. It will thus appear that there is no settled practice. The least that can be said is that cession in time of war in the United Kingdom can always be made by the Crown but in time of peace it can only be made by Parliamentary sanction whether obtained directly or under the Ponsonby rule. In British India parliamentary sanction was not necessary. In Damodar Gordhan vs Deoran Kanji(1) it was laid down that "the general and abstract doctrine laid down by the High Court at Bombay that it is beyond the power of the British Crown without the consent of the Imperial Parliament to make a cession of territory within the jurisdiction of any of the British Courts in India, in time of peace, to a foreign power, is erroneous. " The question is one of domestic as well as International Law and we have been at pains to set down the practice of some countries and that obtaining in British India before dealing with this problem in the light of our Constitution and the facts obtaining here. It will appear from the other analysis that the United States of America and the French Constitutions have a clear guidance on the subject. In England, as no written Constitution exists, difference is made between treaties of peace when the Crown acts without, obtaining the approval of Parliament and cession in peace time when such approval must be had. But even so a distinction is made in the case of British possessions abroad and the United Kingdom. Again a difference is made in cases involving minor (1) [1876] 1 Appeal cases, 332. 276 changes where boundaries have to be ascertained and adjusted. In British India advantage was taken of Section 113 of the Evidence Act in cases of cessions to Native States, Prince or Ruler. That section is now obsolete and has been omitted in Burma and Ceylong but is still borne on our statute, although no longer required. We may now pass on to the Indian Constitution and the facts of this case to see how it views this matter. The Constitution did not include any clear direction about treaties such as is to be found in the United States of America and the French Constitutions. Article I of the Constitution defined the territory of India. It provides that India shall be a Union of States. In the Constitution as originally enacted First Schedule classified States as A, B, C and D. After the Seventh Amendment in 1956 it is now provided that the States and the territories thereof shall be as specified in the First Schedule. Clause (3) ,of the First Article was also amended by the Seventh Amendment but as the amendment is not material we may read here that clause as it is today. It reads : "(3) The territory of India shall comprise (a) the territories of the States; (b) the Union territories specified in the First Schedule; and (c) such other territories as may be acquired. ' Article 3 enables Parliament by law to alter the boundaries of the existing States and it includes the power (b) to increase the area, of any State (c) diminish the area of any State or to alter the name of any State. Then there are items Nos. 14 and 15 in the Seventh Schedule which provide as follows "14. Entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries. War and peace. " These entries enable laws to be enacted on these topics. They are to be read with Article 253 which occurs in Part XI (Relations between the Union and the States) Chapter 1 (Legislative Relations) and is headed Distribution of Legislative Powers, it provides. Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory ,of India for implementing any treaty, agreement or convention with any other country or countries or any 277 decision made at any international conference, association or other body." In point of fact it adds nothing to the legislative entries 14 and 15 above quoted but confers exclusive power of law making upon". Parliament. As the marginal note correctly represents the idea underlying the Article, it may be, read Legislation for giving effect to International agreements and the article only says that Parliament is the authority to make such laws. In addition to these provisions we must also take into account Article 73(1) which lays down the Executive power of the Union. It reads "73(1) Subject to the provisions of this Constitution, the executive power of the Union shall extend (a) to the matters with respect to which Parliament has power to make laws; and (b) to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or agreement Provided that the executive power referred to in subclause (a) shall not, save as expressly provided in this Constitution or in any law made by Parliament, extend in any State to matters with respect to which the Legislature of the State has also power to make laws. " The question is if a law and or a constitutional amendments is necessary for implementing the Award. Before we deal with the facts of the case before us and the. arguments for and against executive act ion we may consider here a few cases of this Court in which a problem of cession of Indian, Territory had previously arisen because both side seek to apply those cases to the facts here. It is convenient to view these cases in the order in which they were decided In Midnapore Zamindary Co. Ltd. vs Province of Bengal and others(1), this question was not directly in issue. There were observations which are pertinent and must be borne in mind. It was observed that disputes as to boundaries between two independent States cannot be the subject of inquiry of municipal courts exercising jurisdiction in either State. The Federal Court relied upon the statement of the law by Oppenheim. (International Law, 7th Edn., Vol. 1, p. 408) that "state territory is an object of the Law of Nations, because the latter recognises the supreme authority of every State within its territory". The Federal Court quoted with approval the dictum of Farwell, J. in Foster vs Globe Venture Syndicate Ltd. (2) which reads: (1) [1949] P. R. 309. (2) 278 "Sound Policy appears to, me to require that I should act in unison with the Government on such a point as that. Assuming that the Foreign Office have already satisfied themselves that the territory in question is within the dominion of Morocco, and have applied. to the Sultan of Morocco for redress in any given matter, it would surely be improver that 1, sitting here as a Judge of the High Court, should, in the face of that art of Her Majesty, hold as a matter of fact that the territory in question was not within the dominion of the Sultan of Morocco. I should be contravening the act of Her Majesty acting as a Sovereign in a matter which is within the cognizance of Her Majesty 's Foreign Office. " This statement of the law had the full approval of Viscount Finlay in Duff Development Co. vs Kalintan Government(1) where consultation between Court and Government was advocated. This ,case does not help us to, solve the problem but it shows that Municipal Courts should be slow to interfere. A similar question like the present arose In re : The Berubari Union and Exchange of Enclaves (2) on a reference by the President of India to this Court of certain questions concerning the Berubari Union and the exchange of certain enclaves. As a result of the Radcliffe Award ' dated August 12, 1947 Berubari Union was included in West Bengal and was treated as such. Certain boundary disputes, having arisen from interpretation of the Radcliffe award, the two Dominions referred the dispute to another Tribunal presided, over by Lord Justice Algot Bagge for decision. The BaggeTribunal gave its award on 26 January, 1950. Subsequently the question of Berubari Union was raised by Pakisthan in 1952 and on September 10 ' 1958 the Prime Ministers of India and Pakistan entered into an agreement between East and West Bengal, which involved transfer of Berubari Union to Pakistan,. Simultaneously an agreement to exchange certain enclaves took place also. This is known as the Indo Pakistan Agreement. Section 290 of the Government of India Act 1935 had provided, that His Majesty could by Order in Council increase or diminish the area of any Province or alter the boundary of any Province and the Extra Provincial Jurisdiction Act of 1947 gave the necessary power in that behalf. The question arose whether the inauguration of the Constitution had led to any change. Three questions were referred to this Court by the President. They were (1)Is any legislative action necessary for the implementation of the Agreement relating to Berubari Union ? (1) (2) 279 (2)If, so, is a law of Parliament relatable to article 3 of the Constitution sufficient for the purpose or is an amendment of the Constitution in accordance with article 368 of the Constitution necessary, in addition to or in the alternative ? "(3) Is a law of Parliament relatable to article 3 of, the Constitution sufficient for implementation of the agreement relating to Exchange of Enclaves or is an amendment of the Constitution in accordance with article 368 of the Constitution necessary for the purpose, in addition or in the alternative." This Court gave the following answers Q? 1. (a) A law of Parliament relatable to article 3 (it the Constitution would be incompetent; (b) A law of Parliament relatable to article 368 of the Constitution is competent and necessary, (c)A law of Parliament relatable to both article 368 and article 3 would be necessary only if Parliament chooses first to pass a law amending article 3 as indicated above; in that case Parliament may have to pass a law on those finds under article 369 and then follow it up with a law relatable to the amended article 3 to implement the Q. 3. Same as answers (a), (b), and (c) to Question 2. " The contention on behalf of the Union was that the Indo Pakistan tan Agreement regarding Berubari Union only ascertained and delineated the exact boundary and did not involve alteration of territorial limits of India or alienation or cession of Indian territory. The exchange of enclaves was also described as a part of the general and broader agreement about Berubari Union and incidental to it. According to the Union Government the Indo Pakistan Agreement could be implemented by executive action alone without Parliamentary legislation whether with or without a constitutional amendment. Reliance was placed on the obser vations of Mukherjee, C.J. in, Rai Sahib Ram Jawaya Kapur vs The State of Punjab (1) where dealing with the limits within which the Executive Government can function, the learned Chief Justice said "that the executive function comprised both the determination of the policy as well as the carrying it into execution. This evidently includes the initiation of legisla (1) 7 280 tion, maintenance of order, the promotion of social and economic welfare, the, direction of foreign Policy, in fact the carrying on or supervision of the general administration of the State. " The Court posed the question whether the Indo Pakistan Agreement had purported to settle, a boundary dispute or to divide the disputed territory half and half. The Court found the latter as there was no attempt in the said Agreement to read or interpret the Awards previously given in that dispute. This Court rejected the contention that it was a pure ascertainment of boundary between the two Countries. On the other hand the Indo Pakistan Agreement ceded territory of India to Pakistan. This conclusion was reached in respect of the Berubari Union as well as the en claves. Since the Berubari Union was treated after the two Awards as part of India its cession would have altered the content of Entry 13 of the First Schedule to the Constitution and an amendment was held necessary. Once the argument that this was a case of marking a boundary on the surface of the earth was rejected this Court considered the steps necessary to make cession of Indian territory. As a result the 9th Amendment to the Constitution was enacted from December 28, 1960. The matter came again in another form before this Court in Ramkishore Sen and Others vs Union of India(1) which is known popularly as the Berubari II case. It was a writ petition filed in the Calcutta High Court and the appeal was brought to this Court. It wag filed by six residents of the District of Jalpaiguri. The complaint was that the village of Chilhati (among others) was being transferred to Pakistan as a result of the Agreement between India and Pakistan and the action was illegal. The main point argued in the petition was that Chilhati was not covered either by the Indo Pakistan Agreement or the 9th Amendment. According to those petitioners it was not competent to transfer Chilhati without first amending the Constitution. The case before the High Court and in this Court was that a part of Chilhati village situated in Debiganj Police Station was a part of Chilhati in Jalpaiguri District. This ' Court observed : "There is no doubt that if a small portion of land admeasuring about 512 acres which is being transferred to Pakistan is a part of Chilahati situated within the jurisdiction of Debiganj Thana, there can be no valid objection to the proposed transfer. It is common ground that the village of Chilahati in the Debiganj Thana has been allotted to Pakistan; and it appears that through inadvertence, a part of it was not delivered to Pakistan on the occasion of the partition which followed (1) ; 281 the Radcliffe Award. It is not surprising that in dividing territories under the Radcliffe Award, such a mistake should have occurred; but it is plain that what the res pondents now propose to do is to transfer to Pakistan the area in question which really belongs to her. " It was then contended that even though that part ought to have been originally transferred to Pakistan under the Radcliffe Award, it having become part of India could not be ceded without the procedure laid down in Berubari I case. As this portion was being administered as part of West Bengal under Entry 13 in the First Schedule it was part of the territory which immediately before the commencement of the Constitution was West Bengal. This Court observed : "It is true that since this part of Chilahati was not transferred to Pakistan at the proper time, it has been regarded as part of West Bengal and administered as such. But the question is : does this fact satisfy the requirement of Entry 13 on which the argument is, based? In other words, what is the meaning of the clause "the territories which were being administered as if they formed part of that Province '; what do the words "as if" indicate in the context ?" Explaining the phrase 'as if they formed part of that Province ' this Court looked into the history of this Province. Clauses (a) and (b) of section 290 A of the Government of India Act 1935" may be reproduced "Administration of certain Acceding States as a Chief Commissioner 's Province or as part of a Governor 's or Chief Commissioner 's Province : (1)Where full exclusive authority, jurisdiction and powers for and in relation to governance of any Indian, State or any group of such States are for the time being exercisable by the Dominion Government, the Governor General may by order direct (2)that the State or the group of States shall be administered in all respects as if the State or the group of States were a Chief Commissioner 's Province; or (3)that the State or the group of States shall be administered in all respects as if the State or the group of States formed part of a Governor 's or a Chief 'Commissioner 's Province specified in the Order. " The Court concluded thus : "In view of this constitutional background, the words "as if" have a special significance. They refer to territories which originally did not belong to West 7Sup. CI/69 19 7 Sup .CI/69 19 282 Bengal but which became a part of West Bengal by reason of merger agreements. Therefore, it would be impossible to hold that a portion of Chilahati is a territory which was administered as if it was a part of West Bengal. Chilahati may have been administered as a part of West Bengal; but the said administration cannot attract the provisions of Entry 13 in the First Schedule, because it was not administered as if it was a part of West Bengal within the meaning of that Entry. The physical fact of administering the said area was not referable to any merger at all it was referable to the accidental circumstance that the said area had not been transferred to Pakistan as it should have been. In other words, the clause "as if" is not intended to take in cases of territories which are administered with the full knowledge that they do not belong to West Bengal and had to be transferred in due course to Pakistan. The said clause is clearly and specifically intended to refer to territories which merged with the adjoining States at the crucial time, and so, it cannot include a part of Chilahati that *as administered by West Bengal under the circumstance to which we have just referred. That is why we think Mr. Mukerjee is not right in contending that by reason of the fact that about 512 acres of Chilahati were not transferred to Pakistan and continued to be admin istered by the West Bengal Government, that area 'became a part of West Bengal within the meaning of :Entry 13 Schedule 1. The West Bengal Government ,knew all the time that it was an area which belonged to Pakistan and which had to be transferred to it. That is, in fact, what the respondents are seeking to do; and so, it would be idle to contend that by virtue of the accidental fact that this area was administered by West Bengal, it has constitutionally and validly become a part of West Bengal itself. That being so,there can be no ,question about the constitutional validity of the proposed transfer of this area to Pakistan. What the respondents are seeking to do is to give to Pakistan what belongs under the Radcliffe Award. " These two cases did not really decide the point we are called upon to decide. The first Berubari Case dealt with transfer of territory which was de facto and de jure Indian territory and there fore as the extent of Indian territories as defined in article I read with the 1st Schedule was reduced a constitutional amendment was held necessary. The second case concerned territory which ,was de facto under the administration by India but being de jure that of Pakistan, transfer of that territory which was not a part 283 of Indian territory was held not to require a constitutional amendment. Neither case dealt with a boundary dispute although in the first case the case from Australia was distinguished on the ground that that case concerned the demarcation of boundaries pure and simple. However it was not said that for adjustment of boundaries a constitutional amendment was not required. Neither case adverted to the practice of Nations particularly Britain, nor attempted to interpret the relation of Articles 1,253 and 73 of the Constitution read with Items 14 and 15 of List I of Schedule 7. The only thing that can be said is that this Court leaned in favour of a constitutional amendment in all cases where admitted territory of India was being ceded but not where the cession was of territory of a foreign power but de facto in possession of India. On which side must a border dispute fall is the question for our decision. The petitioners claim that this will fall in the dictum of the first Berubari Case. The Union Government claims that it is analogous to the case of Chilahati in the second Berubari Case. The question is one of authority. Who in the State can be said to possess plenum dominion depends upon the Constitution and the nature of the adjustment. As to the necessity of it, the Courts must assume it as a matter of law. It is scarcely to be thought that the validity of the action can ever depend upon the judgment of a court. Therefore all argument that the action of Government to go to arbitration was not proper must cease. Unlike the United States of America where the Constitution is defined in ex press terms, we in our Country can only go by inferences from our Constitution, the circumstances and the precedents. The precedents of this Court are clear only on one point, namely, that no cession of Indian territory can take place without a constitutional amendment. Must a boundary dispute and its settlement by an arbitral tribunal be put on the same footing. An agreement to refer the dispute regarding boundary involves the ascertainment and representation on the surface of the earth a boundary line dividing two neighbouring countries and the very fact of referring such a dispute implies that the executive may do such acts as are necessary for permanently fixing the boundary. A settlement of a boundary dispute cannot, therefore, be held to be a cession of territory. It contemplates a line of demarcation on the surface of the earth. It only seeks to reproduce a line, a statutable boundary, and it is so fixed. The case is one in which each contending state ex facie is uncertain of its own rights and therefore consents to the appointment of an I arbitral machinery. Such a case is plainly distinguishable from a case of cession of territory known to be home territory. The argument that if power to settle boundaries be conceded to the Executive, it might cede some vital part of India is to take an extreme view of things. The same may even be said of Parliament itself but it is hardly to be imagined 28 4 that such gross abuse of power is ever likely. Ordinarily an adjustment of a boundary which international Law regards as valid between two Nations, should be recognised by the Courts and the implementation thereof can always be with the Executive unless a clear case of cession is involved when Parliamentary intercession can be expected and should be had. This has been the custom of Nations whose constitutions are not sufficiently elaborate on this subject. The argument on behalf of the petitioners is intended to prove that the areas of Kanjarkot, Dharabanni and Chhadbet and two inlets on either side of Nagar Parkar are Indian territory. From this it follows, that a constitutional amendment as was laid down in the first Berubari case is a condition precedent for the implementation of the Award. The argument, therefore, follows closely the reasoning in that case. It is contended that Article 1 read with the First Schedule to the Constitution made Kutch into a part C State and under the second paragraph of Part C itself its, territory comprised all territories which by virtue of an order made under section 290A of the Government of India Act, 1935, were immediately before the commencement of the Constitution, being administered as if they were a Chief Commissioner 's Province of the same name. We have shown that the meaning of the phrase 'as if they were a Chief Commissioner 's Province of the same name ' must be understood as was, laid down in the second Berubari case. Learned counsel attempted to challenge that decision but we consider ourselves bound by that decision. The petitioners must establish that this area was a part of Kutch. The petitioners, therefore, trace the history of Kutch. Kutch is described in the White Paper on Indian States as follows : " 1 18. Another important State which was taken over under Central administration was Kutch. This State has an area of 17,249 Sq. miles of which 8,461 miles is inhabited by a population of a little over half a million. The remaining area is occupied by what is known as the Rann of Kutch which is covered by water during most part of the year. In view of the geographical situation of the State and the potentialities of this area, the development of which will require a considerable amount of money as well as technical assistance, which neither the State by itself nor the State of Saurashtra with which it was possible to integrate the State could provide, it was decided that the best solution for this State would be to treat it as a Centrally administered unit. An Agreement (Appendix XXIX) was accordingly signed by the Ruler on 4th May, 1948 and the administration was taken over by a Chief Commissioner on behalf of the Dominion Government on 1st June, 1949. 285 This only gives the area but not the boundaries. The Kutch Merger agreement is like any other merger agreement and was executed by the Maharao of Kutch on May 4, 1948. It gives no clue to the boundaries and also leaves the matters at large. Immediately after Kutch was taken over by Chief Commissioner on June 1, 1949. On July, 29, 1949 the States Merger (Chief Commissioner 's Provinces) Order, 1949 was passed. It provided inter alia : "2 (1) (c) the parts of States specified in the Second Schedule to this Order shall be administered in all respects as if they were a Chief Commissioner 's Province, and shall be known as the Chief Commissioner 's Province of 'Kutch." The parts of States comprising Kutch were given as follows "(i) The State of Kutch, excluding the area known as Kutchigar h situate in Okhamandal. (ii)The part of the United State of Saurashtra which is comprised in the Adhoi Mahal of Morvi, consisting of the seven villages Adhoi, Dharna, Gamdan, Halara, Lakhpat, Rampur and Vasatava. " Here again the boundaries are not mentioned. All that we know of Kutch from these documents is that it had an area of 17,249 Sq. miles of which 8,788 Sq. miles were inhabited. Obviously this is most inconclusive from our point of view since the White Paper is completely silent about boundaries. The later history of Kutch is also not helpful. On November 1, 1956 Kutch became a part of Bombay State. The States Re organisation Act referred to 'the existing State of Kutch ' which did not advance matters any nearer certainly than before. On May 1, 1960 the Bombay Reorganisation Act made the area known as Kutch a part of the State of Gujarat State. Therefore none of these documents is of any help in determining boundaries or that the disputed areas were definitely a part of India. There is also no evidence of administration in Dhara Banni and Chhadbet. No revenue administration, establishment of Courts, offices, schools etc. is proved. The Chairman found some evidence of administrative control of Sind which contradicted the Indian case. The evidence of leases was held to be contradicted by other evidence. The 1957 elections show that a polling station was located at Chhadbet but the voters were the personnel of the Watch and Ward force. Indeed the census of India (1961) shows the same 171 persons who belonged to the Watch and Ward personnel. Kanjarkot had almost no evidence in its favour and Mr. Madhu Limaye frankly admitted this fact. , The other petitioners gave. no evidence about it. Cl/69 20 286 No doubt, Pandit Jawaharlal Nehru on March 3, 1956 and Shri Lal Bahadur Shastri on May 11, 1965 asserted that the area belonged to India but that was only a statement and cannot be held to be of an evidentiary character. We were bound to make such a statement if we were at all to lay claim to it. After all the other side was making a similar claim and even a short skirmish also; took place. This cannot be treated as definite evidence. In support of the case the petitioners took us still further back into history. The definition of boundaries of Sind in 1935 by the Surveyor General was in general terms. It did not show whether Kanjarkot, Dhara Banni and Chhadbet were excluded from Sind altogether. 'Me Index Map prepared at the time was tot annexed to the order in Council. This index map was relied upon by Ambassador Ales Bebler who gave opinion for us but was not accepted by the Chairman and Ambassador Nasrollah Entezam. This was probably because the Mosaic Map which is map A on which India rested the claim did not show a continuous boundary along the entire length. The statistical abstracts of India and Pakistan which were sought to supplement the Map before us only give areas and not boundaries and are, therefore, inconclusive. The claim of Kutch State in 1914 when it attempted to enlarge the Rann of Kutch at the cost of Sind was not successful. A compromise was the foundation of 'a friendly understanding ' and not the settlement of a boundary. The Macdonald line that was then determined represents the uncontested portion of the boundary. It was then attempted to get a confirmation of the 'Kutch Sind boundary but no boundary was settled. It appears that the Rann itself was treated as excluded from Kutch. Indeed the Government of Bombay continued to so regard it. The fight before the Tribunal, therefore,, became a cartographic tussle. Over 350 maps were exhibited by the parties and many of these maps conflicted. Maps have been used in such cases but the source of information on which the map is based is always doubtful and maps are contradictory. One cannot go by one set only. In this view of the matter our reliance on Maps B32, 34,35, 36 and 37 became ineffective. The disputed area was about 3,500 Sq. miles. Out of this about 350 sq. miles were included in Pakistan. We are not sitting in appeal over the Award of the Tribunal. Our interpretation of the Maps and facts of history is really not called for. All that we can determine is whether there is concrete and solid evidence to establish that these areas belonged to India. If we could reach this conclusion there may be something to be said applying the first Berubari case. Otherwise we must hold that there was a disputed boundary and this was the occasion for marking out the final boundary on the surface of the earth. in 287 our opinion this is what was done. We cannot go entirely by what of the India pressed before the Tribunal. That is only one art matter, The conditions existing prior to the Award were: (a) that there was a break of hostilities; (b) that then there was a cease fire because the dispute was to be decided by arbitration, (c) that both sides put forward their claims, (d) that there was no clear evidence of demarcation of a boundary acceptable to the parties now or in the past, (e) that the claim Map of India did not show a continuous boundary along all the border, (f) that the area is in different state at different seasons in the year, for part of. the year it is water and for the remaining part it is land. While it is the former it may be regarded as a part of the Rann and while it is land it may well be regarded as part of Sind. Viewed from this angle the contention in this case comes to this : Does India cede undisputed Indian territory or is it the settlement of a disputed boundary? With regard to Kanjarkot which is to the south of Rahim ka Bazar no case was made out at all except assertions that it is Indian territory in which at least Mr. Madhu Limaye (who argued the case very fully and with considerable ability) did not join. With regard to Mora Banni and Chhadbet it is 'clear that Map A (the claim map of India) does not show the border from Manjeet where the boundary determined by the Tribunal leaves the mainland to a point just west of the, point where the boundary determined by the Tribunal again joins the mainland. To the south of this missing boundary lie Dhara Banni and Chhadbet. It is, therefore, clear that at least in this part, India was not certain of the boundary. No doubt some other maps show a continuous boundary even there but other negative it. In other words the, exact location, of the boundary was an open question. Dhara Banni and Chadbett are contiguous with the mainland in some seasons although they are, inundated at times and become indistinguishable from the Rann. In these circumstances the location of the boundary at the southern fringe of Dhara Banni and Chhadbet was no more than fixing a trim boundary, according to the Tribunal. It was well within the terms of reference and the decision being a true marking put of a disputed boundary does not amount to cession of these three areas so as to attract a constitutional amendment. As regards the two inlets, their area is said to be less than 25 sq. miles. They are extremely narrow at their,southern extremities and really represent indentations in land. At the narrow 288 points roads run 1 across them and they are Pakistan 's roads. Treating the inlets as 'inland waters, the Tribunal determined the boundary in such away as to give them to Pakistan. The reasons given by the Tribunal have been reproduced above by us. We cannot say that this will mean a cession of Indian territory. There, was a genuine dispute,regarding the title to these inlets whatever India may have thought about them. The decision of the Tribunal is a decision on a disputed boundary and does not attract a constitutional amendment. The only evidence was this area (which is other wise un inhabited) was in parts occupied by an Indian security force. The existence of these Watch and Ward officers or the establishment of a polling booth for them at election time cannot connote administration such as would make them territory of India. The Diplomatic Notes began soon after the establishment of the two Dominions and the occupation may have meant de facto control but there was no proof of de jure occupation or any other administration. Sovereignty over an area is always a matter of inference. As Judge Huber puts it in the Island of Palmas case "manifestations of territorial sovereignty assume, it is true, different forms, according to time and space. 'Although continuous in principle,. sovereignty cannot be exercised in fact at every moment on every point of a. territory. The intermittence and discontinuity compatible with the maintenance of the right necessarily differ according as inhabited or uninhabited regions are involved. . . (Award dated April 4, 1928 : 2 INT.ARB. AWARDS 867) Garrisoning of an area (a point noted in the International Court of Justice in 1953 in, the Minquiers and Ecrehos case, 1. C.J. Reports page 78) may be one kind of evidence. But this applied 'to both sides. Unless they displayed real existence of sovereignty over the area, none could be said to be in occupation de jure. Hance the propounding of so so many maps and documents. If we were sitting in appeal on the award, of the Tribunal we might have formed a different opinion of of the material but we are not. The fact remains that India undertook to be bound by the award pledging, die national honour and we must implement the award. The only question is as to the steps to be taken. On the whole, therefore, we are of opinion that this reference began in a boundary dispute after open hostilities and was decided as such. In which case it cannot be said that there will be a cession of Indian territory and the rule earlier laid down by us applies` if no ' constitutional amendment is required the. power of the Executive which extends to matters with respect to which 289 Parliament has power to make laws, can be exercised to correct boundaries now that they have been settled, The decision to implement the Award by exchange of letters, treating the Award as an operative treaty after the boundary has been marked in this area, is within the competence of the Executive wing of Government and no constitutional amendment is necessary. The petitions and the appeals fail and will be dismissed but there will be no order about costs. Shah, J. I agree with the learned Chief Justice. The controversy raised in this group of writ petitions and appeals lies within a narrow compass whether the award, dated February 19, 1968 of the Indo Pakistan Western Boundary. Case Tribunal may be implemented by a constitutional amendment and not otherwise. The claimants I use that expression to refer compendiously to the appellants and the petitioners urge that the award may be implemented only by an amendment modifying the relevant provisions in Schedule 1 to the Constitution, because in giving effect to the award of the Tribunal, cession of Indian territory is involved, and. the executive is incompetent to cede Indian territory without the authority of a constitutional amend ment. The Union of India contends that the Award merely fixes or demarcates the boundary between the State of Gujarat in India and West Pakistan regarding which there were disputes and much friction, and by the Award no cession of Indian territory is contemplated, and for implementing it amendment of the Constitution is not needed. The Great Rann of Kutch lies between the mainland of Sind (which is now part of Pakistan) and the mainland of Kutcha district of the State of Gujarat. It has a peculiar surface : it is marshy land : for about four months in the year large parts of the Rann are covered with the waters of the Arabian Sea rushing through the Khori Creek. It is however not fit for navigation. During the rest of the year it is muddy or dry land, but not dry enough for farming. From the very nature of the terrain, the boundaries of the Rann are shifting, its extent depending upon the violence of the natural elements in different years. The northern boundary of the Rann has, on account of its inhospitable terrain and nomadic population on the fringe with no prospect of cultivation, remained ill defined. Between 1816 and 1819 the Indian State of Kutch passed under the domination of the East India Company and the integrity of its territory was guaranteed by the East India Company by the treaty of 1819. In 1843 Sir Charles Napier annexed the territory of Sind, and made it into a Governor 's ' Province, which was later turned into a Division of the Province of Bombay. Kutch continued to be ruled by the 290 Maharao, the British authorities having posted a Political Agent at the capital of the, State. In 1855 the Department of Survey of India commenced a revenue, and topographical survey of the Province of Sind. The survey, called the Macdonald Survey, was completed in 1870, and survey maps were prepared and published in 1876. It is not clear whether the southern boundaries of the Sind villages shown in the maps were village boundaries, or a boundary conterminous between the territory of Sind and Kutch State. The next survey was undertaken under Major Pullan in 1879 and was completed in 1886. Under this project survey of the State of Kutch was undertaken. The northern boundary of Kutch State roughly tallied with the Macdonald alignment of the Sind boundary. The relevant maps were published in 1882. Another survey of a part of the boundary on the Sind side was undertaken in 1904 05 by C. F. Erskine. The alignment of the boundary with a few corrections tallied with the Macdoland alignment. This survey was intended to be a checking survey and related to the western region extending up to a point near Rahim ki Bazar. About the year 1907 08 the Commissioner of Sind raised cer tain disputes relating to encroachments on the territory under his administration by the Maharao of Kutch. The Government of India made an enquiry and a resolution, dated February 24, 1914, was.issued by the Government of the Province of Bombay, of which Sind was then a Division. By the resolution the, disputed area was divided by a new alignment which was partly identical with the claim made by the Kutch State along the Sir Creek from its mouth to its extremity and then slightly departed from it. In the other regions the alignment of the Macdonald Survey was adhered to. To the resolution was annexed a map on which the rectified boundary was shown. A Secretary in the Foreign Department of the Government of India recorded that "the Government of India observe with satisfaction that the dis pute between the Sind authorities and the Kutch Durbar has been settled by a compromise agreeable to both parties and are pleased to accord their sanction to the rectification of the, boundary line proposed in paras 9 and 10". To the letter of the Secretary to the Government of Bombay, Political Department, consent to the rectification of the boundary was evidenced by a letter of the Maharao under his own signature. Pursuant to this resolution in 1924, pillars were fixed up to a point known as the Badin Ja jato Rann tri junction. In 1935 the new Province of Sind was constituted. By the government(Constitution of Sind) Order, 1936, it 291 simply provided, therein that "In the Act and this Order, Sind means the territory known at the date of this Order, as the Division of Sind, and the boundaries of that Division shall be the boundaries of Sind. " It was originally intended to set out by a Schedule to the Order the boundary of Sind, and an Index Map was prepared by the Surveyor General for that purpose. By a communication from the Secretary of State for India in Council, it was recommended that a Schedule to the Order defining the boundary was not necessary and the Governor General accepted that suggestion. The fourth survey called the Onmaston Survey was commenced in 1938 39 : it was intended to be a survey of the Eastern part of the Tharparkar District. This survey adopted the alignment of the Macdonald Survey in that region showing a conterminous boundary between Sind and the States of Western India (now within the State of Gujarat). With the enactment of the Indian Independence Act, 1947 (10 & 1 1 Geo. VI c. 30) the paramountcy of the British power lapsed, and the two independent Dominions of India and Pakistan were carved out with effect from the appointed day. By section 2(2) of the Act the territories of Pakistan were to be (b)the territories which, at the date of the passing of this Act, are included in the Province of Sind . and (c) On May 4, 1948, the State of Kutch merged with the Dominion of India and by Article 1 of the Agreement of Merger the Maharao ceded to the Dominion of India full and exclusive authority over the governance of the State. On June 1, 1949, the administration was taken over by the Government of India , and the territory was constituted into a Chief Commissioner 's Province under section 2(1)(c) of the States Merger (Chief Commissioner 's Province) Order, 1949. Under the Constitution the territory became a Part 'C ' State. Its extent was determined by the 2nd paragraph in Part C to, Schedule 1 of the Constitution as "territories which by virtue of the order made under section 290A of the Government of India Act, 1935, were immediately before the commencement of the Constitution being administered, as if they were a Chief Commissioner 's Province of the same name. " By section 8 (1) (e) of the States Reorganization. Act, 1956, the, territory of the Part C State of Kutch was incorporated with the State of 292 Bombay, and by section 3 (a) of the Bombay reorganization Act, 1960, it was included in the newly formed State of Gujarat. From July 1948 and onwards diplomatic notes were exchanged between the Governments of India and Pakistan concerning the boundary between the two countries in the Gujarat West Pakistan Sector. The dispute led to great tension between India and Pakistan resulting in armed conflict in April 1965. By an agreement dated June 30, 1965, the Government of India and the Government of Pakistan concluded an agreement For setting up machinery "for determination and demarcation of the border" in 'the area of Gujarat West Pakistan. The agreement in so far as it is relevant provides article 1 "There shall be an immediate cease fire with effect from 0030 hours GMT on 1. July 1965. article 2 . article 3 (i) In view of the fact that (a) India claims that there is no territorial dispute as there is a well established boundary running roughly along the northern edge of the Rann of Kutch as shown in the pre partition maps, which needs to be demarcated on the ground. (b) Pakistan claims that 'the border between India and Pakistan in the Rann of Kutch runs roughly along the 24th parallel as is clear from several pre partition and post partition documents and therefore the dispute involves some 3,500 square miles of territory. (c) (ii)In the event of no agreement between the Ministers of the two Governments on the determination of the border being reached within two months of the cease fire, the two Governments shall, as contemplated in the Joint Communique of 24 October 1959, have recourse to the Tribunal referred to in (iii) below for determination of the border in the light of their respective claims and evidence produced before it and the decision of the Tribunal shall be final and binding on both the parties. (iii)For this purpose there shall be constituted, within four months of the cease fire, a Tribunal consisting of three persons, none of whom would be a national of either India or Pakistan. One member shall be nominated by each Government and the third mem 293 ber, who will be the Chairman, shall be jointly selected by the two Governments. In the event of the two Governments failing to agree on the selection of the Chairman within three months of the cease fire, they shall request the Secretary General of the United Nations to nominate the Chairman. (iv) The decision of the Tribunal referred to in, (iii) above shall be binding on both Governments, and shall not be questioned on any ground whatsoever. Both Governments undertake to implement the findings of the Tribunal in full as quickly as possible and shall refer to the Tribunal for decision any difficulties which may arise between them in the implementation of these findings. For that purpose the Tribunal shall remain in being until its findings have been implemented in full. ,, The Ministerial Conference contemplated to be held did not take place, and the two Governments decided to have recourse to the Tribunal to be constituted under article 3(iii) of the agreement. A Tribunal of three members, one appointed by each State and the Chairman nominated by the Secretary General of the United Nations Organization was set up. The agreement between the two States was reached purely as an executive act, and no legislative sanction was obtained by the Government of the Union of ' India to its implementation. The respective claims before the Tribunal by India and Pakistan are set out in paragraph 3 (1 ) of the agreement and at pp. 7, 8 & 9 of the Introductory Part of the award which apparently had the concurrence of all the members of the Tribunal. On behalf of the Government of India it was submitted that the boundary lay as detailed in Map 'A annexed to the award which is a mosaic of Indian Maps B 44, B 37, B 19 and B 79. It was common ground between the two Governments that "the Gujarat West Pakistan boundary stretches from the mouth of the Sir Creek in the west to a point on the Jodhpur boundary in the each. The Parties agree that the Western Terminus of the boundary to be determined by the Tribunal is the point at which the blue dotted line meets the purple line as depicted in Indian Map B 44 and the Pakistan Resolution Map, and that the Eastern Terminus of the same boundary is a point situated 825.8 metres below pillar 920 on the Jodhpur boundary as depicted in Pakistan Map 137. This agreement leaves out of the matters submitted to the Tribunal the portion of the boundary along the blue dotted line, as depicted in Indian Map B 44 and the Pakistan Resolution Map, as well as the boundary in the Sir Creek. The blue dotted line is agreed ' by both Parties to form the boundary between India and Pakistan. 294 In view of the aforesaid agreement, the question concerning the Sir creek part of the boundary is left out of consideration. " It was also common ground that "before. Independence the boundaries between the Province of Sind, on the one hand, and one or more of the Indian States which lay on the opposite side of the Great Rann, on the other hand, were conterminous. Therefore, in the disputed region, apart from, India and Pakistan there is no other State that does or could have sovereignty. There is between India and Pakistan a conterminous boundary today, whether or not there was at all times a conterminous boundary between Sind and the Indian States. " The contention raised by Pakistan was "(a) that during and also before the British period, Sind extended to the south into the Great Rann up to its middle and at all relevant times exercised effective and exclusive control over the northern half of the, Great Rann; (b)that the Rann is A "marine feature" (used for want of a standard term to cover the, different aspects of the Rann). It is a separating entity tying between the States abutting upon it. It is governed by the prin ciples of the median line and of equitable distribution, the bets in the Rann being governed by the principle of the "nearness of shores"; (c)that the whole width of the Rann (without being a condominium) formed a broad belt of boundary between territories on opposite sides; that the question of reducing this wide boundary to a widthless line, though raised, has never been decided; that such widthless line would run through the middle of the Rann and that the Tribunal should determine the said tine. " Pakistan accordingly claimed that the border of Sind extended up to the boundary shown by the thick green dotted line in Map 'B '. It was agreed by both the Governments that "should the Tri bunal find that the evidence establishes that the disputed boundary between India and Pakistan lies along a line different from. the claim lines of either party, the Tribunal is free to declare such a line to be the boundary. The award to be made by the Tribunal was, it was agreed, to operate as a self executing arrangement : it was not only to declare the boundary, but to provide for fixing its location on site. It was agreed between the Agents of India and Pakistan that 295 1. 'The basis of demarcation shall be the alignment of the boundary as delineated by the Tribunal on maps to be annexed to the Award. Each Government should be supplied with two sets of these maps duly authenticated by the Tribunal. 3.The Representatives of the two Governments shall meet at Delhi not later than two weeks after the Award is rendered to discuss and decide upon the following matters : (i) The strength of the team. (It is not possible to give the exact number of personnel composing the team at this stage as the strength of the team will depend upon the alignment of the boundary and the quantum of work involved which can be ascertained only after the Award is rendered). (ii)The design and specifications of the boundary pillars and traverse pillars, the number and spacing of pillars. (The design and specifications of the boundary pillars will depend upon the alignment of the boundary and the nature of the terrain. The pillars may be of cement concrete, stone or masonry according to the requirements (iii)Detailed operational instructions for the guidance of the field staff. (Such operational instructions have to be necessarily finalised only after the nature of the alignment is known). (iv)Any other matter which requires consideration for effective demarcation work. If the Representatives of the two Governments do not agree upon any of the above matters either Government shall immediately report to the Tribunal the matters in difference for the decision of the Tribunal. 6.The first task of the demarcation team shall be to ascertain if any control points exist and are available, These control points should be supplemented, wherever necessary, in order to determine the pillar positions on the ground in accordance with the alignment of the boundary. If control points do not exist or are not available, a fresh series of triangulation or traverse will be carried out and control points determined and the pillar position , located with the help of these points. 296 7.Simultaneously with the location of the pillar positions, pillars shall be emplaced at each position. " The award was published by the Tribunal on February 19, 1968. By the decision of the Chairman of the Tribunal (Judge Gunnar Lagergren) with whom Ambassador Nasrollah Entezam agreed and Ambassador Ales Babler disagreed in part, the boundary was aligned from point W T to E T in Map 'C '. It is unnecessary to set out the detailed description of the boundary. " claim of the Government of India to the Rann was accepted. The claim of the Government of Pakistan to approximately 3,500 square miles out of the Great Rann was rejected except as to 350 square miles, of which more than 325 square miles are found beyond the Rann or on which the Maharao had not exercised sovereign authority . The Tribunal unanimously accepted the claim that the Great Rann of Kutch was part of the territory of the State of Kutch and is now Indian territory. But the majority of the Tribunal accepted the claim of Pakistan, substantially to the following three sectors : (1)Marginal area south of Rahim ki Bazar, marked by B, C, D in Map 'C ', this may be called the Kanjarkot Sector; (2)The area marked in the Map 'C ' by letters E, F, G, H, K which may be called Dhara, Banni and Chhad Bet Sector; (3)Two inlets which practically encircle Nagar Parkar which have apparently characteristic features of the Rann but are still declared to be within the border of Pakistan by drawing straight lines from points L to M and N to 0 in Map 'C '. The reasons for declaring the first two sectors as Pakistan territory are set out (at p. 152 of the printed award) by the Chairman Judge Gunnar Lagergren as follows "Reviewing and appraising the combined strength of the evidence relied upon by each side as proof or indication of the extent of its respective sovereignty in the region, and comparing the relative weight of such evidence, I conclude as follows. In respect of those sectors of the Rann in relation to which no specific evidence in the way of display of Sind authority, or merely trivial or isolated evidence of such a character, supports Pakistan 's claim, I pronounce in favour of India. These sectors comprise about ninety per cent of the disputed territory. However, in respect of sectors where a continuous and for the region intensive Sind activity, meeting with no effective opposition from the Kutch side, is established, 1. am of 297 the opinion that Pakistan has made out a better and superior title. This refers to a marginal area south of Rahim ki Bazar, including Pirol Valo Kun, as well as to Dhara Banni and Chhad Bet, which on most maps appear as an extension of the mainland of Sind." About Item (3) Judge Gunnar Lagergren was of the view that to prevent friction and conflict the inlets ,should not be declared Kutch territory. The effect of an international treaty on the rights of citizens of the States concerned in the agreement is stated in Oppenheim 's International Law, 8th Edn., at p. 40 thus "Such treaties as affect private rights and, generally, as require for their enforcement by English courts a modification of common law or of a statute must receive parliamentary assent through an enabling Act of Parliament. To that extent binding treaties which are part of International Law do not form part of the law of the land unless expressly made so by the legislature." and at p. 924 it is stated The binding force of a treaty concerns in principle the contracting States only, and not their subjects. As International Law is prim arily a law between States only and exclusively, treaties can normally have effect upon States only. This rule can, as has been pointed out by the Permanent Court of International Justice, be altered by the express or implied terms of the treaty, in which case its provisions become self executory. Otherwise, if treaties contain provisions with regard to rights and duties of the subjects of the contracting States, their courts, officials, and the like, these States must take steps as are necessary according to their Municipal Law, to make these provisions binding upon their subjects, courts, officials, and the like. " In Wade and Phillips ' Constitutional Law, 7th Edn., :It is stated at p. 274 : " At first sight the treaty making power appears to conflict with the constitutional principle that the Queen by prerogative cannot alter the law of the land, but the provisions of a treaty duly ratified do not by virtue of the treaty alone have the force of municipal law. The assent of Parliament must be obtained and the necessary legislation passed before a court of law can enforce the treaty, should it conflict with the existing law. " 298 On p. 275 it is stated that "treaties which, for their execution and application in the United Kingdom, require some addition to, or alteration of, the existing law" are treaties which involve legislation. The statement made by Sir Robert Phillimore, Judge of the Admiralty Court in The Parlement Belge(1) (though the ultimate decision was revised by the Court of Appeal in another point [vide (1880) 5 P. D. 197] in dealing with the effect of a "Convention regulating Communications,by Post" signed and ratified in 1876 which purported to confer upon Belgian mail streamers. immunity of foreign warships is appropriate : "If the Crown had power without the authority of parliament by this treaty to order that the Parlement Belge should be entitled to all the privileges of a ship of war, then the warrant, which is prayed for against her as a wrong doer on account of the collision, cannot issue, and the right of the subject, but for this order unquestionable, to recover damages for the injuries done to him by her is extinguished. This is a use of the treaty making prerogative of the Crown which I believe to be without precedent, and in principle contrary to the laws of the Constitution. " In Walker vs Baird(2) the Judicial Committee, affirming the decision of the Supreme Court of Newfoundland, observed that the plea of act of State raised in an action for trespass against the Captain of a British fishery vessel who was authorised by the Commissioners of the Admiralty to superintend the execution of an agreement between the British Crown and the Republic of France, which provided that no new lobster factory shall be established on a certain part of the coast of Newfoundland could not be upheld. The Judicial Committee in Attorney General for Canada vs Attorney General for Ontario and Others(3) made some observations in the context of a rule applicable within the British Empire, which are pertinent : "It will be essential to keep in mind the distinction between (1) the formation, and (2) the performance, of the obligations constituted by a treaty, using that word as comprising any agreement between two or more sovereign States. Within the British Empire there is a well established rule that the making of a treaty is an executive act, while the performance of its obligations, if they entail alteration of the existing domestic law, requires legislative action. Unlike some other countries, (1) [1879] 4P.D.129. (2) [1892] A.C.491. (3) , 347. 299 the, stipulations of a treaty duly ratified do not within the Empire, by virtue of the treaty alone, have the force of law. If the national executive, the Government of the day, decide to incur the obligations of a treaty which involve alteration of law they have to run the risk of obtaining the assent of Parliament to the necessary statute or statutes. . Parliament, no, doubt, . has a constitutional control over the executive : but it cannot be disputed that the creation of the obligation. . undertaken in treaties and the assent to their form and quality are the function of the executive alone. Once they are created, while they bind the State as against the other contracting parties, Parliament may refuse to perform them and so leave the State in default. " These observations are valid in the context of our constitutional set up. By article 73, subject to the provisions of the Constitution, the executive power of the Union extends to the matters with respect to which the Parliament has power to make laws. Our Constitution makes no provision making legislation a condition of the entry into an international treaty in times either of war or peace. The executive power of the Union is vested in the, President and is exercisable in accordance with the Constitution. The executive is qua the State competent to represent the State in all matters international and may by agreement, convention or treaties incur obligations which in international law are binding upon the State. But the obligations arising under the agreement or treaties are not by their own force binding upon Indian nationals. The power to legislate in respect of treaties lies with the Parliament under Entries 10 and 14 of List I of the Seventh Schedule. But making of law under that authority is necessary when the treaty or agreement operates to restrict the rights of citizens or others or modifies the laws of the State. If the rights of the citizens or others which are justiciable are not affected, no legislative measure is needed to give effect to the agreement or treaty. The argument raised at the Bar that power to make treaty or to implement a treaty, agreement or convention with a foreign State can only be exercised under authority of law, proceeds upon a misreading of article 253. Article 253 occurs in Ch. 1 of Part XI of the Constitution which deals with legislative relations: Distinction of Legislative Powers. By article 245 the territorial operation of legislative power of the Parliament and the State Legislatures is delimited, and article 246 distributes legislative power subject wise between the Parliament and the State Legislatures. Articles 247, 249, 250, 252 and 253 enact some of the exceptions to the rule contained in article 246. 'Me effect of article 253 is that if a treaty, agreement or convention with a foreign State 300 deals with a subject within the competence of the State legislature, the Parliament alone has notwithstanding article 246(3), the power to make laws to implement the treaty, agreement or convention or any decision made at any international conference, association or other body. In terms, the Article deals with legislative power thereby power is conferred upon the parliament which it may not otherwise possess. But it does not seek to circumscribe the extent of the power conferred by article 73. If, in consequence of the exercise of executive power, rights of the citizens or others are restricted or infringed, or laws are modified, the exercise of power must be supported by legislation: where there is no such restriction, infringement of the right or modification of the laws, the executive is competent to exercise the power. It may be recalled that cl. 3 (iv) of the Agreement included a covenant that the decision of the Tribunal shall be binding on ,both the Governments. The power of the executive to enter into that covenant cannot also be challenged, and was not challenged. It was conceded that if the contention based on article 253 was not accepted, the award of the Tribunal by majority of two (Judge Gunnar Lagergren with whom Ambassador Nasrollah Entezam agreed) was binding upon the Government of India. It was accepted that as an international agreement between the two States represented by their executive Governments it became binding between the two States as expressly undertaken. No argument was urged that there exist any grounds which may justify the Union of India from declining to implement the agreement. The award of the Tribunal has, it was conceded, to be implemented as an international obligation. Counsel who represented the claimants, and claimants who argued their cases, before us: adopted an eminently fair attitude. it was not urged that the award was not binding upon the Union of India : their plea urged with moderation was that insofar as the award affected the territorial limits of India, it required a constitutional amendment. It was not suggested that apart from the claim to exercise rights to move freely throughout the territory of India under article 19(1) (d), and to reside and settle in any part of the territory of India under article 19 (1) (e) any other right of any individual citizens was likely to be infringed by the implementation of the award. The nature of the terrain of the disputed territory precludes any other claim being made, There are no local residents, no private property and no agriculture. For four months in the year it is mostly under water, for the rest of the year it is marshy land. But it was claimed that every individual citizen of India is entitled to exercise the privileges under cls. (d) and (e) of article 19(1) in respect of territory between the boundary shown in Map 'A annexed to the award, and the boundary delineated by Map 'C" which represents, in the view of the Tribunal, the 301 border between the two States, is Indian territory and deprivation of the rights of the citizens under article 19 (1) (d) & (e) can only be achieved if the cession of what is now part of the territory of India be ceded under the sanction of a constitutional amendment Mr. Limaye petitioner in Writ Petition No. 402 of 1968 claimed that he made an attempt to enter the territory which under the award falls 'within the Pakistan Border, and was prevented by the security police from entering that area. The only question to be determined therefore is whether in implementing the award, the. executive Government is ceding territory of India to Pakistan. I have set out the terms of the agreement and the disputes raised by the two States in some detail. A review of the terms of the agreement, the unanimous introductory part of the award and the terms of the agreement relating to the implementation of the award and of the final award, make it abundantly clear that the dispute related to the boundary between the two States : it was referred as a boundary dispute, the respective claims urged were about the location of the boundary line, and the operative part of the award declared the alignment of the boundary, which has under the terms of the agreement relating to the procedure for demarcation to be filed by pillars on the alignment. Settlement of dispute which relates to the alignment of an undefined boundary between two States involves no cession of territory by either State. In the advice rendered to the President in a reference made to this Court under article 143 in In Re : The Berubari Uninion and Exchange of Enclaves(1) this Court was called upon to determine the true nature of the agreement between the Prime Ministers of India and Pakistan each Prime Minister acting on behalf of his Government September 10, 1958, for a division of the Berubari Union in the State of West Bengal and exchange of certain enclaves and whether the agreement may be implemented otherwise than by a constitutional amendment. This Court held that the agreement between the two Prime Ministers did not seek to interpret the Radcliffe Award or to determine the boundary between the two States. It Was agreed by the two Prime Ministers that a part of the Berubari Union which was allotted to India under that Award and was in occupation of India was to be ceded to Pakistan, and enclaves within Pakistan but in occupation of India de lure were to be exchanged for similar enclaves of Pakistan within Indian territory. This Court advised the President that the appellant could be implemented under the authority of a constitutional amendment only. The Parliament then enacted the Constitution. (Ninth Amendment) Act, 1960, assuming power to implement the agreement and the (1) 302 two other agreements dated October 23, 1959 and January 11, 1960. Another matter arising out of those agreements between the two Prime Ministers was brought before this Court by an appeal from an order passed by the High Court of Calcutta in a writ petition : Ram Kishore Sen & Ors. vs Union of India and Ors.(1). It was proposed pursuant to the Constitution (Ninth Amendment) Act, 1960, to transfer, among other territory, a part of the village of Chilahati in the occupation of the State of West Bengal in India. A petition filed in the High Court of Calcutta challenging the validity of the proposed transfer to Pakistan on the ground that village Chilahati which was part of the Indian territory could not be transferred by the Government of India. The High Court of Calcutta rejected the petition. In appeal to this Court it was urged, inter alia, that the disputed part of the village Chilahati though allotted to Pakistan was not delivered to Pakistan and had become part of the State of West Bengal, because it was being administered as if it formed part of the territory of West Bengal within the meaning of Entry 13 Part 'A Sch. I as amended by the Constitution (Amendment of the First & Fourth Schedules) Order , 1950. The Court held that the proposed transfer of a part of the village of Chilahati, which was allotted to Pakistan under the Radcliffe Award but was not delivered, and continued to remain administered as a part of the State of West Bengal,was not constitutionally invalid. In In Re : The Berubari Union and Exchange of Enclaves(2) there was no question of demarcation of a disputed boundary : it was a case of pure cession of Indian territory. Ram Kishore Sen & Ors ' case(1) which dealt, among others, with the cession of 500 acres of Chilahati village related to transfer of territory which though temporarily under. Indian administration had never become Indian territory. The principle of the First Berubari case has no application here and the principle of the Second Berubari case is against the contention raised by the claimants. But the claimants urge that by the alignment of the boundary under the award, territory which is Indian is now declared foreign territory, and it cannot be implemented without the authority of an amendment modifying the boundary of the State of Gujarat in which is now included the Rann of Kutch. Now the alignment of the boundary under the award deviates from the alignment claimed by the Government of India before the Tribunal in three in ran, respects which have already been set out. The Tribunal was of the view, on ' a consideration of the maps produced, that there did not exist at any time relevant to the proceedings a historically recognized and well established (1)[1966] 1 S.C.R. 43O. (2) 30 3 boundary in the, three sectors. About the Kanjarkot Sector the Chairman observed : "The evidence shows that Kutch did not make any appearance in this area until 1946, and then only abortive attempts were made by the sons of the lessee, Node Sadi Rau, to go there in order to collect Panchari. They reported that they did not even dare to stay overnight in the place. While no specific evidence has been submitted which proves any activities undertaken by Sind subjects in Pirol Valo Kun, the reports of the Kutch lessees establish that Sind inhabitants engaged in grazing there." and further observed at p. 151 "In a sector bounded to the south by the southern limit of Pirol Valo Kun, not only is there a total absence of effective Kutch activity, but there is a consistent exercise of sovereign rights and duties by Sind autho rities, and activities of residents of Sind, in one instance, taking the form of a permanent settlement at Shakur. " The territory in this sector is contiguous to and in fact is an extension of the mainland of Sind, and apart from the survey maps there is no evidence that it is part of the Great Rann of Kutch. No serious argument was advanced to establish that on Kanjarkot, the Kutch State at any time exercised sovereign authority. About the Dhara Banni and Chhad Bet Sector Judge Gunnar Lagergren observed (at p. 141) ". .on the evidence on record it may be taken as positively established that, in this century, prior to independence, outside Dhara Banni and Chhad Bet (which will be treated presently), the police and criminal jurisdiction of Sind authorities over disputed territory extended, in the sector between the eastern loop and Dhara Banni, to Ding, Vighokot and Biar Bet. There is, however, no evidence which affirmatively proves in a conclusive fashion that the jurisdiction of Sind police and Sind courts encompassed areas west of the eastern loop, or east of Chhad Bet. Conversely, no proof is offered that Kutch either assumed or exercised such jurisdiction over any part of the disputed territory (leaving aside Dhara Banni and Chhad Bet). " He again observed (at p. 144) : ". .I deem it established that, for well over one hundred years, the sole benefits which could be derived 304 from those areas are enjoyed by inhabitants of Sind. It is not suggested that the grazing as such was subject to British taxation. Such limited evidence as there is on record seems, however, to justify the assumption that the task of maintaining law and order was dis charged by the Sind authorities , it is not even suggested that the authorities of Kutch at any time viewed such a task as forming part of their duties. . Whatever other Government functions were required with respect to these outlying grazing grounds, on which herds of cattle were from time to time shepherded, were apparently undertaken by Sind. Thus, the births, deaths and epidemics occurring there were recorded by the taluka office in Diplo. It is not shown that Kutch at any time established a thana on Chhad Bet. " He finally observed (at p. 151) "The remaining sector within the area described above in which authority, in this instance exclusively for the protection of activities of private, individuals, is shown to have been displayed by Sind authorities in a manner which is not sporadic but consistent and effective, is Dhara Banni and Chhad Bet. As stated earlier, the activities undertaken by Kutch in these areas cannot be characterised as continuous and effective exercise of jurisdiction. By contrast 9 the presence of Sind in Dhara Banni and Chhad Bet partakes of characteristics which, having regard to the topography of the territory and the desolate character of the adjacent inhabited region, come as close to effective peaceful occupation and display of Government authority as may reasonably be expected in the circumstances. Both the inhabitants of Sind who openly used the grazing grounds for over one hundred years and the Sind authorities must have acted on the basis that Dhara Banni and Chhad Bet were Sind territory. " The claimants urged that the territory in this Sector belonged to the Kutch State and that claim was supported by survey maps, correspondence between the officials of Kutch State and the British Administration, assertions made in the Annual Administration Reports for 75 years before 1947, Statistical Abstracts relating to British India, Bombay Administration Reports Gazetteers, Memorandum on Indian States and a number of official publications, and by the Resolution of the Government of Bombay, dated 305 February 24, 1914. It would be a fruitless exercise to enter upon this historical material. The survey and other maps do not Jay down a uniform or consistent alignment. Macdonald Survey appears to align the boundary of Sind towards the north even of Rahim ki Bazar which is admittedly on the mainland of Sind, and was never claimed as part of the Rann. This lends support to the view that the Macdonald Survey report was rough, and was intended to be a topographical map. The maps prepared at the later surveys follow, with some variations and rectifications, the Macdonald Survey alignment, but those survey maps also do not indicate an international boundary. About Pullan 's Survey it may be observed that Pullan himself stated that he had "carefully abstained from laying down" or suggesting a boundary (vide Resolution of the Government of Bombay July 3 and August 7, 1885). The attitude adopted by the Government of Bombay which is set out in the resolution was that they "did not desire" that any "question of boundaries in the Rann between the Province of Sind and Kutch" should beraised. Erskines Survey also is open to the criticism that as anofficer of the Sind Government he made statements in his letter, dated November 23, 1905, disowning any intention to determine the boundary of the Rann, of Kutch. The maps prepared in the Erskine Survey were not accepted as evidencing a boundary. Even the Maharao of Kutch did not agree to accept the alignment. By the resolution of 1914, it does appear that an attempt was made to resolve the dispute about certain disputed pockets, between the British authorities governing Sind and the Maharao of Kutch. But a review of the correspondence of 1905, followed by erection of Pillars up to the western tri junction, and establishment of a customs line in 1934 appear to suggest that the boundary east of the trijunction was in a state of uncertainty. Conflicting claims were made from time to time by the British authorities and the Maharao of Kutch; and about the exercise of sovereign rights over the areas now in dispute the evidence is very scrappy and discrepant. An. attempt to determine how far general statements of claim and refusal thereof were applicable to the sector now in dispute would serve no useful purpose. Different positions were adopted by the officers of the Government of India according as the exigencies of a particular situation demanded. The statements or assertions do not evidence an existing state of affairs; they were only made to support or resist. claims then made, or to serve some immediate purpose. The claimants before us were unable to pinpoint any definite and reliable piece of evidence which established the exercise of sovereign authority by the Maharao of Kutch over the second sector. It is true that the territory of the entire State of Kutch merged with the Dominion of India. That territory was treated as Indian, 3 06 territory and was at first governed as a separate administrative unit. But unless it be established that the disputed sectors were part of the Kutch State, no firm conclusion can be drawn from the agreement of merger. Undoubtedly the Government of India claimed at all material times the territory in Sectors (1) and (2). In respect of the Kanjarkot Sector there is no evidence of exercise of sovereign authority by the Maharao of Kutch at any point of time. The sector is apparently contiguous to and an extension of the mainland of Sind. It is not shown that it has the characteristics of the Rann terrain. The Dhara Banni and Chhad Bet Sector is also apparently an extension of the mainland of Sind. There is no reliable evidence about the enjoyment of the benefits of the land in the Sector by the inhabitants of Kutch. Evidence of the exercise ,of suzerainty by the Maharao of Kutch over that Sector is also sadly lacking. The sector has more pronounced features of the Rann terrain, but it appears also to be contiguous to the mainland of Sind. Even granting that the evidence about the exercise of sovereign authority by the British authorities governing Sind since 1843 over the Rann of Kutch is inconclusive, the claim by Indian citizens to exercise fundamental rights in respect of the territory in that Sector may be entertained only if it be established that the territory is found to be originally governed by the Maharao of Kutch. On that part of the claim, concrete evidence is wanting. It was contended that the total area of Kutch according to the White Paper on Indian States was 17,249 square miles out of which the area of the Kutch mainland was 8,461 square miles and the balance was 8,788 square miles which consists of the Great and Little Ranns of Kutch. In the Kutch Administration Report for 1910 11 and thereafter the area of Kutch was stated to be "7616 square miles" and it was stated that "the Rann also belongs to the. Maharao". In 1931 a correction was introduced that the area of the State was 8249.5 square miles 'exclusive of the Rann of Kutch which belongs to the Kutch State territory. The Bombay Administration Reports from 1871 72 to 1923 24 give varying figures as the area of Kutch and make a general statement that the Rann of Kutch belongs to the State. The statement in the Imperial Gazetteers of 1881, 1885, 1908, 1909 contain State ments about the areas which are so discrepant that no reliance can be placed upon them. Similarly the recitals about the extent of the Rann, in the Gazetteers of the Bombay Presidency are also imprecise. The only safe conclusion that can be drawn from these documents is that the Rann was part of Kutch State but do not lend any assistance in determining the northern boundary of the Rann. 30 7 It is stated in the affidavit of Mr. Dholakia that the area of the Kutch District was 16567.3 square miles inclusive of 9000 square miles of Rann territory. But evidently the area of the Rann is a rough estimate. In the Census of 1941 the area of Kutch was shown as 8,461 square miles and in 1951 Census as 16,724 square miles inclusive of Rann. There is no evidence that the figures are based upon any precise survey in the context of an accepted boundary. The Census of 1961 shows that there were 171 residents in the Chhad Bet. But these consist exclusively of the Border Guards posted in that area. It is conceded that there is no local population in Chhad Bet and Dhara Banni. The inclusion of Chhad Bet in the area within a polling station for the 1967 General Elections also supports merely an assertion that it was claimed to be Indian territory. It is not evidence of the fact that it was territory over which the Maharao of Kutch exercised sovereign rights and which by merger of the territory became Indian territory. The evidence on which reliance was mainly placed in support of the claim was the conflicting alignments in the survey and other maps, the claims made by the Maharao of Kutch aid the Government of India which were not accepted. Exercise of de facto authority over the territory in the sectors after the disputes took concrete form is evidence of an assertion merely and not evidence of pre existing sovereign rights. The merger of the State of Kutch with the Dominion of India does not result in vesting of sovereign authority over the territory of the two sectors, unless the suzerainty of the State of Kutch is established. The boundary between the two States was indefinite and by the award of the Tribunal the true boundary of India and Pakistan is determined: the award does not purport to, nor does it operate as giving rise to, an obligation to cede Indian territory. The two inlets which practically encircle Nagar Parkar are declared to be within Pakistan Border on the ground that it would be inequitable to recognise those inlets as foreign territory. It was said by the Chairman of the Tribunal that the existence of such foreign territory may be "conducive to friction and conflict". Regarding the two inlets the position is different since the ultimate decision of the Tribunal is founded on considerations of expediency and not on strict determination of rights. We have no power to sit in appeal over the decision of the Tribunal. The ground on which the award is made against the claim made by the Government of India does not strengthen the rights of the claimants to relief. Unless there is evidence to show that the inlets were territory over which the Maharao of Kutch had sovereign rights, acceptance of the award is not required to be implemented by a constitutional amendment. The total area of the inlets, we are 308 informed by counsel on both sides, does not exceed 25 square miles. In the turbulent times which preceded the occupation of Sind by the East India Company in 1843 or even thereafter it is unlikely that any authority was exercised by the Maharao of Kutch over these inlets. It appears from some of the maps that at the extremities the inlets are very narrow : and roads cross these inlets from Nagar Parkar, which is of the shape of a penninsula into the mainland of Sind. It is difficult to accept that at any time effective sovereign authority could have been exercised over these inlets by the Maharao of Kutch. There is no evidence of exercise of any such right, before or after the occupation of Sind. There being no evidence of exercise of sovereign authority by the Maharao of Kutch, this Court cannot treat it as part of Indian territory. On the view the claim made by the claimants that in imple menting the award of the International Tribunal an attempt is made to cede any part of the territory which formed part of the State of Kutch before 1948, or was in de facto occupation and in respect of which sovereign authority was exercised by the Maharao of Kutch. The award does no more than define on the surface of the earth a boundary which has at all material times remained indefinite, because of the nature of the terrain, the shifting nature of the border of what was called Rann, the highly discrepant and conflicting claims made from time to time by the British authorities as well as the Kutch State authorities before the State merged with the Dominion of India in 1948, and the persistent refusal of the British authorities, though there were several occasions to demarcate the boundary between Sind and the Rann of Kutch. The appeal and the writs are dismissed. There will be no order as to costs in the appeals and the writ petitions. R.K.P.S. L7Sup. CI/69 2,500 27 2 70 GIPF. R.K.P.S. Appeals and petitions dismissed.
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The Constitution of India says what makes up the "territory of India" in Article 1. This includes the land of the States. The States and their areas are listed in the First Schedule. Article 3 lets Parliament change the borders of existing States. This means Parliament can make a State bigger or smaller. Parliament has the power to make laws about treaties because of entries 10 and 14 in List I of the Seventh Schedule. These entries cover "Foreign affairs" (dealing with other countries) and "entering into treaties and agreements with foreign countries and carrying them out." Article 253 says that Parliament can make any law for any part of India to carry out a treaty, agreement, or decision made at an international meeting. Article 73 says that the Union's power includes things that Parliament can make laws about. It also includes using rights and authority that the Indian government has because of a treaty or agreement. When India became independent in 1947, the State of Kutch joined India. Kutch became a Chief Commissioner's Province, and then a Part C State under the Constitution. The size of Kutch was based on old orders from 1935, which said it was being run like a Chief Commissioner's Province. Kutch was later added to the State of Bombay and then became part of the new State of Gujarat in 1960. The Great Rann of Kutch is a marshy area between Pakistan and the mainland of Kutch. It's underwater for about four months each year. Because of the type of land, the borders of the Rann change depending on the weather. So, the northern border of the Rann has always been unclear. From 1948, India and Pakistan talked about the border between them in the Gujarat/West Pakistan area. This disagreement caused tension and fighting in 1965. In June 1965, India and Pakistan agreed to create a group called a Tribunal to decide and mark the border in the Gujarat/West Pakistan area. Both countries promised to follow the Tribunal's decision. The Tribunal's decision would automatically set the border. It would not only say where the border was, but also show how to mark it on the ground. In February 1968, the Tribunal gave some areas in the Rann of Kutch to Pakistan. Some people (the petitioners) said that their rights under the Constitution were violated. They asked the Court to stop the Indian government from giving the land to Pakistan. The petitioners didn't say that the Tribunal's decision was wrong. They argued that the land was part of India and had always been. They said that India had controlled the area, and giving it up to Pakistan meant giving away Indian land. This could only be done by changing the First Schedule of the Constitution. The Indian government argued that it wasn't giving away land. The government said it was just settling an uncertain border. It said the Tribunal's decision was like a treaty, and once the border was marked, they could simply exchange letters to recognize it. The Court HELD: The Tribunal's decision doesn't force India to give away land, so no change to the Constitution is needed. The government can carry out the Tribunal's decision by exchanging letters and treating it as a treaty once the border is marked. The Court also said that the Indian government accepted the Tribunal's decision, so it is binding. International law says that a decision made by an arbitration (independent group) is usually only rejected if the terms of agreement weren't followed or if there are major errors. None of these problems exist here, so the people challenging the decision are correct not to argue that the Tribunal’s decision isn’t binding. When a treaty or arbitration decision is made, it must be carried out. This can only happen if the government (including the legislature, executive, and judiciary) has the power to do so. Different countries have different ways of carrying out treaties and arbitration decisions, especially about borders. This is a matter of both national and international law. In the United States, a treaty is the highest law. A law only needs to be passed if the treaty requires it. Under the French Constitution, treaties that need to be approved by law include those that give away, exchange, or add territory. England has no written constitution, so there is a difference between treaties of peace (where the Crown acts without Parliament's approval) and giving away land in peacetime (where Parliament's approval is needed). Even so, there is a difference between British land abroad and the United Kingdom itself. Also, small changes where borders need to be figured out and adjusted are treated differently. In British India, Parliament's approval wasn't needed to give away land. The Indian Constitution doesn't have clear rules about treaties like the US and French Constitutions do. So, in India, we have to look at inferences from the Constitution, the circumstances, and past cases. The legislative entries which allow Parliament to make laws about treaties must be read with article 253. The Article doesn't add anything to the legislative entries, but gives Parliament exclusive power to make laws. The earlier cases decided by this Court are clear on one point: Indian territory cannot be given away without changing the Constitution. The first Berubari case dealt with giving away land that was truly Indian territory. Because the size of India was being reduced, a constitutional amendment was necessary. The second Berubari case dealt with land that India controlled but legally belonged to Pakistan. Giving away that land, which wasn't part of India, didn't require a constitutional amendment. Neither case involved a border dispute. Deciding which side of a border a disputed area falls on is a matter of authority. Who in the government has the power to decide depends on the Constitution and the type of adjustment. The courts must assume that the adjustment is necessary as a matter of law. It's unlikely that the validity of the action can depend on a court's decision. A border dispute and its settlement by an independent group cannot be treated the same as giving away territory. Agreeing to refer a border dispute to arbitration means finding and marking a boundary line between neighboring countries. The very fact of referring such a dispute means that the executive (government) can do what's needed to permanently set the border. Normally, a border adjustment that international law considers valid between two countries should be recognized by the courts. The government can carry it out unless it clearly involves giving away land, in which case Parliament should be involved. This has been the custom of nations whose constitutions don't have specific rules about this. The petitioners haven't proven that the land given to Pakistan was part of Kutch. The phrase "as if they were a Chief Commissioner's Province of the same name" in the Constitution refers to "territories which originally did not belong to West Bengal but which became a part of West Bengal by reason of merger agreements." The history of Kutch doesn't prove that the territories were part of Kutch. The White Paper on Indian States only gives the area of Kutch, not the borders. The Kutch merger agreement doesn't say anything about the borders and leaves the matter open. Also, the orders from 1949 and 1960 don't mention the borders of Kutch. So, none of these documents help in deciding the borders or proving that the disputed area was definitely part of India. The statement by the Prime Minister of India in 1956 and 1965 that the area belonged to India was only a statement and cannot be taken as proof. The maps and other evidence presented by India to the Tribunal show that there has never been a clear border in this area. There is no evidence that India administered (controlled) the disputed area. The presence of Watch and Ward Officers or a polling booth for them at election time doesn't mean that India administered the area or that it was part of India. The diplomatic notes started soon after India and Pakistan were created. The occupation may have meant temporary control, but there was no proof of legal occupation or any other administration. Control over an area is a matter of inference, and unless real control over this area is proven, India cannot be said to legally control it. (Per Shah J.): The Indian Constitution doesn't require a law to be passed before entering into an international treaty. The government can represent the country in all international matters and can take on obligations that are binding on the country under international law. There is a difference between creating a treaty and carrying out its obligations. Under the Constitution, the obligations created by an agreement or treaty are not automatically binding on Indian citizens or others. Parliament has the power to make laws about treaties, and a law is needed when the treaty restricts the rights of citizens or others or changes the laws of the country. If the rights of citizens and others that can be decided in court are not affected, no law is needed to carry out the agreement or treaty. The argument that the power to make or carry out a treaty can only be done under the authority of law is based on a misunderstanding of article 253. The effect of article 253 is that if a treaty deals with a subject that the State Legislature can make laws about, then only Parliament can make laws to carry out the treaty. The Article deals with legislative power and gives Parliament power that it might not otherwise have. But it doesn't limit the government's power under article 73. The government's actions must be supported by law only if they restrict the rights of citizens or others or change laws. In carrying out the Tribunal's decision, there is no giving away of Indian territory to Pakistan. Looking at the agreement, the Tribunal's decision, and the terms for carrying out the decision, it's clear that the dispute is about the border between the two countries. Settling a dispute about an unclear border doesn't mean that either country is giving away territory. In the first Berubari case, the Court said that the agreement could only be carried out by changing the Constitution because there was no question of marking a disputed border. It was a case of simply giving away territory. So, the first Berubari case doesn't apply here. The second Berubari case dealt with giving away land that, although temporarily under Indian administration, had never become Indian territory. The principle of this case goes against the petitioners' argument. There is no definite and reliable evidence that the disputed areas were part of the State of Kutch and, therefore, part of India. Conflicting claims were made by the British authorities and the Maharao of Kutch, and the evidence about who had control over the areas is unclear and inconsistent. Different positions were taken by Indian government officials depending on the situation. These statements don't show an existing state of affairs. They were only made to support or oppose claims or to serve some immediate purpose. Regarding the two inlets, the Tribunal's final decision was based on what was practical, not on a strict determination of rights. But the ground on which the Tribunal's decision was made against India's claim doesn't strengthen the petitioners' rights. There being no evidence that the Maharao of Kutch had control over the inlets, this Court cannot treat them as part of Indian territory. Controlling the territory after the disputes became clear is evidence of an assertion only and not evidence of pre existing rights. The merger of the State of Kutch with India doesn't automatically mean that India has control over the territory unless the control of the State of Kutch is established. The Tribunal's decision simply defines a boundary that has always been indefinite because of the type of land, the changing nature of the border, the inconsistent claims made by the British and Kutch authorities before the State joined India in 1948, and the British authorities' refusal to mark the border between Sind and the Rann of Kutch.
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1900 and 2118 of 1968. 1528, 1900 and 2118 of 1968 and W.P. 234, 402 and 403 of 1968). The several petitioners seek a writ of mandamus or any other appropriate writ or order or direction under Article 32 of the Constitution to restrain the Government of India from coding without the approval of Parliament the areas in the Rann of Kutch known as Kanjarkot, Chhadbet, Dharabanni, Priol Valo Kun and two inlets on either side of Tharparkar to Pakistan as awarded to ' it in the award, 19 February, 1968, of the Indo Pakistan Western Bombay case Tribunal. On 30 June, 1965, the Government of India and the Government of Pakistan concluded an Agreement, reading as follows : Whereas both, the Governments of India and Pakistan have agreed to a cease fire and to restoration of the status quo as at 1 January, 1965, in the area of the Gujarat West Pakistan border in the confidence that this will also contribute to a reduction of the present tension along the entire Indo Pakistan border; 261 Whereas it is necessary that after the status quo has been established in the aforesaid Gujarat West Pakistan border area, arrangements should be made for determination and demarcation of the border in that area; NOW, THEREFORE, the two Governments agree that the following action shall be taken in regard to the said area Article 1: There shall be an immediate cease fire with effect from 0030 hours GMT on 1 July 1965. The award has delineated the boundary in Map C. Maps A and B and C form part of the Award. The Government of Pakistan claimed that "The Tribunal determine that the border between India and Pakistan is that which is marked with green yellow, thick broken line in the Pakistan Claim Map It is common ground that the Gujarat West "Pakistan boundary stretches from the, mouth of the Sir Creek in the west to a point on the Jodhpur boundary in the east. Therefore, in the disputed region, apart from India and Pakistan there is no other State that does or could have sovereignty. There is between India and Pakistan a conterminous boundary today, whether or not there was at all times a conterminous boundary between Sind and the Indian States. Both parties agree that the Rann was not a "tribal area" as defined in Section 311 of the Government of India Act, 1935. Although the AWard of the Tribunal it before us it was necessary to make this brief mention because we are required t"o reach a decision whether this was a clear case of cession of territory following the, award, which it is claimed makes it incumbent for the executive authority in India to obtain the approval of Parliament by suitable amendment of our Constitution, before effectuating the Award. between the two Terminii shall the alignment of the boundary as above described be such as to include in India territory not claimed by India, as defined by the depiction of India 's claim line on Map A. observed "But with regard to cases of territory acquired by conquest during war, and not ceded by treaty, and which are not therefore British freehold, and all possessions that have been ceded by treaty and held as possessions of British Crown, there is no question that the Crown may make a treaty alienating such possession without the consent of Parliament." (1) (3) at 347. A few examples of such action in time of peace may be given. It will thus appear that there is no settled practice. The least that can be said is that cession in time of war in the United Kingdom can always be made by the Crown but in time of peace it can only be made by Parliamentary sanction whether obtained directly or under the Ponsonby rule. Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory ,of India for implementing any treaty, agreement or convention with any other country or countries or any 277 decision made at any international conference, association or other body." It reads "73(1) Subject to the provisions of this Constitution, the executive power of the Union shall extend (a) to the matters with respect to which Parliament has power to make laws; and (b) to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or agreement Provided that the executive power referred to in subclause (a) shall not, save as expressly provided in this Constitution or in any law made by Parliament, extend in any State to matters with respect to which the Legislature of the State has also power to make laws. " (1) (2) 279 (2)If, so, is a law of Parliament relatable to article 3 of the Constitution sufficient for the purpose or is an amendment of the Constitution in accordance with article 368 of the Constitution necessary, in addition to or in the alternative ? "(3) Is a law of Parliament relatable to article 3 of, the Constitution sufficient for implementation of the agreement relating to Exchange of Enclaves or is an amendment of the Constitution in accordance with article 368 of the Constitution necessary for the purpose, in addition or in the alternative." (a) A law of Parliament relatable to article 3 (it the Constitution would be incompetent; (b) A law of Parliament relatable to article 368 of the Constitution is competent and necessary, (c)A law of Parliament relatable to both article 368 and article 3 would be necessary only if Parliament chooses first to pass a law amending article 3 as indicated above; in that case Parliament may have to pass a law on those finds under article 369 and then follow it up with a law relatable to the amended article 3 to implement the Q. This Court observed : "It is true that since this part of Chilahati was not transferred to Pakistan at the proper time, it has been regarded as part of West Bengal and administered as such. Clauses (a) and (b) of section 290 A of the Government of India Act 1935" may be reproduced "Administration of certain Acceding States as a Chief Commissioner 's Province or as part of a Governor 's or Chief Commissioner 's Province : (1)Where full exclusive authority, jurisdiction and powers for and in relation to governance of any Indian, State or any group of such States are for the time being exercisable by the Dominion Government, the Governor General may by order direct (2)that the State or the group of States shall be administered in all respects as if the State or the group of States were a Chief Commissioner 's Province; or (3)that the State or the group of States shall be administered in all respects as if the State or the group of States formed part of a Governor 's or a Chief 'Commissioner 's Province specified in the Order. " Therefore, it would be impossible to hold that a portion of Chilahati is a territory which was administered as if it was a part of West Bengal. The West Bengal Government ,knew all the time that it was an area which belonged to Pakistan and which had to be transferred to it. That being so,there can be no ,question about the constitutional validity of the proposed transfer of this area to Pakistan. The second case concerned territory which ,was de facto under the administration by India but being de jure that of Pakistan, transfer of that territory which was not a part 283 of Indian territory was held not to require a constitutional amendment. The only thing that can be said is that this Court leaned in favour of a constitutional amendment in all cases where admitted territory of India was being ceded but not where the cession was of territory of a foreign power but de facto in possession of India. A settlement of a boundary dispute cannot, therefore, be held to be a cession of territory. It is contended that Article 1 read with the First Schedule to the Constitution made Kutch into a part C State and under the second paragraph of Part C itself its, territory comprised all territories which by virtue of an order made under section 290A of the Government of India Act, 1935, were immediately before the commencement of the Constitution, being administered as if they were a Chief Commissioner 's Province of the same name. The petitioners must establish that this area was a part of Kutch. There is also no evidence of administration in Dhara Banni and Chhadbet. no evidence about it. That is only one art matter, The conditions existing prior to the Award were: (a) that there was a break of hostilities; (b) that then there was a cease fire because the dispute was to be decided by arbitration, (c) that both sides put forward their claims, (d) that there was no clear evidence of demarcation of a boundary acceptable to the parties now or in the past, (e) that the claim Map of India did not show a continuous boundary along all the border, (f) that the area is in different state at different seasons in the year, for part of. If we were sitting in appeal on the award, of the Tribunal we might have formed a different opinion of of the material but we are not. In which case it cannot be said that there will be a cession of Indian territory and the rule earlier laid down by us applies` if no ' constitutional amendment is required the. power of the Executive which extends to matters with respect to which 289 Parliament has power to make laws, can be exercised to correct boundaries now that they have been settled, The decision to implement the Award by exchange of letters, treating the Award as an operative treaty after the boundary has been marked in this area, is within the competence of the Executive wing of Government and no constitutional amendment is necessary. The Union of India contends that the Award merely fixes or demarcates the boundary between the State of Gujarat in India and West Pakistan regarding which there were disputes and much friction, and by the Award no cession of Indian territory is contemplated, and for implementing it amendment of the Constitution is not needed. The Great Rann of Kutch lies between the mainland of Sind (which is now part of Pakistan) and the mainland of Kutcha district of the State of Gujarat. It is not clear whether the southern boundaries of the Sind villages shown in the maps were village boundaries, or a boundary conterminous between the territory of Sind and Kutch State. The Government of India made an enquiry and a resolution, dated February 24, 1914, was.issued by the Government of the Province of Bombay, of which Sind was then a Division. By section 2(2) of the Act the territories of Pakistan were to be (b)the territories which, at the date of the passing of this Act, are included in the Province of Sind . and (c) On May 4, 1948, the State of Kutch merged with the Dominion of India and by Article 1 of the Agreement of Merger the Maharao ceded to the Dominion of India full and exclusive authority over the governance of the State. Its extent was determined by the 2nd paragraph in Part C to, Schedule 1 of the Constitution as "territories which by virtue of the order made under section 290A of the Government of India Act, 1935, were immediately before the commencement of the Constitution being administered, as if they were a Chief Commissioner 's Province of the same name. " Act, 1956, the, territory of the Part C State of Kutch was incorporated with the State of 292 Bombay, and by section 3 (a) of the Bombay reorganization Act, 1960, it was included in the newly formed State of Gujarat. (c) (ii)In the event of no agreement between the Ministers of the two Governments on the determination of the border being reached within two months of the cease fire, the two Governments shall, as contemplated in the Joint Communique of 24 October 1959, have recourse to the Tribunal referred to in (iii) below for determination of the border in the light of their respective claims and evidence produced before it and the decision of the Tribunal shall be final and binding on both the parties. The agreement between the two States was reached purely as an executive act, and no legislative sanction was obtained by the Government of the Union of ' India to its implementation. Therefore, in the disputed region, apart from, India and Pakistan there is no other State that does or could have sovereignty. 'The basis of demarcation shall be the alignment of the boundary as delineated by the Tribunal on maps to be annexed to the Award. claim of the Government of India to the Rann was accepted. The Tribunal unanimously accepted the claim that the Great Rann of Kutch was part of the territory of the State of Kutch and is now Indian territory. By article 73, subject to the provisions of the Constitution, the executive power of the Union extends to the matters with respect to which the Parliament has power to make laws. 'Me effect of article 253 is that if a treaty, agreement or convention with a foreign State 300 deals with a subject within the competence of the State legislature, the Parliament alone has notwithstanding article 246(3), the power to make laws to implement the treaty, agreement or convention or any decision made at any international conference, association or other body. It was accepted that as an international agreement between the two States represented by their executive Governments it became binding between the two States as expressly undertaken. (d) and (e) of article 19(1) in respect of territory between the boundary shown in Map 'A annexed to the award, and the boundary delineated by Map 'C" which represents, in the view of the Tribunal, the 301 border between the two States, is Indian territory and deprivation of the rights of the citizens under article 19 (1) (d) & (e) can only be achieved if the cession of what is now part of the territory of India be ceded under the sanction of a constitutional amendment Mr. Limaye petitioner in Writ Petition No. A review of the terms of the agreement, the unanimous introductory part of the award and the terms of the agreement relating to the implementation of the award and of the final award, make it abundantly clear that the dispute related to the boundary between the two States : it was referred as a boundary dispute, the respective claims urged were about the location of the boundary line, and the operative part of the award declared the alignment of the boundary, which has under the terms of the agreement relating to the procedure for demarcation to be filed by pillars on the alignment. In the advice rendered to the President in a reference made to this Court under article 143 in In Re : The Berubari Uninion and Exchange of Enclaves(1) this Court was called upon to determine the true nature of the agreement between the Prime Ministers of India and Pakistan each Prime Minister acting on behalf of his Government September 10, 1958, for a division of the Berubari Union in the State of West Bengal and exchange of certain enclaves and whether the agreement may be implemented otherwise than by a constitutional amendment. It Was agreed by the two Prime Ministers that a part of the Berubari Union which was allotted to India under that Award and was in occupation of India was to be ceded to Pakistan, and enclaves within Pakistan but in occupation of India de lure were to be exchanged for similar enclaves of Pakistan within Indian territory. In appeal to this Court it was urged, inter alia, that the disputed part of the village Chilahati though allotted to Pakistan was not delivered to Pakistan and had become part of the State of West Bengal, because it was being administered as if it formed part of the territory of West Bengal within the meaning of Entry 13 Part 'A Sch. The Court held that the proposed transfer of a part of the village of Chilahati, which was allotted to Pakistan under the Radcliffe Award but was not delivered, and continued to remain administered as a part of the State of West Bengal,was not constitutionally invalid. In In Re : The Berubari Union and Exchange of Enclaves(2) there was no question of demarcation of a disputed boundary : it was a case of pure cession of Indian territory. But the claimants urge that by the alignment of the boundary under the award, territory which is Indian is now declared foreign territory, and it cannot be implemented without the authority of an amendment modifying the boundary of the State of Gujarat in which is now included the Rann of Kutch. The territory in this sector is contiguous to and in fact is an extension of the mainland of Sind, and apart from the survey maps there is no evidence that it is part of the Great Rann of Kutch. The attitude adopted by the Government of Bombay which is set out in the resolution was that they "did not desire" that any "question of boundaries in the Rann between the Province of Sind and Kutch" should beraised. An. In respect of the Kanjarkot Sector there is no evidence of exercise of sovereign authority by the Maharao of Kutch at any point of time. Even granting that the evidence about the exercise of sovereign authority by the British authorities governing Sind since 1843 over the Rann of Kutch is inconclusive, the claim by Indian citizens to exercise fundamental rights in respect of the territory in that Sector may be entertained only if it be established that the territory is found to be originally governed by the Maharao of Kutch. In the Kutch Administration Report for 1910 11 and thereafter the area of Kutch was stated to be "7616 square miles" and it was stated that "the Rann also belongs to the. In 1931 a correction was introduced that the area of the State was 8249.5 square miles 'exclusive of the Rann of Kutch which belongs to the Kutch State territory. It is not evidence of the fact that it was territory over which the Maharao of Kutch exercised sovereign rights and which by merger of the territory became Indian territory. The evidence on which reliance was mainly placed in support of the claim was the conflicting alignments in the survey and other maps, the claims made by the Maharao of Kutch aid the Government of India which were not accepted. Unless there is evidence to show that the inlets were territory over which the Maharao of Kutch had sovereign rights, acceptance of the award is not required to be implemented by a constitutional amendment. There is no evidence of exercise of any such right, before or after the occupation of Sind. There being no evidence of exercise of sovereign authority by the Maharao of Kutch, this Court cannot treat it as part of Indian territory. On the view the claim made by the claimants that in imple menting the award of the International Tribunal an attempt is made to cede any part of the territory which formed part of the State of Kutch before 1948, or was in de facto occupation and in respect of which sovereign authority was exercised by the Maharao of Kutch. The award does no more than define on the surface of the earth a boundary which has at all material times remained indefinite, because of the nature of the terrain, the shifting nature of the border of what was called Rann, the highly discrepant and conflicting claims made from time to time by the British authorities as well as the Kutch State authorities before the State merged with the Dominion of India in 1948, and the persistent refusal of the British authorities, though there were several occasions to demarcate the boundary between Sind and the Rann of Kutch.
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This includes the land of the States. Parliament has the power to make laws about treaties because of entries 10 and 14 in List I of the Seventh Schedule. Article 253 says that Parliament can make any law for any part of India to carry out a treaty, agreement, or decision made at an international meeting. It also includes using rights and authority that the Indian government has because of a treaty or agreement. The Great Rann of Kutch is a marshy area between Pakistan and the mainland of Kutch. Because of the type of land, the borders of the Rann change depending on the weather. From 1948, India and Pakistan talked about the border between them in the Gujarat/West Pakistan area. It would not only say where the border was, but also show how to mark it on the ground. The petitioners didn't say that the Tribunal's decision was wrong. They argued that the land was part of India and had always been. They said that India had controlled the area, and giving it up to Pakistan meant giving away Indian land. The Indian government argued that it wasn't giving away land. The Court HELD: The Tribunal's decision doesn't force India to give away land, so no change to the Constitution is needed. The Court also said that the Indian government accepted the Tribunal's decision, so it is binding. When a treaty or arbitration decision is made, it must be carried out. This is a matter of both national and international law. The earlier cases decided by this Court are clear on one point: Indian territory cannot be given away without changing the Constitution. Giving away that land, which wasn't part of India, didn't require a constitutional amendment. A border dispute and its settlement by an independent group cannot be treated the same as giving away territory. The government can carry it out unless it clearly involves giving away land, in which case Parliament should be involved. The petitioners haven't proven that the land given to Pakistan was part of Kutch. The history of Kutch doesn't prove that the territories were part of Kutch. The White Paper on Indian States only gives the area of Kutch, not the borders. Also, the orders from 1949 and 1960 don't mention the borders of Kutch. The statement by the Prime Minister of India in 1956 and 1965 that the area belonged to India was only a statement and cannot be taken as proof. The maps and other evidence presented by India to the Tribunal show that there has never been a clear border in this area. Under the Constitution, the obligations created by an agreement or treaty are not automatically binding on Indian citizens or others. Parliament has the power to make laws about treaties, and a law is needed when the treaty restricts the rights of citizens or others or changes the laws of the country. If the rights of citizens and others that can be decided in court are not affected, no law is needed to carry out the agreement or treaty. The argument that the power to make or carry out a treaty can only be done under the authority of law is based on a misunderstanding of article 253. The effect of article 253 is that if a treaty deals with a subject that the State Legislature can make laws about, then only Parliament can make laws to carry out the treaty. The government's actions must be supported by law only if they restrict the rights of citizens or others or change laws. In carrying out the Tribunal's decision, there is no giving away of Indian territory to Pakistan. Looking at the agreement, the Tribunal's decision, and the terms for carrying out the decision, it's clear that the dispute is about the border between the two countries. Settling a dispute about an unclear border doesn't mean that either country is giving away territory. In the first Berubari case, the Court said that the agreement could only be carried out by changing the Constitution because there was no question of marking a disputed border. It was a case of simply giving away territory. There is no definite and reliable evidence that the disputed areas were part of the State of Kutch and, therefore, part of India. There being no evidence that the Maharao of Kutch had control over the inlets, this Court cannot treat them as part of Indian territory. The merger of the State of Kutch with India doesn't automatically mean that India has control over the territory unless the control of the State of Kutch is established. The Tribunal's decision simply defines a boundary that has always been indefinite because of the type of land, the changing nature of the border, the inconsistent claims made by the British and Kutch authorities before the State joined India in 1948, and the British authorities' refusal to mark the border between Sind and the Rann of Kutch.
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the applicability is underfined but the statute is clearly enforceable as long as it is in the statute book side by side with the normal excise duties. The clear intention is that the same provisions shall govern both the levies except that the duty under the later Act is confined to certain goods only und its distributability among the States may perhaps follow a different pattern from the principal duty. [825B C] 3(v) The Finance Acts which levied special or regular or additional excise duties contained in themselves all the elements of charge or duty. T he goods were mentioned and the duty has to be levied either at a percentage of the normal excise duty payable under the 1944 Act or at a percentage of the value of the assessable goods as determined under the 1944 Act. All that was further needed was the applicability of the procedural provisions of the 1944 Act. However, the 1957 Act is incomplete as to the basis of the charge and its provisions would become totally unworkable unless the concepts of 'manufacture ' and 'assessable value ' as determined under the 1944 Act are carried into it. [825D F] & ORIGINAL JURISDICTION: Writ Petition No. 12183 of 1985 etc. etc (Under Article 32 of the Constitution of India) K. Parasaran. Attorney General, Soli i Sorabjee A.J. Rana A.K Sen, S.K. Dholakia, Hari Swarup V.C.Mahajan, A. K. Ganguli, Mrs. Shashi Rana, Mrs. J Wad, Ms. Aruna Mathur, Subhash Parekh, Dushyant Dave, P.H Parekh E. K. Jose Ms. Rashmi Chandrachud, Sanjay Bharthri, Sarve Mitter, C.L. Beri, S.K. Beri R.C. Bhatia. Ravi P. Wadhwani. P C Kapur Sukumaran, D.N. Mishra, B.V. Desai, M.B Lal. Mukul Mudgal, B Kanta Rao, Mrs. H Wahi, Mrs. V D Khanna, Aruneshwar Gupta, Mrs. Anil Katiyar R.K.Kapur, B.R. Kapur. Anis Ahmed Khan. Ms. Abha Jain, R. Karanjawala, Mrs. Karanjawala, Ms. Meenakshi. Vishnu Mathur, Kailash Vasudev P.D.Shah, Shri Narain, Sandeep Narain, M.N. Shroff. Mrs P section Shroff, R. Sasprahbu, S.A.Shroff, S.S Shroff, Praveen Kumar, M.N Chowdhary M.D. Chowdhary, N. Das Gupta, Rajesh Chibber, K.K Bhaduri, Rajiv Dutta. E.C. Agarwala, Harjinder Singh, R.K. Nambiar P Paremeswaran, Ms. Bina Gupta, K.Swami and V.N. Ganpule for the appearing parties. The following Judgments of the Court were delivered PG NO. 783 VENKATACHALIAH J. These appeals, by Special Leave, preferred against the Judgments of the High Court of Gujarat and the High Court of Bombay and the batch of writ petitions under Article 32 of the Constitution of India are heard together and disposed of by this common judgment as they all involve questions common to them concerning the validity of the levy of duties of excise under tariff items 19 and 22 of the Schedule to the ("Central Excise Act") as amended by the Central Excise and Salt Additional Duties Excise (Amendment) 1980 Act ( '"Amending Act") treating as "Manufacture" the process of Bleaching. Dyeing, Printing, Sizing, Mercerising, water proofing, rubberising, Shrink Proofing Organdie, Processing, etc done by the processor who carry out these operations in their factories on Job work basis in respect of Cotton fabric ' and 'Man made fabric belonging to their customers The Amending Act which became effective from 24.12.1979 sought to render the processes of Bleaching, Dyeing, Printing Sizing, Mercerising etc "Manufacture within the meaning of the Section 2(f) of the Central Excise Act The amendment was necessitated by the Judgment of the High Court of Gujarat which has declared the levy on such 'processing as illegal as, according to the High Court the processing did not bring into being a new and commercially different article with a distinctive character and use and did not therefore constitute 'manufacture ' for purposes, and within the meaning, of the charging section. The processors who carry out these operations on cotton fabrics or "man made fabrics which are popularly go by the name 'Grey fabric in the particular trade also challenged the levy of the additional duties of excise under the provisions of the additional Duties of Excise goods (of special importance) Act 1957 (Additional Duties Act) on the ground, first. that if the processes carried on by them do not amount to "manufacture" under Section 2(f) as it originally stood, then, consistent with the impermissibility of main impost. the levy of additional duties also fails and, that at all cvents, even after the amendment the concept of manufacture under the said Additionl Duties Act had not been correspondingly widened by an appropriate amendment. The present hatch of appeals and writ petitions comprise of a large number of cases It is not, having regard to the questions requiring to be decided in these matters, necessary to go into, in any particular detail, the fact situation of each individual case. The processors in these PG NO 784 cases, who may conveniently be referred to as the processors" or "jobbers ', mainly carry out these operations of Bleaching, Dyeing, Printing, Sizing, Finishing etc. of 'Grey fabric ' on 'job work ' against payment of processing charges to them by the customers who are the owners of the Grey fabric. The ownership of the cloth rests with the customers who get these processes done to their specifications from these processing houses on payment of processing charges. The Grey fabric, after processing, is returned by the processing house to the customers. The facts of W P. No. 12 183 of 1985 'M/s. Ujagar Prints vs Union of India and Ors.), in which the petitioner has challenged the levy by a petition under Article 32 of the Constitution are typical and representative of all other similar cases The petitioner is a firm of partners with its Head Office at 51, Sheikh Memon Street, Bombay. It has a factory at Sunder Baug, Deonar, Bombay, which is equipped with machinery and plants for processing of man made grey fabric The machinery and equipment installed in the petitioners factory? it is averred and that is not disputed either are suited for and appropriate to the processing of Grey fabric and are not capable of manufacturing Grey fabric The man made grey fabric such as Art Silk Grey fabric, it is stated, is manufactured in mills and on power looms and that letter is exempt from excise duty on its manufacture Petitioners further over that the Art Silk (Grey fabrics which are processed in the petitioner ' factory are those manufactured on power looms and not by the mills and that the Art Silk (Grey fabric received do not come from the manufacturers of the grey fabric through the manufacturing stream but from the various traders through the sales stream. The point that the petitioners seek to made is that the processing of the grey fabric is not a part, a continuation, of the process of manufacture in the manufacturing stream, but is an independent and distinct operation carried out in respect of the Grey fabric, after it has left manufacturing stage and has become part of the common stock of goods in the market. It is also averred that the firm M/s. Ujagar Prints does not purchase the Grey fabric but is only engaged in processing it for charges and that in many cases the Grey fabric would have passed on from trader to trader with the attendant increase in the prices with each successive change of hands and is entrusted to the petitioner by the last purchaser for processing against stipulated processing charges on job work basis. It is contended that these job work processing operations do not amount to "manufacture" as the petitioners do not carry out any spinning or weaving operations; that what they receive from their customers for processing is PG NO 785 therwise fully manufactured man made fabric and that what is returned to the customers after processing continues to remain man made fabric. The imposition of excise duty on the processor on the basis of the full value of the processed material, which reflects the value of grey fabrics, the processing charges, as well as the selling profits of the customers is, at once unfair and anamolous, for, in conceivable cases the duty itself might far exceed the processing charges that the processors stipulate and get. The batch of cases also includes cases where the grey fabric is also purchased by these processing houses and are sold by them, after processing In some cases the manufacturers of the grey fabric subject it to captive consumption and process them in their own compositeestablishments . The essential question is whether these situational differences have a bearing on the principles of determination of the assessable value of processed grey fabric and whether the assessable value could be different in the different fact situations which would be the logical corollary if the contention of the processing houses which do not processing work for charges on the goods not their own, is accepted and the assessable value determined on the basis of mere processing charges. But the main questions that arise are whether "processing" of the kind concerned in these cases amounts to manufacture", whether the provisions of section 2 of the Amending Act which impart an artificial dimension to the concept of "manufacture" is ultra vires Entry 84 List l; whether at all events, the imposition of a tax on such 1processing is referable to Entry 97 List l; and if the import on the processors is justified under tariff items 19 and 22, according as whether the Grey fabric is cotton or 'man made, what should be the assessable value for purposes of levy of duty so far as processors are concerned. Prior to the Amending Act of 1980, the levy on the processors was challenged before the Gujarat High Court The Gujarat High Court by its judgment dated 24.1.1979 in the cases of Vijaya Textiles Mills vs Union of India and Real Honest Textiles vs Union of India held that the processes that the processing houses imparted to the Grey fabric did not amount to 'manufacture ' and did not attract ad valorem duty under tariff items 19 and 22, and that processors were liable to pay duty under tariff entry 68 only on the value added by the processing. PG NO. 786 Following this judgment a large number of similar claims of processing houses were allowed by the High Court by its judgment dated 13.3.1979. Civil Appeals 1685 to 1766 of 1979 are preferred by the Union of India challenging this view of the High Court. The Bombay High Court on the contrary by its judgment,dated 16th June, 1983 in writ petition 1623 of 1979 New Shakti Dye Works Pvt. Ltd. vs Union of India and Anr. took a view different from the one that commended itself to the Gujarat High Court. Bombay High Court held that even under the concept of "manufacture ' envisaged in Section 2(f) even prior to its amendment, the operations carried on by the processors amounted to "manufacture" and that, at all events, the matter was placed beyond any controversy by the mending Act i.e. Act of 1980. The aggrieved processors have come up in appeal by Special Leave in Civil Appeal No 6396 of 1983. Some of the processors have, as stated earlier, filed writ petitions under Article 32 directly in this court challenging the impost on grounds that commended themselves for acceptance to the Gujarat High Court. Before its amendment by the Amending Act Central Act VI of 1980) Section 2(f) of the Central Excise ACt, defined 'manufacture ' in its well accepted legal sense nomen juris and not with reference to an artificial and statutorily expanded import "2(f) 'manufacture ' includes any process, incidental or ancillary to the completion of a manufactured product; and (i) ] (ii) ] Omitted as unnecessary" The reasoning of the Gujarat High Court was on these lines "In the instant case, the excise duty claimed on the basis of the market value of the processed cotton fabrics or manmade fabrics cannot be levied because, assuming that process amounts to manufacture, all that they have done is to manufacture processed cloth, processed fabric, either cotton or man made and that not being a taxable event in the light of Section 3 read with section 2(d) of the Act and PG NO 787 Items 19 and 22 levy of excise duty on this basis was ultra vires and contrary to law . " This view, according to the Revenue, was incorrect and caused serious prejudice to the legitimate financial interests of the State. Accordingly the President of India promulgated an Ordinance called the 'Central Excise and Salt and Additional Duties of Excise (Amendment) Ordinance ', 1979 (Central Ordinance No. 12 of 1979) sub sequently replaced by Central Act VI of 1980 of the same name with retrospective effect from 24.2.1979 amending Section 2(f) of the Central Excise Act and tariff items 19(1) and 22(1). The relevant entries in the Schedule to the 'Additional Duties Act ' were also amended. So far as amendment to Section 2(f) was concerned, Section of the Amending Act introduced three sub items in the definition of 'manufacture '. Two of them are material for the present purpose: "(v) in relation to goods comprised in Item No. 19(1) of the First schedule, includes bleaching, mercerising, dyeing, printing, water proofing, rubberising. shrink prcofing, organdie processing or any other process or any one or more of these processes. ' "(vii) in relation to goods comprised in Item No 22(1) of the First Schedule, includes bleaching. dyeing, printing, shrink proofing, tentering, heat setting, crease resistant processing or any other process or any one or more of these processes. " Similarly, amendments were affected by Section 3 of the Amendment Act which amended the original tariff items 19 and 22 by sub stituting the following provisions in their respective places: " 1 Cotton fabrics other than (i) embroidery in the piece. strips or in motifs, and (ii) fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials (a) cotton fabrics. not subjected to any process Twenty per cent ad valorem (b) cotton fabrics, subjected to the process of bleaching, mercerising, dyeing, printing, water proofing, rubberising, shrink proofing, organdie processing or any other process or any two or more of these processes. Twenty per cent ad valorem PG NO 788 XXX XXX XXX" "22(1) Man made fabrics other than (i) embroidery in the piece, in strips or in motifs, (ii) fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials (a) man made fabrics, not subjected to any process: Twenty per cent ad valorem plus rupees five per square metre. (b) man made fabrics, subjected to the process of bleaching, dyeing, printing, shrink proofing, tentering, heat setting, crease resistant processing or any other process or any two or more of these processes Twenty per cent ad valorem plus rupees five per square metre. " Section 4 of the Amending Act amended the relevant entries in the Schedule to the Additional Duties Act. Section 5(2) of the Amending Act provided: "5 Special provisions as to duties of excise on cotton fabrics, woollen fabrics, man made fabrics, etc during a certain past period and validation: (1). . . . (2) Any rule or notification or any action or thing made issued, taken or done or purporting to have been made. issued, taken or done under a Central Act referred to in sub section (I) before the date of commencement of this Act, with respect to or in relation to the levy of duties of excise on (a) 'cloth", "cotton cloth" or, as the case may be. cotton fabrics," (b) woollen fabrics", (c) "rayon or artificial silk fabrics" or, as the case may be, "man made fabrics", shall for all purposes be PG NO 789 deemed to be and to have always been, as validly and effectively made, issued taken or done as if the provisions of this section had been in force at all material times and, accordingly, notwithstanding any judgment, decree or order of any court, tribunal or other authority (a) all duties of excise levied, assessed or collected or purported to have been levied assessed or collected before the date of commencement of this Act, on (i) "cloth", "cotton cloth" and "cotton fabrics" subjected to any process, (ii) "woollen fabrics" subjected to any process, (iii) "rayon or artificial silk fabrics" and "man made fabrics" subjected to any process, under any such Central Act shall be deemed to be, and shall be deemed always to have been, as validly levied, assessed or collected as if the provisions of this section had been in force on and from the appointed day; (b) no suit or other proceeding shall be maintained or continued in any court for the refund of, and no enforcement shall be made by any court of any decree or order directing the refund of, any such duties of excise which have been collected and which would have been validly collected if the provisions of this section had been in force on and from the appointed day; (c) . . . . (d) . . . . " 8. Indeed, the correctness of the judgment of the Gujarat High Court in the cases of Vijaya Textiles and Real Honest Textiles were considered by a Bench consisting of three judges of this court in Empire Industries vs Union of India, [1985]SUPP. I SCR 292 by the judgment dated 6.5.1985, one of us (Sabyasachi Mukharji J ) speaking for the Court upheld the validity of the impost Vijaya Textiles Mills vs Union of India, (1979] 4 ELTJ 181, was held not to have been PG NO 790 decided correctly. The view taken by the Bombay High Court in New Shakti Dye Works Pvt. vs Union of India & Anr. was approved. The pronouncement of this court in Empire Industries case otherwise covers, and is a full answer to, the contentions raised in this batch of cases. However, the correctness of the view taken in the Empire Industries ' case on certain aspects was doubted by another Bench of this court and the matter was, accordingly, referred to a Bench of five judges. It is, perhaps, necessary to refer to the order dated 9.12.1986 made by the Division Bench referring the cases to a larger bench. What came before the Division Bench were WP 12183/1985 (M/s. Ujagar Prints vs Union of India & Ors.) and CA Nos. 1685 1766/1979 (Union of India & Ors. vs Narendra Processing Industries & Ors.). Two questions arose before and were examined by the Referring Bench. The first was whether the processing of Grey fabric amounted to 'manufacture ' within the meaning of Section 2(f) as it stood prior to its amendment. The second question was whether, even if such processing did amount to 'manufacture ' what should he the proper basis for determining the assessable value of the processed fabrics. Both these questions had earlier been examined and answered in the Empire Industries case. It is necessary to ascertain as to the precise points on which the Empire Industries ' decision was required to be reconsidered. The Referring Bench did not disagree with the decision in Empire Industries ' case on the question whether processing ' did amount to 'manufacture '. Indeed, the Referring Bench appears to have proceeded on the premise that the view taken in Empire Industries case on the point was the correct one. Referring Bench said this on the point: ". So far as the first question is concerned it was agitated before this Court in Empire Industries Ltd. v Union of India and this Court held that the processes of bleaching, mercerising, dyeing, printing. water proofing. carried out by the processors on job work basis amount to manufacture both under the Act as it stood prior to the amendment as also under the Act subsequent to the amendment and the processed fabrics are liable to be assessed to excise duty in the hands of what may be called jobbers '. Since this was a decision given by a Bench of three Judges, the petitioners and appellants who are carrying on business of processing on job work basis could not contend that these PG NO 791 processes do not amount to manufacture and that the processed fabrics are not liable to be assessed to excise duty in the hands of the jobbers. But, it was the second question which provoked serious controversy before us . It is only on the second question touching valuation that it expressed some doubts. Nevertheless, in par. 6 of the order, the Referring Bench made a further observation to this effect: ". Of course, when. ,n se writ petitions and appeals are referred to the larger Bench it will be open to the larger Bench to consider not only the question of determination of the assessable value but also the other question, namely, whether processing of grey fabric by a processor on job work basis constitutes manufacture, because the judgment in Empire Industries case which has decided this question in favor of the revenue and against the processor is a judgment of a Bench of only three Judges and now the present writ petitions and appeals will be heard by a Bench of five Judges . This is how the first question which is, otherwise concluded by the pronouncement in Empire Industries case is sought to be reagitated before us Out of deference to the learned counsel who vigorously argued this aspect at great length and we though we should examine the submission on this point also, though, the matter could by no means be considered to have been referred to a larger bench. On the second question also the matter is within a short compass. The Referring Bench clearly excluded any possibility of the assessable value being limited to the mere processing charges. It contemplated the alternative possibilities of valuation thus: "It was common ground between the parties that the procedure followed by the Excise authorities was that the trader, who entrusted cotton or man made fabrics to the processor for processing on job work basis would give a declaration to the processor as to what would be the price at which he would be selling the processed goods in the market and that would be taken by the Excise authorities as the assessable value of the processed fabrics and excise duty would be charged to the processor on that basis. This may be illustrated by giving the following example: PG NO 792 (i) Value of grey cloth in the hands of the processor: Rs. 20.00 (2) Value of job work done: Rs.5.00 Value of finished cloth returned to the trader ( 1+2): Rs.25.00 (3) Trader 's selling price inclusive of his selling profits, etc.: Rs.30.00 The assessable value in the case given in this example would be taken by the Excise authorities at Rs.30 which was the sale price of the trader . ' ' The view of the Referring Bench on the point was this: "We cannot accept the contention of the learned counsel on behalf of the petitioners and the appellants that the value of the grey cloth which is processed by the processor should not be included in the assessable value of the processed fabric since the grey cloth is one of the raw materials which goes into the manufacture of the processed fabric and the value of the processed fabric cannot be computed without including the value of the raw material That goes into its manufacture. The assessable value of the processes fabric cannot therefore be limited merely to the value of the job work done but it must be determined by reference to the wholesale cash price of the processed fabric gate of the factory of the processor . The Referring Bench was of the view that the correct assessable value should be: ". . Thus in the example given above the assessable value of the processed fabric must be taken to be Rs. 20 + 5 that is Rs. 25 and the profit of Rs.5 which the trader may make by selling the processed fabric cannot be included in the assessable value. The element of selling profit of the trader would be entirely an extraneous element and it cannot be taken into account for the purpose of determining the assessable value of the processee fabric which would comprise the value of the grey cloth and the PG NO 793 job work charges but exclude the profit at which the trader may sub sequently sell the processed fabric. We have heard Sri A.K Sen, Sri Soli J. Sorabjee, Dr. Chitale and Sri Dholakia, learned Senior Advocates in the appeals and writ petitions preferred by the processors; and Sri K. Parasaran, learned Attorney General and Sri A.K. Ganguli, learned Senior Advocate for the Union of India and its authorities. On the contentions urged, the points that fall for determination are: (a) (i) Whether the processes of Bleaching, Dyeing, Printing, Sizing, Shrink proofing etc. carried on in respect of cotton or man made 'Grey fabric ' amount to 'manufacture ' for purposes, and within the meaning of Section 2(f) of the prior to the amendment of the said Section 2(f) by Section 2 of the Amending Act VI of 1980. (a) (ii) Whether the decision in Empire Industries Limited & Ors. vs Union of India, [1985] Suppl. 1 SCR 282 holding that these operations amount to a manufacture is wrongly decided and requires reconsideration. (b) Whether the amendment brought about by the Amending Act of 1980 of Section 2(f) and to tariff items 19 and 22 of the Central Excise Act is ultra vires Entry 84 List I and, therefore, beyond the competence of the Union Parliament. Whether, at all events, even if the expanded concept of manufacture introduced by the Amendment is beyond the scope of Entry 84 List l, whether the impost is, at all events, referable to and supportable by the residual Entry 97 of List I. (c) Whether, at all events, even if the amendments to Central Excise Act are valid, the levy under the Additional Duties Act is unsupportable and without the authority of law as there is no corresponding enlargement of the definition of 'manufacture ' under the Additional Duties Act. (d) Whether the retrospective operation of the Amending Act is an unreasonable restriction on the fundamental right of the 'processors ' under Article 19(1)(g) of the Constitution. PG NO 794 (e) Whether, even if the levy is justified, at all events, the computation of the assessable value of the processed Grey fabric on the basis of the whole sale cash selling price declared under classification list under Rule 173(b) is unjustified and illegal in respect of the assessable value of the processed Grey fabric done on job work basis. Re: Contention (a) The essential condition to be satisfied to justify the levies, contend counsel, is that there should be 'manufacture ' of goods and in order that the concept of 'manufacture ' in Entry 84 List I is satisfied there should come into existence a new article with a distinctive character and use, as a result of the processing. It is contended that nothing of the kind happens when 'Grey fabric ' is processed; it remains 'grey fabric '; no new article with any distinctive character emerges. A number of authorities of this Court and of the High Courts were cited. Particular reference was made to Union of India vs Delhi Cloth & General Mills, [1963] Supp. ( I) SCR 586 at 597; Tungabhadra Industries Ltd. vs Commercial Officer Kurnool, L 1961] ? SCR 14; Deputy Commissioner of Sales Tax vs Pio Food Packers, ; at 1275; Sterling Foods vs State of Karnataka, ; at 475 & 476; Kailash Nath vs State of U.P., 8 STC 358; Deputy Commissioner Sales Tax vs Sadasivan, 42 STC 201 (Kerala); Swastic Products Baroda vs Superintendent of Central Excise, Swan Bangle Stores v Assistant Sales Tax Officer, 25 STC 122 '(Allahabad); Stale of Andhra Pradesh vs Sri Durga Hardware Stores, 32 STC 322 (Andhra Pradesh) and Extrusion Process Pvt. Ltd. vs N.R. Jadhav, Superintendent of Central Excise, [19791 ELT 380 (Gujarat ). 13. The following observations of this Court in Union of India vs Delhi Cloth and General Mills, AIR 1963 SC p. 791 at 794 were emphasised: "According to the learned counsel "manufacture is complete as soon as by the application of one or more processes. the raw material undergoes some change. To say this is to equate "processing to manufacture and for this we can find no warrant in law. The word "manufacture" used as a verb is generally understood to mean as "bringing into existence a new substance ' and does not mean merely to produce some change in a substance. however minor in consequence the change may be. ' PG NO 795 These observations in Health & Milligan Manufacturing Company, the Sherwin Williams Company, etc. vs J.H. Worst, Director of the North Dakofa Government Agricultural Experiment Station which were referred to with approval by this Court in the case of Pio Food Packers ' supra, was relied upon: "At some point processing and manufacturing will merge. But where the commodity retains a continuing substantial identity through the processing stage we cannot say that it has been "manufactured". (Emphasis Supplied) The following observations of Bhagwati J. in Pio Food Packers case were cited: " . . manufacture is the end result of one or more processes through which the original commodity is made to pass . Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that in one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it MUSt be regarded as still retaining its original identity." (Emphasis Supplied) The observations of this ( 'court in Kailash Nath vs State of U. P., 3 STC 358 made while repelling the contention of the revenue urged in that case that when cloth is printed and coloured it gets transformed to sorne other material and that therefore when such printed and coloured cloth is exported what was exported was not the same cloth and that by such printing and dyeing the original cloth got transformed into different material were relied on: The cloth exported is the same as the cloth sold with this variation or difference that the colour has change by printing and processing. In view which we take the cloth exported is the same as the cloth sold by the petitioners, there can be no question above the exemption clause not applying to it . (Emphasis Supplied) The following passage in the permanent Edition of 'Words and Phrases ' referred to with approval in Delhi Cloth and General Mills ' AIR 1963 SCp. 791 at 795 case was referred to: PG NO 796 "Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use. " Further, learned counsel placed reliance upon Tungabhadra Industries ' case where it was held that ground nut oil after the process of hydrogenation which improved its keeping qualities and shelf life yet remained basically ground nut oil and that the quality of the oil had been improved by the processes it was subjected to, did not detract from its continuing identity as ground nut oil. The change brought about in the oil, it was observed by this Court, rendered it more acceptable to the customers by improving its quality, but did not render the oil a commodity other than ground oil which still continued to be "groundnut oil" notwithstanding the processing which was merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desire to consume ground nut oil. Likewise the processing such as bleaching, dyeing. printing, finishing etc. , it was urged, merely improved the quality of Grey fabric and rendered it more acceptable to the customers while not shedding its basic character as 'cotton fabric ' or 'man made fabric '. It was also urged that the affidavits filed by person engaged in and familiar with the textile trade indicated that the finished fabric was not a commercially different commodity. We have carefully considered these submissions. In the Empire Industries case, this court considered similar submissions in an almost identical context and situation. Learned judges referred to the observations of this Court in Commissioner of Sales Tax UP (Lucknow) vs Harbilas Rai, 21 STC 17 in which the view expressed by the Division Bench of the Madhya Pradesh High Court in Hiralal Jitmal vs Commissioner of Income tax, 8 STC 325 at 326 was held supportable on the reasoning that: " . The decsion of the Madhya Pradesh High Court might perhaps be justified on the ground that a printed or dyed cloth is commercially different article from the cloth which is purchased and printed or dyed." PG NO 797 The Division Bench also referred to, with approval, the decision of the Bombay High Court in Kores (India) Limited vs Union of India and Ors., The Division Bench noticed the question arising for decision: "Fabric itself means woven materials. It was contended that processing the manufactured fabric does not bring into existence any new woven material but the question is: does new and different goods emerge having distinctive name, use and character?" Answering, the Bench said: "It appears in the light of the several decisions and on the construction of the expression that the process of bleaching, dyeing and printing etymologically also means manufacturing processes . ' 15. It is strenuously urged for the processors that the view taken by the Division Bench in the Empire Industries case suffers from fallacies both of reasoning and conclusion and requires to be reconsidered. The prevalent and generally accepted test to ascertain that there is 'manufacture ' is whether the change or the series of changes brought about by the application of processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result of the processes. The principles are clear. But difficulties arise in their application in individual cases. There might be border line case where either conclusion with equal justification be reached. Insistence on any sharp or intrinsic distinction between processing ' and 'manufacture, we are afraid, results in an over simplification of both and tends to blur their interdependence in cases such as the present one. The correctness of the view in the Empire Industries case cannot be tested in the light of material in the form of affidavit expressing the opinion of persons said to be engaged in or connected with the textile trade as to the commercial identity of the commodities before and after the processing placed before the court in a sub sequent case. These opinions are, of course, relevant and would be amongst the various factors to be taken into account in deciding the question. PG NO.798 16. On a consideration of the matter, we are persuaded to think that the view taken in the Empire Industries case that 'Grey fabric ' after they undergo the various processes of bleaching, dyeing, sizing printing, finishing etc. emerges as a commercially different commodity with its own price structure, custom and other commercial incidents and that there was in that sense a 'manufacture ' within the meaning of Section 2(f), even as unamended, is an eminently plausible view and is not shown to suffer from any fallacy. Indeed, on this point the Referring bench did not disagree or have any reservations either. It is to be noticed that if the amending law is valid, this aspect becomes academic. We think, we should reject Contention (a). Re: Contention (b) The concept of manufacture ' embodied in Entry 84 of List I, it is urged, should be construed not in an artificial sense, but in its recognised legal sense and so construed artificial dimensions sought to be imparted to it by the amendment would be impermissible. Learned counsel drew attention to the following observations of this Court in Diamond Sugar Mills vs State of UP, ; at 248. ". . we have, on the one hand, to bear in mind the salutary rule that words conferring the right of legislation should be interpreted liberally and the powers conferred should be given the widest amplitude; on the other hand we have to guard ourselves against extending the meaning of the words beyond their reasonable connotation, in an anxiety to preserve the power of the legislature. (Emphasis supplied) Though entries in the legislative lists are to be construed liberally and the widest possible amplitude given to them, however, no artificial or arbitrary extensions of the meaning of the words in the entry. it is urged, are permissible. It is submitted the concept manufacture in Entry 84 List I has a well accepted legal connotation and in construing the entry the precise connotation which it possesses and conveys in law must be kept in mind. There is in law no 'manufacture ' unless as a result of the process a new and commercially distinct product with distinct use emerges. The idea of manufacture might imply change, but every change is not necessarily manufacture. It is. accordingly, contended that the amendment which seeks to equate "processing "with "manufacture" is beyond the scope of Entry 84 List I. PG NO. 799 18. In the Empire Industries ' case a similar argument was urged but without success. Learned Judges were persuaded to the view that such processes which were referred to by the amendment were not so alien or foreign to the concept of 'manufacture ' that they could not come within that concept. Entries to the legislative lists, it must be recalled, are not sources of the legislative power but are merely topics or fields of legislation and must receive a liberal construction inspired by a broad and generous spirit and not in a narrow pedantic sense. The expression "with respect to" in Article 246 brings in the doctrine of "Pith and Substance" in the understanding of the exertion of the legislative power and wherever the question of legislative competence is raised the test is whether the legislation, looked at as a whole, is substantially 'with respect to ' the particular topic of legislation. If the legislation has a substantial and not merely a remote connection with the entry, the matter may well be taken to be legislation on the topic. In Empire Industries case, it was held: "As has been noted processes of the type which have been incorporated by the impugned Act were not so alien or foreign to the concept of "manufacture ' that these could not come within that concept. At all events, even il the impost on process is not one under Entry 84, list l, but is an impost on 'processing ' distinct from "manufacture" the levy could yet be supported by Entry '97. List l, even without the aid of the wider principle recognised and adopted in Dhillon 's case AIR 1972 SC l061. It was, however, contended that the levy of tax on an activity which cannot reasonably be regarded as an activity of 'manufacture ' cannot be described as a levy of duties of excise under Entry 84, List I. If it is a non descript tax under Entry 97, the Parliament, it is urged, has not chosen1 to enact any such law in this case. The charging section does not, it is urged. bring such a taxable event to charge. This argument was noticed in Empire Industries case thus: " . It was then argued that if the legislation was sought to be defended on the ground that it is a tax on activity like processing and would be covered by the powers enumerated under Entry 97 of List I of the Seventh Schedule PG NO 800 then it was submitted that there was no charging section for such an activity and as such the charge must fail, and there cannot be any levy . " The contention was rejected holding: ". This argument proceeds on an entire misconception. The charging section is the charging section 3 of the . It stipulates the levy and charge of duty of excise on all excisable goods produced or manufactured. "Manufactured" under the Act after the amendment would be the 'manufacture ' as amended in section 2(f) and Tariff item 19 I and 22 and the charge would be on that basis. Therefore it is difficult to appreciate the argument that the levy would fail as there will be no appropriate charging section or machinery for effectuating the levy on the activity like the method of processing even if such an activity can be justified under Entry 97 of List l of Seventh Schedule. We are, therefore, of the opinion that there is no substance in this contention We respectfully agree. If a legislation purporting to be under a particular legislative entry is assailed for lack of legislative competence, the State can seek to support it on the basis of any other entry within the legislative competence of the legislature. It is not necessary for the State to show that the legislature, in enacting the law, consciously applied its mind to the source of its own competence. Competence to legislate flows from Article 245, 246, and the other Articles following, in Part XI of the Constitution. In defending the validity of a law questioned on ground of legislative incompetence, the State can always show that the law was supportable under any othe entry within the competence of the legislature. Indeed in supporting a legislation sustenance could be drawn and had from a number of entries. The legislation could be a composite legislation drawing upon several entries. Such a "rag bag" legislation is particularly familiar in taxation. Bennion in his "Statutory Interpretation" (at page 644) refers such a composite legislation, though the observations must be under stood in the context of the supremacy of the British Parliament and one of unlimited powers and which is, under no inhibitions unlike a federal polity, of PG NO 801 distribution of legislative powers. Learned author refers to: " 'Ragbag ' Acts: Some Acts are 'rag bag ' Acts, covering many areas. The annual Finance Act is an extreme example. It is divided into Parts, dealing respectively with customs and excise duty, value added tax, income tax, capital gains tax, stamp duty, capital transfer tax and so on. Even within a Part of a Finance Act the various provisions havnuite different aims. " In Hari Krishna Bhargav vs Union of India and Anr., ; , this Court said: ". . There is no prohibition against the Parliament enacting in a single statute, matters which call for the exercise of power under two or more entries in List I of the Seventh Schedule. Illustrations of such legislation are not wanting in our statute book, and the fact that one of such entries is the residuary entry does not also attract any disability . " 21. So far as, the exclusive competence of the Union Parliament to legislate is concerned all that is necessary is to find out whether the particular topic of legislation is in List II or List III. If it is not, it is not necessary to go any further or search for the field in List I. Union Parliament has exclusive power to legislate upon that topic or field. Of course, it has concurrent power also in respect of the subjects in List III. Contention (b) is, therefore, insubstantial. Re: Contention (c) This pertains to the validity of levy of additional duties. The contention proceeds on the pre supposition that processing does not amount to 'manufacture ' under Section 3(1) of the Additional Duties Act. If it does, as has been held on point (a), this argument does not survive at all. The point, however, sought to be put across is that, even if the concept of 'manufacture ' for purposes of levy of excise duty under the 'Central Excise Act ' is validly expanded or that a tax on processing is, otherwise, PG NO 802 supportable under Entry 97(1), the position under the 'Additional Duties Act ' ;s quite different. The 'Additional Duties Act ' does not expressly invoke or attract the definition of 'Manufacture ' in Section 2(f) of the 'Central Excise Act '; nor does the 'Additional Duties Act ' itself contain a definition of 'manufacture ' in the broad terms in which Section 2(f), as amended, contains. The result is, it is urged, that the ordinary legal connotation of 'manufacture ', contained in the charging Section 3(1) of the 'Additional Duties Act ' can alone support the levy. It is not, it is urged, permissible to import the artificial and expanded definition of 'manufacture ' containing in Section 2(f), as amended, into Section 3(1) of the Additional Duties Act. The following observations of this court in Pandit Ram Narain vs The State of Uttar Pradesh and Ors. , l1956] SCR 664 at 673 are pressed into service: ". .It was rightly pointed out that it is no sound principle of construction to interpret expressions used in one Act with reference to their use in another Act . " Again, the observations in Macbeth & Co. vs Chisten, at 224 referred to with approval by this court in Commissioner of Sales Tax, Madhya Pradesh vs Jaswant Singh Charan Singh, ; at 725 26 were relied upon: ". .It would be a new terror in the construction Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone '. ." It is further contended that a mere amendment of the schedules to the 'Additional Duties Act ' purported by Section 4 of the Amending Act VI of 1980 would be inadequate to serve the purpose of a valid levy on the activity of processing. It was also urged that Section 3(3) of the 'Additional Duties Act ' which provides that the provisions of 'Central Excise Act ' and the rules made thereunder shall, so far as may be, apply in relation to the 'levy and collection" of the Additional Duties would not also enable the wider definition of 'manufacture ' in Section 2(f) to be imported into Section 3(1) of the Additional Duties Act to justify levy of Additional Duties on 'processing '. The contention was neatly and attractively presented and appeared, at first blush, to merit a serious PG NO 803 consideration of the validity of the levy of additional duties. But on a closer examination of the concept of, and the scheme for, levy and collection of the additional duties and the specific statutory provisions, the tensile strength of the argument breaks down. There are at least two circumstances which render the definition of 'manufacture ' under Section 2(f) attracted to the additional levies. Section 3(3) of the Additional Duties Act provides: ". .Ievy and collection of the additional duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in sub section (l) . " It is plain that the statute expressly makes the provision in the "Central Excise Act" apply in relation to 'levy and collection ' of the additional duties. The question is whether this provision is sufficient to attract Section 2(f) of the main Act as amended. This, in turn, depends upon what the expression "levy" connotes and carries with it. The term 'levy ' it is held, is an expression of wide import. It includes both imposition of a tax as well as its quantification and assessment. In Assistant Collector of Central Excise, Calcutta Division vs National Tobacco Co. of India Ltd., [ 1973] I SCR 822 this Court held: "The term "levy" appears to us to be wider in its import than the term "assessment". It may include both of a tax as well as assessment. The term imposition" is generally used for the levy of a tax or duty by legislative provision indicating the subject matter of the tax and the rates at which it has to he taxed . . 24. That apart, Section 4 of Amending Act VI of 1980 has amended the relevant items in the schedule to the Additional Duties Act. The expressions 'produce ' or 'manufacture ' in Section 3(1) of the Additional Duties Act must be read along with the entries in the schedules. In Att. Gen vs Lamplough, , 229 it is observed: 'A schedule in an Act is a mere question of drafting, a mere question of words. The schedule is as much a part of the statute, and is as much an enactment, as any other part. 804 Maxwell says (in Interpretation of Statutes 11th ed. p. 156): " . if an enactment in a schedule contradicts an earlier clause it pevails against it. " Bennion (in Bennion 's Statutory Interpretation, p. 568 569) referring to the place of schedules in statutes observes: "The Schedule is an extension of the section which induces it. Material is put into a Schedule because it is too lengthy or detailed to be conveniently accommodation in a section, . ." "A Schedule must be attached to the body of the Act by words in one of the sections (known as inducing words]. It was formerly the practice for the inducing words to say that the Schedule was to be construed and have effect as part of the Act. (See, e.g. Ballot Act 1872 section 28.) This is no longer done, being regarded as unnecessary. If by mischance the inducing words were omitted, the Schedule would still form part of the Act if that was the apparent intention. " " . The schedule is as much a part of the statute, and is as much an enactment, as any other par. (See also. to the like effect, Flower Freight C o. Ltd. vs Hammond [19633] 1 QB 275; R vs Legal Aid Committee No. I [London] Legal Aid Area. ex p. Rondel, and metropolitan Police Commr. vs Curran. , What appears. therefore, clear is that what applies to the main levy, applies to the additional duties as well, we find no substance in Contention [c] either. Re: Contention [d] There is really no substance in the grievance that the retroactivity imparted to the amendments is violative of Article 19 [l] (g). A Competent legislature can always validate a law which has been declared by courts to be invalid, provided the infirmities and vitiating infactors noticed in the declaratory judgment are removed or cured. Such a validating law can also be made retrospective. If in the light of such validating and curative exercise made by the Legislature granting legislative competence the earlier judgment becomes irrelevant and unenforceable, that cannot PG NO 805 be called an impermissible legislative overruling of the judicial decision. All that the legislature does is to usher in a valid law with retrospective effect in the light of which earlier judgment becomes irrelevant. (See Sri Prithvi Cotton Mills Ltd. & Anr. vs Broach Borough Municipality & Ors., Such legislative expedience of validation of laws is of particular significance and utility and is quite often applied, in taxing statutes. It is necessary that the legislature should be able to cure defects in statutes. No individual can acquire a vested right from a defect in a statute and seek a windfall from the legislature 's mistakes. Validity of legislations retroactively curing defects in taxing statutes is well recognised and courts, except under extraordinary circumstances, would be reluctant to override the legislative judgment as to the need for and wisdom of the retrospective legislation. In Empire Industries Limited & Ors. vs Union of India & Ors. Etc., [ 19851 l Supp. 292 at 327 this court observed: ". . not only because of the paramount governmental interest in obtaining adequate revenues, but also because taxes are not in the nature of a penalty or a contractual obligation but rather a means of apportioning the costs of government amongst those who benefit from it". In testing whether a retrospective imposition of a tax operates so harshly as to violate fundamental rights under Article l9(1)(g), the factors considered relevant include the context in which retroactivity was contemplated such as whether the law is one of validation of taxing statute struck down by courts for certain defects; the period of such retroactivity, and the degree and extent of any unforeseen or unforseable financial burden imposed for the past period etc. Having regard to all the circumstances of the present case, this court in Empire Industries ' case held that the retroactivity of the Amending provisions was not such as to incur any infirmity under Article 19( l)(g). We arc in respectful agreement with that view. There is no merit in contention (d) either. Re: Contention (e) This concerns the question of the correctness of the determination of the assessable value. The processors say that they have filed classification lists under rule 173 B PG NO 806 of the Central Excises and Salt Rules 1944 as they had no other choice and that if the proper principles of determination of the assessable value do not legally justify the consequences flowing from the classification, it is open to them to contend against the validity of the determination and they are not estopped from doing so. Duties of excise are imposed on the production or manufacture of goods and are levied upon the manufacturer or the producer in respect of the commodity taxed. The question whether the producer or the manufacturer is or is not the owner of the goods is not determinative of the liability. The essential and conceptual nature of the tax is to be kept clearly distinguished from both the extent of the power to impose and the stage at which the tax is imposed. Though the levy is on the production or manufacture of the goods, the imposition of the duty could be at the stage which the law considers most covenient to impose as long as a rational relationship with the nature of the tax is maintained. The processors contend that, the assessable value could only be the job work charges received by them for the processing of 'Grey fabric ' and cannot be the selling price at which the customer who entrusts the Grey fabric for processing ultimately sells it in the market. Such a sale price, it is said, would, quite painly. include the value of the Grey fabric, the processing charges and also the selling profit of the customer. Even in regard to the price of the Grey fabric itself which comes to the processing houses in fully manufactured condition would again depend upon how many hands it has changed before reaching the particular customer who brings them for processing. The determination of assessable value at the actual or hypothetical selling price of goods of like nature and quality in the wholesale market would include the post manufacturing profits of the trader which cannot legitimately be regarded as part of the assessable value. This contention was considered in detail in Empire Industries case [ 1985] 1 Supp. SCR 293 at 327 wherein it was held: "When the textile fabrics are subjected to the processes like bleaching, dyeing and printing etc. by independent processes, whether on their own account or on job charges basis, the value of the purposes of assessment under section 4 of the Central Excise Act will not be the processing charges alone but the intrinsic value of the processed fabrics which is the price at which such fabrics are sold PG NO 807 for the first time in the wholesale market. That is the effect of section 4 of the Act. The value would naturally include the value of grey fabrics supplied to the independent processors for the processing. However, excise duty, if any, paid on the grey fabrics will be given pro forma credit to the independent processors to be utilised for the payment on the processed fabrics in accordance with the Rules 56A or 96D of the Central Excise Rules, as the case may be." Even the Referring Bench did not doubt the correctness of the inclusion in the assessable value the cost of the Grey fabric and the processing charges. The Referring Bench held: "We cannot accept the contention of the learned counsel on behalf of the petitioners and the appellants that the value of the grey cloth which is processed by the processor should not be included in the assessable value of the processed fabric . " 29. In the argument, as presented, that the assessable value would include what is referred to as the "post manufacture profits", there is an obvious fallacy. In Atic Industries Ltd. vs H.H. Dave, Asstt. Collector of Central Excise and Ors., [ 1975] 3 SCR p. 563 Bhagwati J. speaking for the Court said: "The value of the goods for the purpose of excise must take into account only the manufacturing cost and the manufacturing profit and it must not be loaded with post manufacturing cost or profit arising from post manufacturing operation . . " " . It may be noted that wholesale market in a particular type of goods may be in several tiers and the goods may reach the consumer after a series of wholesale transactions. In fact the more common and less expensive the goods, there would be greater possibility of more than one tier of wholesale transactions. ." " . If excise were levied on the basis of second or subsequent wholesale price, it would load the price with a post manufacturing element, namely, selling cost and selling profit of the wholesale dealer. That would be plainly contrary to the true nature of excise as explained in the PG NO 808 Voltas ' case (supra). Secondly, this would also violate the concept of the factory gate sale which is the basis of determination of value of the goods for the purpose of excise. " "There can, therefore, be no doubt that where a manufacturer sells the goods manufactured by him in wholesale to a wholesale dealer at arms length and in the usual course of business, the wholesale cash price charged by him to the wholesale dealer less trade discount would represent the value of the goods for the purpose of assessment of excise . " Explaining what really is the idea of "post manufacturing profit" referred to in Atic 's case this court in Union of India & Ors. v Bombay Tyre International Ltd. etc. , [ 1984] l SCR, p. 347 at 375 aid: ". .When it refers to post manufacturing expenses and post manufacturing profit arising from post manufacturing operations, it clearly intends to refer not to the expenses and profits pertaining to the sale transactions effected by the manufacturer but to those pertaining to the subsequent sale transactions effected by the wholesale buyers in favour of other dealers." (Emphasis Supplied) The principles for the determination of assessable value are laid down under section 4 of the Act. Section 4 of the Central Excise Act ' envisages that the value of an article for the purposes of duty shall be deemed to be; (a) The wholesale cash price for which an article of the like kind and quality was sold or was capable of being sold at the time of removal of the article from the factory or premises of manufacture for delivery at the place of manufacture or; (b) Where such price was not ascertainable, the price at which an article of the like kind and quality was sold or capable of being sold at the time of removal of the article chargeable with duty. The nature of the excise duty is not to he confused with, or tested with reference to, the measure by which the tax is assessed. The standard adopted as the measure of assessment may throw light on the nature of the levy but is not determinative of it. When a statutory measure for assessment of the tax is contemplated, it "need not contour PG NO 809 along the lines which spell out the levy itself.", and "a broader based standard of reference may be adopted for the purposes of determining the measure of the levy. " Any statutory standard which maintains a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the tax. In the case of processing houses, they become liable to pay excise duty not because they are the owners of the goods but because they cause the 'manufacture ' of the goods. The dimensions of the Section 4(1)(a) and (b) are fully explored in number of decisions of this Court. Reference may be made to the case of Bombay Tyres International. Consistent with the provisions of Section 4 and the Central Excise (Valuation) Rules, 1975, framed under Section 37 of the Act it cannot be said that the assessable value of the processed fabric should comprise only of the processing charges. This extreme contention if accepted, would lead to and create more problems than it is supposed to solve; and produce situations which could only be characterised as anomalous. The incidence of the levy should be uniform, uninfluenced by fortuitous considerations. The method of determination of the assessable value suggested by the processors would lead to the untenable position that while in one class of Grey fabric processed by the same processor on bailment, the assessable value would have to be determined differently dependent upon the consideration that the processing house had carried out the processing operations on job work basis, in the other class of cases, as it not unoften happens, the goods would have to be valued differently only for the reason the same processing house has itself purchased the Grey fabric and carried out the processing operations on its own. It is to solve the problem arising out of the circumstances that goods owned by one person are "manufacture ' by another that at a certain stage under rule 174A, a notification was issued by the Central Government exempting from the operation of the rule 174A: ". every manufacturer who gets his goods manufactured on his account from any other person, subject to the conditions that the said manufacturer authorises the person, who actually manufactures or fabricates the said goods to comply with all procedural formalities under ( l of 1944) and the rules made thereunder, in respect of the goods manufactured on behalf PG NO 810 of the said manufacturer and, in order to enable the determination of value of the said goods under section 4 of the said Act, to furnish information relating to the price at which the said manufacturer is selling the said goods and the person so authorised agrees to discharge all liabilities under the said Act and the rules made thereunder. On a consideration of the matter, the view taken in the matter in the Empire Industries case does not call for reconsideration. Contention (e) is also held and answered against the petitioner. In the result the appeals preferred by the Union of India are allowed and the Judgment of the Gujarat High Court under appeal is set aside. The appeals preferred by the processors against the judgment of the Bombay High Court and the writ petitions filed by the processors directly in this court are dismissed. There will, however, be no orders as to costs in the appeals and the writ petitions. The Union of India and its authorities shall be entitled to recover the amounts due by way of arrears of excise duty and shall be entitled to take necessary steps to seek the enforcement of the bank guarantees, if any, for the recovery of the arrears. SABYASACHI MUKHARJI, J. I have had the advantage of reading in draft the judgment proposed to be delivered by my learned brother Venkatachaliah, J. I respectfully agree with him. There is, however, one aspect of the matter in respect of which I would like to say a few words. Contention (e) as noted by my learned brother in his judgment deals with the determination of the assessable value. The processors in the cases before us say that they have filed classification lists under rule 173B of the Central Excises and Salt Rules, 1944 as they had no other choice and that if the proper principles of determination of the assessable value do not legally justify the consequences flowing from the classification it is open to them to contend against the validity of the determination and they are nOt estopped from doing so. The processors are right in contending that the true principle should be followed in determining the assessable value. Then what is the true principle? Section 4 of the Act deals with the valuation of excisable goods for purposes of charging of duty of excise. Section 4 [l] (a) of the Act stipulates that the value should be subject to other provisions of the Section the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer PG NO 811 is not a related person and the price is the sole consideration for the sale. For the present purpose, we are not concerned with the provisos nor the situation where the normal price of goods is not ascertainable for any reason. In Empire Industries Limited & Others etc. vs Union of India and Others etc. , L , it was held that where for the purpose of calculating assessable value, a notional sum is laid down by the legislature to be arrived at one a certain basis, it is not permissible for the courts to engraft into it any other deduction or allowance or addition or read it down on the score that unless the said deduction or allowance or addition is authorised elsewhere in the Act or in the Rules. A statutory charge should be measured by the method of its own computation as laid down in the statute and not by any other method of computation. The circumstances that thereby the benefit of any exemption granted by the legislation may be lost and that in some cases hardship might result are not matters which would influence courts on the construction of the statute. A tax payer is entitled only to such benefit as is granted by the legislature. It was emphasised that the taxation under the Act is the rule and the benefit and exemption, the exception. And it was held that there was no hardship in these cases. It was further reiterated that when the textile fabrics are subjected to the processes like bleaching, dyeing and printing etc. by independent processes, whether on their own account or on job charges basis, the value for the purposes of assessment under section 4 of the Central Excise Act will not be the processing charge alone but the intrinsic value of the processed fabrics which is the price at which such fabrics are sold for the first time in the wholesale market. That is the effect of section 4 of the Act. The value would naturally include the value of grey fabrics supplied to the independent processors for the processing. However excise duty, if any, paid on the grey fabrics will be given proforma credit to the independent processors to be utilised for the payment on the processed fabrics in accordance with the relevant rules. In M/s. Ujagar Prints vs Union of India, [1986] Suppl. S.C.C. 652 Bhagwati C.J. held that the processes of bleaching, dyeing, printing, mercerising etc. carried on by a processor on job work basis in respect of grey cotton fabrics and manmade fabrics belonging to the customer and entrusted by him for processing amount to manufacture with the meaning of the Act prior to its amendment so as to attract levy of excise duty on the processed fabrics and in any event, after the Amendment Act, these processes amount to manufacture and excise duty is leviable on the processed fabrics. The learned Chief Justice also dealt with the other PG NO 812 question, namely, what is the value of the processed fabrics liable to be assessed. Referring to the aforesaid decision of the Empire Industries, (supra), he illustrated the problem by reference to the example set out in the judgment (Page 654 of the report at para 2). In that example illustrated by him the value of the grey cloth in the hands of the processor was Rs.20. The value of the job work was Rs.5. B Trader 's selling price inclusive of his selling profits etc. was put at Rs.30. Bhagwati C.J. at page 655 of the report observed that the assessable value of the processed fabric must obviously be taken to he the wholesale cash price of the processed fabric at the factory gate that is when the processed fabric leaves the factory of the processor and it cannot possibly include the selling profit of the trader who subsequently sells the processed fabrics. The learned Chief Justice reiterated that it is at the point when the processed fabric leaves the factory of the processor that its assessable value has to be determined and that assessable value cannot include the selling profit of the trader. Empire Industries, (supra) did not say that the post manufacturing profits or post manufacturing costs could be included in the assessable value of the processed fabric. If the trader who entrusted cotton or man made fabrics to the processor for processing on job work basis, would give a declaration to the processor as to what would be the price at which he would be selling the processed goods in the market that would be taken by the Excise authorities as the assessable value of the processed fabrics and excise duty would be charged to the processor on that basis. Where a manufacturer sells the goods manufactured by him in wholesale to a wholesale dealer at the arms length and in the usual course of business, the wholesale cash price charged by him to the wholesale dealer less trade discount would represent the value of the goods for the purpose of assessment of excise But the price received by the wholesale dealer who purchases the goods from the manufacturer and in his turn sells the same in wholesale to other dealer, would be irrelevant for determination of the value of the goods and the goods would not be charged on that basis. This has been explained in Atic Industries Ltd. vs H.H. Dave. Asstt. Collector of Central Excise and Ors., [ 1975] 3 S.C.R . This has also been explained in Union of India & Ors. vs Bombay Tyre International Ltd. etc. [1984] l S.C.R. 347 at 375. It has to he reiterated that the valuation must be on the basis of wholesale cash price at the time when the manufactured goods enter into the open market. See in this connection the ratio of this Court in Union of India and Ors. vs Cibatul Ltd., [ 1985] Suppl 3 SCR 95 and the Joint Secy. to the Govt of India & Ors. vs Food Specialities Ltd., 11985] Suppl 3 SCR 165. It was emphasised in Union of India & Ors. vs Cibatul, (supra) that the value of the trade marks was not be taken into account PG NO 813 in computing the assessable value as the affixation of the trade marks of a particular brand was extraneous to manufacture. The values of such extraneous or additional factors do not enter into the computation of assessable value and as such the wholesale cash price at which the goods enter into the wholesale market would be independent of the value of the trade marks. So that cannot be taken into the computation of the assessable value. Similarly, in the case of Joint Secretary to the Govt. of India and others vs Food Specialities Ltd., (supra), it was held that the value of Nestle 's trade marks could not be to the wholesale price charged by the dealer to Nestle 's for the purpose of computing the value of the goods manufactured. The goods in both these cases were manufactured independently of the addition of the trade marks. The price thereof at the factory gate was not after taking into account the value of the trade marks. If that was the position the value of the trade marks cannot be added to the wholesale cash price charged by the dealer. Affixation of trade marks for enhancement of the value thereof is extraneous to and independent of the process of manufacture. The charges for the same are not part of the assessable value and cannot enter into computation of the whole sail cash price on the basis of which excise duties ale to be levied. In the aforesaid view of the law and tor the reasons mentioned by my learned brother, l agree with his answer to this contention. The assessable value would. therefore. include the value of the grey cloth in the hands of the processors plus the value of the job work done plus manufacturing expenses whatever would be included in the price at the factory gate. The correct assessable value must be the value of the fabric at the factory gate, that is to say, the value at which manufactured goods leave the factory and enter the main stream. One more aspect will have to be reiterated. Computation of the assessable value is one question and as to who would be liable for the same is another. Duties of excise are imposed on production or the manufacture of goods and are levied upon the manufacturer or the producer in accordance with the relevant rules. This is quite independent of the ownership of goods. It is, therefore. necessary to reiterate that the value for the assessment under section of the Act will not be the processing charge alone but the intrinsic value of the processed fabrics which is the price at which the fabrics are sold for the first time in the wholesale market. The rules are clear on the computation of that value. If the valuation is made according to the rules as adumbrated in Empire Industries (supra) and as clarified by my learned brother in this judgment no difficulty should arise. PG NO 814 RANGANATHAN, J. I agree but I should like to add a few words on two of the points argued before us. First, I should like to clarify the nature of the decision in Hindustan Milkfood Manufacturers Ltd. vs Union, (the HMM case) (to which I was a party), since learned counsel for the petitioners sought to rely on my judgment in that case as supporting his contention that the Union cannot seek to uphold the amendment presently in question by reference to Entry 97 of List I in the Seventh Schedule to the Constitution. In that case, the Delhi High Court was concerned with the interpretation of the amendment to section 4 of the by Act 22 of 1975. The pre amendment section postulated the determination of excise duty on the basis of the wholesale cash price of the excisable goods at "the factory gate"; and, an explanation provided that, in determining this price, no abatement or deduction shall be allowed in respect of trade discount and the amount of duty payable at the time of the removal of the goods from the factory. The post amendment section made certain changes in the concept of sale at the factory gate by excluding therefrom sales effected in favour of a category of persons defined as "related persons" with which we are not concerned here. The amendment also defined the assessable "value" so as to include packing charges but to exclude the amount of excise duty, sales tax and other taxes as well as trade discount. The question was whether this amendment precluded the deduction, from the wholesale factory gate price, of post manufacturing expenses and profits. The question had been answered by several High Courts in the negative principally on the ground that the duty sought to be levied under the Act was an excise duty, the very nature of which required a proximate connection with production or manufacture and that what had passed beyond this region and entered the domain of sale could not pass as excise duty. Counsel for the Union of lndia. with a view to overcome these decisions, had contended that since Entry 97 of List I in the Seventh Schedule to the Constitution enabled Parliament to enact a legislation even beyond the purview of an excise duty covered by Entry 84 of that list, the Court should not read into the amended section the limitations that had been considered inherent in the section before its amendment. It was in repelling this contention that certain observations were made by me in paras 30 to 32 of the judgment to which Sri Soli Sorabjee drew our attention. It will, however, be clear from the discussion in the paragraphs referred to that the contention was repelled not on the ground that the legislature could not make a wider levy by reference to Entry 97 but only on the ground that the history, context and language of the amendment did not warrant the wider interpretation. This will be clear from the following two sentences in para 31 where I said: PG NO 815 "Mr. Chandrasekharan 's contention . that the language of the new section should be given an enlarged scope and interpretation by relating it to Entry 97 of List I of Seventh Schedule cannot, in our opinion, be accepted. We do not think, in considering this amendment, that it is necessary for us to discuss whether, if Parliament were to enact a law imposing on goods manufactured or produced a duty based not only on the manufacturing cost/profits, but also including in the dutiable value the whole or some part, post manufacturing cost/profits, such a law would be intra vires or not: because it appears to us that no such law has been enacted in this case. We shall assume with Mr. Chandrasekharan, that in view of Entry 97 in the Union List under the Constitution, it is open to and competent for the legislature to expand or even modify the nature of the levy. The question, however, will be whether it has done so. " It was concluded, after referring to the previous position as well as the statement of objects and reasons for the amendment, that there was nothing to show that the legislature had intended to make ally change and that the rule against a presumption of implicit alteration of the law should be invoked in the context. In other words, the HMM decision was based not on the scope of legislative Entry 97 in List 1 but on the language and scope of the amendment actually effected. It was considered not necessary or possible to stretch the language of the definition in section 4 beyond the ambit of the provision as delineated in the earlier decisions. The question decided was not that the legislature could not, but that it did not, make any radical change in the nature of the levy. The position considered in the HMM case may be illustrated by an analogy. Entry 82 in List I of the Seventh Schedule to the Constitution permits the enactment, by the Union Legislature, of a law relating to taxation of 'income. The entry does not restrict such laws only to the income of a 'previous year ', though this was the pattern of the prevelent Income Tax Acts activated by annual Finance Acts. Between 1948 and 1955, however, the Finance Acts purported to impost a tax on "excess dividends" which, in brief, was a tax on dividends declared out of profits of past years. The effect of these enactments was considered by the Bombay High Court as well as this Court. In C.I.T. vs Elphinstone Spinning & Weaving Mills Co. Ltd., , this Court held that the language of the relevant provision in the Finance Acts was so framed that it could not be read as an independent charging section. It will be appreciated that the Finance Acts were also enactments of the Union Legislature and a taxation of profits, even of past years, by an independent and specific enactment could certainly have been brought within the scope of Entry 97, if not Entry 82 itself. Nevertheless, the enactments were held ineffective not because they could not but because they did not contain the words necessary to effectuate the result. The position in the HMM case was somewhat similar. The legislature retained the levy on the basis of the wholesale cash price at the factory gate as before and only introduced a definition of the expression 'value ' in terms a little more elaborate but basically not very different from what had been contained in the earlier section. The Court saw no reason to read into the language of the amended provision a meaning much wider that had been attributed to the provision before its amendment. The amendment gave no indication that, contrary to what had been decided earlier, it was the intention of the legislature to bring into the assessable value even an element of post manufacturing cost/profit. PG NO 816 But here the position is entirely different. The amendment has specifically enlarged the meaning and concept of the word "manufacture". If such extended concept is within the range of duties of excise as envisaged under Entry 84 and I agree that with my learned brothers that is , there is no difficulty. But, if, as contended for by Sri Sri Soli Sorabjee, that legislative entry permits a duty levied with on the process of 'manufacture", stricto sensu, and the processing in this case cannot be brought within that definition then this expended definition cannot be fitted into that entry. Nevertheless the specific statutory definition cannot be ignored and it it cannot be held valid by reference to Entry 84, its validity has to be considered with reference to the residuary Entry 97. The definition of manufacture in a limited sense. It explictly enlarges the scope of the levy of excise duty and, if it is not permissible to bring it within the scope of Entry 84, a resort to Entry 97 cannot be ruled out. In my view, therefore, there is nothing in the decision in the HMM case that supports the contention of the petitioners have that the amendment of the definition of "manufacture" cannot be PG NO 817 sustained by reference to Entry 97 of List I in the Seventh Schedule to the Constitution of India, if it cannot be upheld as falling under the purview of Entry 84. The second point, on which I feel inclined to add a few words is in regard to the contention on behalf of the petitioners that the definition of the term "manufacture" enacted in the Central Excises & Salt Act, 1944 as enlarged by Amendment Act 6/80, cannot be read into the provisions of the Additional Duties of Excise Act (No. 58), 1957. The argument is in three phases and runs thus: (i) section 3 of the 1957 Act, which is the charging section, fastens the charge of duty at the state of 'manufacture out this e expression is deliberately left undefined, though the statute takes special care in section 2 to adopt, for its purposes, the definition of the specified goods as contained in the 1944 Act. This excludes the definition of 'manufacture ' enacted in section 2(f) of the 1944 and enlarged from time to time . (ii) section 3(3) cannot help the Revenue in this regard, as its only purpose and effect is to avoid a repetition. in this Act of the procedural provisions of the 1944 Act. The charge or imposition of the tax having been said under section 3 [1], the purpose of .S. 3(3) is only to say that this charge shall be qualified, demanded of the 1944 Act. This sub section cannot be read as having the effect of incorporating the substantive definition of "manufacture" in the 1944 Act particularly when section 2 chose to incorporate only the definition of the specified goods as contained in the 1944 Act. [iii] Even if the language of section 3( 3 ) is construed more liberaly, it will be effective with only to incorporate the definitions contained in the 1944 Act as on the date of commencement of the 1957 Act but not its subsequent legislative expansions. In my opinion. there is no warrant or justification for giving such a narrow interpretation to the wide language of section 3[3] of the 1957 Act. Learned counsel for the petitioner, in advancing this argument, apparently has in mind the famous dictum of Lord Dunedin in Whitney vs Inland Revenue Commissioners, [1927] A.C. 7 echoed in several decisions of this Court and of the various High Courts in India: PG NO 818 "Now, there are three stages in the imposition of a tax: there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex hypothesi, has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly come the methods of recovery, if the person taxed does not voluntarily pay." The argument, founded on the above figurative analysis, seeks to equate the expressions "levy and collection" used in section 3(3) with the stages of assessment and collection concerned with the procedure for quantification and recovery of a duty that has already been imposed. The first stage of "charge", according to counsel, has already been dealt with in the first sub section of section 3, which has fastened a charge on the production of manufacture of specified goods. The third sub section, it is said, only relates to the quantification or recovery of the charge imposed under section 3(1) . I do not see any force in this argument. In the first place, even section 3(1) which, according to the counsel, is the charging section, uses the same words "levied and collected. These are the same as the words used in Article 265 of the Constitution, which have been interpreted as comprehending the entire process of taxation commencing from the imposition of the tax by enacting a statute to the actual taking away of money from the pocket of a citizen. They take in every stage in the entire process of taxation. The words "levied" is a wide and generic expression. One can say with as much appropriateness that the Income tax Act levies a tax on income as that the the Income Tax Officer levies the tax in accordance with the provisions of the Act. It is an expression of wide import and takes in all the stages of charge, quantification and recovery of duty, though in certain contexts it may have a restricted meaning. In the context of sub section (1) the word "levied" admittedly means "charged " as well as "assessed. The words "levy and collection ' in sub section (3) cannot be construed differently from the words levied and collected used in sub section (1). section 3(3), therefore, also covers the entire gomut of section 3 (1) and cannot be construed as becoming operative at a somewhat later stage. Its operation cannot be excluded in determining the scope of the charge. PG NO 819 In this context, reference has to be made to a decision of this Court which had to consider a provision, almost identical with section 3(3) of the 1957 Act, appearing in the Finance Act 1965, in a somewhat indirect manner, as the decision contains some observations, which, at first sight, appear to support the line of argument of the petitioner herein. Such a provision has been annually repeated in all Finance Acts vide, the Finance Act from 1963 to 1983 and imposes what has been described as "special", "regular" or "auxiliary" duties of excise and customs. The decision I am referring to is that of this Court in Associated Cement Co. Ltd. vs Director of Inspection, 19. This decision was really concerned with section 280 ZD of the Income Tax Act, 1961, which in turn called for a reference to section 80 of the Finance Act, 1965 which is in the following terms: "(I) When goods of the description mentioned in this section chargeable with a duty of excise under the Central Excises Act . are assessed to duty, there shall be levied and collected (a) as respects (certain) goods . . , a special duty of excise equal to 10 per cent of the total amount so chargeable on such goods; (b) as respects (certain other) goods . . , a special duty of excise equal to 20 per cent . : and (c) as respects (certain other) goods . . , a special duty of excise equal to 33 1/3 per cent . (2) xxx xxx (3) The duties of excise referred to in sub section ( l) chargeable on such goods under the Central Excise Act or any other law for the time being in force . (4) The provisions of the Central Excises Act and the rules thereunder. including those relating to refunds and exemptions from duty, shall. so far as may be. apply in relation to the levy and collection of the duty of excise leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or rules. " PG NO 820 Section 280 ZD of the Income Tax Act, 1961 enabled an assessee, in certain circumstances, to obtain a "tax credit" certificate in respect of a percentage of the amount of "duty of excise payable by him." "Duty of excise" was defined by the section to mean "the duty of excise leviable under the Central Excises & Salt Act". The question was whether the tax credit could also be given in respect of the amount of the special duty of excise levied and collected under the Finance Act. This Court held that, obviously, the special duty levied under section 80 could not be regarded as having been levied under the Central Excise Act. It said: "It is true that the expression 'leviable ' is an expression of wide import and includes stages of quantification and recovery of the duty but in the context in which that expression has been used in clause (b) of sub section (6) of section 280 ZD, it is clear that it has been used in the sense of chargeability to duty. In other words, the duty of excise in respect whereof tax credit is available would be in respect of such duty of excise as is chargeable under the Excise Act and clearly the Special excise duty in respect whereof additional tax credit is sought by the appellant company is not chargeable under the Excise Act but chargeable under the Excise Act. " Having said this, the Court added: " 'Sub clauses [3] and (4) of section 8() of the Finance Act on which reliance has been placed by counsel for the appellant company in terms refers to the procedural aspect such as the qualification and collection of the special duty and simply because the qualification and collection of the special duty under the Finance Act is to he done in accordance with the provisions of the Excise Act such duty does not become leviable that is to say chargeable, under the Excise Act. " The above observations no doubt lend some support to the contention of the petitioner, as the wording of section 80(4) of the 1965 Finance Act is identical with that of section 3(3) and has been interpreted as attracting only the procedural aspect of the Central Excise Act. But in my opinion, while that may have been true of section 80(4) of the Finance Act, 1965, it will not be correct to draw the same conclusion about the 1957 Act. For, section 80(1) of the Finance Act, 1965 fully exhausted the aspect of charge of the special duty. It PG NO 821 specified the goods to be taxed and also laid down that the special duty was to be a percentage of the normal excise duty chargeable on those goods. Nothing else remained except the quantification and the collection. But here the position is different. There are three ingredients of the charging provision viz. section 3(1). The additional duties are charged (a) on manufacture, storage of production (b) of certain named goods (c) at the rates specified in the first schedule. Of these, only aspect (b) finds mention in the t957 Act but in relation to the definitions contained in the 1944 Act. Aspect (c), clearly is not complete without a reference to the main Act. For, turning to the First Schedule of the Act, originally it specified rates on the basis of length, weight or number on all items except "cigarettes" where the duty was to be ad valorem. The Amendment Act, No. 6 of 1980, substituted the rate per metre specified under the original schedule in respect of the items with which we are concerned to ad valorem rates. Now the assessable value is to be determined on the basis of which the special duty will have to be worked out cannot be found out from the 1957 Act which contains no definition or indication in this regard. The statute cannot be worked atleast in respect of goods where an ad valorem rate is prescribed unless section 3(l) is read with section 3(3 ) and the definition of "assessable value" in section 14 of the 1944 Act is read with the Finance Act. In like manner, I think. the content of aspect (a) cannot be understood differently from, or independently of, the definition in the main enanctment. Having regard to the nature and content of the levy indicated in s 3(1), it is obvious that section 3(3) has to have the effect of attracting not only the purely procedural and machinery provisions of the 1944 Act but also some of its charging provisions. It is, therefore difficult to consider section 3(1) of the 1(1957 Act in contrast to the Finance Act of 1965 As covering the entire ambit of the charge imposed. In short, the language of section (3) has to he given a wider meaning than under the Finance Act, 1985. I have referred to the fact that a provision similar to that in section 80 of the Finance Act, 1965 is also found in other Finance Acts. On perusal of these provisions, it will be found that a like position exists there also. These provisions are all self contained and completely specify the scope of the charge either as a percentage of the excise duty normally chargeable under the Central Excises & Salt Act, 1944 or as a percentage of the 'assessable value determined under section 4 of the 1944 Act. ' This, in my view, is a very important reason why the observations in the Associated Cement Co. 's case (supra) cannot be of application in the context of the 1957 Act. A question has been raised as to why, if it were the intention of the Legislature to take in all the provisions PG NO 822 including definitions from the 1944 Act, it was considered necessary to make a specific reference to the definitions of the various goods on which additional duty was being imposed as contained in the schedule to the 1944 Act. Counsel says that this enactment of specific definitions drawn from the 1944 Act should lead to an inference that no other definitions from that Act were intended to be incorporated in the 1957 Act. A careful examination will, however. show that this is not the effect. Actually, section 2 is not much of a 'definition ' section. (a) is not strictly necessary and cl. (b) is only intended to clarify that the proceeds of the duties are not be distributed to Union Territories. So far as clause (c) is concerned, it is necessary to make a reference to section 7 of the Act, which reads thus: "7. It is hereby declared that the following goods, namely, subject, tobacco, cotton fabrics, rayon or artificial fabrics and woolen fabrics, are of special importance in inter state trade of commerce and every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of the declared goods, he subject, as from the 1st day of April, 1958, to the restrictions and conditions specified in section 15 of the . " The effect of this provision, as held in M/s Mahendra Pratap Rama Chandra vs Commercial Tax Officer & Others, is that "the contents of section 15 became a part of section 7 from the moment when section ', was enacted. ' ' section 15 of the Central Sales Act applies to "declared" goods as defined in section 2(c) and enumerated in section 14 of that Act as being of special importance in inter state trade and commerce. section 14 of the . enumerates various items of goods among which arc the six items specified in section 3(1) of the 1957 Act and this list further specifies that they shall have the same meaning as is attached to the respective items in the First Schedule to the Central Excises & Salt Act, 1944 vide items (ii a), (vii), (viii), (ix). (x) and (xi). Thus, it was always clear that the specified goods have to be understood in the way they were defined in the Central Excises & Salt Act, 1944. The idea in 1956 was to restrict the powers of the States to levy sales tax in respect of such goods and other goods. In 1958, the idea was conceived of the Centre levying an additional excise duty on these goods and distributing the same to the States subject to the condition specified in Schedule II that such States did not impose any sale or purchase tax on these commodities. Subsequently, perhaps. it was realised that section 7 served no specific purpose under the Act except that of the definitions which was an aspect PG NO 823 already covered by section 2(c). In these circumstances, not much significance need be attached to section 2(c) much less can it be construed as negativing the import of other definitions from the 1944 Act. The next question that arises for considerion is, whether, even assuming that the terms of section 3(3) are applicable, its terms are wide enough to take in not merely the provisions of the Central Excises and & Salt Act, 1944 and, in particular its definition clauses, as they stood in 1957 on the date when the 1957 Act came into force but also the amendments effected therein from time to time. The answer to this question depends upon the general principles applicable to what is described as 'referential legislation ' of which this is an instance. Legislatures sometimes take a short cut and try to reduce the length of statutes by omitting elaborate provisions where such provisions have already been enacted earlier and can be adopted for the purpose on hand. While, on the one hand, the prolixity of modern statutes and the necessity to have more legislation then one on the same or allied topics render such a course useful and desirable, the attempt to legislate by reference is sometimes everdone and previty is achieved at the expense of lucidity. However, this legislative device is quite well known and the principles applicable to it fairly well settled. Referential legislation is of two types. One is where an earlier Act or some of its provisions are incorporated by reference into a later Act. In this event, the provisions of the earlier Act or those so incorporated, as they stand in the earlier Act at the time of incorporation, will be read into the later Act. Subsequent changes in thc earlier Act or the incorporated provisions will have to be ignored because, for all practical purposes, the existing provisions of the earlier Act have been re enacted by such reference into the later one, rendering irrelevant what happens to the earlier statute thereafter. Examples of this can be seen in Secretary of State vs Hindustan Cooperative Insurance Society, AIR 1931 P.C. 149; Solani Ores Ltd. vs State, ; and Mahindra and Mahindra Ltd. vs Union, AIR 1979 S.C.798. On the other hand, the later statute may not incorporate the earlier provisions. It may only make a reference of a broad nature as to thc law on a subject generally, as in Bhajiyu vs Gopikabai. ; ; or contain a general reference to the terms of an earlier statute which are to be made applicable. In this case any modification, repeal or re enactment of the earlier statute will also be carried into in the later, for here, the idea is that certain provisions of an earlier statute which become applicable in certain circumstances are to be made use of for the purpose of the latter Act also. Examples of PG NO 824 this type of legislation are to be seen in Collector of Customs vs Nathella Sampathu Chetty, ; ; New Central Jute Mills Co. Ltd. vs Assistant Collector, ; and Special Land Acquisition Officer vs City Improvement Trust, Whether a particular statute falls into the first or second category is always a question of construction. In the present case, in my view, the legislation falls into the second category. section 3(3) of the l957 Act does not incorporate into the 1957 Act any specific provisions of the 1944 Act. It only declares generally that the provisions of the 1944 Act shall apply "so far as may be", that is, to the extent necessary and practical, for the purposes of the 1957 Act as well. That apart, it has been held, even when a specific provision is incorporated and the case apparently falls in the first of the above categories, that the rule that repeals, modifications or amendments of the earlier Act will have to be ignored is not adhered to incertain situations. These have been set out in State of Madhya Pradesh vs Narasimhan. [ ; In that case. the Supreme Court was considering the question whether the amendment of section 21 of the Penal Code by the Criminal Law Amendment Act. 195X, was also applicable for purposes of the Prevention of Corruption Act, 1947, which by section 2 incorporates, for the purposes of that Act, the definition of `public servant ' in s 2l of the Penal Code. Answering thc (question in the affirmative, the Court outlined the following proposition: "Where a subsequent Act incorporates provisions of a previous Act. then the borrowed provisions become an integral and independent part of the subsequent Act and are totally uneffected by any repeal or amendment in the previous Act This principle. however will not apply in the following, cases: (a) where the subsequent Act and the previous Act are supplemental to each other; (b) where the two Acts are in pari materia: (c) where the amendment in the previous Act, if not imported into the subsequent Act also, would render the subsequent Act wholly unworkable and uneffectual; and (d) where the amendment of the previous Act, either PG NO 825 expressly or by necessary intendment, applies the said provisions to the subsequent Act. " The present case falls within the scope of these exceptions, even if section 3(3) is construed as incorporating certain specific provisions of the 1944 into itself. The legislation presently in question is clearly in pari materia with the 1944 Act. It is also merely supplemental. While the 1944 Act imposes a general levy of excise duty on all goods manufactured and produced, and aim of the present Act is to supplement the levy by an additional duty of the same nature on certain goods. The duration of the applicability is undefined but the statute is clearly enforceable as long as it is in the statute book side by side with the normal excise duties. The clear intention is that the same provisions shall govern both the levies except that the duty under the later Act is confined to certain goods only and its distributability among the States may perhaps follow a different pattern from the principal duty. There is no reason or logic why all the incidents attaching under the earlier legislation, in so &r as they are not clearly inconsistent with the later one should not be extended to the later legislation as well. As has been pointed out earlier, the Finance Acts which levied special or regular or additional excise duties contained in themselves all the elements of charge of duty. The goods were mentioned and the duty as to be levied either at a percentage of the normal excise duty payable under the 1944 Act or at a percentage of the value of the assessable goods as determined under the 1944 Act. All that was further needed was the applicability of the procedural provisions of the 1944 Act Here, however, the 1957 Act is incomplete as to the basis of the charge and its provisions would become totally unworkable unless the concepts of "manufacture" and "assessable value? ' as determined under the 1944 Act are carried into it. In the circumstances, I agree that we should give full and literal effect to the language of section 3(3) and hold that it has the effect not only of attracting the procedural provisions of the 1944 Act but also all its other provisions, including those Containing the definition.
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Section 2(f) of the Central Excise Act says that "manufacture" includes any process that helps finish a manufactured product. The President of India made a law called the Central Excises and Salt and Additional Duties of Excise (Amendment) Ordinance 1979. Later, this was replaced by Central Act VI of 1980, called the Central Excises and Salt and Additional Duties of Excise (Amendment) Act, 1980. This new law started on February 24, 1979. Section 2 of the new law changed Section 2(f) of the Excise Act. It added three things to the meaning of "manufacture." These included activities like bleaching, dyeing, and printing. Two earlier court decisions in Gujarat had said these activities weren't covered by the original law. The new law also changed items 19 and 22 of the First Schedule (a list of items subject to excise tax). These changes were made to apply retroactively, meaning they went back in time. Section 5(2)(b) of the new law said that no one could sue or continue a lawsuit in any court to get a refund of excise taxes that had already been collected. Also, no court could enforce any order to refund these taxes. This applied as if the new Section 5 had been in effect from the date the law defined as the "appointed day." Before the 1980 law, the tax on these processes was challenged in the Gujarat High Court in the case of Vijay Textiles Mills vs Union of India and Real Honest Textile vs Union of India. The Gujarat High Court said that cotton fabric that was bleached, dyed, or printed could not be taxed under items 19 and 22 of the First Schedule. The court said that processors (companies that do the bleaching, dyeing, and printing) only had to pay taxes under tariff entry 68 on the value they added to the fabric. Because of this ruling, many similar claims from processing companies were approved by the High Court in a ruling on March 13, 1979. However, the Bombay High Court disagreed. It said that even under the original definition of "manufacture" in Section 2(f), the work done by the processors was "manufacture." It also said that the 1980 law made this clear. The Gujarat High Court's decision in the Vijay Textiles and Real Honest Textiles case was reviewed by a panel of three judges in the Supreme Court case Empire Industries vs Union of India. The Supreme Court said the Gujarat High Court's decision was wrong. The Supreme Court agreed with the Bombay High Court's view in New Shakti Dye Works Pvt. Ltd. vs Union of India & Anr. The current appeals are against rulings by the High Court of Gujarat and the High Court of Bombay. They also include petitions to the Supreme Court. These cases all involve the same legal questions about whether excise taxes can be charged under tariff items 19 and 22 of the Central Excise Act, as changed by the 1980 law. The question is whether processes like bleaching, dyeing, printing, sizing, etc., done by processors on a job work basis (where they process fabric owned by others) on cotton and man-made fabrics, can be considered "manufacture." The facts are the same in all the cases. The companies bringing the cases do bleaching, dyeing, printing, sizing, finishing, etc., on grey fabric (unfinished fabric). They do this work for customers who own the grey fabric and pay them processing fees. The machines and equipment in these companies' factories are designed for processing grey fabric. They cannot make grey fabric. Man-made grey fabric, like Art Silk Grey fabric, is made in mills and on power looms. Fabric made on power looms is not taxed when it is made. The Art Silk Grey fabrics processed in these companies' factories are made on power looms, not by mills. The Art Silk Grey fabric doesn't come directly from the manufacturers but from traders. Some of the cases involve processing companies that buy the grey fabric themselves and then sell it after processing. In some cases, the manufacturers of the grey fabric use it themselves and process it in their own factories. During the hearing, another panel of Supreme Court judges questioned whether the Empire Industries case was decided correctly on some issues. So, these appeals and petitions were sent to a panel of five judges to decide two questions: (1) Did processing grey fabric count as "manufacture" under Section 2(f) before it was changed? and (2) Even if it did count as "manufacture," how should the value of the processed fabrics be determined for tax purposes? The petitions and appeals raise the following questions: A(i) Does bleaching, dyeing, printing, sizing, shrink proofing, etc., done on cotton or man-made "grey fabric" count as "manufacture" for the purposes of Section 2(f) of the Excise Act, before it was changed by the 1980 law? A(ii) Was the decision in Empire Industries Limited wrong when it said these operations count as "manufacture," and should it be reconsidered? (B) Was the change made by the 1980 law to Section 2(f) and to tariff items 19 and 22 beyond the power of the Union Parliament (the national legislature) because it violates Entry 84 List 1 (a section of the Constitution that defines what the Union Parliament can legislate on)? Even if the expanded meaning of "manufacture" introduced by the change is beyond Entry 84 List 1, can the tax still be justified under Entry 97 of List 1, which covers anything not specifically mentioned in other entries? (C) Even if the changes to the Central Excise Act are valid, is the tax under the Additional Duties Act invalid because there was no similar change to the definition of "manufacture" under the Additional Duties Act? (D) Does applying the 1980 law retroactively unfairly restrict the "processors'" fundamental right to do business under Article 19(1)(g) of the Constitution? (E) Even if the tax is justified, is it wrong and illegal to calculate the value of the processed grey fabric based on the wholesale selling price declared under Rule 173(b) when the fabric is processed on a job work basis? The Supreme Court decided as follows: The appeals by the Union of India (the government) were allowed, and the Gujarat High Court's ruling was overturned. The appeals by the processors against the Bombay High Court's ruling and the petitions filed by the processors directly in the Supreme Court were dismissed. The Union of India and its authorities can take steps to enforce any bank guarantees to recover the unpaid taxes. Justice Sabyasachi Mukharji agreed with Justice Venkatachaliah and added the following points: (1) A tax should be calculated using the method stated in the law, not any other method. The fact that this might mean someone loses a benefit or faces hardship doesn't change how courts interpret the law. Taxpayers are only entitled to the benefits the law gives them. (2) (i) If a manufacturer sells goods they made to a wholesale dealer in a normal business transaction, the price the manufacturer charges the dealer, minus any trade discount, is the value of the goods for calculating excise tax. But the price the wholesale dealer charges when they sell the goods to other dealers is not relevant for determining the value of the goods. (2) (ii) The valuation must be based on the wholesale price when the manufactured goods enter the open market. The value of trademarks should not be included when calculating the taxable value because adding a particular brand's trademark is not part of the manufacturing process. (2) (iii) The taxable value should include the value of the grey cloth in the processors' hands, plus the value of the job work done, plus manufacturing profits and expenses that would be included in the price at the factory gate. The correct taxable value is the value of the fabric at the factory gate, meaning the price at which the manufactured goods leave the factory and enter the market. (3) Calculating the taxable value and deciding who is responsible for paying the tax are two separate issues. Excise taxes are charged on the production or manufacture of goods and are paid by the manufacturer or producer according to the rules. This is separate from who owns the goods. The value for tax assessment will not be just the processing charge, but the full value of the processed fabric, which is the price at which the fabrics are first sold in the wholesale market. The rules are clear on how to calculate that value. Justice Venkatachaliah, speaking for himself and Justices R. section Pathak and section Natarajan, made the following points: 1(i) The common test for determining if something is "manufacture" is whether the changes made by the processes transform the commodity so much that it is no longer seen as the original commodity but as a distinct and new article. 1(ii) The view in the Empire Industries case, that "grey fabrics" become a commercially different commodity after bleaching, dyeing, sizing, printing, etc., with its own price, customs, and other commercial aspects, and that this is "manufacture" under Section 2(f) even before it was changed, is reasonable and doesn't seem to have any flaws. 2(i) The sections in the lists of legislative powers in the Constitution are not the source of the power to make laws but simply the topics or fields of lawmaking. They should be interpreted broadly and generously, not narrowly. The phrase "with respect to" in Article 246 means that when deciding if a law is within the legislature's power, the question is whether the law, as a whole, is substantially related to the specific topic of legislation. If the law has a significant connection to the topic, it can be considered legislation on that topic. 2(ii) The power to make laws comes from Articles 245, 246, and other articles in Part XI of the Constitution. When defending a law that is challenged as being outside the legislature's power, the government can argue that the law is supported by another section within the legislature's power. A law can be based on several sections. Such a "rag bag" law is common in taxation. 2(iii) For the Union Parliament to have the exclusive power to legislate, you only need to check if the topic of legislation is in List II or List III. If it's not, then the Union Parliament has the exclusive power to legislate on that topic. It also has concurrent power over subjects in List III. 2(iv) Even if the tax on processing is not under Entry 84, List I, but is a tax on "processing" separate from "manufacture," the tax can still be supported by Entry 97, List I, which covers topics not specifically mentioned in other entries. 3. Section 4 of the 1980 law changed the relevant items in the schedule to the Additional Duties Act. The terms "produce" or "manufacture" in Section 3(1) of the Additional Duties Act must be read along with the entries in the Schedules. So, what applies to the main tax also applies to the additional duties. 4(i) A legislature can always make a law valid again if a court has declared it invalid, as long as the problems and weaknesses that the court pointed out are fixed. This validating law can also be made retroactive. If the legislature fixes the law and makes it valid, the earlier court ruling becomes irrelevant. This is not an impermissible legislative overruling of a judicial decision. The legislature is simply creating a valid law that applies retroactively, making the earlier ruling irrelevant. This is common and useful in tax laws. The legislature should be able to fix problems in laws. No one has a right to benefit from a mistake in a law. 4(ii) It is generally accepted that legislatures can retroactively fix defects in tax laws. Courts are usually reluctant to question the legislature's judgment about the need for retroactive legislation. 4(iii) When deciding if a retroactive tax unfairly violates fundamental rights under Article 19(1)(g), relevant factors include the context of the retroactivity, such as whether the law is fixing a tax law struck down by courts; the period of retroactivity; and the extent of any unexpected financial burden imposed for the past period. In this case, the Supreme Court in the Empire Industries case correctly held that the retroactive nature of the changes did not violate Article 9(1)(g). 5(i) Section 4 of the Central Excise Act says that the value of an article for tax purposes is: (a) the wholesale price for which a similar article was sold or could be sold when it was removed from the factory for delivery at the place of manufacture; or (b) if that price is not known, the price at which a similar article was sold or could be sold when it was removed from the factory. 5(ii) The taxable value of the processed fabric should not be just the processing charges. That would create more problems than it solves and lead to unfair situations. The tax should be applied uniformly. The view taken in the Empire Industries case should not be changed. 5(iii) Whether the producer or manufacturer owns the goods is not what determines who is responsible for paying the tax. The nature of the tax is different from the power to impose it and the stage at which it is imposed. Even though the tax is on the production or manufacture of the goods, it can be imposed at the stage the law considers most convenient, as long as it is related to the nature of the tax. 5(iv) The nature of the excise duty should not be confused with how the tax is measured. The measure of assessment can give insight into the nature of the tax, but it doesn't define it. The measure of assessment "need not contour along the lines which spell out the levy itself," and "a broader based standard of reference may be adopted for the purposes of determining the measure of the levy." Any standard that is related to the nature of the tax can be a valid basis for assessing the tax. Justice Ranganathan, agreeing with Justice Venkatachaliah, added the following points: 1(i) The Hindustan Milkfood Manufacturers Ltd. vs Union case was based on the specific language and scope of the amendment, not on the scope of legislative entry 97 in List I. The court didn't think it was necessary or possible to stretch the meaning of Section 4 beyond what earlier decisions had said. The question was not whether the legislature could make a major change in the nature of the tax, but whether it did. 1(ii) The HMM case does not support the argument that the change to the definition of "manufacture" cannot be justified by referring to entry 97 of List 1 if it doesn't fall under Entry 84. 2(i) The word "levied" has a broad meaning. You can say that the Income Tax Act levies a tax on income, or that the Income Tax Officer levies the tax according to the Act. It includes all stages of charging, calculating, and collecting the tax. 2(ii) Section 3(3) of the Additional Duties Act covers the entire scope of Section 3(1) and cannot be interpreted as becoming effective at a later stage. Therefore, Section 3(3) attracts not only the procedural provisions of the 1944 Act but also some of its charging provisions. The language of Section 3(3) should be given a wider meaning than under the Finance Act, 1965. 3(i) Legislatures sometimes try to shorten laws by referring to existing provisions instead of repeating them. This can be useful, but it can also make laws less clear. 3(ii) There are two types of referential legislation. One is where an earlier Act or some of its provisions are incorporated into a later Act. In this case, the provisions of the earlier Act are read into the later Act as they were at the time of incorporation. Changes to the earlier Act are ignored. The other type is where the later statute only makes a general reference to the law on the subject or refers to the terms of an earlier statute that are to be applied. In this case, any changes to the earlier statute also apply to the later one. 3(iii) Whether a statute falls into the first or second category depends on how it is interpreted. In this case, the legislation falls into the second category. Section 3(3) of the 1957 Act does not incorporate specific provisions of the 1944 Act. It only says that the provisions of the 1944 Act shall apply "so far as may be" for the purposes of the 1957 Act. 3(iv) The legislation in question is similar to the 1944 Act and is supplemental to it. The 1944 Act imposes a general excise duty on all manufactured goods, while the 1957 Act supplements it with an additional duty on certain goods.
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These appeals, by Special Leave, preferred against the Judgments of the High Court of Gujarat and the High Court of Bombay and the batch of writ petitions under Article 32 of the Constitution of India are heard together and disposed of by this common judgment as they all involve questions common to them concerning the validity of the levy of duties of excise under tariff items 19 and 22 of the Schedule to the ("Central Excise Act") as amended by the Central Excise and Salt Additional Duties Excise (Amendment) 1980 Act ( '"Amending Act") treating as "Manufacture" the process of Bleaching. Dyeing, Printing, Sizing, Mercerising, water proofing, rubberising, Shrink Proofing Organdie, Processing, etc done by the processor who carry out these operations in their factories on Job work basis in respect of Cotton fabric ' and 'Man made fabric belonging to their customers The Amending Act which became effective from 24.12.1979 sought to render the processes of Bleaching, Dyeing, Printing Sizing, Mercerising etc "Manufacture within the meaning of the Section 2(f) of the Central Excise Act The amendment was necessitated by the Judgment of the High Court of Gujarat which has declared the levy on such 'processing as illegal as, according to the High Court the processing did not bring into being a new and commercially different article with a distinctive character and use and did not therefore constitute 'manufacture ' for purposes, and within the meaning, of the charging section. The point that the petitioners seek to made is that the processing of the grey fabric is not a part, a continuation, of the process of manufacture in the manufacturing stream, but is an independent and distinct operation carried out in respect of the Grey fabric, after it has left manufacturing stage and has become part of the common stock of goods in the market. The essential question is whether these situational differences have a bearing on the principles of determination of the assessable value of processed grey fabric and whether the assessable value could be different in the different fact situations which would be the logical corollary if the contention of the processing houses which do not processing work for charges on the goods not their own, is accepted and the assessable value determined on the basis of mere processing charges. But the main questions that arise are whether "processing" of the kind concerned in these cases amounts to manufacture", whether the provisions of section 2 of the Amending Act which impart an artificial dimension to the concept of "manufacture" is ultra vires Entry 84 List l; whether at all events, the imposition of a tax on such 1processing is referable to Entry 97 List l; and if the import on the processors is justified under tariff items 19 and 22, according as whether the Grey fabric is cotton or 'man made, what should be the assessable value for purposes of levy of duty so far as processors are concerned. Prior to the Amending Act of 1980, the levy on the processors was challenged before the Gujarat High Court The Gujarat High Court by its judgment dated 24.1.1979 in the cases of Vijaya Textiles Mills vs Union of India and Real Honest Textiles vs Union of India held that the processes that the processing houses imparted to the Grey fabric did not amount to 'manufacture ' and did not attract ad valorem duty under tariff items 19 and 22, and that processors were liable to pay duty under tariff entry 68 only on the value added by the processing. PG NO. Before its amendment by the Amending Act Central Act VI of 1980) Section 2(f) of the Central Excise ACt, defined 'manufacture ' in its well accepted legal sense nomen juris and not with reference to an artificial and statutorily expanded import "2(f) 'manufacture ' includes any process, incidental or ancillary to the completion of a manufactured product; and (i) ] (ii) ] Omitted as unnecessary" The reasoning of the Gujarat High Court was on these lines "In the instant case, the excise duty claimed on the basis of the market value of the processed cotton fabrics or manmade fabrics cannot be levied because, assuming that process amounts to manufacture, all that they have done is to manufacture processed cloth, processed fabric, either cotton or man made and that not being a taxable event in the light of Section 3 read with section 2(d) of the Act and PG NO 787 Items 19 and 22 levy of excise duty on this basis was ultra vires and contrary to law . " issued, taken or done under a Central Act referred to in sub section (I) before the date of commencement of this Act, with respect to or in relation to the levy of duties of excise on (a) 'cloth", "cotton cloth" or, as the case may be. cotton fabrics," (b) woollen fabrics", (c) "rayon or artificial silk fabrics" or, as the case may be, "man made fabrics", shall for all purposes be PG NO 789 deemed to be and to have always been, as validly and effectively made, issued taken or done as if the provisions of this section had been in force at all material times and, accordingly, notwithstanding any judgment, decree or order of any court, tribunal or other authority (a) all duties of excise levied, assessed or collected or purported to have been levied assessed or collected before the date of commencement of this Act, on (i) "cloth", "cotton cloth" and "cotton fabrics" subjected to any process, (ii) "woollen fabrics" subjected to any process, (iii) "rayon or artificial silk fabrics" and "man made fabrics" subjected to any process, under any such Central Act shall be deemed to be, and shall be deemed always to have been, as validly levied, assessed or collected as if the provisions of this section had been in force on and from the appointed day; (b) no suit or other proceeding shall be maintained or continued in any court for the refund of, and no enforcement shall be made by any court of any decree or order directing the refund of, any such duties of excise which have been collected and which would have been validly collected if the provisions of this section had been in force on and from the appointed day; (c) . So far as the first question is concerned it was agitated before this Court in Empire Industries Ltd. v Union of India and this Court held that the processes of bleaching, mercerising, dyeing, printing. carried out by the processors on job work basis amount to manufacture both under the Act as it stood prior to the amendment as also under the Act subsequent to the amendment and the processed fabrics are liable to be assessed to excise duty in the hands of what may be called jobbers '. Since this was a decision given by a Bench of three Judges, the petitioners and appellants who are carrying on business of processing on job work basis could not contend that these PG NO 791 processes do not amount to manufacture and that the processed fabrics are not liable to be assessed to excise duty in the hands of the jobbers. ,n se writ petitions and appeals are referred to the larger Bench it will be open to the larger Bench to consider not only the question of determination of the assessable value but also the other question, namely, whether processing of grey fabric by a processor on job work basis constitutes manufacture, because the judgment in Empire Industries case which has decided this question in favor of the revenue and against the processor is a judgment of a Bench of only three Judges and now the present writ petitions and appeals will be heard by a Bench of five Judges . It contemplated the alternative possibilities of valuation thus: "It was common ground between the parties that the procedure followed by the Excise authorities was that the trader, who entrusted cotton or man made fabrics to the processor for processing on job work basis would give a declaration to the processor as to what would be the price at which he would be selling the processed goods in the market and that would be taken by the Excise authorities as the assessable value of the processed fabrics and excise duty would be charged to the processor on that basis. : Rs.30.00 The assessable value in the case given in this example would be taken by the Excise authorities at Rs.30 which was the sale price of the trader . ' ' The view of the Referring Bench on the point was this: "We cannot accept the contention of the learned counsel on behalf of the petitioners and the appellants that the value of the grey cloth which is processed by the processor should not be included in the assessable value of the processed fabric since the grey cloth is one of the raw materials which goes into the manufacture of the processed fabric and the value of the processed fabric cannot be computed without including the value of the raw material That goes into its manufacture. The assessable value of the processes fabric cannot therefore be limited merely to the value of the job work done but it must be determined by reference to the wholesale cash price of the processed fabric gate of the factory of the processor . The Referring Bench was of the view that the correct assessable value should be: ". (c) Whether, at all events, even if the amendments to Central Excise Act are valid, the levy under the Additional Duties Act is unsupportable and without the authority of law as there is no corresponding enlargement of the definition of 'manufacture ' under the Additional Duties Act. PG NO 794 (e) Whether, even if the levy is justified, at all events, the computation of the assessable value of the processed Grey fabric on the basis of the whole sale cash selling price declared under classification list under Rule 173(b) is unjustified and illegal in respect of the assessable value of the processed Grey fabric done on job work basis. Ltd. vs N.R. The following observations of this Court in Union of India vs Delhi Cloth and General Mills, AIR 1963 SC p. 791 at 794 were emphasised: "According to the learned counsel "manufacture is complete as soon as by the application of one or more processes. vs J.H. It is. In Empire Industries case, it was held: "As has been noted processes of the type which have been incorporated by the impugned Act were not so alien or foreign to the concept of "manufacture ' that these could not come within that concept. It was, however, contended that the levy of tax on an activity which cannot reasonably be regarded as an activity of 'manufacture ' cannot be described as a levy of duties of excise under Entry 84, List I. It was then argued that if the legislation was sought to be defended on the ground that it is a tax on activity like processing and would be covered by the powers enumerated under Entry 97 of List I of the Seventh Schedule PG NO 800 then it was submitted that there was no charging section for such an activity and as such the charge must fail, and there cannot be any levy . " "Manufactured" under the Act after the amendment would be the 'manufacture ' as amended in section 2(f) and Tariff item 19 I and 22 and the charge would be on that basis. The point, however, sought to be put across is that, even if the concept of 'manufacture ' for purposes of levy of excise duty under the 'Central Excise Act ' is validly expanded or that a tax on processing is, otherwise, PG NO 802 supportable under Entry 97(1), the position under the 'Additional Duties Act ' ;s quite different. .It would be a new terror in the construction Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone '. It was also urged that Section 3(3) of the 'Additional Duties Act ' which provides that the provisions of 'Central Excise Act ' and the rules made thereunder shall, so far as may be, apply in relation to the 'levy and collection" of the Additional Duties would not also enable the wider definition of 'manufacture ' in Section 2(f) to be imported into Section 3(1) of the Additional Duties Act to justify levy of Additional Duties on 'processing '. .Ievy and collection of the additional duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in sub section (l) . " by independent processes, whether on their own account or on job charges basis, the value of the purposes of assessment under section 4 of the Central Excise Act will not be the processing charges alone but the intrinsic value of the processed fabrics which is the price at which such fabrics are sold PG NO 807 for the first time in the wholesale market. That is the effect of section 4 of the Act. The Referring Bench held: "We cannot accept the contention of the learned counsel on behalf of the petitioners and the appellants that the value of the grey cloth which is processed by the processor should not be included in the assessable value of the processed fabric . " Consistent with the provisions of Section 4 and the Central Excise (Valuation) Rules, 1975, framed under Section 37 of the Act it cannot be said that the assessable value of the processed fabric should comprise only of the processing charges. by independent processes, whether on their own account or on job charges basis, the value for the purposes of assessment under section 4 of the Central Excise Act will not be the processing charge alone but the intrinsic value of the processed fabrics which is the price at which such fabrics are sold for the first time in the wholesale market. That is the effect of section 4 of the Act. In M/s. carried on by a processor on job work basis in respect of grey cotton fabrics and manmade fabrics belonging to the customer and entrusted by him for processing amount to manufacture with the meaning of the Act prior to its amendment so as to attract levy of excise duty on the processed fabrics and in any event, after the Amendment Act, these processes amount to manufacture and excise duty is leviable on the processed fabrics. If the trader who entrusted cotton or man made fabrics to the processor for processing on job work basis, would give a declaration to the processor as to what would be the price at which he would be selling the processed goods in the market that would be taken by the Excise authorities as the assessable value of the processed fabrics and excise duty would be charged to the processor on that basis. necessary to reiterate that the value for the assessment under section of the Act will not be the processing charge alone but the intrinsic value of the processed fabrics which is the price at which the fabrics are sold for the first time in the wholesale market. First, I should like to clarify the nature of the decision in Hindustan Milkfood Manufacturers Ltd. vs Union, (the HMM case) (to which I was a party), since learned counsel for the petitioners sought to rely on my judgment in that case as supporting his contention that the Union cannot seek to uphold the amendment presently in question by reference to Entry 97 of List I in the Seventh Schedule to the Constitution. In that case, the Delhi High Court was concerned with the interpretation of the amendment to section 4 of the by Act 22 of 1975. We do not think, in considering this amendment, that it is necessary for us to discuss whether, if Parliament were to enact a law imposing on goods manufactured or produced a duty based not only on the manufacturing cost/profits, but also including in the dutiable value the whole or some part, post manufacturing cost/profits, such a law would be intra vires or not: because it appears to us that no such law has been enacted in this case. The question decided was not that the legislature could not, but that it did not, make any radical change in the nature of the levy. The effect of these enactments was considered by the Bombay High Court as well as this Court. In my view, therefore, there is nothing in the decision in the HMM case that supports the contention of the petitioners have that the amendment of the definition of "manufacture" cannot be PG NO 817 sustained by reference to Entry 97 of List I in the Seventh Schedule to the Constitution of India, if it cannot be upheld as falling under the purview of Entry 84. The second point, on which I feel inclined to add a few words is in regard to the contention on behalf of the petitioners that the definition of the term "manufacture" enacted in the Central Excises & Salt Act, 1944 as enlarged by Amendment Act 6/80, cannot be read into the provisions of the Additional Duties of Excise Act (No. PG NO 819 In this context, reference has to be made to a decision of this Court which had to consider a provision, almost identical with section 3(3) of the 1957 Act, appearing in the Finance Act 1965, in a somewhat indirect manner, as the decision contains some observations, which, at first sight, appear to support the line of argument of the petitioner herein. This decision was really concerned with section 280 ZD of the Income Tax Act, 1961, which in turn called for a reference to section 80 of the Finance Act, 1965 which is in the following terms: "(I) When goods of the description mentioned in this section chargeable with a duty of excise under the Central Excises Act . It said: "It is true that the expression 'leviable ' is an expression of wide import and includes stages of quantification and recovery of the duty but in the context in which that expression has been used in clause (b) of sub section (6) of section 280 ZD, it is clear that it has been used in the sense of chargeability to duty. Having said this, the Court added: " 'Sub clauses [3] and (4) of section 8() of the Finance Act on which reliance has been placed by counsel for the appellant company in terms refers to the procedural aspect such as the qualification and collection of the special duty and simply because the qualification and collection of the special duty under the Finance Act is to he done in accordance with the provisions of the Excise Act such duty does not become leviable that is to say chargeable, under the Excise Act. " section 3(1). A question has been raised as to why, if it were the intention of the Legislature to take in all the provisions PG NO 822 including definitions from the 1944 Act, it was considered necessary to make a specific reference to the definitions of the various goods on which additional duty was being imposed as contained in the schedule to the 1944 Act. section 14 of the . In this case any modification, repeal or re enactment of the earlier statute will also be carried into in the later, for here, the idea is that certain provisions of an earlier statute which become applicable in certain circumstances are to be made use of for the purpose of the latter Act also. section 3(3) of the l957 Act does not incorporate into the 1957 Act any specific provisions of the 1944 Act. [ ; In that case. While the 1944 Act imposes a general levy of excise duty on all goods manufactured and produced, and aim of the present Act is to supplement the levy by an additional duty of the same nature on certain goods.
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Section 2 of the new law changed Section 2(f) of the Excise Act. Two earlier court decisions in Gujarat had said these activities weren't covered by the original law. The court said that processors (companies that do the bleaching, dyeing, and printing) only had to pay taxes under tariff entry 68 on the value they added to the fabric. It said that even under the original definition of "manufacture" in Section 2(f), the work done by the processors was "manufacture." It also said that the 1980 law made this clear. The Gujarat High Court's decision in the Vijay Textiles and Real Honest Textiles case was reviewed by a panel of three judges in the Supreme Court case Empire Industries vs Union of India. The Supreme Court said the Gujarat High Court's decision was wrong. They cannot make grey fabric. and (2) Even if it did count as "manufacture," how should the value of the processed fabrics be determined for tax purposes? The petitions and appeals raise the following questions: A(i) Does bleaching, dyeing, printing, sizing, shrink proofing, etc., done on cotton or man-made "grey fabric" count as "manufacture" for the purposes of Section 2(f) of the Excise Act, before it was changed by the 1980 law? (B) Was the change made by the 1980 law to Section 2(f) and to tariff items 19 and 22 beyond the power of the Union Parliament (the national legislature) because it violates Entry 84 List 1 (a section of the Constitution that defines what the Union Parliament can legislate on)? (C) Even if the changes to the Central Excise Act are valid, is the tax under the Additional Duties Act invalid because there was no similar change to the definition of "manufacture" under the Additional Duties Act? (E) Even if the tax is justified, is it wrong and illegal to calculate the value of the processed grey fabric based on the wholesale selling price declared under Rule 173(b) when the fabric is processed on a job work basis? The Supreme Court decided as follows: The appeals by the Union of India (the government) were allowed, and the Gujarat High Court's ruling was overturned. The value for tax assessment will not be just the processing charge, but the full value of the processed fabric, which is the price at which the fabrics are first sold in the wholesale market. 2(iv) Even if the tax on processing is not under Entry 84, List I, but is a tax on "processing" separate from "manufacture," the tax can still be supported by Entry 97, List I, which covers topics not specifically mentioned in other entries. 4(i) A legislature can always make a law valid again if a court has declared it invalid, as long as the problems and weaknesses that the court pointed out are fixed. No one has a right to benefit from a mistake in a law. In this case, the Supreme Court in the Empire Industries case correctly held that the retroactive nature of the changes did not violate Article 9(1)(g). 5(i) Section 4 of the Central Excise Act says that the value of an article for tax purposes is: (a) the wholesale price for which a similar article was sold or could be sold when it was removed from the factory for delivery at the place of manufacture; or (b) if that price is not known, the price at which a similar article was sold or could be sold when it was removed from the factory. 5(ii) The taxable value of the processed fabric should not be just the processing charges. Even though the tax is on the production or manufacture of the goods, it can be imposed at the stage the law considers most convenient, as long as it is related to the nature of the tax. Any standard that is related to the nature of the tax can be a valid basis for assessing the tax. The question was not whether the legislature could make a major change in the nature of the tax, but whether it did. 1(ii) The HMM case does not support the argument that the change to the definition of "manufacture" cannot be justified by referring to entry 97 of List 1 if it doesn't fall under Entry 84. This can be useful, but it can also make laws less clear. One is where an earlier Act or some of its provisions are incorporated into a later Act. In this case, any changes to the earlier statute also apply to the later one. 3(iv) The legislation in question is similar to the 1944 Act and is supplemental to it.
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cement of additional security deposit. It stands to reason that if there is a revision in the rate of tariff there must he an upward revision in the consumption security deposit since it has direct hearing to the level of supply in consumption of electricityThis being a condition of supply no reason need be given at the timeof upward revision. [278 C, 277 A C] & CIVILAPPELLATE JURISDICTION: Civil Appeal Nos. 2117 to 2122 of 1993 etc. From the Judgment and Order dated 28.4.1989 of the Andhra Pradesh High Court in W. P. Nos. 11162/84, 18968/87, 12007/84, 15131/87, 5050/82 and 15746/87. Altaf Ahmed, V.R. Reddy, Addl. Solicitor General, Narasimha murthy, K. Parasaran, Anil B. Divan, Harish N. Salve, Soli j. Sorabjee, G. Ramaswamy, P.P. Rao, Gobind Mukhoty, Dr. Shanker Ghosh, Shanti Bhushan, G.L. Sanghi, Pawan Kumar, P.S. Poti, B.M. Patnaik. Sanjay Parikh, P. Niriop, Kailash Vasdev, section Khaitan, K. K. Khaitan, Darshan Singh, Sushi] Kumar Jain, A.P. Dhamija, section Atreya. E.C. Agarwal, A. V. Palli. Atul Sharma, Ms Reena Aggarwal, A. K. Mehta, R. K. Gupta, P.C Kapur, T.V.S.N Chari, B. Reddy, Ms. Pramila, Anil K. Sangal, Ajay K. Tayal. Koka Raghava. B. Kanta Rao, Shiv Prakash Pandey, Ms Rekha Pandey. R.K. Priyokumar Singh, T.V. Ratlinain, K.R. Chowdhary, K. Ram Kumar, Ashok Kr. Gupta, R.B. Misra , Pradeep Misra, Mrs. Sheil Mohini Seth, Jain Hansaria & Co, R.P. Gupta, Ms. Sarla Chandra, M/s Mitter Mitter & Co. Ms Abha Jain, Ranjit Kumar, M.P. Jha, S.K. Jain, Vinoo Bhagat, Surva Kant, Aruneshwar Gupta, Badridas Sharma, Prabhu Dayal, Sudarshan La] Aneja, R. Venkataramani, Y.P. Rao, D.K Garg, K.C. Agarwals, O.P Khaitan, P.B. Agarwala, Mohinder Rupal, Mrs. Kamakshi Mehllwal, Ms Archna Kau] (For Gagrat & Co. ), Vijay Hansaria, R. section Sodhi , D.A. Dave, Raian Karanjwala, Mrs. Manik Karanjawala, Rajesh mar, Ms. Suruchi Aggarwal, K.J. John, Ms. Deepa Dixit (For 213 Swarup John & Co.), A. T. Patra, S.R. Agarwal, Ms. Bina Gupta, Prashant Bhushan, K. Rajendra Choudhary, Rakesh K. Sharma, Shivi Shamia, Anil K. Chopra, Pallav Sisodia, Ravinder Narain (For JBD & Co. ) Praveen Kumar, Virender Kaushal, Bimal Rao Jad, Ms Malini Poduval, K.K. Lahri and section Sukumaran for the appearing parties. The judgment of the Court was delivered by MOHAN,J. Leave granted. These civil appeals are directed against the judgment of the Division Bench of Andhra Pradesh High Court reported in Southern Steel Ltd. vs A. P. State Electricity Board, Hydrabad AIR 1990 Andhra Pradesh 58. The facts briefly are as under: The Andhra Pradesh State Electricity Board is constituted under Section 5 of the Electricity Supply Act, 1948 (hereinafter referred to as the Act). The said board is engaged in generation, distribution and supply of electricity in the State of Andhra Pradesh. Electric energy is supplied for industrial, commercial, agricultural and domestic purposes. To such of these industries, using energy about a particular level, it is supplied at a higher voltage. They are classified as high tension consumers (H.T. consumers). All the appellants herein belong to that category. Section 49 of the Act empowers the Board to notify the terms and conditions upon which it will supply electricity to a person. It is also empowered to frame uniform tariffs in that behalf. Sub section 2 specifies in fixing the uniform tariff, the Board shall have regard to all or any or the following factors, namely a) the nature of the supply and the purposes for which it is required; b) the coordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time 214 being served or adequately served by the licensee; c) the simplification and standardisation of methods and rates of charges for such supplies; d) the extension and cheapening of supplies of electricity to sparsely developed areas. Sub section 3 empowers the Board to enter into a special agreement with any consumer any prescribe different tariffs for Wm. Under Section 4, an obligation is cast on the Board not to show undue preference to any person while fixing the tarrif and terms and conditions for the supply of electricity. In all these cases, the appellants are covered by the general terms and conditions notified under Section 49 (1) of the Act. The terms and conditions were notified by the Board and the B.P.M.S. No. 690 dated 17th of September, 1975. It is not necessary to refer in detail to the various terms and conditions. However, what requires to be noticed is the terms and conditions oblige every consumer executing an agreement in the prescribed form, undertaking to abide by the term and conditions prevailing on the date of agreement and also agreed to be bound by the terms and conditions as may be notified from time to time. It is important to note under Section 25, the Board has unilateral right to vary the term from time to time under clause 25.1. The terms and conditions for supply of electricity by special or general proceedings. Condition 32. 1. provides "the Board shall as far as possible within 15 days after the expiration of each calendar month cause to be delivered to every consumer a bill of charges stating the amounts payable by the consumer towards charges for energy supplied and any other sum in connection with supply of energy by the Board. " Conditions 32.2. 1. obliges the consumers to pay the amount shown in the bill, within 15 days of the date of the bill in, default 'whereof they are liable to pay "an additional charge of 2% per month or part thereof for the period of delay" in paying the bill. Condition 32.3 empowers the Board to disconnect the supply in case of default in paying the bill, without prejudice to its right to recover the amount due. Condition 24.3 also lays down that the consumer shall pay to the Board 215 every month the charges for electrical energy supplied to him during the preceding month at the tariff in force from time to time. Condition 28 obliges the consumers to deposit an amount equivalent to three months consumption charges with the Board. It would be appropriate to set out condition No. 28 as far as it is necessary for our purposes, committing what is not relevant as under: 28.Consumption deposits: 28.1 Initial consumption deposit. The consumer shall deposit with the Board a sum in cash equivalent to estimated three month 's consumption charges. The consumer coming under the L.T. category 'domestic ' shall however pay at Rs. 30.00 per Kilowatt or part thereof connected load. "Provided that the Board may, in the case of industrial consumers, accept by way of consumption deposit a sum equivalent to two months consumption charges during a period of three years from the date of first release of supply of electricity". 28.1.2In the event of the consumer failing to pay to the Board any sum that may become due for payment to the Board on the dates fixed for payment thereof, the Board may, in addition to and without prejudice to the other rights of the Board, appropriate a part or whole of such deposit towards the sum due from the consumer. 28.2Additional Consumption Deposit All consumers other than those L.T. Domestic consumers whose monthly bills are less than Rs. 500 for a continuous period of six months, shall keep with the Board an amount equivalent to charges for three months demand and energy charges as consumption deposit. The aduacy of the consumption deposit shall be reviewed by. the Board usually once in every year and/ or at any time during the year if so warranted dur to upward revision of tariffs, enhancement of the con 216 tracted demand by the consumer charges in the pattern of consumption by the consumer relaxation of power restrictions or such other factors which in the opinion of the Board, warrant review of the, adequacy of the existing consumption deposit. The review shall take into account the following factors: (i)In the case of consumers where there is no change in the contracted demand, the average consumption for the preceeding twelve months after taking into consideration the quantum and nature of restrictions imposed, if any, during that period shall be the basis. (ii)in the case of consumers who were sanctioned additional demand and availed it during a part of the period, average recorded consumption for the period of review shall be from the date of utilisation of increased demand to the date of review after taking into consideration the nature and quantum of restrictions imposed, if any during that period. (iii)The demand shall be contracted demand of the consumer at the time of review. (iv)The rates, at which the demand or energy charges shall be calculated, will be tariff rates prevailing as on the date of review. Based on such review, if the consumption deposit of the consumer is found inadequate or has fallen short on account of adjustments made as indicated in clause 28.1.2hereof the consumer shall deposit within 30 days of receipt of notice in this regard such additional amountas may be required by the Board or replenish the required amount as the case may be. 28.3 Interest on consumption deposit: Interest shall be paid by the Board on deposits of more than Rs. 60 made in cash at the rate of 3% per annum or such other 217 rate as may be fixed by the Board from time to time. Full calender months only shall be taken into account for the purpose of calculating interest and interest shall be calculated to nearest five paisa. The interest accruing to the credit of the consumer shall be adjusted every year in the month of April in the Electricity Supply bills. 28.4 Disconnection or non payment of consumption deposit: If the consumer does not make payment of amount of consumption deposit or additional consumption deposit or where the deposit is given in Government security or National Saving Certificate Bank guarantee etc. , he fails to replace them by deposit in cash when so demanded by Board within the notice period of 30 days supply of consumer shall be liable for disconnection. 28.5 "The Consumption Deposit so calculated as per the Clause 28.1 and /or 28.2 above shall not be less than three times the monthly minimum charges, applicable to the consumer under the category to which he belongs". 28.6 "All consumers shall pay the Consumption Deposit or additional consumer deposit within thirty days from the date the demand notice if there be any delay in payment, the consumer shall pay surcharge thereon equal to 1 1/2% per month or such other percentage to be fixed by the Board from time to time, of the demanded amount for each month of delay or part thereof. This will be without prejudice to the Board 's right to disconnected supply of electricity". Clause (1) of condition 28 is general in nature. It applies to all consumers. (1.2) enables the Board to appropriate a part or whole of the said deposit towards any amount due to the Board and not paid within the prescribed period. (2) applies to all consumers, except those L.T. Domestic consumers whose monthly bills are less than Rs. 218 . 500 per month for a continuous period of six months. Such consumers are obliged to keep with the Board an amount equivalent to three months ' demand and energy charges, as consumption deposit. The deposit is liable to be reviewed by the Board from time to time, having regard to the factors mentioned in the said clause. (3) prescribes interest which the Board has, to pay on such deposit. It is 3% per annum. Clause (4) empowers the Board to disconnect the supply if consumption deposit/ additional consumption deposit is not made, or is not replaced whenever called upon to do so. Clause (5) prescribes a certain floor below which consumption deposit shall not go. Clause (6) says that the consumption deposit or additional deposit shall be paid within thirty days of the notice demanding such deposit. In default, not only interest is payable but the supply also is liable to be disconnected. The attack before the High Court was that according to Condition No. 32. 1, the bill is served within 15 days of the expiration of each calendar month. The amount covered by the bill is payable within 15 days of the date of the bill. The period of 15 days for payment is calculated not from the date of service of the bill but from the date of the bill. A bill could be served even on the very first day of the succeeding month in which event it will become payable within 15 day of the date of the bill. In such a situation, it is not correct to say that a consumer goes on availing and enjoying energy for a period of three months without paying for it. Invariably it does not exceed six weeks or at any rate, two months. In the event of non payment under Condition No. 32.3, supply of energy can be disconnected without seven days notice as contemplated under Section 24 of the . Therefore: (1)It was urged that the consumption deposit should in no event exceed two months average consumption charges. (2)The second attack was the payment of 3% interest by the Board on such consumption deposit is no longer good law in view of the judgment of Supreme Court rendered in M/s Jagdamba Paper Industries (p) Ltd. vs H.S. E. Board, ; , since this Court had taken the 'view that the interest on such deposit should be paid at the same rate as is paid by the schedule bank on fixed deposit. 219 It was generally urged that the Electricity Board being a State; within the meaning of Article 12, it has to act fairly. Any term of condition will have to answer the test of reasonableness. On the contrary, if it is arbitrary, it would be violative of Article 14. The High Court after analysing the object behind Condition No,. 28 relating to the consumption deposit held: The condition requiring the consumer to pay the charges within 15 days from `the date of the bill and on such failure, a right is conferred on the Board to disconnect the supply. The condition merely refer to the power of the Board. Existence of power is distinct from exercise of power. The Board cannot blindly act upon Condition 32.3 and disconnect the supply the moment 15 days time (from the date of the bill) expires. It has to take a realistic view of the situation. After all, these industries are engaged in production of goods essential to the community. A blind and mechanical adherence to Condition 32.3 (instant disconnection) may indeed prove counter productive in larger sense. It was also not possible for the Board to notice the non payment immediately in view of the large number of consumers and the extensive nature of organisation. Besides, huge sums are required by the Electricity Board as rotating capital. It borrows large amounts from organisations like L.I.C. and Banks, on which it pays interest to them. Hence, it is well entitled to require the consumer to co operate by paying their bills regularly, by furnishing security deposits and by conforming to the terms and conditions of supply. Under these circumstances, the requirement of three months deposit could not be said to be unreasonable and unjustified. As regards, the payment of 3 % interest, the High Court was of the view that the decision of this Court in Jagdamba Paper Industries (P) Ltd. (supra) could not be read as a decision of the Supreme Court on the basis of which it could be declared that the earlier Bench decisions of the High Court were no longer binding, Accordingly, it dismissed the writ petitions. Aggrieved by this decision, the present S.L.Ps. have come to be preferred. Mr. R.N. Narasimha nmurthy, learned counsel for the appellant 220 after drawing our attention to clauses 28 and 32 would submit that if there is any laxity on the part of the Board in preparing the bill that cannot be a ground to make a consumer to pay three months deposit. The tariffs of 1974 provided for the payment of bills within 14 days from the date of the bill while the quantum of deposit is three months consumption charges. Originally, the time for payment was 30 days from the date of the bill. That has been reduced to 15 days which is a drastic change. The security deposit is a provision for continued default of the consumer. The quantum of such a deposit is reckoned on the basis of the lapse of time between the consumption charges that become due after expiry of time required for reading of meter, billing, delivery of the bill to the consumer; grace time allowed and the reasonable time required for disconnecting the consumer 's service connection. The reduction to 15 days has great relevance on the quantum of deposit as the deposit is intended to cover the defaulted amount by the time of disconnection. However, considering that the bills of power intensive industries are prepared within 3 days of meter reading and also considering the close monitoring that is feasible in verification of payments of bills of these consumers and the small number of these consumers distributed among the several Circle Offices of the Board, any default is detectable within 20 days of the bill for appropriate action to be taken immediately. The purpose of consumption deposit is only to safeguard the actual consumption charges that become payable by the time penal action could be initiated. Even the judgment of the High Court indicates that a time lapse of 37 days from the date of the meter reading without considering the 7 days notice prescribed under Section 24 of the . The balance time of 23 days to make up for 90 days is provided for the laxity in the Board administrative system which justifiably cannot be passed on to the consumer by way of consumption deposit. In view of the high stakes involved in the case of power intensive consumers, the Board should evolve a suitable system of payments and must keep the security deposit to the minimum instead of three months. It is further submitted that the security deposit could be in the form of bank guarantee. There is no justification to require cash deposit. As a matter of fact, as noted in M/s Haryana Ice Factory vs Municipal 221 Corporation of Delhi and Another AIR 1986 Delhi 78, the security in the form of Government Bond is permissible. In Jagdamba Paper Industries Case (supra), paragraph 11 of the judgment deals with rate of interest. That is a case where 8% was increased to 10% by consent. If really, it is in the nature of a deposit, there is no Justification as to why bank rate should not be awarded. It seen from The Chairman Karnataka Electricity Board and Others vs Gadag Mining Co. & Ors. etc. AIR 1986 Karnataka 252, 10% interest had been awarded. Mr. Anil B. Divan, learned counsel for the appellant in S.L.P. (c) No. 2564/92 would submit is under: Power intensive units like the appellant 's form a distinct class of consumers. The Ferro Silicon plant of petitioner No. 1 is a power intensive one where the cost of electricity constitutes about 55% of the price of the ferro silicon produced. Electricity, thus is the basic raw 'material for this industry. On an average, the appellant is consuming electricity worth Rs. 1.6 crores per month. If there was full supply of electricity (without there being a power cut), the monthly bill would be approximately Rs. 4 crores at a present tariff. The power intensive plant of the appellant maintains a very high load factor of 0.9%. Ordinary H.T. consumers work at a load factor of only 60% and the units consumed at only 50 per KVA demand. The HT 111 tariff for power intensive consumers requires a minimum consumption of 403.3 units per KVA demand. This means more than 8 times that of H.T. consumers. The Electricity Board has always classified power intensive units as a separate category. At present, there is a special tariff called HT III tariff with a fist of power intensive industries specified in the tariff notification. The appellant No. 1 had deposited Rs. 1.07 crores in cash towards the security deposit. A bank guarantee for Rs. 53.64 lacs had also been furnished. A further demand of Rs. 96.5 lacs prompted the filing of the writ petition in the High Court. As per the order of this Court in S.L.P. No. 12077/84 it was directed on 6.2.1987 that a sum of Rs. 1 crore be paid by the 3rd of every month and the balance within 7 days of the 222 presentation of the bill This order came to be modified that Rs.1 Crore was to be paid on the 30th of the month and the balance within one week of the receipt of the bill. The said arrangement has been working satisfactorily. There has not been any default in payment of electricity bills. Therefore, the entire dispute is a theoretical one as to what the quantum of the security deposit can, or ought to be. A deposit in cash of an amount equal to three months average bills at full supply at the present tariff without any power cut will amount to Rs. 12 cores on the basis of tariff revised in October 1992. With ever increasing tariffs, the deposit demanded will also keep increasing. Under these circumstances, the condition requiring three months security deposit is arbitrary and illegal for power intensive consumers. The paid up share capital of appellant No. 1 is Rs. 3.8 crores. The gross value of the plant and machinery of the power intensive unit is Rs. 7.94 crores. The total advances made by the consortium of bankers for working capital is Rs. 4.25 crores. The total net worth of all the divisions of appellant No. 1 that is Merine products, Sugar & Engineering, Machine Building and the power intensive Ferro Silicon Plant is Rs. 14.6 crores. The security already furnished namely Rs. 5.7 crores is crippling the Ferro Silicon Plant division. A demand of three months cash deposit would be in the range of Rs. 12 crores. It is arbitrary and unjustifiable to require appellant No. 1 to deposit several times its share capital by way of security. If this demand is enforced strictly, the plant of the appellant will become sick and ultimately, will have to be wound up. In other States, the provision is not so harsh. If the security deposit is 'consumption deposit ' and it is for meeting the cost of supply in advance, then the Electricity Board cannot charge penal interest at 2% per month for non payment of bills within the stipulated period. The deposit, first must be appropriated against the dues and the interest charged only if there is balance due. The Stand of the Electricity Board is perverse and illegal. Equally, there can be no question of 'supply on credit ' if deposit is adjusted against consumption all the time. The consumer has got a right to negotiate. In The Indian Aluminum Co. vs Karnataka Electricity Board , this Court directed the Electricity Board to adopt a realistic policy. Here also Condition No. 28 must be altered. 223 There is no power under the Electricity Supply Act to enable the Board to raise revenue or to cover its capital cost etc. except by way of adjusting tariffs as seen from under Section 59 of the Supply Act, 1948. Therefore, consumption deposit cannot be used for the purpose of revenue or raising revenue. In this case, the Electricity Board had not placed any material to give interest only at 3%. Mr. K. Parasaran, learned counsel appearing in S.L.P. No. 13004/ 89 after referring to the passage occurring at page 66 of Haryana Ice Factory case (supra) submits that the security deposit cannot go to buildup the capital or fixation or tariff. Under Sections 49 and 59 of the Supply Act, finance is required to be adjusted including the payment of interest. Demand of three months consumption deposit cannot be resorted to. In support of his submission, reliance is placed on Hindustan Zinc Ltd. etc. vs Andhra Pradesh State Electricity Board & Ors. ; Mr. Kailash Vasudev. learned counsel for appellant in S.L.P. 13004/89 submits that under Section 49 of the Supply Act, it is enjoined upon the Board to adjust its tariffs by keeping the factors detailed in the said Supply Act. Therefore, the Board cannot have recourse methods not provided under the said Act. The demand for a deposit to ensure the due payment of the bills for electrical energy consumed amounts to framing an additional tariff. The Board cannot do indirectly what it cannot do directly. The Board being 'a state monopoly ' has to act reasonably and not arbitrarily. The terms and conditions of supply cannot be unfair and oppressive. Mr. R. Venkataramani, learned counsel in his written submis sions in Writ Petition Nos. 1293/89 & 1353/89 and S.L.P. (c) Nos. 4791 92/90 & 4793 94/90 would urge that Section 49 of the Supply Act is unconstitutional since there are no guidelines for framing the terms and conditions of supply of electricity. The said Section does not specifically spell out fairness of action. Clause 28 of the terms and conditions of supply is a clear illustration of arbitrariness and subordinate legislation. 224 The words as the Board thinks fit ought to be interpreted so as to be consistent with the fairness of State action. They are to be construed as "reasonably thinks fit" as held in Roberts vs Hopwood, and Granite vs Minister of Housing and Local Government, Clause 28 of the terms and conditions of supply relation to fixation of 3% interest and additional charges are vitiated due to non application of mind. Under clause 28.6 of the terms and conditions, in the event of delay in payment of consumption deposit or additional consumption deposit within the stipulated period, the consumer is obliged to pay surcharge at 18%. The obligation to pay surcharge and the power of the Board to vary the percentage from time to time would constitute draconian provision. Money, wherever it is held in deposit could only be used to earn some interest. Therefore, paying 3% interest on the consumer deposit is not at all justified. A public institution cannot be allowed to get excessive interest. In meeting these arguments, the learned Additional Solicitor General submits that under Electricity Supply Act, the finances of the Board are controlled to the minutest detail. Originally, prior to 1978, Section 59 required the Board as far as practicable and after taking credit for any subvention from the State Government not to carry on its operation on loss. For this purpose, it was empowered to adjust its charges accordingly from time to time. Section 59 was amended by Act 23 of 1978. After the amendment, the Board after taking credit for any subvention from the State Government was required to carry on its operations and to adjust its tariffs so as to ensure that the total revenues in any year after meeting of the expenses left such surplus as state government may specify from time to time. This Court has taken the view in Kerala State Electricity Board vs S.N. Govinda Prabhu & Bros. & Ors ; that even if the Government had, not prescribed surplus, the Electricity Board could generate surplus. After the amendment by Act 16 of 1983 which came into force on 225 1.4.1985, the Board was to create a minimum surplus of 3% or such higher percentage as the State Government would specify in this behalf. It is in this background. , the matter will have to adjuged. The reason why three months security deposit is demanded is, for two months, the consumer gets free electricity. For supply of such electricity, the Board has to borrow and make payment of interest. If there are no consumer deposits, the tariff shall have to be increased. That will effect all the consumers. Interest at 2% is charged in case of default only in order to ensure proper payment. It is penal in character. In the judgment under appeal, the High Court held that the burden relating to interest can be reflected either in the tariff or could be set off by calling upon the consumer to make deposit. In fact, this Court has upheld the tariff revision effected by Andhra Pradesh Electricity Board as seen from Hindustan Zink Ltd. Etc. v, Andhra Pradesh State Electricity Board & Others ; It cannot be contended that the three months consumption deposit is arbitrary. This argument ignores the following important factors: i)This is not a security deposit but a consumption deposit. ii) It in the nature of an advance payment. iii)In the event of failure to pay, it could be proceeded against as seen from clause 28.1.2. (iv) Consumption deposit is variable as per clause 28.2 (iv) If therefore, the object of consumption deposit is to ensure proper payment with reference to electricity supply, there is nothing arbitrary or unjustifiable. The fact that some of the appellants pay large amounts by way of electricity charges will have nothing to do with the nature of deposit. Merely because it is a power based unit, it cannot be treated separately. Nor can the appellant make a virtue out of necessity. The terms of supply relating to consumer deposit must be uniform, therefore, it is not correct to contend that the power based unit must be treated separately. As regards payment of interest at 3%, electricity supply is made on 226 credit basis. Therefore, it is a matter of adjustment of Board finances. Strictly speaking, the consumer deposit is in the nature of fidelity guarantee to ensure proper payment by consumer. The consumer may not be entitled to interest at all. However, where the Board has so adjusted finances and pay 3% interest, the Board cannot be defaulted. Jagdamba Paper Industries case (supra) cannot be said to be a decision as to the rate of interest payable by the Electricity Board. Upon reading paragraph 11 of the judgment, it will be clear that it proceeded on the consent of the counsel. RAJASTHAN The writ petitioners applied to appellant Board for the supply of high tention power for their factories. After the execution of the necessary agreement and furnishing of security deposit, power connections were given. Subsequently, the Board issued notice requiring the consumers to deposit the enhanced amount of cash security as well as the bank guarantee on the basis of maximum power consumption of three months. With regard to security deposit, Part 11 of the General Conditions of Supply and Scale of Miscellaneous Charges in Note II stated that no interest will be paid by the Board on the security deposit. Two contentions were raised in the petitions, (i) Note II providing for no interest was bad in law, (ii) the enhanced security must be calculated not on three months maximum consumption but on the basis of minimum power consumption. These two contentions found favour with the learned Single Judge. The Rajasthan Electricity Board filed special appeals while the consumers filed cross appeals. The Division Bench held as under: i)The Board has power to demand additional security but the average consumption of three months should be taken as the basis for calculating the amount of such security. ii)The clause relating to non payment of interest was not reasonable. Interest must be allowed on the entire amount of cash security from the date of the writ petition. The appeals by the Board were dismissed while cross appeals by the consumers were allowed. Ag 227 grieved by this judgment, the present S.L.Ps. have come to be preferred by the Rajsthan Electricity Supply Board. Mr. Soli J. Sorabjee, learned counsel appearing for the appellant argued as follows: There is no legal obligation to pay interest on a deposit made by the consumer with the Board in terms of Clause 20 (a) & (c) of the General Conditions of Supply. Nor even interest is payable under common law or in equity. In this connection, the learned counsel draws our attention to Halsbury 's 4th Edition, volume 32 pages 54 55. There is no legal or equitable obligation to pay interest for detention of monies. In support of this argument, learned counsel relies on Bengal Nagpur Railway company Ltd. vs RuttanjiRamji, (1937) L.R. 65 I.A. 66 and Union of India vs A.L. Rallia Ram ; , pages 187, 189 190. There is no contract or agreement which provides for payment of interest. On the contrary, Clause 9 (b) (ii) of the General Conditions expressly provides that no interest will be paid by the Board on security deposit. There is no statutory provision which casts an obligation on the Board to pay interest on the security deposit. The High Court erred in relying on the model form of draft conditions of supply because the said model form is applicable to only licensee as defined under Section 2 (h) of Electricity Act. It is not applicable to a Board which is not a licencee. Further, it is not necessary on the part of the Board to adopt model form. Schedule VI of 1948 Act again cannot be pressed into service as the Board is not a licencee clause 2 (b) (v) of Schedule VI merely specifies interest on security deposit as properly incurred item of expenditure for the purpose of determining the 'clear profit ' of the licencee. The said clause does not and cannot by itself impose an obligation on the licencee to pay interest on security deposit. Should interest be paid, then it qualifies as an item of expenditure properly incurred. The High Court also erred in relying on Section 4 (2) of the . Section 4 (2) has no application where on account of contractual term or a statutory provision, payment of interest is not permitted. Section 4 (2) of the merely enlarges the 228 categories of cases mentioned under Section 4 (1). The said Section cannot override other statutory provisions or a contract between the parties. The non obstante clause under Section 4 (2) is restricted only to the provisions of Interest Act, 1948. It is submitted that under the billing practice prevalent with the Rajasthan Electricity Board the consumer has free use of electricity during the period between consumption of electricity and expiry of period after notice. During this period which varies from 2 to 2 1/2 months, the consumer in effect enjoys a credit facility. Therefore, if security deposit is demanded for three months, it is neither unreasonable nor arbitrary. As a matter of fact, the security demanded by the appellant Board is in the form of cash for one month and bank or insurance guarantee for two months. Therefore, it is all the more reasonable. In support of this, reliance is placed on Kistna Cement Works Tadepalli vs The Secretary APSEB, Vidyut Soudha AIR 1979 A.P. 291, B.R. Oil Mills, Bharatpur vs Assistant Engineer (D) R.S.E.B., Bharatpur, AIR , .Municipal Corporation for Greater Bombay vs M/s Devidayal Metal Industries, , Haryana Ice Factory vs Municipal Corporation of Delhi, AIR 1986 Delhi 78 and Southern Steel Ltd. vs The A.P. State Electricity Board, Hyderabad, AIR 1990 A.P. 58. On the question of the constitutionality of the provisions regarding non payment of interest and whether it is violative of Article 14, it is submitted: i)Article 14 does not mandate mathematical exactitude or scientific precision; ii)The mode and period of security should be related to the billing practice prevailing in Rajasthan Electricity Board. iii)The consumer with open eyes has entered into the agreement and has solemnly undertaken to abide by the condition regarding nonpayment of interest. He cannot resile from that condition. There is nothing inherently objectionable, nor is the condition illegal or void as opposed to public policy. Even assuming, the contract between the consumer and the Board is an adhesion contract it is not necessarily unconscionable. In this connection, reference is invited to Black 's Law Dictionary, 6th Edition, page 40. That passege has been cited with 229 approval in Central Inland Water Transport Corpn. vs Brojo Nath Ganguly. In such matters, relief is given to the party only if the contract is so unreasonable as to be unconscionable. In this connection reliance is placed on Gillespie Brothers Ltd. vs Roy Bowles Ltd. at 200 (g), Farmsworth on Contracts, 2nd Edition, 319 & 320 para 4.27. The rate of interest on security deposit cannot be equated with the rate of interest payable on fixed deposit because the nature and character of a security deposit is basically different from fixed deposit. This is clearly brought out by the Companies (Acceptance of Deposits) Rules, 1975. The said Rules expressly exempt security deposit in definition of Rule 2, clause (v) & (vi), In Jagdamba paper Industries case (supra). the rate of interest was based on a concession by the parties. The Court had no occasion to decide the rate of interest. That part of the judgment proceeds sub silentio. The argument based on surcharge levied for delayed payment is a non sequitur. If the provision for non payment of interest is valid and not arbitrary, it does not become arbitrary and unconstitutional because surcharge is levied at 2% per month. In fact, surcharge has not been challenged. Surcharge is attracted only if the bill is not paid within the due date. The submissions based on Sections 57 & 59 of the Supply Act in relation to security deposit proceed on a misconception of the nature and character of payment as a security deposit. The object of security deposit is to secure prompt payment of electricity bills. They are not intended to finance the Board 's transaction. Section 57 read with sixth Schedule is meant to ensure a reasonable return. expression 'charges ' in the Sixth Schedule clearly shows that security deposits are not included within the expression 'charges '. There is no mutual exclusivity between increase of tariffs and earning interest on security deposits, It is also incorrect to contend that prompt payees of electricity bills are treated on par with the defaulters and thus anequals are treated alike. The real test is, whether in the general application of law there is any discrimination. In support of this submission, the learned counsel placed his reliance on: The Collector of Customs, Madras vs Nathella Sampathu Chetty 230 ; , Vivian Joseph Ferreira vs Municipal Corporation of Greater Bombay , B. Banerjee vs Anita Pan [975] 2 774 and Fatehchand Himmatlal vs State of Meharashtra ; The last submission of the learned counsel is that a statutory provision may be struck down as unconstitutional only if it is palpably arbitrary and irrationality is writ large. Merely because the Court considers a particular provision to be unwise or undesirable, it is never struck down. The learned counsel fairly concedes that the enhanced security deposit could be calculated only on the average consumption of three months of the previous years. Mr. Altaf Ahmad, learned counsel supporting the arguments of Mr. Soli J. Sorabjee would urge: In this case, the consumers are those who use H.T. and E. H. T. lines. Section 49 (3) gives the clue that each Board can have its own scheme. Section 79 of the Supply Act speaks of the power to make regulation. Clauses (i) and (j) are relevant because they talk of principles governing the making of arrangements with licensees under Section 47 and other then licensees under Section 49. The industrial consumers constitute the majority user of the electricity amounting to 49.51 per cent. the transmission losses for 1992 93 alone are 22 per cent. Besides, the Board is also purchasing power from other corporations and States. Therefore, the demand for security deposit is fully justified and there is nothing arbitrary in not providing for interest. That is what is provided under clause 21 (a) of the agreement in relation to high tension supply. The consumption deposit cannot be equated to the deposit in a bank and interest could be demanded as of right. Mr. Kapil Sibal, learned counsel appearing for the Haryana Board which Board has now withdrawn payment of interest, has filed intervention application since the present day position of the Haryana Board is on a par with Rajasthan. Mr. R.K. Mehta, learned counsel for the intervenor on behalf of 231 the Orissa Electricity Board through his written submissions.urges that it may be that the regulations in the case of Andhra Pradesh, Utter Pradesh and Bihar Provide for payment of interest at a certain rate on the security deposit. However, the Rajasthan and Orissa regulations provide that no interest shall be payable on the securities furnished by the Board. In the impugned judgment the Division Bench has not given any cogent or valid reason for striking down Condition No. 20 of the General Conditions of the Rajasthan Electricity Board. The High Court had failed to appreciate the following factors while quashing the impugned clause of the regulations. Electricity is an item which cannot be sold and supplied immediately after generation. For the sale of electricity one has to take meter reading meant for the said purpose and, therefore, the Board sends the bill for particular duration. It is obvious that the reading of the meter could not be taken at every point of time but only for duration/period. In the process 2 1/2 months elapse. The Board does not charge any interest at least for 2 1/2 month from its consumers. At the same time, the Board needs finance for production, supply and other charges necessary for supply of electricity. The Board is thus obliged to take loans from various financial institutions. The consumers who are utilising electricity for 2 1/2 months without making any payment will be unjustifiably enriched at the cost of general public in the absence of security deposit. Further taking of advance money without interest for Providing other services in the market is a general practice. Therefore, a similar provision in the general conditions for supply of the Board cannot be treated as arbitrary or unreasonable. A consumer is not entitled to claim interest on his security deposit having regard to the following considerations. 1.The security deposit is furnished in consideration of the performance of the consumer 's obligation for obtaining the service essential to the life and the well being of community. The electricity supply is made to that consumer on credit withoutrequiring him to make instant payment. The billing time taken by the Board is for the benefit and convenience of the consumer as he saves additional expenditure on 232 account of instant or shorter billing time, possibly through electronic devices which will be included in the tariffs. 4.The public revenues Ire blocked in the generation, transmission and distribution of electricity for the performance of supply on which the Board pays interest in so far as they form part of the loans borrowed by the Board for performing the public service. On the return of the blocked moneys the Board gets no interest from the consumers. 5.The Board needs back its blocked money to carry out service with a reasonable recompense. 6.The Board is not essentially a commercial Organisation to which the consumer furnishes the security deposit to earn interest. Having entered into a contract with open eyes it is not open to the consumer to say that interest should be paid. The basis of supply of electricity and the conditions on which it is supplied being statutory, the provisions under the conditions of supply that the Board shall not pay interest on the security deposit has statutory basis and accordingly cannot be struck down as arbitrary on the basis of a commercial transaction governing a bank deposit. Therefore, it is submitted that regulation 7 of the Orissa State Electricity Board General conditions of Supply Regulations, 1981 providing that no interest would be payable on security deposit is just and reasonable and is not arbitrary or violative of Article 14 of the Constitution. Mr. Shanti Bhushan, learned counsel opposing the stand of Rajasthan Electricity Board submits that the only question in this special leave petition is whether Electricity Board is obliged to pay interest on the cash security deposits as the Board compels industrial consumers to secure against default in payment of electricity bills. In the first place, as laid down in Jagdamba Paper Industries (Pvt.) Ltd. vs Haryana State Electricity Board ; this Court has indicated that the security amount should bear the same interest as admissible on fixed deposit of scheduled banks. The interest rate on 10 per cent was decided not really on the basis of admission but on a positive finding. Apart from this, this Court has in several other writ petitions ordered interest at 12 per cent. 233 It is submitted that the scheme of Indian Electricity Rules of 1956 and the scheme of the Electricity Supply Act also show that the interest on security deposit is supposed to be payable. The Board is not entitled to use the deposits to augment its finances. They are meant only to secure the default in payment of the bills. Section 59 of the Supply Act indicates that the only condition in which the Board could raise the revenue is by adjustment of its tariff. Section 49 of the Act makes provision for the sale of electricity by the Board to persons other then licensees under the terms and conditions as the Board thinks fit. It can be seen from the definitions of the Sixth Schedule to the Supply Act that the scheme was meant to be applicable to licensees. The place of the licensees has been taken over by the Board. That is why clause 2 (b) (v) of Schedule VI of the definition of "clear profit" states that the interest on security deposits was to be a part of the expenditure properly incurred by licensees. Then again, the manner in which the accounts are to be maintained by the licensees also shows that the licensees have to make a provision for payment of interest on security deposits. The High court is right in relying on Section 4 of the Interest Act. The contract in the instant case is between a consumer, however, high he might be and a monopolistic public utility company. It is clearly an adhesion contract. This Court in Central Inland Water Transport Corporation vs Brojo Nath Ganguly has clearly held that an unreasonable term of an adhesion contract will not be enforced by the Court. Interest on security deposit is also admissible under equity or common law. Halsbury 's 4th Edn. 32, paragraph 106 at page 53 defines "interest" as the return or compensation for the use or retention by one person of a sum of money belonging to or owing to another. The Board is clearly in the position of a trustee in respect of this money since the money is deposited by the consumers in trust with the Board to secure the Board against default in payment of bills. The deposit of security is like the usufructory mortgage which is provided for in Section 76 of the Transfer of property Act. Section 76 G & H 234 provide that the mortgagee in a usufructory mortgage would have to keep account of the incomes received from the mortgagee in his use and would have to pay compensation for the benefit derived by the user of the mortgaged property. The position here is more or less similar. It is not correct to state that security is an advance payment. If it is so, it would amount to Board taking three months advance payment from the consumers. In such a case, the Board cannot disconnect the electricity until the period of three months is over. But the rules of the Board enable it to disconnect even if the consumer fails to pay his bills on the due date. Then again, a penal interests is charged in case of default. If it is in the nature of an advance payment there is no scope for charging 2 1/2 per cent penal interest. Lastly, it is submitted that even under English Law interest is payable on security for electricity as seen from Halsbury 's Volume 16 paragraph 129: "129. Giving of security. Security required under the Schedule to be Electric Lighting (Clauses) Act 1899 to be given to an electricity board (See the Electric Lighting (Clauses) Act 1899, Schedule, sections 25 (2), 27 (2), (3), and paras. 115, 118, ante.) may be by deposit or otherwise, and of an amount agreed or, failing agreement, determined by a magistrates ' court, and that court may deal with the caused of the proceedings and its decision is final and binding on all parties, (bid., Schedule, section 71; Electricity Act 1947, section 57 (2), 1 Sch 4, Part 111) Where security is given by way of deposit the party to whom it is given must pay interest at the rate of 4 per annum an every sop for each period of Six months during which it remains so deposited. (Electric Lighting (Clauses) Act 1899, Schedule, section 71 proviso; Decimal Currency Act 1969, section 10 (I)." UTTAR PRADESH STATE ELECTRICITY BOARD The question raised before the High Court was as to the rate of 235 interest. The respondent (U.P.State Electricity Board ) amended the rate of security deposit as Rs. 2 per K.V.A. On such deposit it paid only 3 per cent interest whereas on late payment of the bills it charged more than 24 per cent surcharge from the consumer. The appellants preferred writ petitions in so far as they were denied 12 per cent interest on the deposit taken from the consumers. The Division Bench of the High Court held: "These petitions are dismissed with a direction that in case the Supreme Court decided that the interest at a rate higher that 3% should be paid on such security and additional security deposit, the benefit of the same judgment shall also be extended to the petitioners herein without the necessity of any further proceedings being taken by the petitioners." Hence, the special leave petitions. Mr. G. Ramaswami learned counsel for the appellants would urge that Jagdamba 's case (supra) has decided that rate of interest. Therefore, that should govern. In a number of matters this Court has also ordered interest at 12 per cent. The same principle should apply to this case as well. 1.Security Deposit is a compulsory levy. The consumer has no option. 2.Even in contractual matters if the Board, which is a State, does not behave fairly, this Court can always interfere. 3.The Board cannot compel the consumer to make a security deposit without corresponding obligation to pay interest. Deposit does not contemplate appropriation. Prior to appropriation, what is the character of the deposit, requires to be determined. It is not the payment of money by way of 236 advance. As to the meaning of interest it could be gathered from the case in Riches vs West minister Batik Limited. 1947 Appeal Cases 390 at 400. In Union of India vs A.L. Rallia Ram ; this Court held that interest is awardable in equity. A distinction will have to be made between unreasonable and unconscionable. In Administrative Law mere unreasonableness is enough to set aside a contract while unconscionable relates to private law. If interest is not paid security deposit cannot be demanded as this will amount to unconscionable bargain. As to the meaning of unconscionability, Black 's Law Dictionary. (Fifth Edition) at page 1367 can be usefully referred to: "Basic test of "unconscionability" of contract is whether under circumstances existing at time of making of contract and in light of general commercial background and commercial needs of particular trade or case, clauses involved are so one sided as to oppressor unfairly surprise party. Division of Triple 7. Service, Inc. vs Mobil oil Corp., 60 Misc. 2d 720, , 201. Unconscionability is generally recognized to include an absence of meaningful choice on the part of one of the parties. to a contract together with contract terms which are unreasonably favorable to the other party. Gordon vs Crown Central Petroleum Corn., D.C. Ga., 423F. Supp. 58, 61. Typically the cases in which unconsionablity is found involve gross overall one sidedness or _gross one sidedness of a term disclaiming a warranty, limiting damages. or granting procedural advantages. In these cases one sidedness is often coupled with the fact that the imbalance is buried in small print and often couched in language unintelligible to even a person of moderate education. Often the seller deals with a particularly susceptible clientele. Kugler vs Romain, 58, N.J. 522, 237 As to the meaning of reasonableness it is stated in G.B Mahajan and Ors. vs Jalgaon Municipal Council and Ors. ; at 109. Under English Law relating to electricity supply as seen from Halsbury 's Vol. 16 at paragraph 129 it is clearly stated that interest on security deposit is payable. Therefore, all the more the reason why here also it must be held to be payable. Mr. Kapil Sibal, opposing the stand of Mr. G. Ramaswami arguers that there is no order of this Court adjudicating the rights of the Board on the consumer in respect of the validity of consumption security deposit being condition precedent for the supply of electricity by the Board as we II as the liability of the Board to pay interest to the consumer in respect of the consumption security deposit. In the absence of any such adjudication the question of Board being bound by the previous orders of this Court. does not arise. In cases where 12 per cent interest was awarded it was only by way of ad interim measure. The other orders are also not conclusive on this aspect. Therefore, the matter will have to be decided afresh in the instant cases. Far from being a compulsory levy, the consumption security deposit is not only a deposit in cash to safeguard recovery of electricity dues for the energy supplied to the consumer on credit but also a security towards payment or satisfaction of any money (For example, theft), which may become due and payable to the Board by the consumer. The obligation to pay interest to the consumer proceed on the assumption that the Board is keeping the security deposit and depriving the consumer of tile use of the money which is alleged to be earning interest with the Board. This assumption is not warranted for the followings reasons: 1, The cycle of billing demonstrates that in the very nature of things the consumer is supplied energy on credit. The security deposit is hardly sufficient to secure the payment to the Board by the time the formal bill by the Board is raised on the consumer. 2.The consumption security deposit indeed represents only part of he money which is payable to the Board at the end of the billing 238 cycle. ' The said amount can be appropriated at any time towards the payments that are due to the Board and reflected in the formal bill. 3.In the nature of billings cycle it is the Board which has to receive interest on the energy supplied to the consumers on credit. 4.The concept of interest earned on a fixed deposit is alien to the issue. The liabilities of the consumer increase on a daily basis depending on the level of supply and consumption. Therefore, the amounts due are liable to be appropriated forthwith. That is not possible where moneys are placed either on fixed deposit or a savings bank account. It is incorrect to contend that the amount is lying in trust with the Board. The amount lying with the Board could also be appropriated for satisfaction of any amount liable to he paid by the consumer for violation of any conditions of supply in the context of wide scale theft of energy and tempering with meters. Therefore, the security deposit serves not only to secure the interest of the Board but also serves as a deterrent on the consumer in discharging his obligation towards the Board. Under section 49 the Board is enabled to supply electricity upon such terms and conditions, as it thinks fit under Article 226 of the constitution, the Court is to conduct a limited scrutiny whether by imposing such a condition the Board has not acted as a private trader and there by shd off its public utility character. Should the Coust come to the conclusion that the Board has not acted as a private trader and tile nature of ' deposit has a rational relationship, the issue will fall outside the scope of judicial purview. Section 49 must be read alongwith Section 59. The contention that the Board can achieve a surplus by adjusting its credit does not flow from the language of Section 59. The requirement of consumption security deposit is a condition of supply. It has a direct bearing on the operation of the Board. Hence it is 'per se ' reasonable and constitutional. If there is a revision in the rate of tariff there has to be an upward revision of the consumption security deposit since it has a direct bearing on the level of supply in consumption of electricity. In October 239 1986, the tariffs in the State of Uttar Pradesh were adjusted upwards. The revision in the form of an additional security deposit with interest at the rate of 3 per cent was made in January 1987. These facts would suggest the rationale in the imposition of additional security deposit. This being a condition of supply no reasons need be given at the time of upward revision. Union of India vs A.L Rallia Ran ; relates to the award of interest by an Arbitrator. The nature of consumption security deposit is such that it represents the moneys of the Board. There is no relationship of debtor and creditor. There is no deprivation of property which alone will entail the consequences like payment of interest. The learned counsel has also filed a tabulated statement to show that the security deposit made by the appellant is 72.42 lakh for all industries while the affairs in electricity come to 965.73 lakh. A formal chart has been filed based on the figures for August. September and October 1991 to show that after the third month the consumption charges total to 45.09 lakh. While security that is offered is 15.95. The same is the position with reference to other industries as well concerning whom the learned counsel has filed a tabulated statement. This so to establish how the Electricity Board has supplied electricity on credit to the various consumers and the security deposit is hardly sufficient even for one month 's consumption. BIHAR SLP 11799 of 1989 The appellant (Bihar Electricity Board) provided 4 per cent interest per annum on security deposit. When this was questioned in C.W.J.C. No. 3000 of 1987 in the matter of Dhanbad Flour Mills, a Division Bench of the High Court was of the view that an interest at 4 per cent appeared to be unreasonable and directed the Board to examine the question of enhancement of the rate of interest. Similar directions were issued in another case. The appellant Board after examining the matter issued a Notification on 27th of May, 1988 and enhanced the rate of simple interest to 5 per cent per annum. This was because the amount of security deposit was kept in the savings account which earned 5 per cent interest which was passed on the consumer. The said notification was questioned before the High Court by seeking 240 a writ of mandamus claiming interest at the rate payable on fixed deposit by a nationalised bank in view of the decision by this court in Jagdamba 's case (supra). By the impugned judgment the High Court directed payment of interest on security deposit at the rate payable on fixed deposit by nationalised banks. Aggrieved by this judgment the Bihar State Electricity Board has preferred the special leave petition. Mr. G. L. Sanghi learned counsel appearing for the Bihar Board draws our attention to clause 15.3 of the tariff notification and submits that the consumption security deposit is not only for the supply of energy on credit but also for satisfaction of any money payable by him. If the consumer does not pay the dues in time the arrears of consumption charges will have to be adjusted against the security deposit. Therefore, the security deposit can never be kept in bank under fixed deposit. This is the reason why the amount is kept in savings bank account and whatever interest is earned thereon. that is passed on to the consumer. Therefore, the High Court was not right in awarding a higher rate of interest. In other respect, the learned counsel adopts the argument of the other learned counsel appearing for the various Boards including the contention that Jagdamba 's case (supra) did not lay down the rate of interest. Normally, in market transaction when any one supplies on credit to a consumer a guarantee is taken for the payment on dues. Such a guarantee may be in the shape of a bank guarantee, fixed deposit. Similarly, the Board when it supplies electricity on credit it keeps tile security for the amount of supply of the electricity. According to Board 's standing order No. 433 dated 31.12.74, dues at any time are not allowed to exceed amount of security deposit and adjustment is to be made against the security deposit after the disconnection of supply. Therefore, it is not correct to state that the security is not adjusted towards the bill and is kept in tact. Section 24 of the Electricity Act is the only provision to ensure payment is indicated in Bihar State Electricity Board Patna vs M/s. Green Rubber Industries and other [1990] 1 SCC 731. In meeting these arguments it is submitted by Mr. M.P. Jha, learned counsel for the respondent that the stand of the Board in 241 making payment of interest at 4/5 per cent is clearly arbitrary. The security aspect of the Board requirement can easily be satisfied by the board resorting to liquidation of security deposit. As a matter of fact, the security deposit was never adjusted by the appellant Board. As a result large amounts were kept without investing them in fixed deposit. Learned counsel for the respondent relies on the orders issued by this Court and submits that the question of interest is settled by the ruling in Jagdamba 's case (supra). Section 24 is of no help for payment of a lower percentage of interest. W.P. No. 578 of 1987 In this writ petition, under Article 32 of the Constitution, the challenge is to the increase of security deposit for L and H power consumers above 100 B.H.P. It has been increased from Rs. 170 to Rs. 200. No reason whatever has been assigned for such an increase of security deposit. That will he bad in law as laid down in Central Inland Water Transport Corporation Limited (supra). This is the argument of Mr. Gobind Mukhoty. 'This is countered saying that when there is an increase in tariff the security deposit also is liable to be increased. PUNJAB W.P. NO. 1317 of 1990 In this writ petition, the challenge is to the validity of Sections 49 and 79 of the Supply Act. According to the respondent (Punjab State, Electricity Board), the writ petition is not maintainable. A challenge to the imposition of advance consumption of deposit does not involve any fundamental right. The Punjab State Electricity Board is a licensee of the State of Punjab. The electrical energy is generated through hydro as well as thermal plants for ultimate sale to consumers. 50% of powers generated through hydro while the remaining through thermal plants which consume coal/oil. The coal companies and those major suppliers of power plants are demanding cost of coal in advance. On these advances no interest is payable to the Board. Therefore, while the Electricity Board is required to make colossal advances to generate electricity and supply to consumers the consumers also use and consume electricity 242 on credit ranging from 2 to 3 months depending upon the category of consumers. To off set part of the amount that the consumer owes to the Board constantly and also to ensure timely payment of advances by the Board to its suppliers an advance consumption deposit is insisted upon before commencing supply to the consumer. If this is not so taken the Board will be left with no other option than to increase the tariff. This advance deposit cannot be termed as a fixed deposit as the amount cannot be utilized against non payment of dues from consumers. Besides,the consumers can also ask for the refund. Sections 49(1) and 79 (j) cannot be termed as arbitrary. In fact, this Court has upheld the validity of Section 49 (1) in Jagdamba 's case (supra). Lastly, it is submitted that the Board is generating electricity and each unit so generated costs the Board rupee one per unit. The Board is selling at an average rate of 50 paisa per unit to the consumer which includes the agricultural sector. Therefore, the amendment to clause 23 of abridged conditions of supply requiring to pay advance consumption deposits is perfectly reasonable. Mr. P.P. Rao, learned counsel appearing as intervenor on behalf of Calcutta Electricity Supply Corporation supplements the submissions of Mr. Soli J. Sorabjee. The deposit though called security deposit is really an adjustable advance payment of consumption charges. The amount is revisable from time to time depending upon the average consumption charges on the basis of actual consumption over a period. The true nature of transaction in these cases is one of advance for consumption of electricity estimated for a period of three months subject to adjustment /revision, if necessary. Such an advance is liable to be made good and kept at a stipulated level from month to month. It is open to the consumer to permit adjustment of the advance in the first instance. Thereafter, make good the shortfall in consumption charges and the security deposit before actual disconnection of supply which takes at least about three months. In short, it is in the nature of a running account. The security deposit does not remain in tact like a fixed deposit but gets depleted day after day depending on the extent of consumption More often than not, the consumption charges and other dues exceed the security deposit. That necessitates calling for 243 additional advance to make up a shortfall. In the absence of any usage or contract or any provision of law requiring payment of interest is not payable for wrongful detention of money. In this case, there is no wrongful detention of even. Section 4 (2) of the Interest Act has no application to this deposit. When electricity supply is duly made with a consequential liability to pay for each day 's consumption, the so called security deposit is not a deposit in the real sense for the consumers to claim the benefit of Interest Act. We will now proceed to consider the correctness of the above submissions with reference to the following aspects: (i) Whether Section 49 is bad for want of guidelines. (ii)The nature of consumption deposit, irrespective of the nomenclature by which it is called. (iii)(a) The liability of the Electricity Board to pay interest. (b) Whether the clause in the terms of supply providing for nonpayment of interest is unconstitutional or arbitrary. (iv)The demand for additional consumer deposit Whether valid? VALIDITY OF SECTION 49 The law relating to electricity is principally contained in two Acts. (i)The of 1910 (hereinafter referred to as the "Electricity Act"). 'Ms provides for grant of licences in relation to supply of electricity and the projects of undertakings. It also provides for supply of electricity including the protective clauses. (ii)The of 1948 (hereinafter referred to as the "Supply Act") provides for constitution of State Electricity Boards, the powers and duties of such Boards. Certain important 244 provisions of the Act may now be seen. Section 2 is interpretation Section, Under Section 2 (2) the Board means a State Electricity Board constituted under Section 5. Under Section 2 (10) states that regulation means regulations made by the Board under Section 79. Section 5 deals with the constitution and composition of State Electricity Board. Section 49 is the provision for sale of electricity by the Board to persons other than the licensees. Sub section (1) of the said Section commences with the words "Subject to the provisions of this Act and of Regulations". This means if there are any provisions regulating the Board in the matter of supplying electricity to any persons not being a licensee then the supply by the Board will he subject to all those provisions. It has been so laid down in Mysore State Electricity Board vs Bangalore Woollen, Cotton and Silk Mills Ltd., 28 at page 1136: "The expression "Subject to the provisions of this Act" merely that if there are any provisions regulating the Board in the matter of supplying electricity to any person not being a licensee, then the supply by the Board will be subject to those provisions. No provision has been brought to our notice which regulates the Board in the matter of the charges which it may fix for the supply of electricity." This Court had occasion to deal with the scope of the said Section and Section 59. In Hindustan Zinc Ltd. vs Andhra Pradesh State Electricity, Board ; at pages 317 319 it has been observed thus: "Section 49 makes provision for the sale of electricity by the Board to persons other than licensees. Sub 245 section (1) starts with the words "Subject to the provisions of this Act and of regulations, if any, made in this behalf '. This means that the provision made therein is subject to other provisions of the Supply Act and the regulations. It then proceeds to say that the Board may supply electricity to any person not being a licensee upon 'such terms and conditions as the Board thinks fit and may for the purposes of such supply frame 'uniform tariffs '. Sub section (2) then enumerates several factors which the Board is required to 'have regard to ' in fixing the uniform tariffs. The meaning of the expression have regard to is well settled, it means that the factors specifically enumerated shall be taken into account while performing the exercise which in this case is fixation of the uniform tariffs. Ordinarily, therefore, uniform tariffs are required to be framed by the Board for making such supply. Sub section (3) then proceeds to say that nothing in the earlier enacted provisions shall derogate from the power of the Board, "if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person", having regard to the geographical position of any area, the nature of the supply and purpose for which supply is required an d any other relevant factors '. Sub section (4) then says that in fixing the tariffs and terms and conditions for the supply of electricity, 'the Board shall not show undue preference to any person. , In other word, subsection (4) provides against any unreasonable dis crimination in fixing the tariffs and terms and conditions for supply of electricity. The power of fixation of tariffs in the Board is provided in this manner by Section 49 of the Supply Act which requires the fixation of uniform tariffs ordinarily having regard particularly to the specified factors and enables fixation of such tariffs for any person having regard to the factors expressly stated and any other relevant factors, providing further that no unreasonable or undue preference shall be shown to any person by the Board in exercise of its powers of fixin the tariffs. 246 The next important provision is Section 59 of the Supply Act. For appreciating the argument based on Section 59, it is necessary to bear in mind the distinction in Section 59 as it stood prior to 1978, as amended by Act 23 of 1978 and finally as amended by Act 16 of 1983, quoted earlier. Prior to 1978, Section 59 required the Board, as far as practicable and after taking credit for any subventions from the State Government under Section 63, not to carry on its operations under this Act at a loss and for this purpose, it was empowered to adjust its charges accordingly from time to time. Under the provision as it then existed, the main thrust was to avoid the Board incurring any loss and for that purpose, it could adjust its charges accordingly from time to time. Section 59 as amended by Act 23 of 1978 required the Board, after taking credit for any subventions from the State Government under Section 63, to carry on its operations under this Act and to adjust its tariffs so as to ensure that the total revenues in any year after meeting all expenses properly chargeable to revenue including those specified,left such surplus as the State Government specified from time to time. The shift was, therefore, towards having a surplus. as the State Government specified from time to time. Sub section (2) then provided guidelines for the State Government in specifying the surplus under sub section (1) and mentioned the factors to which regard was to be had for this purpose. The effect of the amendment made in Section 59 by Act 16 of 1983, which came into effect from April 1, 1985, was to provide for a minimum surplus, of three per cent or such higher percentage as the State Government is to specify in this behalf. In other words, prior to 1978 amendment, the requirement from the Board was towards ensuring a surplus as specified by the State Government, and after the 1983 amendment the Board is required to ensure a surplus of at least three per cent unless the State Government specifies a higher. sur 247 plus. This is the scheme of Section 59 and it is Section 59 as amended by 1978 Act but prior to its amendment by the 1983 Act, with which we are concerned in the present case. It cannot be doubted that Section 59 requiring the Board to adjust its tariffs for the purpose of Board 's finance is to be read along with Section 49 which provides specifically for fixation of tariffs and the manner in which that exercise has to be performed while dealing with any question relating the revision of tariffs. into force from April 1, 1985, is that the Board entitled to adjust its tariffs to ensure generating a surplus of not less than three per cent even without such specification by the State Government and when the State Government specifies a higher surplus, then the Board must ensure generating the higher specified surplus. This is, of course, subject to the accepted norm of the Board acting in consonance with its public utility character and not entirely with a profit motive like that of a private trader. The pre 1978 concept of the Board 's functioning to merely avoid any loss is replaced by the shift after 1978 amendment towards the positive approach of requiring a surplus to be gener ated, the quantum of Surplus being specified by the State Government, with a minimum of three per cent surplus in the absence of the specification by the government of a higher surplus, after the 1983 amendment. This construction made of Section 59, as it stood at different times in Govinda prabhu case ; indicated earlier cannot be faulted in any manner. In Govinda Prabhu case the same argument which is advanced before us was expressly rejected. We are of the same view. " The next Section is Section 79 which talks of power to make 248 regulations. Clause (j) deals with the principles governing the supply of electricity by the Board to persons other than the licensees under Section 49. In accordance with this, each of the Boards has framed regulations. All consumers are required to execute agreements governing the supply of energy. The attack against Section 49 is that it does not contain any norm of guideline with regard to framing of terms and conditions for the supply of electricity and in particular, the demand of payment of interest on the amounts due to the Board. Further, the principle of fairness of action has not been explicitly set out so as to make it a visible guide. The words occurring in the Section "as the Board thinks fit" must be construed as "reasonably thinks fit". We are unable to countenance this argument. A careful reading of Section 49 clearly discloses as was noted in Hindustan Zinc Ltd. vs A.P.S.E.B. ; at 317 sub section (1) of the said section starts with the words "Subject to the provisions of the Act and all regulations, if any, made in this behalf '. Therefore, the Board has to conform to the various provisions of the Act and the regulations. Section 49 contains two powers: 1. To prescribe terms and conditions of supply; and 2. fix the tariff. No guidelines are required in this regard. In Jagdamba Paper Industries Pvt. Ltd. vs Haryana State Electricity Board ; at 513 14 it was pointed out as follows: "We are of the view that the Board has been conferred statutory power under Section 49 (1) of the Act to determine the conditions on the basis of which supply is to be made. This Court in Bisra Stone Lime Company Ltd. vs Orissa State Electricity Board ; , took the view that enhancement of rates by way of surcharge was well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act. What applied to the tariff would equally apply to the security, that being a condition in 249 the contract of supply. Each of the petitioning consumers had agreed to furnish security in cash for payment of energy bills at the time of entering into their respective supply agreements. There was no challenge in these writ petitions that the demand of security at the time of entering into supply agreements has to be struck down as being without jurisdiction. Section 49 (1) of the Act clearly indicates that the Board may supply electricity to any person upon such terms and conditions as the Board thinks fit. In exercise of this power the Board had initially introduced the condition regarding security and each of the petitioners had accepted the term." (Emphasis supplied) Where, therefore, under Section 49 read with Section 79 (j) regulations are made, the validity of the regulations could be examined by the Court, whether they are reasonable or not. In Southern Steel Ltd. Hyderabad vs The Andhra Pradesh State Electricity Board AIR 1990 Andhra Pradesh 58 at 66 67, it was observed: "Before we proceed to deal with the rival contentions, it would be appropriate to notice the scope of judicial scrutiny by this Court in such matters. Acting under article 226 of the Constitution, this Court does not sit as an appellate authority over the Electricity Board. Indeed, the Act has not chosen to provide an appeal against the terms and conditions under S.49. The jurisdiction exercised by this Court under article 226 is supervisory in nature. It is to ensure the observance of fundamental right the rule of law, and to keep the authorities within their bounds. Undoubtedly, the Electricity Board is a 'State ' within the meaning of article 12 and hence it is subject to Parts III and IV of the Constitution. The scope of enquiry, therefore, would be to examine whether the power conferred 250 upon the Board by S.49 of the Act has been exercised so unreasonably and arbitrarily that interference by this Court is called for. For the purpose of this enquiry it is not necessary for us to go into the question whether the terms and conditions notified under S.49 are statutory, in nature or not. We shall proceed on the assumption that they are not statutory. We shall also proceed on the assumption that the terms and conditions notified under section 49 ought to be reasonable, in the sense that they must be related to the object and purpose for which they are issued. We are equally aware that the power under section 49 cannot be allowed to be used for oblique purposes, or for purposes unrelated to the one sought to be achieved by a given condition. " In M/s Mills, Bharatpurv Assistant Engineer(D) R.S.E .B. ,Bharatpur AIR at 109, it was observed: "Where demand for deposit of cash security for one month 's estimated consumption charges and bank security equal to two months estimated charges as contemplated by Regulation 20 read with the Schedule theret o was made by the Electricity Board from a consumer of high tension electricity, the demand could not be said to be unreasonable and the consumer would not be entitled to continuation of the energy under Sec. 24 of the Electricity Act on his failure to deposit such security, even if no agreement had been entered. into between the consumer and the Board after the commencement of high tension supply. Once the supply for electricity had commenced the consumer was bound by the terms and conditions of supply contained in the Regulations. Further, in such a case, merely because the Board did not encase or could not encash a small portion of the security deposited in the form of National Saving Certificates before coming into force of the Regulations, it could 251 not be said that the demand of cash security in the form of Bank guarantee by the Board under the Regulations was unreasonable. furthermore, the demand of security from the consumer which was in accordance with the Regulations framed by the Board could not be said to be unreasonable merely because no interest is paid on the cash security deposited by the consumer. " In other words, the terms and conditions notified under Section 49 must relate to the object and purpose for which they are issued. Certainly, that power cannot be exercised for a collateral purpose. In this view, we hold Section 49 as valid. NATURE OF CONSUMPTION SECURITY DEPOSIT Each of the Electricity Boards before us is a State within the mening the meaning of Article l2 the Constitution of India. The Boards are different from licensees. (Emphasis supplied) Each of the Board has framed the tern is and conditions of supply. One such condition relates to security deposits. Such a deposit varies from Board to Board. For example, under the terms and conditions notified by Andhra Pradesh Electricity Board under Condition No. 28. 1.1 the consumer is required to deposit with the Board a sum in cash equivalent to estimated three months consumption charges. In the case or Rajasthan, the security is in the form of cash for one month and bank or insurance guarantee for two months. The legislative Sanction behing the power of the Board to direct a consumer to furnish security may be examined. It has already been seen that the Supply Act is complementary to the Electricity Act, 1910. Section 26 of the supply Act states that the Board shall have all the powers and obligations of a licensee under the Electricity Act. And this shall be deemed to be a licence of the Board for the purpose of the Act. Under the regulations framed by the Board in exercise of powers of Section 49 read with Section 79 (j) the consumer is only entitled and the Board has an obligation to supply energy to the consumer upon such terms and conditions as laid down in the regulations. If, therefore, the regulations prescribed a security deposit that will have to be complied with. It also requires to be noticed under clause (6) of Schedule II of 252 the Electricity Act that the requisition for supply of energy by the Board is to be made under proviso (a) after a written contract is duly executed with sufficient security. This, together with the regulations stated above, could be enough to clothe it with legal sanction. In cases where regulations have not been made Rule 27 of the Rules made under the Electricity Act enables the adoption of model form of draft conditions of supply. Annexure VI in clause 14 states that the licensee may require any consumer to deposit security for the payment of his monthly bills for energy supplied and for the value of the meter and other apparatus installed in his premises. Thus, the Board has the power to make regulations to demand security from the consumers. The next question will be: what is the object in demanding security? The deposit though called security deposit is really an adjustable advance payment of consumption charges. The payment is in terms of the agreement interpreting the conditions of supply. This security deposit is revisable from time to time on the basis of average consumption charges depending upon the actual consumption over a period. This is the position under the terms of supply of energy with reference to all the Boards. As a matter of fact, electricity is supplied in anticipation of payment. In almost every case it takes nearly 2 1/2 months for the recovery of the amount before action for disconnection could be taken. We will give one illustration as is in the case of Rajasthan. The following.is the billing cycle: (a) Consumption period 30 days (b) Period consumed after taking the meter readings to issue bills. 10 days (c) Period allowed for payment 17 days (d) Notice for disconnecting 253 supply if consumer fails to deposit energy bill in 7 days time. (e) Period taken in actual disconnection after expiry of notice. 10 days Total: 74 days In practice, some time is also taken between the period allowed for payment and the notice of disconnection. At the same time, there is no obligation that the consumer must use only a particular quantum of electricity. He could even consume more than the average consumption. The Board after 2 1/2 months recovers amount for the electricity supplied by it. It could charge late surcharge in case of high tension tariff after the expiry of the said period. Thus, it will be clear that the true nature of the transaction in these cases is one of advance payment of charges for consumption of electricity estimated for a period of approximately three months. Such an advance is liable to be made good and kept at the stipulated level from month to month. It is open to the consumer to permit adjustment of the advance in the first instance. Thereafter, he could make good the shortfall in consumption charges and the security deposit before actual disconnection. Actually speaking, it is only after three months the disconnection takes place. Hence, it is like a running current account. The cycle of billing by the Board demonstrates that in the very nature of things, the consumer is supplied energy on credit. The compulsory deposit in the context of billing cycle is hardly adequate to secure payments to the Board by the time the formal bill by the Board is raised on the consumer. In one sense, the consumption security deposit represents only a part of the money which is payable to the Board on the bill being raised against the consumer. Thus, the Board secures itself by resorting to such deposit to cover part of the liability. For supply of electricity the Board needs finance for production, supply and other charges necessary for supply of electricity. For this purpose, it takes loans from various financial institutions. This is best 254 illustrated if one looks at the transactions of Punjab Electricity Board where electric energy is generated through hydro as well as thermal plants for ultimate sale to the consumers of the total power generated about 50 per cent is through hydro plants. The remaining energy is generated through thermal power plants which are operated on coal/ oil. Due to limited hydro resources within the State of Punjab the dependency on power on thermal plants is on the increase. The present requirement for working of thermal plants is more than 52 lakh tonnes of coal per annum. In addition, 60 thousand kolo litre of furnace oil is required. The coal companies/Coal India Limited together with major suppliers of power plant like M/s. BHEL demand cost of coal/ spares/projects in advance for the supply of material. The Board is also required to purchase power from Central projects N.T.P.C., N.H.P.C. in order to meet the demand for power by the consumers. For purchase of such power again advance payment are made by the Board. On such advances the Board is not paid any interest. The effect is, the Board is obliged to bear the liability of hundreds of crores of rupees per annum. It has no option but to pay the charges and deposits in order to keep the power available at a level to meet with the demand of the consumers. It is the case of the Board that it has opened letters of credit by making advance deposits in favour of National Thermal Power Corporation and the suppliers. Coal India Limited has also asked the Board to open revolving letters of credit in favour of Coal companies/Coal India Limited. Despatch of coal is only against the letter of credit. From the above, it is clear that while the Electricity Board is required to make colossal advances to generate electricity and supply to consumers, the consumers use and consume electricity on credit ranging from 2 to 3 months depending upon the category of consumers. To off set part of the amount the consumer owes to the Board continually to ensure timely payment of bills by the Board to its suppliers, the advance consumption deposit is required to be kept with the Board before commencing supply to the consumer. The clauses in the contract in relation to conditions of supply of electric energy enable the Board to adjust the bill against such deposits. Therefore, this is not a case of mere deposit of money as in commercial transaction. In demanding security deposit it is open to the Court to take note of pilferage as laid down in Ashok Soap Factory vs Municipal Corporation of Delhi J.T. at page 137: 255 ". . The variation in the electricity consumed by different consumers indicated that the charge of pilferage of electricity and gross under utilisation or consumption of electricity compared to the sanctioned load was not without foundation. . The meaning of he term "deposit" is given in Corpus Juris Secundum, Vol. quoted in Davidson vs U.S., CCA.Pa., , 752 as follows: "In the sense of an Act. A deposit has been described as a mere incident of custody, and, in its ordinary signification, implies something more than mere possession, negatives all idea of loan with contemplation of use for profit, and has been defined as an act by which a person receives the property of another, binding himself to preserve it and return it in kind; the act of one person giving to another, with his consent the possession of personal property to keep for the use and benefit of the first or of a third party. It may mean a permanent disposition of the thing placed or deposited, or a mere temporary disposition or placing of the thing. In these circumstances, we conclude that the object of security deposit is to ensure proper payment of bills. Three months ' security deposit cannot be characterised either unreasonable or arbitrary. This Court had occasion to point out in Jagdamba Paper industries Pvt. (supra) at paragraph 10 which reads as under: "We agree however, on the facts placed that the stand of the Board that a demand equal to the energy bill of two months or a little more is not unreasonable. Once we reach the conclusion that the Board has the power to unilaterally revise the conditions of supply, it must follow that the demand of higher additional security for payment of energy bills is unassailable, provided 256 that the power is not exercised arbitrarily or unreasonably." Several High Court decisions also had taken this view as seen from K.C Works vs Secretary APSEB. Vidyut Soudha AIR 1979 Andhra Pradesh 291 at 294: "The reasonableness of such a requirement is explained by the Board in its counter in W.P. No. 2359/ 75 out of which W.A. No. 156 of 1977 arises. In the counter it was stated as follows: "The consumer is billed for such month separately. The consumers electricity consumption during the month is billed at the end of the succeeding month and 30 days time is given to him for payment of the bill. If he does not pay the bill his supply is liable to be disconnected after giving one week 's notice under Section 24 of the . Meanwhile he will be consuming the power. So by the time the supply is disconnected to a defaulting consumer the would have consumer energy for 3 months. The Board 's interest requires that there should be some protection by way of security of advance payment in respect of the consumption of this three months period. " This is how the Board sought to explain the reasonableness of the requirement of security representing three months average consumption charges. Nobody can say that this is unreasonable. For three months a consumer can go on consuming electrical power without paying any charges. It is therefore, eminently reasonable for the Board to require the consumer to furnish security for three months charges. Therefore, we are satisfied that the requirement of security for three months consumption charges is reasonable. " At page 295 it was observed thus: 257 "As a matter of fact it may be that the writ appellant and the writ petitioner before us are prompt in paying their electrical dues. but the Board alees with lakhs and lakhs of consumers and it should have a uniform policy in demanding security. It cannot make a dis tinction or discrimination from one consumer to another. That is why a uniform policy has been laid down by incorporating it in the conditions aforesaid. For these reasons we are satisfied that the requirement of security for three months average consumption charges by way of cash deposit is reasonable. " In Municipal Corporation for Greater Bombay vs M/s D.M Industries at 256 it was observed thus: "This brings us to the last argument advanced by Mr. Hidayatullah that Clause 12 of the draft agreement is arbitrary and unreasonable. The argument was that the power to impose conditions cannot be exercised to impose unreasonable conditions and it must also be ascertained whether the condition achieves the object for which it is imposed. On principle, the proposition is undisputable. Clause 12 which can be described as unreasonable and whether this Clause has no nexus with the object of the Act and the Rules. The argument ,appears to be that if the object of security is to secure payment of bills, then insistence on cash deposits would be unreasonable because the object could also be served by furnishing of any security and it is said that the consumer was willing to furnish a bank guarantee. In addition, it is urged that the period of. consumption for which these security is required should not exceed two months and, therefore, the determination of three months is arbitrary. " In Haryana Ice Factory vs Municipal Corporation of Delhi AIR 1986 Delhi 78, It was held thus: "Also, the demand of the security was corelated to the 258 consumption Pattern of the consumers and to cover the energy charges from the date of its consumption till the date of ultimate disconnection as a result of non payment of the changes due. The court cannot enter into mathematical calculations to come to a conclusion that in stead of three months it should be 21/2 months. The fixing of the period of security equal to energy consumption of three months is reasonable. It may be that the Haryana Electricity Board has fixed the period of security deposit equal to the amount of energy consumed for a period of two months but that would depend upon the billing cycle adopted by the Haryana State Electricity Board. " In Southern Steel Ltd. Hvderabad V. The A.P. State Electricity Board AIR 1 990 Andhra Pradesh 58 at pages 68 69 it was observed: "It is also stated by the Board that huge sums are required by it as rotating capital; that it borrows large amounts from organisations like L.I.C. and Banks; that it pays interest to them, and that in such circumstances it is well entitled to require the consumer to co operate by paying their bills regularly, by giving security deposits, and by conforming to the terms and conditions of supply. It is argued that this consideration was also one of the bases of condition No. 28. We do not think it necessary to express any opinion on this question, though the truth of the matter cannot be denied. There are two views upon the matter. The petitioners say that the interest burden should be reflected in the tariffs, while the Board says that interest burden can be reflected in consumption deposits, and not necessarily in tariffs. All that can say is that there no hard and fast rule in this behalf. The interest burden can be reflected either in tariffs, or can be sought to be set off by calling upon the consumers to make deposits. In this case, however. It is unnecessary to go into this aspect, since the requirement of three months deposit, in our opinion, cannot be said to be unreasonable and unjustified having regard to the facts mentioned above. It cannot be said that the said condition is so unreasonable and. arbitrary as to call for interference by this Court under article 259 226 of the Constitution. We reiterate that even if this court comes to the conclusion that the deposit should not be 3 months, but 2 months 7 days, or 2 1/2 months, it would not be entitled to interfere in the matter, not being an appellate authority. It cannot substitute its own opinion for the opinion of the Board. It can interfere only when the exercise of power is shown to be arbitrary, and unrelated to the object sought to be achieved. " We are in agreement with the above extracts. The liability of Electricity Board to pay interest on Security Deposit: Now, we come to the crucial question as to whether interest is payable on security deposit or advance consumption deposit. We will examine from the following angle: (a) The scheme of Electricity Acts. (b) Schedule VI of the Supply Act. (c) (d) Equity or Common Law. (a & 6) Scheme of Electricity Acts & Schedule VI of Supply Act: It is the submission of Mr. Shanti Bhushan, learned counsel appearing for the respondent against Rajasthan Electricity Board that the scheme of the Electricity Act and Supply Act together with the rules suggest the payment of interest. The Board is 'not entitled to utilize the security deposits for augmenting its finances as they are meant to secure the Board against default in payment of the bills. The correctness of this argument may now be seen: There is no statutory provision which casts an obligation on the Board to pay interest on security deposit. However, reliance is placed on model form of draft conditions of supply as is found in Annexure VI, traceable to Role 27 of Indian Electricity Rules, 1956. Clause 14 relating to security deposit of the said Annexure reads: 260 ". Interest at the rate of per cent per annum will be paid by the licensee on deposits exceeding Rs. 251/ ". (Emphasis supplied) The model form is applicable only to a licensee as defined in Section 2 (4) of the Electricity Act. Though Rule 27 prescribes a model form it is not compulsory,even for a lincesee to adopt the model condition of supply. This is because Rule 27 itself Stipulates the model conditions of supply contained in Annexure VI, may with such variations as the circumstances of each case require, be adopted by the licensee. " Therefore, there is an option available to adopt with such modifications. In such a case, the adoption of the model form becomes permissive. In this connection, Section 26 of the Supply Act, to which we have made a reference earlier, must be looked at. Though the Board is to have powers and obligations of a licensee under the Electricity Act, the second proviso to this Section assumes importance. It reads: "Provided further that the provisions of Clause VI of the Schedule to that Act shall apply to the Board in respect of that area only where distribution mains have been laid by the Board and the supply of energy through any of them has commenced." Second proviso of the Supply Act leads us to Schedule VI. This Schedule has been framed in exercise of powers under Sections 57 and 57A. In defining "clear profit" paragraph (2) of clause XVII, Item (v) makes a reference, as interest of security deposits which is a part of expenditure properly incurred by the licensee. From this it is impossible to hold that this clause imposes an obligation on the licensee to pay interest on security deposits. All that would mean is, if interest is paid then it qualifies as an item of expenditure properly incurred. This is the position with regard to licensee. But this cannot apply to the Board, which as stated above, is not a licensee. For the same reason Item L 1 (c) of Form IV of the Electricity Rules relating to interest paid and accrued on consumers ' security deposits is of no avail because that relates to the manner of keeping accounts by the licensee, not being applicable to a Board. 261 In the above premises, it follows that there is nothing to indicate under the scheme of the Electricity Act or Schedule VI of the Supply Act that interest must be paid on the security deposit. (c) : applicability. As regards the applicability of , we find that the Division Bench of Rajasthan High Court has erred in holding that it is applicable. Section 4(2) (g) of the of 1978 reads as under: "Notwithstanding the aforesaid and without prejudice to the generality of the provisions of sub section (1), the Court shall in each of the following cases allow interest from the dates specified below to the date of institution of the proceedings at such rate as the Court may consider reasonable, unless the court is satisfied that there are special reasons why interest should not be allowed namely: (a)Where money or other property has been deposited as security for the performance of an obligation imposed by law or contract from the date of the deposit. " This section has no application to a case where on account of a contractual term or a statutory provision payment of interest is not permitted, A careful reading of Section 4(2) of the would disclose that it merely enlarges the category of cases mentioned in Section 4(1). Even otherwise, there is nothing to indicate that section 4(2) could override other statutory provisions or a contract between the parties. No doubt, Section 4(2) contains a non obstante clause. But such a clause is restricted to the provisions of and cannot extend to other laws or a contract between the parties. Accordingly we overrule the judgment of Rajasthan High Court which holds the is applicable. 262 The deposit made cannot be equated to a fixed deposit. It has already bee In seen that in the case of daily supply of electricity, there is a consequential liability to pay for each day 's consumption of electricity. To ensure that payment, the security deposit is furnished. Hence ' it cannot be equated to a deposit at all. It is in the nature of a running current account. (d) Position in Equity or Common Law If this be the position, could interest be claimed either on equity or common law? The argument on behalf of the consumers is, if money belonging to any person is used by someone else he is oblilsed to pay interest for the period of its user. Halsbury 's Volume 32 (page 53 para 106) defines "interest" as "the return or compensation for the use or retention by one person of a sum of money belonging or owed to another". Therefore, it is contended that the Board is clearly in the position of a trustee in respect of this money since the money is deposited by the consumer in trust with the Board to secure the Board against default in payment of interest. The object of the deposit is to secure the payment of consumption charges. These charges may very depending upon the daily consumption, depending on the level of supply. The amount due by way of consumption charges would also be liable to be appropriated. Therefore, it is incorrect to state that the Board is a trustee. The relationship between the Board and consumer is not that of a trustee and a beneficiary but a depositor and deposited. This is not even a case of a constructive trust under Section 90 of the Indian Trust Act, since no advantage is gained by the Electricity Board in derogation of the rights of the consumer in, view of what we have observed above. Strictly speaking, the word "interest" would apply only to two cases where there is a relationship of debtor and creditor. A lender of money who allows the borrower to use certain funds deprives himself of the use of those funds. He does so because he charges interest which may be described as a kind of rent for the use of the funds. For example, a bank or a lender lending out money on payment of interest, In this case, as already noted, there is no relationship of debtor and creditor. We may now refer to Halsbury 's Vol. 32 para 108: 26 "108. When interest is payable at common law. At common law interest is payable (1) where there is an express agreement to pay interest; (2) where an agreement to pay interest can be implied from the course of dealing between the parties or from the nature of the transaction or a custom or usage of the trade or profession concerned; (3) in certain cases by way of damages for breach of a contract (other than a contract merely to pay money) where the contract, if performed, would to the knowledge of the parties have entitled the plaintiff to receive interest. Except in the cases mentioned, debts do not carry interest at common law. " Consumption security deposit does not fall under any of categories mentioned above. Para 109 says: "Equitable right to interest. In equity interest may be recovered in certain cases where a particular relationship exists between the creditor and the debtor, such a mortgagor and mortgagee, obligor and obliged on a bond, personal representative and beneficiary, prin cipal and surety, vendor and purchaser, principal and agent, solicitor and client, trustee and beneficiary, or where the debtor is in a fiduciary position to the creditor, Interest is also allowed on pecuniary legacies not paid within a certain time, on the dissolution of a partnership, on the arrears of an annuity where there has been misconduct or improper delay in payment, or in the case of money obtained or retained by fraud. It may also be allowed where the defendant ought to have done something which would have entitled the plaintiff to interest at common law, or has Wrongfully prevented the plaintiff from doing something which have so entitled him." This Paragraph is also inapplicable to the present case. 264 Even a case of wrongful detention of money cannot arise. In Bengal Nagpur Railway vs RuttanjiRamji AIR 1938 PC67 the question arose whether interest was payable on damages on account of wrongful detention of money. It was held: "The however contains a proviso that "interest shall be payable in all cases in which it is now payable by law. " This proviso applies to cases in which the Court of equity exercises jurisdiction to allow interest: As observed by Lord Tomlin in Maine and New Brunswick Electrical Power Co. Ltd. vs Hart, 1: "In order to invoke a rule of equity, it is necessary in the first instance to establish the existence of a state of circumstances which attracts the equitable jurisdiction, as for example, non performance of a contract of which equity can give specific performance." "The present case does not however attract the equitable jurisdiction of the Court and cannot come within the purview of the proviso. " The very passage was noted by this Court in Union of India vs A.L. Rallia Ram ; at 188 189. The argument of Mr. G., Ramaswami, learned counsel, that the deposit does not contemplate appropriation is not correct because in the nature of contract it is liable to be appropriated for the satisfaction of any amount liable to be paid by the consumer to the Board for violation of any conditions of supply in the context of wide scale theft of energy, tempering with the meters and such other methods adopted by the consumers. Therefore, the said consumption security deposit serves not only to secure the interest of the Board for any such violation but should serve as a, deterrent on the consumer in discharging his obligations towards the Board. Mr. G. Ramaswami would rely on Riches vs Westminster Batik Limited 1947 Appeal Cases 390 at 400. 265 That is a case which arose under Income Tax Act. That has no application to this case. What came up for consideration in A.L Rallia Ram 's case (supra) was the power of the Board to award interest. Hence, that case has no application. Accordingly, it is held that the claim for interest cannot be legally founded either on common law or equity. As is rightly contended by Mr. Kapil Sibal, learned counsel and the other learned counsel appearing for the various Boards, it is the Board which should be entitled to receive interest on energy supplied to the consumers on credit as the consumers enjoy a credit facility as noted already. We are also unable to accept the argument advanced on behalf of consumers that because the Electricity Boards charge interest on belated payments, interest must be paid on security deposit. Interest on belated payments is by way of penalty. That has no bearing, Clause providing for non payment of interest: Whether unrea sonable? While the terms and conditions of supply of Andhra Pradesh, Uttar Pradesh and Bihar provide for payment of interest at certain rate, in the case of Rajasthan and Orissa the Boards have clearly stipulated that no interest shall be payable on the securities furnished to the Board. Whether that clause could be considered unconstitutional or arbitrary? In examining the constitutionality of this provision, in that it is violative of Article 14 of the Constitution of India, the following factors have to be borne in mind: 1.Article 14 does not mandate mathematical exactitude or scientific precision. 2.The mode and the period of security vis a vis the billing practice must form the consideration. 3.The consumer with open eyes has entered into the agreement and solemnly undertaken to abide by the conditions regarding nonpayment of interest. He cannot resile from the condition because there is nothing inherently objectionable about such a condition nor is such a condition per se illegal or void as opposed to public policy. It is not uncommon in commercial transaction, such a provision is entered into. 266 The argument that the Board is monopolistic in character and therefore, the consumers have no other option but to enter into contract appears to be misconceived. The Board under Section 49 of the Supply Act is entitled, apart from framing uniform tariff, to insist upon such terms and conditions as the Board thinks fit. This has also been so stated in. Jagdamba case (Supra). The consumption security deposit whether or not it carries interest is a condition precedent for the supply of electric energy. We are clearly of the view that the scrutiny by the Court in determining the unconstitutionality of a provision not providing for interest must be tested on the following touchstone: In imposing such a condition has the Board acted as a private trader and thereby shed off its public utility character '? By referring to Hindustan Zinc Ltd. (supra) we have earlier pointed out the interrelationship between Sections 49 and 59 as noted by this Court. We are therefore. of the view that in imposing such a condition the Board has not acted as a private trader. The nature of deposit has a rational relationship to the object which is incorporated as a condition of supply. Some of the learned counsel appearing for the consumers would draw our attention to Section 59 of the Supply Act as well. Under the said section the Board is obligated to carry on its operation as to ensure that it generates a surplus of 3 per cent or as specified by the State Government. The Board is obligated to adjust its tariffs for ensuring such surplus. The condition of supply requiring a consumption security deposit has a direct bearing on the operations of the Board which are to be conducted in such a manner as to ensure a surplus. The language in Section 59 of the Supply Act is "carry, on its operations under this Act and adjust its tariffs. " The language of the said section is not by adjusting tariff. Therefore, the argument that the only manner in which the Board can achieve a surplus is to adjust its tariffs does not flow from the language of Section 59. So read, in the context of the insistence of a security deposit which has direct bearing on the operations of the Board is per se reasonable and constitutional. We will assume, for a moment, that the contract is an adhesion contract. But still, it is not unconscionable. 267 In Central Inland Water Transport Corporation vs Brojo Nath Ganguly at 208 "adhesion contract" is defined quoting Black 's Law Dictionary, Fifth Edition, at page 38, as follows: "Adhesion contract. Standardized contract form offered to consumers of goods and services on essentially 'take it or leave it ' basis without affording consumer realistic opportunity to bargain and under such condition that consumer cannot obtain desired product or services except by acquiescing in forth contract. Distinctive feature of adhesion contract is that weaker party has no realistic choice as to its terms is. Not every such contract is unconscionable." With reference to these contracts the Court offered relief to the parties against such a clause if it is so unreasonable as to be unconscionable. As a matter of fact at page 21 1, paragraph 83 of Central Inland Water Transport Corporation vs Brojo Nath Ganguly it stated thus: "Yet another theory which had made its emergence in recent years in the sphere of the law of contracts is the test of reasonableness or fairness of a clause in a contract where there is inequality of bargaining power. Lord Denning, MR, appears to have been the pro pounder, and perhaps the originator at least in England, of this theory. In Gillespie Brothers & Co. Ltd. vs Roy Bowled Transport Ltd. , 416 where the question was whether an indemnity clause in a contract, on its true construction, relieved the indemnifier from liability arising to the identified from his own negligence, Lord Denning said (at pages 415 416): The time may come when this process of 'construing ' the contract can be pursued no further. The words are too clear to permit of it. Are the courts then powerless? Are they to permit the party to enforce his unreasonable clause, even when it is so unreasonable, 268 or applied so unreasonably, as to be unconscionable? When it gets to this point, I would say, as I said many year ago:. 'there is the vigilance of the common law which, while allowing freedom of contract, watches to see that it is not abused ' John Lee & Son (Grantham) Ltd. vs Railway Executive , 584. It will not allow a party to exempt himself from his liability at common law when it would be quite unconscionable for him to do so. (emphasis supplied,)" Farms worth on Contracts, 2nd Edn. 319, 320 para 4.27 states: "4.27 Precursors of Unionscionability. Courts of equity did not share the reluctance of common law courts to police bargains for substantive unfairness. Though mere "inadequacy of consideration" alone was not a ground for with holding equitable relief, a contract that was "inequitable" or "unconscionable" one that was so unfair as to "shock the conscience of the court ' would not be enforced in equity. In one such case, a man promised to give a 20 percent interest in all property that he might later acquire in Alaska in return for the Promisee 's payment of $1,000 and his cancellation of an $11,225 debt of questionable collectability. When the promiser acquired property worth over $ 750,000, the promises sought specific Performance. The court refused to grant it. Though the fairness of the bargain was to be judged as of the time that the bargain was made, in equity as at common law, here the "inadequacy of consideration" for the promise sought to be enforced was "so gross as to render the contrast unconscionable." In dealing with the validity of the agreement containing a clause 269 relating to minimum guarantee this Court had occasion to observed in Bihar State Electricity, Board vs Green Rubber Industries [1990] 1 SCC 731 at page 740 as follows: "It is true that the agreement is in a standard form of contract. The standard clauses of this contract have been settled over the years and have been widely adopted because experience shows that they facilitate the supply of electric energy. Lord Diplock has observed: "If fairness or reasonableness were relevant to their enforceability the fact that they are widely used by parties whose bargaining power is fairly matched would arise a strong presumption." That their terms are fair and reasonable. Schroeder(A.) Music Publishing Co. Ltd. vs Macaulayr ,624. in such contracts a standard form enables the supplier to say: "If you want these goods or services at all, these are the only terms on which they are available. Take it or leave it. "It is a type of contract on which the conditions are fixed by one of the parties in advance and are open to acceptance by anyone. The contract, which frequently contains many conditions is presented for acceptance and is not open to discussion. It is settled law that a person who signs a document which contains contractual terms is normally bound by them even though he has not read them, even though he is ignorant of the precise legal effect. " In the light of the above discussion we hold that the clause not providing for interest is neither arbitrary nor palpably unreasonable, nor even unconscionable. In holding so we have regard to the following: 1.The consumer made the security deposit in consideration of the performance of Ms obligation for obtaining the service which is essential to Wm. 2.The electricity supply is made to the consumers on credit as has been noted above. 270 3. The billing time taken by the Board is to the advantage of the consumer. 4.Public revenues are blocked in generation, transmission and distribution of electricity for the purpose of supply. The Board pays interest on the loans borrowed by the Board. This is in order to perform public service. On those payment made by the Board it gets no interest from the consumers. 5.The Board needs back its blocked money to carry out public service with reasonable recompense. 6.The Board is not essentially a commercial Organisation to which the consumer has fumished the security to earn interest thereon. Weshould also observe that the rate of interest on security deposit cannotbe equated with the rate of interest on the fixed deposit. First of all, if the consumption charges are to be appropriated the moneys accrued by way of deposits cannot be held in fixed deposits. Nor all deposits need carry interest in every transaction. Secondly, the nature and character of the security deposit is essentially different from fixed deposit. It is worthwhile, in this connection, to refer to Companies Acceptance of Deposits) Rules, 1975. In Rule 2 it is stated: "2. Definitions. In these Rules, unless the context otherwise requires. (a) (b) "deposit" means any deposit of money with, and includes any amount borrowed by, a company, but does not include (i) (ii) (iii) 271 (iv). . . (v) any amount received from an employee of the company by way of security deposit; (vi) any amount received by way of security or as an advance from any purchasing agent, selling agent, or other agents in the course of or for the purposes of the business of the company or any advance received against orders for the supply of goods or properties or for the rendering of any service;. . We may add that merely because the English Acts provide for interest, it is not necessary the same should be adopted here as well. Thus, we hold that the Division Bench of the Rajasthan High Court erred in striking down Condition No. 20 of the General Conditions of the Rajasthan Electricity Board as violative of Article 14 of the Constitution of India. Has this Court decided the question of rate of interest in jagdamba Paper Industries (Pvt.) Ltd. vs Haryana State Electricity Board ; In that case the following two points were raised as seen from paragraph 3 at page 51 1: 1.The enhancement made in the security amount towards the meter is without any justification. The enhancement of security deposit was not warranted. On the question of interest in paragraph 11 at page 515 in Jagdamba 's case (supra) it is stated thus: "On the security amount interest at the rate of 4 per cent was initially payable. The same has already been enhanced to 8 per cent per annum. Since the amount is held as security, we indicated to the counsel for the Board that security amount should bear the same 272 interest as admissible on fixed deposits of Scheduled Banks for a term of years and we suggested keeping the present rate of interest in view that it should be enhanced to 10 per cent. Board 's counsel has now agreed that steps would be taken to enhance the present rate of interest of 8 percent to 10 percent 'with effect from October 1, 1983. " It requires to be carefully noted that the question of interest on security was not raised before the Court. Therefore, the Court had no occasion to decide this issue of interest. That part of the judgment, as rightly contended by Mr. Soli J. Sorabeejee, learned counsel, is sub silentio. However, the learned counsel for the consumers pressed into service the various orders passed by this Court in relation to interest and urged that it is concluded by those orders. We are unable to accept his argument. All the orders have their root in Interlocutory Application No.1 of 1989 in Writ petition No. 578 of 1987. That order is extracted in full: "We have heard counsel for the parties. Mr. Gopal Subramaniam ' counsel for the State Electricity Board on instructions states that the initial deposit which has been made by the consumer petitioner, to the tune of Rs. 10,07,378.81 was intended as security for pay ment of energy dues. In terms of our order of 5th May. 1988. the petitioner would be entitled to the interest on that amount from the date of the deposit at the rate of 12% per annum. Mr. Gobind Mukhoty, counsel for the petitioner now agrees to deposit the balance amount of Rs. 691,621 minus the interest which is said to be the additional security and while making the deposit of the additional amount, the petitioner is entitled to deduct the interest already accrued on the deposit of Rs. 10,07,378.81 from the date of the deposit at the rate of 12% per annum. The balance amount after deduction of the interest shall be deposited in two equal quarterly instalments, the first being due by 15.10.89. 273 The application for directions is disposed of accordingly. " Based on this, in Writ Petition No. 613 of 1990 it was stated thus: "In view of the order made by this Court in the connected matters on September 7, 1989, after hearing parties in Writ Petition No. 578/87 on the amount deposited by the consumer as security, interest at the rate of 12% would be admissible. The Writ petition is disposed of accordingly. " Two other orders remain to be seen. One rendered in W.P. 5582 of 1989 which was disposed of by consent and the other in W.P.No.576 of 1990 where the writ petition was disposed of in the following manner: "If the Electricity Board has been directed to allow interest at the rate of 12% per annum on the security deposited with the Board by the petitioners similarly situated, the claims of the petitioners should similarly be dealt with by the Board. The Writ Petition is disposed of. " On careful examination of the above orders, we do not think the Court ever intended to adjudicate upon the rate of interest or render a decision on that question. Therefore, it cannot be contended that the disposal of Writ Petition No. 613 of 1990, though by a Bench of 3 judges would be binding on us because, as pointed out above. It was entirely based on Interlocutory order. We are of the view that we are free to decide the question on its merits. The argument of Mr. Anil Divan, learned counsel that unequals are treated equals has no basis. It may be that the consumers of electricity, where it is raw material, would be prompt in their payment .in their own interest. On that basis, it cannot be contended that they 274 cannot be treated in the same way as defaulters. The test, in our considered opinion, is whether in the general application of law there is any discrimination. Merely because some of the consumers are prompt those related cases cannot render the provision constitutional. We may usefully refer to the following cases: The Collector of Customs, Madras vs Nathella ; at 829 30 it was observed? "The deleterious effects of smuggling, as pointed out in the extract from the Report, are real and it is not in dispute that the prevention and eradication of smuggling is a proper and legally attainable objective and that this is sought to be achieved by the relevant law. If therefore for the purpose of achieving the desired objective and to ensure that the intentions of Parliament shall not be defeated a law is enacted which operates somewhat harshly on a small section of the public, taken in conjunction with the position that without a law in that form and with that amplitude smuggling might not be possible of being effectively checked, the question arises whether the law could be held to be violative of the freedom guaranteed by article 19 (1) (f) & (g) as imposing an unreasonable restrain. That the restrictions are in the "interest of the general public" is beyond controversy. " In Vivian Joseph vs Municipal Corporation, Bombay, ; at 276 77 it was observed: "The levy of the cess under section 27 of the Act is not based on the principle of quid pro quo. Its object is not to repair all residential premises, but to preserve and prolong their lives in order to avert the dilema caused by the acute shortage of residential accommodation on the one hand, and the reluctance and/or inability of the owners to carry out repairs resulting from the Rent Act, on the other and to establish an agency so that structural repairs to buildings in dangerous or ruinous 275 conditions can be carried out. The finances for these objects are provided from a fund from the impugned cess and contributions by the State and the Corporation. The contention that some of the buildings falling in categories B and C would not need structural repairs throughout the life of the Act or that such repairs would carried out in buildings not cared for by defaulting landlords, takes no notice of the fact that the primary object of the Act is not to repair all buildings subject to cess but to prevent the annually recurrent mischief of house collages and the human tragedy and deprivations they cause. The cess being thus levied to prevent such disasters, there is no question of unequal treatment between one class of owners and another. The classification of buildings into three categories is based, as already stated, on their age and the construction current during the periods of their erection. It is,therefore, based on an intelligible differentia and is closely related to the objects of the legislation. There is, therefore no question of unequals being treated as equals, as each building of the Board and has to be structurally repaired if the need were to arise." In B. Banerjee vs Anita Pan, ; at 787 88 it was observed: "Moreover, what is the evil corrected by the Amendment Act? The influx of a transferee class of evictors of tenants and institution of litigation to eject and rack rent or re build to make larger profits. Apparently, the inflow of such suits must have been swelling slowly over the years and when the stream became a flood the Legislature rushed with an amending bill. Had it made the law merely prospective these who had in numbers, already gone to Court and induced legislative intention would have escaped the inhibition. This would defeat the object and so the application of 276 the additional than to pending actions could not be called unreasonable. To omit to do so would have been unreasonable folly. The question is whether those cases which were filed several years ago should have been carved out of the category of transferees hit by the act? Where do you draw the line? When did the evil assume proportions? These are best left to legislative wisdom and not court 's commensense although there may be grievances for some innocent transferees. If this be the paradigm of judicial review of constitutionality, we have to ignore exceptional cases which suffer misfortune unwittingly. The law is made for the bulk of 'the community to produce social justice and isolated instances of unintended injury are inevitable martyre for the common good since God Himself has failed to make perfect laws and perfect justice, Freaks have to be accepted by the victims rightly or wrongly as froensic fate" In Fatelichand Himmatlal vs State of Maharashtra, ; at 851 it was observed: "May be, some stray money lender,. may be good souls and to stigmatize the lovely and unlovely is simplistic betise. But the legislature cannot easily make meticulous exceptions and has to proceed on broad categorisations, not singular individualisations. so viewed pragmatics overrule punctilious and unconscionable money lenders fall into a defined group. Nor have the creditors placed material before the Court to contradict the presumption which must be made in favour of the legislative judgment. After all, the law makers representatives of the people, are expected to know the socioeconomic conditions and customers. Since nice distinctions to suit every kindly creditor is beyond the law making process, we have to uphold the grouping as reasonable and the restrictions as justified in the circumstances of, the case. In this 277 branch, there are no finalities. " The attack on additional consumer deposit is that no reasons have been adduced for additional demand. It stands to reason that if there is a revision in the rate of tariff there must be an upward revision in the consumption security deposit since it has direct bearing to the level of supply in consumption of electricity. For example,in the State of Uttar Pradesh, the tariffs were adjusted upwards in October 1986. The revision in the form of an additional security deposit with interest at the rate of 3 per cent was made in January 1987. These facts indicate the rationale in the demand of additional security deposit. As stated above, this being a condition of supply, no reason need be given at the time of upward revision. Therefore. we reject the argument of Mr. Govind Mukhoty, learned counsel in this regard. In view of the above finding, upholding the clause relating to nonpayment of interest, for example, Rajasthan and Orissa, what is to happen to such of those cases where interest is provided like Andhra Pradesh, Utter Pradesh and Bihar? In all those cases wherever the electricity boards have framed a provision for payment of interest after adjusting its finances at a stated rate they cannot be allowed to delete such a clause. The provision for interest has been made by the various Boards having regard to the overall budgetary and financial position. Further, keeping in view the quantum and made of security deposit and billing and recovery practice. Nor again, could the Board withhold payment of interest on the basis of this judgment. However, if there is any change in the circumstances affecting the budgetary and financial position, the Board can examine the case and decide the future course of action. But any change resulting in non payment or reduction of interest will have to be justified by cogent reasons and materials having a bearing on the financial position of each Board and facts and circumstances of each case. We also add that not withstanding Jagdamba 's case (supra) as on today, Haryana Electricity Board has dispensed with payment of interest. We make it clear by this judgment that we are not deciding the validity of such provision since the matter is stated to be pending. Inconclusion, We hold: 278 (1) Section, 49 of the Supply Act is valid. (2) The nature of consumption deposit is to secure prompt payment and is intended for appropriation. (3)There is no liability on the Electricity Board either tinder the statute or common law or equity to pay interest. (4)Conditions and the terms of supply providing for non payment of interest is not so unconscionable as to shock the conscience of the Court. (5)No reason need be given for. enhancement of additional security deposit. Accordingly we uphold the judgment of Andhra Pradesh High Court and reverse the judgment of Rajasthan High Court. In the result, the following cased filed against Andhra Pradesh Electricity Board are dismissed: S.L.P. (c) Nos. 13004/89, 14995/89,14629/89,14899/89,15739/ 89,15817/89,7475/90,6374/90,9661 65/90,5461/90,6371/00,5294/ 90, 6779/90, 5492/90, 5921/90, 5559/90, 4793 94/90, 4791 91/90, 6375/90. 6570/90, 12270/90, 9926/90, 11548/90, 2600/90, 6372.73/90, 6035 44/90, 6505/90,6374/90, 6094/00, 6765 68/90,6462/90, 5306 08/90, 9132/00, 12424/90, 6370/90, C.A. No. 1779/90, S.L.P. (c) Nos. 17465/91, 17679/91, 17865 66/91, 20125/91, 19532/91, 18043/91, 19586 93/91, 19597 600, 20076/91, 21/92, 649/92, 2564/92,5782 83/92,8336/92,9124 25/92,9488/92,12318/92,12506/ 92, 12610/92, 12805/92, 12804/92, 12814/92, 14439/92, 14449/92, 14555/92, 1739 43&43A/92, 13593/92, C.A. No. 2409/92, W.P. (c) Nos. 603/92,455/92, 3558/83, 566/92, 1353/89, 48/92, 362/92, 1293/ 89, 6770/90. The Transfer Petition (c) No. 366/92 filed by the Andhra Pradesh Electricity Board is allowed. 279 The following cases filled by Rajasthan State Electricity Board are allowed: C.A. Nos. 4714/91 &4028 43/91,S1,P(c) Nos.446/92.703/92, 12941/90. 433 36/92, 439 42/92, ( '.A. Nos. 5342/92. 1187 88/92, 4512/92, 45 10/92. 4511/92, 2800/92. 1204/92, 406 436/92, section L. P. (c) No. 20/92,46/02.47/92,50/92,53/02,449 452/92,494/02,516/92,48/92.49/92.51/02.52/92,54/92,55/92,43 45/92,56 72/92,428 432/92, 443 444/92,453 457/92,503 08/92. 512 14/92.530 33/92,14450/92. The following cases filed by the Bihar Electricity Board are allowed: SLP(c) Nos. 11799/89, 1856/90, 8318/92, 16028/92. The following, cases against Uttar Pradesh Electricity Board are dismissed. W.P. (c) Nos, 513/87, 804/87, 1144/87. 743/87, 531/87, 725/87. 739/87, 526/91. 576/87, 577/87, 801/87, 833/87. 769/87, 676/87, 578, 87, 728/87, 762/87. 818/87, 526/87, 744/87. 742/87. 540/87, 1238/87, 738/87.684/87, S.L.P. (c) Nos, 2952 56/1987, 15885/91, & 12902/9 1. The W.P. (c) No. 1317/90 filed against Punjab Electricity Board is dismissed. All the I.A.s are allowed. However, there shall he no order as to costs. T. N. A. Petitions disposed of.
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Under the rules for getting electricity from the Andhra Pradesh State Electricity Board, consumers had to keep an amount equal to three months' worth of electricity charges with the Board. This was called a consumption deposit. The Board would pay 3% interest per year on this deposit. If a consumer didn't pay the consumption deposit on time, they would have to pay extra charges. Also, their electricity could be shut off. Some people filed petitions in the Andhra Pradesh High Court, saying that these rules were not valid. They argued that the consumption deposit should never be more than two months' worth of average electricity charges. They also said that, based on a Supreme Court case, the Board should pay the same interest rate that banks pay on fixed deposits. The High Court disagreed with these petitions. The consumers then appealed to the Supreme Court, arguing that: (1) the law that lets the Board make these rules is unconstitutional because it doesn't give enough guidance; (2) requiring a three-month deposit is unfair for businesses that use a lot of electricity, since electricity costs are high for them; and (3) the Electricity Supply Act doesn't allow the Board to raise money except by changing electricity prices. Therefore, they said, the consumption deposit cannot be used to raise money. The Electricity Board argued that: (1) the point of the consumption deposit (which is like an advance payment, not a security deposit) is to make sure people pay their electricity bills on time, so a three-month deposit is not unfair; and (2) the fact that some consumers pay a lot for electricity doesn't change the nature of the deposit. Just because a business uses a lot of power doesn't mean it should be treated differently. The rules for consumer deposits must be the same for everyone. In Rajasthan, the rules said that the Electricity Board would not pay any interest on security deposits. The Board also sent notices telling consumers to deposit more money or provide a bank guarantee, based on their maximum power use. The consumers filed petitions in the Rajasthan High Court, saying that the rule about not paying interest was against the law and that the deposit amount should be based on their minimum, not maximum, power use. A judge in the High Court agreed with the consumers. But another panel of judges in the High Court said that not paying interest was unreasonable. They said that, according to the law and a sample form in the 1948 Act, interest should be paid on the security deposit. The Rajasthan State Electricity Board appealed to the Supreme Court, arguing that: (1) no law requires the Board to pay interest on the security deposit; (2) the High Court was wrong to rely on the sample form; (3) a three-month security deposit is not unreasonable; (4) even if the agreement between the Board and the consumer is one-sided, it is not necessarily unfair; and (5) in the previous case, the right to interest was based on an agreement between the parties, and the Court didn't decide the interest rate. The consumers argued that: (1) the laws and rules about electricity suggest that interest should be paid; (2) since the consumers' money is held by the Board to protect against unpaid bills, the Board is like a trustee for this money; and (3) even under English law, interest was payable on security for electricity. A representative for the Orissa Electricity Board said that their rule about not paying interest on security deposits was fair and didn't violate the Constitution. The Uttar Pradesh State Electricity Board was paying 3% interest on consumption deposits. The consumers filed petitions in the Allahabad High Court, asking for 12% interest, but their petitions were denied. In appeals to the Supreme Court, the consumers argued that: (1) the Court had ordered 12% interest on security deposits in other cases, so the same should apply here; (2) if interest is not paid, the security deposit cannot be required because it would be an unfair deal; and (3) the security deposit is not meant to be used by the Board. The Electricity Board argued that: (1) the 12% interest was only a temporary measure in other cases, so those orders are not final; and (2) the Court should only check if the Board acted like a private business instead of a public utility when setting the deposit rules. The Bihar State Electricity Board was paying 5% interest on the security deposit. The consumers asked for the same interest rate that banks pay on fixed deposits, and the High Court agreed. The Electricity Board filed a petition in the Supreme Court, saying that the High Court was wrong to award a higher interest rate. The consumers argued that raising the security deposit without giving a reason was against the law. In another petition, the consumers challenged the validity of certain sections of the Supply Act. The Punjab State Electricity Board said that it has to make large payments to generate and supply electricity, and consumers use electricity on credit for 2-3 months. To offset the money that consumers owe and to ensure timely payments to its suppliers, the Board requires an advance consumption deposit before providing electricity. If this deposit were not required, the Board would have to raise electricity prices. The advance deposit is not like a fixed deposit because it can be used for unpaid bills. Also, consumers can ask for a refund. Therefore, the relevant sections of the law are not unfair. The Punjab State Electricity Board also argued that the rule requiring consumers to pay advance consumption deposits is reasonable. A representative for the Calcutta Electricity Supply Corporation said that the deposit, though called a security deposit, is really an adjustable advance payment for electricity charges. The amount can be changed depending on the average consumption charges over time. It is like a running account. The security deposit doesn't stay the same like a fixed deposit, but decreases as electricity is used. Often, the electricity charges are more than the security deposit. That is why additional money is sometimes required to make up the difference. Without a law or contract requiring it, interest is not payable for holding money. In this case, there is no wrongful holding of money. A different section of the law does not apply to this deposit. After reviewing the petitions, the Supreme Court decided: 1. The section of the law allowing the Board to set terms for electricity supply is valid. The Board must follow the law and any regulations made under it. The law gives the Board the power to set terms for supply and to set electricity prices. No specific guidelines are needed for this. 1.1 The Court can review the regulations made under this law to see if they are reasonable. 1.2 The terms and conditions set by the Board must be related to the purpose for which they are issued. The Board cannot use this power for unrelated purposes. Therefore, this section of the law is valid. 2. The purpose of the consumption deposit is to ensure prompt payment and to be used to pay for electricity. The deposit, though called a security deposit, is really an advance payment for electricity charges. The payment is based on the agreement and the conditions of supply. The security deposit can be changed from time to time based on average consumption charges. This is the practice for all the Boards. 2.1 The way the Board bills consumers shows that they are getting electricity on credit. The deposit is not enough to cover all payments by the time the Board sends the bill. The deposit only covers part of the money owed to the Board. 2.2 The deposit is not the same as a fixed deposit. Electricity is supplied daily, so there is a daily cost. The security deposit is used to ensure payment. It is like a running account. 2.3 The argument that the deposit cannot be used for payment is incorrect. It can be used to pay any amount owed by the consumer for violating the conditions of supply, such as stealing electricity or tampering with meters. The deposit protects the Board's interests and discourages consumers from violating their obligations. 2.4 The Electricity Board has to make large payments to generate and supply electricity, and consumers use electricity on credit for 2-3 months. The advance consumption deposit is used to offset the money that consumers owe and to ensure timely payments to the Board's suppliers. The contract allows the Board to use the deposit to pay the bill. This is not just a deposit of money like in a commercial transaction. The Court can consider theft of electricity when deciding whether to require a security deposit. 2.5 A three-month security deposit is not unreasonable. 2.6 The regulations allow the Board to supply electricity to consumers under certain terms and conditions. If the regulations require a security deposit, it must be paid. If there are no regulations, a sample form can be used. This form says that the Board may require a consumer to deposit security for the payment of monthly bills and for the cost of the meter and other equipment. Therefore, the Board has the power to demand security from consumers. 2.7 The Board must operate in a way that ensures a profit of 3% or as specified by the State Government. The Board must adjust its prices to ensure this profit. The consumption security deposit helps the Board operate in a way that ensures a profit. The law says the Board must "carry on its operations under this Act and adjust its tariffs." It doesn't say that the only way to achieve a profit is to adjust tariffs. Therefore, requiring a security deposit is reasonable. 3. The Electricity Board is not required to pay interest on the security deposit by law or by common practice. 3.1 No law requires the Board to pay interest on the security deposit. The sample form that mentions interest on security deposits only applies to certain electricity companies. Even for those companies, it is not required to adopt the sample form. 3.2 A section of the law defines "clear profit" and mentions interest on security deposits as an expense for the electricity company. This doesn't mean that the company has to pay interest, only that it can be counted as an expense if it is paid. This applies to certain electricity companies, not to the Board. Therefore, there is nothing in the law to indicate that interest must be paid on the security deposit. The Rajasthan High Court was wrong to say that this section of the law applies. 3.3 A section of another law does not apply to cases where interest is not allowed due to a contract or law. This section only expands on the cases mentioned in another section. It does not override other laws or contracts. This section does not apply to these cases. 3.4 The word "interest" only applies when there is a lender and a borrower. The lender charges interest for the use of the money. In this case, there is no lender and borrower relationship. Therefore, the claim for interest cannot be legally supported. 3.5 The purpose of the deposit is to secure the payment of electricity charges. These charges can vary depending on daily consumption. The money owed can be used to pay the charges. Therefore, the Board is not a trustee. The relationship is not that of a trustee and a beneficiary, but of a depositor and a deposit. 4. The rule not providing for interest on the security deposit is not unfair because: (a) The consumer made the security deposit in order to get electricity service. (b) Electricity is supplied on credit. (c) The time it takes the Board to bill is beneficial to the consumer. (d) Public money is used to generate, transmit, and distribute electricity. The Board pays interest on the loans it takes out. It does not get interest from the consumers. (e) The Board needs its money back to provide public service. (f) The Board is not a commercial organization where the consumer provides security to earn interest. 4.1 The argument that the Board has a monopoly and consumers have no choice is incorrect. The security deposit is required for the supply of electricity. The Court must decide whether the Board acted like a private business when setting this condition. The Board did not act like a private business. The deposit is rationally related to the object of supplying electricity. 4.2 Even if the contract is one-sided, it is not unfair. The condition not providing for interest is not so unfair as to shock the Court. 4.3 The question of interest on security was not raised in a previous case. Therefore, the Court did not decide this issue. 4.4 The Court never intended to decide the rate of interest. The disposal of a previous petition is not binding because it was based on a temporary order. Therefore, the Court can decide the question on its own merits. 4.5 The Rajasthan High Court was wrong to strike down the rule about interest on security deposits. 4.6 The rate of interest on a security deposit cannot be compared to the rate of interest on a fixed deposit. The money from the security deposit can be used to pay charges. Also, not all deposits need to carry interest. The security deposit is different from a fixed deposit. 5. It is possible that consumers who use electricity as raw material will be prompt in their payments. However, they cannot be treated differently from those who default. The test is whether there is any discrimination in the general application of the law. The fact that some consumers are prompt does not make the provision unconstitutional.
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From the Judgment and Order dated 28.4.1989 of the Andhra Pradesh High Court in W. P. Nos. 11162/84, 18968/87, 12007/84, 15131/87, 5050/82 and 15746/87. Sanjay Parikh, P. Niriop, Kailash Vasdev, section Khaitan, K. K. Khaitan, Darshan Singh, Sushi] Kumar Jain, A.P. The facts briefly are as under: The Andhra Pradesh State Electricity Board is constituted under Section 5 of the Electricity Supply Act, 1948 (hereinafter referred to as the Act). Section 49 of the Act empowers the Board to notify the terms and conditions upon which it will supply electricity to a person. In all these cases, the appellants are covered by the general terms and conditions notified under Section 49 (1) of the Act. 500 for a continuous period of six months, shall keep with the Board an amount equivalent to charges for three months demand and energy charges as consumption deposit. 28.3 Interest on consumption deposit: Interest shall be paid by the Board on deposits of more than Rs. 60 made in cash at the rate of 3% per annum or such other 217 rate as may be fixed by the Board from time to time. 28.4 Disconnection or non payment of consumption deposit: If the consumer does not make payment of amount of consumption deposit or additional consumption deposit or where the deposit is given in Government security or National Saving Certificate Bank guarantee etc. 28.6 "All consumers shall pay the Consumption Deposit or additional consumer deposit within thirty days from the date the demand notice if there be any delay in payment, the consumer shall pay surcharge thereon equal to 1 1/2% per month or such other percentage to be fixed by the Board from time to time, of the demanded amount for each month of delay or part thereof. Such consumers are obliged to keep with the Board an amount equivalent to three months ' demand and energy charges, as consumption deposit. E. Board, ; , since this Court had taken the 'view that the interest on such deposit should be paid at the same rate as is paid by the schedule bank on fixed deposit. 28 relating to the consumption deposit held: The condition requiring the consumer to pay the charges within 15 days from `the date of the bill and on such failure, a right is conferred on the Board to disconnect the supply. As regards, the payment of 3 % interest, the High Court was of the view that the decision of this Court in Jagdamba Paper Industries (P) Ltd. (supra) could not be read as a decision of the Supreme Court on the basis of which it could be declared that the earlier Bench decisions of the High Court were no longer binding, Accordingly, it dismissed the writ petitions. The tariffs of 1974 provided for the payment of bills within 14 days from the date of the bill while the quantum of deposit is three months consumption charges. As per the order of this Court in S.L.P. There has not been any default in payment of electricity bills. A deposit in cash of an amount equal to three months average bills at full supply at the present tariff without any power cut will amount to Rs. If the security deposit is 'consumption deposit ' and it is for meeting the cost of supply in advance, then the Electricity Board cannot charge penal interest at 2% per month for non payment of bills within the stipulated period. 1293/89 & 1353/89 and S.L.P. 4791 92/90 & 4793 94/90 would urge that Section 49 of the Supply Act is unconstitutional since there are no guidelines for framing the terms and conditions of supply of electricity. Under clause 28.6 of the terms and conditions, in the event of delay in payment of consumption deposit or additional consumption deposit within the stipulated period, the consumer is obliged to pay surcharge at 18%. For supply of such electricity, the Board has to borrow and make payment of interest. If there are no consumer deposits, the tariff shall have to be increased. The consumer may not be entitled to interest at all. Jagdamba Paper Industries case (supra) cannot be said to be a decision as to the rate of interest payable by the Electricity Board. With regard to security deposit, Part 11 of the General Conditions of Supply and Scale of Miscellaneous Charges in Note II stated that no interest will be paid by the Board on the security deposit. The Division Bench held as under: i)The Board has power to demand additional security but the average consumption of three months should be taken as the basis for calculating the amount of such security. Mr. Soli J. Sorabjee, learned counsel appearing for the appellant argued as follows: There is no legal obligation to pay interest on a deposit made by the consumer with the Board in terms of Clause 20 (a) & (c) of the General Conditions of Supply. There is no contract or agreement which provides for payment of interest. There is no statutory provision which casts an obligation on the Board to pay interest on the security deposit. The rate of interest on security deposit cannot be equated with the rate of interest payable on fixed deposit because the nature and character of a security deposit is basically different from fixed deposit. The submissions based on Sections 57 & 59 of the Supply Act in relation to security deposit proceed on a misconception of the nature and character of payment as a security deposit. The consumption deposit cannot be equated to the deposit in a bank and interest could be demanded as of right. Mr. R.K. Mehta, learned counsel for the intervenor on behalf of 231 the Orissa Electricity Board through his written submissions.urges that it may be that the regulations in the case of Andhra Pradesh, Utter Pradesh and Bihar Provide for payment of interest at a certain rate on the security deposit. Therefore, a similar provision in the general conditions for supply of the Board cannot be treated as arbitrary or unreasonable. The basis of supply of electricity and the conditions on which it is supplied being statutory, the provisions under the conditions of supply that the Board shall not pay interest on the security deposit has statutory basis and accordingly cannot be struck down as arbitrary on the basis of a commercial transaction governing a bank deposit. Therefore, it is submitted that regulation 7 of the Orissa State Electricity Board General conditions of Supply Regulations, 1981 providing that no interest would be payable on security deposit is just and reasonable and is not arbitrary or violative of Article 14 of the Constitution. Mr. Shanti Bhushan, learned counsel opposing the stand of Rajasthan Electricity Board submits that the only question in this special leave petition is whether Electricity Board is obliged to pay interest on the cash security deposits as the Board compels industrial consumers to secure against default in payment of electricity bills. If it is so, it would amount to Board taking three months advance payment from the consumers. If it is in the nature of an advance payment there is no scope for charging 2 1/2 per cent penal interest. may be by deposit or otherwise, and of an amount agreed or, failing agreement, determined by a magistrates ' court, and that court may deal with the caused of the proceedings and its decision is final and binding on all parties, (bid., Schedule, section 71; Electricity Act 1947, section 57 (2), 1 Sch 4, Part 111) Where security is given by way of deposit the party to whom it is given must pay interest at the rate of 4 per annum an every sop for each period of Six months during which it remains so deposited. The Division Bench of the High Court held: "These petitions are dismissed with a direction that in case the Supreme Court decided that the interest at a rate higher that 3% should be paid on such security and additional security deposit, the benefit of the same judgment shall also be extended to the petitioners herein without the necessity of any further proceedings being taken by the petitioners." If interest is not paid security deposit cannot be demanded as this will amount to unconscionable bargain. ; at 109. Mr. Kapil Sibal, opposing the stand of Mr. G. Ramaswami arguers that there is no order of this Court adjudicating the rights of the Board on the consumer in respect of the validity of consumption security deposit being condition precedent for the supply of electricity by the Board as we II as the liability of the Board to pay interest to the consumer in respect of the consumption security deposit. Far from being a compulsory levy, the consumption security deposit is not only a deposit in cash to safeguard recovery of electricity dues for the energy supplied to the consumer on credit but also a security towards payment or satisfaction of any money (For example, theft), which may become due and payable to the Board by the consumer. Under section 49 the Board is enabled to supply electricity upon such terms and conditions, as it thinks fit under Article 226 of the constitution, the Court is to conduct a limited scrutiny whether by imposing such a condition the Board has not acted as a private trader and there by shd off its public utility character. The requirement of consumption security deposit is a condition of supply. If there is a revision in the rate of tariff there has to be an upward revision of the consumption security deposit since it has a direct bearing on the level of supply in consumption of electricity. This was because the amount of security deposit was kept in the savings account which earned 5 per cent interest which was passed on the consumer. Mr. G. L. Sanghi learned counsel appearing for the Bihar Board draws our attention to clause 15.3 of the tariff notification and submits that the consumption security deposit is not only for the supply of energy on credit but also for satisfaction of any money payable by him. If the consumer does not pay the dues in time the arrears of consumption charges will have to be adjusted against the security deposit. 433 dated 31.12.74, dues at any time are not allowed to exceed amount of security deposit and adjustment is to be made against the security deposit after the disconnection of supply. Jha, learned counsel for the respondent that the stand of the Board in 241 making payment of interest at 4/5 per cent is clearly arbitrary. Therefore, while the Electricity Board is required to make colossal advances to generate electricity and supply to consumers the consumers also use and consume electricity 242 on credit ranging from 2 to 3 months depending upon the category of consumers. This advance deposit cannot be termed as a fixed deposit as the amount cannot be utilized against non payment of dues from consumers. The true nature of transaction in these cases is one of advance for consumption of electricity estimated for a period of three months subject to adjustment /revision, if necessary. Section 4 (2) of the Interest Act has no application to this deposit. Section 2 is interpretation Section, Under Section 2 (2) the Board means a State Electricity Board constituted under Section 5. It then proceeds to say that the Board may supply electricity to any person not being a licensee upon 'such terms and conditions as the Board thinks fit and may for the purposes of such supply frame 'uniform tariffs '. Prior to 1978, Section 59 required the Board, as far as practicable and after taking credit for any subventions from the State Government under Section 63, not to carry on its operations under this Act at a loss and for this purpose, it was empowered to adjust its charges accordingly from time to time. This is the scheme of Section 59 and it is Section 59 as amended by 1978 Act but prior to its amendment by the 1983 Act, with which we are concerned in the present case. It cannot be doubted that Section 59 requiring the Board to adjust its tariffs for the purpose of Board 's finance is to be read along with Section 49 which provides specifically for fixation of tariffs and the manner in which that exercise has to be performed while dealing with any question relating the revision of tariffs. The attack against Section 49 is that it does not contain any norm of guideline with regard to framing of terms and conditions for the supply of electricity and in particular, the demand of payment of interest on the amounts due to the Board. Ltd. vs Haryana State Electricity Board ; at 513 14 it was pointed out as follows: "We are of the view that the Board has been conferred statutory power under Section 49 (1) of the Act to determine the conditions on the basis of which supply is to be made. Section 49 (1) of the Act clearly indicates that the Board may supply electricity to any person upon such terms and conditions as the Board thinks fit. We shall also proceed on the assumption that the terms and conditions notified under section 49 ought to be reasonable, in the sense that they must be related to the object and purpose for which they are issued. ,Bharatpur AIR at 109, it was observed: "Where demand for deposit of cash security for one month 's estimated consumption charges and bank security equal to two months estimated charges as contemplated by Regulation 20 read with the Schedule theret o was made by the Electricity Board from a consumer of high tension electricity, the demand could not be said to be unreasonable and the consumer would not be entitled to continuation of the energy under Sec. furthermore, the demand of security from the consumer which was in accordance with the Regulations framed by the Board could not be said to be unreasonable merely because no interest is paid on the cash security deposited by the consumer. " Section 26 of the supply Act states that the Board shall have all the powers and obligations of a licensee under the Electricity Act. Under the regulations framed by the Board in exercise of powers of Section 49 read with Section 79 (j) the consumer is only entitled and the Board has an obligation to supply energy to the consumer upon such terms and conditions as laid down in the regulations. Thus, the Board has the power to make regulations to demand security from the consumers. Thus, it will be clear that the true nature of the transaction in these cases is one of advance payment of charges for consumption of electricity estimated for a period of approximately three months. In one sense, the consumption security deposit represents only a part of the money which is payable to the Board on the bill being raised against the consumer. From the above, it is clear that while the Electricity Board is required to make colossal advances to generate electricity and supply to consumers, the consumers use and consume electricity on credit ranging from 2 to 3 months depending upon the category of consumers. So by the time the supply is disconnected to a defaulting consumer the would have consumer energy for 3 months. The argument ,appears to be that if the object of security is to secure payment of bills, then insistence on cash deposits would be unreasonable because the object could also be served by furnishing of any security and it is said that the consumer was willing to furnish a bank guarantee. It cannot be said that the said condition is so unreasonable and. The liability of Electricity Board to pay interest on Security Deposit: Now, we come to the crucial question as to whether interest is payable on security deposit or advance consumption deposit. (a & 6) Scheme of Electricity Acts & Schedule VI of Supply Act: It is the submission of Mr. Shanti Bhushan, learned counsel appearing for the respondent against Rajasthan Electricity Board that the scheme of the Electricity Act and Supply Act together with the rules suggest the payment of interest. In this connection, Section 26 of the Supply Act, to which we have made a reference earlier, must be looked at. But this cannot apply to the Board, which as stated above, is not a licensee. 261 In the above premises, it follows that there is nothing to indicate under the scheme of the Electricity Act or Schedule VI of the Supply Act that interest must be paid on the security deposit. Section 4(2) (g) of the of 1978 reads as under: "Notwithstanding the aforesaid and without prejudice to the generality of the provisions of sub section (1), the Court shall in each of the following cases allow interest from the dates specified below to the date of institution of the proceedings at such rate as the Court may consider reasonable, unless the court is satisfied that there are special reasons why interest should not be allowed namely: (a)Where money or other property has been deposited as security for the performance of an obligation imposed by law or contract from the date of the deposit. " This section has no application to a case where on account of a contractual term or a statutory provision payment of interest is not permitted, A careful reading of Section 4(2) of the would disclose that it merely enlarges the category of cases mentioned in Section 4(1). 262 The deposit made cannot be equated to a fixed deposit. When interest is payable at common law. At common law interest is payable (1) where there is an express agreement to pay interest; (2) where an agreement to pay interest can be implied from the course of dealing between the parties or from the nature of the transaction or a custom or usage of the trade or profession concerned; (3) in certain cases by way of damages for breach of a contract (other than a contract merely to pay money) where the contract, if performed, would to the knowledge of the parties have entitled the plaintiff to receive interest. The argument of Mr. G., Ramaswami, learned counsel, that the deposit does not contemplate appropriation is not correct because in the nature of contract it is liable to be appropriated for the satisfaction of any amount liable to be paid by the consumer to the Board for violation of any conditions of supply in the context of wide scale theft of energy, tempering with the meters and such other methods adopted by the consumers. While the terms and conditions of supply of Andhra Pradesh, Uttar Pradesh and Bihar provide for payment of interest at certain rate, in the case of Rajasthan and Orissa the Boards have clearly stipulated that no interest shall be payable on the securities furnished to the Board. This has also been so stated in. We are therefore. The condition of supply requiring a consumption security deposit has a direct bearing on the operations of the Board which are to be conducted in such a manner as to ensure a surplus. The language in Section 59 of the Supply Act is "carry, on its operations under this Act and adjust its tariffs. " On the question of interest in paragraph 11 at page 515 in Jagdamba 's case (supra) it is stated thus: "On the security amount interest at the rate of 4 per cent was initially payable. Since the amount is held as security, we indicated to the counsel for the Board that security amount should bear the same 272 interest as admissible on fixed deposits of Scheduled Banks for a term of years and we suggested keeping the present rate of interest in view that it should be enhanced to 10 per cent. 578 of 1987. 1988. the petitioner would be entitled to the interest on that amount from the date of the deposit at the rate of 12% per annum. 613 of 1990 it was stated thus: "In view of the order made by this Court in the connected matters on September 7, 1989, after hearing parties in Writ Petition No. On that basis, it cannot be contended that they 274 cannot be treated in the same way as defaulters. 1204/92, 406 436/92, section L. P. (c) No. T. N. A.
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If a consumer didn't pay the consumption deposit on time, they would have to pay extra charges. They also said that, based on a Supreme Court case, the Board should pay the same interest rate that banks pay on fixed deposits. The consumers then appealed to the Supreme Court, arguing that: (1) the law that lets the Board make these rules is unconstitutional because it doesn't give enough guidance; (2) requiring a three-month deposit is unfair for businesses that use a lot of electricity, since electricity costs are high for them; and (3) the Electricity Supply Act doesn't allow the Board to raise money except by changing electricity prices. Therefore, they said, the consumption deposit cannot be used to raise money. The Electricity Board argued that: (1) the point of the consumption deposit (which is like an advance payment, not a security deposit) is to make sure people pay their electricity bills on time, so a three-month deposit is not unfair; and (2) the fact that some consumers pay a lot for electricity doesn't change the nature of the deposit. In Rajasthan, the rules said that the Electricity Board would not pay any interest on security deposits. The consumers filed petitions in the Rajasthan High Court, saying that the rule about not paying interest was against the law and that the deposit amount should be based on their minimum, not maximum, power use. They said that, according to the law and a sample form in the 1948 Act, interest should be paid on the security deposit. The Rajasthan State Electricity Board appealed to the Supreme Court, arguing that: (1) no law requires the Board to pay interest on the security deposit; (2) the High Court was wrong to rely on the sample form; (3) a three-month security deposit is not unreasonable; (4) even if the agreement between the Board and the consumer is one-sided, it is not necessarily unfair; and (5) in the previous case, the right to interest was based on an agreement between the parties, and the Court didn't decide the interest rate. The consumers argued that: (1) the laws and rules about electricity suggest that interest should be paid; (2) since the consumers' money is held by the Board to protect against unpaid bills, the Board is like a trustee for this money; and (3) even under English law, interest was payable on security for electricity. In appeals to the Supreme Court, the consumers argued that: (1) the Court had ordered 12% interest on security deposits in other cases, so the same should apply here; (2) if interest is not paid, the security deposit cannot be required because it would be an unfair deal; and (3) the security deposit is not meant to be used by the Board. The Electricity Board argued that: (1) the 12% interest was only a temporary measure in other cases, so those orders are not final; and (2) the Court should only check if the Board acted like a private business instead of a public utility when setting the deposit rules. The consumers asked for the same interest rate that banks pay on fixed deposits, and the High Court agreed. The Punjab State Electricity Board said that it has to make large payments to generate and supply electricity, and consumers use electricity on credit for 2-3 months. The advance deposit is not like a fixed deposit because it can be used for unpaid bills. The Punjab State Electricity Board also argued that the rule requiring consumers to pay advance consumption deposits is reasonable. The purpose of the consumption deposit is to ensure prompt payment and to be used to pay for electricity. 2.4 The Electricity Board has to make large payments to generate and supply electricity, and consumers use electricity on credit for 2-3 months. This is not just a deposit of money like in a commercial transaction. If there are no regulations, a sample form can be used. The Electricity Board is not required to pay interest on the security deposit by law or by common practice. 3.1 No law requires the Board to pay interest on the security deposit. This doesn't mean that the company has to pay interest, only that it can be counted as an expense if it is paid. Therefore, there is nothing in the law to indicate that interest must be paid on the security deposit. The rule not providing for interest on the security deposit is not unfair because: (a) The consumer made the security deposit in order to get electricity service. The security deposit is required for the supply of electricity. 4.6 The rate of interest on a security deposit cannot be compared to the rate of interest on a fixed deposit. The money from the security deposit can be used to pay charges.
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N: Crl. A. Nos. 437 & 438 of 1976. (Appeals by Special Leave from the Judgment and Order dated the 8/9/10 3 1976 of the Bombay High Court in Crl. Appeals Nos. 17 and 18 of 1976 and confirmation Case No. 3 of 1976) and Crl. A. No. 441 of 1976. 639 (Appeal by Special Leave from the Judgment and Order dated the 8/9/10 3 1976 of the Bombay High Court in Criminal Appeal No. 18 of 1976). P. Narayan, B.G. Kolse Patil, B.S. Bhonde and V.N. Ganpule, for the appellants in Crl. A. Nos. 437 438 and for respondent in Crl. A. 441/76. V. section Desai, P.P. Hudlekar and M.N. Shroff for respond ents in Crl. Appeal Nos. 437 438 and for the appellant in Crl. A. No. 441/76. The Judgment of Y.V. Chandrachud and P.N. Sitinghal, JJ. was delivered by Chandrachud, J. P.K. Goswami, J. gave a separate opinion. CHANDRACHUD, J. Five small girls about ten years of age, a year, old infant and four women in their mid thirties were found murdered between November 14, 1972 and January 4, 1974 in a village called Manwar in Maharashtra. The murders of these ten females show significant SimilaritieS in pat tern and conception. The time and place chosen for the crimes, the preference for females as victims, the nature of injuries caused to them, the strange possibility that the private parts ' of some of the victims were cut in order to extract blood, the total absence of motive for killing these very girls and women, the clever attempt to dodge the police and then to put them on a false scent and the extreme bru tality surrounding the crimes give to the case an eerie appearance. Such harrowing happenings make the task of discovering truth difficult and it is just as well to begin with Justice Vivian Bose 's reminder that the shocking nature of the crime ought not to induce an instinctive reaction against a dispassionate scrutiny of facts and law. We have three appeals before us,. all by special leave granted by this Court. Criminal Appeal No. 437 of 1976 is flied by accused Nos. 9 to 12, Criminal Appeal No. 438 of 1976 by accused No. 3 while Criminal Appeal No. 441 of 1976 is flied by the State of Maharashtra against the acquittal of accused Nos. 1 and 2. Eighteen persons were put up for trial before the learned Sessions judge, Parbhani for the ten murders. Two out of these, Ganpat Bhagoji Salve and Shankar Gyanoba Kate were tendered pardon by the learned Judge and were examined in the case as approvers. Accused Nos. 6 died during the trial leaving 15 persons for consideration of the question whether they had conspired to commit the murders and whether the murders were committed in pursuance of that conspiracy. The learned Sessions Judge acquitted accused Nos. 4, 5, 7, 8 and 13 to 16. Accused Nos. 1 and 2 were convicted under sec. 302 read with sec. 120 B and sec. 109 of the Penal Code. Accused Nos. 3 and 9 to 12 were convicted under sec. 302 read with sec. 120 B and sec. 34 of the Penal Code. Accused Nos. 1, 2 and 3 were sentenced to death while ac cused Nos. 9 to 12 were sentenced to life imprisonment. The matter went to the Bombay High Court in various forms. The seven accused who were convicted by the Trial Court filed an appeal challenging the order of conviction and sentence. The Sessions Court 640 made a reference to the High Court for confirmation of. the death. sentence imposed on accused Nos. 1, 2 and 3. The State Government flied an appeal against the acquittal of accused Nos. 4 and 5. It also filed an appeal under section 377 of the Criminal Procedure Code, 1973 asking that the sentence of life imprisonment imposed on accused Nos. 9 to I2 be enhanced to death. The State not having challenged the order of acquittal passed by the Sessions Court in regard to accused Nos,7, 8 and 13 to 16, that order has become final and was not in any form assailed before Us as erroneous. The High court acquitted. Nos.1 and 2 holding friar the offence of conspiracy which formed the gravamen of the charge against them was not proved. The charge of conspira cy having failed and it being common ground that accused Nos. 1 and 2 had not taken any direct part in the commis sion of the murders, the High Court held that they Were entitled to acquittal on all the charges. The High Court dismissed the appeal file flied by accused No. 3 holding that he was responsible for the first four murders and.con firmed his conviction under section 302 read with section 34 as also the sentence of death imposed upon him. The conviction ,and sentence of accused No. 3 under section 302 read with s.120B was set aside by the ' High Court in view of its finding, that the prosecution had failed to establish the charge,of con spiracy. High court dismissed the State 's appeal against the acquittal of accused Nos.4 and 5 but it allowed the appeal flied.by the State for enhancement of the sentence of life imprisonment imposed on accused Nos. 9 to 12. High Court enhanced their sentence to death under section 302 read with 8. 34 but consistently, with its finding on the charge of conspiracy it set aside their conviction and sentence under section 302 read with section 120B. There were delay on the" part of the State Government in filing the appeal for en hancement of the sentence of accused Nos. 9 to 12 but the High Court condoned that delay. We are thus called upon to consider the correctness of: (1)the order of the High Court acquitting accused Nos. 1 and 2; (2) the order of conviction of accused No. 3 under section 302 read with section 34 and the sentence of death imposed upon him by the Sessions Court and the High Court; and (3) the order of conviction of accused Nos. 9 to 12 under section 302 read with section 34. Thus, we are concerned in these appeals with accused Nos. 1 to 3 and 9 to 12 only. The hamlet of Manwat has a population of 15 thousand and is situated in. Taluka Pathri, District Parbhani, Maharash tra. Accused No. 1, Rukhmini, was about 32. years of age at the relevant time and despite the pledge to secularism, it has to be mentioned that she is Pardhi by caste. She was in the keeping of accused No. 2, Uttamrao Barshate, a non pardhi, who is a man of means and was at one time the Presi dent of the Manwat Municipality. He purchased a house for accused No. 1 in which the two lived together and it is this house or wada.which became 'the focal point of the conspira cy. Accused No. 2 purchased the house really in order to ensure the exclusiveness of mistress but it happened to blaze an altogether new trial. 641 In the house was a Pimpal tree which is believed to be the emblem of God Vishnu, the Preserver. The Pimpal is also believed to be the haunt of Munjaba, who is supposed to be the spirit of an unmarried Brahmin boy. The Parbhani Dis trict Gazetteer says at page 115 that "some childless per sons who trace their misfortune to the influence of some evil spirit cause the Brahminic thread ceremony performed for a pimpal tree and a masonry platform built round its trunk. " The Man want village folk commonly believe that treasure troves are lying buried in the town ever since the sixteenth century when its inhabitants fled away after the troops of Murtazahad invaded the town, which was then under the Ni zamshahi of Ahmednagar. Quite some quacks in the periphery of 'Manwat make their living by diagnosing where the treas ure trove lies and what means to adopt for diScovering it. Accused No. 1, though in her thiries, had entered a period of premature menopause. She was anxious to get a child which could only happen if her menstrual cycle was restored. She used to consult quacks and mantriks who, she 'believed, could help her get a child. Accused No. 2 's mother was ,credited with a sixth sense in the matter of discovering treasure troves. 'She had oracled that a ' treasure trove lay buried in accused No. 1 's house under neath the Pimpal tree. The stage was thus set for the visits of mountebanks to the house of accused No. 1 for the display of their supernatural. attainments. The case of the prosecution is that accused Nos land 2 consulted quacks who prescribed that virgins should be offered as sacrifice to munjaba. and blood from the irpri vate arts be sprinkled on the food offered by way of Naive dya to the God. One of such quacks was Ganpat Salve, the approver, who was examined as: P.W. 1. Accepting Ganpat 's advice, accused Nos. 1,, 2, 3,4 and 6 conspired to commit the murders of virgin girls. Ganpat himself joined the conspiracy and so did Shankar Gyanoba Kate who was a servant of accused No. 2. Shankar, also an approver, was examined in the case as P.W.2. Accused Nos. 5 and 7 to 16 are alleged to have joined the conspiracy at a later point of time. In pursuance of the conspiracy, ten murders were committed between November 14, 1972 and January 4, 1974. The first four murders are alleged to have been commit ted by the approver Shankar and accused No. 3, Sopan, who was also in the employment of accused No. 2. Gayabai, a girl of 11 was murdered on November 14, 1972; Shakila, a girl of 10, was murdered on December 9, 1972;. Sugandhabai, a woman Of 35 was murdered on February 21, 1973 and Nasima a girl of lO was murdered on April 13, 1973. It is said that the blood from the private parts of these victims was offered to Munjaba and yet there was no clue as to where the treasure trove lay. Gayabai, Shakila and Sugandhabai had evidently died in vain and therefore Nasima, the fourth victim, was beheaded so that the severed head could be offered. to propitiate the deity. Even Nasima 's head failed to move Munjaba 's heart. The treasure trove remained undisclosed. 642 The next two murders are alleged to have been committed by accused Nos. 5 and 6. Kalavati, a woman of 30, was murdered on June 29, 1973 and Halires, a girl of 11, on July 12, 1973. Accused No. 5 has been acquitted and the order of acquittal has become final. Accused No. 6 died during the pendency of the trial in the Sessions Court. The seventh murder is alleged to have been committed by accused Nos. 7 and 8 when Parvatibai, aged about 35, was murdered on October 8, 1973. These two accused were ac quired by the Sessions Court and the acquittal was not challenged by the State. The three last murders are alleged to have been commit ted by accused Nos. 9 to 12, all at the same time. Haribai, aged 35, was going along with her daughter Taravati aged 9 and was carrying in her arms an infant daughter, Kamal, aged a year and half. All of them were murdered on the afternoon of January 4, 1974. Accused Nos. 1, 2, and 14 were arrested on June 18, 1973 in connection with the first four murders which had taken place between November 14, 1972 and April 13, 1973. It is alleged that, while in custody, accused No. 2 sent a message to accused No. 5 to commit a few more murders so that no suspicion may fall on those who were arrested. That is why accused Nos. 5 and 6, accused No. 6 being a servant of accused No. 1, are said to have committed the murders of Kalavati and Halires in June and July, 1973. On July 30, 1973 accused Nos. 1, 2, 9 and 14 were released on bail on condition that they shall not enter the limits of Manwat. This condition was relaxed on October 4, 1973 for investiga tional purposes. Accused Nos. 1 and 2 were in Manwat from October 4 to October 21, 1973 during which period they are alleged to have procured the service. of accused Nos. 7 and 8 for the commission of Parvatibai 's murder on October 8. On December 18, 1973, an application was moved for cancella tion of the bail granted to accused Nos. 1 and 2. That application was allowed and they were rearrested on January 4, 1974 when the murders of Haribai, Taramati and Kamal were committed. Accused No. 3 was arrested on December 28, 1973, accused Nos. 9 to 11 on January 8, 1974 and accused No. 12 on January 11, 1974. Accused Nos. 1 and 2 are the linch pin of the case and therefore, it would be appropriate to deal with their cases first. Accused No. 1 is the mistress of accused No. 2 and whereas the former was anxious to get a child, they both were anxious to discover the treasure trove lying buried in their house. The charge against them is that for the purpose of achieving these objects they consulted quacks who advised that the Munjaba should be propitiated by offering the blood of virgin girls. Accepting that advice, accused Nos. 1 and 2 are alleged to have entered into a conspiracy with the other accused to commit the various murders. The prosecution relied inter alia on the evidence of the two approvers, Ganpat, P.W. 1, and Shanku, P.W. 2, in order to prove the charge of conspiracy against accused Nos. 1 and 2 as also for proving that various murders were com mitted in pursuance of that 643 conspiracy. The learned Sessions Judge accepted the evi dence, of both the approvers as against accused Nos. 1 and 2 but the High Court rejected the evidence of Ganpat and accepted that of Shankar only. Before considering that evidence, it would be necessary to state the legal position in regard to the evidence of accomplices and approvers. Section 133 of the Evidence Act lays down that an accomplice shall be a competent witness against an accused person; and a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice. Section 114 of the Evidence Act provides that the Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case. Illustration (b) to section 114 says that the Court may presume that an accomplice is unworthy of credit unless he is corroborated in material particulars. There is No. antithesis between section 133 and illustration (b) to s.114 of the Evidence Act, because the illustration only says that the Court 'may ' presume a certain state of affairs. It does not seek to raise a conclusive and irre butable presumption. Reading the two together the position which emerges is that though an accomplice is a competent witness and though a conviction may lawfully rest upon his uncorroborated testimony, yet the Court is entitled to presume and may indeed be justified in presuming in the generality of cases that no reliance can be placed on the evidence of an accomplice unless that evidence is corrobo rated in material particulars, by which is meant that there has to be some independent evidence tending to incriminate, the particular accused in the commission of the crime. It is hazardous, as a matter of prudence, to proceed. upon the evidence of a self confessed criminal, who, in so far as an approver is concerned, has to testify in terms of the pardon tendered to him. The risk involved in convicting an accused on the testimony of an accomplice, unless it is corroborated in material particulars, is so real and potent that what during the early development of law was felt to be a matter of prudence has been elevated by judicial experience into a requirement or rule of law. All the same, it is necessary to understand that what has hardened into a rule of law is not that the conviction is illegal if it proceeds upon the uncorroborated testimony of an accomplice but that the rule of corroboration must be present to the mind of the Judge and that corroboration may be dispensed with only it the peculiar circumstances of a case make it safe to dispense with it. In King vs Baskerville(1) the accused was convicted for committing gross acts of indecency with two boys who were treated as accomplices since they were freely consenting parties. Dealing with their evidence Lord Reading, the Lord Chief Justice of England, observed that though there was no doubt that the uncorroborated evidence of an accomplice was admissible in law it was for a long time a role of practice at common law for the Judge to warn the Jury of the danger of convicting a person on the uncorroborated testimo ny of an accomplice. Therefore, though the Judge was enti tled, to point out (1) 2 7078CI/77 644 to the Jury that it was within their legal province to convict upon the unconfirmed evidence of an accomplice, the rule of practice had become virtually equivalent to a rule of law and therefore in the absence of a proper warning by the Judge the conviction could not be permitted to stand. If after being properly cautioned by the Judge the Jury never theless convicted the prisoner, the Court would not quash the conviction merely upon the ground that the accomplice 's testimony was uncorroborated. In Rameshwar vs State of Rajasthan(1) this Court ob served that the branch of law relating to accomplice evi dence was the same in India as in England and that it was difficult to better the lucid exposition of it given in Baskerville 's (supra) case by the Lord Chief Justice of England. The only clarification made by this Court was that in cases tried by a Judge without the aid of a Jury it was necessary that the Judge should give some indication in his judgment that he had this rule of caution in mind and should proceed to give reasons for considering it unnecessary to require corroboration on the facts of the particular case before him and show why he considered it safe to convict without corroboration in the particular case. In Bhuboni Sahu vs The King(a) the Privy Council after noticing section 133 and illustration (b) to section 114 of the Evi dence Act observed that whilst it is not illegal to act on the uncorroborated evidence of an accomplice, it is a rule of prudence so universally followed as to amount almost to a rule of law that it is unsafe to act on the evidence of an accomplice unless it is corroborated in material respects so as to implicate the accused; and further that the evi dence of one accomplice cannot be used to corroborate the evidence of another accomplice. The rule of prudence was based on the interpretation of the phrase "corroborated in material particulars" in illustration (b). Delivering the judgment of the Judicial Committee, Sir John Beaumont ob served that the danger of acting on accomplice evidence is not merely that the accomplice is on his own admission a man of bad character who took part in the offence and afterwards to save himself betrayed his former associates, and who has placed himself in a position in which he can hardly fail to have a strong bias in favour of the prosecution the real danger is that he is telling a story which in its general outline is true, and it is easy for him to work into the story matter which is untrue. He may implicate ten people in an offence and the story may be true in all its details as to eight of them but untrue as to the other two whose names may have been introduced because they are enemies of the approver. The only real safeguard therefore against the risk of condemning the innocent with the guilty lies in insisting on independent evidence which in some measure implicates each accused. This Court has in a series of cases expressed the same view as regards accomplice evidence. (see The State of Bihar vs Basawan (1) ; (2) 76 I.A. 147. 645 Singh(1); Hari Charan Kurmi vs State of Bihar;(2) Haroon Haji Abdulla vs State of Maharashtra;(a) and Ravinder Singh vs State of Haryana(4). In Hari Charan(2) Gajendragadkar, C.J., speaking for a five Judge Bench observed that the testimony of an accomplice is evidence under section 3 of the Evidence Act and has to be dealt with as such. The evidence is of a tainted character and as such is very weak; but, nevertheless, it is evidence and may be acted upon, subject to the requirement which has now become virtually a part of the law that it is corroborated in material particulars. We will assess the evidence of the two approvers Ganpat and Shankar in the light of these principles. Ganpat Bhagoji Salve, P.W. 1, fails to cross the initial hurdle of reliability and no amount of corroboration cure the infirmi ties which beset his evidence. He is not a quack but a charlatan who traded on the credulous optimism of the ster ile village women. He admits that he possessed no cure but made a pretence of it by carrying the confidence of lay, uninformed women. He was sent for to prescribe a cure to enable accused No. 1 to bear a child but accused Nos. 1 and 2, taking advantage of his expert presence, consulted him on where the treasure trove lay. Ganpat prescribed the facade of a procedure which was in the nature of a confidence trick. Practising it deftly on his credulous audience, he passed on the errand of God that Munjaba has to be appeased by offering the blood of virgin girls. That work was as signed by accused No. 2 to his servants, accused No. 3 and the other approver Shankar. Accused No.3 and Shankar committed the murders of Gaya bai and Shakila and handed over the bowlful of blood from the private parts of the victims to accused Nos. 1 and 2 who performed the puja of Munjaba. But the treasure trove did not come up. Then Sugandhabai was murdered and her menstur al blood was offered to the God, again without a purpose. The fourth to die was Nasima whose head and small finger were offered as sacrifice. But even that heavy price yield ed no clue to the treasure trove Ganpat was paid a fee of Rs. 100 whereupon he made himself scarce and left for a place called Baramati from where he was traced by the po lice. That is what Ganpat 's evidence comes to. Ganpat is an utterly worthless witness whose evidence has been rightly discarded by the. High Court. His entire story is incredible and abounds in contradictions of the gravest kind. Accused No. 2 is a man of some means and was for some time the President of the Manwat Municipality. It is hardly likely that a person in his position would readily gulp the fantastic process prescribed by Ganpat for discov ering the treasure trove Ganpat was interrogated by the police for nearly a month and a half after his arrest at Baramati and it was only at the end of that trying period that he trotted out some story (1) ; (2) ; (3) ; (4) ; 646 to save his skin. It is common ground, and we see much more in that episode, that Ganpat struck his head against a wall while in police custody and sustained a head injury for which he was charge sheeted for attempting to commit sui cide. He admits in his evidence that he was driven to break his head as a result of the torture inflicted upon him by the police. Though he implicated both accused Nos. 1 and 2 in the search for treasure trove, he admitted later that. accused No.1 had never talked to him. in that behalf. He made several significant statements for the first time in the Court and though we agree that an approver has real incentive to speak out his mind after tender of pardon, it is impossible to reconcile his earlier statements with his later assertions. It is one thing to say as was said in Madan Mohan Lal vs State of Punjab(1) that an approver 's statement cannot be discarded for the mere reason that he did not disclose the entire story in his police statement and quite another to accept an approver in spite of contra dictions which cast a veil of doubt over his involvement of others. Conceding the ratio. of Tahsildar 's(2) case, on. which Mr. Desai for the State Government relies, the conclu sion seems to us inescapable that Ganpat has mixed a ton of falsehood with an ounce of truth. His evidence has there fore to be left out of consideration. The other approver Shankar Gyanoba Kate, P.W. 2, has greater credibility than Ganpat. Shankar was working with accused No. 2 as an agricultural servant along with accused No. 3. He speaks of Ganpat 's visits, the performance of the 'shakun ' and of being commanded by accused Nos. 1 and 2 to commit murders of virgin girls. He has unreservedly admitted having committed the murders of Gayabai, Shakila, Sngandha bai and Nasima with accused No. 3 's assistance. He impli cates accused Nos. 1 and 2 by deposing that after each o[ the murders was committed, he and accused No. 3 used to go to accused No.1 's house for delivering the blood and that the accused used to perform the Puja thereafter. Not only has Shankar tarred himself with the same brush as accused Nos. 1, 2 and 3 but he has confessed to having played the leading role in the commission of the first four murders. Impressed by that circumstance, the Sessions Court and the High Court concluded that he is a reliable witness, but they took the view that the conviction of accused Nos. 1 and 2 cannot be permitted to rest on his uncorroborated testimony. We unhesitatingly share that view. Having played the role of the master killer in four ghastly murders, he is bound to know every little detail as to the manner of kill ing. The vivid description given by him of the luring, the gagging and the throwing away of the dead bodies may there fore be true. But it is easy enough for him to introduce nice falsities here and there by involving some others in the broadly true framework of his story. It is therefore necessary to see whether the evidence of Shankar in regard to the implication of accused Nos. I and 2 is corroborated by some independent evidence. (1) (2) [1959] Supp. 2 S.C.R. 875. 647 Before looking out for corroboration. , we must point out that Shankar used to be interrogated by the police every night for about 9 or 10 days and it was at the end of that gruelling interrogation that his statement came to be re corded. Though Shankar claims that he had seen the 'shakun ' being performed by Ganpat, he had not stated so before the police nor had he then described the elaborate ritual ob served during the performance of that ceremony. He also did not say to the police that accused No. 1 had asked him to commit the murders. Neither to the police nor in his state ment recorded under section 164 of the Code of Criminal Procedure did he say that he had gone to accused No.1 's house on the morning following the first murder and that She had told him that since the treasure trove was not found another murder should be committed. The statement attributed by Shankar to accused No. 1 that menstrual blood was required for sacri fice is also conspicuous by its absence in his police state ment. These significant omissions are in the nature of contradictions because not only do they pertain to a very vital aspect of the case against accused Nos. 1 and 2, but they are of such a nature that the story told by Shankar to the police and under section 164 of the Code of Criminal Proce dure, cannot sensibly stand along with what he told the Court in regard to the part played by accused Nos. 1 and 2. It is true that Shanker was under a higher obligation while deposing in the Court because as a condition of the pardon tendered to him he had to disclose the whole truth to the Court. But while assessing the value of Shankar 'section evidence in so far as he implicates accused Nos. 1 and 2 we find it impossible to overlook the studied improvements which he made to involve them. Such gross departure from the earliest versions makes the story of conspiracy suspect and uninspir ing. All the same, we may examine the argument advanced before us by the learned counsel for the State that Shan kar 's evidence against accused Nos. 1 and 2 is corroborated in material particulars and should therefore be accepted. For affording corroboration to Shankar 's evidence reli ance is placed on the evidence of four witnesses Laxman (P.W. 19), Sakharam (P.W. 29), Ramchandra (P.W. 30) and Kachru (P.W. 34). We see nothing in the evidence of these witnesses which can lend corroboration to the approver 's story, that accused Nos. 1 and 2 conspired to commit the murders or that they asked Shankar and accused No. 3 to do so or that the blood of victims was handed over to either of them, or that any Puja was performed after the commission of murders. Laxman says nothing about the treasure trove, Sakharam merely carried the errand to Ganpat, Ramchandra was mauled by the police who pulled out Iris pig tail and the quack called Kachru only prescribed a medicine for accused, No.1 's meno pause. Nor indeed is the evidence of P.Ws. 20, 21 and 51 of any assistance in the matter of corroboration. They merely say that Ganpat was eking his livelihood by prescribing Mantras and medicines, which takes one nowhere near corroborative factors for implicating accused Nos. 1 and 2. 648 The recovery of Ganpat 's satchel. containing charms and herbs, trader the Panchnama exhibit 130A, also proves nothing beyond showing that Ganpat was equipped with a quack 's repertoire. One of the strongest arguments made by Mr. Desai on behalf of the State was that accused Nos. 1 and 2 stood to gain by the commission of the murders and that would afford corroboration to their participation in the conspiracy. Motive may conceivably furnish the necessary corroboration, but we are unable to see any independent evidence on the record regarding the treasure trove theory. Scrapings were taken from Munjaba 's image and samples of earth were also taken from the place where Munjaba is alleged to have been propitiated with the blood of the victims. If Puja was really performed in the manner described by Shankar, it is strange that no blood stains should have been found anywhere near the Pimpal tree. There is also no evidence at all to show that any attempt was made by accused Nos. 1 and 2 to discover the treasure, as for example, by digging. These circumstances cast a serious doubt on the theory that ac cused Nos. 1 and 2 were trying to locate the treasure trove. The fact that accused No. 3 is a servant of accused No. 2 cannot by itself be sufficient to connect accused No. 2 with the crime charged. The last circumstance on which prosecution relies to. connect accused Nos. 1 and 2 with the crime is the confes sion, exhibit 108, made by accused No. 1 Rukhmam. That confes sion was recorded by a Sub Divisional Magistrate, Devidas Sakharam Pawar, P.W. 23. Later, we will have a great deal to say about the various confessions recorded by this learned Magistrate but in so far as the confession of ac cused No. 1 is concerned it is enough to point out that it is entirely exculpatory and can, therefore, serve no useful purpose. Besides, the confession was retracted by accused No. 1. Along with these considerations is the circumstance that the High Court has acquitted accused Nos. 1 and 2 after a fair examination of the material relied upon by the prosecu tion as against them. The various reasons given by us would so that there is no justification for interfering with the conclusion to which the High Court has come. The acquittal of accused Nos. 1 and 2 has, therefore, to be confirmed. It would now be convenient to take up the ease of ac cused No. 3, Sopan Rambhau Salve. The allegation against him is that he and the approver Shankar committed the murder of Gayabai on November 14, 1972, of Shakila on December 9, 1972, of Sugandhabai on February 21, 1973 and of Nasima on April 13, 1973. There is no eyewitness to any of these four murders but for establishing the charge against accused No. 3, the prosecution relies on the evidence of the two approv ers Ganpat (P.W. 1) and Shankar (P.W.2), the discovery of article 17 by accused No. 3, the discovery of articles 18 and 19 by approver Shankar, the seizure of articles 20 and 21 from the house of accused No. 1 and lastly the retracted confession of accused No. 3 himself. We have already dealt with the evidence of the approvers while considering the case against accused Nos. 1 and 2 and we have given our reasons for discarding Ganpat 's evidence outright. In regard to Shankar 's evidence we have taken the view that though he is 649 a reliable witness, his evidence cannot be acted upon unless it is corroborated in material particulars. Shankar and accused No. 3 were in the employment of accused No. 2. After describing the 'Shakun ' ceremony which was performed for ascertaining the desire of the deity, Shankar deposes that he and accused No. 3 were commissioned to commit the murders of virgin girls. Shankar, after some hesitation, agreed to do so on the promise that accused Nos. 1 and 2 will,give to him and accused No.3 a share in the treasure trove. Accused No. 3, according to Shankar, lured Gayabai, Shakila and Nasima to secluded spots. , where upon Shankar gagged and throttled them. Accused No. 3 facilitated the murders by holding the legs of victims which also helped Shankar to collect blood from their private parts after causing cuts thereon. Accused No. 3 played a more signifi cant role in the murder of Sugandabhai by axing her to death. Shankar 's evidence is amply corroborated as regards the broad outlines of the story narrated by him. But that is not enough. We must see whether his evidence receives corrobo ration from an independent source and in material particu lars, so as to fasten the guilt on accused No. 3. The first circumstance which is said to corroborate the evidence of the approver is the discovery of 27 pieces of shirt, which are collectively marked as article 17. The panchanama of discovery (exhibit 127) is dated January 2, 1974 and is proved by the Pancha Vithalrai Takankhar (P.W. 27). The report of the serologist which is at exhibit 312 shows that there were several blood stains on the shirt pieces ranging from 0.1 cm. to 0.5 cm. in diameter, all of 'A ' group. Gayabai 's blood also belonged to 'A ' group. Mr. Bhonde who appears for accused No. 3 has, subjected the evidence of discovery to a searching criticism which at first blush seems plausible but which does not bear close scrutiny. The argument that the panchanama of discovery does not attribute to accused No,. 3 the authorship of concealment has the simple answer that the English transla tion of the Marathi panchanama is incorrect. The original document expressly states that accused No. 3 agreed to point out the place where. he had kept the shirt pieces. The evidence of the Panch (P.W. 27) and of Dy. S.P. Waghmare (P. W. 96) is. the same effect. In the absence of any effective cross examination of these witnesses, we see no substance in the contention that accused NO. 3 's father, who was standing near the hut, should have been examined as a witness. It is urged that it is highly unlikely that accused No. 3 will preserve the tell tale evidence of the crimes in the manner alleged by the prosecution. Why the accused chose to do this is difficult to know but we are not examining the evidence in the case as a Court of first instance. The evidence in regard to the discovery is accepted as unexcep tionable by the Sessions Court as well as the High Court 650 and we are unable to characterise that view of the matter as preverse or against the weight of evidence. The recovery of article 17 thus afford material corroboration to the part played by accused No. 3, at least in Gayabal, s murder. The discovery of the blade (article 18) and the undervest (article 19) at the instance of the approver affords no cor roboration as against accused No. 3. Nor indeed can the recovery of the bowl (article 20) and the bottle (article 21) from the house of accused No. 1 connect accused No. 3 with the crime. These are articles of common use and no blood was detected thereon. What remains to be considered is the retracted con fession accused No. 3, which is exhibit 106. While on this question, we would like to deal with all the confessional statements recorded in the case so that it will not be necessary to revert to. the question time and again. As many as eight confessions were recorded in the case, the confessing accused, apart from the two approvers, being accused Nos. 1, 3, 4, 5, 6, and 12. The approvers, Ganpat and Shankar, stuck to their confessions while all others retracted theirs. Section 24 of the Evidence Act makes a confessional statement irrelevant in a criminal proceeding if the making thereof appears to have been caused by any inducement, threat or promise, having reference to the charge against the accused, proceeding from a person in authority and sufficient to give the accused grounds which would appear to him reasonable for supposing that by making the confes sion he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him. Section 163 of the Criminal Procedure Code bars a Police Officer or any person in authority from offering or causing to be offered any inducement, threat or promise as is referred to in section 24 of the Indian Evidence Act. Section 164 of the Code prescribes the mode of recording confession al statements. Acting under section 554 of the Criminal Proce dure Code, 1898, the High Court of Bombay had framed in structions for the guidance of Magistrates while recording confessional statements. Those instructions are contained in Chapter I, Paragraph 18, of the Criminal Manual 1960, of the Bombay High Court. The instructions require the Magistrate recording a confession to ascertain from the accused whether the accused is making the confessional statement voluntarily and to find whether what the accused desires to state appears to be true. The instructions prescribe a form in. which the. confessional statement has to be recorded. Similar circulars or instructions have been issued by the various High Courts in India and their impor tance has been recognised by this Court in Sarwan Singh vs State of Punjab(1) in which it was said that the instruc tions issued by the High Courts must be followed by the Magistrates while recording confessional statements. ; 651 All of the eight confessions were recorded in this case by a Sub Divisional Magistrate, Devidas Sakharam Pawar (P. W. 23), whose evidence leaves no room for doubt that he was blissfully unaware of the stringent responsibilities east by law on Magistrates. who. are called upon to record confes sions. He made no effort to ascertain from any of the accused whether he or she was making the confession volun tarily. He did not ask any of the accused whether the police had offered or promised any incentive for making the confessional statement nor did he ascertain for how long the confessing accused was in police custody prior to. his production for recording the confession nor indeed did he maintain any record to show where the accused were sent after they were given time for reflection. One of the glaring infirmities from which the confessional statements of the various accused suffer is that none of those state ments contain a memorandum as required by section 164 of the Code that the Magistrate believed that the "confession was volun tarily made". It is also clear that when the various ac cused were produced before the Magistrate after the time for reflection was over, he asked no further questions and recorded the confessions. mechanically for the mere reason that the accused expressed their willingness to confess. The Magistrate was either overcome by the sensation which the case had aroused in Maharashtra or perhaps he blindly trusted the high police officers who were frantically look ing out for a clue to these mysterious murders. They pro duced the accused for recording the confessions and the Magistrate thought that the mere production of the accused was guarantee enough of their willingness to confess. Learned counsel appearing for the State is right that the failure to comply with section 164(3), Criminal Procedure Code, or with the High Court Circulars will not render the confessions inadmissible in evidence. Relevancy and admis sibility of evidence have to be determined in accordance with the provisions of the Evidence Act. Section 29 of that Act lays down that if a confession is otherwise. relevant it does not become irrelevant merely because, inter alia, the accused was not warned that he was not bound to make it and the evidence of it might be given against him. If, there fore, a confession does not violate any one of the condi tions operative under sections 24 to 28 of the Evidence Act, it will be admissible in evidence. But as in respect of any other admissible evidence, oral or documentary, so in the case of confessional statements which are otherwise admissi ble, the Court has still to consider whether they can be accepted as true. If the facts and circumstances surround ing the making of a confession appear to. cast a doubt on the veracity or voluntariness of the confession, the Court may refuse to act upon the confess;on even if it is admissible in evidence. That shows how important it is for the Magistrate who. records the confession to satisfy him self by appropriate questioning of the confessing accused, that the confession is true and voluntary. A strict and faithful compliance with section 164 of the Code and with the instructions issued by the High Court affords in a Large measure the guarantee that the confession is voluntary. The failure to observe the safeguards prescribed therein are in practice calculated to impair the evidentiary value of the confessional statements. 652 Considering the circumstances leading to the procession al recording of the eight confessions and the abject disre gard, by the Magistrate, of the provisions contained in section 164 of the Code and of the instructions issued by the High Court, we are of the opinion that no reliance can be placed on any of the confessions. Apart from the confessions of the two approvers, all others were retracted, which further cripples their evidentiary value. Since the evidence of the approver Shankar is corrobo rated in material particulars by the discovery of article 17, there is no valid reason for departing from the concur rent view of the High Court and the Sessions Court that the complicity of accused No. 3. in the four murders is proved beyond a reasonable doubt. As the charge of conspir acy fails, the High Court was right in convicting accused No. 3 under section 302 read with section 34 of the Penal Code only. That leaves the case of accused Nos. 9 to 12 for consid eration,. being the subject matter of Criminal Appeal No. 437 of 1976 filed by them. The charge against these accused is that in furtherance of conspiracy and in pursuance of their common intention they, on January 4, 1974, committed the murders of Haribai, aged 35 years, her daughter Taramati aged 9 years, and her infant child Kamal aged 1 1/2 years. The Sessions Court convicted these accused under section 302 read with sections 120B and 34 of the Penal Code and sentenced them to life imprisonment. The charge of conspiracy having failed before the High Court and the main co conspirators, accused Nos. 1 and 2, having been acquitted, the High Court convict ed these accused under section 302 read with section 34 only. But, accepting the appeal flied by the State, the High Court enhanced their sentence from life imprisonment to death. The evidence against accused Nos. 9 to 12 consists of : (1) The: eye witness account of Umaji Limbaji, Pitale (P.W. 31); (2) Discoveries effected in pursuance of statements made by the accused; (3) Injuries on accused No. 10; (4) The evidence in regard to the movements of the accused at or about the time when the murders were committed and (5) the confession of accused N6. Umaji was working as. an agricultural servant with one Balabhau Lad on a daily wage of Rs. 3/ . On January 4, 1974 while he was on his way to one of the lands of his master, he first met accused No. 10 and then accused Nos. 9 and 11, and had some conversation with accused No. 10. At about the same time, he saw Haribai carrying her infant child in her arms, and a basket of food on her head. Her other daughter Taramati was walking behind her. Umaji climbed the Mala, which is a raised platform from which crops are generally watched, and soon thereafter he heard the shrieks of a child. Turning in the direction from which the shrieks came, he saw accused No. 10 holding Haribai from behind by her waist and accused No.9 giving an axe blow on her head. Almost simultaneously, Umaji saw accused No. 12 holding Taramati from behind and accused No. 11 giving an axe blow on her head. Feeling nervous and fearful, jumped down from the Maid, tethered his horse in his master 's land, went by 653 a bus to the Manwat Road Railway Station, took a train to Ranjani and from there proceeded to the village of Iregaon where his maternal uncle Mathaji lived. After staying at Iregaon for about four days, Umaji went back to his master 's house at Manwar when a police constable took him to. the Police Station, where a Police Officer recorded his state ment. Umaji 's evidence having been concurrently accepted by the Sessions Court and the High Court, we do. not propose to undertake a fresh reappraisal of that evidence except to the extent to which the view of the Courts below is contrary to the weight of the record or is otherwise such as is impossi ble in the context to sustain. On a careful consideration of Mr. Narayan 's closely reasoned submissions, we have formed the conclusion, which does not materially differ from that of the two Courts, that Umaji 's evidence cannot be accepted without adequate corroboration. Our reasons for taking this view are briefly these: Fear and pame may account for the fact that the witness did not raise an alarm. But there is no reasonable explanation why, having had the presence mind to tether back the horse, he did not see his master. Then again, he sojourned from the scene of offence to Iregaon but spoke to none. At Iregaon, which was far removed from the scene of Manwat murders, he holidayed with his uncle for four days but even on being questioned as to the purpose of his visit, he made no an swer. After returning to Manwat he saw his master but told him nothing. His statement was recorded by the police after two days of close interrogation. In regard to accused No. 9, there are two circumstances which afford reliable corroboration to Umaji 's evidence. On January 11, 1974 accused No. 9 made a statement leading to the discovery of an axe blade, article 160, from his house. The panchnama of recovery is exhibit 91 A which is proved by the Panch Sheikh Imam (P.W. 11 ). It shows that accused No. 9 took out an axe blade from below a piece of wood lying behind a cupboard in his house. The report of the Serolo gist, exhibit 267, shows that the axe blade was stained with human blood of 'A ' group. The blood of the deceased Haribai belonged to the same group. Accused No. 9 admitted in his examination that he had produced the axe blade and that it was stained with blood but he sought to explain the blood stains by saying that his wife had sustained an injury while hewing wood with the axe. That is a flimsy explanation because were it true, it is difficult to understand why such great care was taken to conceal the axe blade. On January 21.1974 a burnt shirt piece, article 170, was recovered in consequence of information given by accused No. 9. The Panchnama, exhibit 87 A, and the evidence of the Panch Munjaba (P.W. 25) show that the accused dug out the shirt piece from under a heap of earth lying inside his house. Article 170 was found by the Sessions Judge to fit squarely with the shirt sleeve, article 112, which was found at the place of occurrence near Haribai 's dead body. The report of the Chemical Analyser at Ex.271 shows that arti cles 112 and 170 bore ' identical textile and physiochemical characteristics. 654 In our opinion, the courts below were justified in relying upon these corroborative circumstances to connect accused No. 9 with the murder of Haribai. Turning to accused No. 10, an axe handle, article 169, was recovered at his instance on January 17, 1974. The Panchanama, exhibit 86 A, and the evidence of the Panch Mohd. Yusuf Bade Khan (P.W. 10) show that the axe handle was. recovered from below a thorny fence in the Pardhi Wada locality. The report of the serologist, Ex.267, shows that there was human blood on the axe but the group of, the blood could not be determined. It is not possible to accept the submission of Mr. Narayan that the axe handle was recov ered from a place which was easily accessible to the public because the handle was taken out after making quite some efforts to locate it. Accused No. 10 was the author of its concealment. On January 8, 1974 when accused No. 10 was arrested a turban, bush shirt and dhoti (articles 150 to 1.52) were seized from his person. The serologist 's report, Ex.267, shows that human blood was detected on the bush shirt and the dhoti. The blood stain. on the shirt was 0.5 cm in diameter and the blood detected on the bush shirt and the dhoti belonged to 'A ' group. Accused No. 10 admitted in his examination that the shirt and the dhoti were blood stained but he offered an unconvincing explanation that a child of his had bled from the nose, The evidence of Dr. Salunke (P.W. 48) who examined accused No. 10 on the date of his arrest shows that he had four injuries on his person, the certificate in regard to, which is exhibit 174. Injuries Nos. 1 and 2 were interrupted abrasions which in the opinion of Dr. Salunke could be caused by teeth bite. That fits in with 'the part played by accused No. 10, who according to Umaji 's evidence, had held Haribai from behind by her waist. Evidently, Haribai strug gled to release herself in a frantic attempt to save her life she caused the injuries to accused No. 10. We agree with the view taken by both the Courts that the discovery of the blood stained axe handle, the seizure of clothes stained with 'A ' group blood and the teeth bite injuries afford adequate corroboration to Umaji 's evidence regarding the part played by accused No. 10, in the murder of Haribai. As regards accused No. 11, an axe blade (article. 167) was recovered in consequence of information supplied by him. The Panchanama, exhibit 84 A, and the evidence of the Panch Mohd. Yusuf Bade Khan. (P.W. 10) show that accused No.11 led the police party and the panchas to a water tap in the Pardhi Wada locality and dug out the axe blade which was lying buried under a stone. The report of the Serologist, exhibit 269, shows that human blood of 'A ' group ' was detected on the axe blade. Taramati, according to Umaji 's evidence, was assaulted with an axe by accused No. 11. Her clothes, articles 142 and 143, were found to be stained with human blood of 'A ' group. We see no infirmity in the Pancha 's evidence and no substance in the counsel 's contention that the discovery of the axe blade was foisted on the accused. 655 The discovery of the axe blade stained with human blood of 'A ' group sufficiently corroborates the evidence of Umaji as regards the part played by accused No. 11 in Taramati 's murder. Before considering the case of accused No. 12, we would like to point out that there is satisfactory evidence to show the presence of accused Nos. 9 to 11 at or near the scene of offence some time before the incident. Dagdu (P.W. 5), Bhanudas (P.W. 14), Sitaram (P.W. 16), Narayan (P.W. 17), Baliram (P.W. 18) and Santram (P.W. 24) have deposed about the same either in regard to all of these accused or some of them. Their evidence has been examined with gear care by the learned Sessions Judge and we agree with his assessment that except for Sant Ram, the other witnesses can be relied up.on for affording corroboration to Umaji 's evidence. That leaves the case of accused No. 12 for considera tion. It is alleged that he held Taramati from behind whereupon accused No. 11 gave axe blows on her head. Tara mati was just a girl of 9 and the allegation that accused No. 12 had to hold her from behind to enable accused No. 11 to assault her with an axe sounds inherently incredible. 1t is significant that some time before the occurrence, Umaji met accused Nos. 9,10 and 11 near the scene of offence but not accused No. 12. The importance of this circumstance is twofold: Firstly that accused No. 12 was not in the company of the other three at or about the time of the incident and secondly that Umaji 's identification of the person who held Taramati, namely accused No. 12, becomes somewhat infirm. There was standing crop about five feet high between the Mala where Umaji was standing and the place where Taramati was held. Besides, the spot where Taramati was done to death was in a depression, which would further affect the witness 's ability to. identify the person who. had held Taramati. After all, Umaji had but a fleeting glimpse of the incident and the chance of an error in identifying accused No. 12, who w.as not seen earlier in the company of accused Nos. 9 to 11, cannot fairly be excluded. All the same, since Umaji has no particular reason to implicate accused No. 12 falsely and since the Courts below have concurrently accepted his evidence in regard to accused No. 12 also, we must examine carefully the strenuous submission made by Mr. Desai for the State that even as regards accused No. 12, Umaji 's evidence is sufficiently corroborated. That corroboration consists of the discovery of. an axe handle, article 168, from the house of accused No. 12 on January 17 1974. The Panchanama of recovery is exhibit 85 A which is proved by the Panch Mohd. Yusuf Bade Khan, P.W. 10. It is alleged that the axe handle was produced by accused No. 12 from below the tin sheet roof of his house in Pardhi Wada. The report of the serologist, exhibit 269, says that there was human blood of 'A ' group on the axehandle. We find it impossible to place any. reliance on the discovery of the axe handle for the following reasons: Though accused No. 12 was 656 arrested on January 11, 1974 his house was searched on January 7, 1974 in connection with the murders of Haribai and her daughters which had taken place on January 4, 1974. That search is borne out by the Panchanama, exhibit 221. On January 6, 1974 accused No. 12 figured in an identifica tion parade which was arranged in order to ascertain if the Dog squad could afford assistance in fixing the identity of the culprits. The evidence of the Senior Dog Master, Ram chandra (P.W. 52), shows that a female dog called Mala sniffed her suspicion at accused No. 12. With the clue provided by the Dog Squad on the 6th, the house of accused No. 12 was searched on the 7th. That house consists of one room only. The Panchanama shows that the axe handle was not in any manner concealed under the tin sheet. It was lying openly, visible to the naked eye, so that he who cared could easily see it. It is then strange that it was not found on the 7th itself. There is also a serious dis crepancy in the evidence of the two Panehas, Mohd. Yusuf, P.W. 10, and Sheikh Imam, P.W. 11, regarding the discovery. Whereas according to the former, accused No. 12 said that he had concealed the axe,handle below the tin sheet of the roof, according to the latter the information which accused No. 12 gave was that he had kept the handle below a stone inside his house. Coupled with the circumstance which emerges from the evidence of Panch Sheikh Imam that there is no door to the room from which the axe handle was pro duced, the evidence in regard to. the recovery of the axe handle becomes manifestly suspect. These infirmities in the recovery of the axe handle failed to evoke the attention of the High Court. The Sessions Court too missed their impact on the point at issue. The seizure of a blood stained ' Dhoti from the person of accused No. 12 at the time of h,is arrest, even if the blood belonged to 'A ' group, is not of a kind which, in the context of the various circumstances referred to above, can be accepted as safely of sufficiently corroborative of Umaji 's evidence. This is particularly so because, at the very threshold, it is doubtful if Umaji could identify accused No. 12. The evidence regarding the presence of accused No. 12 in the fields roundabout the scene of offence on the after noon of the day of incident cannot connect him with the crime. And the retracted confession of the accused, like its counterparts, has to be excluded from consideration altogether because of the cavalier fashion in which the Sub Divisional Magistrate recorded the various confessions. Accused No. 12 is thus entitled to an acquittal for the reason that the prosecution has failed to prove its case against him beyond a reasonable doubt. Learned counsel for accused Nos. 3, 9, 10 and 11 whose conviction under section 302 read with section 34 has been affirmed by us and who stand sentenced to death, contend that the ac cused were not heard on the question of sentence and there fore the sentence is not according to law. It is urged that we should remand the appeal of accused Nos. 9, 10 and 11 to the High Court which sentenced them to death, 657 and accused No. 3 's appeal to the Sessions Court which sentenced him to death, in order to enable these accused to make their contentions as to why they should not be sen tenced to death even though they have been convicted under section 302 of the Penal Code. In support of this argument reliance is placed on a decision of this Court in Santa Singh vs State of Punjab(1). In Santa Singh(1), the Sessions Judge, after pronouncing the judgment convicting the appellant for a double murder, did not give him opportunity to be heard on the question of sentence. He pronounced the appellant guilty of murder and, as a part of a single judgment, imposed the sentence of death. The High Court confirmed the conviction and the sentence of death. In appeal, it was held by this Court (Bhagwati and Fazal Ali, JJ) that the provisions of section 235 of the Code of Criminal Procedure, 1973, which are clear and explicit, require that the Court must in the first instance deliver a judgment of acquitting the accused and if the accused be convicted, he must be given an opportunity to be heard in regard to the sentence. Holding that the provi sions of section 235 are mandatory in character, the Court set aside the sentence of death and remanded the case to. the Sessions Court with the direction that it should pass an appropriate sentence after giving to the appellant an oppor tunity to be heard on the question of sentence. Section 235 of the Criminal Procedure Code, 1973 reads thus: "235(1) After heating arguments and points of law (if any), the Judge shall give a judgment in the case. If the accused is convicted, the Judge shall, unless he proceeds in accordance with the provisions of Section 360, hear the accused on the question of sentence, and then pass sentence on him according to law. " The imperative language of sub section (2) leaves No. room for doubt that after recording the finding of guilt and the order of conviction, the Court is under an obligation to hear the accused on the question of sentence unless it releases him on probation of good conduct or after admo nition under section 360. The right to be heard on the question of sentence has a beneficial purpose, for a variety of facts and considerations bearing on the sentence can, in the exercise of that right, be placed before the Court which the accused, prior to the enactment of the Code of 1973, had No. opportunity to do. The social compulsions, the pressure of poverty, the retributive instinct to seek an extra legal remedy to a sense of being wronged, the lack of means to be educated in the difficult art of an honest living, the parentage, the heredity all these and similar other con siderations can, hopefully and legitimately, tilt the scales on the propriety of sentence. The mandate of section 235(2) must, therefore, be obeyed in its letter and spirit. (1) 658 But we are unable to read the judgment in Santa Singh (supra) as laying down that the failure on the part of the Court, which convicts an accused, to 'hear him on the ques tion of sentence must necessarily entail a remand to that Court in order to afford to the accused an opportunity to. be heard on the question of sentence. The Court, on con victing an accused, must unquestionably hear him on the question of sentence. But if, for any reason, it omits to do so and the accused makes a grievance of it in the higher court, it would be open to that Court to remedy the breach by giving a hearing to the accused on the question of sen tence. That opportunity has to be real and effective, which means that the accused must be permitted to adduce before the Court all the data which he desires to adduce on the question of sentence. The accused may exercise that right either by instructing his counsel to make oral submissions to the Court or he may, on affidavit or otherwise, place in writing before the Court whatever he desires to place before it on the question of sentence. The Court may, in appropri ate cases, have to adjourn the matter in order to give to the accused sufficient time to produce the necessary data and to make his contentions on the question of sentence. That, perhaps, must inevitably happen where the conviction is recorded for the first time by a higher court. Bhagwati J. has observed in his judgment that care ought to be taken to ensure that the opportunity of a hearing on the question of sentence is not abused and turned into an instrument for unduly protracting the proceedings. The material on which the accused proposes to rely may there fore, according to the learned Judge, be placed before the Court by means of an affidavit. Fazal Ali, J., also ob serves that the courts must be vigilant to exercise proper control over their proceedings, that the accused must not be permitted to adopt dilatory tactics under the cover of the new right and that what section 235(2) contemplates is a short and simple opportunity to place the necessary material before the Court. These observations show that for a proper and effective implementation of the provision contained in section 235(2), it is not always necessary to remand the matter to the court which has recorded the conviction. The fact that in Santa Singh (supra) this Court remanded the matter to the Sessions Court does not spell out ratio of the judgment to be that in every such case there has to be a remand. Remand is an exception, not the rule, and ought therefore to be avoided as far as possible in the interests of expeditious, though fair disposal of cases. After counsel for accused Nos. 3, 9, 10 and 11 raised an objection before us that the sentence of death was imposed upon the accused without hearing them as required by section 235(2) of the code, we granted to them liberty to produce before us such material as they desired and to make such contentions as they thought necessary on the question of sentence. Accordingly, counsel made their oral submissions before us on the question of sentence and they also flied the relevant material before us showing why we should not uphold the death sentence imposed on the accused. 659 That takes us to the question of sentence. For the offence under section 302, it is no longer obligatory to impose the sentence of death. Prior to the amendment of section 367(5) of the Code of Criminal Procedure, 1898 by Act 26 of 1955, the normal sentence for murder was death and the Court had to record its reasons for imposing the lesser sentence of life imprisonment. The obligation to record reasons for imposing the lesser penalty was deleted by Act 26 of 1955, so that Courts became free to award either the sentence of life imprisonment or the sentence of death, depending on the circumstances of each individual case. Section 354(3) of the Code of 1973 provides that when the conviction is for an offence punishable with death or, in the alternative, with imprisonment for life or imprisonment for a term of years, the judgment shall state the reasons for the sentence award ed, and in the case of sentence of death, the special rea sons for awarding that sentence. The legislative history of the sentencing provisions and the explicit language of section 354(3) show that capital punishment can be awarded for the offence of murder, only if there are special reasons for doing so. All murders are inhuman, some only more so than others. Having considered the matter in all its aspects penal, juristic and sociological and having given our most anxious consideration to the problem, we are of the opinion that accused Nos. 3, 9, 10 and 11 deserve the extreme penalty of law and that there is no justification for interfering with the sentence of death imposed upon them. Accused No. 3 put an end to four innocent lives, three small girls ten years of age and a woman in her thirties. Accused Nos. 10 and 11 committed the murders of Haribai, her nine year old daughter and her infant child. The victims had given no cause for the ' atrocities perpetrated on them. They were killed as a child kills flies. And the brutality accompanying the manner of killing defies an adequate description. The luring of small girls, the gagging, the cutting of their private parts, the ruthless defiling in order to prevent identification of the victims and the mysterious motive for the murders call for but one sentence. Nothing short of the death sentence can atone for such callous and calculated transgression of law. Morbid pity can have no place in the assessment of murders which, in many respects. will remain unparalleled in the annals of crime. Accordingly, we confirm the death sentence imposed on accused Nos. 3, 9, 10 and 11. The overall result is as follows: (1 ) We uphold the acquittal of accused Nos. 1 and 2 and dismiss Criminal Appeal No. 441 of 1976 filed by the State of Maharashtra. Both the two Accused who are in jail shall be released. (2) We uphold the conviction of ac cused No. 3 under section 302 read with section 34 of the Penal Code and the sentence Of death imposed upon him. Criminal Appeal No. 1438 of 1976 filed by him is accordingly dismissed (3) We uphold the conviction of accused Nos. 9, 10 and 11 under section 302 read with section 34 of the Penal Code and 3 707SCI/77 660 the sentence of death imposed upon them. We acquit accused No 12 by giving him the benefit of doubt and direct that he shall be released. Criminal Appeal No.437 of 1976 filed by ac cused Nos. 9 to 12 thus succeeds partly in so far as accused No. 12 is concerned and fails in so far as accused Nos. 9, 10 and 11 are concerned. Before concluding, we would like to make a few observa tions concerning the detection and investigation of these crimes. It is a matter of grave concern that the police were not able to obtain any clue whatsoever to the numerous murders which were committed so systematically in the small village of Manwat. The spate of those atrocities commenced with the murder of Gayabai on November 14, 1972 and ended with the murders of Haribai and her two daughters on January 4,, 1974. All along, a strong patrol of policemen was keep ing vigil in the very locality in which most of the murders were committed. The evidence of Dy. S.P. Waghmare shows that apart from the mobile police, fixed post patrols were deputed to keep a close watch on the activities of all and sundry in the area which was chosen by the murderers for their criminal activities. Haribai and her daughters were murdered under the very nose of the policemen. Quite a few of them were on duty a few hundred yards away from the scene of occurrence and yet the culprits could escape with impuni ty. And it is astonishing that when the three dead bodies were lying in close proximity, the police with their trained hawk sight could see only one. All this hardly does any credit to the efficiency and watchfulness of a system which in Maharashtra has won many encomiums. Eventually Provi dence, and perhaps the police, persuaded Samindrabhai Pawar, accused No. 4, to make a confessional statement on December 28, 1973 and the wheels of a baffled machine started moving fast. It would perhaps have been more conducive to greater efficiency if an unduly large number of senior police offi cers were not commissioned for the investigational work. No one seems to have assumed an overall responsibility for investigation and so many of them working together spoiled the broth like so many cooks. It is plain common sense that suspects are seldom will ing to furnish a quick and correct clue to the crimes for which they are arrested. A certain amount of coaxing and promising has inevitably to be done in order to persuade the accused to disclose at least the outlines of the crime. But the use of strong methods of investigation, apart from raising problems concerning the observance of decency in public affairs and of human dignity, is fraught with the danger that the very process by which evidence is collected may become suspect and fail to inspire confidence. Ganpat, the approver, was driven to admit that he was tortured while in the lock up and we have serious doubts whether the injury caused on his head was, as alleged by the police, self inflicted. A witness called Ramchandra also admitted that while under interrotation the police pulled out his pig tail We have resisted the failing which tempts even judicially trained minds to revolt against such methods and throw the entire case out of hand. But we must with hopes for the future, utter a word of warning that just as crime does not pay 661 so shall it not pay to resort to torture of suspects and witnesses during the course of investigation. History shows that misuse of authority is a common human failing and, therefore, Courts must guard against all excesses. The police, with their wide powers, are apt to overstep their zeal to detect crimes and are tempted to use the strong arm against those who happen to fall under their secluded juris diction. That tendency and that temptation must, in the larger interests of justice, be nipped in the bud. GOSWAMI, J. I am in agreement with the judgment proposed by my brother Chandrachud which is a piece of conspicuous clarity after marshalling and compressing a mass of evi dence. I also agree with the views expressed therein on the legal questions raised in these appeals. Even so I feel obliged to add a few lines. I would particularly emphasise that there is no mandatory direction for remanding any case in Santa Singh vs The State of Punjab(1) nor is remand the inevitable recipe of section 235(2) Code of Criminal Procedure, 1973. Whenever an appeal court finds that the mandate of section 235(2) Cr. P.C. for a heating on sentence had not been complied with, it, at once, becomes the duty of the appeal court to offer to the accused an adequate opportunity to produce before it whatev er materials he chooses in whatever reasonable way possible. Courts should avoid laws ' delay and necessarily inconsequen tial remands when the accused can secure full benefit of section 235(2) Cr. P.C. even in the appeal court, in the High Court or even in this Court. We have unanimously adopted this very course in these appeals. Treasure trove legend survives generations. There had been many casualties in honest exploits to the peaks of gold bars. Gold was not found So was treasure trove not located in spite of the notorious Manwat murders. The gruesome story revealed in these cases beggars description of the limit of human credulity, horrid avarice and unconcerned and heartless execution of evil ends. I am not on that. The final curtain, so far as legal process goes is drawn. Conviction in these cases does no credit to the police, nor to the hoodwinking demonstration of flashy 'dog squad '. Murders committed. one 'after the other in series, under the very nose of a publicised ring of a camping platoon of police personnel widely cordoning the entire scene of occur rence for months with check posts, for recording names of passers by, may secure banner in newspapers, but no laurels for the police. But for the blazing lust for life of the confessing approvers supplying the infrastructure for the prosecution case which, we find, is corroborated in material particulars by independent testimony so far as some of the appellants are concerned, there is much more to be. desired in an investigation of such awe inspiring cases. The archaic attempt to. secure confessions by hook or by crook seems to be the be all and end all of the (1) 662 police investigation. The investigation does not reflect any imaginative drive on the part of the police in a crime of this magnitude. To mention one item only, even Balabhau Lad, a close neighbouring relative of the deceased Haribai and master of Umaji, the star witness against accused 9 to 12, has not been produced in this case to corroborate the sudden and instant disappearance of Umaji for four days from the very scene of murder, being his master 's field, by leaving his horse tethered therein. Next having got blood stains in the articles produced by the accused there was no attempt to ascertain the blood group of the accused 's family members. In fact accused No. 9 did tell the court that the blood stains in the exhibit were from his wife 's injury from the axe. Again, accused No. 10 said that the blood stains on the exhibited clothes were from his child 's bleeding nose. We have disbelieved the pleas of the accused but that does not redound to the credit of the quality of the investiga tion of these dastardly crimes. It is distressing that when three murders took place on the 4th of January, 1974, and all the dead bodies were lying at the same field, only one dead body was located and the other two. were not traced until next morning. If the murderers could escape from the barricaded area in broad day light by throwing dust in the eyes of the police, what would have happened if the other two dead bodies were removed during the night beyond trace; ? Is this investigation with a 'dog squad ' at command ? A dog is its master 's voice. Did the police play the true master ? The police. should remember that confession may not always be a short cut to solution. Instead of trying to "start" from a confession they should strive to "arrive" at it. Else, when they are busy on this short route to suc cess, good evidence may disappear due to inattention to the real clues. Once a confession is obtained, there is often flagging of zeal for a full and thorough investigation with a view to establish the case de hors the confession. It is often a sad experience to find that on the confession, later, being inadmissible for one reason or other the case founders in court. It is an irony that a Sub Divisional Magistrate holding executive charge of a Sub Division was completely ignorant of the duties imposed on him under section 164, Code of Criminal Procedure and we had to reject the confessions. Under the new Code such powers are exercised by a Metropoli tan or Judicial Magistrate. The pitfalls in recording confession may be so. disastrous that it may be of immense value for the Magistrates to have some practical guidance from superior officers for properly discharging their func tion under section 164, Cr. Even after conclusion of the trial in a heinous case of this magnitude, the police should be well advised to pursue clues and for missing links to unearth 'the yet undiscovered guilty ones and should not rest satisfied with 'the result of these cases. There is yet room for a wider probe into men and matters in connection with these ghastly crimes. 663 Counsel drew our attention to a very disquieting fea ture in the attempt of the police to see that the accused did not get the assistance of the local Bar. The suggestion has of course been denied by the police officer. If there is any truth in this unholy move for denying proper defence to the accused, no matter how heinous the offence, it is highly obnoxious to the notions of fair play and all that justice stands for. Such ideas should be banished. I hasten to add that the accused before us could not have been better defended as has been done by the three conscientious young counsel who impressed us with their industry and ability.
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A woman, called Accused No. 1, was in her thirties but had gone through menopause early. She wanted to have a child, but that could only happen if her period started again. She went to fake doctors and witch doctors for help. Accused No. 1's mother was said to have a sixth sense for finding hidden treasure. She claimed that treasure was buried under a Pimpal tree in Accused No. 1's yard. People believed that a spirit of an unmarried Brahmin boy, called Munjaba, lived in the Pimpal tree. Accused Nos. 1 and 2 went to fake doctors. These doctors said that young virgin girls should be sacrificed to Munjaba. To please the spirit, they said that blood from the girls' private parts should be sprinkled on the food offering. Five young girls around 10 years old, a one-year-old baby, and four women in their thirties were found murdered in a village called Manawat between November 14, 1972, and January 4, 1974. The murders of these 10 females were very similar. The crimes happened at the same time and place. The victims were always females. The injuries were alike. In some cases, it seemed like the killers cut the private parts of the victims to get blood. There was no clear reason to kill these girls and women. The killers tried to trick the police. The crimes were very brutal, making the case seem strange. Eighteen people were put on trial for the 10 murders. Two of them were offered a pardon (forgiveness) and testified in the case. Accused No. 6 died during the trial. The trial judge found accused 4, 5, 7, 8, and 13 to 16 not guilty. Accused Nos. 1 and 2 were found guilty of murder along with conspiracy (planning a crime together). Accused Nos. 1, 2, and 3 were sentenced to death. Accused Nos. 9 to 12 were sentenced to life in prison. The case was brought to the High Court in different ways. The High Court found accused Nos. 1 and 2 not guilty. They said there was not enough proof that they had planned the crime. Since the conspiracy charge failed and because accused Nos. 1 and 2 did not directly commit the murders, the High Court said they should be found not guilty of all charges. The High Court rejected the appeal by accused No. 3. They said he was responsible for the first 4 murders. They agreed with his murder conviction and death sentence. The High Court rejected the state's appeal against the not-guilty verdict for accused Nos. 4 and 5. But they allowed the state's appeal and changed the sentence of accused Nos. 9 to 12 to death. Accused Nos. 9 to 12 filed Criminal Appeal No. 437 of 1976. Accused No. 3 filed Criminal Appeal No. 438 of 1976. The State of Maharashtra filed Criminal Appeal No. 441 of 1976 against the not-guilty verdict for accused Nos. 1 and 2. The Court found accused No. 12 not guilty because there was some doubt. The court rejected the three appeals. HELD: (1) Section 133 and example (b) of section 114 of the Evidence Act do not disagree. The example says that the Court can assume something is true under section 114 of the Evidence Act. The Court can assume any fact is true if it seems likely, based on how things usually happen, how people act, and how business is done. Under section 133 of the Evidence Act, someone who helped with the crime (an accomplice) can testify against the accused. A guilty verdict is not wrong just because it is based on the unproven testimony of an accomplice. (2) An accomplice can testify, and a guilty verdict can be based on their unproven testimony. But, the court can assume that the accomplice's testimony is not reliable unless other evidence supports it. This other evidence must connect the accused to the crime. (3) It is risky to base a decision on the evidence of someone who admits to being a criminal. It is very dangerous to convict someone based on the testimony of an accomplice unless there is supporting evidence. Because of this danger, what was once seen as a careful approach has become a requirement of law. The law does not say that a guilty verdict is wrong if it is based on the unproven testimony of an accomplice. But, the judge must be aware of the need for supporting evidence. The judge can only ignore the need for supporting evidence if the specific facts of the case make it safe to do so. (4) An accomplice has a reason to tell the truth after being offered a pardon. But, if their earlier statements do not match their later statements, their evidence should not be considered. It is one thing to say that an accomplice's statement cannot be ignored just because they did not tell the whole story to the police. It is another thing to accept an accomplice's statement even if there are contradictions that create doubt about whether they are telling the truth about others. (5) If the rules in section 164(3) of the Criminal Procedure Code and the High Court's instructions are not followed, it does not mean that the confessions cannot be used as evidence. Whether evidence is relevant and can be used is decided by the Evidence Act. (6) Under section 29 of the Evidence Act, a confession is not irrelevant just because the accused was not warned that they did not have to make it and that it could be used against them. If a confession does not break any of the rules in sections 24 to 28 of the Evidence Act, it can be used as evidence. But, like any other evidence (written or spoken), the Court must decide if the confession is true. If the facts suggest that the confession is not truthful or voluntary, the Court can refuse to use the confession, even if it is allowed as evidence. (7) Following section 164 of the Code and the High Court's instructions closely helps to make sure that the confession is voluntary. If these rules are not followed, it can make the confession less valuable as evidence. In this case, none of the confessions can be trusted. Besides the confessions of the two accomplices who were offered a pardon, all the others were taken back, which makes them even less valuable as evidence. (8) The language of subsection (2) makes it clear that after finding someone guilty, the Court must hear the accused about their sentence. The Court does not have to do this if the accused is released on probation (being watched) or after a warning under section 360. Social pressures, poverty, a desire for revenge, a lack of education, family background - all of these things can affect the decision about the sentence. The rules in section 235 (2) must be followed exactly. (9) If the Court convicts someone but does not hear them about their sentence, it does not always mean that the case must be sent back to that Court. The purpose of sending it back would be to give the accused a chance to be heard about their sentence. (10) The Court must hear the accused about their sentence. But, if the Court does not do so and the accused complains in a higher court, that court can fix the problem by hearing the accused about their sentence. This hearing must be real and effective. The accused must be allowed to present all the information they want to about the sentence. The accused can do this by having their lawyer make arguments or by giving the Court a written statement. The Court may need to delay the matter to give the accused time to gather information and make their arguments about the sentence. To properly follow the rules in section 235(2), it is not always necessary to send the case back to the Court that made the conviction. Sending the case back is the exception, not the rule, and should be avoided whenever possible to handle cases quickly and fairly. GOSWAMI, I. (Agreeing): Whenever an appeal court finds that the rule in section 235(2) of the Criminal Procedure Code about hearing on sentence has not been followed, the Court must give the accused a chance to present any information they want in any reasonable way. Courts should avoid sending cases back whenever possible if the accused can get the full benefit of section 235 (2) of the Criminal Procedure Code in the appeal court.
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A. Nos. 437 & 438 of 1976. (Appeals by Special Leave from the Judgment and Order dated the 8/9/10 3 1976 of the Bombay High Court in Crl. A. No. 441 of 1976. 18 of 1976). A. Nos. A. A. No. The time and place chosen for the crimes, the preference for females as victims, the nature of injuries caused to them, the strange possibility that the private parts ' of some of the victims were cut in order to extract blood, the total absence of motive for killing these very girls and women, the clever attempt to dodge the police and then to put them on a false scent and the extreme bru tality surrounding the crimes give to the case an eerie appearance. 437 of 1976 is flied by accused Nos. 438 of 1976 by accused No. 1 and 2. Two out of these, Ganpat Bhagoji Salve and Shankar Gyanoba Kate were tendered pardon by the learned Judge and were examined in the case as approvers. Accused Nos. 4, 5, 7, 8 and 13 to 16. Accused Nos. Accused Nos. Accused Nos. sentence imposed on accused Nos. 1, 2 and 3. 4 and 5. It also filed an appeal under section 377 of the Criminal Procedure Code, 1973 asking that the sentence of life imprisonment imposed on accused Nos. 3 holding that he was responsible for the first four murders and.con firmed his conviction under section 302 read with section 34 as also the sentence of death imposed upon him. The conviction ,and sentence of accused No. 3 under section 302 read with s.120B was set aside by the ' High Court in view of its finding, that the prosecution had failed to establish the charge,of con spiracy. High court dismissed the State 's appeal against the acquittal of accused Nos.4 and 5 but it allowed the appeal flied.by the State for enhancement of the sentence of life imprisonment imposed on accused Nos. 9 to 12. High Court enhanced their sentence to death under section 302 read with 8. 1 and 2; (2) the order of conviction of accused No. 3 under section 302 read with section 34 and the sentence of death imposed upon him by the Sessions Court and the High Court; and (3) the order of conviction of accused Nos. Accused No. He purchased a house for accused No. Accused No. Accused No. Accused No. One of such quacks was Ganpat Salve, the approver, who was examined as: P.W. Shankar, also an approver, was examined in the case as P.W.2. Accused Nos. The first four murders are alleged to have been commit ted by the approver Shankar and accused No. It is said that the blood from the private parts of these victims was offered to Munjaba and yet there was no clue as to where the treasure trove lay. 642 The next two murders are alleged to have been committed by accused Nos. 5 and 6. Accused No. Accused No. The seventh murder is alleged to have been committed by accused Nos. 9 to 12, all at the same time. Accused Nos. That is why accused Nos. 5 and 6, accused No. Accused Nos. of accused Nos. 1 and 2. That application was allowed and they were rearrested on January 4, 1974 when the murders of Haribai, Taramati and Kamal were committed. Accused No. 9 to 11 on January 8, 1974 and accused No. Accused Nos. Accused No. 1 and 2 but the High Court rejected the evidence of Ganpat and accepted that of Shankar only. Before considering that evidence, it would be necessary to state the legal position in regard to the evidence of accomplices and approvers. There is No. Reading the two together the position which emerges is that though an accomplice is a competent witness and though a conviction may lawfully rest upon his uncorroborated testimony, yet the Court is entitled to presume and may indeed be justified in presuming in the generality of cases that no reliance can be placed on the evidence of an accomplice unless that evidence is corrobo rated in material particulars, by which is meant that there has to be some independent evidence tending to incriminate, the particular accused in the commission of the crime. All the same, it is necessary to understand that what has hardened into a rule of law is not that the conviction is illegal if it proceeds upon the uncorroborated testimony of an accomplice but that the rule of corroboration must be present to the mind of the Judge and that corroboration may be dispensed with only it the peculiar circumstances of a case make it safe to dispense with it. The only clarification made by this Court was that in cases tried by a Judge without the aid of a Jury it was necessary that the Judge should give some indication in his judgment that he had this rule of caution in mind and should proceed to give reasons for considering it unnecessary to require corroboration on the facts of the particular case before him and show why he considered it safe to convict without corroboration in the particular case. In Bhuboni Sahu vs The King(a) the Privy Council after noticing section 133 and illustration (b) to section 114 of the Evi dence Act observed that whilst it is not illegal to act on the uncorroborated evidence of an accomplice, it is a rule of prudence so universally followed as to amount almost to a rule of law that it is unsafe to act on the evidence of an accomplice unless it is corroborated in material respects so as to implicate the accused; and further that the evi dence of one accomplice cannot be used to corroborate the evidence of another accomplice. Delivering the judgment of the Judicial Committee, Sir John Beaumont ob served that the danger of acting on accomplice evidence is not merely that the accomplice is on his own admission a man of bad character who took part in the offence and afterwards to save himself betrayed his former associates, and who has placed himself in a position in which he can hardly fail to have a strong bias in favour of the prosecution the real danger is that he is telling a story which in its general outline is true, and it is easy for him to work into the story matter which is untrue. This Court has in a series of cases expressed the same view as regards accomplice evidence. The evidence is of a tainted character and as such is very weak; but, nevertheless, it is evidence and may be acted upon, subject to the requirement which has now become virtually a part of the law that it is corroborated in material particulars. Accused No. It is hardly likely that a person in his position would readily gulp the fantastic process prescribed by Ganpat for discov ering the treasure trove Ganpat was interrogated by the police for nearly a month and a half after his arrest at Baramati and it was only at the end of that trying period that he trotted out some story (1) ; (2) ; (3) ; (4) ; 646 to save his skin. It is one thing to say as was said in Madan Mohan Lal vs State of Punjab(1) that an approver 's statement cannot be discarded for the mere reason that he did not disclose the entire story in his police statement and quite another to accept an approver in spite of contra dictions which cast a veil of doubt over his involvement of others. Impressed by that circumstance, the Sessions Court and the High Court concluded that he is a reliable witness, but they took the view that the conviction of accused Nos. It is therefore necessary to see whether the evidence of Shankar in regard to the implication of accused Nos. I and 2 is corroborated by some independent evidence. He also did not say to the police that accused No. Neither to the police nor in his state ment recorded under section 164 of the Code of Criminal Procedure did he say that he had gone to accused No.1 's house on the morning following the first murder and that She had told him that since the treasure trove was not found another murder should be committed. 1 and 2, but they are of such a nature that the story told by Shankar to the police and under section 164 of the Code of Criminal Proce dure, cannot sensibly stand along with what he told the Court in regard to the part played by accused Nos. 1 and 2. We see nothing in the evidence of these witnesses which can lend corroboration to the approver 's story, that accused Nos. 20, 21 and 51 of any assistance in the matter of corroboration. 1 and 2. One of the strongest arguments made by Mr. Desai on behalf of the State was that accused Nos. There is also no evidence at all to show that any attempt was made by accused Nos. 1 and 2 with the crime is the confes sion, exhibit 108, made by accused No. The acquittal of accused Nos. The allegation against him is that he and the approver Shankar committed the murder of Gayabai on November 14, 1972, of Shakila on December 9, 1972, of Sugandhabai on February 21, 1973 and of Nasima on April 13, 1973. 1) and Shankar (P.W.2), the discovery of article 17 by accused No. In regard to Shankar 's evidence we have taken the view that though he is 649 a reliable witness, his evidence cannot be acted upon unless it is corroborated in material particulars. Shankar and accused No. 1 and 2 will,give to him and accused No.3 a share in the treasure trove. Accused No. Accused No. Accused No. The first circumstance which is said to corroborate the evidence of the approver is the discovery of 27 pieces of shirt, which are collectively marked as article 17. The evidence in regard to the discovery is accepted as unexcep tionable by the Sessions Court as well as the High Court 650 and we are unable to characterise that view of the matter as preverse or against the weight of evidence. 3, which is exhibit 106. While on this question, we would like to deal with all the confessional statements recorded in the case so that it will not be necessary to revert to. As many as eight confessions were recorded in the case, the confessing accused, apart from the two approvers, being accused Nos. 1, 3, 4, 5, 6, and 12. which the. relevant it does not become irrelevant merely because, inter alia, the accused was not warned that he was not bound to make it and the evidence of it might be given against him. 652 Considering the circumstances leading to the procession al recording of the eight confessions and the abject disre gard, by the Magistrate, of the provisions contained in section 164 of the Code and of the instructions issued by the High Court, we are of the opinion that no reliance can be placed on any of the confessions. Since the evidence of the approver Shankar is corrobo rated in material particulars by the discovery of article 17, there is no valid reason for departing from the concur rent view of the High Court and the Sessions Court that the complicity of accused No. 3 under section 302 read with section 34 of the Penal Code only. The evidence against accused Nos. 10; (4) The evidence in regard to the movements of the accused at or about the time when the murders were committed and (5) the confession of accused N6. On January 4, 1974 while he was on his way to one of the lands of his master, he first met accused No. 10 and then accused Nos. At about the same time, he saw Haribai carrying her infant child in her arms, and a basket of food on her head. Umaji 's evidence having been concurrently accepted by the Sessions Court and the High Court, we do. In regard to accused No. 9, there are two circumstances which afford reliable corroboration to Umaji 's evidence. On January 11, 1974 accused No. 9 made a statement leading to the discovery of an axe blade, article 160, from his house. It shows that accused No. Accused No. 9 admitted in his examination that he had produced the axe blade and that it was stained with blood but he sought to explain the blood stains by saying that his wife had sustained an injury while hewing wood with the axe. The report of the serologist, Ex.267, shows that there was human blood on the axe but the group of, the blood could not be determined. It is not possible to accept the submission of Mr. Narayan that the axe handle was recov ered from a place which was easily accessible to the public because the handle was taken out after making quite some efforts to locate it. Accused No. On January 8, 1974 when accused No. Accused No. 10 admitted in his examination that the shirt and the dhoti were blood stained but he offered an unconvincing explanation that a child of his had bled from the nose, The evidence of Dr. Salunke (P.W. 10 on the date of his arrest shows that he had four injuries on his person, the certificate in regard to, which is exhibit 174. We agree with the view taken by both the Courts that the discovery of the blood stained axe handle, the seizure of clothes stained with 'A ' group blood and the teeth bite injuries afford adequate corroboration to Umaji 's evidence regarding the part played by accused No. The report of the Serologist, exhibit 269, shows that human blood of 'A ' group ' was detected on the axe blade. Taramati, according to Umaji 's evidence, was assaulted with an axe by accused No. 12, we would like to point out that there is satisfactory evidence to show the presence of accused Nos. an axe handle, article 168, from the house of accused No. It is alleged that the axe handle was produced by accused No. 12 was 656 arrested on January 11, 1974 his house was searched on January 7, 1974 in connection with the murders of Haribai and her daughters which had taken place on January 4, 1974. On January 6, 1974 accused No. Coupled with the circumstance which emerges from the evidence of Panch Sheikh Imam that there is no door to the room from which the axe handle was pro duced, the evidence in regard to. 12 at the time of h,is arrest, even if the blood belonged to 'A ' group, is not of a kind which, in the context of the various circumstances referred to above, can be accepted as safely of sufficiently corroborative of Umaji 's evidence. Accused No. 3, 9, 10 and 11 whose conviction under section 302 read with section 34 has been affirmed by us and who stand sentenced to death, contend that the ac cused were not heard on the question of sentence and there fore the sentence is not according to law. It is urged that we should remand the appeal of accused Nos. 9, 10 and 11 to the High Court which sentenced them to death, 657 and accused No. 3 's appeal to the Sessions Court which sentenced him to death, in order to enable these accused to make their contentions as to why they should not be sen tenced to death even though they have been convicted under section 302 of the Penal Code. The High Court confirmed the conviction and the sentence of death. In appeal, it was held by this Court (Bhagwati and Fazal Ali, JJ) that the provisions of section 235 of the Code of Criminal Procedure, 1973, which are clear and explicit, require that the Court must in the first instance deliver a judgment of acquitting the accused and if the accused be convicted, he must be given an opportunity to be heard in regard to the sentence. If the accused is convicted, the Judge shall, unless he proceeds in accordance with the provisions of Section 360, hear the accused on the question of sentence, and then pass sentence on him according to law. " The right to be heard on the question of sentence has a beneficial purpose, for a variety of facts and considerations bearing on the sentence can, in the exercise of that right, be placed before the Court which the accused, prior to the enactment of the Code of 1973, had No. (1) 658 But we are unable to read the judgment in Santa Singh (supra) as laying down that the failure on the part of the Court, which convicts an accused, to 'hear him on the ques tion of sentence must necessarily entail a remand to that Court in order to afford to the accused an opportunity to. But if, for any reason, it omits to do so and the accused makes a grievance of it in the higher court, it would be open to that Court to remedy the breach by giving a hearing to the accused on the question of sen tence. The accused may exercise that right either by instructing his counsel to make oral submissions to the Court or he may, on affidavit or otherwise, place in writing before the Court whatever he desires to place before it on the question of sentence. The fact that in Santa Singh (supra) this Court remanded the matter to the Sessions Court does not spell out ratio of the judgment to be that in every such case there has to be a remand. 3, 9, 10 and 11 raised an objection before us that the sentence of death was imposed upon the accused without hearing them as required by section 235(2) of the code, we granted to them liberty to produce before us such material as they desired and to make such contentions as they thought necessary on the question of sentence. Prior to the amendment of section 367(5) of the Code of Criminal Procedure, 1898 by Act 26 of 1955, the normal sentence for murder was death and the Court had to record its reasons for imposing the lesser sentence of life imprisonment. Section 354(3) of the Code of 1973 provides that when the conviction is for an offence punishable with death or, in the alternative, with imprisonment for life or imprisonment for a term of years, the judgment shall state the reasons for the sentence award ed, and in the case of sentence of death, the special rea sons for awarding that sentence. Accused No. Accused Nos. 3, 9, 10 and 11. 3 under section 302 read with section 34 of the Penal Code and the sentence Of death imposed upon him. 9, 10 and 11 under section 302 read with section 34 of the Penal Code and 3 707SCI/77 660 the sentence of death imposed upon them. even in the appeal court, in the High Court or even in this Court. But for the blazing lust for life of the confessing approvers supplying the infrastructure for the prosecution case which, we find, is corroborated in material particulars by independent testimony so far as some of the appellants are concerned, there is much more to be. 9 did tell the court that the blood stains in the exhibit were from his wife 's injury from the axe. The police.
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A woman, called Accused No. Accused No. She claimed that treasure was buried under a Pimpal tree in Accused No. 1's yard. These doctors said that young virgin girls should be sacrificed to Munjaba. The murders of these 10 females were very similar. There was no clear reason to kill these girls and women. Two of them were offered a pardon (forgiveness) and testified in the case. Accused No. The trial judge found accused 4, 5, 7, 8, and 13 to 16 not guilty. 1 and 2 were found guilty of murder along with conspiracy (planning a crime together). 1, 2, and 3 were sentenced to death. The High Court found accused Nos. 1 and 2 not guilty. They said there was not enough proof that they had planned the crime. 1 and 2 did not directly commit the murders, the High Court said they should be found not guilty of all charges. The High Court rejected the appeal by accused No. The High Court rejected the state's appeal against the not-guilty verdict for accused Nos. 4 and 5. But they allowed the state's appeal and changed the sentence of accused Nos. 9 to 12 filed Criminal Appeal No. 437 of 1976. Accused No. 438 of 1976. 441 of 1976 against the not-guilty verdict for accused Nos. 1 and 2. The Court found accused No. 12 not guilty because there was some doubt. The example says that the Court can assume something is true under section 114 of the Evidence Act. Under section 133 of the Evidence Act, someone who helped with the crime (an accomplice) can testify against the accused. A guilty verdict is not wrong just because it is based on the unproven testimony of an accomplice. (2) An accomplice can testify, and a guilty verdict can be based on their unproven testimony. But, the court can assume that the accomplice's testimony is not reliable unless other evidence supports it. (3) It is risky to base a decision on the evidence of someone who admits to being a criminal. The law does not say that a guilty verdict is wrong if it is based on the unproven testimony of an accomplice. But, the judge must be aware of the need for supporting evidence. The judge can only ignore the need for supporting evidence if the specific facts of the case make it safe to do so. It is one thing to say that an accomplice's statement cannot be ignored just because they did not tell the whole story to the police. (5) If the rules in section 164(3) of the Criminal Procedure Code and the High Court's instructions are not followed, it does not mean that the confessions cannot be used as evidence. Whether evidence is relevant and can be used is decided by the Evidence Act. (6) Under section 29 of the Evidence Act, a confession is not irrelevant just because the accused was not warned that they did not have to make it and that it could be used against them. If a confession does not break any of the rules in sections 24 to 28 of the Evidence Act, it can be used as evidence. If the facts suggest that the confession is not truthful or voluntary, the Court can refuse to use the confession, even if it is allowed as evidence. The Court does not have to do this if the accused is released on probation (being watched) or after a warning under section 360. (9) If the Court convicts someone but does not hear them about their sentence, it does not always mean that the case must be sent back to that Court. The purpose of sending it back would be to give the accused a chance to be heard about their sentence. (10) The Court must hear the accused about their sentence. But, if the Court does not do so and the accused complains in a higher court, that court can fix the problem by hearing the accused about their sentence. The accused must be allowed to present all the information they want to about the sentence. The Court may need to delay the matter to give the accused time to gather information and make their arguments about the sentence. To properly follow the rules in section 235(2), it is not always necessary to send the case back to the Court that made the conviction. GOSWAMI, I. (Agreeing): Whenever an appeal court finds that the rule in section 235(2) of the Criminal Procedure Code about hearing on sentence has not been followed, the Court must give the accused a chance to present any information they want in any reasonable way. Courts should avoid sending cases back whenever possible if the accused can get the full benefit of section 235 (2) of the Criminal Procedure Code in the appeal court.
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No. 457 of 1972 (Under Article 32 of the Constitution of India) Soli J. Sorabji, section Rangarajan, Harish N. Salve, D .N. Mukharji, Ranjan Kukherjee, Udey K. Lalit, S.K. Nandi and section Parekh for the Petitioner. Dr. Shankar Ghosh, G.L. Sanghi, P. Chowdhary, C.S. Vaidyanathan, C.V. Subba Rao, for the Respondents. Mrs. A.K. Verma for the Intervener. The following Judgments of the Court were delivered: SABYASACHI MUKHARJI, J. I agree with Brother Venkata chaliah, that the contentions urged on behalf of the peti tioner in support of the challenge to the impugned legisla tions must fail and the writ petitions must be dismissed. I would, however, like to express my 553 views only on one aspect of the matter, which is common to this case as well as the writ petition No. 458/72, civil appeal No 4113/85 and writ petition No. 5(N)/74, i.e. the scope of judicial review of legislation where there is declaration in the legislation under article 31C of the Consti tution. In these writ petitions we are concerned with two legis lations, namely, the Indian Electricity (Assam Amendment Act, 1973, (Assam Act IX of 1973), and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973 (Act X of 1973). The main point which is significant in these writ petitions, is the extent and scope of judicial review of legislation where there is 'declaration under article 31 C of the Constitution, which enjoins that no law giving effect to the policy of the State towards securing all or any of the principles laid down, inter alia, namely, Arti cles 38, 39, 39A, 40, 41, 42, 43A, 44 to 48, 48A and 49 to 51 shall be deemed to be void on the ground that those are inconsistent or take away or abridge any of the rights conferred by Article 14 or 19, and further provides that no law containing a declaration that it is for giving effect to such a policy, shall be called in question in any court on the plea that it does not give effect to such a policy. The two legislations in question are covered by the declaration under Article 31C of the Constitution. The principal question which falls for consideration is, whether that declaration is justiciable and open to judicial review and the extent of that judicial review. Article 39(b) of the Constitution enjoins that the State in particular should direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as to best subserve the common good and that the operation of the economic system does not result in concentration of wealth and means of production to the common detriment. See, in this connection, the observations of Ray J. as the learned Chief Justice then was, in Kesava nanda Bharati vs State of Kerala, at 45 1 452. Hence, in order to decide whether a Statute is within Article 31C, the Court, if necessary, may examine the nature and the character of legislation and the matter dealt with as to whether there is any nexus between the law and the principles mentioned in Article 39(b) and (c). On such an examination if it appears that there is no such nexus be tween the legislation and the objectives and the principles mentioned in Article 39(b) & (c), the legislation will not enjoy the protection of Article 31C. In order to see the real nature of the Statute, if need be, the court may also tear the veil. 554 Justice Jaganmohan Reddy in the same decision at page 530 of the report reiterated that a law not attracting Article 31C cannot be protected by a declaration by just mixing it with other laws really failing within Article 31 C with those that do not fall under that Article. Hence, in such a case the Court will always be competent to examine the true nature and character of the legislation in the particular instance and its design and the primary matter dealt with its object and scope. In this connection, reli ance was placed on the observations of the Privy Council in Charles Russel vs The Queen, [1882] VII AC 829 at 838 840. Justice Palekar in the same decision at page 63 1 also reiterated that if the court comes to the conclusion that the object of the legislation was merely a pretence and the real object was discrimination or something other than the object specified in Article 39(b) and (c), Article 31C would not be attracted and the validity of the Statute would have to be tested independently of Article 31C. Whenever a question is raised that the Parliament or the State legislature have abused their powers and inserted a declaration in a law for not giving effect to securing the Directive Principles specified in Article 39(b) & (c), the court can and must necessarily go into that question and decide. See the observations of Justice Mathew in Kesavanan da Bharati 's case (supra) at page 855 of the report. If the court comes to the conclusion that the declaration was merely a pretence and that the real purpose of the law is the accomplishment of some object other than to give effect to the policy of the State towards securing the Directive Principles as enjoined by Article 39(b) & (c), the declara tion would not debar the court from striking down any provi sion therein which violates Articles 14, 19 or 31. In other words, if a law passed ostensibly to give effect to the policy of the State is, in truth and substance, one for accomplishing an unauthorised object, the Court would be entitled to tear the veil created by the declaration and decide according to the nature of the law. Also see pages 851 & 856 of the report. Justice Beg, as the learned Chief Justice then was, at pages 884 885 of the report reiterated that a colourable piece of legislation with a different object altogether but merely dressed up as a law intended for giving effect to the specified principles would fail to pass the test laid down by the first part, and the declara tion by itself would not preclude a judicial examination of the nexus, so that the courts can still determine whether the law passed is really the one covered by the niche carved out by Article 31C or merely pretends to be so protected by parading under cover of the declaration. Justice Dwived at page 934 of the report said that the Court still retains power to determine whether the law has relevancy to the distribution of the ownership and 555 control of the material resources of the community and to the operation of the economic system. If the Court finds that the law has no such relevancy, it can declare the law void. The declaration cannot be utilised as a clog to pro tect law bearing no relationship with the objectives men tioned in the two clauses of Article 39. With respect, I am inclined to agree with the observa tions of Justice Chandrachud, as the learned Chief Justice then was, at page 996 of the said report that the declara tion under Article 31 C does not exclude the jurisdiction of the Court to determine whether the law is for giving effect to the policy of the State towards securing the principles specified in Article 39(b) & (c). Chief Justice Chandrachud in Minerva Mills Ltd. vs Union of India, ; at 261 observed that the clear intendment of Article 31C is that the power to enquire 'into the question whether there is a direct and reasonable nexus between the provisions of a law and a Directive Principle can not confer upon the courts the power to sit on judgment over the policy itself of the State. At the highest, courts can, under Article 31C, satisfy themselves as to identity of the law in the sense whether it bears a direct and reasona ble nexus with the directive principles. If the court is satisfied as to the existence of such nexus, the inevitable consequence provided for by Article 31C must follow. He recorded that all the 13 Judges in Kesavananda Bharati 's case (supra) agreed. The only question open to judicial review under Article 31 C is whether there is a direct and reasonable nexus between the impugned law and the provisions of Article 39(b) & (c). Reasonableness is evidently regard ing the nexus and not regarding the law. Justice Bhagwati, as the learned Chief Justice then was, reiterated at pages 337 338 of the report that if the Court finds that the law though passed seemingly for giving effect to a Directive Principle is, in pith and substance, one for accomplishing an unauthorised purpose unauthorised in the sense of not being covered by any Directive Principle, such law would not have the protection of the amended Article 31C, which does not give protection to a law which has merely some remote or tenuous connection with a Directive Principle. What is necessary is that there must be a real and substantial connection and the dominant object of the law must be to give effect to the Directive Principles. Also see the observations of this Court in Sanjeev Coke Mfg. Co. vs Bharat Coking Coal Ltd. & Anr., ; at 1020. 556 Looked at from this point of view, it cannot be said that the principles of colourable legislation would not be applicable. If it was demonstrated that there was no direct and reasonable nexus between these two impugned laws and the principles as enshrined under Article 3 l(b) & (c) of the Constitution, then that would have been colourable legisla tions and would have been bad on that score. It was contended on behalf of the petitioner by Mr. Sorabji as well as Mr Rangarajan that in order to bye pass 'the payment of compensation for acquisition of property of the petitioner in negotiations the device of the impugned Acts was envisaged. In that context, the substitution of the book value in place of market value was, therefore, depriva tion of property and is illusory and would amount to taking away of ' property without compensation. I do not and cannot agree. It is indisputed that the electric energy generated by the supplier petitioner compa nies constitutes material resources of the community within the scope and meaning of Article 39(b), and having regard to the true nature and the purpose of the legislations, reading the legislations entirely the object of the legislations have a direct and reasonable nexus with the objective of distributing the material resources so as to subserve the common good. The determination of value thereof and the substitution of the bookvalue in place of market value, are only methods for such acquisition and do not disclose the true nature and character of the legislation, but are inci dental provisions thereof. If that is the position then it is incorrect to say that what was acquired, was not the material resources but choses in action. The true nature and character of the legislations in. question was to acquire the material resources, namely, the electric energy for better supply and distribution. In that view of the matter the principles of the decision of the Division Bench of the Calcutta High Court in Bihar State Electricity Board & Ors. vs Patna Electricitv Supply Co. Ltd., would have no scope of application to this case. A Constitution Bench of this Court in State of Tamil Nadu & Ors. vs L. Abu Kavur Bai & Ors., has expressed the view that the Act giving effect to Article 39(b) & (c) is pro tected if a reasonable nexus is established. In that view of the matter, I agree having regard to the true nature and character of the legislations that the impugned legislations are not colourable legislations in the sense that there was no direct and reasonable nexus with Article 31(b) & (c) of the Constitution. 557 On the other aspects of the matter, I agree with re spect, with the conclusion indicated in the judgment of Justice Venkatachaliah. VENKATACHALIAH, J. 1. In these two writ petitions invok ing Article 32 of the Constitution of India, the Tinsukia Electric Supply Company Limited and the Dibrugarh Electric Supply Company Limited, which are licensees under the 19 10 for the supply of electricity within the areas of the municipal boards of Tinsukhia and Dibrugarh towns respectively, in the. State of Assam and the share holder Managing Directors of the two companies assail the constitutional validity of the Indian Electricity (Assam Amendment) Act, 1973, and of the Tinsukia and Dibrugarh Electric Supply Undertaking (Acquisition) Act, 1973. By the latter enactments, the undertakings of the two companies were sought to be acquired so as to vest them in the Govern ment with effect from 27.9. The petitioners also urge, in the petitions, a challenge to the validity of the Twentyfourth and Twenty fifth Amend ments to the Constitution. This part of the petition, in view of the subsequent pronouncements of this court on these amendments, does not survive. The petitioner companies are Public Limited Companies registered under the Indian Companies Act, 1913, and are existing companies under the with their registered offices at Tinsukhia and Dibrugarh respectively in the State of Assam. The two companies, Tinsukhia Electric Supply Company Ltd., and the Dibrugarh Electric Supply Company Ltd. hereinafter referred to respectively as the 'Tinsukhia Co. ' and 'Dibrugarh Co. ' were granted 'licences under the provisions of the ( 1910 Act for short) for supply of electricity within the respective licenced areas viz. of the Tinsukhia and Dibru garh Municipal Boards. The 'Dibrugarh Company ' was granted the 'Dibrugarh Electricity Licence, 1928 ' on terms and conditions particularised in the grant, incorporating, inter alia, an option to the State to purchase the undertaking on the expiration of 50 years from 13.2.1928 the date of com mencement of the licence and thereafter on the expiration of every subsequent period of twenty years. The Tinsukhia Company was similarly granted the 'Tinsuk hia Electricity Licence, 1954 ', incorporating, inter alia, a condition as to the option exercisable by the State of Assam to purchase the electricity undertaking of the licencee on the expiration of 20 years from 21.7. 1954, the date of commencement of the licence, and thereafter on 558 the expiration of every subsequent decennial period. However, by two Ordinances, namely, The Indian Elec tricity (Assam Amendment) Ordinance, 1972: (Assam Ordinance VII, 1972) and the Tinsukhia & Dibrugarh Electricity Supply Undertakings (Acquisition) ordinance, 1972, (Assam Ordinance VIII of 1972) promulgated by the Governor in exercise of his legislative powers under Article 2 13 of the Constitution, the Electricity Supply Undertakings of the two companies were acquired by, and stood vested in, the Government with effect from 23.30 hrs. on 27.9.1972. Possession and control of the two undertakings were, accordingly, taken over by the Government of Assam that day. The two ordinances were subse quently replaced by the two corresponding legislative enact ments viz., the Indian Electricity (Assam Amendment) Act, 1973, (Assam Act IX, 1973) and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973, (Assam Act, X of 1973). At the time of filing of the writ petitions the two Ordinances had not been replaced by the legislative meas ures. However, after the coming into force of the two legis lative enactments, with retrospective effect from:the date of promulgation of the earlier ordinances, petitioners sought, and were granted by an order of this Court dated 18.12.1973, leave to amend the petitions so as to direct the challenge against the enactments. An advertence, though brief, to the factual anteced ents leading upto to the promulgation of the Ordinances and to certain earlier steps taken by the State Government to acquire the said undertakings, first by negotiations, and later by exercise of the option to purchase, is necessary in order to put the grounds of challenge in their proper per spective. Respondent No. 4 i.e. the Assam State Electricity Board, it would appear, had been expressing its intention to take over the undertaking of the Tinsukia Co. by private negotia tions even from the year 1964. Pursuant to and in implemen tation of this proposal the Board had constituted a commit tee of 3 members for assessing the value of the assets of the Tinsukhia 's undertaking. On the valuation so made and the inventories so prepared, the Board, on 27.3.1970, in formed the Tinsukia Co. that the Board had approved the valuation of the assets of the undertaking at Rs.30,54,246, excluding, the value of the land, whose value was later estimated at Rs.2,40,000. By letter dated 4.3.1971, the Chairman of the Assam State Electricity Board 559 informed Tinsukia Co., that the company should immediately signify and communicate its acceptance of the proposal to transfer the undertaking to the Board at the valuation of Rs.33,00,000. The company, appears to have tarried and did not signify and communicate its immediate and unqualified acceptance of the offer; but appears to have had some coun ter proposal in mind and, in the expectation of pursuading the Board to its view, requested the Chairman of the Board to visit Tinsukia for holding further discussions in the matter of valuation of the Undertaking. Thereafter the Chairman along with the officers of the Board visited Tinsu kia sometime in June, 1971, and held discussion with the company. The company avers that pursuant to these discus sions, the Executive Engineer of the Board was asked by the Chairman to prepare a fresh inventory as on 31.10.1971 in collaboration with the company. However, the Secretary of the Board sent a communication dated 10.12.1971 to the company to the effect that as the company had not conveyed its concurrence to the offer con tained in the Board 's letter dated 25.3.1970 the said offer be treated as withdrawn. Thereafter, the Board issued the notice dated 15/23 May 1972 to the company conveying the Board 's intention to exercise its option of purchasing the undertaking under Section 6(1) of the 1910 Act read with clause 12(iv) of the licence on the expiration "the term of the licence" and, accordingly, required the company to sell the undertaking to the Board on the expiration of 21.9.1974 when the 20 year period of the licence would come to an end. In response to this notice, the company sent its communica tion dated 17.8.1972 seeking confirmation of its expectation that the purchase price for the statutory sale would be determined in accordance with the provisions of section 7A of the 1910 Act and that such price would also be tendered to the company on or before the date of taking over. Nothing further appears to have happened pursuant to this notice to purchase. But, as stated earlier, the two Ordinances were promulgated on 27.9.1972 for the compulsory acquisition of the undertaking of the company. So far as the Dibrugarh company is concerned, similar negotiations for purchase by private negotiations had been initiated and the Chief Engineer of the Board accompanied by the Finance and Accounts Member of the Board visited Dibru garh on 27.1.1965 for discussions as to the valuation of the undertaking. Nothing moved in the matter for some years. However, in the communication dated 3.8.1970 addressed by the Secretary to Government of Assam, Power (Electricity), Mines and Minerals Department, to the Secretary of the 560 Board, it was reiterated that Government had decided that the undertaking of the Dibrugarh Co. should be taken over by negotiation. While matters remained thus, the company 's undertaking was taken over on 27.9.1972 pursuant to the two ordinances promulgated by the Governor. We may briefly turn to the provisions of the two enactments which have since replaced the two Ordinances: The amendments made to Sections 5, 6 and 7A of the , by the Indian Electricity (Assam Amendment) Act, 1973, are substantial and far reach ing. Section 2 of the Amending Act amended Section 5 of the Principal Act by substituting the expression "the purchase price of the undertaking" in sub sec. (2) of Section 5 by the expression 'an amount '. Section 3 of the Amending Act which amended sub Sec. (7) of Section 6 of the Principal Act substituted the words 'the purchase price ' occurring in sub Sec. (7) of Section 6 by the words "an amount". The amendments brought about by Section 4 of the Amending Act to Section 7 A of the Principal Act were equally substantial. Section 7A of the Principal Act, ' it may be recalled, pro vided that where an undertaking of a licensee, not being a local authority, was sold under sub Sec. (1) of Section 5 the purchase price of the undertaking shah be the market value of the undertaking at the time of purchase, or where the undertaking had been delivered before the purchase under sub Sec. (3) of Sec. 5, at the time of delivery of the undertaking, and that if there was any difference of dispute regarding such purchase price, the same shall be determined by arbitration. But Section 4 of the Amending Act substitut ed an entirely different provision in the place of the old section 7 A. It substituted "book value" in place of "mar ket price". Sections 5(2), 6(7) and 7 A, of the Principal Act after their amendment read thus: "Section 5(2): Where an undertaking is sold under sub section (1) the purchaser shall pay to the licencee an amount in accord ance with the provisions of sub sections (1) and (2) of Section 7 A." Sub sec. (7) of Section 6, after the amend ment, reads: Section 6(7): Where an undertaking is purchased under this section, the purchaser shall pay to the license an amount determined in accordance with the provisions of sub sections (1), (2) and (3) of Section 7A. 561 Section 7A reads: "7 A. Determination of amount pay able. (1) where an undertaking of a licensee is sold under sub section (1) of Sec. 5 or purchased under Sec. 6, the amount payable for the undertaking shall be the book value of the undertaking at the time of purchase or where the undertaking has been delivered before the purchase under sub Section (3) of Sec. 5, at the time of delivery of the undertaking. (2) The book value of an undertaking for the purpose of sub section (1) shall be deemed to be the depreciated book value as shown in the audited balance sheet of the licensee under the law for the time being in force, of all lands, buildings, works, materi als and plant of the licensee, suitable to and used by him for the purpose of the undertak ing, other than (i) a generating station declared by the licensee not to form part of the undertaking for the purpose of purchase, and (ii) service lines or other capital works or any part thereof which have been construct ed at the expense of the consumers, but with out any addition in respect of compulsory purchase or of goodwill or any profit which may be or might have been made from the under taking or of any similar consideration. (3) Notwithstanding anything contained in any licence or any instrument, order agreement or law for the time being in force in respect of any additional sum by whatever name may it be called, payable to a licensee for compulsory purchase, the licensee shall be entitled only to a solatium of ten per centum of the book value as determined under sub sections (1) and (2) for compulsory purchase of his undertaking under Sec. (4) No provision of any Act for the time being in force including the other provi sions of this Act and of any rules made there under or of any instrument including licence have effect by virtue of any of such Acts or any rule made thereunder, shall, in so far as it is inconsistent with any of the provisions of this section, have any effect. " It is material to point out that sub section (3) of Section 1 of the Amending Act provides that the Amending Act shall be deemed to 562 have come into force on 27.9.1972, which was the date of promulgation of the earlier Ordinance. We may now notice some of the material provisions of the Acquisition Act i.e. Assam Act X of 1973. Section 1(3) provides that the Act shall be deemed to have come into force on 27.9.1972. Clauses (f), (h), (j) & (l) of the interpretation clause (Sec. 2) may be noticed: 2(f) 'Fixed Assets ' includes works, spare parts, stores, tools, motor and other vehicles, office equipment and furniture; 2(h): 'Licensee ' means the Tinsukia Electric Supply Company Ltd. and/or the Dibrugarh Electric Supply Company Private Ltd., as the case may be; 2(j): 'Undertaking ' means the Tinsukia Elec tric Supply Undertaking owned and managed by the Tinsukia Electric Supply Company Ltd., and/or the Dibrugarh Electric Supply Undertak ing owned and managed by the Dibrugarh Elec tric Supply Company Private Ltd., as the case may be; 2(1): 'Works ' includes electric supply lines and any lands, buildings, machinery or appara tus required to supply energy and to carry into effect the object of a licence granted under the Electricity Act; Section 3(2) provides: 3(2): Any notice given under any of the provisions of the Electricity Act or the Electricity Supply Act to the licensee for the purchase of the undertaking and in pursuance of which notice the undertaking has not been purchased before the commencement of this Act, shall lapse and be of no effect. Explanation: There shall be no obliga tion on the part of the Government or the Board to purchase any undertaking in pursuance of any notice given as aforesaid, nor shall the service of such notice ' be deemed to prevent the Government from taking any pro ceeding de novo in respect of the undertaking under this Act. Section 4 provides: 4. Vesting date. The Tinsukia and Dibrngarh Electric Sup 563 ply Undertakings shall be deemed to be trans ferred to and shall vest in the Government, on the 27th day of September, 1972, at 11.30 P.M. Section 5 provides for the transfer of the undertaking so acquired by Government to the Board. Section 6 provides for the gross amount pay able to the licensee. Gross amount payable to Licensee. (1) The gross amount payable to a licensee shall be the aggregate value of the amounts specified below: (i) the book value of all completed works in beneficial use pertaining to the undertaking and taken over by the Government (excluding works paid for by consumers) less depreciation calculated in accordance with Schedule I; (ii) the book value of all works in progress taken over by the Government, exclud ing works paid for by consumers or prospective consumers; (iii) the book value of all stores including spare parts taken over by the Gov ernment and in the case of used stores and spare parts, if taken over, such sums as may be decided upon by the Government; (iv) the book value of all other fixed assets in use on the vesting date and taken over by the Government less depreciation calculated in accordance with Schedule I; (v) the book value of all plants and equipments existing on the vesting date, if taken over by the Government, but no longer in use owing to wear and tear or to obsolescence, to the extent such value has not been written off in the books of the licensee less depreci ation calculated in accordance with Schedule I; (vi) the amount due from consumers in respect of every hire purchase agreement referred to in Sec. 7(i)(ii) less a sum which bears to the difference between the total amount of the instalments and the original cost of the material or equipment, the same proportion as the amount due bears to the total amount of the instalments; 564 (vii) any amount paid actually by the licensee in respect of every contract referred to in Section 7(i)(iii). Explanation The book value of any fixed asset means its original cost and shall com prise (i) the purchase price paid by the licensee for the asset, including the cost of delivery and all charges properly incurred in erecting and bringing the asset into benefi cial use as shown in the books of the under taking; (ii) the cost of supervision actually incurred but not exceeding fifteen per cent of the amount referred to in paragraph (i); Provided that before deciding the amounts under this subsection, the licensee shall be given an opportunity by the Govern ment of being heard, after giving him a notice of at least 15 days therefor. (2) In addition a sum equal to 10 per cent of the amounts assessed under Clauses (i) to (iv) of sub section (1) shall be paid to the licensee by the Government. (3) When any asset is acquired by the licensee after the expiry of the period to which the latest annual accounts relate, the book value of the asset shall be such as may be decided upon by the Government; Provided that before deciding the book value of any such asset, the licensee shall be given an opportunity by the Government of being heard after giving him a notice of at least 15 days therefor. Section 7 provides: 7. Vesting of undertakings. (1) The property, rights, liabilities and obligations specified below in respect of the undertaking shall vest in the Government of the vesting date; (i) all the fixed assets of the licensee and all the documents relating to the under taking; 565 (ii) all the rights, liabilities, and obligations of the licensee under hire pur chase agreements, if any, for the supply of materials or equipment made bona fide before the vesting date; (iii) all the rights, liabilities and obligations of the licensee under any other contract entered into bona fide before the vesting date, not being a contract relating to the borrowing or leading of money, or to the employment of staff. (2) All the assets specified in sub Section (1)(i) shall vest in the Government free from any debts, mortgages or similar obligations of the licensee or attaching to the undertaking; Provided that such debts, mortgages or obligations shall attach to the amount payable under this Act for the assets. (3) In the case of an undertaking which vests in the Government under this Act, the license granted to it under part II of the Electricity Act shall be deemed to have been terminated on the vesting date and all the rights, liabilities and obligations of the licensee under any agreement to supply elec tricity entered into before that date shall devolve or shall be deemed to have devolved on the Government; Provided that where any such agreement is not in conformity with the rates and condi tions of supply approved by the Government and in force on the vesting date, the agreement shall be voidable at the option of the Govern ment. (4) In respect of any undertaking to which Sec. 4 applies, it shall be lawful for the Government or their authorised representa tive on and. after the vesting date, after removing any obstruction that may be or might have been offered, to take possession of the entire undertaking, or as the case may be the fixed assets and of all documents relating to the undertaking which the Government may require for carrying it on. (5) All the liabilities and obliga tions, other than those vesting in the Govern ment under sub Sections (1) and (3), shall continue to be the liabilities and obligations of the licensee, after the vesting date. Explanation. All liabilities and obligations in respect of 566 staff, taxes, provident fund, employees ' state Insurance, Industrial disputes and all other matters, upto and including the vesting date, shall continue to be the liabilities and obligations of the licensee, after the vesting date. Section 9 provides: 9. Deductions from the gross amount. The Government shall be entitled to deduct the following sums from the gross amount payable under this Act to a licensee (a) the amount, if any, already paid in ad vance; (b) the amount if any, specified in Sec. 8; (c) the amount due, if any, 'including interest thereon, from the licensee to the Board, for energy supplied by the Board before the vesting date; (d) all amounts and arrears of interest, if any thereon, due from the licensee to the Government, (e) the amount, if any, equivalent to the loss sustained by the Government by reason of any property or rights belonging to the undertaking not having been handed over to the Government, the amount of such loss being deemed to be the amount by which the market value of such property or rights exceeds the amount payable therefor under this Act, to gether with any income which might have been realized by the Government, if the property or rights had been handed over on the vesting date; (f) the amount of all loans due from the licensee to any financial institutions consti tuted by or under the authority of the Govern ment and arrears, or interest, if any, there on; (g) all sums paid by consumers by way of security deposit and arrears of interest due thereon on the vesting date, in so far as they have not been paid over by the licensee to the Government, less the amounts which according to the books of the licensee are due from the consumers to the licensee for energy supplied by him before that date; (h) all advances from consumers and prospec tive consum 567 ers, and all sums which have been or ought to be set aside to the credit of the consumers ' fund, in so far as such advances or sums have not been paid over by the licensee to the Government; (i) the amounts remaining in Tariffs and Dividends Control Reserve, Contingencies Reserve and Development Reserve, in so far as such amounts have not been paid over by licen see to the Government; (j) the amount, if any, as specified in Ss. 11(2) and 11(3): (k) the amount, if any, relating to debts, mortgages or obligations as mentioned in proviso to sec. 7(2); Provided that before making any deduc tion under this section, the licensee shall be given a notice to show cause against such deduction, within a period of fifteen days from the date of receipt of such notice. Section 10 enables the Government to appoint, by order in writing, a person having adequate knowledge and experience in matters relating to accounts as Special Officer to assess the net amount payable under this Act, after making the deductions enumerated in section 9. Section 20 provides: 20. Arbitration. (1) Where any dispute arises in respect of any of the matters speci fied below, it shall be determined by an arbitrator appointed by the Government, who shall be a sitting or retired District or High Court Judge (a) whether any property belonging, or any right, liability or obligation attaching to the undertaking, vests in the Government; (b) whether any fixed asset forms part of the undertaking; (c) whether any contract or hire pur chase agreement or other contract referred to in SEC. 7(1)(ii) or (iii) has been entered into bona fide or not; (d) whether any agreement to supply electricity entered into by the licensee prior to the vesting date is of the nature referred to in proviso to section 7(3). 568 (2) Subject to the provisions of this section, the provisions of the (Central Act 10 of 1940) shall supply to all arbitrations under this Act. Section 23 of the Act incorporates a declaration to the effect that the legislation is for giving effect to the policy of the State to secure the principle of State Policy contained in Article 39(b) of the Constitution of India. The two legislations, one amending the provisions of Sections 5(2) 6(7) and 7 A of the , and the other providing for the acquisition of the two undertakings are challenged by the petitioner on several grounds, the principal attack, however, being that the legislations, brought forth, as they were, in the wake of the private negotiations and the exercise of the option to purchase, are not bona .fide, but constitute a mere colour able exercise of the legislative power and that, at all events the real objects of the two legislations have no direct and reasonable nexus to the objects envisaged in clause (b) of Article 39 of the Constitution and that a careful and critical discernment of the context in which the legislation was brought forth would lay bare before the judicial eye that what was sought to be acquired was not the "undertakings" of the two companies but really the differ ence between the "market value" of the undertakings which the State has agreed, under the private treaties, to pay and what, in any event, the State was obliged to pay under the provisions of Section 7A, as it then stood on the one hand and the "Book Value" of the undertaking, which the law seeks to substitute on the other. If the protective umbrella of Article 31 C is, thus, out of the way, the 'amount ' payable under the impugned law, it is urged, would be illusory even on the judicially accepted tests applied to Article 31(2) as it then stood. The validity of some of the specific provi sions of the acquisition law which excluded certain items from valuation and envisaged and authorised certain deduc tions in the amount are also assailed. These writ petitions were heard along with a batch of writ petitions, viz, WP Nos. 5, 14, and 15 of 1974, where the constitutionality of an analogous statute of the State of Tamil Nadu was assailed by the companies whose undertak ings were similarly sought to be acquired and civil appeal No. 243 of of 1985 and C.A. 4113 of 1985 arising out of the Judgment, dated 20.7.1984, of the High Court of Bombay striking down certain amendments to the , made by the Maharashtra State Legislature in the matter of statutory purchase of some of the private 569 electricity supply undertakings in the State of Maharashtra. The three batches of cases arising from Assam, Tamil Nadu and Maharashtra were heard together as there were certain aspects common to them. However, in view of the distinctiveness and particularities of the facts of the cases and the situational variations even in respect of the legal context in which questions arise for decision, the three batches of cases are disposed of by separate Judg ments. The present Judgment disposes of the challenge made to the Assam Legislation. We have heard Shri Soli J. Sorabji, learned Senior Advocate, and Shri Harish Salve, learned Advocate, for the petitioner in W.P. 457 of 1972 and Sri Rangarajan, learned Senior AdVocate for the petitioner in W.P. 458 of 1972 and Dr. Shankar Ghosh, learned Senior Advocate, for the State of Assam and Sri G.L. Sanghi, learned Senior Advocate for the Assam State Electricity Board and its authorities. On the contentions urged at the hearing, the points that fall for consideration in the writ petitions admit of being formulat ed thus: (a) That the declaration in Sec. 23 of Assam Act X 1973 is invalid as the impugned Act has no reasonable and direct nexus to the principles in Article 39(b) of the Constitu tion and is merely a cloak which the law is made to wear to undo the legitimate obliga tions arising out of the intended statutory sale of the undertakings and, accordingly, Article 31 C is not attracted. That, at all events, not every provision of a statute is entitled to the protection of Article 31 C but only those provisions which are basically and essentially necessary for giving effect to the principle in Article 39(b) and that, accordingly, the provisions in the impugned law relating to the determination of the amount do not attract Article 31 C. (b) That in effect and substance the law is not one for the acquisition electricity undertakings but is merely one to acquire a 'chose in action ' and to extinguish the legal rights of the Tinsukhia Co. for the difference between the "market price" of the undertakings which the State was obliged to pay under the intended statutory purchase and the "Book Value" to which the liability is sought to be limited under the impugned legislations. (c) That, if the immunity under Article 31 C for the legis 570 lations is not available, the 'amount ' payable in accordance with the provision of the ac quiring law is wholly "illusory" and is an attempt to take away a 'fortune for a far thing '. And accordingly, the law is ultra vires and violative of Article 31(2) of the Consti tution (as it then stood). Payment of "Book Value" of the assets acquired irrespective of their 'market value ' renders the 'amount ' unreal and illusory. (d) That the exclusion of "service lines", which are part of the assets of the licensee as from valuation, renders the law unconstitutional and ultra vires. (e) That the provision of Section 9(i) for the deduction of the 'Reserves ' from the "Amount", in addition to the takingover of the same in the form of 'fixed assets ' and the omission to value the unexpired period of licence are unreasonable and arbitrary. (f) That the continued liability of the petitioner licensee under Section 11(3) for payment to employees retrenched by Government after the vesting date and the provision for deduction of such sums from the "Amount" payable for the acquisition are arbitrary and unreasonable. (g) That while Section 7(5) makes all the liabilities of the licensee, other than those specifically referred to and expressly taken over by Government under the Act, as the continuing liabilities of the licensee, yet some of those liabilities referred to in clauses (c) (d) and (f) of Section 9, are yet made deductible from the "Amount", without the corresponding express obligation on the part of the Government to hold the sums so deducted in trust for, and for benefit of the concerned creditors and without statutory discharged to the petitioner in that behalf. This is unjust enrichment. (h) That there is no machinery envisaged by and set up under the 'Act ' to adjudicate upon and determine either the amounts deducti ble under clauses (c) (d) and (e) of Section 9 or the "loss" deductible under Section 8. This renders the provisions of the 'Act ' intracta ble and liable to be declared unworkable. 571 (i) That Section 20 limits arbitrabili ty only to matters enumerated in clauses (a) to (d) of that section, leaving many other disputes arising under the 'Act ' between the Government and the licensee without any ma chinery for their resolution, also rendering the 'Act ' unworkable. The contentions noticed at (a), (b) and (c) cover amongst them certain overlapping areas. The central attack, however, remains that Assam Act X of 1973 has no reasonable and direct nexus with the effectuation of the principles envisaged in clause (b) of Article 39 of the Constitution and that the relationship of the impugned legislation to the objects of Article 39(b), being merely remote and tenuous, the legislation is a colourable legislation. The contentions are, however, noticed distinctively to make due acknowledge ment for the shifts of emphasis in the course of the argu ments. In this case the legal and constitutional position has to be examined with reference to the provisions of the Constitution as they stood as in 1972. Article 31C was inserted by the 25th Amendment with effect from 20.4.1972 prior to its more comprehensive expansion to extend its protection to the laws giving effect to "All or any of the provisions laid down in Part IV ' brought about by the Con stitution (Fortysecond Amendment) 1976. Article 31C gave protection in respect of a law giving effect to the policy of the State towards securing the principles specified in clause (b) or clause (c) of Article 39. Then again, though Article 31 had not, by then, been deleted, its content had been cut down so much, so that even under a law providing for acquisition of property which did not have the protec tion of 31C the adequacy of the "Amount" determined was not justiciable and all that was necessary was that it should not be unreal or illusory. By then the Constitution had done away with the idea of a Just equivalent or full idemnifica tion principle and substituted therefore the idea of an "Amount" and rendered the question of the adequacy or the inadequacy of the amount non justiciable. The Indian Constitutional experiments with the 'right to property ' offer an interesting illustration of how differ ences in the interpretation of the fundamental law sometimes conceal or, perhaps, expose conflicts of economic idealog ics and philosophies. With the right to property conceived of as a fundamental fight at the inception of the Constitu tion, it found so strong an entrenchment that in its pris tine vigour it tended to be overly demanding and sought the sacrifice of too many social and economic goals at its alter and made 572 the economic cost of social and economic change unaffordably prohibitive and the fulfilment of the constitutional ethos of the promise of an egalitarian social order difficult. Inevitably the constitutional process of de escalation of this right in the constitutional scale of values commenced culminating, ultimately, in the deletion of this right from the fundamental rights part. Articles 31 A and 31 C were significant Constitutional milestones in the harnessing and socialisation of the concept of the right to property which, in its laissez faire trappings, became an unruly horse. Article 31 C in effect and substance is to urban property what Article 31 A is to agricultural property. The arguments in this case in regard to what, if at all, survives for judicial scrutiny in the matter of the Constitutional tests of the validity, under Article 31(2) of the 'amount ' if the law has the protection of Article 31C, were marked by a forensic resourcefulness aimed at a resus citation and re kindling of the relics and embers of old and hard fought but lost legal battles. Sri Rangarajan, learned Senior Advocate, relying upon the construction suggested by him of certain observations of Chandrachud, J. in the Keshavananda case and certain observations of Fazl Ali J. in State of Tamil Nadu vs Abu Kavur Bai, ; strenuously, and quite seriously, attempted the exercise that even if a law had the protection of Article 31C, yet the court would be required when the provision is challenged to go into the question of the "Amount" being illusory or the principles for its determina tion being arbitrary. Learned Counsel further propounded that despite Article 31 C, the burden of proving that the amount is not illusory and principles for its determination not arbitrary is on the State. We may excerpt the substance of the contention from the written submissions filed by Sri Rangarajan: " . . Therefore, where the law provides for compensation, fin spite of the same being protected by Article 31 C the Court can go into the question of the amount being illusory or the principles being arbitrary. Not merely that, the burden of providing that the amount is not illusory and the principles are not arbitrary, is on the State. " We shah later examine how far this contention is at all available in the light of the authoritative pronouncements of this Court on the effect of Article 31C and whether if a law has such protection, the plenitude of its constitutional immunity would not extend to all attacks based on Articles 14, 19 and 31 (as it then stood). 573 We may now examine the contentions seriatim. Contentions (a) and (b) admit of being dealt with together. Re: Contentions (a) and (b): Shri Soli J Sorabjee submitted that in the present case, notwithstanding the legislative declaration in Sec. 23 of Assam Act X of 1973, the question whether there is any real nexus between the legislation and the principles envisaged in Article 39(b) is justiciable and indeed the existence of such nexus or connection is a condition precedent for the attraction and applicability of Article 31 C. Learned Coun sel submitted that in order to decide whether a Statute is within Article 31 C or not, the Court has to examine the nature and character of the legislation and if upon such scrutiny it appears that there is no nexus between the legislation and the principles in Article 39(b) the legisla tion must be held to fall outside the protection of Article 31 C. Shri Sorabjee said, stripped of its veils and vest ments, the law, would show its real nature as one whose avowed nexus to Article 39(b) is merely a pretence and that its purpose is other than the objects envisaged in Article 39(b). The validity of the legislation, learned counsel says, would have to be examined independently of the immuni ty under Article 31C. The proposition that the legislative declaration of the nexus between the law and the principles in Article 39 is in conclusive and justiciable is well settled. Indeed that part of Article 31 C which sought to impart a Constitutional sanctity, conclusiveness and nonjusticiability to such legislative declarations was struck down in the Keshavanada case. The sequintor is that whenever any immunity is claimed for a law under Article 31 C, the Court has the power .to examine whether the provisions of the law are basically and essentially necessary for the effectuation of the principles envisaged in Article 39(b) and (c). The observations of Mathew, J. in Keshvananda case ( may be recalled: " . . Whenever a question is raised that the Parliament or State Legisla tures have abused their power and inserted a declaration in a law not for giving effect to the State Policy towards securing the direc tive principles specified in Article 39 B or 39 C, the Court must necessarily go into that question and decide it . . " (P. 855) 574 " . . If the Court comes to the conclusion that the declaration was merely a pretence and that the real purpose of the law is the accomplishment of some object other than to give effect to the policy of the State towards securing the directive principles in Article 39(b) and (c) the declaration would not be a bar to the court from striking down any provision therein which violates Article 14, 19 or 31. In other words, if a law passed ostensibly to give effect to the policy of the State is, in truth and substance, one for accomplishing an unauthorised object, the court would be entitled to tear the veil created by the declaration and decide accord ing to the real nature of the law . " (P. 855 56) Chandrachud, J. observed in the Keshavananda case: " 'Laws passed under Article 31 C can, in my opinion, be upheld only, and only if, there is a direct and reasonable nexus between the law and the directive policy of the State expressed in Article 39 B or C." (P. 996) To the same effect are the observations of the learned Chief Justice in Minerva Mills Ltd. vs UOL. ; " . . the Courts can, under Article 31 C, satisfy themselves as to the identity of the law in the sense whether it bears direct and reasonable nexus with a directive principle." "The only question open to judicial review under the unamended Article 31 C was whether there is a direct and reasonable nexus between the impugned law and the provisions of Article 39(b) and (c)" (P. 261) (Emphasis Supplied) In the same case, Bhagwati, J. observed: " . . The point that I wish to emphasis is that the amended Article 31 C does not give protection to a law which has merely some remote or tenuous connection with a directive principle." 575 " . . Even where the dominant object of a law is to give effect to a direc tive principle it is not every provision of the law which is entitled to claim protec tion . " (P. 338) " . . it is not every provision of a statute which has been enacted with the dominant object of giving effect to a direc tive principle, that it entitled to protec tion, but only those provisions of the statute which are basically and essentially necessary for giving effect to the directive principles are protected under the amended Article 31 C " . (P. 339) (Emphasis Supplied) 13. The proposition of Sri Sorabjee, in principle, is, therefore, unexceptionable; but the question remains wheth er, upon the application of the appropriate tests, the impugned statute fails to measure up to the requirements of the Constitution to earn the protection under Article 31 C. Learned counsel sought to contend that the Assam State Electricity Board having exercised the option of purchasing the undertaking of the Tinsukia Co., under Section 6(1) of 1910 Act by the statutory notice dated 23.5.1972 requiring the company to sell the undertaking to the Board on the expiration of the period of the licence, the question of any further need to acquire the undertaking for the purpose of effectuating the objects envisaged in article 39(b) of the Constitution by the expedience of a separate and independent legislation was, indeed, unreal or non existent. The real object, therefore, of the enactment of Assam Act X of 1973 it was urged, was not to enact a law for purposes of effec tuating the objects envisaged by Article 39(b) of the Con stitution which had already been accomplished by the exer cise of the option to purchase; but was only to deprive the petitioner of its legitimate entitlements under the statuto ry sale. What was sought to be acquired by the impugned law, it is contended, was not the undertaking but the difference between the 'Market price ' and the 'Book value ' which the impugned legislation envisaged. It is urged that the purpose of the impugned law is, therefore, something other than the effectuation of principles in Article 39(b). It is also urged that with the exercise of the option to purchase what remained to. be acquired and what really was sought to be acquired was a mere actionable claim or a chose in action. It is further urged that, at all events, since not all the provisions of a legislative enactment need necessarily qualify for protection of Article 31 C but only those provi sions that have a direct nexus with the principles of Arti cle 39(b), the 576 provisions in the impugned legislation touching the determi nation of the quantum of the "Amount" are not so protected as they are intended merely to inter dict and extinguish the vested rights of the Tinsukhia Co. under the intended statu tory sale. The object of the legislation, it was urged, was not the legitimate one of securing the objects envisaged in Article 39(b) but a less honourable and less sanctimonious one of depriving the petitioner of the benefit of the statu tory contract for the sale of the undertaking pursuant to and in terms of the statutory notice dated 23.5.1972. The court, so goes the argument, is entitled to pierce the apparent veil under which the acquiring legislation masquer ades as one for securing the object of Article 39(b). Dr. Shankar Ghosh and Sri G.L. Sanghi for the State of Assam and the Assam State Electricity Board,. the contest ing Respondents, however, say that the Assam Act X, 1973, is entitled to the protection of Article 31 C as, indisputably, Electrical energy is a material resource of the community and any legislative measure to nationalise the undertaking falls squarely within the ambit of Article 39(b). Any appeal by the petitioner to the doctrine of colourable legislation, they say, is wholly inapposite as, indeed, where, as here, legislative competence is undisputed, any speculation as to the motives of the legislative is impermissible. No mala fides could be attributed to the Legislature. Respondents further submit that on the question of even the possible 'illusory ' nature, let alone the adequacy, of the "Amount" could not be agitated if the law has the protection of Article 31 C. They, however, assert that 'Book value ' is a well accepted accountancy concept of value and could never be characterised as illusory, even if the law did not come under Article 31 C. The questions that arise for consideration are, sequen tially, whether the electrical energy generated and supplied by the petitioner companies is a "material resource of the community" within the meaning of Article 39(b); whether the impugned legislation has a reasonable and direct nexus to the objective of distributing this materials resource so as to subserve the common good and what are the appropriate tests to ascertain this nexus. The incidental questions that arise on certain specific contentions centre around the effect of the option to purchase the undertaking exercised by the Assam State Electricity Board in the case of Tinsukia Co. and whether immediately upon the exercise of the option the proprietory rights respecting the undertaking of the company get transformed into a mere "actionableclaim" or "chose in action", as contended for by the petitioners. 577 Apropos of the contention that, at all events, the provi sions pertaining to the "amount" could have no reasonable or direct nexus to the principles envisaged in Article 39(b), but are merely intended to extinguish the legitimate rights of the petitioner company to receive the price of the under taking under the 1910 Act, as the law then stood, pursuant to the option exercised by the 'Board ', it would, perhaps, be necessary to ascertain the composite elements that make for a law of nationalisation and whether provisions touching the quantification of the "amount" payable for the acquisi tion are not an essential and integral part of such law. On the contention urged by Shri Rangarajan as to what could be said to survive for consideration under Article 31(2), (as it then stood), if the law has the protection of Article 31 C the question that arises is whether anything at all survives for consideration under Article 31. The conten tion indeed, runs in the teeth of several pronouncements of this Court which lay down that when Article 31 C comes in, Articles 14, 19 and 31 (the last mentioned article as it then stood) go out. This we will consider under point (c). It is not disputed that the electricity generated and distributed by the undertakings of the petitioner compa nies constitute "material resources of the community" for the purpose and within the meaning of Article 39(b). In Sanjeev Coke Manufacturing Company vs Bharat Coking Coal Ltd., ; this Court, referring to what constitute "material resources of the community" and whether resources produced by, or at the command of, private, as distinguished from the State agencies, constitute such resources as the resources of the community, noticed the contention urged in that case thus: " . . The submission of Shri A.K. Sen was that neither a coal mine nor a coke oven plant owned by private parties was a 'material resources of the community '. Accord ing to the learned counsel they would become material resources of the community only after they were acquired by the State and not until then. In order to qualify as material re sources of the community the ownership of the resources must vest in the community i.e. the State . . A law providing for acquisition was not a law for distribution . " (P. 1022) 578 Repelling this argument which suggested a limited concept of "Material resources of the Community" the Court observed: " . . We are unable to appreciate the submission of Shri Sen: The expression 'material resources of the community ' means all things which are capable of producing wealth for the community. There is no warrant for interpreting the expression in so narrow a fashion as suggested by Shri Sen and confine it to public owned material resources, and exclude private owned material resources. The expression involves no dichotomy . " ( P. 1022 & 23) It can, therefore, hardly be gain said that the electri cal energy generated and distributed by the undertakings of the petitioner constitutes "material resources of the commu nity". This takes us to the question whether the provisions of the impugned Assam Act X 1973 have any reasonable and direct nexus to the principles in Article 39(b) of the Constitution. It is true that if such a relationship is merely remote and tenuous the protection under Article 31 C may not be available. The idea of distribution of the mate rial resources of the community in Article 39(b) is not necessarily limited to the idea of what is taken over for distribution amongst the intended beneficiaries. That is one of the modes of "distribution". Nationalisation is another mode. In State of Tamil Nadu vs L. Abu Kavur Bai, ; this Court had occasion to refer to this aspect. It was held: "In other words, the word 'distribu tion ' does not merely mean that property of one should be taken over and distributed to others like land reforms where the lands from the big landlords are taken away and given to landless laboureft, . . That is only one of the modes of distribution but not the only mode . " "By nationalising the transport as also the units the vehicles would be able to go the farthest comer of the State and pene trate as deep as possible . "This would undoubtedly be a distri bution for the common good of the people and would be clearly covered by clause (b) of Article 39. " 579 On an examination of the scheme of the impugned law the conclusion becomes inescapable that the legislative measure is one of nationalisation of the undertakings and the law is eligible for and entitled to the protection of Article 31 C. 16. It was then contended that not all the provisions of a law can and need be eligible for the protection of Article 31 C and that accordingly, in the present case the provi sions as to the quantification of the "amount", which were meant to achieve an oblique motive of interdicting and extinguishing the vested rights of the petitioner company to receive payment in accordance with the provisions of the 1910 Act, as they then stood, should not have the protection of Article 31 C. We are afraid this contention proceeds on an impermissible dichotomy of the components integral to the idea of nationalisation. The economic cost of social and economic reform is, perhaps, amongst the most vexed problems of social and economic change and constitute the core ele ment in Nationalisation. The need for constitutional immuni ties for such legislative efforts at social and economic change recognise the otherwise unaffordable economic burden of reforms. The observations of Mathew J. in Keshavananda case on the point are worth recalling: "If full compensation has to be paid, concentration of wealth in the form of immova ble or movable property will be transformed into concentration of wealth in the form of money and how is the objective underlined in Article 39(b) and (c) achieved by the trans formation? And will there be enough money in the coffers of the State to pay full compensa tion?" " . . I am unable to understand the purpose of substituting the word 'amount ' for the word 'compensation ' in the sub Article unless it be to deprive the Court of any yard stick or norm for determining the adequa cy of the amount and the relevancy of the principles fixed by law. I should have thought that this coupled with the express provision precluding the Court from going into the adequacy of the amount fixed or determined should put it beyond any doubt that fixation of the amount or determination of the princi ple for fixing it is a matter for the Parlia ment alone and that the Court has no say in the matter." (1973 Supp. SCR 1 at page 846) It is, therefore, not possible to divorce the economic considera 580 tions or components from the scheme of nationalisation with which the former are inextricably integrated. The financial cost of a scheme of nationalisation lies at its very heart and can not be isolated. Both the provisions relating to the vestiture of the undertakings in the State and those per taining to the quantification of the "Amount" are integral and inseparable parts of the integral scheme of nationalisa tion and do not admit of being considered as distinct provi sions independent of each other. The memorandum of the writ petition contains aver ments as to the efficiency and public utility of the serv ices rendered by the undertakings and that on the date of the take over the market value of the Tinsukhia and Dibru garh undertakings were Rs.55 lakhs and Rs.35 lakhs respec tively and that. the undertakings were discharging their obligations to the consumers efficiently and satisfactorily. The case of the petitioners is that there was no justifica tion at all for the nationalisation as the undertakings were efficient and fully catered to the needs of the consumers. It was also averted that it was the Government and the Board the had come in the way of the expansion envisaged by the undertakings by withholding the requisite permission for the installation of additional capacity for generation of elec tricity. The Respondents have sought elaborately to traverse these grounds and to justify the measure for nationalisa tion. We are afraid, the debate whether nationalisation is by itself to be considered as fulfilling a public purpose or whether the nationalisation should be shown to be justified by the actual effectuation of the avowed objectives of such nationalisation the choice between the pragmatic and the doctrinaire approaches is concluded and no longer avail able. In Akadasi Padhan vs State of Orissa and Ors. , ; this debate on the philosophy of nationalisa tion is concluded. was held: " . . Broadly speaking, this discussion discloses a difference in approach. To the socialist, nationalisation or State ownership is a matter of principle and its justification is the general notion of social welfare. To the rationalist, nationalisation or. State ownership is a matter of expediency dominated by considerations of economic effi ciency and increased output of production . . ". " . The amendment made by the Legislature in article 19(6) shows that according to the Legislature, a law 581 relating to the creation of State monopoly should be presumed to be in the interests of the general public . " " . . In other words, the theory underlying the amendment in so far as it relates to the concept of State monopoly, does not appear to be based on the pragmatic ap proach, but on the doctrinaire approach which socialism accepts . .". Indeed, in the United States of America after the hey days of the substantive due process, the Supreme Court in 1963 in Ferguson vs Skrupa, ; said: "We refuse to sit as a 'superlegis lature to weigh the wisdom of legislation ', and we emphatically refuse to go back to the time when courts used the Due Process Clause 'to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought ' . . Whether the legislature takes for its textbook Adam Smith, Herbert Spencer, Lord Keynes, or some other is no concern of ours." (Emphasis Supplied) 18. Equally untenable is the contention based on the assumption that immediately upon the exercise of the option to purchase, the proprietory rights of the Tinsukhia Company in relation to the undertaking stood transformed into, and was crystalised in the form of, a mere actionable claim or a "chose in action" and that, therefore, what was sought to be acquired by the present legislative measure was merely a "chose in action". It was contended that no public purpose is achieved by the acquisition of a "chose in action". This needs examination of the legal character and incidents of the consequences that flow from the exercise of the option to purchase under the 19 10 Act. The contention presupposes that contemporaneous with the service of the notice on the licensee, the proprietory rights of the licensee in relation to the undertaking, proprio vigore, get transformed into a mere "chose in action". This consequence does not flow from the pro: visions of 1910 Act. In Fazilka Electric Supply Company Limited vs The Commissioner of Income Tax, Delhi, [1962] Supp. 3 SCR 496 this court, referring to the nature of the transaction emerging from the exercise of the option, said: 582 "It merely provides for an option of purchase to be exercised on the expiration of certain periods agreed to between the parties, and section 10 further provides that in an appropriate case Government may even forego the option. This section does not provide for a compulsory purchase or compulsory acquisi tion without reference to and independently of any agreement by the licencee. " (See Page 505). (Emphasis Supplied) In Gujarat Electricity Board vs Shantilal, ; referring to the legal conse quences that ensue by a mere exercise of the option, it was held: " . that the right to purchase the undertaking accrues only at the expiration of the period of licence but for exercising that right, the authority must make its elec tion within the period prescribed in sec. 7(4) and issue a notice as required by that sub section . . " (Emphasis Supplied) That the right, title and interest of the licensee in the undertaking does not get transferred to the Board or the State, as the case may be, immediately upon the mere exer cise of the option to purchase is further clear from what is implicit in the observa tions of this Court in Godra Electricity Company Limited and another vs The State of Gujarat and another; , at page 54. The proposition contended for by the Learned Additional Solicitor General in that case was noticed thus: "In support of the contention that when once the notice exercising the option to purchase the undertaking has been served, the licensee has no further right to carry on the business, the learned Additional Solicitor General placed reliance on the decision of this Court in Kalyan Singh vs State of U. P . . " This Court held that the exercise of the option would have no such effect on the licen see 's right to carry on his business until the undertaking was actually taken over and paid for. It was held: "A licensee cannot be told that he has no right to carry on the business unless a valid purchase is made at the expiry of the period . . " 583 " . Admittedly, the undertak ing belonged to the licencee and if delivery of the undertaking is to be taken by the State Electricity Board, the purchase price must be paid before the delivery or, there must be a provision for payment of interest on the purchase price for the period during which payment is withheld. Otherwise, the licence will not cease to have operation and the licensee wilt be entitled to carry on the business." (See Page 54). The contentions that immediately upon the exercise of the option, ipso facto, the relationship between the parties get transformed into one as between a Debtor and a Creditor and that the interest of the licensee in the undertaking becomes an "actionableright", or a "chose in action" and that no public purpose could be said to be served by the acquisition of a "chose in action" are all out of place in this case. It is not necessary, therefore, to go into the question whether a "chose in action" can at all be acquired. Certain observations of this Court in Madan Mohan Pathak vs Union of India and Ors., ; do suggest that "chose in action" could also be acquired. It will also not be necessary to go into the legal concept of a "chose in action" in Indian law and its distinctiveness from the principles in English law. Williams on "Personal property" refers to "chose in action" thus: " . . another important distinction exists among personal things. Such things are said to be in possession or in action; or they are called, in law French, choses in posses sion or choses in action. Choses in possession are movable goods, of which their owner has actual possession and enjoyment, and which he can deliver over to another upon a gift or sale; tangible things, as cattle, clothes, furniture, or the like . " "The term choses in action appears to have been applied to things, to recover or realise which, if wrongfully withheld, an action must have been brought; things, in respect of which a man had no actual posses sion or enjoyment, but a mere right enforce able by action. The most important personal things recoverable by action only were 584 money due from another, the benefit of a contract and compensation for a wrong; and .these have always been the most prominent choses in action, though not the only things to which the term has been applied . . "(see page 29 and 30) Indeed, in English law the difficulties in the precise definition of chose in action arise out of the fact that the meaning attributed to the expression has been expanded from time to time by judicial decisions and the principles pertaining to the concept did not develop on any logical or scientific basis. W.S. Holdsworth also refers to this diffi culty in apprehending the precise incidents of the concept of a "chose in action": "It is sometimes difficult to ascer tain the sense in which the legislature has used the term 'chose in action 'we have seen that Bankruptcy Act affords one illustration, and, as we can see from the case of Edwards vs Dicard the modifications introduced by the Courts have some times occasioned a similar difficulty. Some of these difficulties might be perhaps mitigated by a codifying Act, for which there is plenty of material. But, it is probable that a branch of the law which comes at the meeting place of the law of property and the law of obligation can never be any thing but difficult to formulate and apply." (Emphasis Supplied) (See: "The History of the treatment of chose inaction by the common law": Vol. 33 Harvard Law Review 997 at 1030). Petitioners, however, placed strong reliance upon a decision of the Calcutta High Court in Bihar State Electricity Board vs Patna Electricity Supply Co. Ltd., and in particular on the following observations of the Division Bench of the High Court in para 22: " . The purported acquisition of part of the debt or chose in action by Sections 2(ii) and 3 of the Bihar Act 7 of 1976 with retrospective effect is, therefore, without any public purpose. Sections 2(ii) and 3 also do not provide for payment of compensa tion. In the circumstances, it must be 585 held that Sections 2(ii) and 3 of the Bihar Act 7 of 1976 are ultra vires article 31(2) of the Constitution. " It is not necessary to consider the correctness of this pronouncement in view of the circumstance that even to the extent the decision goes it is distinguishable. On 5.1.1973, the Electricity Board exercised its option to purchase the undertaking. On 2.2.1974, the Board paid a sum of Rs.36,00,000 "on account" to the licensee. On 6.2.1974, possession was taken. On 2.2.1974, Ordinance 50 of 1974 was promulgated amending Section 7A of the 19 10 Act reducing the price payable under Section 7A to the book value of the assets. This Ordinance was renewed by two successive ordi nances No. 83 of 1974 and 123 of 1974. The last ordinance was replace by Bihar Act 15 of 1975. On 10.2.1976, the Indian 'Electricity (Bihar Amendment) Act 7 of 1976 was brought into force validating the substitution of Section 6 and 7A, made by Bihar Act 15 of 1975 with retrospective effect from 2.2.1974. The Validating Act sought to affect the rights and obligations of the parties retrospectively. The High Court was persuaded to the view that the purported acquisition, virtually, pertained to the debt or "chose inaction" and not the undertaking itself. It is, therefore, not necessary to consider the submissions of the learned counsel for the respondent that it does not lay down the law correctly in as much as the arguments based on Article 31 C were neither advanced nor considered in that case. It requires, therefore, to be held that the impugned legislation viz., Assam Act X, 1973, was broughtforth for securing the principles contained in Article 39(b) of the Constitution and is protected under Article 31 C. The amend ment made to the provisions of the , by Assam Act IX of 1973, amending the basis for quan tification of the amount payable in the case of a statutory purchase pursuant to the exercise of the option in terms of the licence would apply to and govern cases of statutory sales and would not assume any immateriality in this case as the Assam Act X of 1973 is itself as we have held a valid piece of legislation. We find, therefore, no substance in the contentions (a) and (b) urged by the petitioner. Re. contention (C): This pertains to the question whether the principles laid down in the Act for determination of the "amount" payable for the acquisition 586 are so arbitrary as to render the "amount" unreal and merely illusory. This contention would not, in law, be available to the petitioners inasmuch as the law providing for the acqui sition has the protection of Article 31 C of the Constitu tion. The arguments of Shri Soli J. Sorabjee in regard to the alleged "illusory" nature of the "amount" presupposes and proceeds on the premise that the impugned law does not have the protection of Article 31 C. Now that we have held that Article 31 C is attracted, the argument in regard to the alleged illusory nature of the amount does not survive at all. Shri Rangarajan, however, contended that notwith standing that a law has the protection of Article 31 C, the question would yet be justiciable under Article 31(2), as it then stood, if the "amount" is illusory or the principles for its determination arbitrary. To support this, somewhat difficult, proposition Shri Rangarajan relied upon certain observations of Chandrachud, J. in the Keshavananda case; whose import and importance, according to the learned coun sel, has not been fully and properly comprehended in subse quent cases. The passages relied upon are: " . But to say that an amount does not bear reasonable relationship with the market value is a different thing from saying that it bears no such relationship at all, none whatsoever. In the later case the payment becomes illusory and may come within the ambit of permissible challenge." (See para 2 137 at page 2051 of AIR 1973). " . . Courts would have the powers to question such a law if an amount fixed thereunder is illusory; if the princi ples, if any are stated, for determining the amount are wholly irrelevant for fixation of the amount; if the power of compulsory acqui sition or requisition is exercised for a collateral purpose; if the law offends Consti tutional safeguards other than the one con tained in Article 19(1)(f); or if the law is in the nature of a fraud on the Constitution ". (See: para 2138 at page 2051 of AIR 1973). These observations. Sri Rangarajan says, were intended to govern even a law which had the protection of Article 31 C. Shri Rangara jan also relied upon certain observations of Fazal Ali, J. in State of Tamil Nadu vs L. Abu Kaur Bai ; which say: "87. Thus, so far as this aspect of the matter is con 587 cerned, two conclusions broadly emerge: (1) that in view of the express provisions of Article 31 C which excludes article 31(2) also where a property is acquired in public interest for the avowed purpose of giving effect to the principles enshrined in article 39(b) and (c), no compensation is neces sary and article 31(2) is out of the harm 's way, and (2) that even if the law provides for compensation, the courts cannot go into the details or adequacy of the compensation and it is sufficient for the State to prove that the compensation was reasonable and not monstrous or illusory so as to shock the conscience of the court." (Emphasis of counsel) Sri Rangarajan would say that the observations empha sised would show that even if Article 31 C was attracted yet the State should show that compensation was reasonable and not illusory. We are afraid, these passages are quoted out of context and, if properly understood, were not intended to support the proposition now propounded by Shri Rangarajan. Indeed in the Keshavananda case itself Chandrachud J. referring to the effect of Article 31 C observed: ". In fact article 31 C is a logi cal extension of the principles underlying article 31(4) and (6) and article 31A. . . The true nature and char acter of article 31 C is that it identifies a class of legislation and exempts it from the operation of articles 14, 19 and 31 . . " (1973 supp. SCR 1 at 995) Khanna J. observed in that case: Both articles 31A and 31C deal with right to property. Article 31 A deals with certain kinds of property and its effect is, broadly speaking, to take those kinds of property from the persons who have rights in the said property. The objective of article 31C is to prevent concentration of wealth and means of production and to ensure the distri bution of ownership and control of the materi al resources of the community for the common good. Article 588 31C is thus essentially an extension of the principle which was accepted in article 31A . "(page 743) Beg, J said: "Article 31 C has two parts. The first part is directed at removing laws passed for giving effect to the policy of the State towards securing the principles specified in clause (b) or clause (c) of Article 39 of the Constitution from the vice of invalidity on the ground that any such law "is inconsistent with or takes away or abridges any of the rights conferred by Articles 14, 19 and 31 of the Constitution." . the effect of invalidity for alleged violations of Articles 14 or 19 or 31 would vanish so long as the law was really meant to give effect to the princi ples of Article 39(b) and (c) . " In State of Karnataka vs Ranganath Reddy, ; this Court had occasion to observe: " . . For the purpose of deciding the point which fails for consideration in these appeals, it will suffice to say that still the over whelming view of the majority of judges in Kesavandanda Bharati 's case is that the amount payable for the acquired property either fixed by the legislature or determined on the basis of the principles engrafted in the law of acquisition cannot be wholly arbitrary and illusory. When we say so we are not taking into account the effect of Article 31 C inserted in the Constitution by the 25th Amendment (leaving out the invalid part as declared by the majority)." (p. 653) (Emphasis Supplied) In Sanjeev Coke Manufacturing Co. vs Bharat Coking Coal Company Lt.; , this Court said: " . . To accept the submission of Shri Sen that a law rounded on discrimination is not entitled to the protection of Article 31 C, as such a law can never be said to be to further the Directive Principle affirmed in article 39(b), would indeed, be, to use a hack neyed phrase, to put the cart before the horse. If the law made to further the Direc tive Principle iS necessarily non discrimina tory or is based 589 on a reasonable classification, then such law does not need any protection such as that afforded by article 31 C. Such law would be valid on its own strength, with no aid from article 31 C. To make it a condition precedent that a law seeking the haven of article 31 C must be non discriminatory or based on reasonable classification is to make article 31 C meaning less . " (p.1019) "We are firmly of the opinion that where article 31 C comes in article 14 goes out . " (p. 1021) What applies to Article 14 would equally apply to Article 31 (as it then stood before its deletion by the Constitution Fortysecond (Amendment) Act, 1978). In State of Tamil Nadu vs L. Abu Kavur Bai, ; on which Shri Rangarajan relied, Fazal Ali J. categorily said: "It is manifest from a bare reading of the newly added article 31 C that any law effectuating the policy of the State in order to secure or comply with the directive princi ples specified in clauses (b) and (c) of article 39 would not be deemed to be void even if it is inconsistent with or violates Articles 14, 19 or 31 . . " (P. 332) In the same case Fazal Ali J. further said: " . If, once the conditions mentioned in Article 31C are fulfilled by the law, no question of compensation arises because the said Article expressly excludes not only Arti cles 14, and 19 but also 31 which, by virtue of the 25th amendment, had replaced the word 'amount ' for the word 'compensation ' in Arti cle 31(,2) . . " (p. 334) (Emphasis supplied) Sri Rangarajan cannot, therefore, draw any sustenance from Fazal Ali J. for his argument. Sri Rangarajan then placed reliance on the following observa 590 tions of Krishna Iyer J. in Gwalior Rayon vs UOL, " . the legislature is expected except in exceptional socio historical set ting, to provide just payment for the deprived persons. To exclude judicial review is not to block out the beneficient provisions of Arti cles 14, 19 and 31." (p. 695) But we see nothing in these observations which can lend support to justiciability of an alleged violation of Article 31 by a law protected under Article 31 C. Ideally, perhaps, it may not be just to deprive a recompence that is just and fair, in all cases. But that is not to say that even under a law which has the protection of 31 A or 31 C, the adequacy, or justness or fairness of the compensation would, yet, be justiciable. The contention of Shri Rangarajan in our opinion, is wholly unsupportable. Indeed, the purpose of Article 31 C is, amongst others, to exclude Article 31, as it then stood. The effect of accepting Sri Rangarajan 's contention would be to let in Article 31 by the backdoor, frustrating the very object of Article 31 C and to unsettle the law laid down in a series of authoritative pronouncements of this Court. The contention really, is not available to the petitioners at all. Even if the impugned law did not have the protection of Article 31 C, a hypothesis on which contention (c) is based, the adequacy or inadequacy of the amount is not justiciable. The limitations of the courts ' scrutiny explic it in Article 31(2), are referred to by Mathew J. in the Keshavananda case: " . the word 'amount ' conveys no idea of any norm. It supplies no yard stick. It furnishes no measuring rod. The neutral word 'amount ' was deliberately chosen for the purpose. I am unable to understand the purpose in substituting the word 'amount ' for the word 'compensation ' in the sub article unless it be to deprive the Court of any yard stick or norm for determining the adequacy of the amount and the relevancy of the principles fixed by law (para 1765) Referring to what might, yet, be open to judicial scrutiny, under 591 Article 31(b), Shelat and Grower, JJ observed in the Keshavananda case: "But still on the learned Solicitor General 's argument, the right to receive the amount continues to be a fundamen tal right. That cannot be denuded of its iden tity. The obligation to act on some principle while fixing the amount arises both from Article 31(2) and from the nature of the legislative power for, there can be no power which permits in a democratic system an arbi trary use of power." "But the norm or the principle of fixing or determining the 'amount ' will have to be disclosed to the Court. It will have to be satisfied that the 'amount ' has reasonable relationship with the value of the property acquired or requestioned and one or more of the relevant principles have been applied and further that the 'amount ' is neither illusory nor it has been fixed arbitrarily, nor at such a figure that it means virtual deprivation of the right under Article 31(2). The question of adequacy or inadequacy, however, cannot be gone into." Justice Chandrachud observed: "The specific obligation to pay an 'amount ' and in the alternative the use of the word 'principles ' for determination of that amount must mean that the amount fixed or determined to be paid cannot be illusory. If the right to property still finds a place in the Constitution, you cannot mock at the man and ridicule his right. You cannot tell him: 'I will take your fortune for a farthing '. All the same, the concept of "Book Value" is an accepted accountancy concept of value. It cannot be held to be illusory. In Eswari Khetan Sugar Mills vs State of U.P., ; at page 359 it has been held that even the concept of "written down value" which is more disadvantageous to the owner than the "Bookvalue" is not irrelevant: " . . This Court has in terms accepted that payment of compensation on the basis of written down value calculated accord ing to the income tax law for used 592 machinery is not irrelevant as a principle for determining compensation. That principle appears to have been adopted for valuing used machinery though the legislation fixes compen sation payable to each undertaking in round Sum . ." 28. Accordingly, even if the impugned law had no protec tion of Article 31 C and tests appropriate to and available are applied, in the circumstances of this case, it cannot be said that the principles envisaged in the impugned law lead to an "amount" which can be called unreal or illusory. Contention (c) is accordingly held and answered against the petitioners. Re: Contention (d): This point is again, available only if the impugned law is outside Article 31 C. The contention that "Service Lines" which are expressly excluded from the valuation do consti tute the property of the licensee and their exclusion from valuation would make the principles for determination of the 'amount ' arbitrary does not have much to commend it. Learned counsel for the petitioner placed reliance on the definition of 'works ' in Section 2(n) of the 1910 Act and on the pronouncement of this Court in Calcutta Electric Supply Corporation vs Commissioner of Wealth tax, ; The question in that case was whether in the computation of net wealth of the licensee, the "Service lines" should be included. That was a converse case where the licensee rely ing upon the statutory provisions of the Electricity Act contended that "Service lines" were not a part of his wealth. This Court negatived that contention for purposes of assessment to wealth tax. Learned counsel placed some store by this pronouncement to contend that the exclusion of this 'wealth ' from valuation is arbitrary. But, in our opinion, the pronouncement relied upon does not advance petitioners ' case on the point. While it is true that the expression 'works ' in Section 2(n) of the 1910 Act includes 'Service lines ', the reason why 'Service lines ' could justifiably be excluded from valuation for purposes of determination of the 'amount ' is indicated in page 166 the report: "It is true that in view of Sec. 7(A)(2) of the Electricity Act, in computing the market value of the undertaking sold under sub section (1) of section 5 of that Act the value of service lines which had been con structed at the expense 593 of the consumers will not be taken into con sideration. The reason for this provision is obvious. It will be the duty of the new licen see to not only maintain and repair those lines but also to replace them when they become unserviceable. " Under the law when a requisition is made by an intend ingconsumer for electrical energy, the licensee has an obligation tO lay down Service lines. But, according to the provisions the entire cost of service line is not required to be borne by the licensee. The licensee is entitled to call upon the consumer to pay part of the cost of service line which may in a given case amount to a substantial part in accordance with the provisions in the Schedule to the Electricity Supply Act. Dealing with a similar provision the Gujarat High Court in Dakor Umreth Electricity Company Ltd. vs State of Gujarat, ( 13 Gujarat Law Reporter 88 at page 106) held: " . The question is whether the exclusion of such service lines from the valuation can be said to have rendered the principle of compensation irrelevant or inap propriate. We do not think so . . The petitioner is not constituted .the owner of these service lines for all purposes. More over, even after the purchase, these service lines would continue to be utilised for sup plying electrical energy to the consumers who paid for them. It would be most inequitable in these circumstances to provide for payment of compensation to the petitioner for these service lines. There is no reason in logic or principle why the petitioner should be allowed to make unjust and undeserved profit from transfer of these service lines for which it has paid nothing and which are not the product of its own labour . . " This reasoning, if we may say so with respect, is sound and should be accepted. Contention (d) is, therefore, insub stantial and is answered against the petitioners. Re: Contention (e): The apprehensions of the petitioners on this point is that while under Section 9(1)(i) of the impugned Act X of 1973, Government 594 would be entitled to deduct from the 'amount ' such sums as remain in the "Tariffs and Devidend Control Reserve"; "Contingency Reserve" and the "Development Reserve", in so far as such amounts have not been paid over by the licensees to the Government, the provision, however, does not take into account and provide for cases where such reserves are invested in 'fixed assets ' and as such "fixed assets" vest in the Government under the Acquisition. There would, there fore, it is urged be, a duplication of the liability of the licensee on this score, in the sense that while the "Re serves" in the form of fixed assets vest in the Government, the licensee is still exposed to the liability for the deduction of the amount shown in the accounts. Section 9(1)(i) provides: "Deductions from the Gross amount: The Government shall be entitled to deduct the following sums from the gross amount payable under this Act to the licensee. (a) (to) (h) Omitted as unnecessary (i) The amounts remaining in tariffs and dividends control reserve, contingencies reserve and development reserve, in so far as such amounts have not been paid over by licen see to the Government; (j) (k) Omitted as unnecessary On a reasonable construction, the expressions 'amounts remaining ' and 'in so far as such amounts have not been paid overl ' necessarily exclude any such duplication of the ac countability of the licensee for these 'Reserves '. If any part of the reserves is invested in "fixed assets" and the reserves in the form of such "fixed assets" are takenover by the Government pursuant to the acquisition, what remains to be accounted for by the licensee is only the 'amounts re maining ' in the pertinent accounts. The liability of the licensee for deduction of the 'Reserves ' from the 'amount ' would arise only if the balance remaining in those accounts are not paid. Indeed, Dr. Shankar Ghosh, learned counsel for the State of Assam, submitted that this is the correct interpretation to be placed on Section 9(1)(i) of the Act. With this construction of the provision, the contention of the petitionercompany on this point, does not survive. 595 31. The other contention raised under this point is that the property of the licensees represented by the unexpired portion of the licence has not been taken into account in computing the amount payable for the acquisition. As already indicated, the law having the protection of Article 31C the contention is not available at all. Section 7(3) of the impugned Act provides: "In the case of an undertaking which vests in the Government under this Act, the licence granted to it under Part II of the Electricity Act shall be deemed to have been terminated on the vesting date and all the rights, liabilities and obligations of the licensee under any agreement to supply elec tricity entered into before that date shall devolve or shall be deemed to have devolved on the Government: Provided that where any such agree ment is not in conformity with the rates and conditions of supply approved by the Govern ment and in force on the vesting date, the agreement shall be voidable at the option of the Government." This provision is a part of a scheme of nationalisation and is protected by Article 31C. 32. Contention (e) is accordingly held and answered against the petitioners. Re: Contention (f): This contention pertains to the liability of the licen see under Section 11(3) of the Act in respect of the amounts payable to employees retrenched by the Government or the "Board ' as the case may be, within one year from the vest ing date after the take over. Section 11(3) provides that if the Board or the Government, as the case may be, retrenches any employee within a period of one year from the vesting date, the liability for the amounts payable to the re trenched employee shall be deducted from the 'amount '. This provision, it is contended, imposes a liability which is arbitrary. Dr. Shankar Ghosh submitted that this point is purely academic inasmuch as there has been no such case of retrenchment. Dr. Ghosh further submitted that the provision is not unreasonable because in the case of employees so 596 retrenched, the amounts payable would substantially relate to the period during which the employment subsisted under the licensee and that it is not unreasonable to take this circumstances into account in continuing the licensee 's liability which would, even otherwise, be substantially be that of the licensee. 'On a consideration of the matter, we are inclined to the view even if this question is justicia ble that the provision is not unreasonable or arbitrary as it envisages the continuance of a liability which was, otherwise, substantially that of the licensee. There is no merit in this contention (f) either. Re: Contention (g): The grievance of the petitioners on this aspect, we are afraid, proceeds on a total misconception of the effect of the statutory provisions. The contention, in substance, is that while certain liabilities of the licensee arising out of its Quondam business operations are not expressly taken over by the Government and are declared to be the subsisting and continuing liabilities of the licensee, however, Section 9(7) authorises the deduction of some of those very liabilities from the 'amount ' without a corre sponding statutory obligation on the part of the GOvernment, in turn, to pay the same to the creditors on whose account and for whose benefit the deductions are made and without providing an express statutory discharge to the petitioners in that behalf. There is no substance in this contention. The legisla tive intention is plain and manifest. Though some of the liabilities arising out of the conduct of the licensees ' business prior to vesting are not taken over by Government, some of those liabilities are, yet, authorised to be deduct ed from the amount. The purpose of this provision is too obvious to require any statutory declaration of the obliga tions that arise in law and are attendant upon these sums coming to the hands of and retained by the Government. Quite obviously, the provision is not intended for an unjust enrichment in the hands of Government. The purpose is obvi ously to facilitate recovery of certain types of debts owing to public institutions etc., and the deduction is for the benefit of those creditor institutionS. Government would, plainly, be under a legal obligation to pay the sums so deducted to the concerned creditors. The provisions of the Statute must be read along, and in consonance, with the general principles of law which import such obligations on the part of the Government and an implied corresponding discharge to the petitioners to the extent of such deduc tions in their liabilities. There is a resulting, statuto ry trust in the hands of the Gov 597 ernment to pay the sums so deducted to the respective credi tors, even in the absence of express provisions in this behalf in the Statute the general principles of law operate. As a matter of construction it requires to be held that these obligations and consequences follow. There is really no justifiable grievance on this score. Contention (g) is, accordingly, held and answered against the petitioners. Re: Contentions (h) and (i): These two contentions pertain to the machinery envisaged by and set up under the impugned law for resolution of disputes on questions essential for the determination of the amount in accordance with the provisions of the Act. The contention of the petitioners, in substance, is that there is no machinery set up under the Act to determine the amounts under Section 9(c), (d) and (e) and to assess the loss referred to in Section 8. The Other contention on the point is that the arbitra tion clause is a limited one and is confined only to dis putes in four areas specifically enumerated in clauses (a) to (d) of sub section (1) of Section 20 of the Act. These lacunae in the Statute, it is contended, render the scheme of the Act for the determination of the 'Amount ' unreasonable and the scheme of the 'Act ' in relation to the determination of the 'Gross Amount ', the deductions to be made therefrom and the assessment of the 'amount ' payable for the acquisition, unworkable. The Courts strongly lean against any construction which tends to reduce a Statute to a futility. The provision of a Statute must be so construed as to make it effective and operative, on the principle "ut res majis valeat quam periat". It is, no doubt, true that if a Statute is abso lutely vague and its language wholly intractable and abso lutely meaningless, the Statute could be declared void for vagueness. This is not in judicial review by testing the law for arbitrariness or unreasonableness under Article 14; but what a Court of construction, dealing with the language of a Statute, does in order to ascertain from, and accord to, the Statute the meaning and purpose which the legislature in tended for it. In Manchester Ship Canal Co. vs Manchester Racecourse Co., Farwell J. said: "Unless the words were so absolutely senseless that I could do nothing at all with them, I should be bound to find 598 some meaning and not to declare them void for uncertainty." (See page 360 and 361) In Fawcett Properties vs Buckingham Coun try Council, Lord Denning approving the dictum of Farwell, J. said: "But when a Statute has some mean ing, even though it is obscure, or several meanings, even though it is little to choose between them, the Courts have to say what meaning the Statute to bear rather than reject it as a nullity." (Vide page 516) It is, therefore, the Court 's duty to make what it can of the Statute, knowing that the Statutes are meant to be operative and not inept and that nothing short of impossibility should allow a Court to declare a Statute unworkable. In Whitney vs Inland Revenue Commissioner, Lord Dunedin said: "A Statute is designed to be worka ble, and the interpretation thereof by a Court should be to secure that object, unless cru cial omission or clear direction makes that end unattainable." (vide page 52) 37. On consideration of the Statute on hand, it is not possible to subscribe to the view that the impugned law has not envisaged any machinery for the due ascertainment of the sums referred to in clauses (c), (d) and (e) of Section 9 which require, on such ascertainment and quantification, to be deducted from the gross amount. Section 10 enjoins upon the Government to appoint a person having adequate knowledge and experience in matters reling to accounts "to assess the net amount payable under this Act by the Government to the licensee after making the deductions mentioned in Section 9". Sub Section (2) of Section 10 provides that the Special Officer may call for the assistance of such Officer and staff of the Government or the Board or the undertaking as he may deem fit "in assessing the net amountpayable". These provisions, contemplate the determination by the Special Officer, who is constituted as a statutory authority under the Act, of the net amount payable. The functions of the Special Officer include an examination of the correctness of all the determinations made by the Government in the matter of the deductions, except where Government is statutorily specially constituted as an appellate authority in respect of certain matters under the Act. The Proviso to Sections 8 and 9 envisages prior notice to be 599 issued to the licensee by the Government to show cause against any deduction proposed to be made under Section 8 or 9, as the case may be, within the period specified in the Provisos. Even after the Government so makes such determina tion of the amounts which, according to it, are deductible from the gross amount, such determination would not be final. The assessment of the net amount payable to the licensee will have to be made by the "Special Officer". It is reasonable to construe that the decision of the Govern ment both under Sections 8 and 9 arrived at, even after giving an opportunity to the licensee of being heard, would not be final, but the final determination will have to be made by the "Special Officer" appointed under Section 10 of the Act. Section 10(1) and (2) of the Act must be so con strued as to enable the "Special Officer" to take into account the determinations respecting the deduction under Section 9 and 10 of the Act made by the Government and take a decision of his own in the matter. The power to "assess" the net amount by necessary implication takes within its sweep the power to examine the validity of the determination made by the Government in the matter of deductions from the gross amount. This power to determine and assess the 'net amount ' payable by necessary implication cover matters envisaged in Sections 8 and 9. Though only Section 9 is specifically referred to in sub section (1) of section 10, the language of sub section (1) and (2) which enable the Special Officer to "assess" the net amount paybale would, by necessary implication, attract the power to decide as to the validity and correctness of the deduction to be made under Section 8 as well. So construed, the provisions of Section 10 would furnish a reasonably adequate machinery for the assessment of the "net amount" payable to licensee. So far as Arbitration is concerned, even after the decision of the "Special Officer", there is the further Arbitral forum to decide disputes in respect of the specific areas in which disputes are rendered arbitrable under Sec tion 20. In view of these circumstances, we think the grievance of the petitioners on these points questions are not sub stantial. The points (h) and (i) are also, accordingly, held and answered against the petitioners. In the result, for the foregoing reasons all the contentions urged by the petitioners in support of their challenge to the impugned legislations fail. The Writ peti tions are, accordingly, dismissed; but in the circumstances, there will be no order as to costs. G.N. Petitions dis missed.
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The Public Limited Companies were given licenses to provide electricity in certain areas of Tinsukhia and Dibrugarh. These areas were within the boundaries of the Tinsukhia and Dibrugarh Municipal Boards. The Dibrugarh Company got its license in 1928. The license had specific rules and allowed the government to buy the company after 50 years. After that, the government could buy it every 20 years. Similarly, the Tinsukhia company received its license in 1954 with certain rules. The government had the choice to buy the company after 20 years, and then every 20 years after that. The government talked with both companies about buying them. These talks continued for many years. On September 27, 1972, the Governor made two official orders (ordinances) to force the companies to sell their businesses. Later, these orders were replaced by laws. These laws were the Indian Electricity (Assam Amendment) Act, 1973, and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973. The companies challenged these two laws in court. One law changed parts of the Indian Electricity Act. The other law took over the two companies. The companies had several reasons for their challenge. They argued that because of the private talks and the government's choice to buy them, the laws were not fair. They said the laws were just a way for the government to do what it wanted, and they did not really help the goals in Article 39(b) of the Constitution. This article deals with using resources for the common good. The companies also claimed that the government was not really taking over their businesses. Instead, they were only taking the difference between the market value (what the businesses were really worth) and the book value (what the businesses were worth on paper). The laws changed how the book value was calculated. The companies also challenged the protection given to the laws under Article 31 C of the Constitution. They also questioned certain parts of the laws that left out some things when calculating how much the companies would be paid, and allowed some deductions from the payment amount. The government argued that electricity is important for everyone. They said that any law to take over an electricity company falls under Article 39(b) and should be protected by Article 31 C. The government also said that book value is a normal way to value a company in accounting. They claimed that it is not unfair, even if the laws are not protected by Article 31 C. The court dismissed the companies' challenges and HELD: [R.S. Pathak. CJ, M.N. Venkatachaliah, section Natara jan and section Ranganathan, J J per Venkatachaliah, J.] 1.1. The court has already decided that it can review whether a law truly relates to the goals in Article 39. This means that if a law claims protection under Article 31 C, the court can check if the law is really needed to achieve the goals of Article 39(b) and (c). It is clear that the electricity produced and distributed by the companies is a "material resource of the community." The idea of distributing resources in Article 39(b) is not just about taking something and giving it to certain people. That is just one way to "distribute." Nationalization (government takeover) is another way. The cost of making social and economic changes is a difficult issue. It is a key part of nationalization. Giving constitutional protection to these changes recognizes that they can be very expensive. Economic issues are closely tied to nationalization. The financial cost of nationalization is very important and cannot be ignored. The rules about transferring the companies to the government and calculating the payment amount are connected and cannot be separated. The question of whether nationalization is good for the public, and whether it achieves its goals, has already been decided. [578C. D, E, 579C, D, H, 580A, B, E] 1.3. The company's right to the business is not transferred to the government or a board just because the government says it wants to buy it. The company can continue to run its business until the government actually takes it over and pays for it. The argument that the relationship between the parties changes immediately to a debtor and creditor situation is incorrect. Also, the idea that the company's interest becomes a "right to sue" that is not a public purpose is incorrect. [582E, 583C] 547 1.4. The law to take over the companies was made to support the principles in Article 39(b) of the Constitution and is protected under Article 31 C. The change made to the Indian Electricity Act, which changed how the payment amount is calculated, applies to cases of government purchase and is relevant in this case. [585E, F] Kesavananda Bharati vs State of Kerala; [1973] Suppl. SCR 1; Minerva Mills Ltd. vs Union of India, ; ; Sanjeev Coke Mfg. Co. vs Bharat Coking COal Ltd., ; ; State of Tamil Nadu vs L. Abu Kavar Bai; , ; Akadasi Padhart vs State of Orissa and Ors., ; ; Godra Electricity Co. Ltd. and Anr. vs The State of Gujarat and Anr., ; and Madan Mohan Pathak vs Union of India and Ors., , relied on. Fergusan vs Skrupa, ; ; Fazilka Electric Supply Co. Ltd. vs The Commissioner of Income Tax, Delhi, [1962] Suppl. 3 SCR 496 and Gujarat Electricity Board vs Shantilal; , , referred to. Bihar State Electricity Board vs Patna Electricity Supply Co. Ltd., ; distinguished. "History of the treatment of choses in action by the common law" by W.S. Holdsworth Vol. 33 Harvard law Review referred to. 2. It may not be right to deny a fair payment in all situations. However, even under a law protected by Article 31 A or 31 C, the fairness of the payment is not something the court can decide. Article 31 C is similar to Article 31 A, but for "urban property" instead of "agricultural property." The idea of "Book Value" is an accepted accounting method. It cannot be considered unfair. Even if the law was not protected by Article 31 C, and the appropriate tests were applied, the payment amount would still not be considered unreal or unfair. [590C, 592B] 548 Eswari Khetan Sugar Mills vs State of U.P., ; ; relied on. Gwalior Rayon vs Union of India, ; 671; referred to. When a customer asks for electricity, the company must provide service lines. However, the company does not have to pay for the entire cost of the service line. The company can ask the customer to pay part of the cost, which can be a large part, according to the Electricity Supply Act. While "works" in the Indian Railways Act includes "Service lines," service lines can be left out of the valuation because the new company will repair and maintain them. [593B, C; 592F, G] Dakor Umreth Electricity Co. Ltd. vs State of Gujarat, ; ; approved. The phrases "amounts remaining" and "in so far as such amounts have not been paid over" mean that there should be no double counting of the company's responsibility for these "Reserves." If any of the reserves are invested in "fixed assets" and the government takes over these assets, the company only needs to account for the "amounts remaining" in the accounts. The company is only responsible for the "Reserves" if the balance in those accounts is not paid. [594F, G] 5. Regarding the company's responsibility under Section 11(3) of the Acquisition Act for payments to employees let go by the government within a year of the takeover, it is not unreasonable because it continues a responsibility that the company already had. [595F, G, H, 596A, B] 6. Even though the government does not take over some of the company's responsibilities from before the takeover, some of those responsibilities can be deducted from the payment amount. The reason for this is clear: to make sure that debts to public institutions are paid. The government is not trying to unfairly enrich itself. The goal is to help recover debts owed to public institutions, and the deduction benefits those institutions. The government is legally required to pay the deducted amounts to the creditors. The law must be read in line with general legal principles, which require the government to pay these debts and relieve the companies of their responsibility. The government has a legal obligation to pay the deducted amounts to the creditors, even if the law does not say so directly. Therefore, these obligations must be followed. [596E, F, G, H, 597A] 7. Courts try to avoid interpreting a law in a way that makes it useless. A law should be interpreted to be effective, based on the principle that "it is better for a thing to have effect than to be made void." If a law is too vague and its language is meaningless, it can be declared void. This is not the same as judging whether the law is arbitrary or unreasonable under Article 14. Instead, it is about understanding the law's language to find the meaning and purpose that the legislature intended. Therefore, the court must do its best to understand the law, knowing that laws are meant to be effective. Only if it is impossible should a court declare a law unworkable. [597F, G, 598C] Manchester Ship Canal Co. vs Manchester Race Course Co., and Fawcet Properties vs Buckingham County Council, [1960] 3 AII.E.R. 503, referred to. Section 10 of the Acquisition Act requires the government to appoint someone with accounting knowledge to calculate the net amount payable to the company after making the deductions mentioned in Section 9. Sections 8 and 9 require the government to give the company notice and a chance to explain why any proposed deductions under those sections are wrong. Even after the government decides on the deductible amounts, that decision is not final. The "Special Officer" must assess the net amount payable to the company. It is reasonable to assume that the decisions made by the government under Sections 8 and 9 are not final, even after giving the company a chance to be heard. The "Special Officer" appointed under Section 10 of the Act will make the final determination. Section 10(1) and (2) of the Act must be interpreted to allow the "Special Officer" to consider the government's decisions about deductions under Sections 9 and 10 of the Act, but to make his own decision. The power to "assess" the net amount includes the power to examine the validity of the government's deductions. This power covers matters in Sections 8 and 9. Although Section 10 only mentions Section 9, the language of subsections (1) and (2), which allows the Special Officer to "assess" the net amount, also gives him the power to decide on the validity of deductions under Section 8. Therefore, Section 10 provides a reasonable way to assess the "net amount" payable to the company. [598E H; 599A E] 9. Regarding Arbitration, even after the "Special Officer's" decision, there is a further way to resolve disputes under Section 20. This section allows for the appointment of a sitting or retired District or High Court Judge as arbitrator. Therefore, there is a proper way to resolve disputes between the government and the company, making the Acquisition Act workable. [599F, G] Per Mukharji, J. (Concurring) 1. Article 39(b) of the Constitution says that the government should ensure that the ownership and control of community resources are distributed to best serve the common good. It also says that the economic system should not concentrate wealth and production in a way that harms the common good. To decide if a law is within Article 31 C, the Court can examine the law's nature and character to see if there is a connection between the law and the principles in Article 39(b) and (c). If there is no connection, the law will not be protected by Article 31 C. To understand the true nature of the law, the Court can look beyond the surface. [553E H] Kesavananda Bharati vs State of Kerala, [1973] Suppl. SCR 1; relied on. Charles Russel vs The Queen, [1882] VII AC 829; referred to. If someone claims that the government has misused its power by including a declaration in a law that does not actually support the principles in Article 39(b) and (c), the Court must investigate. If the Court finds that the declaration was just a pretense and the law's real purpose is something else, the declaration will not prevent the Court from striking down any part of the law that violates Articles 14, 19, or 31. In other words, if a law is supposedly meant to support the State's policy but is actually meant to achieve something else, the Court can ignore the declaration and decide based on the law's true nature. The only thing the Court can review under Article 31 C is whether there is a direct and reasonable connection between the law and the provisions of Article 39(b) and (c). The reasonableness applies to the connection, not to the law itself. [554D, E, F, 555B, C] Kesavananda Bharati vs State of Kerala, [1973] Suppl. SCR 1; Minerva Mills Ltd. vs Union of India, ; and Sanjeer Coke Mfg. Co. vs Bharat Coking Coal Ltd. & Anr. , ; , relied on. It is agreed that the electricity produced by the companies is a community resource under Article 39(b). Considering the true nature and purpose of the laws, they have a direct and reasonable connection to the goal of distributing resources to serve the common good. The way the value is determined and the substitution of book value for market value are just methods for taking over the companies. They do not reveal the true nature of the laws, but are just related details. Therefore, it is incorrect to say that what was taken was not the material resources, but the right to sue. The true purpose of the laws was to take over the material resources, namely the electric energy, for better supply and distribution. [556D, E, F] State of Tamil Nadu & Ors. vs L. Abu Kavur Bai & Ors., , relied on. Bihar State Electricity Board & Ors. vs Patna Electrici ty Supply Co. Ltd., distinguished. Considering the true nature of the laws, they are not just a disguised way to achieve something that does not relate to Article 31(b) and (c) of the Constitution. [556H]
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No. The main point which is significant in these writ petitions, is the extent and scope of judicial review of legislation where there is 'declaration under article 31 C of the Constitution, which enjoins that no law giving effect to the policy of the State towards securing all or any of the principles laid down, inter alia, namely, Arti cles 38, 39, 39A, 40, 41, 42, 43A, 44 to 48, 48A and 49 to 51 shall be deemed to be void on the ground that those are inconsistent or take away or abridge any of the rights conferred by Article 14 or 19, and further provides that no law containing a declaration that it is for giving effect to such a policy, shall be called in question in any court on the plea that it does not give effect to such a policy. Hence, in order to decide whether a Statute is within Article 31C, the Court, if necessary, may examine the nature and the character of legislation and the matter dealt with as to whether there is any nexus between the law and the principles mentioned in Article 39(b) and (c). On such an examination if it appears that there is no such nexus be tween the legislation and the objectives and the principles mentioned in Article 39(b) & (c), the legislation will not enjoy the protection of Article 31C. Justice Palekar in the same decision at page 63 1 also reiterated that if the court comes to the conclusion that the object of the legislation was merely a pretence and the real object was discrimination or something other than the object specified in Article 39(b) and (c), Article 31C would not be attracted and the validity of the Statute would have to be tested independently of Article 31C. Justice Dwived at page 934 of the report said that the Court still retains power to determine whether the law has relevancy to the distribution of the ownership and 555 control of the material resources of the community and to the operation of the economic system. The only question open to judicial review under Article 31 C is whether there is a direct and reasonable nexus between the impugned law and the provisions of Article 39(b) & (c). on 27.9.1972. 6, the amount payable for the undertaking shall be the book value of the undertaking at the time of purchase or where the undertaking has been delivered before the purchase under sub Section (3) of Sec. (2) The book value of an undertaking for the purpose of sub section (1) shall be deemed to be the depreciated book value as shown in the audited balance sheet of the licensee under the law for the time being in force, of all lands, buildings, works, materi als and plant of the licensee, suitable to and used by him for the purpose of the undertak ing, other than (i) a generating station declared by the licensee not to form part of the undertaking for the purpose of purchase, and (ii) service lines or other capital works or any part thereof which have been construct ed at the expense of the consumers, but with out any addition in respect of compulsory purchase or of goodwill or any profit which may be or might have been made from the under taking or of any similar consideration. It is material to point out that sub section (3) of Section 1 of the Amending Act provides that the Amending Act shall be deemed to 562 have come into force on 27.9.1972, which was the date of promulgation of the earlier Ordinance. Explanation: There shall be no obliga tion on the part of the Government or the Board to purchase any undertaking in pursuance of any notice given as aforesaid, nor shall the service of such notice ' be deemed to prevent the Government from taking any pro ceeding de novo in respect of the undertaking under this Act. (1) The gross amount payable to a licensee shall be the aggregate value of the amounts specified below: (i) the book value of all completed works in beneficial use pertaining to the undertaking and taken over by the Government (excluding works paid for by consumers) less depreciation calculated in accordance with Schedule I; (ii) the book value of all works in progress taken over by the Government, exclud ing works paid for by consumers or prospective consumers; (iii) the book value of all stores including spare parts taken over by the Gov ernment and in the case of used stores and spare parts, if taken over, such sums as may be decided upon by the Government; (iv) the book value of all other fixed assets in use on the vesting date and taken over by the Government less depreciation calculated in accordance with Schedule I; (v) the book value of all plants and equipments existing on the vesting date, if taken over by the Government, but no longer in use owing to wear and tear or to obsolescence, to the extent such value has not been written off in the books of the licensee less depreci ation calculated in accordance with Schedule I; (vi) the amount due from consumers in respect of every hire purchase agreement referred to in Sec. (3) In the case of an undertaking which vests in the Government under this Act, the license granted to it under part II of the Electricity Act shall be deemed to have been terminated on the vesting date and all the rights, liabilities and obligations of the licensee under any agreement to supply elec tricity entered into before that date shall devolve or shall be deemed to have devolved on the Government; Provided that where any such agreement is not in conformity with the rates and condi tions of supply approved by the Government and in force on the vesting date, the agreement shall be voidable at the option of the Govern ment. 8; (c) the amount due, if any, 'including interest thereon, from the licensee to the Board, for energy supplied by the Board before the vesting date; (d) all amounts and arrears of interest, if any thereon, due from the licensee to the Government, (e) the amount, if any, equivalent to the loss sustained by the Government by reason of any property or rights belonging to the undertaking not having been handed over to the Government, the amount of such loss being deemed to be the amount by which the market value of such property or rights exceeds the amount payable therefor under this Act, to gether with any income which might have been realized by the Government, if the property or rights had been handed over on the vesting date; (f) the amount of all loans due from the licensee to any financial institutions consti tuted by or under the authority of the Govern ment and arrears, or interest, if any, there on; (g) all sums paid by consumers by way of security deposit and arrears of interest due thereon on the vesting date, in so far as they have not been paid over by the licensee to the Government, less the amounts which according to the books of the licensee are due from the consumers to the licensee for energy supplied by him before that date; (h) all advances from consumers and prospec tive consum 567 ers, and all sums which have been or ought to be set aside to the credit of the consumers ' fund, in so far as such advances or sums have not been paid over by the licensee to the Government; (i) the amounts remaining in Tariffs and Dividends Control Reserve, Contingencies Reserve and Development Reserve, in so far as such amounts have not been paid over by licen see to the Government; (j) the amount, if any, as specified in Ss. The two legislations, one amending the provisions of Sections 5(2) 6(7) and 7 A of the , and the other providing for the acquisition of the two undertakings are challenged by the petitioner on several grounds, the principal attack, however, being that the legislations, brought forth, as they were, in the wake of the private negotiations and the exercise of the option to purchase, are not bona .fide, but constitute a mere colour able exercise of the legislative power and that, at all events the real objects of the two legislations have no direct and reasonable nexus to the objects envisaged in clause (b) of Article 39 of the Constitution and that a careful and critical discernment of the context in which the legislation was brought forth would lay bare before the judicial eye that what was sought to be acquired was not the "undertakings" of the two companies but really the differ ence between the "market value" of the undertakings which the State has agreed, under the private treaties, to pay and what, in any event, the State was obliged to pay under the provisions of Section 7A, as it then stood on the one hand and the "Book Value" of the undertaking, which the law seeks to substitute on the other. 243 of of 1985 and C.A. That, at all events, not every provision of a statute is entitled to the protection of Article 31 C but only those provisions which are basically and essentially necessary for giving effect to the principle in Article 39(b) and that, accordingly, the provisions in the impugned law relating to the determination of the amount do not attract Article 31 C. (b) That in effect and substance the law is not one for the acquisition electricity undertakings but is merely one to acquire a 'chose in action ' and to extinguish the legal rights of the Tinsukhia Co. for the difference between the "market price" of the undertakings which the State was obliged to pay under the intended statutory purchase and the "Book Value" to which the liability is sought to be limited under the impugned legislations. Then again, though Article 31 had not, by then, been deleted, its content had been cut down so much, so that even under a law providing for acquisition of property which did not have the protec tion of 31C the adequacy of the "Amount" determined was not justiciable and all that was necessary was that it should not be unreal or illusory. 23 of Assam Act X of 1973, the question whether there is any real nexus between the legislation and the principles envisaged in Article 39(b) is justiciable and indeed the existence of such nexus or connection is a condition precedent for the attraction and applicability of Article 31 C. Learned Coun sel submitted that in order to decide whether a Statute is within Article 31 C or not, the Court has to examine the nature and character of the legislation and if upon such scrutiny it appears that there is no nexus between the legislation and the principles in Article 39(b) the legisla tion must be held to fall outside the protection of Article 31 C. Shri Sorabjee said, stripped of its veils and vest ments, the law, would show its real nature as one whose avowed nexus to Article 39(b) is merely a pretence and that its purpose is other than the objects envisaged in Article 39(b). If the Court comes to the conclusion that the declaration was merely a pretence and that the real purpose of the law is the accomplishment of some object other than to give effect to the policy of the State towards securing the directive principles in Article 39(b) and (c) the declaration would not be a bar to the court from striking down any provision therein which violates Article 14, 19 or 31. "The only question open to judicial review under the unamended Article 31 C was whether there is a direct and reasonable nexus between the impugned law and the provisions of Article 39(b) and (c)" (P. 261) (Emphasis Supplied) In the same case, Bhagwati, J. observed: " . it is not every provision of a statute which has been enacted with the dominant object of giving effect to a direc tive principle, that it entitled to protec tion, but only those provisions of the statute which are basically and essentially necessary for giving effect to the directive principles are protected under the amended Article 31 C " . The proposition of Sri Sorabjee, in principle, is, therefore, unexceptionable; but the question remains wheth er, upon the application of the appropriate tests, the impugned statute fails to measure up to the requirements of the Constitution to earn the protection under Article 31 C. Learned counsel sought to contend that the Assam State Electricity Board having exercised the option of purchasing the undertaking of the Tinsukia Co., under Section 6(1) of 1910 Act by the statutory notice dated 23.5.1972 requiring the company to sell the undertaking to the Board on the expiration of the period of the licence, the question of any further need to acquire the undertaking for the purpose of effectuating the objects envisaged in article 39(b) of the Constitution by the expedience of a separate and independent legislation was, indeed, unreal or non existent. What was sought to be acquired by the impugned law, it is contended, was not the undertaking but the difference between the 'Market price ' and the 'Book value ' which the impugned legislation envisaged. Respondents further submit that on the question of even the possible 'illusory ' nature, let alone the adequacy, of the "Amount" could not be agitated if the law has the protection of Article 31 C. They, however, assert that 'Book value ' is a well accepted accountancy concept of value and could never be characterised as illusory, even if the law did not come under Article 31 C. The questions that arise for consideration are, sequen tially, whether the electrical energy generated and supplied by the petitioner companies is a "material resource of the community" within the meaning of Article 39(b); whether the impugned legislation has a reasonable and direct nexus to the objective of distributing this materials resource so as to subserve the common good and what are the appropriate tests to ascertain this nexus. 577 Apropos of the contention that, at all events, the provi sions pertaining to the "amount" could have no reasonable or direct nexus to the principles envisaged in Article 39(b), but are merely intended to extinguish the legitimate rights of the petitioner company to receive the price of the under taking under the 1910 Act, as the law then stood, pursuant to the option exercised by the 'Board ', it would, perhaps, be necessary to ascertain the composite elements that make for a law of nationalisation and whether provisions touching the quantification of the "amount" payable for the acquisi tion are not an essential and integral part of such law. On the contention urged by Shri Rangarajan as to what could be said to survive for consideration under Article 31(2), (as it then stood), if the law has the protection of Article 31 C the question that arises is whether anything at all survives for consideration under Article 31. It was then contended that not all the provisions of a law can and need be eligible for the protection of Article 31 C and that accordingly, in the present case the provi sions as to the quantification of the "amount", which were meant to achieve an oblique motive of interdicting and extinguishing the vested rights of the petitioner company to receive payment in accordance with the provisions of the 1910 Act, as they then stood, should not have the protection of Article 31 C. We are afraid this contention proceeds on an impermissible dichotomy of the components integral to the idea of nationalisation. (Emphasis Supplied) That the right, title and interest of the licensee in the undertaking does not get transferred to the Board or the State, as the case may be, immediately upon the mere exer cise of the option to purchase is further clear from what is implicit in the observa tions of this Court in Godra Electricity Company Limited and another vs The State of Gujarat and another; , at page 54. It is not necessary, therefore, to go into the question whether a "chose in action" can at all be acquired. 83 of 1974 and 123 of 1974. It requires, therefore, to be held that the impugned legislation viz., Assam Act X, 1973, was broughtforth for securing the principles contained in Article 39(b) of the Constitution and is protected under Article 31 C. The amend ment made to the provisions of the , by Assam Act IX of 1973, amending the basis for quan tification of the amount payable in the case of a statutory purchase pursuant to the exercise of the option in terms of the licence would apply to and govern cases of statutory sales and would not assume any immateriality in this case as the Assam Act X of 1973 is itself as we have held a valid piece of legislation. Shri Rangarajan, however, contended that notwith standing that a law has the protection of Article 31 C, the question would yet be justiciable under Article 31(2), as it then stood, if the "amount" is illusory or the principles for its determination arbitrary. Thus, so far as this aspect of the matter is con 587 cerned, two conclusions broadly emerge: (1) that in view of the express provisions of Article 31 C which excludes article 31(2) also where a property is acquired in public interest for the avowed purpose of giving effect to the principles enshrined in article 39(b) and (c), no compensation is neces sary and article 31(2) is out of the harm 's way, and (2) that even if the law provides for compensation, the courts cannot go into the details or adequacy of the compensation and it is sufficient for the State to prove that the compensation was reasonable and not monstrous or illusory so as to shock the conscience of the court." Accordingly, even if the impugned law had no protec tion of Article 31 C and tests appropriate to and available are applied, in the circumstances of this case, it cannot be said that the principles envisaged in the impugned law lead to an "amount" which can be called unreal or illusory. Section 7(3) of the impugned Act provides: "In the case of an undertaking which vests in the Government under this Act, the licence granted to it under Part II of the Electricity Act shall be deemed to have been terminated on the vesting date and all the rights, liabilities and obligations of the licensee under any agreement to supply elec tricity entered into before that date shall devolve or shall be deemed to have devolved on the Government: Provided that where any such agree ment is not in conformity with the rates and conditions of supply approved by the Govern ment and in force on the vesting date, the agreement shall be voidable at the option of the Government." There is no substance in this contention.
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These laws were the Indian Electricity (Assam Amendment) Act, 1973, and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973. They argued that because of the private talks and the government's choice to buy them, the laws were not fair. They said the laws were just a way for the government to do what it wanted, and they did not really help the goals in Article 39(b) of the Constitution. The companies also claimed that the government was not really taking over their businesses. They said that any law to take over an electricity company falls under Article 39(b) and should be protected by Article 31 C. The government also said that book value is a normal way to value a company in accounting. They claimed that it is not unfair, even if the laws are not protected by Article 31 C. The court dismissed the companies' challenges and HELD: [R.S. This means that if a law claims protection under Article 31 C, the court can check if the law is really needed to achieve the goals of Article 39(b) and (c). The idea of distributing resources in Article 39(b) is not just about taking something and giving it to certain people. The rules about transferring the companies to the government and calculating the payment amount are connected and cannot be separated. The company's right to the business is not transferred to the government or a board just because the government says it wants to buy it. Also, the idea that the company's interest becomes a "right to sue" that is not a public purpose is incorrect. The law to take over the companies was made to support the principles in Article 39(b) of the Constitution and is protected under Article 31 C. The change made to the Indian Electricity Act, which changed how the payment amount is calculated, applies to cases of government purchase and is relevant in this case. Co. vs Bharat Coking COal Ltd., ; ; State of Tamil Nadu vs L. Abu Kavar Bai; , ; Akadasi Padhart vs State of Orissa and Ors., ; ; Godra Electricity Co. Ltd. and Anr. vs The State of Gujarat and Anr., ; and Madan Mohan Pathak vs Union of India and Ors., , relied on. 3 SCR 496 and Gujarat Electricity Board vs Shantilal; , , referred to. Bihar State Electricity Board vs Patna Electricity Supply Co. Ltd., ; distinguished. However, even under a law protected by Article 31 A or 31 C, the fairness of the payment is not something the court can decide. [590C, 592B] 548 Eswari Khetan Sugar Mills vs State of U.P., ; ; relied on. [593B, C; 592F, G] Dakor Umreth Electricity Co. Ltd. vs State of Gujarat, ; ; approved. Regarding the company's responsibility under Section 11(3) of the Acquisition Act for payments to employees let go by the government within a year of the takeover, it is not unreasonable because it continues a responsibility that the company already had. [596E, F, G, H, 597A] 7. Section 10 of the Acquisition Act requires the government to appoint someone with accounting knowledge to calculate the net amount payable to the company after making the deductions mentioned in Section 9. It is reasonable to assume that the decisions made by the government under Sections 8 and 9 are not final, even after giving the company a chance to be heard. To decide if a law is within Article 31 C, the Court can examine the law's nature and character to see if there is a connection between the law and the principles in Article 39(b) and (c). If there is no connection, the law will not be protected by Article 31 C. To understand the true nature of the law, the Court can look beyond the surface. If someone claims that the government has misused its power by including a declaration in a law that does not actually support the principles in Article 39(b) and (c), the Court must investigate. The only thing the Court can review under Article 31 C is whether there is a direct and reasonable connection between the law and the provisions of Article 39(b) and (c). Considering the true nature and purpose of the laws, they have a direct and reasonable connection to the goal of distributing resources to serve the common good. Considering the true nature of the laws, they are not just a disguised way to achieve something that does not relate to Article 31(b) and (c) of the Constitution.
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No. 10 of 1950. Appeal from a Judgment of the High Court of Judicature at Bombay (Chagla C.J. and Tendolkar J.) dated 29th March, 1950, in Suit No. 24 of 1950. December 20. The Court delivered Judgment as follows: FAZL ALI J. I have read the judgment prepared by my brother, Mahajan J., and generally agree with his conclu sions and reasonings, but, having regard to 54 the importance of the points raised, I wish to add a short judgment of my own. There are really three questions to be decided in this appeal, and they are as follows : (1) Whether the Bombay City Civil Court Act, 1948 (Act XL of 1948), is ultra vires the Legislature of the State of Bombay; (2) Whether in any event section 4 of the above Act is ultra vires the State Legislature; and (3) Whether the Bombay High Court has jurisdicion to try the suit. The first and the third questions have been answered by the High Court in favour of the appellant and the second question has been answered in favour of the respondents. In this Court, the appellant attacked the judgment of the High Court in so far as it concerns the second question, whereas the first respondent attacked it in so far as it concerns the first and the third questions. The Bombay City Civil Court Act purports to create in additional civil court for Greater Bombay having jurisdic tion to try, receive and dispose of all suits and other proceedings of a civil nature not exceeding a certain value, subject to certain exceptions which need not be referred to here. It was contended on behalf of the respondents that the Act is ultra vires the Legislature of the State of Bombay, because it confers jurisdiction on the new court not only in respect of maters which the Provincial Legislature is compe tent to legislate upon under List II of the 7th Schedule to the Government of India Act, 1935, but also in regard to matters in respect of which only the Central or Federal Legislature can legislate under List I (such as, for in stance, promissory notes, which is one of the subjects mentioned in entry 28 of List I). To understand this argu ment, it is necessary to refer to entry 53 of List , entries 1 and 2 of List II and also entry 15 of List II. These entries run as follows : Entry 53, List I : 55 "Jurisdiction and powers of all courts except the Feder al Court, with respect to any of the matters in this List . ." Entries 1 and 2, List II : "1 . the administration of justice;constitution and organisation of all courts except the Federal Court . " "2. Jurisdiction and powers of all courts except the Federal Court, with respect to any of the matters in this List . " Entry 15, List III : "Jurisdiction and powers of all courts except the Feder al Court, with respect to any of the matters in this List. " The respondents ' contention may appear at the first sight to be a plausible one, but, in my opinion, it is not well founded in law. For the purpose of correctly deciding the question raised, we must first try to understand the meaning of the following items in entry 1 of List II, "administration of justice, constitution and organization of all courts except the Federal Court. " A reference to the three Legislative Lists shows that "administration of jus tice" is entirely a provincial subject on which only the Provincial Legislature can legislate. The same remark ap plies to "constitution and organization of all courts except the Federal Court. " The expression "administration of jus tice" has a wide meaning, and includes administration of civil as well as criminal justice, and in my opinion entry 1 in List II, which I have quoted, is a complete and self contained entry. In this entry, no reference is made to the jurisdiction and powers of courts, because the expressions "administration of justice" and "constitution and organi zation of courts", which have been used therein without any qualification or limitation, are wide enough to include the 'power and jurisdiction of courts, for how can justice be administered if courts have no power and jurisdiction to administer it, and how can courts function without any power or jurisdiction. Once this fact is clearly 56 grasped, it follows that, by virtue of the words used in entry 1 of List II, the Provincial Legislature can invest the courts constituted by it with power and jurisdiction to try every cause or matter that can be dealt with by a court of civil or criminal jurisdiction,and that the expression "administration of justice" must necessarily include the power to try suits and proceedings of a civil as well as criminal nature, irrespective of who the parties to the suit or proceeding or what its subject matter may be. This power must necessarily include the power of defining, enlarging, altering, amending and diminishing the jurisdiction of the courts and defining their jurisdiction territorially and pecuniarily. The question then arises as to the exact meaning of entry 2 of List II and entry 53 of List I, which are said to militate against the above construction. These entries, in my opinion, confer special powers on Provincial and Central Legislatures, as opposed to the general power conferred on the Provincial Legislature by entry 1 of List II, the spe cial powers being the logical consequence or concomitant of the power of the two Legislatures to legislate with regard to the matters included in their respective Legislative Lists. The effect of these entries is that while legislating with regard to the matters in their respective Legislative Lists, the two Legislatures are competent also to make provisions in the several Acts enacted by them, concerning the jurisdiction and powers of courts in regard to the subject matter of the Acts, because otherwise the legisla tion may not be quite complete or effective. The words used in entry 2 of List II and entry 53 of List I are wide enough to empower the two Legislatures to legislate negatively as well as affirmatively with regard to the jurisdiction of the courts in respect of the matters within their respective legislative ambits. In other words, they can exclude or bar the jurisdiction of the courts in regard to those matters, and they can also confer special jurisdiction on certain courts. They can also, apart from the general power which the courts usually exercise, confer power on the courts to 57 pass certain special orders, instances of which I shall give later. In this connection, reference may be made to section 9 of the Code of Civil Procedure, which provides that "the Courts shall have jurisdiction to try all suits of a civil nature ' excepting suits of which their cognizance is either expressly or impliedly barred. " This section obviously postulates among other things the barring of the jurisdiction of the civil courts by Legislatures with respect to particular classes of suits of a civil nature, and the statute book abounds in instances in which the jurisdiction of the civil courts is barred under Acts passed by the Central and Provincial Legislatures. There are also many Acts providing that any suit or proceed ing concerning the subjects matters of those Acts shall be triable by the court or courts specified therein. Such provisions are to be found in a number of Acts enacted both prior to and after the enactment of the Government of India Act, 1935, and there can be no doubt that the British Par liament while enacting that Act was fully aware of the existing legislative practice obtaining in this country as well as of the fact that the provisions in question were sometimes necessary and therefore it empowered the Central and Provincial Legislatures to make them under entry 53 of List I and entry 2 of List II, respectively. This, in my opinion, is the true meaning of these entries, and it also explains why a separate entry was necessary enabling the two Legislatures to legislate with regard to the power and jurisdiction of the courts in respect of the subject matters mentioned in the three Legislative Lists. But for an express provision like that made in the entries referred to above, the two Legislatures might not have been able to confer special jurisdiction on the courts in regard to the matters set out in the Legislative Lists, nor could they have been able to bar the jurisdiction of the ordinary courts in regard to them, however necessary or desirable such a course might have appeared to them. 8 58 It should be noted that the words used in these entries are: "jurisdiction and power". "Power" is a comprehensive word, which includes all the procedural and substantive powers which may be exercised by a court, but the full significance of the use of the word in the context can be grasped only by reading a large number of local and special Acts in which power has been given to Courts to pass certain special and unusual orders. For example, section 13 of the Indian , provides that " where any person is convicted of an offence punishable under any rule made under clauses . the Court by which he is convicted may direct that the aircraft or arti cle or substance, as the case may be, in respect of which the offence has been committed, shall be forfeited to His Majesty. " Reference may also be made to section 24 of the Indian Arms Act, 1878, which provides that "when any person is convicted of an offence punishable under this Act, committed by him in respect of any arms, ammunition or military stores, it shall be in the discretion of the convicting Court or Magistrate further to direct that the whole or any portion of such arms, ammunition or mili tary stores, and any vessel . . . shall be confiscated." (See also section 10 of the [Act I of 1944], and section 13 of the Food Adul teration Act, 1919 [Bengal Act VI of 1919], which are in similar terms, and the various Acts relating to money lend ers and money lending which confer special power on the courts of reopening several kinds of transactions for the relief of debtors.) It seems to me that the word "power" was added to the word "jurisdiction", in entry 53 of List I, entry 2 of List II, and entry 15 of List III, in order to enable the two Legislatures to grant special powers like those I have mentioned to the courts which are to deal with the subject matter of any special legislation. A reference to the Acts passed after the enactment of the Government of India Act, 1935, will show that 59 special provisions with regard to the jurisdiction of courts have been made even after the passing of that Act, in a large number of Central and local Acts. Confining ourselves to the Acts passed by the Bombay Legislature, since we are concerned here with one of such Acts, we find that in The Bombay Probation of Offenders Act, 1938 (Bombay Act No. XIX of 1938), section a empowers the following courts "to exer cise powers under the Act, (a) the High Court, (b) a Court of Session, (c) a District Magistrate, (d) a Sub Divisional Magistrate, (e) a salaried Magistrate . " Similarly, in the Bombay Agricultural Produce Markets Act, 1939, sec tion 23 provides that "no offence under this Act . shall be tried by a Court other than that of a Presidency Magistrate, or a Magistrate of the First Class or a Magis trate of the Second Class specially empowered in this be half. " Section 11 of the Bombay Cotton Control Act, 1942, provides that "no criminal court inferior to that of a Presidency Magistrate or a Magistrate of the Second Class shall try any offence under this Act". Section 19 of the Bombay Sales of Motor Spirit Taxation Act, 1946, and section 5 of the Bombay Harijan Temple Entry Act, 1947, are provi sions which exclude the jurisdiction of courts under certain circumstances. Similar instances may be multiplied from the Acts of the Central Legislature and other Provincial Legis latures, but, in my opinion, the instances I have quoted are sufficient to show (1) that the practice which prevailed before the Government of India Act has continued even after its enactment, and (2) that the words "jurisdiction and powers" have been consistently construed to bear the meaning which I have attributed to them. The interpretation which is sought to be put on the entries by the respondent is in my opinion open to the following objections : (1).It involves the curtailment of the meaning of the expression "administration of justice" in such a way as to rob it of its primary content the jurisdiction and powers of the court, without which justice cannot be administered. 60 (2) It makes it necessary to read entry 2 of List II as part of entry 1 of the same List, though it has been sepa rately numbered as an independent entry. This is opposed to the scheme followed in the three Legislative Lists, which seems to be that each particular entry should relate to a separate subject or group of cognate subjects, each subject or group of subjects being independent of the others (subject only to incidental overlapping). The construction suggested by the respondents makes it necessary to assume that though according to their line of reasoning the words "jurisdiction and powers of courts, etc. " occurring in entry 2 of List II should have been put in entry 1 of the same List, being intimately connected with the subject of "admin istration of justice and the constitution and organization of courts", it was without any apparent reason numbered separately and made an independent entry. (3) The suggested construction would exclude from the jurisdiction of the Provincial Courts a large number of matters which normally come before courts exercising civil or criminal jurisdiction and, if it is accepted, the courts will not be able to function in the fullest sense unless both the Provincial and Central Legislatures have by piece meal legislation or otherwise exhausted their power of legislating on all the subjects comprised in Lists II and I respectively. Even after they have exhausted such power, the courts will not be able to deal with important matters, such as contracts, transfer of property, arbitration, wills and succession, criminal law, etc., which are subjects mentioned in List III, until one of the two Legislatures has legislated in regard to those subjects, which raises two important questions: (1) Which of the two Legislatures has to do it first; and (2) How is the conflict to be avoided ? That the construction put by the respondents will lead to anomalous results which could not have been within the contemplation of the British Parliament while enacting the Government of India Act, 1935, may be illustrated by one or two examples. Reference 61 might here be made to entry 26 of List I, which deals with "carriage of passengers and goods by sea or by b air. " It should be supposed that if any of the goods carried by air are lost and a suit is instituted in regard to them, the suit will be triable by the court having jurisdiction over the matter under the Civil Procedure Code, subject to any special legislation on the subject by the Central Legisla ture, in spite of the fact that the carriage of goods and passengers by sea or by air is a subject mentioned in List I. But, on the view propounded before us by the respondent, the Provincial civil courts will not be competent to try such a suit, unless they are empowered to do so by the Central Legislature. In order to show to what absurd result this doctrine may be pushed, and in order to avoid the criticism of taking for granted what is in controversy, we may take a very extreme example, because the soundness of the respondents ' contention can be tested only by trying to find out what would happen if we were to stretch it to the utmost limit to which it can be stretched. Entry 13 in List I is: "the Banaras Hindu University and the Aligarh Muslim University." Under entry 53 of List I, the Central Legisla ture has power to legislate in regard to the jurisdiction and powers of courts in respect of the subject matter of entry 13. It may therefore be supposed, having regard to the wide language used in entry 13, that it is open to the Central Legislature to enact that suits in which these Universities are concerned as plaintiff or as defendant, will be triable only by the particular court mentioned in the enactment concerned and that no other court shall have jurisdiction in regard to such suits, It is difficult to think that until such a legislation is made, a court which would otherwise be the proper court, has no jurisdiction to try any suit in which one of these Universities is a party, no matter what the subject matter of the suit may be. I am certain that the framers of the Government of India Act did not contemplate such a result. We all know that at the date when the Government of India Act, 1935, was passed, there were in existence 62 in the different Provinces a large number of courts of law and the administration of justice throughout the Provinces was in the hands of these provincial courts. The civil courts in the Province used to try all suits and proceedings of a civil nature which are triable under section 9 of the Civil Procedure Code, and the criminal courts used to try all criminal cases which are triable under the Code of Criminal Procedure. The jurisdiction and power of the courts were not confined to cases in regard to the subjects stated in List II, nor were they debarred from dealing with cases relating to matters which have been assigned to List I. The jurisdiction of the courts depended in civil cases on a "cause of action" giving rise to a civil liability, and in criminal cases on the commission of an offence, and on the provisions made in the two Codes of Procedure as to the venue of the trial and other relevant matters. It seems to me that the Government of India Act, 1935, did not contem plate any drastic change in the existing system of adminis tration of justice, but what it contemplated was that that system should continue subject to future legislation by the proper Legislature; Central or Provincial, barring the jurisdiction of courts or conferring jurisdiction or power on special courts with regard to the matters included in the appropriate Legislative Lists, should there be any occasion for such special legislation. Under the Govern ment of India Act, 1935, every Province became more or less an autonomous unit with a complete machinery for administer ing justice to the fullest extent. In my opinion, there is nothing in the Act of 1935 to show that there was any inten tion on the part of its framers to affect the machinery so drastically as to confine it to the administration of a mere partial or truncated kind of justice relating only to mat ters specified in List II. Mr. Setalvad, the ]earned Attorney Genera], who ap peared on behalf of the appellant, in supporting the im pugned Act, argued before us that for the purpose of decid ing this appeal, we might also refer to entry 4 List III. His contention was that the impugned 63 Act having had the assent of the Governor General, it would be permissible to see what powers the Provincial Legislature could exercise under Lists II and III taken together. If the course which he suggests is adopted, then the subjects on which the Provincial Legislature can legislate would be: (1) administration of justice; (2)constitution and organiza tion of courts; and (3) civil procedure, including all matters included in the Code of Civil Procedure at the date of the passing of the Government of India Act, 1935. One of the matters included in the Civil Procedure Code is the jurisdiction of courts, Section 9 of the Code provides, as I have already stated, that the courts shall have jurisdic tion to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. There are are also provisions in the Code dealing with the territorial and pecuniary jurisdiction of the courts. The three entries will thus cover exactly the field which is covered by item 14 of section 92 of the Canadian Constitution which comprises the following matters: "administration of justice in the Provinces, including constitution, maintenance and organization of provincial courts both of civil and criminal jurisdiction including procedure in civil matters in those courts. " It has been held in Canada that the words referred to above include the power and jurisdiction of courts, and, under that item, the provincial Legislature can confer the widest power on the courts. It seems to me that the approach suggested by the learned Attorney General is useful for testing whether entry 2 of List II was intended to be treated as the sole and only basis of the power of the Provincial Legislature to confer jurisdiction on the provincial courts and whether it was really the intention of the British Parliament to empower the Provincial Legislature to confer jurisdiction of only such a limited character as can be conferred on the provin cial courts under entry 2 of List II, if that entry is treated as a self sufficient entry. In my opinion, the correct view is to hold that it is not necessary to call into aid either entry 4 of List III or any of the 64 provisions of the Canadian Constitution in this case, and that the words "administration of justice; constitution and organization of courts" are by themselves sufficient to empower the Provincial Legislature to invest a new court with all the power which has been conferred upon it by the impugned Act. It is of course open to the Central Legisla ture to bar the jurisdiction of the new court by a special enactment with regard to any of the matters in List I, but so long as such jurisdiction is not barred, the court will have jurisdiction try all suits and proceedings of a civil nature as enacted in the Act in question. I think that if the Provincial Legislature had merely enhanced the pecuniary jurisdiction of any of the existing civil courts there could have been no objection to that course. Why then should there, be any objection when, instead of investing one of the existing courts with power to try suits and proceedings of a civil nature not exceeding a certain amount, the Legis lature has created a new court and invested it with the same power. Perhaps, it will be simpler to deal at this stage with the third question, namely, whether the Bombay City Civil Court has jurisdiction to try a suit based on a promissory note. So far as this point is concerned, the respondent bases his contention on entries 28 and 33 of List I. Entry 28 relates to "cheques, bills of exchange, promissory notes and other like instruments". Entry 53, as already stated, relates to "jurisdiction and powers of courts with respect to any of the matters in List I." It is contended on behalf of the respondent that the effect of these two entries, when they are read together, is that no court can try a suit relating to a promissory note, unless it is invested with the jurisdiction to try such a suit by the Central Legisla ture by virtue of the power given by entry 53 of List I. The question so raised is covered by the answer to the first question, and I shall only add that the answer already given to that question finds some support in the case of Prafulla Kumar Mukherjee and Others vs Bank of Commerce Limited Khulnal (1), in which the arguments of the (1) [1947] F.C.R.28. 65 respondents before the Privy Council proceeded on the same lines as the arguments of the respondents before us. The question raised in that case was as to the validity of the Bengal Money lenders ' Act, 1940, which limited the amount recoverable by a money lender on his loans and interests on them, and prohibited the payments of sums larger than those permitted by the Act. The validity of the Act was questioned by the respondent Bank in certain suits brought by them to recover loans and interests alleged to be due on promisso ry notes executed by the appellants borrowers as well as in suits brought by the debtors claiming relief under the Act. The argument put forward on behalf of the Bank was that the Bengal Legislature by the impugned Act had attempted to legislate on subjects expressly forbidden to it and expressly and exclusively reserved for the Federal Legislature, that is to say, in relation to promissory notes and banking, which are reserved for the Federal Legislature exclusively, under entries 28 and 38 respectively of List I. On the other hand, the arguments put forward on behalf of the appellants was that the impugned Act was in pith and substance legislation dealing with money lending and that in so far as it dealt with promissory notes or banking that was only incidental or ancillary to the effective use of the admitted legislative powers of the Provincial Legislature to deal with money lending. 'This argument of the appellants was substantially accepted by the Privy Council. The second point raised on behalf of the respondent relates to the validity of section 4 of the Act, which runs as follows : "Subject to the exceptions specified in section 3, the Provincial Government, may by notification in the Official Gazette, invest the City Civil Court with jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature, arising within the Greater Bombay and of such value not exceeding Rs. 25,000 as may be specified in the notification. " 9 66 It is contended that this section is invalid, because the Provincial Legislature has thereby delegated its legis lative powers to the Provincial Government which it cannot do. This contention does not appear to me to be sound. The section itself shows that the provincial Legislature having exercised its judgment and determined that the new Court should be invested with jurisdiction to try suits and pro ceedings of a civil nature of a value not exceeding Rs. 25,000, left it to the Provincial Government to determine when the Court should be invested with this larger jurisdic tion, for which the limit had been fixed. It is clear that if and when the new court has to be invested with the larger jurisdiction, that jurisdiction would be due to no other authority than the Provincial Legislature itself and the court would exercise that jurisdiction by virtue of the Act itself. As several of my learned colleagues have pointed out, the case of Queen vs Burah (1), the authority of which was not questioned before us, fully covers the contention raised, and the impugned provision is an instance of what the Privy Council has designated as conditional legislation, and does not really delegate any legislative power but merely prescribes as to how effect is to be given to what the Legislature has already decided. As the Privy Council has pointed out, legislation conditional on the use of particular powers or on the exercise of a limited discretion entrusted by the Legislature to persons in whom it places confidence, is no uncommon thing, and in many instances it may be highly convenient and desirable. Examples of such legislation abound in England, America and other countries. As some of the American Judges have remarked, "there are many things upon which wise and useful legislation must depend which cannot be known to the law making power and must therefore be the subject of enquiry and determination outside the halls of legislation (Field vs Clark (2). Mr. Setalvad, the learned Attorney General who appeared on behalf of the appellant, contended that in this country even delegated legislation is (1) 3 A.C. 889. (2) ; , 67 permissible, but I do not consider it necessary to go into that question, because the principle enunciated in Queen vs BUrah(1) is sufficient to dispose of the contention raised here. I think that the present case stands well outside what was laid down by the Federal Court in Jitendranath Gupta vs The Province of Bihar,(2) as two of my colleagues who were parties to the majority decision in that case have pointed out. In the result, this appeal is allowed. PATANJALI SASTRI J. This appeal raises the important ques tion of the constitutional validity of the Bombay City Civil Court Act, 1948 (hereinafter referred to as the Act) and though I concur in the conclusion reached by the majority of my learned brothers I wish to state precisely the reasons which lead me to that conclusion. The first respondent brought the suit in the High Court at Bombay on its orginal side for recovery of Rs. 11,704 from the second respondent on promissory notes. Notwithstanding that the jurisdiction of the High Court to try suits cog nisable by the City Civil Court was barred under section 12 of the Act and the pecuniary limit of the jurisdiction of the latter court had been enhanced from Rs. 10,000 to Rs. 25,000 by a notification issued by the Provincial Government under section 4 of the Act, it was stated in the plaint that the High Court had jurisdiction to try the suit because the Act as well as the said notification was ultra vires and void. In view of the constitutional issues thus raised, the State of Bombay, the appellant herein was on its own motion, made a party defendant. The High Court (Chagla C.J. and Tendolkar J.) held (1) the Act was intra vires, but (2) that section 4 which autho rised the Provincial Government to enhance the jurisdiction of the City Court up to the limit of Rs. 25,000 amounted to a delegation of legislative power, and as such, was void and inoperative, with the result that the suit, which ex ceeded Rs. 10,000 in (1)5 I.A. 178. (2) 68 value and was not cognisable by the City Court apart from the impeached notification, was held to have been property laid in the High Court. Both these findings have been challenged before us as erroneous, the first by the first respondent and the second by the appellant. On the first point, learned counsel for the first re spondent urged that section 100 of the Government of india Act, 1935, read with entries 53 of List I, 2 of List II and 15 of List III, the relevant parts of which are in identical terms, namely, "jurisdiction and powers of all courts except the Federal Court with respect to any of the matters in this List", conferred power on Legislatures in British India to make laws with respect to jurisdiction of courts only in relation to matters falling within their respec tive legislative fields, and that, therefore, the expres sions "administration of justice" and "constitution and organisation of courts" in entry 1 of List II, although they might be wide enough, if that entry stood alone, to include the topic of "jurisdiction and powers of courts", should not be construed in that comprehensive sense as such construc tion would give no effect to the limiting words in entry 2 which would then become meaningless indeed if those expres sions in entry 1 included the power to legislate with re spect to jurisdiction also, there would be no need for entry 2, while, on the other hand, without including such power, they would still have ample content, as various other mat ters relating to administration of justice and constitu tion of courts would have to be provided for, The scheme disclosed by the three separate entries in identical terms in the three lists was said to be this: The, Provincial Legislatures were to have the power of constituting courts and providing for administration of justice, but the power to invest the courts with jurisdiction was to rest with the Federal Legislature in respect of the matters mentioned in List I and with the Provincial Legislature in respect of the matters mentioned in List Ii, while both the Federal and the Provincial Legislatures were to have such power with respect to 69 the matters mentioned in List III subject to the provisions of section 107. It was, therefore, submitted that the Act, in so far as it purported to provide by section 3 that the City Civil Court established thereunder "shall have juris diction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding Rs. 10,000 in value and arising within Greater Bombay" (with certain exceptions not material here) was ultra vires the Provincial Legislature, constituting as it did a direct invasion of the Federal field marked out by entry 53 of List I. As all the three entries dealt with the same topic of jurisdiction and powers of courts, there was no room, it was said, for the application of the doctrine of incidental enroachment. The argument is not without force. The Bombay High Court in Mulchand vs Raman (1), which was followed by the learned Judges in the present case, and the Attorney General who adopted the same line before us, invoked the doctrine of pith and substance in answer to the argument on behalf of the respondent. But that doctrine, while it often furnishes the key to the solution of problems arising out of the distribution of overlapping legislative powers in a Federal system, is not of much assistance in meeting the difficulty in finding any usefulness in entry 2 if under entry 1 the Provincial Legislature were intended to have the power to legislate generally with respect to the jurisdiction and powers of courts. The greater power must include the less. A similar difficulty in construing entry 4 of List III and entry 2 of List II arose in Stewart vs Brojendra Kishore (2) and led a Division Bench of the Calcutta High Court to construe the expression "civil procedure" occurring in the former entry in a "limited sense" as excluding jurisdiction and powers of courts. After referring to the decision of the Judicial Committee in In re Marriage Reference(3) where "marriage ,and divorce" in the Dominion List was construed as excluding matters relating to the "solemnisation of marriage (1) 51 B.L.R. 86. (3) 628 (2) A.I.R. 1939 Cal. 628 70 in the province" because the latter topic was specifically included in the Provincial List, the learned Judges ob served: "The position is similar here. 'Civil procedure ' in the Concurrent Legislative List must be held to exclude matters relating to jurisdiction and powers of courts since special provision is made for those matters elsewhere in the lists." "To hold otherwise", they pointed out, "would be completely to wipe out the second entry in the Provincial Legislative List." Learned counsel for the first respondent strongly relied on that decision and suggested that, if it had been brought to the notice of the learned Judges in Mulchand vs Raman (1), their decision might well have been the other way. On the other hand, the Attorney General submitted that there could be no question of conflict between two entries in the same list and that the natural meaning of one should not be restricted simply because of the presence of the other. He placed reliance on the following observations of Gwyer C.J. in Aliqa Begum 's case (4) "It would be practi cally impossible for example to define each item in the Provincial List in such a way as to make it exclusive of every item in that list and Parliament seems to have been content to take a number of comprehensive categories and to describe each of them by words of broad and general import. I think, however, that none of the items in the lists is to be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it. " These observations were, however, made to support the conclusion that the power to legislate with respect to" collection of rents" under entry 21 of List II includes the power to legislate with respect to any limitation on the power of a landlord to collect rents, that is to say, with respect to the remission of rents as well, and that, therefore, the United Provinces Regularisation of Remissions Act, 1933, was intra vires. General observations made in such context (4) ,134 71 do not answer the objection that the wider construction of entry 1 would deprive entry 2 of all its content and reduce it to useless lumber. I am therefore, of opinion that the words" ' administration of justice" and "constitution and organisation of courts" occurring in entry 1 must be under stood in a restricted sense excluding from their scope "jurisdiction and powers of courts" dealt with specifically in entry 2. This does not, however, compel the conclusion that it is beyond the competence of the Provincial Legislature to confer general jurisdiction on courts constituted by it, for, if entry 1 does not by itself enable the legislature to do so, entry 2 certainly does when read with entry 1. It should be remembered and this is what the argument for restricting the legislative power of provinces in regard to jurisdiction overlooks that "administration of justice" is one of the matters mentioned in List II itself. The Provin cial Legislature, therefore, is competent under entry 2 to legislate conferring jurisdiction on courts with respect to administration of justice, that is to say, general juris diction to administer justice by adjudicating on all matters brought before them, except, of course, matters excluded expressly or by implication either by an existing law con tinued in force or by a statute passed by the appropriate legislature under the entries in the three Lists relating to jurisdiction and powers of courts. In other words, though "administration of justice" in entry 1 does not authorise legislation with respect to jurisdiction and powers of courts, the legislative power under entry 2 in regard to the tatter topic, which can be legitimately exercised" with respect to any of the matters in this List," can be exer cised with respect to administration of justice, one of the matters comprised in that List, with the result that the subject of general jurisdiction is brought within the autho rised area of provincial legislation. This view thus leaves a field in which entry 2 could apply. When once the Provincial Legislature is found competent to make a law with respect to the general jurisdiction of courts, the apparent conflict with the 72 central legislative power under entry 53 of List I can be resolved in a given case by invoking the doctrine of pith and substance and incidental encroachment. For, that rule, though not of much assistance in construing entries 1 and 2 which occur in the same List II, has its legitimate applica tion in ascertaining the true character of an enactment and attributing it to the appropriate list where the Federal and the Provincial Lists happen to overlap. Accordingly, if the Legislature of Bombay was, in conferring jurisdiction on the City Civil Court to hear and determine all suits of a civil nature, really legislating on a subject which was within the ambit of its legislative power, and if in doing so, it encroached on the forbidden field marked off by entry 53 of List 1, the encroachment should be taken to be only inciden tal. It may be that such encroachment extends to the whole of that field, but that is immaterial, as pointed out by the Judicial Committee in the Khulna Bank case(1). One of the questions their Lordships put to themselves in that case was "Once it is determined that the pith and substance is money lending, is the extent to which the federal field is invaded a material matter?" Answering the question in the negative their Lordships observed: "No doubt it is an important matter, not, as their Lordships think, because the validity of an Act can be determined by discriminating between de grees of invasion, but for the purpose of determining what is the pith and substance of the impugned Act. Its provi sions may advance so far into the federal territory as to show that its true nature is not concerned with provincial matters, but the question is not, has its trespassed, more or less, but is the trespass, whatever it be, such as to show that the pith and substance of the impugned Act is not money lending but promissory notes or banking ? Once that question is determined, the Act falls on one or the other side of the line and can be seen as valid or invalid accord ing to its true content". In answering the objection that that view does not give sufficient effect to the words of precedence used in section 100 of the Government of (1) [1947] F.C.R.28. 73 India Act as between the three Lists, their Lordships went on to say "No doubt where they come in conflict List I has priority over Lists III and II, and List III has priority over List II; but the question still remains priority in what respect? Does the priority ' of the Federal Legislature prevent the Provincial Legislature from dealing with any matter which may incidentally affect any item in its list or in each case has one to consider what the substance of an Act is and whatever its ancillary effect, attribute it to the appropriate list according to its true character ? In their Lordships ' opinion the latter is the true view. " The test for determining whether in pith and substance a particular enactment falls within one list or another is further elucidated in a passage quoted with approval from Lefroy 's Treatise on Canadian Constitutional Law in the judgment of the Federal Court in the Bank of Commerce case(1). "It seems quite possible" says the learned writer, summarising the effect of the Privy Council decisions on the point "that a particular Act regarded from one aspect might be intra vires of a Provincial Legislature and yet regarded from another aspect might also be intra vires of the Domin ion Parliament. In other words, what is properly to be called the subject matter of an Act may depend upon what is the true aspect of the Act. The cases which illustrated this principle show. by 'aspect ' here must be understood the aspect or point of view of the legislator in legislating the object, purpose and scope of the legisla tion. The word is used subjectively of the legislator rather than objectively of the matter legislated upon. " Applying that test there can be little doubt that the im pugned Act must, in its pith and substance, be attributed to List II. as the legislators of Bombay were certainly not conferring on the new court, which they were constituting under the Act, jurisdiction with ' respect to any of the matters in List I. They were, as section 3 clearly indi cates constituting a new court, the Bombay City Civil Court, and investing it with the (1) [1944] F.C.R.126,139. 10 74 general jurisdiction to try all suits of a civil nature within certain. pecuniary and territorial limits, and if they were acting, as I have endeavoured to show, within the scope of the legislative power conferred on them under entry 2 read with entry 1 of List II, it seems immaterial that the enactment, so far as one aspect of jurisdiction, namely, its conferment, is concerned, encroaches practically on the whole of the federal field marked out by entry 53 of List I. The encroachment, however, would still leave ample room for the exercise by the Centre of its legislative power under entry 53 in regard to other aspects of jurisdiction and powers of courts. This view is strongly reinforced by a consideration of the legislative practice prevailing in this country prior to the passing of the Government of India Act, 1935. That it is legitimate to have regard to legislative practice in deter mining the scope of legislative powers has been recognised in decisions of high authority (e.g., Croft vs Dunphy) (1), It had long been the practice in this country to constitute and organise courts with general jurisdiction over all persons and matters subject only to certain pecuniary and territorial limitations, and to confer special jurisdiction limited to certain specified cases or matters either on the ordinary courts in addition to their general jurisdiction or on tribunals set up to deal with such matters exclusively. The various Provincial Civil Court Acts as well as the provisions of the Civil and Criminal Procedure Codes invest the courts, both civil and criminal, with general jurisdic tion, that is to say, power to adjudicate in respect of all persons and all matters except those that are specifically excluded or brought within the cognisance of tribunals with special or limited jurisdiction extending only to those matters. The grading of the courts too in their heirarchy has reference to the pecuniary and territorial limits rather than to the nature and kind of the subject matter which they are empowered to deal with. It is reasonable to presume that this system of organisation of courts in (1) ,165 75 British India was known to the framers of the Government of India Act, 1935, and it cannot be readily supposed that they wanted to introduce a radical change by which the power of constituting courts and providing for administration of justice is to be vested in the Provincial Legislatures, while jurisdiction has to be conferred by piecemeal legisla tion by the Federal and Provincial Legislatures with respect to specific matters falling within their respective legisla tive fields which are by no means capable of c]ear demarca tion. The constitutional puzzles which such a system is likely to pose to the legislatures no less than to the courts and the litigant public in the country whenever a new court is constituted in finding out by searching through the legislative lists, whether jurisdiction to deal with a particular matter or power to make a particular order is validly conferred by the appropriate legislature must make one pause and examine the relevant provisions of the Govern ment of India Act to see if there is anything in them to compel the acceptance of so novel a system. After giving the matter my careful consideration, I am convinced that both the language of the provisions and the antecedent legislative practice support the conclusion that the Provin cial Legislatures which have the exclusive power of consti tuting and organising courts and of providing for the admin istration of justice in their respective provinces, have also the power of investing the courts with general juris diction. On the question whether section 4 of the Act operates as a delegation of legislative power, I entirely agree with the reasoning and conclusion of my learned brother Das who has said all I wish to say in his judgment which I have had the advantage of reading, and, like him, I reserve the larger question raised by the Attorney General as to how far it is open to the legislatures in this country, while acting within their authorised areas, to delegate their legislative powers to other agencies. I find it no more necessary in the present case to decide that point than in Jatindranath 76 Gupta 's case(I) where I preferred to rest my decision on a narrower ground. It follows that the High Court has no jurisdiction :0 hear and determine the first respondent 's suit and I agree that the appeal should be allowed. MAHAJAN J. This is an appeal from the judgment of the High Court of Judicature at Bombay dated the 29th March, 1950, in Suit No. 240 of 1950, holding that section 4 of the Bombay City Civil Court Act (Bombay Act XL of 1948) is ultra vires the Provincial Legislature. The facts are that on the 6th February, 1950, the first respondent presented a plaint to the Prothonotary and Senior Master of the High Court for filing a summary suit against the second respondent to recover a sum of Rs. 11,704 24 alleged to be due under promissory notes. This suit was instituted in the High Court, in contravention of a notifi cation dated the 20th January, 1950, issued under section 4 of the City Civil Court Act, under which suits up to the pecuniary limit of Rs. 25,000 could be heard only by the City Civil Court, and not by the High Court. As the question of jurisdiction was of importance, the matter was referred to the sitting Judge in Chambers. On 23rd February, 1950, the learned Judge admitted the plaint holding that section 4 of the Act was ultra vires the Provincial Legislature and the notification issued under it was consequently inopera tive and that the High Court had jurisdiction to hear the suit. The first respondent thereupon took out summons for judgment against the second respondent. On the application of the AdvocateGeneral, the State of Bombay was impleaded as defendant at this stage and the proceedings were trans ferred to a Division Bench of the High Court. The Division Bench upheld the view of the Judge in Chambers and returned the cause to him for disposal on the merits. The State of Bombay, dissatisfied with this decision, has preferred the present appeal. (1) 77 Two questions have been canvassed in this appeal: (1) whether the City Civil Court Act is ultra vires the legisla ture of the Province of Bombay in so far as it deals with the jurisdiction and powers of the High Court and City Civil Court with respect to matters in List I of the Seventh Schedule of the Government of India Act, 1935; and (2) whether section 4 of the Act is void as it purports to delegate to the Provincial Government legislative authority in the matter of investing the City Civil Court with ex tended jurisdiction. Bombay Act of 1948 came into force on 10th May, 1948. It was considered expedient to establish an additional civil court for Greater Bombay presumably with the object of relieving congestion of work on the original side of the Bombay High Court. Sections 3, 4 and 12 of the Act are in these terms : "3. The State Government may, by notification in the Official Gazette, establish for the Greater Bombay a court, to be called the Bombay City Civil Court. Notwithstanding anything contained in any law, such court shall have juris diction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding ten thousand rupees in value, and arising within the Greater Bombay, except suits or proceedings which are cognisable (a) by the High Court as a Court of Admiralty or Vice Admiralty or as a Colonial Court of Admiralty, or as a Court having testamentary, intestate or matrimonial jurisdiction, or (b) by the High Court for the relief of insolvent debt ors, or (c) by the High Court under any special law other than the Letters Patent, or (d) by the Small Cause Court: Provided that the State Government may, from time to time, after consultation with the High Court, by a like notifica tion extend the jurisdiction of the City Court to any suits or proceedings which are cognisable by the High Court as a court having testamentary or 78 ntestate jurisdiction or for the relief of insolvent debt ors. Subject to the exceptions specified in section a the State Government may by notification in the Official Ga zette, invest the City Court with jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature arising within the Greater Bombay and of such value not exceeding twenty five thousand rupees as may be specified in the notification. Notwithstanding anything contained in any law, the High Court shall not have jurisdiction to try suits and proceedings cognisable by the City Court: Provided that the High Court may, for any special rea son, and at any stage remove for trial by itself any suit or proceeding from the City Court. " On the second question the High Court held that section 4 of the Act was inoperative as it purported to delegate the law making powers of the legislature to an outside authority and hence the notification issued in pursuance of it had no effect whatsoever and did not take away the jurisdiction of the High Court to try the present suit. On the first ques tion the High Court placed reliance on its own earlier decision in Mulchand Kundanmal Jagtiani vs Raman Hiralal Shah(1), and held that the Act was intra vires the Bombay Legislature. The appellant assails the correctness of the decision of the High Court on the second point and supports the decision on the first point. The first respondent, on the other hand, while supporting the decision of the High Court on the second question, challenges its correctness in regard to the first question. The learned Attorney General contends that the High Court placed an erroneous construc tion on sections 3 and 4 of the Act; that reading the two sections together the effect is that the legislature has set up the City Civil Court with an initial jurisdiction of Rs. 10,000 and has placed an outside limit of Rs. 25,000 on its pecuniary jurisdiction and that it (1) 79 has left to the discretion of the Provincial Government the determination of the circumstances under which this exten sion of the pecuniary jurisdiction between Rs. 10,000 to Rs. 25,000 is to take place. It was said that section 4 is in the nature of a conditional legislation and that under it no legislative function has been delegated to the Provincial Government. The learned Chief Justice in the court below disposed of this contention with the following,observations: "I am also conscious of the fact that an Act must be construed in a manner which would reconcile its differ ent sections but with the best of intention in the world I do not see how it is possible to read sections 3 and 4 together so as to come to the conclusion for which the AdvocateGeneral contends. To my mind it is patent that the Legislature never applied its mind to the question as to whether the new court which it was setting up should have a jurisdiction higher than that of Rs. 10,000. It never passed any judgment on that question. It never laid down any policy with regard to that question and section 4 is not a section which merely directs the Provincial Government to carry out the policy laid down by the legislature . but it is a section which confers upon the Provincial Gov ernment the power to confer jurisdiction upon the Court, or in other words, it is a section which entitled the Provin cial Government to lay down its policy as to whether the new Court should have the increased jurisdiction up to twenty five thousand rupees. " I find it difficult to accept this view. Without apply ing its mind to the question as to whether the new Court which it was setting up should have a jurisdiction higher than Rs. 10,000, how could the legislature possibly enact in section 4 that the pecuniary jurisdiction of the new court would not exceed Rs. 25,000. The fixation of the maximum limit of the court 's pecuniary jurisdiction is the result of exercise of legislative will, as without arriving at this judgment it would not have been able to determine the out side limit of the pecuniary jurisdiction of the new 80 court. The policy of the legislature in regard to the pecuniary jurisdiction of the court that was being set up was settled by sections 3 and 4 of the Act and it was to the effect that initially its pecuniary jurisdiction will be limited to Rs. 10,000 and that in future if circumstances make it desirable and this was left to the determination of the Provincial Government it could be given jurisdiction to hear cases up to the value of Rs. 25,000. It was also determined that the extension of the pecuniary jurisdiction of the new court will be subject to the provisions contained in the exceptions to section 3. I am therefore of the opinion that the learned Chief Justice was not right in saying that the legislative mind was never applied as to the conditions subject to which and as to the amount up to which the new court could have pecuniary jurisdiction. All that was left to the discretion of the Provincial Government was the determination of the circumstances under which the new court would be clothed with enhanced pecuniary jurisdiction. The vital matters of policy having been determined, the actual execution of that policy was left to the Provincial Government and to such conditional legislation no exception could be taken. The section does not empower the Provincial Government to enact a law as regards the pecuniary jurisdic tion of the new court and it can in no sense be held to be legislation conferring legislative power on the Provincial Government. In Queen vs Burah(1), section 9 of Act XXII of 1869, which was a piece of legislation analogous to section 4 of the City Civil Court Act, was held intra vires by their Lordships of the Privy Council. By the 9th section power was conferred on the Lieutenant Governor of Bengal to deter mine whether the Act or any part of it should be applied to certain districts. In other words, authority to extend the territorial limits of the operation of the statute was conferred on the Lieutenant Governor and such extension had the result of depriving the High Court of its jurisdiction in those areas and of conferring jurisdiction in respect to them (1) 5 I.A. 178. 81 on the commissioner. Objection was taken as to the validity of section 9 on the ground that it was legislation delegat ing legislative power and was therefore void, Their Lord ships negatived this contention and held that section 9 was intra vires the Governor General 's power to make laws and was a piece of conditional legislation. That was a case of an extension of territorial limits within which an Act of the Legislature was to be in force, whereas the present is a case of extension of pecuniary limits of a court 's jurisdic tion. In principle, there seems no difference between the two cases and the present case is therefore within the rule of the decision in Queen vs Burah(1). Their Lordships in holding section9 intra vires made the following observations : "Their Lordships think that it is a fallacy to speak of the powers thus conferred upon the Lieutenant Governor (large as they undoubtedly are) as if, when they were exer cised, the efficacy of the acts done under them would be due to any other legislative authority than that of the Gover nor, General in Council. Their whole operation is, directly and immediately, under and by virtue of this Act (XXII of 1869) itself. The proper Legislature has exercised its judgment as to place, person, laws, powers, and the result of that judgment has been to legislate conditionally as to all these things. The conditions having been fulfilled, the legislation is now absolute. Where plenary powers of legis lation exist as to particular subjects, whether in an Impe rial or in a Provincial Legislature, they may (in their Lordships ' judgment) be well exercised, either absolutely or conditionally. Legislation, conditional on the use of particular powers, or on the exercise of a limited discre tion, entrusted by the Legislature to persons in whom it places confidence, is no uncommon thing; and, in many cir cumstances. it may be highly convenient. The British Stat ute Book abounds with examples of it; and it cannot be supposed that the Imperial Parliament did not, when consti tuting the (1) 5 I A. 178, 11 82 Indian Legislature, contemplate this kind of conditional legislation as within the scrape of the legislative powers which it from time to time conferred. certainly used no words to exclude it. " These observations appositely apply to the legislative provision contained in section 4 of the impugned Act. The true distinction is between the delegation of power to make the law which necessarily involves a discretion as to what it shall be and conferring authority or discretion as to its execution, to be exercised under and in pursuance of the law. Objection may be taken to the former but not to the latter. Reference in this connection may also be made to the decision of the Supreme Court of America in Field vs Clark(1) wherein referring to Locke 's case(2) the following observations were made : "To assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the Legislature of the power to act wisely for the public wel fare whenever a law is passed relating to a state of affairs not yet developed, or to things future and impossible to fully know. " The proper distinction the court said was this: "The Legislature cannot delegate its power to make a law, but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends make, its own action depend. To deny this would be to stop the wheels of government. There are many things upon which wise and useful legislation must depend which cannot be known to the law making power, and, must there fore, be a subject of inquiry and determination outside of the halls of legislation. " The High Court in support of its view placed considera ble reliance on the decision of the Federal Court in Jatin dra Nath Gupta vs The Province of Bihar(3) and it was con sidered that the present case fell1 within the ambit of the rule therein laid down. It seems to me that the decision in the Bihar case has no application to the case in hand. The Federal Court there was (1) 143 U.S.649. (3) [1949] F.C.R.595. (2) 72 Pa.491. 83 dealing with an Act which contained the following provisions in section 1, sub section (3) : "The Act shall remain in force for a period of one year from the date of its commencement: Provided that the Provincial Government may, by notifi cation, on a resolution passed by the Bihar Legislative Assembly and agreed to by the Bihar Legislative Council, direct that this Act shall remain in force for a further period of one year with such modifications, if any, as may be specified in the notification. " In connection with this proviso I said in my judgment in that case that the power conferred therein was much larger than was conferred on the Lieutenant Governor in Queen vs Burah(1) inasmuch as it authorised the Provincial Government to modify the Act and also to re enact it. It was pointed out that "distinction between delegation of power to make the law which necessarily involves a discretion as to what it shall be, and conferring discretion or authority as to its execution to be exercised Under and in pursuance of the law is a true one and has to be made in all cases where such a question is raised. " The following observations made by me there pointedly bring out the distinction between the two cases : "The proviso which has been assailed in this case. judged on the above test, comes within the ambit of delegat ed legislation, and is thus an improper piece of legislation and is void. To my mind, it not only amounts to abdication of legislative authority by the Provincial Legislature, it goes further and amounts to setting up a parallel Legisla ture for enacting a modified Bihar Maintenance of Public Order Act and for enacting a provision in it that that Act has to be enacted for a further period of one year. A careful analysis of the proviso bears out the above conclu sion. It may be asked what does the proviso purport to do in terms and in substance ? The answer is that it empowers the Provincial Government to issue a notification saying (1) 5 I.A. 178. 84 that the Provincial Act shall remain in force for a further period of one year with such modifications, if any, as may be specified in the notification . Modification of statute amounts to re enacting it partially. It involves the power to say that certain parts of it are no longer parts of the statute and that a statute with X sections is now enact ed with Y sections. In the act of modification is involved a legislative power as a discretion has to be exercised wheth er certain parts of the statute are to remain law in future or not or have to be deleted from it. The power to modify may even involve a power to repeal parts of it. A modified statute is not the same original statute. It is a new Act and logically speaking, it amounts to enacting a new law. " I have not been able to follow how these observations concerning the Bihar statute could be relied upon by the High Court in support of its decision in respect 10 the invalidity of section 4 of the Bombay City Civil Court Act. The two provisions are not analogous in any manner whatsoev er and that being so, no support can be derived by the respondent from this decision. In the concluding portion of his judgment under appeal the learned Chief Justice observed as follows: " Now applying once more these tests to the City Civil Court Act, we find that the Legislature in the exercise of its legislative power has set up a Civil Court with a limit ed jurisdiction under section 5 of the Act. It has not set up a court with jurisdiction higher than ten thousand rupees. Having set up a court of limited jurisdiction it has given to the Provincial Government under section 4 the power to center upon that court a higher jurisdiction up to twen ty five thousand rupees. Now this power which is conferred upon the Provincial Government is a power which could only have been exercised by the Legislature itself. " It seems to me that the above observations are based on a construction of sections 3 and 4 of the Act which these sections cannot legitimately bear. As already observed. the Legislature set up a Civil Court for Greater 85 Bombay and decided that, to start with, it will have pecuni ary jurisdiction up to Rs. 10,000. It also decided at the same time that it would also have jurisdiction up to Rs. 25,000 as soon as circumstances, necessitate it the Provin cial Government was constituted the judge of those circum stances. What the limit of that jurisdiction was to be was in unmistakeable terms enacted in section 4 of the Act. It was not left to the will of the Provincial Government to confer on that court any pecuniary jurisdiction that it liked to confer upon it. It would be by force of the legis lative power of section 4 that the City Civil Court will be vested with enhanced jurisdiction but that vesting cannot take place till a notification is issued by the Provincial Government. It is conditional on that event only. For the reasons given above, in my judgment, the High Court was in error in holding that section 4 of the City Civil Court Act was void and ultra vires the Provincial legislature. In this view the notification issued under section 4 must be held to be effective. That being so, it is unnecessary to go into the question raised by the learned Attorney General that assuming that section 4 of the Act was delegation of legislative power, it was still valid. The next question to decide is whether the Act is ultra vires the Bombay Legislature. In order to appreciate Mr. Seervai 's contention on this point it is necessary to set out some of the provisions of the Government of India Act, 1935. relevant to the enquiry. These are contained in sec tion 100. and in the Seventh Schedule in entries 28 and 53 of List I, entries 1 and 2 of List II, and entries 4 and 15 of List III. They are in these terms: Sec. (1) Notwithstanding anything in the two next succeeding sub sections, the Federal Legislature, has, and a Provincial Legislature has not power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule to this Act (hereinafter called the "Feder al Legislative List.") 86 (2) Notwithstanding anything in the next succeeding sub section, the Federal Legislature, and, subject to the pre ceding subsection, a Provincial Legislature also, have power to make laws with respect to any of the matters enumerated in List III in the said Schedule (hereinafter called the "Concurrent Legislative List.") (3) Subject to the two preceding sub sections, the Provin cial Legislature has, and the Federal Legislature has not, power to make laws for a Province or any part thereof with respect 10 any of the matters enumerated in List II in the said Schedule (hereinafter called the" Provincial Legis lative List.") (4) The Federal Legislature has power to make laws with respect to matters enumerated in the Provincial Legislative List except for a Province or any part thereof. List I. 23. Cheques, bills of exchange, promissory notes and other like instruments. Jurisdiction and powers of all courts, except the Federal Court, with respect to any of the matters in this list and, to such extent as is expressly authorized by Part IX of this Act, the enlargement of the appellate jurisdic tion of the Federal Court, and the conferring thereon of supplemental powers. List II. Public order (but not including the use of His Majesty 's naval, military or air forces in aid of the civil power); the administration of justice; constitu tion and organization of all courts, except the Federal Court, and fees taken therein; preventive detention for reasons connected with the maintenance of public order; persons subject to such detention. Jurisdiction and powers of all courts except the Federal Court, with respect to any of the matters in this list; procedure in Rent and Revenue Courts. List III.4. Civil Procedure, including the Law of Limitation and all matters included in the Code of Civil Procedure at the date of the passing of this Act; the recovery in a Governor 's Province or a Chief 87 Commissioner 's Province of claims in respect of taxes and other public demands, including arrears of land revenue and sums recoverable as such, arising outside that Province. Jurisdiction and powers of all courts except the Federal Court, with respect to any of the matters in this list. Mr. Seervat contends that section 3 of the impugned Act is void because it directly trenches on the exclusive legis lative powers of the Centre conferred on it by List I of the Seventh Schedule inasmuch as 'it confers jurisdiction on the new court in respect to all cases of a civil nature. The expression "all cases of a civil nature" presumably brings within the ambit of the Act suits in respect to subjects contained in List I. He urged that the three simi lar entries in the three is, name]y, entry 53 in List I, entry 2 in List II and entry 15 in List III indicated that in respect to the subjects covered by the three fields of legislation demarcated for the two Legislatures the Parlia ment empowered each of them respectively to make laws in respect to jurisdiction and power of courts and that in view of the provisions of section 100 of the Constitution Act the Provincial Legislature had no power to make any law confer ring jurisdiction on courts in respect to subjects covered by List I. In other words, the Federal Legislature alone could legislate on the jurisdiction and powers of a court in regard to the subjects in List I. Similarly in respect of subjects contained in the Provincial List, jurisdiction and power of courts could only be determined by a law enacted by the Provincial Legislature and that in respect of items contained in List III, both Legislatures could make laws on the subject of jurisdiction and powers of courts. It was said that the exceptions and the proviso to section 3 of the City Civil Court Act in dear terms disclosed that jurisdic tion in respect to the subjects on which the Provincial Legislature had no competence to legislate was also con ferred on the new court. Section '12 of the Act by which the High Court was deprived of all jurisdiction on matters that fell 88 within the jurisdiction of the City Civil Court was assailed on similar grounds. In regard to the legislative power conferred under entry I of List 11 on the Provincial Legis lature it was contended that this wide power stood limited by the three entries above mentioned and that under it legislation could only be made to the extent of establishing and organizing courts but no legislation under it was per missible in respect to the powers of those courts. The learned Attorney General, on the other hand, con tends that the Act is intra vires the Bombay Legislature under entry 1 of List II and under entries 4 ' and 15 of List III, it having received the assent of the Governor General. It was urged that the Provincial Legislature had exclusive legislative power on the subject of administration of jus tice and constitution and organization of all courts and that this power necessarily included the power to make a law in respect to the jurisdiction of courts established and constituted by it and that the impugned legislation in pith and substance being on the subject of administration of justice, it could not be held ultra vires even if it trenched on the field of legislation of the Federal Legisla ture. In regard to entry 53 of List I, entry 2 of List II and entry 15 of List II of the Schedule, it was said that these conferred legislative power on the respective Legisla tures to confer special jurisdiction on established courts in respect of particular subjects only if it was considered necessary to do so. In other words the argument was that the Provincial Government could create a court of general jurisdiction legislating under entry 1 of List II and that it was then open to both the Central and the Provincial Legislatures to confer special jurisdiction on courts in respect to particular matters that were covered by the respective lists. In my opinion, the contention of the learned Attorney General that the Act is intra vires the Bombay Legislature under entry 1 of List If is sound and I am in respectful agreement with the view expressed by the Chief Justice of Bombay on this point in Mulchand Kundanmal Jagtiani vs Raman Hiralal 89 Shah (1). The learned Chief Justice when dealing with this point said as follows: "If, therefore, the Act deals with administration of justice and constitutes a court for that purpose and confers ordi nary civil jurisdiction upon it, in my opinion, the legis lation clearly falls within the legislative competence of the Provincial Legislature and is covered by item 1 of List 11 of Schedule 7. That item expressly confers upon the Provincial Legislature the power to legislate with regard to the administration of justice and the constitution and organization of all courts except the Federal Court. It is difficult to imagine how a court can be constituted without any jurisdiction, and if Parliament has made the adminis tration of justice exclusively upon the Provincial Legisla ture the power to constitute and organize all courts, it must follow, that the power is given to the Provincial Legislature to confer the ordinary civil jurisdiction upon the courts to carry on with their work. Item 2 of List II deals with jurisdiction and power of all courts except the Federal Court with respect to any of the matters in this list, and Mr. Mistree 's argument is that item 1 is limited and conditioned by item 2 and what he contends is that the only power that the Provincial Legislature has is undoubted ly to create courts, but to confer upon them only such jurisdiction as relates to items comprised in List II. I am unable to accept that contention or that interpretation of List 11 in Schedule 7. Each item in List 11 is an independ ent item, supplementary of each other, and not limited by each other in any way. Item 1 having given the general power to the Provincial Legislature with regard to all matters of administration of justice and with regard to the constitution and organization of all courts, further gives the power to the Legislature to confer special juris diction, if needs be, and special power, if needs be, to these courts with regard to any of the items mentioned in List 11. It is impossible to read item 2 as curtailing (1) 12 90 and restricting the very wide power with regard to adminis tration of justice given to the Provincial "Legislature under item 1. Similarly in List I the Federal Legislature has been given the power under item 53 to confer jurisdic tion and power upon any court with regard to matters falling under any of the items in that list, and, therefore, it would be competent to the Federal Legislature to confer any special jurisdiction or power which it thought proper upon any court with regard to suits on promissory notes or mat ters arising under the Negotiable Instruments Act. ". It seems to me that the legislative power conferred on the Provincial legislature by item 1 of List II has been con ferred by use Of language which is of the widest amplitude (administration of justice and constitution and organization of all courts). It was not denied that the phrase employed would include within its ambit legislative power in respect to jurisdiction and power of courts established for the purpose of administration of justice. Moreover, the words appear to be sufficient to confer upon the Provincial Legis lature the right to regulate and provide for the whole machinery connected with the administration of justice in the PrOvince. Legislation on the subject administra tion of justice and constitution of courts of justice would be ineffective and incomplete unless and until the courts established under it were clothed with the jurisdiction and power to hear and decide causes. It is difficult to visua lise a statute dealing with administration of justice and the subject of constitution and organization of courts without a definition of the jurisdiction and powers of those courts, as without such definition such a statute would be like a body without a soul. To enact it would be an idle formality. By its own force it would not have power to clothe a court with any power or jurisdiction whatsoever. It would have to look to an outside authority and to another statute to become effective. Such an enactment is, so far as I know, unknown to legislative practice and history. The Parliament by making administration of justice a provin cial subject 91 could not be considered to have conferred power of legisla tion on the Provincial Legislature of an ineffective and useless nature. Following the line of argument taken by Mr. Mistree before the High Court of Bombay, Mr. Seervai stren uously contended that the only legislative power conferred on the Provincial Legislature by entry 1 of List II was in respect to the establishment of a court and its constitution and that no legislative power was given to it to make a law in respect to jurisdiction and power of the court estab lished by it. The argument, logically analysed, comes to this: that a statute will contain the name of the court, the number of its judges, the method of their appointment, the salaries to be drawn by them and it will then stop short at that stage and will not include any provision defining the powers of the tribunal or its other jurisdiction and that the court so constituted could acquire jurisdiction only when a law was made relating to its jurisdiction and powers by the Federal Legislature under entry 53 of List I, by the Provincial Legislature under entry 2 of List II and by either Legisla ture under entry 15 of List III. The learned counsel con tended that this peculiar result was the natural consequence of a federal constitution with divided powers, and that entries 53, 2 and 15 of the three respective lists limit and curtail the wide power conferred on the Provincial Legisla ture by item 1 of List II. It is difficult to accede to this contention because it would amount to holding that though the Provincial Legislature under item 2 of List II has been given the widest power of legislation in the matter of administration of justice and constitution and Organiza tion of courts and though that field has been demarcated for it as its exclusive field of legislation, yet all that it can do, acting within that field, is merely to establish a court without any competency to function and that in can only become an effective instrument for administering jus tice by laws enacted elsewere or under powers conferred under other items of the different lists. I am unable to read items 53, 2 and 15 of the three respective 92 lists as imposing limitations on legislative power con ferred on the Province by item 1 of List II. Such a con struction of the Act would not only do violence to the plain language of item 1 of List II but would be contrary to its scheme under which administration of justice was made a provincial subject. It is significant that no other Legis lature has been given the power to bring into existence a court. A court without powers and jurisdiction would be an anomaly as it would not be able to discharge the func tion of administration of justice and the statute estab lishing such a court could not be said to be a law on the subject of administration of justice. It is a fundamental principle of the construction of a constitution that every thing necessary for the exercise of powers is included in the grant of power. Everything necessary for the effective execution of power of legislation must therefore be taken to be conferred by the constitution with that power. It may be observed that in exercise of legislative power under item 1 of List 11 a provincial Legislature can alter the constitu tion of the existing courts, can abolish them, reorganize them and can establish new courts. If the construction contended for by Mr. Seervai is accepted, then the existing courts re established or re organised by the provincial Legislature would not be able to function till legislation under item 53 of List I, under item 2 of List II or item 15 of List III also simultaneously was made. I do not think that such a result was in the contemplation of parliament. Mr. Seervai with some force argued that it full effect is given to the comprehensive phraseology employed in item 1 of List II, then it would result in making the provisions of item 2 of List II, of item 53 of List I and item 15 of List III nugatory. in other words, if the provincial Legislature could bring into existence a court of general jurisdiction which could hear all causes on subjects concerning which legislative power was divided in the three lists, then the conferment of legislative power on the Federal Legislature under item 53 of List 1, on the provincial Legislature under item 2 in List II and on both the Legislatures under 93 item 15 of List III was purposeless. In my opinion, this argument is not a valid one and the premises on which it is based are not sound. The three lists of subjects contained in Schedule 7 have not been drawn up with any scientific precision and the various items in them overlap. The point kept in view in drawing up the lists was to see that all possible power of legislation was included ,within their ambit. By making administration of justice a provincial subject and by conferring on the Provincial Legislature power to legislate on this subject and also on the subject of constitution and organization of courts, Parliament conferred on that Legislature an effective power which included within its ambit the law making power on the sub ject of jurisdiction of courts. The Provincial Legislature could therefore bring into existence a court with general jurisdiction to administer justice on all matters coming before it within certain territorial and pecuniary limits, subject of course to the condition that such general juris diction may be expressly or impliedly taken away by the provisions of other laws. The Parliament having divided the field of legislation between the two Legislatures, naturally thought that as a corollary or a necessary consequence of this division of legislative power it was necessary to provide by way of a complementary provision a legislative power specifically on the two Legislatures in respect to the jurisdiction and powers of courts on subjects which were within their exclusive legislative field. If a Legislature could exclusively legislate in respect to particular sub jects, as a necessary consequence it should also have the power to legislate in respect to jurisdiction and power of the court dealing with that subject. It is this power that has been conferred by entries 53, 2 and 15 above mentioned on the two Legislatures. Entries 42 and 99 of List I, entries 37 and 42 of List II and entries 25 and 36 of List III are of a similar consequential character. The respective Legislatures are therefore competent to confer special powers on courts and can create special jurisdic tions acting under those powers in respect to 94 their divided fields of legislation. Instances of confer ment of powers and jurisdiction on courts to hear cases on particular subjects were well known to Parliament. Such powers had been conferred on different courts in respect of testamentary and intestate jurisdiction, admiralty jurisdic tion, under the Indian Companies Act, under the Succession Act, Guardians and Wards Act and under the various. Rent Acts and Acts dealing with relief of indebtedness. In view of the division of powers in respect to different subjects, power was given under item 53 of List I, item 2 of last II and item 15 of List III to the different Legislatures when dealing with those subjects also to legislate on the ques tion of jurisdiction and powers of the courts. This confer ment of legislative power to create special jurisdiction in respect to particular subjects does not in any way curtail the legislative power conferred on the Provincial Legisla ture under item 1 of List II. As soon as special legisla tive power under item 53 of List I, under item 2 of List II and item 15 of List III is exercised, the causes that arise in respect to those subjects would then only be heard in jurisdictions created by those statutes and not in the courts of general jurisdiction entrusted with the normal administration of justice. In the language of section 9 of the Code of Civil Procedure, jurisdiction of the general courts will then become barred by those statutes. I am therefore of the opinion that under item 1 of List II the Provincial Legislature has complete competence not only to establish courts for the administration of justice but to confer on them jurisdiction to hear all causes of a civil nature, and that this power is not curtailed or limit ed by power of legislation conferred on the two Legislatures under items 53, 2 and 15 of the three lists. On the other hand, these three items confer on the respective Legisla tures power to legislate when dealing with particular sub jects within their exclusive legislative field to make laws in respect of jurisdiction and powers of courts that will be competent to hear causes relating to those subjects; in other words, this is a power of creating special 95 jurisdictions only. This interpretation of the entries in the lists is not only in accordance with the scheme of the statute but it harmonizes the different entries in the lists and does not make any of them nugatory and in effective. The interpretation contended for by Mr. Seervai would reduce the power of the Provincial Legislature under item 1 to almost nothingness. The crux of the case is whether item 1 of List 11 should be given a limited construction which makes it nugatory or whether a limited construction is to be placed on items 53, 2 and 15 of the three lists. I have no hesitation in holding that both in the light of principles of construction of statutes and principles of legislation, the course to adopt is the one that I have indicated above. Finally, it was contended that section 12 of the Act in any case was a void piece of legislation as it deprived the High Court of its jurisdiction even in respect to subjects contained in List I of the Seventh Schedule. In view of the construction that I have placed on item 1 of List II this argument has no force. If the Legislature has power to bring into existence a court and confer jurisdiction and power on it, a fortiori it has power to take away the jurisdic tion and power that already exist in other courts. More over, the Bombay City Civil Court Act in section a has excepted from the jurisdiction of the new court all cases which the High Court can hear under any special law. Spe cial law has been defined as a law applicable to a particu lar subject. If under List 1 of the Seventh Schedule the Federal Legislature by any law determines that a case has to be heard by the High Court, section 5 will not affect the jurisdiction of that court in any manner whatsoever. The result, therefore, is that the Bombay City Civil Court Act is a statute which is wholly within the legisla tive field of the Province under item 1 of List II and its validity cannot be affected even if it incidentally trenches on other fields of legislation. It is not a statute dealing with any of the subjects mentioned in List I and therefore it cannot be said that the 96 Provincial Legislature has in any way usurped the power demarcated for the Centre. In view of this conclusion I think it unnecessary to pronounce any opinion on the other points raised by the learned Attorney General. For the reasons given above I allow the appeal preferred by the Government of Bombay and set aside the decision of the High Court holding that section 4 of the City Civil Court Act (XL of 1948) is void. In the circumstances of the case I leave the parties t9 bear their own costs of the appeal. MUKHERJEA J. In my opinion this appeal should be allowed and I concur substantially in the line of reasoning adopted by my learned brother Mahajan J. in his judgment. Having regard to the constitutional importance of the questions raised in this case, I would desire to add some observations of mine own. There are really two questions which require considera tion in this appeal. The first is whether section 4 of the Bombay City Civil Court Act, 1948, is void and inoperative by reason of its amounting to a delegation of legisltive powers by the Provincial Legislature to the Provincial Government of Bombay. The Bombay High Court has answered this question in the affirmative and it is entirely upon this ground that the judgment appealed against is based. The propriety of this decision has been challenged by the learned Attorney General who appeared on behalf of the State of Bombay in support of this appeal. On the other hand, Mr. Seervai, appearing on behalf of the respondents, has not only attempted to repel the contention ad vanced by the learned Attorney General, but has sought to support the judgment appealed against on another and a more comprehensive ground which, if accepted, would make the entire Bombay City Civil Court Act a void piece of legisla tion, as being an encroachment by the Provincial Legislature upon the field of legislation reserved for the Centre under List I of Schedule 7 to the Government of India Act, 1935. 97 As regards the first point, I agree that the contention of the appellant is sound and must prevail. I have no hesi tation in holding that the Legislature in empowering the Provincial Government to invest the City Court, by notifica tion, with jurisdiction of such value not exceeding Rs. 25,000 as may be specified in the Notification, has not delegated its legislative authority to the Provincial Gov ernment. The provision relates only to the enforcement of the policy which the Legislature itself has laid down. The law was full and complete when it left the legislative chamber permitting the Provincial Government to increase the pecuniary jurisdiction of the City Court up to a certain amount which was specified in the Statute itself. What the Provincial Government is to do is not to make any law; it has to execute the will of the Legislature by determining the time at which and the extent to which, within the limits fixed by the Legislature, the jurisdiction of the court should be extended. This is a species of conditional legis lation which comes directly within the principle enunciated by the Judicial Committee in The Queen vs Burah(1), where the taking effect of a particular provision of law is made to depend upon determination of certain facts and conditions by an outside authority. The learned Judges of the Bombay High Court in coming to their decision on the point seem to have been influenced to some extent by the pronouncement of the Federal Court in Jatindranath Gupta vs Province of Bihar(2), and the learned. Counsel for the respondents naturally placed reliance upon it. I was myself a party to the majority decision in that case and expressed my views in a separate judgment. I do not think that there is anything in my judgment which lends support to the contention which the respondents have put forward. I stated expressly in course of, my Judgment on the authority of the well known American decision in Locke 's appeal(3) that a legislature may not (1) 5 I.A. 178. (3) 13 American Reports 716. 13 98 delegate its powers to make law but "it can make a law to delegate a power to determine some fact or state of things upon which the law makes or intends to make its own action depend "; and that the inhibition against delegation does not extend to legislation which is complete in itself, though its operation is made to depend upon contingencies the ascertainment of which is left to an external body. The subject matter of dispute in the Bihar case was the validity of a proviso engrafted upon section 1, subsection (3) of the Bihar Maintenance of Public Order Act. The sub section laid down that the Act would remain in force for a period of one year from the date of its commencement. The proviso then added "that the Provincial Government may, by notification on a resolution passed by the Bihar Legislative Assembly and agreed to by the Bihar Legislative Council direct that this Act shall remain in force for a further period of one year with such modifications, if any, as may be specified in the notification." Mr. Seervai would have been probably right in invoking the decision in that case as an authority in his favour if the proviso simply empowered the Provincial Government, upon compliance with the condi tions prescribed therein, to extend the duration of the Act for a further period of one year, the maximum period being fixed by the Legislature itself. The proviso, however, went further and authorised the Provincial Government to decide at the end of the year not merely whether the Act should be continued for another year but whether the Act itself was to be modified in any way or not. It was conceded by the learned Counsel appearing for the Province of Bihar that to authorise another body to modify a statute amounts to in vesting that body with legislative powers. What the learned Counsel contended for, was that the power of modification was severable from the power of extending the duration of the statute and the invalidity of one part of the proviso should not affect its other part. To this contention my answer was that the two provisions were inter related in such a manner in the statute that one could not be severed from the other. 99 Obvious]y, the facts of this case are quite different, and all that I need say with regard to my pronouncement in Jatindranath Gupta 's case is that the principle upon which that case was decided is not applicable and cannot be at tracted, to the present case. I may state here that a question in the broad form as to whether a Provincial Legislature exercising its legislative powers within the limits prescribed by the Imperial Parlia ment in the Government of India Act, 1935, could delegate its legislative functions in any manner to an outside au thority as it thought proper, was neither raised nor decided in Jatindranath Gupta 's case. The learned Attorney General has not very properly invited any final decision on that point in the present case and I would refrain from express ing any opinion upon it. ' The second point appears to be of some complexity and it was decided by the Bombay High Court adversely to the re spondents on the basis of an earlier pronouncement of the same Court in Mulchand vs Raman(1). The arguments of Mr. Seervai are really directed at assailing the correctness of this earlier decision which the learned Judges held to be binding on them in the present case. The contention of Mr. Seervai, in substance, is, that the Bombay City Civil Court Act, which is a piece of provincial legislation, is ultra vires the legislature inasmuch as it purports to endow the City Court, which it brings into existence, with jurisdic tion to receive, try and dispose of "all suits and other proceedings of a civil nature" with certain exceptions that are specified in the different sub sections of section 8. What is said is that the expression "all suits of a civil nature" is wide enough to include suits in respect to mat ters specified in List I of the Seventh Schedule of the Constitution Act with regard to which the Central Legisla ture alone is competent to confer jurisdiction on courts under entry 53 of the said List. It is argued that so far as the Provincial Legislature is concerned, it may empower all courts (except the Federal Court) with jurisdiction in respect to any of the matters in the Provincial List. (1) 100 and it may also be capable of exercising like powers in regard to subjects enumerated in the Concurrent List as provided for in article 15 of List III, subject to the conditions laid down in section 107 of the Act. But as the scope of section 3 of the Bombay City Civil Court Act is not limited to matters in Lists II and III only and its language can embrace subjects coming under List I as well, and fur thermore as the different subjects both within and outside the provincial and concurrent fields dealt with by section 3 are inextricably, intertwined and not capable of severance or demarcation, the whole Act must be held to be ultra vires. In answer to this, it has been urged by the learned Attorney General that amongst the subjects included in Item 1 of the Provincial List are "the administration of justice and constitution and organization of all courts except the Federal Court", and these expressions obviously include within their ambit the conferring of general jurisdiction to hear and decide cases upon courts which are set up by the Provincial Legislature, and without which they cannot func tion as courts at all. 'It is said that Item 2 of the Provincial List which mentions "jurisdiction and powers of all courts except the Federal Court with respect to any of the matters in this List" does not in any way limit or curtail the ordinary connotation of the ,expressions "admin istration of justice and constitution of courts" as used in Item I of the said List referred to above. It cannot be disputed that the words "administration of justice" occuring in Item 1 of the Provincial List, unless they are limited in any way, are of sufficient amplitude to confer upon the Provincial Legislature the right to regulate and provide for the whole machinery connected with the administration of justice. Section 92, of the North America Act deals with the exclusive powers of the Provincial Legis latures and clause (14) of the section speaks of "the admin istration of justice in the Provinces" as including "the constitution, maintenance and organization of Provincial Courts. " In interpreting this provision of the constitution it has been held in North America that the words 101 "constitution, maintenance and organization of courts" plainly include the power to define the jurisdiction of such courts territorially as well as in other respects(2). Mr. Seervai argues that this might be the normal meaning of the words if they stood alone. But if Items 1 and 2 of the Provincial List are read together, the conclusion cannot be avoided that the expressions "administration of justice and constitution of courts" do not include "jurisdiction and powers of courts" which are separately dealt with under Item 2. To find out, therefore, the extent of powers of the Provincial Legislature in respect conferring jurisdic tion upon courts, the relevant item to be looked to is not Item 1 but Item 2 of the Provincial List. The contention in this form seems to me to be plainly unacceptable. I agree with Mr. Setalvad that the different topics in the same Legislative List should not be read as exclusive of one another. As was observed by Sir Maurice Gwyer in The United Provinces vs Atiqa Begum(1), "the sub jects dealt with in the three Legislative Lists are not always set out with scientific definition. It would be practically impossible for example to define each item in the Provincial List in such a way as to make it exclusive of every other item in that List, and Parliament seems to have been content to take a number of comprehensive categories and to describe each of them by a word of broad and general import . I think that none of the items in the List is to be read in a narrow or restricted sense, and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it. " As there can be no question of conflict between two items in the same List, there is no warrant for restricting the natural meaning of one for the simple reason that the same subject might in some aspect come within the purview of the other. The difficulty, however, arises when we come to entry 53 of List I. Under this entry, it is the Central (1) Re County Courts of British, Columbia 21 S.C.R. 446. (2) at p. 134. 102 Legislature that has been given the power of legislating in regard to jurisdiction and powers of all courts except the Federal Court in respect to any of the matters in List L The difficulty that one is confronted with, is that if Item 1 of the Provincial List is taken to empower the Provincial Legislature to invest a court with jurisdiction with respect to all subjects no matter in whichever List it might occur, a clear conflict is bound to arise between Item 1 of the Provincial List and Item 53 of the Central List; and a Provincial legislation trespassing upon the exclusive field of the Centre would be void and inoperative under section 100 of the Constitution Act. This being the posi tion, a way would have to be found out to avoid the conflict. As the Privy Council observed in the case of the Citizens Insurance Company of Canada vs Parsons(2) "it could not have been the intention that a conflict should exist and in order to prevent such a result the two sections must be read together and the language of the one interpreted and where necessary modified by the other." Mr. Seervai suggests that the proper way of reconciling this apparent conflict would be to read the words "adminis tration of justice and constitution of courts" occurring in entry 1 of the Provincial List as exclusive of any matter relating to jurisdiction of courts. The Provincial Legisla ture can only set up or constitute courts but their juris diction or power of deciding cases must be derived from the Central or the Provincial Legislature or, from either of them in accordance with the subjects to which such juris diction relates. The Provincial Legislature can endow the court with jurisdiction in respect to any matter in List II and the Central Legislature can do the same with regard to subjects specified in List I. So far as matters in the Concurrent List are concerned, either of the Legislatures can make provisions in respect of them subject to the condi tions laid down in section 107 the Constitution Act. (2).A.C. ,96 at p. 109. 103 This argument, though apparently plausible, cannot, in my opinion, be accepted as sound. It is to be noted that the right to set up courts and to provide for the whole machinery of administration of justice has been given exclu sively to the Provincial Legislature. Under section 101 of the North America Act, the Parliament of Canada has a re serve of power to create additional courts for better admin istration of the laws of Canada but the Indian Constitution Act of 1935 does not give any such power to the Central Legislature. Courts are to be established by the Provincial Legislature alone. The word 'court ' certainly means a place where justice is judicially administered, The appointment of Judges and officers or the mere setting apart of a place where the Judges are to meet, are not sufficient to consti tute a court. A court cannot administer justice unless it is vested with jurisdiction to decide cases and "the consti tution of a court necessarily includes its jurisdiction. "(1) If Mr. Seervai 's contention is accepted, the result will be that when a Provincial Legislature estab lishes a civil court, it can only be invested with jurisdic tion to decide cases in respect to matters coming within the Provincial List. Such court can have no power to decide cases relating to any matter which is enumerated in List I so long as the appropriate Legislature does not confer upon it the requisite authority. Thus an ordinary Provincial Court established to decide civil suits would be entitled to entertain all money claims but not a claim on a promissory note; nor could it entertain a suit for recovery of corpora tion tax, for Negotiable Instruments and corporation tax are subjects of the Central List. This certainly was not the scheme of the Constitution Act. In my opinion, the proper way to avoid a conflict would be to read entry 1 of the Provincial List, which contains the only provision relating to constitution of courts and administration of justice, along with the group of three entries, viz., entry 53 of List I, entry 2 of List II and entry 15 of List III with which it is supposed to be in conflict, (1) Vide Clement 's Canadian Consitution, 3rd Edn., p. 527, 104 and to interpret the language of one by that of the other. Entry 1 of List II uses the expressions "administration of justice and constitution of all courts" in a perfectly general manner. No particular subject is specified to which the administration of justice might relate or for which a court might be constituted. It can, therefore, be legitimately interpreted to refer to a general jurisdiction to decide cases not limited to any particular subject. The other three items on the other hand relate to particular matters appearing in the three Lists and what they contem plate is the vesting of jurisdiction in courts with regard to such specific items only. In one case the jurisdiction is 'general ' as is implied in the expression "administration of justice", while in the other three the jurisdiction is 'particular ' as limited to particular matters and hence exclusive. I agree with my learned brother Patanjali Sastri J. that one approved way of determining the scope of a legislative topic is to have regard to what has been ordi narily treated as embraced within that topic in the legisla tive practice of the country(2); and if that test is ap plied, the interpretation suggested above would appear to be perfectly legitimate. The distinction between general and particular jurisdiction has always been recognised in the legislative practice of this country prior to the passing of the Constitution Act of 1935 and also after that. There have been always in this country civil courts of certain classes and categories graded in a certain manner according to their pecuniary jurisdiction and empowered to entertain and decide all suits of a civil nature within particular localities. Particular jurisdiction again have been conferred on some one or the other of these courts to try cases relating to certain specified matters. Thus there have been special jurisdictions created for insolvency, probate or guardianship proceedings, for deciding disputes relating to compulsory acquisition of land and for dealing with cases arising under the Rent Acts or the different legislations passed in recent years (2) vide Croft vs Dunphy. 105 for scaling down exorbitant rates of interest or giving relief to rural debtors. Similar instances may be cited with regard to conferring of special jurisdiction in criminal cases. There will be no difficulty in interpreting in a proper manner the different entries in the Legislative Lists re ferred to above if this distinction between general and special jurisdiction is kept in view. The entire scheme of the Constitution Act of 1935 is to vest the power of estab lishing courts upon the Provincial Legislature. The Provin cial Legislature can endow the courts which it sets up with general jurisdiction to decide all cases which, according to the law of the land, are triable in a court of law, and all these powers can be exercised under entry I of List II. If the Central Legislature or the Provincial Legislature chooses to confer special jurisdiction on certain courts in respect to matters enumerated in their appropriate legisla tive lists, they can exercise such powers under the three entries specified above. But the exercise of any such powers by the Central Government would not m any way conflict with the powers exercisable by the Provincial Legislature under entry 1 of List II. The expression 'general ' must always be understood as being opposed to what is 'special ' or exclu sive. If the Central Legislature vests any particular juris diction upon a court in respect to a Central matter, that matter would cease to be a general matter and consequently the court having general jurisdiction would no longer deal with that, but the general jurisdiction of such courts would not be affected thereby. The contents of general jurisdic tion are always indeterminate and are not susceptible of any specific enumeration. In this view, I do not think that it would be at all necessary to invoke 'the pith and substance ' doctrine in avoiding the possibility of incidental encroach ment by the Provincial Legislature upon Central subjects in regard to conferring jurisdiction upon courts. If the expression 'jurisdiction ' in entry 53 of List I means and refers to special jurisdiction only, there cannot be even an incidental encroachment upon such special jurisdiction 14 106 by reason of the conferring of general jurisdiction upon courts by the Provincial Legislature under entry 1 of List II. As I have said already what is 'special ' or made so, will automatically cease to be in the category of what is 'general ' and no question of a conflict would at all arise. It may be pointed out in this connection that in the Canadian Constitution also, the general scheme is to carry on administration of justice throughout Canada through the medium of provincial courts. Subject to the residuary power reserved to the Dominion Parliament under section 101 of the North America Act, the Constitution has assigned to the provinces the exclusive power in relation to administration of justice including the maintenance, constitution and organization of courts. There is no limitation in any provincial court along the line of division that exists between matters within the legislative competence of the Dominion Parliament and of the Provincial Legislative Assemblies (1). There is indeed no such thing as Entry 53 in List I of the Indian Act in the Canadian Constitution, but there are judicial pronouncements to the effect that the Dominion Parliament can impose jurisdiction on provincial courts over Dominion subjects (2). It may be that the British Parliament in framing the legislative topics in the Government of India Act of 1935 in regard to administration of justice and jurisdiction of courts wanted to adopt the Canadian model with such modifications as they considered necessary. It is, however, immaterial to speculate on these matters. For the reasons given above, I am of the opinion that the decision of the Bombay High Court in Mulchand vs Raman(3) is correct, and the contention of Mr. Seervai should fail. In the result, the appeal is allowed and the judgment of the High Court is set aside. DAS J: I agree that this appeal should be allowed. In view of the importance of the questions raised in (1) Vide Clement 's Canadian Constitution p. 526. (2) Vide Lefroy 's Canada 's Federal system p. 541, (3) 107 this appeal, I consider it right to state 'my reasons for coming to that conclusion. The salient facts, as to which there is no dispute, are as follows: On May 10, 1948, the Provincial Legislature of Bombay passed Act No. XL of 1948, called the Bombay City Civil Court Act, 1948. It was passed with a view "to estab lish an additional Civil Court for Greater Bombay. " The provisions of that Act which will be relevant for the pur poses of the present appeal may now be set out: "1. (2) It shall come into force on such date as the Provincial Government may, by notification in the Official Gazette, appoint in this behalf. The Provincial Government may, by notification in the Official Gazette, establish for the Greater Bombay a Court, to be called the Bombay City Civil Court. Notwith standing anything contained in any law, such Court shall have jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding ten thousand rupees in value, and arising within the Greater Bombay, except suits or proceedings which are cognizable (a) by the High Court as a Court of Admiralty or Vice Admiralty or as a Colonial Court of Admiralty, or as a Court having testamentary, intestate or matrimonial jurisdiction, or (b) by the High Court for the relief of insolvent debt ors, or (c) by the High Court under any special law other than the Letters Patent, or (d) by the Small Cause Court: Provided that the Provincial Government may, from time to time, after consultation with the High Court, by a like notification extend the jurisdiction of the City Court to any suits or proceedings of the nature specified in Clauses (a) and (b). Subject to the exceptions specified in section 3, the Provincial Government may, by notification in the Offi cial Gazette, invest the City Court with jurisdiction to receive, try and dispose of all suits and 108 other proceedings of a civil nature arising within the Greater Bombay and of such value not exceeding twenty five thousand rupees as may be specified in the notification. Notwithstanding anything contained in any law, the High Court shall not have jurisdiction to try suits and proceedings cognizable by the City Court: Provided that the High Court may, for any special rea son, and at any stage, remove for trial by itself any suit or proceeding from the City Court. " The Act received the assent of the Governor General about the same time. It came into force on August 16, 1948, by a notification issued by the Provincial Government and published in the Official Gazette. Simultaneously with the passing of the above Act the Bombay Legislature also enacted Act (XLI of 1948) called the Bombay High Court Letters Patent Amendment Act, 1948. By section3 of that Act Clause 12 of the Letters Patent was amended by adding the following words: "Except that the said High Court shall not have such Original jurisdiction in cases falling within the jurisdic tion of the Small Cause Court at Bombay or the Bombay City Civil Court. " Shortly after the passing of the above Acts, the validi ty of the Bombay City Civil Court Act (XL of 1948) was challenged in Mulchand Kundanmal Jagtiani vs Raman Hiralal Shah(1), a suit on promissory notes filed in the Original side of the High Court. A Division Bench of the Bombay High Court (Chagla C.J. and Bhagwati J.), on September 2, 1948, held that the Act was well within the legislative competence of the Provincial Legislature and was not ultra vires. Leave was given to the plaintiff in that suit under section 205 of the Government of India Act, 1935, to appeal to the Federal Court but no such appeal appears to have been filed. On January 20, 1950, the Provincial Government of Bombay issued the following notification No. 2346/5 in the Official Gazette: (1) A,I.R. 1949 Bom. 197; 109 "In exercise of the powers conferred by section 4 of the Bombay City Civil Court Act, 1948 (Bombay, Act XL of 1948), the Government of Bombay is pleased to invest, with effect from and on the date of this notification, the City Court with jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding twen ty five thousand rupees in value, and arising within the Greater Bombay subject, however, to the exceptions specified in section a of the said Act. " On February 6, 1950, the first respondent Narothamdas Jethabhai presented a plaint before the Prothonotary of the Bombay High Court for recovery of Rs. 11,704 5 4 with further interest due by the second respondent Aloysious Pinto Phillips upon three several promissory notes. In paragraph 4 of this plaint it was expressly pleaded that the High Court had jurisdiction to receive, try and dispose of that suit because (1)the Bombay City Civil Court Act, 1048, was ultra vires and (2) at least section 4 of that Act and the notification issued thereunder were ultra vires. Having some doubts as to whether in view of the notification issued 1 by the Provincial Government under section 4 of the Act the plaint could be admitted in the High Court, the Prothon otary placed the matter under the rules of the Court before Bhagwati J. who was then the Judge in Chambers. By his judgment delivered on February 23, 1950, Bhagwati J. held that section 4 of the Act and the notification issued there under were ultra vires and void and that the High Court, therefore, had jurisdiction to entertain the suit. The plaint was accordingly received and admitted. The first respondent thereupon took out a summons under the rules of the Court for leave to sign judgment against the second respondent. The State of Bombay was, on its own application, added as a party to the suit. The matter was put up before a Division Bench (Chagla C.J. and Tendolkar J.) for trial of the following issues: 110 "(1) Whether Act XL of 1948 is ultra vires of the Legis lature of the State of Bombay. (2) Whether,Section 4 of Act XL of 1948 is in any event ultra rites of the Legislature of the State of Bombay. (3) Whether the Government of Bombay Notification 'No. 2346/5 dated 20th January, i1950, is ultra vires, void and inoperative in law. (4) Whether this Court has jurisdiction to try the suit. The larger point involved in issue No. 1 having been concluded by the earlier decision of the Division Bench in Mulchand Kundanmal Jagtiani vs Raman Hiralal Shah(1) that issue was answered in the negative without any argument but leave was reserved to the first respondent to contest the correctness of that earlier decision in this Court. The Division Bench in agreement with Bhagwati J. held that by section 4 of the Act the Provincial Legislature did not itself legislate but delegated the power of legislation to the Provincial Government which it had no power to do and, therefore, section 4 and along with it the notification No. 2346/5 issued thereunder were ultra vires, void and inoperative. Accordingly they answered issues Nos. (2), (3) and (4)in the affirmative and sent the summons for judgment back to the learned Judge taking miscellaneous matters to dispose it of on merits. The State of Bombay has now come up before us in appeal from this decision of the High Court. The Advocate General of Madras has intervened in support of this appeal and for maintaining the validity of the Madras City Civil Court Act (VII of 1892) section 3A of which inserted in 1935 by way of amendment is in identical terms with section 4 of the Bombay Act except that the amount of the value was fixed at Rs. 10,000 in section 3A of the Madras Act instead of Rs. 25,000 fixed in section 4 of the Bombay Act. The distinction between conditional legislation and delegation of legislative power has been well known (1) 51 Bom L R.86 111 ever since the decision of the Privy Council in R.v. Burah(1) and the other Privy Council cases cited in the judgments of the High Court. It is firmly established that conditional legislation is not only permissible but is indeed in many cases convenient and necessary. The difficul ty which confronts the Courts is in ascertaining whether a particular provision of a Statute constitutes a conditional legislation as explained in the decisions of the Privy Council. In the present case the High Court, on a construc tion of section 4 of the Bombay City Civil Court Act, came to the conclusion that it was not an instance of conditional legislation at all. The use of the word "invest" in section 4 was considered by the High Court to be very significant and the difference between the language in section 3 and that in section 4 appeared to them to be very marked and striking. According to the High Court while by section a the Legislature itself set up a Court with a particular pecuniary jurisdiction, under section 4 the Legislature itself did not invest the Court with any higher jurisdiction but left it to the Provincial Government to exercise the function which the Government of India Act laid down should be exercised by the Provincial Legislature. The learned Chief Justice expressed the view that the Legislature never applied its mind to the question as to whether the new Court which it was setting up should have a jurisdiction higher than that of Rs. 10,000, and that section 4 was not a sec tion which merely directed the Provincial Government to carry out the policy laid down by the Legislature, but that it was a section which conferred upon the Provincial Govern ment the power to confer jurisdiction upon the Court. Then, after referring to R.V. Baruha(1) and several other cases and purporting to apply the tests laid down in the decisions to the Act the learned Chief Justice concluded that the Legislature in the exercise of its legislative power had set up a Civil Court with a limited jurisdiction under section a of the Act, that it had not set up a Court with a jurisdiction higher than ten thousand rupees and (1) L.R 5 I. A. 178. 112 that, having set up a Court of, limited jurisdiction, it had given to the Provincial Government under section 4 the power to confer upon that Court a higher jurisdiction up to twenty five thousand rupees. This power, which was con ferred upon the Provincial Government was according to the Chief Justice, a power which could only have been exercised by the Legislature itself. I am unable to accept the afore mentioned construction of sections 3 and 4 of the Act. As I have already said, the High Court rounded their conclusions principally on the observations of their Lord ships of the Privy Council in R.v. Burah(1) and certain other Privy Council cases. It will be useful, therefore, to analyse the Privy Council decision in R.v. Burah(1). In 1869 the Indian Legislature passed an Act (No. XXII of 1869) purporting, first, to remove a district called Garo Hills from the jurisdiction of the Courts of civil and criminal jurisdiction and from the law prescribed for such Courts by Regulations and Acts and, secondly, to vest the administra tion of civil and criminal justice, within the same territo ry, in such officers as the Lieutenant Governor of Bengal might, for the purpose of tribunals of first instance, or of reference and appeal, from time to time appoint. The Act was to come into operation on such day as the Lieutenant Governor of Bengal should, by notification in the Calcutta Gazette, direct. The 8th section authorised the Lieuten ant Governor of Bengal by notification in the Calcutta Gazette to extend to the said territory, any law or any portion of any law then in force in other territories sub ject to his government or which may thereafter be enacted by the Council of the Governor General or of himself. The 9th section of that Act provided: "The said Lieutenant Governor may from time to time, by notification in the Calcutta Gazette, extend mutatis mutan dis all or any of the provisions contained in the other sections of this Act to the Jaintia Hills, the Naga Hills, and to such portion of the Khasi Hills, as for the time being forms part of British India, (1) L.R. 5 I.A. 178. 113 Every such notification shall specify the boundaries of the territories to which it applies. " On October 14, 1871, the Lieutenant Governor of Bengal issued a notification in exercise of the powers conferred on him by section 9 extending the provisions of that Act to the territory known as the Khasi and Jaintia Hills and excluded therefrom the jurisdiction of the Courts of civil and crimi nal justice. The respondent Burah and another person having been convicted by the Deputy Commissioner of the Khasi and Jaintia Hills of murder and sentenced to death, which was later on commuted to transportation for life, they from jail sent a petition of appeal against their conviction. The provisions of Act XXII of 1869 having been extended, by notification under section 9, to the Khasi and Jaintia Hills, the High Court would have no jurisdiction to enter tain the appeal, unless section 9 and the notification were ultra rites and void. The majority of the Judges of the Full Bench constituted for considering the question took the view that section 9 was really not legislation but was an in stance of delegation of legislative power. The Crown ob tained special leave to appeal to the Privy Council. In summarising the effect of the provisions of sections 1 to 8 of that Act on Garo Hills Lord Selborne who delivered the judgment of the Privy Council observed at page 194 that the Governor General in council had determined, in the due and ordinary course of legislation, to remove a particular district from the jurisdiction of the ordinary Courts and offices, and to place it under new Courts and offices, to be appointed by and responsible to the Lieutenant Governor of Bengal leaving it to the Lieutenant Governor to say at what time that change should take place, that the Legisla ture had determined that, so far, a certain change should,take place, but that it was expedient to leave the time, and the manner, of carrying it into effect to the discretion of the Lieutenant Governor and also, that the laws which were or might be in force in the other territo ries subject to the same Government were such as it might be fit and proper to apply to this 15 114 district also, but that, as it was not certain that all those laws, and every part of them, could with equal conven ience be so applied, it was expedient, on that point also, to entrust a discretion to the LieutenantGovernor. His Lordship then proceeded to state the true meaning and effect of the provisions of section 9: "This having been done as to the Garo Hills, what was done as to the Khasi and Jaintia Hills? The Legislature decided that it was fit and proper that the adjoining dis trict of the Khasi and Jaintia Hills should also be removed from the jurisdiction of the existing Courts, and brought under the same provisions with the Garo Hills, not neces sarily and at all events, but if and when the Lieutenant Governor should think it desirable to do so; and that it was also possible that it might be expedient that not all, but some only, of those provisions should be applied to that adjoining district. And accordingly the Legislature en trusted for these purposes also, a discretionary power to the Lieutenant Governor. " Finally, his Lordship concluded at p. 195: "Their Lordships think that it is a fallacy to speak of the powers thus conferred upon the LieutenantGovernor (large as they undoubtedly are) as if, when they were exercised, the efficacy of the acts done under them would be due to any other legislative authority than that of the Governor General in Council. Their whole operation is, directly and immediately, under and by virtue of this Act XXII of 1869 itself. The proper Legislature has exercised its judgment as to place, person, laws, powers; and the result of that judgment has been to legislate conditionally as to all these things. The conditions having been fulfilled, the legisla tion is now absolute. Where plenary powers of legislation exist as to particular subjects, whether in an imperial or in a provinciall Legislature, they may, in their Lordships ' judgment be well exercised, either absolutely or condition ally. Legislation, conditional on the use of particular powers, or on the exercise of a limited discretion, entrust ed by the Legislature to persons in whom it places confi dence, 115 is no uncommon thing; and, in many circumstances, it may be highly convenient. " If the reasonings underlying the observations of the ' Bombay High Court were correct then on those very reasonings it could be held in Burah 's case(1) that while in enacting sections 1 to 8 the Legislature had applied its mind and laid down its policy as to the exclusion of the Garo Hills from the jurisdiction of the Courts the Legislature did not apply its mind and did not lay down any policy as to the exclusion of the Khasi and Jaintia Hills rom the jurisdic tion of the Courts but had left it to the Lieutenant Gover nor to do what it alone could do. This construction quite clearly did not find favour with the Privy Council. The Privy Council by construction spelt out of the very language section 9 that the Legislature itself had decided that it was fit and proper that the Khasi and Jaintia Hills should also be removed from the jurisdiction of the existing Courts and brought under the same provisions as applied to the Garo Hills, not necessarily and at all events but if and when the LieutenantGovernor should think it desirable to do so and accordingly entrusted a discretionary power to the Lieutenant Governor. Adopting the same method of construc tion and adopting the language of Lord Selborne it may well be said that in enacting section 3 the Legislature itself has determined, in the due and ordinary course of legisla tion, to establish an additional Court of civil jurisdiction with jurisdiction to entertain suits and other proceedings arising within the Greater Bombay of the value up to Rs. 10,000 leaving it, by section 1 (2), to the Provincial Government to say at what time that change should take place. Likewise, it may be said that in enacting section 4 the Legislature itself has decided that it is fit, and proper to extend the pecuniary jurisdiction of the new Court, not necessarily and at all events or all at once but if and when the Provincial Government should think it de sirable to do so and accordingly entrusted a discretionary power to the Provincial Government. It is entirely wrong to say that the (1) L.R. 5 I.A. 178. 116 Legislature has not applied its mind or laid down any poli cy. Indeed, the very fact that the extension of pecuniary jurisdiction should not exceed twenty five thousand rupees, that the extension should be subject to the exceptions specified in section 3 clearly indicate that the Legislature itself has decided that the extension of the pecuniary jurisdiction of the new Court should be made, not necessarily or at all events or all at any one time but when the Provincial Government may consider. it desirable to do so and while entrusting a discretionary power with the Provincial Government to determine the time for investing such extended jurisdiction on the new Court, the Legislature itself has also prescribed the limits of such extension. The efficacy of the Act of extension of jurisdiction is, there fore, not due to any other legislative authority than that of the Legislature itself. The expression "invest" does not appear to me to have any special significance. It only implies or indicates the result of the fulfilment of the condition which the Legislature itself laid down. To use the language of Lord Selborne the extension of jurisdiction is directly and immediately under and by virtue of this very Act itself. Here there is no effacement of the Legislature, no abdication of the legislative power. On the contrary, the proper Legislature has exercised its judgment as to the possible necessity for the extension of the pecuniary juris diction of the new Court and the result of that judgment has been to legislate conditionally as to such extension and that the condition having been fulfilled by the issue of the notification by the Provincial Government the legislation has now become absolute. In my judgment the construction put upon sections 3 and 4 by the High Court was erroneous and cannot be supported either on principle or on authority. When properly construed in the light of the observations and decision of the Privy CounCil in R.v. Burah(1) as indi cated above section 4 does not amount to a delegation of legislative power at all but constitutes what is known as conditional legislation. (1) L.R. 5 I.A 178. 117 Reliance was placed by the High Court on the decision of the Federal Court of India in Jatindra Nath Gupta vs Prov ince of Bihar (1) in support of their conclusions. That case was concerned with the question of the validity of the proviso to section 1 (3)of the Bihar Maintenance of Public Order Act (V of 1947). Section 1 (a) provided that the Act should remain in force for a period of one year from the date of its commencement. The relevant part of the proviso was in the following terms: "Provided that the Provincial Government may, by notifi cation, on a resolution passed by the Bihar Legislative Assembly and agreed to by the Bihar Legislative Council, direct that this Act shall remain in force for a further period of one year with such modifications, if any, as may be specified in the notification. " Three of the learned Judges held that the proviso and the notification thereunder were ultra vires and void They laid particular emphasis on the power given to the Provin cial Government to make any modification in the Act when extending its life as indicating that it was a delegation of legislative power. Another learned Judge did not decide this point but agreed to set aside the order of detention on another ground not material for our present purpose and the remaining learned Judge took a different view of the effect of the proviso and held that it was a conditional legisla tion within the meaning of the decision in R., vs Burah(2). I do not find it necessary, for the purposes of the present appeal, to express any view as to the correctness of the decision of the Federal Court in that case. Assuming, but without deciding, that the entrustment with the Provincial Government of the power to extend the life of an Act with such modifications as the Provincial Government in its unfettered discretion thought fit to make was nothing but a delegation of legislative powers, there is no such power of modification given to the Provincial Government by section 4 of the Bombay City Civil Court (1) A.I.R. 1949 F.C. 175, (.2) L.R. 5 I.A. 178. and, therefore, that decision of the Federal Court can have no application to the case before us. The learned Attorney General wants to go further and contend that under the Government of India Act, 1935, it was permissible for the Legislatures, Central or Provincial, while acting within their respective legislative fields, to delegate their legislative powers. In the view I have ex pressed above, namely, that section 4 of the Bombay City Civil Court Act, 1948, does not involve any delegation of legislative power, I do not consider it necessary, on this occasion, to go into that question and I reserve my right to consider and decide that question including the question of the correctness of the decision of the Federal Court in Jatindra Nath Gupta 's case(1) on that point as and when occasion may arise in future. Learned counsel for the first respondent then raises before us the larger question as to whether the Bombay City Civil Court Act, 1948, as a whole was or was not within the legislative competence of the Provincial Legislature of Bombay. Legislative powers were by section 100 of the Gov ernment of India Act, 1935, distributed amongst the Federal and the Provincial Legislatures. Under that section the Federal Legislature had, and the Provincial Legislature had not, power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule to that Act. Likewise, the Provincial Legislature had, and the Federal Legislature had not, power to make laws the Province with respect to my of the matters enumerated in List II in that Schedule. It will be noticed that 'the section, while af firmatively giving legislative power with respect to certain matters to one Legislature, expressly excluded the legisla tive power of the other Legislature with respect to those matters. Lastly, section 100 gave concurrent power of legis lation to the Federal as well as to the Provincial Legisla ture with respect to matters enumerated in List III in that Schedule. Section 107 of that Act made provision for resolv ing the inconsistency, if any, between a Provincial law and a Federal law or the existing Indian (1) A.I.R. 1949 F.C. 175 119 law with respect to any of the matters in the Concurrent List (i.e., List III). Turning now to the three lists we find several entries relating to Courts, the relevant por tions of which are as follows : List I. Entry 53: Jurisdiction and powers of all Courts, except the Federal Court, with respect to any of the matters in this list . List II. Entry 1: . . the administration of justice, constitution and organisation of all Courts, except the Federal Court, and fees taken therein; . Entry 2: Jurisdiction and powers of all Courts, except the Federal Court, with respect to any of the matters in this list; procedure in Rent and Revenue Courts. List III. PART 1. Entry 2: Criminal Procedure, including all matters included in the Code of the Criminal Procedure at the date of the passing of this Act. Entry 4: Civil Procedure, including the law of Limita tion and all matters included in the Code of Civil Procedure at the date of the passing of this Entry 15: Jurisdiction and powers of all Courts, except the Federal Court, with respect to any of the matters in this list. Learned Attorney General urges that entry 1 in List II clearly indicates that administration of justice had been expressly made a provincial subject and that it was only the Provincial Legislature which could make laws with respect to administration of justice. The next steps in the argument are that there could be no administration of justice unless Courts were constituted and organised, that the constitution and organisation of Courts would be meaningless enterprises for the Provincial Legislatures to indulge in, unless the Courts so constituted and organised were 120 vitalised by being invested with jurisdiction and powers to receive, try and determine suits and other proceedings. The argument, therefore, is that entry 1 in List II by itself gave power to the Provincial Legislature not only to consti tute and organise Courts but also to confer jurisdiction and powers on them. The learned Attorney General relies on Jagtiani 's case(1) and points out that under entry 1 admin istration of justice was entirely a provincial responsibili ty and the Provincial Legislature was authorised to make laws with respect to administration of justice. Administra tion of justice, so the argument ' proceeds, is inseparable from Courts and Courts without jurisdiction is an incompre hensible notion. The conclusion sought to be established. therefore, is that under entry 1 alone of List II the Provincial Legislature had power to make a law not merely constituting a new Court but, investing such new Court with general jurisdiction and powers to receive, try and deter mine all suits and other proceedings. If entry 1 in List II stood alone and entry 53 in List I, entry 2 in List II and entry 15 in List HI were not in the Seventh Schedule, the argument would have been unanswerable. In Section 92 of the British North America Act, 1867, there was no separate provision authorising the making of laws with respect to jurisdiction and powers of Courts and, therefore, the au thority to make laws with respect to the jurisdiction and powers of Courts had of necessity to be found in and spelt out of the words ' 'administration of justice" occurring in section 92 (14) of that Act. There is, however, no such pressing or compelling necessity for giving such wide and all embracing meaning to the words "administration of jus tice" in entry 1 of List 11. The expression "administration of justice" may be an expression of wide import and may ordinarily, and in the absence of anything indicating any contrary intention, cover and include within its ambit several things as component parts of it, namely, the consti tution and organisation of Courts, jurisdiction and powers of the Courts and the laws to be administered by the Courts. But the legislative (1) 51 Bom. L.B. 86. 121 practice in England as well as in India has been to deal With these topics separately in legislative enactments: see for example Indian High Courts Act 1861. (24 and 25 Vic., c. 104) sections 2 and 19; Government of India Act, 1935, sections 220 and 223, the Letters i Patent of the Bombay High Court, 1865, and also the different Civil Courts Acts. Of these, one topic, namely, "constitution and organisa tion of Courts" had been expressly included in entry 1 of List II in addition to "administration of justice", a fact of some significance which must be noted although I do not say that the inclusion of the words "constitution and organ isation of all Courts" in entry 1 of List II by itself and in the absence of anything else cut down the generality of the meaning of the expression "administration of justice" which preceded those words, for such a construction may militate against the principle laid down by the Privy Coun cil in Meghraj vs Allah Rakhia(1). Further, entry 2 in List II would have been wholly unnecessary if the expression "administration of justice" in entry 1 in List II were to be given the wide meaning contended for by the learned Attor neyGeneral, for if under entry 1 ' in List II the Provincial Legislature had plenary powers to make laws conferring on, or taking away from, Courts, existing or newly constituted, 0jurisdiction and powers of the widest description, such power would also include the lesser power of conferring jurisdiction and powers with respect to any of the matters enumerated in List II, such as is contemplated by entry 2 in List II. The greater power would certainly have included the lesser. I do not say that the presence of entry 2 in List II by itself cut down the ambit of the expression "administration of justice" in entry 1, for if there were only entries 1 and 2 in List II and there were no entries like entry 53 in List I and entry 15 in List III, it might have been argued with some plausibility that in framing the two entries in the same list not much care was bestowed by the draftsman to prevent overlapping and that as (1) L.R. 74 I.A. 12, at p.20 16 16 122 both the entries in one and the same list gave legislative power to the same Legislature the overlapping caused no confusion or inconvenience and that it was not necessary, therefore, to construe entry 1 of List II as cut down by entry 2 in the same List. The important thing to notice is that the topic of "jUrisdiction and powers of Courts" had not been included in entry 1 in List II along with the topic of "constitUtion and organization of Courts", but the legislative powers with respect to the topic of "jurisdic tion and powers of the Courts" had been distributed between the Federal and the Provincial Legislatures in the manner set forth in entry 53 in List I, entry 2 in List II and entry 15 in List III. The inclusion of "constitution and organisation of Courts" as a separate item in entry 1 in List II, the omission of the topic of "jurisdiction and powers of Courts" from entry 1 and the deliberate distribu tion of powers to make laws with respect to jurisdiction and powers of Courts with respect to the several matters speci fied in the three lists clearly indicate to my mind that the intention of Parliament was not, by entry 1 in List II by itself, to authorise the Provincial Legislature to make any law with respect to the jurisdiction and powers of Courts. In my judgment, entry 1 in List II cannot be read as at all giving any power to the Provincial Legislature to confer any jurisdiction or power on any Court it might constitute or organise under that entry and that the expressions "admin istration of justice" and "constitution and organisation of Courts" occurring in entry 1 in List II should be read as exclusive of "the jurisdiction and powers of Courts" the powers of legislation with respect to which were distributed under entry 53 in List I, entry 2 in List II and entry 15 in List III. Such a construction will be consonant with the principle of construction laid down by, the Privy Council in the case of In re Marriage Legislation in Canada(1). It is next said that entry 1 in List II gave general powers to the Provincial Legislature to make laws (1) 123 conferring general jurisdiction and powers on Courts consti tuted by it under that entry while entry 53 in List I, entry 2 in List II and entry 15 in List III conferred special powers on the Federal and Provincial Legislatures to make laws conferring special jurisdiction and powers with respect to matters specified in their respective Lists. As I have already pointed out, if entry 1 in List II conferred plenary powers on the Provincial Legislature to make laws with respect to jurisdiction and powers of Courts in widest terms, entry 2 in List II would be wholly redundant, for the wider power itself would include the lesser power. Further,the very concession that entry 53 in List 1, entry 2 in List II and entry 15 in List III gave special powers to the Legislature to confer special jurisdiction and powers necessarily amounts to an admission that the powers conferred on the Provincial Legislature by entry 1 in List II were exclusive of the powers conferred under entry 53 in List I, entry 2 in List II and entry 15 in List III, for if entry 1 in List II gave power to the Provincial Legislature to make laws conferring general jurisdiction of the widest kind which included jurisdiction and powers with respect to all matters specified in all the Lists, then the utility of entry 53 in List I, entry 2 in List II and entry 15 in List III as giving special powers to make laws conferring special jurisdiction would vanish altogether. Special power to confer special jurisdiction would be meaningless if it were included in the general power also. This circumstance by itself should be sufficient to induce the Court to assign a limited scope and ambit to the power conferred on the Pro vincial Legislature under entry 1 in List II. We, there fore, come back to the same conclusion that entry 1 in List II should be construed and read as conferring on the Provin cial Legislature all powers with respect to administration of justice and constitution and organisation of Courts minus the power to make laws with respect to the jurisdiction and powers of Courts. It is pointed out that under entry 1 in List II it was only the Provincial Legislature which alone could 124 constitute and organise a new Court and if that entry did not empower the Provincial Legislature to vest in such new Court the general jurisdiction and power to re ceive, try and dispose of all kinds of suits and other proceedings, then no new Court of general jurisdiction could be established at all. As will be seen hereafter, the Provincial Legislature has, under entry 2 in List II, power to make laws conferring wide general jurisdiction and powers on a newly constituted Court and consequently a forced construction need not be placed on entry 1 in List II. It is said that if the Provincial Legislature could not, under entry 1 in List II, confer jurisdiction on a new Court set up by under that entry, the result would have been that the Provincial Legislature would have had to set up a new Court by one law made under entry 1 of List II without conferring on it any jurisdiction whatever and would have had to make another law with respect to ' the jurisdic tion and powers of such Court. I see no force in this, for the Provincial Legislature could by one and the same law have set up a Court under entry 1 in List II and vested in the Court jurisdiction and powers with respect to any of the matters specified in List II and, subject to section 107 of the Act, with respect to any of the matters enumerated in List III. It is wrong to assume that the Provincial Legisla ture could not make one law under both entry 1 and entry 2 in List II and entry 15 in List III at one and the same time. A good deal of argument was advanced before us as to the applicability of the doctrine of pith and substance and, indeed, the decision of the Bombay High Court in Jagtiani 's case was practically rounded on that doctrine. Shortly put, the argument, as advanced, is that under entry 1 in List II the Provincial Legislature had power to make laws with respect to administration of justice; that, therefore, the Provincial Legislature had power, under entry 1 itself, to make laws conferring general jurisdiction and powers on Courts constituted and organised by it under that entry; that if in making such law 125 the Provincial Legislature incidentally enroached upon the legislative field assigned to the Federal Legislature under entry 58 in List I with respect to the jurisdiction and powers of Court with respect to any of the matters specified in List I, such incidental encrochment did not invalidate the law, as in pith and substance it was a law within the legislative powers. In my judgment, this argu ment really begs the question. The doctrine of pith and substance postulates, for its application, that the impugned law is substantially within the legislative competence of the particular Legislature that made it, but only inciden tally encroached upon the legislative field of another Legislature. The doctrine saves this incidental en croachment if only the law is in pith and substance within the legislative field of the particular Legislature which made it. Therefore, if the Provincial Legislature under entry 1 had power to vest general jurisdiction on a newly constituted Court, then if the law made by it incidentally gave jurisdiction to the Court with respect to matters specified in List I the question of the applicability of the doctrine of pith and substance might have arisen. I have already pointed out that, on a proper construction, entry 1 of List II did not empower the Provincial Legislature to confer any jurisdiction or power on the Court and the ex pression "administration of justice" had to be read as covering matters relating to administration of justice other than jurisdiction and powers of Court and, if that were so, the discussion of the doctrine of pith and substance does not arise at all. I find it difficult to support the rea sonings adopted by the Bombay High Court in Jagtiani 's case. The argument as to the applicability of the doctrine of pith and substance to the impugned Act can, however, be well maintained in the following modified form: Under entry 2 in List II the Provincial Legislature had power to make laws with respect to the jurisdiction and powers of Courts with respect to any of the matters enumerated in List II; that "administration of justice" in entry 1 is one of the matters in 126 List II; that, therefore, the Provincial Legislature had power to confer the widest general jurisdiction on any new Court or take away the entire jurisdiction from any existing Court and there being this power, the doctrine of pith and substance applies. It is suggested that this argument cannot be formulated in view of the language used in entry 2 in List II. It is pointed out that entry 2 treats "any of the matters in this List" as subject matter "with respect to" which, i.e., "over" which the Court may be authorised to exercise jurisdiction and power. This construction of entry 2 is obviously fallacious, because jurisdiction and powers of the Court "over" administration of justice as a subject matter is meaningless and entry 2 can never be read with entry 1. This circumstance alone shows that the words ' 'with respect to" occurring in entry 2 in List 11 when applied to entry 1 did not mean "over" but really meant "relating to" or "touching" or "concerning" or "for" admin istration of justice, and so read and understood, entry 2, read with entry 1 in List 11, clearly authorised the Provin cial Legislature to make a law conferring on or taking away from a Court general jurisdiction and powers relating to or touching or concerning or for administration of justice. This line of reasoning has been so very fully and lucidly dealt with by my brother Sastri J. that I have nothing to add thereto and I respectfully adopt his reasonings and conclusion on the point. This argument, in my opinion, resolves all difficulties by vesting power in the Provincial Legislature to confer general jurisdiction on Courts consti tuted and organised by it for effective administration of justice which was made its special responsibility. Any argument as to deliberate encroachment that might have been rounded on the Proviso to section 3 of the Act which ena bled the Provincial Government to give to the City Court even Admiralty jurisdiction which was a matter in List I has been set at rest by the amendment of the Proviso by Bombay Act XXVI of 1950. The impugned Bombay Act may, in my judg ment, be well supported as a law made by the Provincial Legislature under 127 entry 2 read with entry 1 in List II and I hold accordingly. I, therefore, concur in the order that this appeal be al lowed. In the view I have taken, it is not necessary to discuss the contention of the learned Attorney General that the Bombay City Civil Court Act may be supported as a piece of legislation made by the Provincial Legislature of Bombay under entry 4 read with entry 15 in Part I of List III and I express no opinion on that point. Appeal allowed.
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The Bombay City Civil Court Act of 1948 was a law made by the government of Bombay. Section 3 of this law said that the government could create a court in Bombay called the Bombay City Civil Court by announcing it in the official government publication. This court would handle all civil cases (lawsuits about private matters, not criminal cases) worth up to Rs. 10,000 in Bombay, no matter what other laws said, except for certain types of cases listed in the section. Section 4 of the law said that, with some exceptions, the government could give the City Civil Court the power to handle civil cases in Bombay worth up to Rs. 25,000 by announcing it in the official government publication. Section 12 said that the Bombay High Court could not hear cases that the City Civil Court could handle. Using the power given by section 4, the government gave the City Civil Court the power to handle all civil cases worth up to Rs. 25,000. Someone filed a lawsuit in the Bombay High Court for Rs. 11,704 based on a promissory note (a written promise to pay money). They argued that the Bombay government didn't have the power to make laws about court cases involving promissory notes because that was a federal issue. They said the Bombay City Civil Court Act of 1948 was therefore invalid. They also argued that section 4 of the law was invalid because it gave too much law-making power to the government. Because of this, they said the High Court should hear the case. The Full Court decided: (i) The law was about something on the state government's list of powers and was valid. (ii) The lawmakers had already decided that the City Civil Court should handle cases up to Rs. 25,000. The government only had to decide the details of when the court would get this power. So, section 4 didn't give away law-making power, and it was a valid "conditional legislation." (iii) The law was mainly about something on the state government's list of powers. The fact that it also affected promissory notes (which are on the federal list) didn't make it invalid. The High Court couldn't hear the case. Justices FAZL ALI, MEHR CHAND MAHAJAN, and MUKHERJEA said: The state government's power to make laws about "administration of justice" and "courts" includes the power to make laws about what kinds of cases those courts can hear. Federal and state laws give special powers to make laws about courts and specific issues. But, these special powers don't limit the state's general power to make laws about courts and give them the power to hear civil cases. The federal and state governments can still make special laws about specific issues. Justices PATANJALI SASTRI and DAS said: The phrases "administration of justice" and "courts" should be understood in a limited way that does not include what cases courts can hear. This is because the issue of what cases courts can hear is specifically addressed elsewhere. The state government's power over "administration of justice" allows it to make laws about what cases courts can hear. Any conflict with the federal government's power can be resolved by focusing on the main purpose of the law and any accidental effects it might have. [The court looked at past practices before 1935 to support the idea that state governments had the power to give the courts they created the power to hear cases up to a certain amount of money]. Question: Could the governments of India give away their law-making powers to other groups under the Government of India Act of 1935? Queen vs Burah was applied. Jatindra Nath Gupta vs Province of Bihar was distinguished. Mulchand Kundanmmal Jagtiani vs Raman, United Provinces vs Atiqa Begum, and Prafulla Kumar Mukherjea and Others vs Bank of Commerce, Khulna were referred to.
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There are really three questions to be decided in this appeal, and they are as follows : (1) Whether the Bombay City Civil Court Act, 1948 (Act XL of 1948), is ultra vires the Legislature of the State of Bombay; (2) Whether in any event section 4 of the above Act is ultra vires the State Legislature; and (3) Whether the Bombay High Court has jurisdicion to try the suit. It was contended on behalf of the respondents that the Act is ultra vires the Legislature of the State of Bombay, because it confers jurisdiction on the new court not only in respect of maters which the Provincial Legislature is compe tent to legislate upon under List II of the 7th Schedule to the Government of India Act, 1935, but also in regard to matters in respect of which only the Central or Federal Legislature can legislate under List I (such as, for in stance, promissory notes, which is one of the subjects mentioned in entry 28 of List I). Once this fact is clearly 56 grasped, it follows that, by virtue of the words used in entry 1 of List II, the Provincial Legislature can invest the courts constituted by it with power and jurisdiction to try every cause or matter that can be dealt with by a court of civil or criminal jurisdiction,and that the expression "administration of justice" must necessarily include the power to try suits and proceedings of a civil as well as criminal nature, irrespective of who the parties to the suit or proceeding or what its subject matter may be. It may therefore be supposed, having regard to the wide language used in entry 13, that it is open to the Central Legislature to enact that suits in which these Universities are concerned as plaintiff or as defendant, will be triable only by the particular court mentioned in the enactment concerned and that no other court shall have jurisdiction in regard to such suits, It is difficult to think that until such a legislation is made, a court which would otherwise be the proper court, has no jurisdiction to try any suit in which one of these Universities is a party, no matter what the subject matter of the suit may be. In my opinion, the correct view is to hold that it is not necessary to call into aid either entry 4 of List III or any of the 64 provisions of the Canadian Constitution in this case, and that the words "administration of justice; constitution and organization of courts" are by themselves sufficient to empower the Provincial Legislature to invest a new court with all the power which has been conferred upon it by the impugned Act. It is of course open to the Central Legisla ture to bar the jurisdiction of the new court by a special enactment with regard to any of the matters in List I, but so long as such jurisdiction is not barred, the court will have jurisdiction try all suits and proceedings of a civil nature as enacted in the Act in question. The second point raised on behalf of the respondent relates to the validity of section 4 of the Act, which runs as follows : "Subject to the exceptions specified in section 3, the Provincial Government, may by notification in the Official Gazette, invest the City Civil Court with jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature, arising within the Greater Bombay and of such value not exceeding Rs. 25,000 by a notification issued by the Provincial Government under section 4 of the Act, it was stated in the plaint that the High Court had jurisdiction to try the suit because the Act as well as the said notification was ultra vires and void. On the first point, learned counsel for the first re spondent urged that section 100 of the Government of india Act, 1935, read with entries 53 of List I, 2 of List II and 15 of List III, the relevant parts of which are in identical terms, namely, "jurisdiction and powers of all courts except the Federal Court with respect to any of the matters in this List", conferred power on Legislatures in British India to make laws with respect to jurisdiction of courts only in relation to matters falling within their respec tive legislative fields, and that, therefore, the expres sions "administration of justice" and "constitution and organisation of courts" in entry 1 of List II, although they might be wide enough, if that entry stood alone, to include the topic of "jurisdiction and powers of courts", should not be construed in that comprehensive sense as such construc tion would give no effect to the limiting words in entry 2 which would then become meaningless indeed if those expres sions in entry 1 included the power to legislate with re spect to jurisdiction also, there would be no need for entry 2, while, on the other hand, without including such power, they would still have ample content, as various other mat ters relating to administration of justice and constitu tion of courts would have to be provided for, The scheme disclosed by the three separate entries in identical terms in the three lists was said to be this: The, Provincial Legislatures were to have the power of constituting courts and providing for administration of justice, but the power to invest the courts with jurisdiction was to rest with the Federal Legislature in respect of the matters mentioned in List I and with the Provincial Legislature in respect of the matters mentioned in List Ii, while both the Federal and the Provincial Legislatures were to have such power with respect to 69 the matters mentioned in List III subject to the provisions of section 107. (1) 77 Two questions have been canvassed in this appeal: (1) whether the City Civil Court Act is ultra vires the legisla ture of the Province of Bombay in so far as it deals with the jurisdiction and powers of the High Court and City Civil Court with respect to matters in List I of the Seventh Schedule of the Government of India Act, 1935; and (2) whether section 4 of the Act is void as it purports to delegate to the Provincial Government legislative authority in the matter of investing the City Civil Court with ex tended jurisdiction. Notwithstanding anything contained in any law, such court shall have juris diction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding ten thousand rupees in value, and arising within the Greater Bombay, except suits or proceedings which are cognisable (a) by the High Court as a Court of Admiralty or Vice Admiralty or as a Colonial Court of Admiralty, or as a Court having testamentary, intestate or matrimonial jurisdiction, or (b) by the High Court for the relief of insolvent debt ors, or (c) by the High Court under any special law other than the Letters Patent, or (d) by the Small Cause Court: Provided that the State Government may, from time to time, after consultation with the High Court, by a like notifica tion extend the jurisdiction of the City Court to any suits or proceedings which are cognisable by the High Court as a court having testamentary or 78 ntestate jurisdiction or for the relief of insolvent debt ors. It was pointed out that "distinction between delegation of power to make the law which necessarily involves a discretion as to what it shall be, and conferring discretion or authority as to its execution to be exercised Under and in pursuance of the law is a true one and has to be made in all cases where such a question is raised. " Now this power which is conferred upon the Provincial Government is a power which could only have been exercised by the Legislature itself. " It was urged that the Provincial Legislature had exclusive legislative power on the subject of administration of jus tice and constitution and organization of all courts and that this power necessarily included the power to make a law in respect to the jurisdiction of courts established and constituted by it and that the impugned legislation in pith and substance being on the subject of administration of justice, it could not be held ultra vires even if it trenched on the field of legislation of the Federal Legisla ture. In regard to entry 53 of List I, entry 2 of List II and entry 15 of List II of the Schedule, it was said that these conferred legislative power on the respective Legisla tures to confer special jurisdiction on established courts in respect of particular subjects only if it was considered necessary to do so. In other words the argument was that the Provincial Government could create a court of general jurisdiction legislating under entry 1 of List II and that it was then open to both the Central and the Provincial Legislatures to confer special jurisdiction on courts in respect to particular matters that were covered by the respective lists. Similarly in List I the Federal Legislature has been given the power under item 53 to confer jurisdic tion and power upon any court with regard to matters falling under any of the items in that list, and, therefore, it would be competent to the Federal Legislature to confer any special jurisdiction or power which it thought proper upon any court with regard to suits on promissory notes or mat ters arising under the Negotiable Instruments Act. Following the line of argument taken by Mr. Mistree before the High Court of Bombay, Mr. Seervai stren uously contended that the only legislative power conferred on the Provincial Legislature by entry 1 of List II was in respect to the establishment of a court and its constitution and that no legislative power was given to it to make a law in respect to jurisdiction and power of the court estab lished by it. The argument, logically analysed, comes to this: that a statute will contain the name of the court, the number of its judges, the method of their appointment, the salaries to be drawn by them and it will then stop short at that stage and will not include any provision defining the powers of the tribunal or its other jurisdiction and that the court so constituted could acquire jurisdiction only when a law was made relating to its jurisdiction and powers by the Federal Legislature under entry 53 of List I, by the Provincial Legislature under entry 2 of List II and by either Legisla ture under entry 15 of List III. I am therefore of the opinion that under item 1 of List II the Provincial Legislature has complete competence not only to establish courts for the administration of justice but to confer on them jurisdiction to hear all causes of a civil nature, and that this power is not curtailed or limit ed by power of legislation conferred on the two Legislatures under items 53, 2 and 15 of the three lists. In answer to this, it has been urged by the learned Attorney General that amongst the subjects included in Item 1 of the Provincial List are "the administration of justice and constitution and organization of all courts except the Federal Court", and these expressions obviously include within their ambit the conferring of general jurisdiction to hear and decide cases upon courts which are set up by the Provincial Legislature, and without which they cannot func tion as courts at all. 102 Legislature that has been given the power of legislating in regard to jurisdiction and powers of all courts except the Federal Court in respect to any of the matters in List L The difficulty that one is confronted with, is that if Item 1 of the Provincial List is taken to empower the Provincial Legislature to invest a court with jurisdiction with respect to all subjects no matter in whichever List it might occur, a clear conflict is bound to arise between Item 1 of the Provincial List and Item 53 of the Central List; and a Provincial legislation trespassing upon the exclusive field of the Centre would be void and inoperative under section 100 of the Constitution Act. Notwith standing anything contained in any law, such Court shall have jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding ten thousand rupees in value, and arising within the Greater Bombay, except suits or proceedings which are cognizable (a) by the High Court as a Court of Admiralty or Vice Admiralty or as a Colonial Court of Admiralty, or as a Court having testamentary, intestate or matrimonial jurisdiction, or (b) by the High Court for the relief of insolvent debt ors, or (c) by the High Court under any special law other than the Letters Patent, or (d) by the Small Cause Court: Provided that the Provincial Government may, from time to time, after consultation with the High Court, by a like notification extend the jurisdiction of the City Court to any suits or proceedings of the nature specified in Clauses (a) and (b). 197; 109 "In exercise of the powers conferred by section 4 of the Bombay City Civil Court Act, 1948 (Bombay, Act XL of 1948), the Government of Bombay is pleased to invest, with effect from and on the date of this notification, the City Court with jurisdiction to receive, try and dispose of all suits and other proceedings of a civil nature not exceeding twen ty five thousand rupees in value, and arising within the Greater Bombay subject, however, to the exceptions specified in section a of the said Act. " In the present case the High Court, on a construc tion of section 4 of the Bombay City Civil Court Act, came to the conclusion that it was not an instance of conditional legislation at all. According to the High Court while by section a the Legislature itself set up a Court with a particular pecuniary jurisdiction, under section 4 the Legislature itself did not invest the Court with any higher jurisdiction but left it to the Provincial Government to exercise the function which the Government of India Act laid down should be exercised by the Provincial Legislature. Learned counsel for the first respondent then raises before us the larger question as to whether the Bombay City Civil Court Act, 1948, as a whole was or was not within the legislative competence of the Provincial Legislature of Bombay. In my judgment, entry 1 in List II cannot be read as at all giving any power to the Provincial Legislature to confer any jurisdiction or power on any Court it might constitute or organise under that entry and that the expressions "admin istration of justice" and "constitution and organisation of Courts" occurring in entry 1 in List II should be read as exclusive of "the jurisdiction and powers of Courts" the powers of legislation with respect to which were distributed under entry 53 in List I, entry 2 in List II and entry 15 in List III. It is next said that entry 1 in List II gave general powers to the Provincial Legislature to make laws (1) 123 conferring general jurisdiction and powers on Courts consti tuted by it under that entry while entry 53 in List I, entry 2 in List II and entry 15 in List III conferred special powers on the Federal and Provincial Legislatures to make laws conferring special jurisdiction and powers with respect to matters specified in their respective Lists. Further,the very concession that entry 53 in List 1, entry 2 in List II and entry 15 in List III gave special powers to the Legislature to confer special jurisdiction and powers necessarily amounts to an admission that the powers conferred on the Provincial Legislature by entry 1 in List II were exclusive of the powers conferred under entry 53 in List I, entry 2 in List II and entry 15 in List III, for if entry 1 in List II gave power to the Provincial Legislature to make laws conferring general jurisdiction of the widest kind which included jurisdiction and powers with respect to all matters specified in all the Lists, then the utility of entry 53 in List I, entry 2 in List II and entry 15 in List III as giving special powers to make laws conferring special jurisdiction would vanish altogether. It is pointed out that under entry 1 in List II it was only the Provincial Legislature which alone could 124 constitute and organise a new Court and if that entry did not empower the Provincial Legislature to vest in such new Court the general jurisdiction and power to re ceive, try and dispose of all kinds of suits and other proceedings, then no new Court of general jurisdiction could be established at all. It is said that if the Provincial Legislature could not, under entry 1 in List II, confer jurisdiction on a new Court set up by under that entry, the result would have been that the Provincial Legislature would have had to set up a new Court by one law made under entry 1 of List II without conferring on it any jurisdiction whatever and would have had to make another law with respect to ' the jurisdic tion and powers of such Court. I see no force in this, for the Provincial Legislature could by one and the same law have set up a Court under entry 1 in List II and vested in the Court jurisdiction and powers with respect to any of the matters specified in List II and, subject to section 107 of the Act, with respect to any of the matters enumerated in List III. Shortly put, the argument, as advanced, is that under entry 1 in List II the Provincial Legislature had power to make laws with respect to administration of justice; that, therefore, the Provincial Legislature had power, under entry 1 itself, to make laws conferring general jurisdiction and powers on Courts constituted and organised by it under that entry; that if in making such law 125 the Provincial Legislature incidentally enroached upon the legislative field assigned to the Federal Legislature under entry 58 in List I with respect to the jurisdiction and powers of Court with respect to any of the matters specified in List I, such incidental encrochment did not invalidate the law, as in pith and substance it was a law within the legislative powers. I have already pointed out that, on a proper construction, entry 1 of List II did not empower the Provincial Legislature to confer any jurisdiction or power on the Court and the ex pression "administration of justice" had to be read as covering matters relating to administration of justice other than jurisdiction and powers of Court and, if that were so, the discussion of the doctrine of pith and substance does not arise at all. The argument as to the applicability of the doctrine of pith and substance to the impugned Act can, however, be well maintained in the following modified form: Under entry 2 in List II the Provincial Legislature had power to make laws with respect to the jurisdiction and powers of Courts with respect to any of the matters enumerated in List II; that "administration of justice" in entry 1 is one of the matters in 126 List II; that, therefore, the Provincial Legislature had power to confer the widest general jurisdiction on any new Court or take away the entire jurisdiction from any existing Court and there being this power, the doctrine of pith and substance applies. In the view I have taken, it is not necessary to discuss the contention of the learned Attorney General that the Bombay City Civil Court Act may be supported as a piece of legislation made by the Provincial Legislature of Bombay under entry 4 read with entry 15 in Part I of List III and I express no opinion on that point.
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The Bombay City Civil Court Act of 1948 was a law made by the government of Bombay. Section 3 of this law said that the government could create a court in Bombay called the Bombay City Civil Court by announcing it in the official government publication. This court would handle all civil cases (lawsuits about private matters, not criminal cases) worth up to Rs. 10,000 in Bombay, no matter what other laws said, except for certain types of cases listed in the section. Section 4 of the law said that, with some exceptions, the government could give the City Civil Court the power to handle civil cases in Bombay worth up to Rs. 25,000 by announcing it in the official government publication. Section 12 said that the Bombay High Court could not hear cases that the City Civil Court could handle. Using the power given by section 4, the government gave the City Civil Court the power to handle all civil cases worth up to Rs. 25,000. Someone filed a lawsuit in the Bombay High Court for Rs. 11,704 based on a promissory note (a written promise to pay money). They argued that the Bombay government didn't have the power to make laws about court cases involving promissory notes because that was a federal issue. They said the Bombay City Civil Court Act of 1948 was therefore invalid. They also argued that section 4 of the law was invalid because it gave too much law-making power to the government. Because of this, they said the High Court should hear the case. The Full Court decided: (i) The law was about something on the state government's list of powers and was valid. (ii) The lawmakers had already decided that the City Civil Court should handle cases up to Rs. 25,000. The government only had to decide the details of when the court would get this power. So, section 4 didn't give away law-making power, and it was a valid "conditional legislation." (iii) The law was mainly about something on the state government's list of powers. The fact that it also affected promissory notes (which are on the federal list) didn't make it invalid. The High Court couldn't hear the case. Justices FAZL ALI, MEHR CHAND MAHAJAN, and MUKHERJEA said: The state government's power to make laws about "administration of justice" and "courts" includes the power to make laws about what kinds of cases those courts can hear. Federal and state laws give special powers to make laws about courts and specific issues. But, these special powers don't limit the state's general power to make laws about courts and give them the power to hear civil cases. The federal and state governments can still make special laws about specific issues. Justices PATANJALI SASTRI and DAS said: The phrases "administration of justice" and "courts" should be understood in a limited way that does not include what cases courts can hear. This is because the issue of what cases courts can hear is specifically addressed elsewhere. The state government's power over "administration of justice" allows it to make laws about what cases courts can hear. Any conflict with the federal government's power can be resolved by focusing on the main purpose of the law and any accidental effects it might have. [The court looked at past practices before 1935 to support the idea that state governments had the power to give the courts they created the power to hear cases up to a certain amount of money]. Question: Could the governments of India give away their law-making powers to other groups under the Government of India Act of 1935? Queen vs Burah was applied. Jatindra Nath Gupta vs Province of Bihar was distinguished. Mulchand Kundanmmal Jagtiani vs Raman, United Provinces vs Atiqa Begum, and Prafulla Kumar Mukherjea and Others vs Bank of Commerce, Khulna were referred to.
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mpt notices does not absolve the officers of their misconduct. The State Govern ment is directed to proceed with the disciplinary proceed ings for taking appropriate action. [1000B] & ORIGINAL JURISDICTION: Writ Petition (CRL.) No. 517 of 1989 etc. (Under Article 32 of the Constitution of India). J. Sorabjee, Attorney General, Ashok H. Desai, Addl. Solicitor General, R.K. Garg, G. Ramaswamy, F.S. Nariman, Dr. L.M. Singhvi, G.A. Shah, T.U. Mehta, V.M. Tarkunde, B.K. Mehta S.S. Ray, A.K. Gupta, S.K. Dhingra, T.C. Sharma, Kishan Dutt, R.J. Trivedi, Manoj Swarup, M.N. Shroff, Sudarsh Menon, Sushil Kumar Jain, Bahl Singh Malik, Gopala Subramanium, Ms. Binu Tamta, Shahid Rizi. D.K. Singh, T. Ray, Pramod Swarup, Praveen Swarup, 955 P.H. Parekh, Sunil Dogra, C.L. Sahu, G.L. Gupta, Brij Bhu shan, N.S. Das Bahl, Mrs. H. Wahi, Harish Javeri and section Ganesh. T.C. Sharma for the appearing parties. The Judgment of the Court was delivered by K.N. SINGH, J. On 25th September, 1989, a horrendus incident took place in the town of Nadiad, District Kheda in the State of Gujarat, which exhibited the berserk behaviour of Police undermining the dignity and independence of judi ciary. S.R. Sharma, Inspector of Police, with 25 years of service posted at the Police Station, Nadiad, arrested, assaulted and handcuffed N.L. Patel, Chief Judicial Magis trate, Nadiad and tied him with a thick rope like an animal and made a public exhibition of it by sending him in the same condition to the Hospital for medical examination on an alleged charge of having consumed liquor in breach of the prohibition law enforced in the State of Gujarat. The In spector S.R. Sharma got the Chief Judicial Magistrate photo graphed in handcuffs with rope tied around his body along with the constables which were published in the news papers all over the country. This led to tremors in the Bench and the Bar throughout the whole country. The incident undermined the dignity of courts in the country, Judicial Officers, Judges and Magistrates all over the country were in a state of shock, they felt insecure and humiliated and it appeared that instead of Rule of Law there was Police Raj in Gujarat. A number of Bar Associations passed Resolutions and went on strike. The Delhi Judicial Service Association, the All India Judges Association, Bar Council of Uttar Pradesh, Judicial Service of Gujarat and many others approached the Apex Court by means of telegrams and petitions under Article 32 of the Constitution of India for Saving the dignity and honour of the judiciary. On 29.9.1989, this Court took cognizance of the matter by issuing notices to the State of Gujarat and other Police Officers. The Court appealed to the Members of the Bar and Judiciary to resume work to avoid inconvenience to the litigant public. Subsequently, a number of petitions were filed under Article 32 of the Constitution of India for taking action against the Police Officers and also for quashing the criminal proceedings initiated by the Police against N.L. Patel, Chief Judicial Magistrate. A number of Bar Associations, Bar Councils and individuals appeared as interveners condemning the action of the police and urging the Court for taking action against the Police Officers. 956 In Petition No. 5 18 of 1989 alongwith Contempt Petition No. 6 of 1989 filed by the President, All India Judges Association, notices for contempt were issued by this Court on 4.10.1989 to seven Police Officials, D.K. Dhagal, D.S.P., A.M. Waghela, Dy. S.P., S.R. Sharma, Police Inspector, Kuldeep Singh Lowchab, Police Inspector (Crime), K.H. Sadia, Sub Inspector of Police, Valjibhai Kalabhai, Head Constable and Pratap Singh, Constable. N.L. Patel, CJM, Nadiad also filed an application in W.P. No. 517 of 1989 with a prayer to quash the two FIRs lodged against him, to direct the trial of the complaint filed by him as State case and to award compensation. On 13.2.1990 notices from contempt were issued to. K. Dadabhoy, exhibit D.G.P., Gujarat, Dr. Bhavsar, Senior Medical Officer of Govt. Hospital Nadiad and M.B. Savant, Mamlatdar, Nadiad. The Court during the proceedings also issued notices to R. Bala Krishnan, Additional Chief Secretary (Home), Government of Gujarat and S.S. Subhalkar, District Judge, Nadiad to show cause why action be not taken against them in view of the Report of Justice Sahai. N.L. Patel was posted as Chief Judicial Magistrate at Nadiad in October, 1988. He soon found that the local Police was not cooperating with the courts in effecting service of summons, warrants an notices on accused persons, as a result of which the trials of cases were delayed. He made complaint against the local Police to the District Superintendent of Police and forwarded a copy of the same to the Director General of Police but nothing concrete happened. On account of these complaints S.R. Sharma, Police Inspector Nadiad was annoyed with the Chief Judicial Magistrate, he withdrew constables posted in the CJM Court. In April, 1989 Patel filed two complaints with the Police against Sharma and other Police Officials, Nadiad for delaying the process of the court. On 25 July, 1989 Patel directed the Police to register a criminal case against 14 persons who had caused obstruction in judicial proceedings but subsequently since they tendered unqualified apology, the CJM directed the Police Inspector to drop the cases against those persons. Sharma reacted strongly to Patel 's direction and he made complaint against the CJM to the Registrar of the High Court through District Superintendent of Police. These facts show that there was hostility between the Police of Nadiad and the CJM. On 25.9. 1989, S.R. Sharma met Patel, CJM in his Chambers to discuss the case of one Jitu Sport where the Police had failed to submit charge sheet within 90 days. During discussion Sharma invited the CJM to visit the Police Station to see the papers and further his visit would mollify the sentiments of the Police Officials. It is al leged that at 957 8.35 p.m. Sharma sent a Police Jeep at Patel 's residence, and on that vehicle Patel went to the Police Station. What actual happened at the Police Station is a matter of serious dispute between the parties. According to the CJM, he ar rived in the Chamber of Sharma in the Police Station, he was forced to consume liquor and on his refusal he was assault ed, handcuffed and tied with rope by Sharma, Police Inspec tor, Sadia Sub Inspector, Valjibhai Kalajibhai, Head Consta ble and Pratap Singh, Constable. It is further alleged that Patal was sent to Hospital for Medical examination under handcuffs where he was made to sit on a bench in the varanda exposing him to the public gaze. Sharma, Police Inspector and other Police Officers have disputed these allegations. According to Sharma, Patel entered his chamber at the Police Station at 8.45 p.m. on 25.9. 1989 in a drunken state, shouting and abusing him, he caught hold of Sharma and slapped him, since he was violent he was arrested, hand cuffed and sent to Hospital for medical examination. Patel himself wanted to be photographed while he was handcuffed and tied with ropes, a photographer was arranged to take his photograph which was published in the newspapers. Since, there was serious dispute between the parties with regard to the entire incident, the Court appointed Justice R.M. Sahai senior puisne Judge of the Allahabad High Court (as he then was) to inquire into the incident and to submit report to the Court. Justice Sahai was appointed to hold the inquiry on behalf of this Court and not under the provisions of the Commission of Inquiry Act. Justice Sahai visited Nadiad and held sittings there. The learned Commis sioner/Judge invited affidavits/statements, and examined witnesses including S.R. Sharma the Police Inspector, D.K. Dhagal, D.S.P. and other Police Officers, lawyers, N.L. Patel, CJM, and Doctors and other witnesses. Justice Sahai afforded full opportunity to all the concerned persons including the State Government, Police Officers and lawyers to lead evidence and to cross examine witnesses. He submit ted a detailed Report dated 28.11.1989 to this Court on 1.12.1989. On receipt of the Report this Court directed copies to be delivered to concerned parties and permitted the parties and the contemners to file their objections, if any, before this Court. The objections were filed by the Police Officers and the contemners disputing the findings recorded by the Commissioner, On 12.12.1989, when the matter came up for final dispos al the Court issued notices to the Attorney General and Advocate General of the State of Gujarat. On 10.1.1990 the Court directed the State of Gujarat to file affidavit stat ing as to what action it had taken or pro 958 posed to take against the officers in the light of the Report of Justice Sahai. The Court further issued notices to R. Bala Krishnan, Additional Chief Secretary (Home), Govern ment of Gujarat, K. Dadabhoy, Director General of Police, S.S. Sudhalkar, District Judge, to show cause as to why action should not be taken against them in view of the Report of Justice Sahai. The State Government was further directed to explain as to why action against D.K. Dhagal, DSP, S.R. Sharma, Police Inspector and other police officers had not been taken. On 13.2. 1990 a notice for contempt of this Court was issued to K. Dadabhoy on the same date in view of the findings recorded by Justice Sahai, notices for contempt of court were issued to Dr. Bhavsar and M.B. Sa vant, Mamlatdar, Nadiad also. in his affidavit, S.R. Sharma, Police Inspector has raised a number of objections to the findings recorded by the Commissioner. The objections are technical in nature, chal lenging the authority and jurisdiction of the Commissioner in collecting evidence and recording findings against him. Sharma has further stated in his objections that the Commis sioner acted as if he was sitting in judgment over the case. Other Police Officers have also raised similar objections. We find no merit in the objections raised on behalf of Sharma, Police Inspector and other contemners. The Commis sioner had been appointed by this Court to hold inquiry and submit his report to the Court. Justice Sahai was acting on behalf of this Court and he had full authority to record evidence and cross examine witnesses and to collect evidence on behalf of this Court. Since, the main incident of Chief Judicial Magistrate 's arrest, assault, handcuffing and roping was connected with several other incidents which led to the confrontation between the Magistracy and local po lice, the learned Commissioner was justified in recording his findings on the background and genesis of the entire episode. The Police Inspector Sharma raised a grievance that he was denied opportunity of cross examination of Patel, CJM and he was not permitted to produce Dr. Jhala as a witness, Sharma 's application for the recall of CJM for further cross examination and for permission to produce Dr. Jhala, retired Deputy Director, Medical and Health Services, Guja rat, was rejected by a well reasoned order of the Commis sioner dated 9.11.1989. We have gone through the order and we find that the Commissioner has given good reasons for rejecting the recall of CJM for further cross examination, as he had been crossexamined by the counsel appearing on behalf of the Police officials including Sharma. The Police Officers and the State Government and CJM were represented by counsel before the Commissioner and every opportunity was afforded to them for cross examining the witnesses. 959 Dr. Jhala 's evidence was not necessary, the Commissioner rightly refused Sharma 's prayer. On behalf of the contemners it was urged that in the absence of any independent testimony the Commission was not justified in accepting interested version of the incident as given by the CJM with regard to his visit to the Police Station and the incident which took place inside the Police Station. There was oath against oath and in the absence of any independent testimony the Commission was not justified in accepting the sole interested testimony of Patel, CJM. We find no merit in this objection. The learned Commissioner has considered the evidence as well as the circumstances in support of his findings that Patel had been invited by Sharma to visit the Police Station and he had sent a Police jeep on which Patel went to the Police Station. This fact is supported by independent witnesses as discussed by the Commissioner. If Patel had gone on the invitation of Sharma on Police jeep and not in the manner as alleged by Sharma, Patel could not be drunk and there appears no reason as to why he would have assaulted Sharma as alleged by the Police. The circumstances as pointed out by the Commissioner fully justify the findings recorded against the Police Officers. It is settled law that even in a criminal trial, accused is convicted on circumstantial evidence in the absence of an eye witness, Learned Commissioner acted judicially in a fair and objective manner in holding the inquiry, he afforded opportunity to the affected Police Officers and other per sons and submitted his Report based on good reasons in respect of his findings which are amply supported by the material on record. The Commissioner did a commendable job in a record time. After hearing arguments at length and on perusal of the statements recorded by the Commissioner and the documentary evidence submitted by the parties, and a careful scrutiny of the affidavits and objections filed in this Court, we find no valid ground to reject the well reasoned findings recorded by the learned Commissioner. The Commissioner 's Report runs into 140 pages, which is on record. The contemners and other respondents have failed to place any convincing material before the Court to take a different view. We accordingly accept the same. After hearing learned counsel for the parties and on perusal of the affidavits, objections, applications and the Report of the Commissioner, we hold that the following facts and circumstances are fully proved: (1) N.L. Patel, Chief Judicial Magistrate found that the Police of 960 Nadiad was not effective in service of summons and it had adopted an attitude of indifference to court orders. He tried to obtain the assistance of the District Superintend ent of Police in February, 1989 and addressed a letter to the Director General ' of Police but no response came from the Police Authorities, even though the Government had reminded D.K. Dhagal, D.S.P., Kheda to do the needful. Patel, the CJM filed two complaints against Police Officers of Nadiad Police Station and the Inspectors, and forwarded it to the District Superintendent of Police on 19th and 24th July, 1989 for taking action against them. Sharma, the Police Inspector who had by then been posted at Nadiad reacted to the CJM 's conduct by withdrawing constables working in the courts of Magistrates on the alleged pretext of utilising their services for service of summons. This led to confrontation between the local Police and the Magistracy commenced. (2) On 25th July, 1989, the CJM had directed the regis tration of a case against 14 accused persons for misbeha viour and causing obstruction in the judicial proceedings. Since the accused persons had later expressed regret and tendered unqualified apology to the court, the CJM sent a letter to the Police Inspector, Sharma to drop proceedings. Sharma went out of his way, to send a complaint to the High Court through the D.S.P. saying that Patel was functioning in an illegal manner in the judicial discharge of his du ties. The action of Sharma, Police Inspector was highly irresponsible and Dhagal, D.S.P. should not have acted in a casual manner in forwarding Sharma 's letter to the Registrar of the High Court directly. (3) Remand period of Jitu Sport was to expire on 27th September, 1989, the CJM directed the Police Inspector to produce complete papers before the expiry of the period of remand but he applied for the extension of the judicial remand. The CJM directed the Police Inspector to produce papers on 22.9.1989, Sharma did not appear before the CJM as directed, on the contrary he interpolated the order, sent to him indicating that he was required to appear before the CJM on 23.9.1989, which was admittedly a holiday. (4) On 25th September, 1989, Sharma met the CJM in his Chamber and as a pretext requested him to come to the Police Station to see the papers which could not be brought to the Court, as that could satisfy him that the Police was doing the needful for complying with the orders of the Court. Sharma pleaded with CJM that his visit to Police Station will remove the feeling of confrontation between the Police and Magistracy. The CJM agreed to visit the Police Station and 961 Sharma offered to send police jeep to CJM 's house for bring ing him to the Police Station. (5) On 25.9.89 after the Court hours the CJM went to the officers ' club where he remained in the company of Sudhal kar, District Judge and Pande, Civil Judge till 8,30 p.m. Thereafter, he went to his residence. A Police jeep came to his residence at about 8.40 p.m. in the Officers Colony, he went on that Police jeep to the Police Station situated at a distance of about 2 kms. Patel had not consumed liquor before he went to the Police Station. (6) The Police version that Patel had consumed liquor before coming to the Police Station and that he assaulted the Police Inspector Sharma and misbehaved with him at the Police Station is a cooked up story. Patel did not go to the Police Station on foot as alleged by Sharma, instead, he went to the Police Station in a Police jeep on Sharma 's invitation. Patel was handcuffed and tied with rope, and he received injuries at the Police Station, he was assaulted and forced to consume liquor after he was tied to the chair on which he was sitting, Police Inspector Sharma, Sub In spector Sadia, Head Constable Valjibhai Kalabhai and Consta ble Pratap Singh took active part in this episode. They actively participated in the assualt on Patel and in forcing liquor in his mouth. They acted in collusion with Sharma to humiliate and teach a lesson to Patel. (7) On the direction of Sharma, Police Inspector, Patel was handcuffed at the Police Station and he was further tied up with a thick rope by the Police Inspector, Sharma, Sadia, Sub Inspector, Valjibhai Kalabhai, Head Constable and Pratap Singh, Constable. This was deliberately done in defiance of Police Regulations and Circulars issued by the Gujarat Government and the law declared by this Court in Prern Shankar Shukla vs Delhi Administration. , ; Patel had not committed any offence nor he was violent and yet he was handcuffed and tied up with rope without there being any justification for the same. There were seven police personnel present at the Police Station and most of them were fully armed while Patel was empty handed, there was absolutely no chance of Patel escaping from the custody or making any attempt to commit suicide or attacking the Police Officers and yet he was handcuffed and tied up with a thick rope like an animal with a view to humiliate and teach him a lesson. For this wanton act there was absolutely no justification and pleas raised by Sharma that Patel was violent or that he would have escaped from the custody are figment of imagination made for the purpose of the case. 962 (8) The panchnama showing the drunken state of Patel prepared on the dictation of Sharma, Police Inspector, and signed by Sharma as well as by two panches, M.B. Savant, Mamlatdar and P.D. Barot, Fire Brigade Officer, Nadiad, did not represent the correct facts, instead, it was manufac tured for the purpose of preparing a false case against CJM PateI, justifying his arrest and detention. (9) On examination at the Civil Hospital Patel 's body was found to have a number of injuries. The injury on the left eye was very clear which appeared to have been caused by external force. His body had bruises and abrasions which could be caused by fists and blows. While in the casualty ward of the Civil Hospital, Patel requested the Doctors to contact the District Judge and inform him about the inci dent. Dr. Parashar tried ' to ring up the District Judge but he was prevented from doing so by Sharma and other Police Officers who were present there. Dr. Parashar and Dr. Bhav sar found the speech of Patel normal, gait steady, he was neither violent, nor he misbehaved. His blood was taken for chemical examination but the Forms used were not according to the rules and the blood was not taken in accordance with procedure prescribed by the Rules and the Circulars issued by the Director of Medical Services, Gujarat. The chemical examination of the blood sample taken in the Civil Hospital was not correctly done. The blood sample was analysed by a teenager who was not a testing officer within the Bombay Prohibition Act and necessary precautions at the time of analysis were not taken. The phial in which the blood sample had been sent to the Chemical Examiner did not contain the seal on phial and the seal was not fully legible. The Chemi cal Examiner who submitted the report holding that the blood sample of Patel contained alcohol on the basis of the calcu lation made by him in the report clearly admitted before the Commission that he had never determined the quantity of liquor by making calculation in any other case and Patel 's case was his first case. (10) When Patel was taken to Civil Hospital handcuffed and tied with thick rope he was deliberately made to sit outside in the Varanda on bench for half an hour in public gaze, to enable the public to have a full view of the CJM in that condition. A Press photographer was brought on the scene and the Policemen posed with Patel for the press photograph. The photographs were taken by the Press Reporter without any objection by the Police, although a belated justification was pleaded by the Police that Patel desired to have himself photographed in that condition. This plea is totally false. The photographs taken by the Press Reporter were published in `Jan Satta ' and 'Lokmat ' on 26th 963 September. 1989 showing Patel handcuffing and tied with rope and the Policemen standing beside him. This was deliberately arranged by Sharma to show to the public that Police weilded real power and if the CJM took confrontation with Police he will not be spared. (11) At the initial stage, one case was registered against Patel by the Police under the Bombay Prohibition Act. Two Advocates Kantawala and Brahmbhatt met Sharma at 11.30 p.m. for securing Patel 's release on bail, as offences under the Prohibition Act were bailable. The lawyers re quested Sharma to allow them to meet the CJM who was in the police lock up but Sharma did not allow them to do so. With a view to frustrate lawyers ' attempt to get Patel released on bail. Sharma registered another case against Patel under Sections 332 and 506 of Indian Penal Code as offence under Section 332 is non bailable. (12) D.K. Dhagal, the then District Superintendent of Police, Kheda exhibited total indifference to CJM 's com plaint regarding the unsatisfactory state of affairs in the matter of execution of court processes. Dhagal identified himself with Sharma, Police Inspector who appeared to be his favourite. Instead of taking corrective measures in the service of processes, he became party along with Sharma in forwarding his complaint to the High Court against Patel 's order in a judicial matter. The incident which took place in the night of 25/26 September 1989, had the blessing of Dhagal. He did not take any immediate action in the matter instead he created an alibi for himself alleging that he had gone to Lasundara and then to Balasinor Police Station and stayed there in a Government Rest House. The register at the Rest House indicating the entry regarding his stay was manipulated subsequently by making interpolation. On the direction of Additional Chief Secretary (Home) Dhagal sub mitted his report on 27.9. 1989 but in that report he did not make any reference of handcuffing and roping of the CJM although it was a matter of common knowledge and there was a great resentment among the judicial officers and the local public. Dhagal 's complicity in the sordid episode is further fortified by the fact that he permitted Sharma, the main culprit of the entire episode to carry on investigation against Patel in the case registered against him by Sharma and also in the case registered by Patel against Sharma. (13) Police Inspector Sharma had pre planned the entire incident and he had even arranged witnesses in advance for preparing false case against N.L. Patel, CJM, as M.B. Sa vant, Mamlatdar in the 964 Police Station, immediately on the arrival of PateI, CJM, and they acted in complicity with Sharma in preparing the panchnama which falsely stated that Patel was drunk. M.B. Sawant and P.D. Barot both were hand in glove with Sharma to flasely implicate Patel in Prohibition Case. Learned Commissioner has adversely commented upon the conduct of various officers including K. Dadabhoy, the then Director General of Police, Gujarat, Kuldip Singh Lowchab, CID Inspector, Dr. Bhavsar, Senior Medical Officer, Nadiad, M.B. Savant, Mamlatdar, P.D. Barot, Fire Brigade Officer and A.N. Patel, Chemical. Examiner, Nadiad. After considering the material on record, we agree with the view taken by the Commissioner that ,their conduct was not above board as expected from responsible officers. We do not consider it necessary to burden the judgment by referring to the details of the findings as the same are contained in the Commis sioner 's Report. Mr. Nariman contended on behalf of the Po1ice Officers that the findings recorded by the Commission cannot be taken into account as those findings are hit by Article 20(3) of the Constitution. Inspector Sharma and other Police Officers against whom criminal cases have been registered were com pelled to be witnesses against themselves by filing affida vits and by subjecting them to cross examination before the Commissioner. Any finding recorded on the basis of their evidence is violative of Article 20(3) of the Constitution. Article 20(3) of the Constitution declares that no person accused of any offence shall be compelled to be a witness against himself. In order to avail the protection of Article 20(3) three conditions must be satisfied. Firstly, the person must be accused of an offence. Secondly, the element of compulsion to be a witness should be there and thirdly it must be against himself. All the three ingredients must necessarily exist before protection of Article 20(3.) is available. If any of these ingredients do not exist, Article 20(3) cannot be invoked see: Balkishan Devidayal vs State of Maharashtra., ; In the instant case this Court had issued notices for contempt to Sharma, Police Inspector and other contemners. Mere issue of notice or pendency of contempt proceedings do not attract article 20(3) of the Constitution as the contemners against whom notices were issued were not accused of any offence. A criminal contempt is punishable by the superior courts by fine or imprisonment, but it has many characteristics which distin guishes it from ordinary offence. An offence under the criminal jurisdiction is tried by a Magistrate or a Judge and the procedure of trial is regulated by the ' Code of Criminal Procedure, 1973 which provides as elaborate 965 procedure for flaming of charges, recording of evidence, crossexamination, argument and the judgment. But ' charge of contempt is tried on summary process without any fixed procedure as the court is free to evolve its own procedure consistent with fair play and natural justice. In contempt proceedings unlike the trial for a criminal offence no oral evidence is ordinarily recorded and the usual practice is to give evidence by affidavits. Under the English Law a crimi nal offence is tried by criminal courts with the aid of Jury but a criminal contempt is tried by courts summarily without the aid and assistance of Jury. Ordinarily, process of trial for contempt is summary. A summary form of trial is held in the case of civil contempt and also in the case of criminal contempt where the act is committed in the actual view of the court or by an officer of justice. The summary procedure is applicable by immemorial usage when criminal contempt was committed out of court by a stranger. The practice of pro ceeding summarily for the punishment of contempt out of court has been the subject of comment and protest, but the practice is founded upon immemorial usage, it has, since the eighteenth century, been generally assumed. We do not con sider it necessary to refer to decisions from English Courts which have been discussed in detail in the History of Con tempt of Court by Fox JC 1927. Proceedings for contempt of Court are not taken in the exercise of original criminal jurisdiction. Proceedings for contempt of Court are of a peculiar nature; though it may be that in certain aspects they are quasi criminal, but in any view they are not exer cised as part of the original criminal jurisdiction of the Court, as was held in re: Tushar Kanti Ghosh and Another. AIR 1935 Calcutta 419. The High Court held that since the proceedings for contempt of Court do not fall within the original criminal jurisdiction of the Court no leave could be granted for appeal to Privy Council under Clause 41 of the Letters Patent of that Court. In Sukhdev Singh Sodhi vs The Chief Justice and Judges of the PEPSU High Court, ; Sukhdev Singh Sodhi approached this Court for transfer of contempt proceedings from PEPSU High Court to any other High Court under Section 527 of the Criminal Procedure Code, 1898. This Court. re jected the application holding that Section 527 of the Criminal Procedure Code did not apply to the contempt pro ceedings as the contempt jurisdiction is a special jurisdic tion which is inherent in all courts of record and the Cr. P.C. excludes such a special jurisdiction from the Code. The Court further held that notwithstanding the provisions contained in the Contempt of Courts Act, 1926 making an offence of contempt, punishable, the Act does not confer any jurisdiction or create the offence, it merely limits the 966 amount of the punishment which could be awarded and it removes a certain doubt. The jurisdiction to initiate the proceedings and take seisin of the contempt is inherent in a court of record and the procedures of the Criminal Procedure Code do not apply to contempt proceedings. Section 5 of the Code of Criminal Procedure lays down that nothing contained in this Code shall, in the absence of a specific provision to the contrary, affect any special or local law for the time being in force, or any special jurisdiction or power conferred, or any special form of procedure prescribed, by any other law for the time being in force. The power to take proceedings for the contempt of Court is an inherent power of a Court of record, the Criminal Procedure Code does not apply to such proceedings. Since, the contempt proceedings are not in the nature of criminal proceedings for an of fence, the pendency of contempt proceedings cannot be re garded as criminal proceedings merely because it may end in imposing punishment on the contemner. A contemner is not in the position of an accused, it is open to the Court to cross examine the contemner and even if the contemner is found to be guilty of contempt, the Court may accept apology and discharge the notice of contempt, whereas tendering of apology is no defence to the trial of a criminal offence. This peculiar feature distinguishes contempt proceedings from criminal proceedings. In a criminal trial where a person is accused of an offence there is a public prosecutor who prosecutes the case on behalf of the prsecution against the accused but in contempt proceedings the court is both the accuser as well as the judge of the accusation as ob served by Hidayatullah, CJ in Debabrata Bandopadhyaya 's, case AIR 1969 SC I89. Contempt proceeding is sui generis, it has peculiar features which are not found in criminal pro ceedings. In this view the contemners do not stand in the position of a person accused of an offence" merely on ac count of issue of notice of contempt by this Court and the Commission which was acting on behalf of this Court had full authority to reord the testimony of the contemners. Commis sion issued notice and directed Sharma, Police Inspector and other Police Officials to place their version of the inci dent before it and there was no element of compulsion. In this view there has been no violation of Article 20(3) of the Constitution and Commission 's findings are not vitiated. Mr. F.S. Nariman contended that this Court has no jurisdiction or power to indict the Police Officers even if they are found to be guilty as their conduct does not amount to contempt of this Court. He urged that Article 129 and 215 demarcate the respective areas of jurisdiction of the Su preme Court and the High Courts respectively. 967 This COurt 's Jurisdiction under Article 129 is confined to the contempt of itself only and it has no jurisdiction to intict a person for contempt of an inferior court subordi nate to the High Court. The Parliament in exercise of its legislative power under Entry 77 of List 1 read with Entry 14 of List III has enacted Contempt of. Courts Act 1971 (hereinafter referred to as the 'Act ') and that Act does not confer any jurisdiction on this Court for taking action for contempt of subordinate courts. Instead the original juris diction of High Courts in respect of contempt of subordinate courts is specificially preserved by Sections 11 and 15(2) of the Act. The Supreme Court has only appellate powers under Section 19 of the Act read with Articles 134(1)(c) and 136 of the Constitution. The Constitutional and statutory provisions confer exclusive power on the High Court for taking action with regard to contempt of inferior or subor dinate court, and the Supreme Court has no jurisdiction in the matter. Shri Nariman further urged that in our country there is no court of universal jurisdiction, and the juris diction of all courts including Supreme Court is limited and this Court can not enlarge its jurisdiction. Shri Soli J. Sorabji learned Attorney General (as he then was) urged that power to punish contempt is a special jurisdiction which is inherent in a court of record. A superior court of record has inherent power to punish for contempt of itself and it necessarily includes and carries with it the power to punish for contempt committed in respect of subordinate or inferior courts. A superior court of record having power to correct the order of inferior court has power to protect that court by punishing those who interfere with the due administration of justice of the court. Articles 129 and 2 15 do not confer any additional jurisdiction on the Supreme Court and the High Court. The constitutional provisions as well as the legislative enactment "The Contempt of Courts Act" recognise and preserve the existing contempt jurisdiction and power of the court of record for punishing for contempt of subordi nate or inferior courts. The Act has not affected or re stricted the suo moto inherent power of the Supreme Court being a court of record which has received constitutional sanction under Article 129. Mr. Sorabji further urged that even otherwise the Act does not restrict or affect the suo moto exercise of power by the Supreme Court as a court of record in view of Section 15(1) of the Act. The Supreme Court as the Apex Court is the protector and guardian of justice throughout the land, therefore, it has a right and also a duty to protect the courts whose orders and judgments are amenable to correction, form commission of contempt against them. This right and duty of the Apex Court is not abrogated merely because the High Court also has this right and duty of protection of the subordinate courts. The juris dictions are concurrent and not exclusive or antagonistic. 968 The rival contentions raise the basic question whether the Supreme Court has inherent jurisdiction or power to punish for contempt of subordinate or inferior courts under Article 129 of the Constitution and whether the inherent jurisdiction and power of this Court is restricted by the Act. The answer to the first question depends upon the nature and the scope of the power of this Court as a court of record, in the background of the original and appellate jurisdiction exercised by this Court under the various provisions of the Constitution. It is necessary to have a look at the constitutional provisions relating to the origi nal and appellate jurisdiction of this Court. Article 124 lays down that there shall be a Supreme Court of India consisting of Chief Justice of India.and other Judges. Article 32 confers original jurisdiction on this Court for enforcement of fundamental rights of the citizens. This jurisdiction can be invoked by an aggrieved person even without exhausting his remedy before other courts. Article 129 provides that the Supreme Court shall be a court of record and shall have all the powers of such a court includ ing the power to punish for contempt of itself. Article 13 1 confers original jurisdiction on the Supreme Court in cer tain matters. Article 132 confers appellate jurisdiction on this Court against any judgment, decree or final order of the High Courts in India. Articles 133, 134 and 134A confer appellate jurisdiction in the Supreme Court in appeals from High Courts in regard to civil and criminal matters respec tively on certificate to be issued by the High Court. Arti cle 136 provides for special leave to appeal before the Supreme Court, notwithstanding the provisions of Articles 132, 133, 134 and 134A. Article 136 vests this Court with wide powers to grant special leave to appeal from any judg ment, decree determination sentence or order in any cause or matter passed or made by any court or tribunal in the terri tory of India except a court or Tribunal constituted by or under any law relating to the Armed Forces. The Court 's appellate power under Article 136 is plenary, it may enter tain any appeal by granting special leave against any order made by any Magistrate. Tribunal or any other subordinate court. The width and amplitude of the power is not affected by the practice and procedure followed by this Court in insisting that before invoking the jurisdiction of this Court under Article 136 of the Constitution, the aggrieved party must exhaust remedy available under the law before the appellate authority or the High Court. Self imposed restric tions by this Court do not divest it of its wide powers to entertain any appeal, against any order or judgment passed by any court or Tribunal in the country without exhausting alternative remedy before the appellate authority or the High Court. The power of this Court under Article 136 is unaffected by Article 132, 133, 134 and 134(A) in view of the expression 969 "notwithstanding anything in this Chapter" occurring in Article 136. This Court considered the scope and amplitude of plenary power under Article 136 of the Constitution in Durga Shankar Mehta vs Thakur Raghuraj Singh & Ors., [1955] 1 SCR 267. Mukherjee, J. speaking for the Court observed: "The powers given by Article 136 of the Con stitution however are in the nature of special or residuary powers which are exercisable outside the purview of ordinary law, in cases where the needs of justice demand interference by the Supreme Court of the land. The article itself is worded in the widest terms possible. It vests in the Supreme Court a plenary juris diction in the matter of entertaining and hearing appeals, by granting of special leave, against any kind of judgment or order made by a court or Tribunal in any cause or matter and the powers could be exercised in spite of the specific provisions for appeal contained in the Constitution or other laws. The Constitu tion for the best of reasons did not choose to fetter or circumscribe the powers exercisable under this Article in any way. " In Arunachalam v.P.S.R. Sadhanantham & Anr., ; this Court entertained an appeal under Article 136 of the Constitution of India by special leave at the in stance of a complainant against the judgment and the order of acquittal in a murder case and on appraisal of evidence, it set aside the order of acquittal. Objections raised on behalf of the accused relating to the maintainability of the special leave petition under Article 136 of the Constitu tion, was rejected. Chinnappa Reddy, J. speaking for the Court held as under: "Article 136 of the Constitution of India invests the Supreme Court with a plentitude of plenary, appellate power over all courts and Tribunals in India. The power is plenary in the sense that there are no words in Article 136 itself qualifying that power. But, the very nature of the power has led the court to set limits to itself within which to exercise such power. It is now the well established practice of this Court to permit the invoca tion of the power under ArtiCle 136 only in very exceptional circumstances, as when a question of law of general public importance arises or a decision shocks the conscience of the Court. But, within the restrictions im posed by itself, this Court has the 970 undoubted power to interfere even with find ings of fact, making no distinction between judgments of acquittal and conviction, if the High Court, in arriving at those findings, has acted "perversely or otherwise improperly". " With regard to the competence of a private party, distin guished from the State, to invoke the jurisdiction of this Court under Article 136 of the Constitution, the Court observed: "Appellate power vested in the Supreme Court under Article136 of the Constitution is not to be confused with ordinary appellate power exercised by appellate courts and appellate tribunals under specific statutes. As we said earlier, it is a plenary power, exercisable outside the purview of ordinary law ' to meet the pressing demands of justice (vide Durga Shankar Mehta vs Thakur Raghuraj Singh,). Article 136 of the Constitution neither con fers on anyone the right to invoke the juris diction of the Supreme Court nor inhibits anyone from invoking the Court 's jurisdiction. The power is vested in the Supreme Court but the right to invoke the Court 's jurisdiction is vested in no one. The exercise of the power of the Supreme Court is not circumscribed by any limitation as to who may invoke it. " There is therefore no room for any doubt that this Court has wide power to interfere and correct the Judgment and orders passed by any court or Tribunal in the country. In addition to the appellate power, the Court has special residuary power to entertain appeal against any order of any court in the country. The plenary jurisdiction of this Court to grant leave and hear appeals against any order of a court or Tribunal, confers power of judicial superintendence over all the courts and Tribunals in the territory of India including subordinate courts of Magistrate and District Judge. This Court has, therefore, supervisory jurisdiction over all courts in India. Article 129 provides that the Supreme Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself. Article 215 contains similar provision in respect of High Court. Both the Supreme Court as well as High Courts are courts of record having powers to punish for contempt in cluding the power to punish for contempt of itself. The Constitution does not define "Court of Record". This expres sion is well recognised in jurisdical world. In Jowitt 's Dictionary of English Law, "Court of Record" is defined as: 971 "A court whereof the acts and judicial pro ceedings are enrolled for a perpetual memorial and testimony, and which has power to fine and imprison for contempt of its authority. " In Wharton 's Law Lexicon, Court of Record is defined as: "Courts are either of record where their acts and judicial proceedings are enrolled for a perpetual memorial and testimony and they have power to fine and imprison; or not of record being courts of inferior dignity, and in a less proper sense the King 's Courts and these are not entrusted by law with any power to fine or imprison the subject of the realm, unless by the express provision of some Act of Parliament. These proceedings are not enrolled or recorded. " In Words and Phrases (Permanent Edition) Vol. 10 page 429, "Court of Record" is defined as under: "Court of Record is a court where acts and judicial proceedings are enrolled in parchment for a perpetual memorial and testimony, which rolls are called the "record" of the court, and are of such high and supereminent authori ty that their truth is not to be questioned. " Halsbury 's Laws of England Vol. 10 page 319, states: "Another manner of division is into courts of record and courts not of record. Certain Courts are expressly declared by statute to be courts of record. In the case of courts not expressly declared to be courts of record, the answer to the question whether a court is a court of record seems to depend in general upon whether it has power to fine or imprison, by statute or otherwise, for contempt of itself or other substantive offences; if it has such power, it seems that it is a court of record. . proceedings of a Court of record preserved in its archives are called records, and are conclusive evidence of that which is recorded therein." In England a superior court of record has been exercised power to indict a person for the contempt of its authority and also for the contempt of its subordinate and inferior courts in a summary manner 972 without the aid and assistance of Jury. This power was conceded as a necessary attribute of a superior court of record under Anglo Saxon System of Jurisprudence. The con cept of inherent power of the superior court of record to indict a person by summary procedure was considered in detail in Rex vs Almon, ; commonly known as Aimon 's case. In that case King 's Bench initiated proceedings for contempt against John Almon, a book seller for publishing a libel on the Chief Justice, Lord Mansfied. On behalf of the contemner objection was taken to the summary procedure followed by the Court. After lengthy arguments judgment was prepared by Chief Justice Wilmot holding that a libel on a Judge was punishable by the process of attachment without the intervention of a Jury, as the summary form of procedure was founded upon immemorial usage. The judgment prepared with great learning and erudition could not be delivered as the proceedings were dropped following the change of Govern ment. After long interval Wilmot 's judgment was published in 1802. The judgment proceeded on the assumption that the superior Common Law Courts did have the power to indict a person for contempt of court, by following a summary proce dure on the principle that this power was 'a necessary incident to every court of justice '. Undelivered judgment of Wilmot, J. has been subject of great controversy in England ' and Sir John Fox has severely criticised Almon 's case, in his celebrated book "The History of Contempt of Court ', The Form of Trial and Mode of Punishment: In spite of serious criticism of the judgment of Wilmot, J. the opinion ex pressed by him has all along been followed by the English and Commonwealth Courts. In Rainy vs The Justices of Seirra Leone, 8 Moors PC 47 at 54 on an application for leave to appeal against the order of the Court of Seirra Leone for contempt of court, the Privy Council upheld the order on the ground that the court of Seirra Leone being a Court of Record was the sole and exclusive judge of what amounted to contempt of court. In India, the courts have followed the English practice in holding that a court of record has power of summarily punishing contempt of itself as well as of subordinate courts. In Surendra Nath Banerjee vs The Chief Justice and Judges of the High Court at Fort William in Bengal, ILR to Calcutta 109 the High Court of Calcutta in 1883 convicted Surendra Nath Banerjee, who was Editor and Proprietor of Weekly newspaper for contempt of court and sentenced him to imprisonment for two months for publishing libel reflecting upon a Judge in his judicial capacity. On appeal the Privy Council upheld the order of the High Court and observed that the High Courts in Indian Presidencies were superior courts of record, and the powers of the High 973 Court as superior courts in India are the same as in Eng land. The Privy Council further held that by common law every court of record was the sole and exclusive judge of what amounts to a contempt of court. In Sukhdev Singh Sodhi 's case this Court considered the origin, history and development of the concept of inherent jurisdiction of a court of record in India. The Court after considering Privy Council and High Courts decisions held that the High Court being a court of record has inherent power to punish for contempt of subordinate courts. The Court further held that even after the codification of the law of contempt in India the High Court 's jurisdiction as a court of record to initi ate proceedings and take seisin of the matter remained uneffected by the Contempt of Courts Act, 1926. Mr. Nariman contended that even if the Supreme Court is a court of record, it has no power to take action for the contempt of a Chief Judicial Magistrate 's court as neither the Constitution nor any statutory provision confer any such jurisdiction or power on this Court. He further urged that so far as the High Court is concerned, it has power of judicial and administrative superintendence over the subor dinate courts and further Section 15 of the Act expressly confers power of the High Court to take action for the contempt of subordinate courts. This Court being a court of record has limited jurisdiction to take action for contempt of itself under Article 129 of the Constitution, it has no jurisdiction to indict a person for the contempt of subordi nate or inferior courts. The question whether in the absence of any express provision a Court of Record has inherent power in respect of contempt of subordinate or inferior courts, has been consid ered by English and Indian Courts. We would briefly refer to some of those decisions. In the leading case of Rex vs Parke, at 442. Wills, J. observed: "This Court exercises a vigilant watch over the proceedings of inferior courts and suc cessfully prevents them from usurping powers which they do not possess, or otherwise acting contrary to law. It would seem almost a natu ral corollary that it should possess correla tive powers of guarding them against unlawful attacks and interferences with their independ ence on the part of others." In King vs Davies, Wills, J. further held that the Kings Bench being a court of record must protect the inferior courts 974 from unauthorised interference, and this could only be secured by action of the Kings Bench as the inferior courts have no power to protect themselves and for that purpose this power is vested in superior court of record. Since the Kings Bench is the custos morum of the kingdom it must apply to it with the necessary adaptations to the altered circumstances of the present day to uphold the independence of the judiciary. The principle laid down in Rex vs Davies, was followed in King vs Editor of the Daily Mail, where it was held that the High Court as a court of record has inherent jurisdiction to punish for contempt of a court martial which was an inferior court. Avory, J. observed: "The result of that judgment (Rex vs Davies ) is to show that wherever this Court has power to correct an inferior court, it also has power to protect that court by punishing those who interfere with Due administration of ,justice in their court." In Attorney General vs B.B.C., ; 1 the House of Lords proceeded on the assumption that a court of record possesses protective jurisdiction to indict a person for interference with the administration of justice in the inferior courts but it refused to indict as it held that this protection is available to a court exercising judicial power of the State and not to a Tribunal even though the same may be inferior to the court of record. These authori ties show that in England the power of the High Court to deal with the contempt of inferior court was based not so much on its historical foundation but on the High Court 's inherent jurisdiction being a court of record having juris diction to correct the orders of those courts. In India prior to the enactment of the Contempt of Courts Act, 1926, High Court 's jurisdiction in respect of contempt of subordinate and inferior courts was regulated by the principles of Common Law of England. The High Courts in the absence of statutory provision exercised power of con tempt to protect the subordinate courts on the premise of inherent power of a Court of Record. Madras High Court in the case of Venkat Rao, held that it being a court of record had the power to deal with the contempt of subordinate courts. The Bombay High Court in Mohandas Karam Chand Gandhi 's, [1920] 22 Bombay Law Reporter 368 case held that the High Court possessed the same powers to punish the contempt of subordinate courts as the Court of the King 's Bench Division had by virtue of the Common Law of England. Similar view was expressed by the 975 Allahabad High Court in Abdul Hassan Jauhar 's, case AIR 1926 Allahabad 623 and Shantha Nand Gir vs Basudevanand., AIR 1930 Allahabad 225 (FB). In Abdul Hassan Jauhar 's case (supra) a Full Bench of the Allahabad High Court after considering the question in detail held: "The High Court as a court of record and as the protector of public justice through out its jurisdiction has power to deal with con tempts ' directed against the administration of justice, whether those contempts are committed in face of the court or outside it, and inde pendently or whether the particular court is sitting or not sitting, and whether those contempts relate to proceedings directly concerning itself or whether they relate to proceedings concerning an inferior court, and in the latter case whether those proceedings might or might not at some stage come before the High Court. " Similar view was taken by the Nagpur and Lahore High Courts in Mr. Hirabai vs Mangal Chand, AIR 1935 Nagpur 16; Harki shan Lal vs Emperor, AIR 1937 Lahore 197 and the Oudh Chief Court took the same view in Mohammad Yusuf vs Imtiaz Ahmad Khan., AIR 1939 Oudh 13 1. But, the Calcutta High Court took a contrary view in Legal Remembrancer vs Motilal Ghosh, ILR holding that there was no such inherent power with the High Court. Judicial conflict with regard to High Court 's power with regard to the contempt of subordinate court was set at rest by the Contempt of Courts Act 1926. The Act resolved the doubt by recognising to the power of High Courts in regard to contempt of subordinate courts, by enacting Section 2 which expressly stated that the High Courts will continue to have jurisdiction and power with regard to contempt of subordinate courts as they exercised with regard to their own contempt. Thus the Act reiterated and recognised the High Court 's power as a court of record for taking action for contempt of courts subordinate to them. The only excep tion to this power, was made in subsection (3) of Section 2 which provided that no High Court shall take cognizance of a contempt alleged to have been committed in respect of a court subordinate to it where such contempt is an offence punishable under the Indian Penal Code. Section 3 of the Act restricted the punishment which could be passed by the High Court. Since doubt was raised whether the High Court as a court of record could punish contempt of itself and of courts subordinate to it if contempt was committed outside its territorial jurisdiction, the Parliament enacted the Con 976 tempt of Courts Act 1952 removing the doubt. Section 3 of the 1952 Act again reiterated and reaffirmed the power, authority and jurisdiction of the High Court in respect of contempt of courts subordinate to it, as it existed prior to the enactment. It provided that every High Court shall have and exercise the same jurisdiction, power and authority, in accordance with the same procedure and prac tice in respect of contempt of courts subordinate to it as it has and exercise in respect of contempt of itself. Sec tion 5 further expanded the jurisdiction of the High Court for indicting a person in respect of contempt committed outside the local limits of its jurisdiction. The Parliamen tary legislation did not confer any new or fresh power or jurisdiction on the High Courts in respect of contempt of courts subordinate to it, instead it reaffirmed the inherent power of a Court of Record, having same jurisdiction, power and authority as it has been exercising prior to the enact ments. The effect of these statutory provisions was consid ered by this Court in Sukhdev Singh Sodhi 's case, and the Court held that contempt jurisdiction was a special one inherent in the very nature of a court of record and that jurisdiction and power remained unaffected even after the enactment of 1926 Act as it did not confer any new jurisdic tion or create any offence, it merely limited the amount of punishment which could be awarded to a contemner. The juris diction of the High Court to initiate proceedings or taking action for contempt of its subordinate courts remained as it was prior to the 1926 Act. In R.L. Kapur vs State of Tamil Nadu, ; the Court again emphasised that in view of Article 215 of the Constitution, the High Court as a court of record possesses inherent power and jurisdiction, which is a special one, not arising or derived from Contempt of Courts Act and the provisions of Section 3 of 1926 Act, do not affect that power or confer a new power or jurisdic tion. The Court further held that in view of Article 215 of the Constitution, no law made by a Legislature could take away the Jurisdiction conferred on the High Court nor it could confer it afresh by virtue of its own authority. The English and the Indian authorities are based on the basic foundation of inherent power of a Court of Record, having jurisdiction to correct the judicial orders of subor dinate courts. The Kings Bench in England and High Courts in India being superior Court of Record and having judicial power to correct orders of subordinate courts enjoyed the inherent power of contempt to protect the subordinate courts. The Supreme Court being a Court of Record under Article 129 and having wide power of judicial supervision over all the courts in the country, must possess and exer cise similar jurisdiction and power as the High Courts had prior to Contempt Legislation in 1926. Inherent 977 powers of a superior Court of Record have remained unaffect ed even after Codification of Contempt Law. The was enacted to define and limit the powers of courts in punishing contempts of courts and to regulate their procedure in relation thereto. Section 2 of the Act defines contempt of court including criminal contempt. Sections 5, 6, 7, 8, and 9 specify matters which do not amount to contempt and the defence which may be taken. Section 10 which relates to the power of High Court to punish for contempt of subordinate courts. Section 10 like Section 2 of 1926 Act and Section 3 of 1952 Act reiterates and reaffirms the jurisdiction and power of a High Court in respect of its own contempt and of subordinate courts. The Act does not confer any new jurisdiction instead it reaf firms the High Courts power and jurisdiction for taking action for the contempt of itself as well as of its subordi nate courts. We have scanned the provisions of the 1971 Act, but we find no provision therein curtailing the Supreme Court 's power with regard to contempt of subordinate courts, Section 15 on the other hand expressly refers to this Court 's power for taking action for contempt of subordinate courts. Mr. Nariman contended that under Section 15 Parlia ment has exclusively conferred power on the High Court to punish for the contempt of subordinate courts. The legisla tive intent being clear, this Court has no power under its inherent jurisdiction or as a court of record under Article 129 of the Constitution with regard to contempt of subordi nate courts. Section 15 of the Act reads as under: "15. Cognizance of criminal contempt in other cases (1) In the case of a criminal contempt, other than a contempt referred to in Section 14, the Supreme Court or the High Court may take action on its own motion or a motion made by (a) the Advocate General, or (b) any other person, with the con sent in writing of the Advocate General (or) (c) in relation to the High Court for the Union Territory of Delhi, such Law Officer as the Central Government may by notification in the official Gazette, specify in this behalf or any other person, with the consent in writing of such Law Officer. (2) In the case of any criminal contempt of subordinate 978 court, the High Court may take action on a reference made to it by the subordinate Court or on a motion made by the Advocate General or, in, relation to a Union Territory, by such Law Officer as the Central Government may, by notification in the official Gazette, specify in this behalf. (3) Every motion or reference made under this section shall specify the contempt of which the person charged is alleged to be guilty. Explanation In this section, the expression "Advocate General" means (a) in relation to the Supreme Court, the Attorney General or the Solicitor General; (b) in relation to the High Court, the Advocate General of the State or any of the States for which the High Court has been established; (c) in relation to the Court of a Judicial Commissioner, such Law Officer as the Central Government may, by notification in the official Gazette, specify in this behalf. Under sub section (1) the Supreme Court and High Court both have power to take cognizance of criminal contempt and it provides three modes for taking cognizance. The Supreme Court and the High Court both may take cognizance on its own motion or on the motion made by the Advocate General or any other person with the consent in writing of the Advocate General. Sub section (2) provides that in case of any crimi nal contempt of subordinate court, the High Court may take action on a reference made to it by the subordinate court or on a motion made by the Advocate General, and in, relation to a Union Territory, on a motion made by any officer as may be specified by the Government. Thus Section 15 prescribes modes for taking cognizance of criminal contempt by the High Court and Supreme Court, it is not a substantive provision conferring power or jurisdiction on the High Court or on the Supreme Court for taking action for the contempt of its subordinate courts. The whole object of prescribing proce dural modes of taking cognizance in Section 15 is to safe guard the valuable time of the ' High Court and the Supreme Court being wasted by frivolous complaints of contempt of court. Section 15(2) does not restrict the power of the High Court to take cognizance of the 979 contempt of itself or of a subordinate court on its own motion although apparently the Section does not say so. In S.K. Sarkar, Member, Board of Revenue, U.P. Lucknow vs Vinay Chandra Misra, ; this Court held that Section 15 prescribed procedure for taking cognizance and it does not affect the High Court 's suo moto power to take cogni zance and punish for contempt of subordinate courts. Mr. Nariman urged that under Entry 77 of List I of the VIIth Schedule the Parliament has legislative competence to make law curtailing the jurisdiction of Supreme Court. He further urged that Section 15 curtails the inherent power of this Court with regard to contempt of subordinate courts. Entry 77 of List 1 states: "Constitution, organisation, jurisdiction and powers of the Supreme Court (including contempt of such Court), and the fees taken therein; persons entitled to practise before the Supreme Court." This Entry. read with Article 246 confers power on the Parliament to enact law with respect to the constitution, organisation, jurisdiction and powers of the Supreme Court including the contempt of this court. The Parliament is thus competent to enact a law relating to the powers of Supreme Court with regard to 'contempt of itself ' such a law may prescribe procedure to be followed and it may also prescribe the maximum punishment which could be awarded and it may provide for appeal and for other matters. But the Central Legisla ture has no legislative competence to abridge or extinguish the jurisdiction or power conferred on this Court under Article 129 of the Constitution. The Parliament 's power to legislate in relation to law of contempt relating to Supreme Court is limited, therefore the Act does not impinge upon this Court 's power with regard to the contempt of subordi nate courts under Article 129 of the Constitution. Article 129 declares the Supreme Court a court of record and it further provides that the Supreme Court shall have all the powers of such a court including the power to punish for contempt of itself (emphasis supplied). The expression used in Article 129 is not restrictive instead it is exten sive in nature. If the Framers of the Constitution intended that the Supreme Court shall have power to punish for con ' tempt of itself only, there was no necessity for inserting the expression "including the power to punish for contempt of itself '. The Article confers power on the Supreme Court to punish for contempt of itself and in addition, it confers some additional power relating to contempt as would appear from the expression '*including". The expression "including" has been interpreted by courts, to extend and widen the 980 scope of power. The plain language of Article clearly indi cates that this Court as a court of record has power to punish for contempt of itself and also something else which could fall within the inherent jurisdiction of a court of record. In interpreting the Constitution, it is not permis sible to adopt a construction which would render any expres sion superfluous or redundant. The courts ought not accept any such construction. While construing Article 129, it is not permissible to ignore the significance and impact of the inclusive power conferred on the Supreme Court. Since, the Supreme Court is designed by the Constitution as a court of record and as the Founding Fathers were aware that a superi or court of record had inherent power to indict a person for the contempt of itself as well as of courts inferior to it, the expression "including" was deliberately inserted in the Article. Article 129 recognised the existing inherent power of a court of record in its full plenitude including the power to punish for the contempt of inferior courts. If Article 129 is susceptible to two interpretations, we would prefer to accept the interpretation which would preserve the inherent jurisdiction of this Court being the superior court of record, to safeguard and protect the subordinate judici ary, which forms the very back bone of administration of justice. The subordinate courts administer justice at the grass root level, their protection is necessary to preserve the confidence of people in the efficacy of Courts and to ensure unsullied flow of justice at its base level. Disputing the inherent power of this Court with regard to the contempt of subordinate courts, Mr. Nariman contended that inherent powers are always preserved, but they do not authorise a court to invest itself with jurisdiction when that jurisdiction is not conferred by law. He urged that the status of an appellate court like High Court, does not enable the High Court to claim original jurisdiction not vested by law. Similarly, the Supreme Court having appellate jurisdiction under Section 19 of the , cannot invest itself with original jurisdiction for contempt of subordinate courts. He placed reliance on the decision of this Court in Raja Soap Factory & Ors. vs S.P. Shantharaj & Ors., ; We are unable to accept the contention. In Raja Soap Factory 's case (supra), High Court had entertained an original suit and issued injunction under the although under the Act the suit was required to be instituted in the District Court. In appeal before this Court, order of the High Court was sought to be justified on the ground of High Court 's power of transfer under Section 24 read with its inherent power under Section 151 of the Code of Civil Proce dure. This Court rejected the submission on the ground that exercise 981 of jurisdiction under Section 24 of Code of Civil Procedure was conditioned by lawful institution of the proceeding in a subordinate court of competent jurisdiction, and transfer thereof to the High Court. The Court observed that power to try and dispose of proceedings, after transfer from a court lawfully seized of it, does not involve a power to entertain a proceeding which is not otherwise within the cognizance of the High Court. Referring to the claim of inherent powers under Section 151 to justify entertainment of the suit grant of injunction order, the Court observed that the inherent power could be exercised where there is a proceeding lawful ly before the High Court, it does not, however, authorise the High Court to invest itself with jurisdiction where it is not conferred by law. The facts and circumstances as available in the Raja Soap Factory 's case, were quite dif ferent and the view expressed in that case do not have any bearing on the inherent power of this Court. In Rata Soap Factory 's case there was no issue before the Court regarding the inherent power of a superior court of record instead the entire case related to the interpretation of the statutory provisions conferring jurisdiction on the High Court. Where jurisdiction is conferred on a court by a statute, the extent of jurisdiction is limited to the extent prescribed under the statute But there is no such limitation on a superior court of record in matters relating to the exercise of constitutional powers. No doubt this Court has appellate jurisdiction under Section 19 of the Act, but that does not divest it of its inherent power under Article 129 of the Constitution The conferment of appellate power on the court by a statute does not and cannot affect the width and ampli tude of inherent powers of this Court under Article 129 of the Constitution. We have already discussed a number of decisions holding that the High Court being a court of record has inherent power in respect of contempt of itself as well as of its subordinate courts even in the absence of any express provi sion in any Act. A fortiori the Supreme Court being the Apex Court of the country and superior court of record should possess the same inherent jurisdiction and power for taking action for contempt of itself, as well as, for the contempt of subordinate and inferior courts. It was contended that since High Court has power of superintendence over the subordinate courts under Article 227 of the Constitution, therefore, High Court has power to punish for the contempt of subordinate courts. Since the Supreme Court has no super visory jurisdiction over the High Court or other subordinate courts, it does not possess powers which High Courts have under Article 215. This submission is misconceived. Article 227 confers supervisory jurisdiction on the High Court and in exercise of that 982 power High Court may correct judicial orders of subordinate courts, in addition to that, the High Court has administra tive control over the subordinate courts. Supreme Court 's power to correct judicial orders of the subordinate courts under Article 136 is much wider and more effective than that contained under Article 227. Absence of administrative power of superintendence, over the High Court and subordinate court does not affect this Court 's wide power of judicial superintendence of all courts in India. Once there is power of judicial superintendence, all the Courts whose orders are amenable to correction by this Court would be subordinate courts and therefore this Court also possesses similar inherent power as the High Court has under Article 215 with regard to the contempt of subordinate courts. The jurisdic tion and power of a superior Court of Record 'to punish contempt of subordinate courts was not founded on the court 's administrative power of superintendence, instead the inherent jurisdiction was conceded to superior Court of Record on the premise of its judicial power to correct the errors of subordinate Courts. Mr. Nariman urged that assumption of contempt jurisdic tion with regard to contempt of subordinate and inferior courts on the interpretation of Article 129 of the Constitu tion is foreclosed by the decisions of Federal Court, he placed reliance on the decisions of Federal Court in K.L. Gauba vs The Hon 'ble the Chief Justice and Judges of the High Court of Judicature at Lahore & Anr., AIR 1942 FC 1 and Purshottam Lal Jaitly vs The King Emperor., He urged that this Court being successor to Federal Court was bound by the decisions of the Federal Court under Arti cle 374(2) of the Constitution. Mr. Sorabji, learned Attor ney General seriously contested the proposition, he contend ed that there is a marked difference between the Federal Court and this Court, former being established by a statute with limited jurisdiction while this Court is the Apex constitutional court with unlimited jurisdiction, therefore, the Federal Court decisions are not binding on this Court. He urged that Article 374(2) does not bind this Court with the decisions of the Federal Court, instead it provides for meeting particular situation during transitory period. In the alternative learned Attorney General urged that the aforesaid two decisions of Federal Court in Gauba 's case and Jaitly 's case do not affect the jurisdiction and power of this Court with regard to contempt of subordinate and infe rior courts as the Federal Court had no occasion to inter pret any provision like Article 129 of the Constitution in the aforesaid decisions. Article 374 made provision for the continuance of Federal Court Judges as the Judges of the Supreme Court on the commencement of the Constitution and it also made 983 provisions for transfer of the proceedings pending in the Federal Court to the Supreme Court. Clause (2) of Article 374 is as under: "All suits, appeals and proceedings, civil or criminal, pending in the Federal Court at the commencement of this Constitution shall stand removed to the Supreme Court, and the Supreme Court shall have jurisdiction to hear and determine the same, and the judgments and orders of the Federal Court delivered or made before the commencement of this Constitution shall have the same force and effect as if they had been delivered or made by the Supreme Court. " On the promulgation of the Constitution, Federal Court ceased to exist and the Supreme Court was set up and with a view to meet the changed situation, provisions had to be made with regard to the matters pending before the Federal Court. Article 374(2) made provision for two things, firstly it directed the transfer of all suits, appeals and proceed ings, civil or criminal pending before the Federal Court to the Supreme Court. Secondly, it provided that any orders and judgments delivered or made by the Federal Court before the commencement of the Constitution shall have the same force and effect as if those orders or judgments had been deliv ered or made by the Supreme Court. This was necessary for the continuance of the proceedings before the Supreme Court. The Federal Court may have passed interlocutory orders, it may have delivered judgments in the matters pending before it and in order to maintain the continuance of validity of orders or judgments of Federal Court a legal fiction was created stating that those judgments and orders shall be treated as of Supreme Court. Article 374(2) is in the nature of transitory provision to meet the exigency of the situa tion on the abolition of the Federal Court and setting of the Supreme Court. There is no provision in the aforesaid Article to the effect that the decisions of the Federal Court shall be binding on the Supreme Court. Similar view was taken by the Allahabad High Court in Om Prakash Gupta vs The United Provinces, AIR 195 1 Allahabad 205 para 43 and Bombay High Court in State of Bombay vs Gajanan Mahadev Badley., AIR 1954 Bombay 352 para 14. The decisions of Federal Court and the Privy Council made before the com mencement of the Constitution are entitled to great respect but those decisions are not binding on this Court and it is always open to this Court to take a different view. In The State of Bihar vs Abdul Majid, ; at 795 and Shrinivas Krishnarao Kango vs Narayan Devji Kango and Ors. ; at 24 and 25. Federal 984 Court decisions were not followed by this Court. There is, therefore, no merit in the contention that this Court is bound by the decisions of the Federal Court. But even otherwise the decisions of Federal Court in K.L. Gauba 's case and Purshottam Lal Jaitly 's case have no bearing on the interpretation of Article 129 of the Consti tution. In K.L. Gauba 's case the facts were that K.L. Gauba, an Advocate of Lahore High Court was involved in litigation of various kinds including a case connected with his insol vency. A Special Bench of the High Court of Lahore was constituted to decide his matters. His objection against the sitting of a particular Judge on the Special Bench, was rejected. His application for the grant of certificate under Section 205 of the Government of India Act to file appeal against the order of the High Court before the Federal Court was refused. Gauba filed a petition before the Federal Court for the issue of direction for the transfer of his case to Federal Court from High Court. The Federal Court held that appeal against the order of the High Court refusing to grant certificate was not maintainable. Gauba argued that the High Court was guilty of contempt of Federal Court as it had deliberately and maliciously deprived the Federal Court 's jurisdiction to hear the appeal against its orders. Gwyer, CJ. rejected the contention in the following words: "We have had occasion more than once to con strue the provisions of Section 205, and we repeat what we have already said, that no appeal lies to this Court in the absence of the certificate prescribed by that Section: a certificate is the necessary condition prece dent to every appeal. We cannot question the refusal of a High Court to grant a certificate or investigate the reasons which have prompted the refusal; we cannot even inquire what those reasons were, if the High Court has given none. The matter is one exclusively for the High Court; and, as this Court observed in an earlier case, it is not for us to speculate whether Parliament omitted per incuriam to give a right of appeal against the refusal to grant a certificate or trusted the High Courts to act with reasonableness and impartiality: at page 16. The jurisdiction of the Court being thus limited by the statute in this way, how could it be extended by a High Court acting even perversely or maliciously in withholding the certificate. " In Purshottam Lal Jaitly 's case an application purporting to 985 invoke extraordinary original jurisdiction of the Federal Court under Section 2 10(2) of the Government of India Act, 1935 was made with a prayer that the Federal Court should itself deal directly with an alleged contempt of a Civil Court, subordinate to the High Court. By a short order the Court rejected the application placing reliance on its decision in K.L. Gauba 's case. The Court observed as under: "The expression "any contempt of court" in that provision must be held to mean "any act amounting to contempt of this Court". This was the view expressed in Gauba 's case and we have been shown no reason for departing from that view. Under the Indian Law the High Courts have power to deal with contempt of any Court subordinate to them as well as with contempt of the High Courts. It could not have been intended to confer on the Federal Court a concurrent jurisdiction in such matters. The wider construction may conceivably lead to conflicting judgments and to other anomalous con sequences. " In the case of K.L. Gauba the Federal Court found itself helpless in the matter as the Government of India Act, 1935 did not confer any power on it to entertain an appeal against the order of High Court refusing to grant certifi cate. The decision has no bearing on the question which we are concerned. In Purshottam Lal Jaitly 's case the decision turned on the interpretation of Section 210(2) of the 1935 Act. Section 2 10 made provisions for the enforcement of decrees and orders of Federal Court. Sub section (2) provid ed that Federal Court shall have power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents or the investiga tion or "punishment of any contempt of court", which any High Court has power to make as respects the territory within its jurisdiction, and further the Federal Court shall have power to award costs and its orders shall be enforce able by all courts. While interpreting Section 2 10(2) the Federal Court held that it had no power to deal with con tempt of any court subordinate to High Court and it further observed that the wider constructions may lead to conflict ing judgments and to other anomalous consequences. It is not necessary for us to consider the correctness of the opinion expressed by the Federal Court, as in our view the Federal Court was a court of limited jurisdiction, it was not the Apex Court like this Court as against the judgment, order and decree of the Federal Court appeals lay to the Privy Council. The Federal Court exercised limited jurisdiction as conferred on it by the 1935 Act. The question regarding the inherent power of the 986 Superior Court of Record in respect of the Contempt of Subordinate court was neither raised nor discussed in afore said decisions. The Federal Court observed that if the High Court and the Federal Court both have concurrent jurisdic tion in contempt matters it could lead to conflicting judg ments and anomalous consequences, that may be so under the Government of India Act as the High Court and the Federal Court did not have concurrent jurisdiction, but under the Constitution, High Court and the Supreme Court both have concurrent jurisdiction in several matters, yet no anomalous consequences follow. While considering the decision of Federal Court, it is necessary to bear in mind that the Federal Court did not possess wide powers as this Court has under the Constitu tion. There are marked differences in the constitution and jurisdiction and the amplitude of powers exercised by the two courts. In addition to civil and criminal appellate jurisdiction, this Court has wide powers under Article 136 over all the courts and Tribunals in the country. The Feder al Court had no such power, instead it had appellate power but that too could be exercised only on a certificate issued by the High Court. The Federal Court was a court of record under Section 203 but it did not possess any plenary or residuary appellate power over all the courts functioning in the territory of India like the power conferred on this Court under Article 136 of the Constitution, therefore, the Federal Court had no judicial control or superintendence over subordinate courts. Advent of freedom, and promulgation of Constitution have made drastic changes in the administration of justice neces sitating new judicial approach. The Constitution has as signed a new role to the Constitutional Courts to ensure rule of law in the country. These changes have brought new perseptions. In interpreting Constitution, we must have regard to the social, economic and political changes, need of the community and the independence of judiciary. The court cannot be a helpless spectator, bound by precedents of colonial days which have lost relevance. Time has come to have a fresh look to the old precedents and to lay down law with the changed perceptions keeping in view the provisions of the Constitution. "Law", to use the words of Lord Coler idge, "grows; and though the principles of law remain un changed, yet their application is to be changed with the changing circumstances of the time. " The considerations which weighed with the Federal Court in rendering its deci sion in Guaba 's and Jaitley 's case are no more relevant in the context of the constitutional provisions. 987 Since this Court has power of judicial superintendence and control over all the courts and Tribunals functioning in the entire territory of the country, it has a corresponding duty to protect and safeguard the interest of inferior courts to ensure the flow of the stream of justice in the courts without any interference or attack from any quarter. The subordinate and inferior courts do not have adequate power under the law to protect themselves, therefore, it is necessary that this court should protect them. Under the constitutional scheme this court has a special role, in the administration of justice and the powers conferred on it under Articles 32, 136, 14 1 and 142 form part of basic structure of the Constitution. The amplitude of the power of this Court under these Articles of the Constitution cannot be curtailed by law made by Central or State Legislature. If the contention raised on behalf of the contemners is accept ed, the courts all over India will have no protection from this Court. No doubt High Courts have power to persist for the contempt of subordinate courts but that does not affect or abridge the inherent power of this court under Article 129. The Supreme Court and the High Court both exercise concurrent jurisdiction under the constitutional scheme in matters relating to fundamental rights under Article 32 and 226 of the Constitution, therefore this Court 's jurisdiction and power to take action for contempt of subordinate courts would not be inconsistent to any constitutional scheme. There may be occasions then attack on Judges and Magistrate of subordinate courts may have wide repercussions through out the country, in that situation it may not be possible for a High Court to contain the same, as a result of which the administration of justice in the country may be paraly sed, in that situation the Apex Court must intervene to ensure smooth functioning of courts. The Apex Court is duty bound to take effective steps within the constitutional provisions to ensure a free and fair administration of justice through out the country, for that purpose it must wield the requisite power to take action for contempt of subordinate courts. Ordinarily, the High Court would protect the subordinate court from any onslaught on their independ ence, but in exceptional cases, extra ordinary situation may prevail affecting the administration of public justice or where the entire judiciary is affected, this Court may directly take cognizance of contempt of subordinate courts. We would like to strike a note of caution that this Court will sparingly excercise its inherent power in taking cogni zance of the contempt of subordinate courts, as ordinarily matters relating to contempt of subordinate courts must be dealt with by the High Courts. The instant case is of excep tional nature, as the incident created a situation where functioning of the subordinate courts all over the country was adversely affected, and the administration of justice was paralysed, 988 therefore, this Court took cognizance of the matter. Mr. Nariman contended that in our country there is no court of universal jurisdiction, as the jurisdiction of all courts including the Supreme Court is limited. Article 129 as well as the do not confer,any express power to this Court with regard to contempt of the subordinate courts, this Court cannot by construing Article 129 assume jurisdiction in the matter which is not entrusted to it by law. He placed reliance on the observations of this Court in Naresh Shridhar Mirajkar & Ors. vs State of Maha rashtra & Ors. ; , at 77 1. We have carefully considered the decision but we find nothing therein to support the contention of Mr. Nariman. It is true that courts constituted under a law enacted by the Parliament or the State Legislature have limited jurisdiction and they cannot assume jurisdiction in a matter, not expressly as signed to them, but that is not so in the case of a superior court of record constituted by the Constitution. Such a court does not have a limited jurisdiction instead it has power to determine its own jurisdiction. No matter is beyond the jurisdiction of a superior court of record unless it is expressly shown to be so, under the provisions of the Con stitution. In the absence of any express provision in the Constitution the Apex court being a court of record has jurisdiction in every matter and if there be any doubt, the Court has power to determine its jurisdiction. If such determination is made by High Court, the same would be subject to appeal to this Court, but if the jurisdiction is determined by this Court it would be final. Halsbury 's Laws of England Vol. 10 Para 7 13, states: "Prima facie no matter is deemed to be beyond the jurisdiction of a superior court unless it is expressly shown to be so, while nothing is within the jurisdiction of an inferior court unless it is expressly shown on the face of the proceedings that the particular matter is within the cognizance of the particular court. " The above principle of law was approved by this Court in Special Reference No. I of 1964 ; at 499 in holding that the, High Court being a superior court of record was entitled to determine its own jurisdiction in granting interim bail to a person against whom warrant of arrest had been issued by the Speaker of a State Legisla ture. In Mirajkar 's case (supra) this Court again reiterated the principles that a superior court of record unlike a court of limited jurisdiction is entitled to determine about its own jurisdiction. In Ganga Bishan vs Jai Narain, the Court emphasised that the 989 Constitution has left it to the judicial discretion of Supreme Court to decide for itself the scope and limits of its jurisdiction in order to render substantial justice in matters coming before it. We therefore hold that this Court being the Apex Court and a superior court of record has power to determine its jurisdiction under Article 129 of the Constitution, and as discussed earlier it has jurisdiction to initiate or entertain proceedings for contempt of subor dinate courts. This view does not run counter to any provi sion of the Constitution. Constitutional hurdles over, now we would revert back to the incident which has given rise to these proceedings. The genesis of the unprecedented attack on the subordinate judiciary arose out of confrontational attitude of the local police against the Magistracy in Kheda. The Chief Judicial Magistrate is head of the Magistracy in the District. Under the provisions of Chapter XII of the Code of Criminal Proce dure, 1973, he exercises control and supervision over the investigating officer. He is an immediate officer on the spot at the lower rung of the administration of justice of the country to ensure that the Police which is the law enforcing machinery acts according to law m investigation of crimes without indulging into excesses and causing harass ment to citizens. The main objective of Police is to appre hend offenders, to investigate crimes and to prosecute them before the courts and also to prevent commission of crime and above all to ensure law and order to protect the citi zens life and property. The law enjoins the Police to be scrupulously fair to the offender and the Magistracy is to ensure fair investigation and fair trial to an offender. The purpose and object of Magistracy and Police are complemen tary to each other. It is unfortunate, that these objectives have remained unfulfilled even after 40 years of our Consti tution. Aberrations of Police officers and Police excesses in dealing with the law and order situation have been the subject of adverse comments from this court as well as from other courts but it has failed to have any corrective effect on it. The Police has power to arrest a person even without obtaining a warrant of arrest from a court. The amplitude of this power casts an obligation on the Police to take maximum care in exercising that power. The Police must bear in mind, as held by this Court that if a person is arrested for a crime, his constitutional and fundamental rights must not be violated. See: Sunil Batra vs Delhi Administration & Ors. , ; In Prem Shankar Shukla 's (supra) case 526, this Court considered the question of placing a prisoner under handcuff by the Police. The Court declared that no prisoner shall be handcuffed or lettered routinely or merely for the convenience of custody or escort. The Court empha sised that the Police did not enjoy any unrestricted or unlimited 990 power to handcuff an arrested person. If having regard to the circumstances including the conduct, behaviour and character of a prisoner, there is reasonable apprehension of prisoner 's escape from custody or disturbance of peace by violence, the Police may put the prisoner under handcuff. If a prisoner is handcuffed without there being any justifica tion, it would violate prisoner 's fundamental rights under Articles 14 and 19 of the Constitution. To be consistent with Articles 14 and 19 handcuffs must be the last refuge as there are other ways for ensuring security of a prisoner. In Prem Shankar Shukla 's case, Krishna Iyer, J. observed: "If today freedom of the ferlorn person fails to the police somewhere tomorrow the freedom of many may fall else where with none to whimper unless the court process invigilates and polices the police before it is too late." The prophetic words of Krishna Iyer, J. have come true as the facts of the present case would show. In the instant case, Patel, CJM, was assaulted, arrested and handcuffed by Police Inspector Sharma and other Police Officers. The Police Officers were not content with this, they tied him with a thick rope round his arms and body as if N.L. Patel was a wild animal. As discussed earlier, he was taken in that condition to the hospital for medical examination where he was made to sit in varanda exposing him to the public gaze, providing opportunity to the members of the public to see that the Police had the power and privi lege to apprehend and deal with a Chief Judicial Magistrate according to its sweet will. What was the purpose of unusual behaviour of the police, was it to secure safety and securi ty of N.L. Patel, or was it done to prevent escape or any violent activity on his part justifying the placing of handcuffs and ropes on the body of N.L. Patel. The Commis sion has recorded detailed findings that the object was to wreck vengeance and to humiliate the CJM who had been polic ing the police by this judicial orders. We agree with the findings recorded by the Commission that there was no justi fication for this extraordinary and unusual behaviour of Police Inspector Sharma and other Police Officers although they made an attempt to justify their unprecedented, dehuma nising behaviour on the ground that Patel was drunk, and he was behaving in violent manner and if he had not been hand cuffed or tied with ropes, he could have snatched Sharma 's revolver and killed him. We are 991 amazed at the reasons given by Sharma justifying the hand cuffs and ropes on the body of N.L. Patel. Patel was un armed, he was at the Police Station in a room, there were at least seven police officials present in the room who were fully armed, yet, there was apprehension about Patel 's escape or violent behaviour justifying handcuffs and roping. The justification given by them is flimsy and preposterous. S.R. Sharma acted in utter disregard of this Court 's direc tion in Prem Shankar Shukla 's case. His explanation that he was not aware of the decision of this Court is a mere pre tence as the Commissioner has recorded findings that Gujarat Government had issued Circular letter to the Police incorpo rating the guide lines laid down by this Court in Prem Shanker Shukla 's case with regard to the handcuffing of prisoner. What constitutes contempt of court? The Common Law definition of contempt of Court is: 'An act or omission calculated to interfere with the due administration of justice. ' (Bowen L.J. in Helmore vs Smith, [1886] 35 Ch. D. 436 at 455. The contempt of court as defined by the includes civil and criminal contempt. Criminal contempt as defined by the Act: 'Means the publica tion whether by words, spoken or written, or by signs, or by visible representations, or otherwise of any matter or the doing of any other act whatsoever which scandalizes or tends to scandalize, or lowers or tends to lower the authority of, any court; or prejudices, or interferes or tends or to interfere with, the due course of any judicial proceeding; or interferes, or tends to interfere with, or obstructs or tends to obstruct, the administration of justice in any other manner. The definition of criminal contempt is wide enough to include any act by a person which would tend to interfere with the administration of justice or which would lower the authority of court. The public have a vital stake in effective and orderly administration of justice. The Court has the duty of protecting the interest of the commu nity in the due administration of justice and, so, it is entrusted with the power to commit for contempt of court, not to protect the dignity of the Court against insult or injury, but, to protect and vindicate the right of the public so that the administration of justice is not pervert ed, prejudiced, obstructed or interfered with. "It is a mode of vindicating the majesty of law, in its active manifesta tion against obstruction and outrage." (Frank Furter, J. in Offutt vs U.S.) ; The object and purpose of punishing contempt for interference with the administration of justice is not to safeguard or protect the dignity of the Judge or 992 the Magistrate, but the purpose is to preserve the authority of the courts to ensure an ordered life in society. In AttOrney General vs Times Newspapers, at p. 302 the necessity for the law of contempt was summarised by Lord Morris as: "In an ordered community courts are estab lished for the pacific settlement of disputes and for the maintenance of law and order. In the general interests of the community it is imperative that the authority of the courts should not be imperilled and that recourse to them should not be subject to unjustifiable interference. When such unjustifiable inter ference is suppressed it is not because those charged with the responsibilities of adminis tering justice are concerned for their own dignity: it is because the very structure of ordered life is at risk if the recognised courts of the land are so flouted and their authority wanes and is supplanted." The Chief Judicial Magistrate is head of the Magistracy in the District who administers justice to ensure, protect and safeguard the rights of citizens. The subordinate courts at the district level cater to the need of the masses in administering justice at the base level. By and large the majority of the people get their disputes adjudicated in subordinate courts, it is, in the general interest of the community that the authority of subordinate.courts is pro tected. If the CJM is led into trap by unscrupulous Police Officers and if he is assaulted, handcuffed and roped, the public is bound to lose faith in courts, which would be destrictive of basic structure of an ordered society. If this is permitted Rule of Law shall be supplanted by Police Raj. Viewed in this perspective the incident is not a case of physical assault on an individual judicial officer, instead it is an onslaught on the institution of the judici ary itself. The incident is a clear interference with the administration of justice, lowering its judicial authority. Its effect was not confined to one District or State, it had a tendency to affect the entire judiciary in the country. The incident highlights a dangerous trend that if the Police is annoyed with the orders of a presiding officer of a court, he would be arrested on flimsy manufactured charges, to humiliate him publicly as has been done in the instant case. The conduct of Police Officers in assaulting and humiliate the CJM brought the authority and administration of justice into disrespect, affecting the public confidence in the institution of justice. "The summary power of punish ment for contempt has been conferred on the courts to keep a blaze of glory around them, to deter people from attempting to render 993 them contemptible in the eyes of the public. These powers are necessary to keep the course of justice free, as it is of great importance to society." (Oswald on Contempt of Court). The power to punish contempt is vested in the Judges not for their personal protection only, but for the protec tion of public justice, whose interest, requires that decen cy and decorum is preserved in Courts of Justice. Those who have to discharge duty in a Court of Justice are protected by the law, and shielded in the discharge of their duties, any deliberate interference with the discharge of such duties either in court or outside the court by attacking the presiding officers of the court, would amount to criminal contempt and the courts must take serious cognizance of such conduct. It takes us to the question against which of ' the con temners contempt is made out. On behalf of the petitioners it was urged that the Police Officers ' conduct amounts to criminal contempt as their action lowered the authority of the Chief Judicial Magistrate and it further caused inter ference with the administration of justice. Mr. Soli Sorab jee, learned Attorney General contended that all those who abetted and helped the Police Officers ' in their conduct and design are also guilty of contempt of court. On behalf of the contemners it was urged that the incident which took place in the Police Station does not make out any contempt of court. The Chief Judicial Magistrate had consumed liquor and in druken state he went to the Police Station and slapped the Police Inspector, Sharma, thereby he committed offence under the Bombay Prohibition Act as well as under Section 332, 504 and 506 of the Indian Penal Code. Criminal cases have been registered against N.L. Patel, CJM and after investigation charge sheets have been submitted to the court. In this context, it was urged that no action could be taken against the contemners as the facts in issue in the present proceedings are the same as involved in the criminal prosecutions pending against N.L. PateI, CJM. The question raised on behalf of the contemners need not detain us long. Proceedings for contempt of court are different than those taken for the prosecution of a person for an offence under the criminal jurisdiction. Contempt proceedings are peculiar in nature although in certain aspects they are quasicriminal in nature but they do not form part of criminal jurisdiction of the court. Criminal prosecution pending against the CJM or against the contemners has no bearing on the contempt proceedings initiated by this Court as the present proceed ings are not for the purpose of punishing the contemners for the offence of wrongful detention and assault on N.L. Patel, Chief Judicial Magistrate, instead these proceedings have been taken to protect the interest of the public in the 994 due administration of justice and to preserve the confidence of people in Courts. We, accordingly, reject the contemner 's objection. We have already recorded findings that Sharma, Police Inspector, Nadiad had preplanned the entire scheme, he deliberately invited Patel to visit Police Station where he was forced to consume liquor and on his refusal he was assaulted, arrested, handcuffed and tied with rope S.R. Sharma, K.H. Sadia, Sub Inspector, Valjibhai Kalajibhai, Head Constable and Pratap Singh, Constable, all took active part in this shameful episode with a view to malign and denigrade the CJM on accout of his judicial orders against the Police. We, therefore, hold S.R. Sharma, Police Inspec tor, K.H. Sadia, Sub Inspector, Valujibhai Kalajibhai Head Constable and Pratap Singh, Constable guilty of contempt of court. M.B. Savant, Mamlatdar had been summoned by Sharma, Police Inspector, to the Police Station in advance for purposes of being witness to the Panchnama drawn up by Sharma describing drunken condition of Patel, CJM. The document was false and deliberately prepared to make out a Case against Patel, CJM. M.B. Sawant was in complicity with Sharma, he actively participated in the preparation of the document to malign and humiliate the CJM and to prepare a false case against him, he is also, therefore, guilty of contempt of court. As regards D.K. Dhagal, the then District Superintendent of Police, Kheda, we have already recorded findings that he was hand in glove with Sharma, Police Inspector. The circum stances pointed out by the Commission and as discussed earlier, show that though D.K. Dhagal, had not personally participated in the shameful episode but his Conduct, act and omission establish his complicity in the incident. It is difficult to believe or imagine that a Police Inspector would arrest, humiliate, assault and handcuff a CJM and the Police Chief in the District would be indifferent, or a mute spectator. The circumstances unequivocally show that Sharma was acting under the protective cover of Dhagal as he did not take any immediate action in the matter instead he created an alibi for himself by interpolating the entries in the register at the Government Rest House, Balasinor. In his report submitted to the Addl. Chief Secretary (Home) on 27.9.1989, Dhagal did not even remotely mention the hand cuffing and roping of CJM. It is unfortunate that Dhagal as the district Superintendent of Police did not discharge his duty like a responsible Police Officer instead he identi fied himself with Sharma, Police Inspector and actively abetted the commission of onslaught on the CJM. We, accord ingly, hold D.K. Dhagal, the then D.S.P. Kheda guilty of contempt of court. 995 This takes us to the petition filed by N.L. Patel for quashing the criminal cases initiated against him on the basis of two First Information Reports made by Police In spector S.R. Sharma. As noticed earlier Sharma, Police Inspector, had registered two FIRs on 25.9.1989 against N.L. Patel for the offences under Section 85(1)(3) read with Section 66(1)(b) and also under Section 110 of Bombay Prohi bition Act on the allegations that Patel had consumed liquor without permit or pass and under the influence of alcohol entered into Sharma 's chamber and behaved in an indecent manner. The FIR further alleged that Patel caught hold of PoliCe Inspector Sharma and slapped him. The second FIR was lodged by Sharma against Patel for offences under Sections 332,353, 186 and 506 of the Indian Penal Code on the same allegations as contained in the earlier FIR. During the pendency of the contempt proceedings before this Court, the Police continued the investigation and submitted charge sheet in both the cases against N.L. Patel and at present Criminal Cases Nos. 1998/90 and 1999/90 are pending in the Court of Chief Judicial Magistrate, Nadiad. These proceed ings are sought to be quashed. On behalf of the State and the Police Officers, it was urged that since charge sheets have already been submitted to the Court, Patel will have full opportunity to defend himself before the court where witnesses would be examined and cross examined, therefore, this Court should not inter fere with the proceedings. The gravamen of the charge in the two cases registered against N.L. Patel is that he had consumed liquor without a pass or permit and under the influence of liquor, he entered the chamber of Police In spector Sharma at the Police Station and assaulted him. The Police over powered and arrested him and a panchnama was prepared and he was taken to the Hospital for medical exami nation, and the report of medical examination indicates that he had consumed liquor. These very facts have been inquired into by the Commissioner and found to be false. We have recorded findings that Police Inspector Sharma and other Police Officers manipulated records and manufactured the case against N.L. Patel with a view to humiliate and teach him a lesson as the Police was annoyed with his judicial orders. We have already recorded findings holding S.R. Sharma, Police Inspector, Sadia, Sub Inspector, Valjibhai Kalabhai, Head Constable, Pratap Singh, Constable, M.B. Savant, Mamlatdar, and D.K. Dhagal, D.S.P. guilty of con tempt of court. These very persons are specified as witness es in the two charge sheets. The Commission 's as well as our findings clearly demonstrate that the allegations contained in the two FIRs are false. If Police is permitted to prose cute Patel on those allegations merely on the basis 996 that charge sheets have been submitted by it, it would amount to gross abuse of the process of the Court. In the circumstances, proceedings against N.L. Patel are liable to be quashed. Learned counsel, appearing on behalf of the State of Gujarat and the Police Officers, urged that in the present proceedings this Court has no jurisdiction or power to quash the criminal proceedings pending against N.L. Patel, CJM. Elaborating his contention, learned counsel submitted that once a criminal case is registered against a person the law requires that the court should allow the case to proceed to its ' normal conclusion and there should be no interference with the process of trial. He further urged that this Court has no power to quash a trial pending before the criminal court either under the Code of Criminal Procedure or under the Constitution, therefore, the criminal proceedings pend ing against Patel should be permitted to continue. Learned Attorney General submitted that since this Court has taken cognizance of the contempt matter arising out of the inci dent which is the subject matter of trial before the crimi nal court, this Court has ample power under Article 142 of the Constitution to pass any order necessary to do justice and to prevent abuse of process of the court. The learned Attorney General elaborated that there is no limitation on the power of this Court under Article 142 in quashing a criminal proceeding pending before a subordinate court. Before we proceed to consider the width and amplitude of this Court 's power under Article 142 of the Constitution it is necessary to remind ourselves that though there is no provision like Section 482 of the Criminal Procedure Code conferring express power on this Court to quash or set aside any criminal proceedings pending before a criminal court to prevent abuse of process of the court, but this Court has power to quash any such proceedings in exercise of its plenary and residuary power under Article 136 of the Consti tution, if on the admitted facts no charge is made out against the accused or if the proceedings are initiated on concocted facts, or if the proceedings are initiated for oblique purposes. Once this Court is satisfied that the criminal proceedings amount to abuse of process of court it would quash such proceedings to ensure justice. In State of West Bengal & Ors. vs Swapan Kumar Guha & Ors., ; this Court quashed First Information Report and issued direction prohibiting investigation into the allegations contained in the FIR as the Court was satisfied that on admitted facts no offence was made out against the persons named in the FIR. In Madhavrao Jivajirao Scindia & Ors. vs Sambhajirao Chandrojirao Angre & Ors., ; criminal proceedings were quashed as this Court Was satis fied that the case was founded on false facts, and the proceedings 997 for trial had been initiated for oblique purposes. Article 142(1) of the Constitution provides that Supreme Court in exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete jus tice in any 'cause ' or 'matter ' pending before it. The expression 'cause ' or 'matter ' would include any proceeding pending in court and it would cover almost every kind of proceeding in court including civil or criminal. The inher ent power of this Court under Article 142 coupled with the plenary and residuary powers under Article 32 and 136 em braces power to quash criminal proceedings pending before any court to do complete justice in the matter before this Court. If the court is satisfied that the proceeding in a criminal case are being utilised for oblique purposes or if the same are continued on manufactured and false evidence or if.no case is made out on the admitted facts, it would be in the ends of justice to set aside or quash the criminal proceedings. It is idle to suggest that in such a situation this Court should be a helpless spectator. Mr. Nariman urged that Article 142(1) does not contem plate any order contrary to Statutory provisions. He placed reliance on the Court 's observations in Prem Chand Garg vs Excise Commissioner. U.P. Allahabad, [1963] Supp. 1 SCR 885 at 899 and, A.R. Antulay vs R.S. Nayak & Anr. ; where the Court observed that though the powers con ferred on this Court under Article 142(1) are very wide, but in exercise of that power the ' court cannot make any order plainly inconsistent with the express statutory provisions of substantive law. It may be noticed that in Prem Chand Garg 's and Antulay 's case (Supra) observations with regard to the extent of this Court 's power under Article 142(1) were made in the context of fundamental rights. Those obser vations have no bearing on the question in issue as there is no provision in any substantive law restricting this Court 's power to quash proceedings pending before subordinate court. This Court 's power under Article 142(1) to do "complete justice" is entirely of different level and of a different quality. Any prohibition or restriction contained in ordi nary laws cannot act as a limitation on the constitutional power of this Court. Once this Court has seisin of a cause or matter before it, it has power to issue any order or direction to do "complete justice" in the matter. This constitutional power of the Apex Court cannot be limited or restricted by provisions contained in statutory law. In Har bans Singh vs U.P. State, ; at 243 the Court observed: "Very wide powers have been conferred on this Court for 998 due and proper administration of justice. Apart from the jurisdiction and powers con ferred on this Court under Articles 32 and 136 of the Constitution I am of the opinion that this Court retains and must retain, an inher ent power and jurisdiction for dealing with any extra ordinary situation in the largest interests of administration of justice and for preventing manifest injustice being done. This power must necessarily be sparingly used only in exceptional circumstances for furthering the ends of justice. " No enactment made by Central or State Legislature can limit or restrict the power of this Court under Article 142 of the Constitution, though while exercising power under Article 142 of the Constitution, the Court must take into considera tion the statutory provisions regulating the matter in dispute. What would be the need of "complete justice" in a cause or matter would depend upon the facts and circum stances of each case and while exercising that power the Court would take into consideration the express provisions of a substantive statute. Once this Court has taken seisin of a case, cause or matter, it has power to pass any order or issue direction as may be necessary to do complete jus tice in the matter. This has been the consistent view of this Court as would appear from the decisions of this Court in State of U.P. vs Poosu & Anr. ; ; Ganga Bishan & Ors. vs Jai Narain, ; Navnit R. Kamani & Ors. vs R.R. Kamani, ; ; B.N. Nagara jan & Ors. vs State of Mysore & Ors., Special Reference No. I of 1964, (supra), and Harbans Singh vs State of U,P. Ors. (supra). Since the foundation of the criminal trial of N.L. Patel is based on the facts which have already been found to be false, it would be in the ends of justice and also to do complete justice in the cause to quash the criminal proceedings. We accordingly quash the criminal proceedings pending before the Chief Judicial Magistrate, Nadiad in Criminal Cases Nos. 1998/90 and 1999/ 90. The question arises what punishment should be awarded to the contemners found guilty of contempt. In determining the punishment, the degree and the extent of part played by each of the contemners has to be kept in mind. Sharma, Police Inspector who was the main actor in the entire incident and who had planned the entire episode with a view to humiliate the CJM in the publis eye is the main culprit, therefore, he deserves maximum punishment. Sadia, Sub Inspector took active part in assaulting and tying the CJM at the behest of Sharma, Police Inspector. Valijibhai Kalajibhai, Head Con stable and Pratap 999 Singh, Constable also took active part in handcuffing and tying the CJM with ropes, but as subordinate officials they acted under the orders of his superior officer. M.B. Sawant, Mamlatdar was friendly to Sharma, Police Inspector, he had no axe to grind against the CJM but he acted under the influence of Sharma, Police Inspector. So far as D.K. Dhagal is concerned, he actively abetted the commission of on slaught on the CJM. Having regard to the facts and circum stances and individual part played by each of the aforesaid contemner we hold them guilty of contempt and award punish ment as under: S.R. Sharma, the then Police Inspector, Nadiad shall undergo simple imprisonment for a period of six months and he shall pay fine of Rs.2,000. K.H. Sadia, Sub Inspector, Nadiad shall undergo simple imprisonment for a period of five months and will pay a fine of Rs.2000 and in default he will undergo one month 's simple imprisonment. Valjibhai Kalajibhai, Head Constable and Pratap Singh, Constable, both are convicted and awarded simple imprisonment for a period of two months and a fine of Rs.500 each, in default they would undergo simple imprisonment for a further period of 15 days. M.B. Savant, Mamlatdar is convicted and awarded two month 's simple imprisonment and a fine of Rs. 1000 and in default he would undergo one month 's simple imprisonment. D.K. Dhagal, the then District Superintendent of Police, Kheda, is convicted and sentenced to imprisonment for a period of one month and to pay a fine of Rs. 1000 and in default to undergo simple imprisonment for 15 days. So far as other respondents against whom notices of contempt have been issued by the Court, there is no adequate material on record to hold them guilty of contempt of court, we accord ingly discharge the notices issued to them. Before we proceed further, we would like to express the Court 's displeasure on the conduct of K. Dadabhoy, the then Director General of Police, Gujarat. As the head of the Police in the State he was expected to intervene in the matter and to ensure effective action against the erring Police Officers. We are constrained to observe that he was totally indifferent to the news that a CJM was arrested, handcuffed, roped and assaulted. He took this news as a routine matter without taking any steps to ascertain the correct facts or effective action against the erring Police Officers. If the head of the Police administration in the State exhibits such indifference to a sensitive matter which shook the entire judicial machinery in the State, nothing better could be expected from his subordinate officers. K. Dadabhoy did not act like a responsible officer. The State Government should 1000 take action against him departmentaly on the basis of the findings recorded by the Commission. The State Government has initiated proceedings against other erring officers in respect of whom the Commission has adversely commented, we would make it clear that discharge of contempt notices does not absolve those officers of their misconduct, the State Government is directed to proceed with the disciplinary proceedings for taking appropriate action against them. We are constrained to observe that the State Government did not immediately take effective steps against the erring officials. In spite of the direction issued by this Court the erring Police Officers were neither arrested nor placed under suspension. It was only after this Court took serious view of the matter and directed the State Government to suspend the erring Police Officers and arrest them, the State Government moved in the matter. The apathy of the State Government in taking effective action against the erring Police Officers leads to an impression that in the State of Gujarat, Police appears to have upper hand, as the administration was hesitant in taking action against the erring Police Officers. If this practice and tendency is allowed to grow it would result in serious erosion of the Rule of Law in the State. We hope and trust that the State Government will take effective measures to avoid re occur rence of any such instance. The State Government should further take immediate steps for the review and revision of the Police Regulations in the light of findings recorded by the Commission. The facts of the instant case demonstrate that a presid ing officer of a court may be arrested and humiliated on flimsy and manufactured charges which could affect the administration of justice. In order to avoid any such situa tion in future, we consider it necessary to lay down guide lines which should be followed in the case of arrest and detention of a Judicial Officer. No person whatever his rank, or designation may be, is, above law and he must face the penal consequences of infraction of criminal law. A Magistrate, Judge or any other Judicial Officer is liable to criminal prosecution for an offence like any other citizen but in view of the paramount necessity of preserving the independence of judiciary and at the same time ensuring that infractions of law are properly investigated, we think that the following guidelines should be followed. (A) If a judicial officer is to be arrested for some offence, it should be done under intimation to the District Judge or the High Court as the case may be. 1001 (B) If facts and circumstances necessitate the immediate arrest of a judicial officer of the subordinate judiciary, a technical or formal arrest may be effected. (C) The facts of such arrest should be immedi ately communicated to the District and Ses sions Judge of the concerned District and the Chief Justice of the High Court. (D) The Judicial Officer so arrested shall not be taken to a police station, without the prior order or directions of the District & Sessions Judge of the concerned District, if available. (E) Immediate facilities shall be provided to the Judicial Officer to communication with his family members, legal advisers and Judicial Officers, including the District & Sessions Judge. (F) No statement of a Judicial Officer who is under arrest be recorded nor any panchnama be drawn up nor any medical tests be conducted except in the presence of the Legal Adviser of the Judicial Officer concerned or another Judicial Office of equal or higher rank, it ' available. (G) There should be no handcuffing of a Judi cial Officer. If, however, violent resistance to arrest is offered or there is imminent need to effect physical arrest in order to avert danger to life and limb, the person resisting arrest may be over powered and ' handcuffed. In such case, immediate report shall be made to the District & Sessions Judge concerned and also to the Chief Justice of the High Court. But the burden would be on the Police to establish necessity for effecting physical arrest and handcuffing the Judicial Officer and if it be established that the physical arrest and handcuffing of the Judicial Officer was unjustified, the Police Officers causing or responsible for such arrest and handcuffing would be guilty of misconduct and would also be personally liable for compensation and/or damages as may be summarily determined by the High Court. The above guidelines are not exhaustive but these are minimum safeguards which must be observed in case of arrest of a judicial officer. These guidelines should be implement ed by the State Government as well as by the High Courts. We, accordingly, direct that a copy of the guidelines shall be forwarded to the Chief Secretaries of all the State Governments and to all the High Courts with a direction that the 1002 same may be brought to the notice of the concerned officers for compliance. We do not approve N.L. Patel 's conduct in visiting the Police Station on the invitation of Police Inspector Sharma. In our opinion, no Judicial Officer should visit a Police Station on his own except in connection with his official and judicial duties and functions. If it is necessary for a Judicial Officer or a Subordinate Judicial Officer to visit the Police Station in connection with his official duties, he must do so with prior intimation of his visit to the District & Sessions Judge. Pursuant to this Court 's appeal made on September 29, 1989, the members of the Bar as well as the members of the Judiciary throughout the country refrained from going on strike as a result of which inconvenience to general public was avoided and the administration of justice continued. The Court is beholden to the members of the Bar and members of the Judiciary for their response to this Court 's appeal. We record our appreciation of the able assistance rendered to the Court by the learned counsel for the par ties. We are beholden to Sri Soli Jl. Sorabjee, the then Attorney General, who at our request ably assisted the Court in resolving complex questions of law. The Writ Petitions, Contempt Petitions and Criminal Miscellaneous Petitions are disposed of accordingly. N.V.K. Petitions disposed of.
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Mr. N.L. Patel became the Chief Judicial Magistrate (CJM), a type of judge, in Nadiad in October 1988. He soon realized that the local police were not helping the courts. They weren't delivering summons (orders to appear in court), warrants (permissions to arrest someone), and notices to people accused of crimes. This made trials take longer. He complained about the police to the District Superintendent of Police and sent a copy to the Director General of Police, but nothing changed. Because of these complaints, Mr. S.R. Sharma, a Police Inspector in Nadiad, was angry with the CJM. He removed the police officers who worked in the CJM's court. In April 1989, the CJM filed two complaints with the police against the Police Inspector and other police officials in Nadiad. He said they were delaying the court's work. On July 25, 1989, the CJM told the police to file a criminal case against 14 people who had interfered with court proceedings. But later, after they apologized, the CJM told the Police Inspector to drop the cases. The Police Inspector was very upset by the CJM's order. He complained about the CJM to the High Court (a higher court) through the District Superintendent of Police. Because of these events, there was a lot of bad feeling between the police in Nadiad and the CJM. On September 25, 1989, the Police Inspector met the CJM in his office to talk about a case. In this case, the police hadn't filed the charge sheet (a list of accusations) within 90 days, as required. During their talk, the Police Inspector invited the CJM to visit the police station to see the papers. He promised that he would calm down the angry police officers. At 8:35 p.m. that day, the Police Inspector sent a police jeep to the CJM's house, and the CJM went to the police station. The CJM said that when he got to the police station, he was forced to drink alcohol. When he refused, the Police Inspector, a Sub Inspector, a Head Constable, and a Constable attacked him, handcuffed him, and tied him with a rope. Then, they sent him to the hospital for a medical exam while he was still handcuffed. They also arranged for a photographer to take his picture, which was then printed in the newspapers. The Police Inspector denied these claims. He said that the CJM came to his office at the police station drunk, yelling and swearing at him. Because the CJM was acting violently, he was arrested, handcuffed, and sent to the hospital for a medical exam. The Police Inspector also said that the CJM wanted to be photographed, so that's why the press photographer took pictures. This event damaged the respect for courts in the country. Judges and magistrates (another type of judge) all over the country were shocked and felt unsafe and humiliated. Many Bar Associations (groups of lawyers) passed resolutions (official statements) and went on strike. The Delhi Judicial Service Association, the All India Judges Association, the Bar Council of Uttar Pradesh, and many others contacted the Supreme Court (the highest court) with telegrams and petitions asking for help to protect the dignity and honor of the judiciary (the court system). The CJM also filed a request to cancel the two FIRs (First Information Reports – the first step in a police investigation) that had been filed against him. He also asked for his complaint to be tried as a state case and for compensation (money to make up for the harm he suffered). On September 29, 1989, the Supreme Court took the case and sent notices to the State of Gujarat and the police officers involved. Because there was a big disagreement about what happened, the Court appointed a senior judge from the Allahabad High Court to investigate the incident and report back to the Court. The inquiry was done for the Court, not under the Commission of Inquiry Act (a law that sets up official investigations). A detailed report was sent to the Court, and the Court gave copies to the people involved. The Court also allowed them to file objections (reasons why they disagreed with the report). The Commissioner's Report showed these facts: The CJM found that the police in Nadiad were not effectively delivering summons and were ignoring the court's orders. When the CJM complained to the authorities, the local police and the magistrates had a conflict. When the CJM visited the police station at the Police Inspector's request to discuss the matter, he was forced to drink alcohol. When he refused, he was attacked. He was tied up with a rope by the police and handcuffed, even though state police rules and the Supreme Court's decision in *Prem Shankar Shukla vs Delhi Administration* said this wasn't allowed. The Police Inspector made a *panchnama* (a written record of events) saying the CJM was drunk. This was signed by two *panchas* (witnesses), a *Mamlatdar* (a local official), and a Fire Brigade Officer. A press photographer was brought to the scene, and the police posed with the CJM for the photographer. The photos were published in newspapers. The CJM asked the doctors at the Civil Hospital to contact and tell the District Judge about the incident, but they weren't allowed to. When the CJM was examined at the hospital, he was found to have several injuries. His blood was taken and tested for alcohol. The test showed that his blood contained alcohol. At first, the police only filed one case against the CJM under the Bombay Prohibition Act (a law about alcohol). But when lawyers met the Police Inspector to get the CJM released on bail (temporary release from jail), the Police Inspector filed another case under Sections 332 and 506 of the IPC (Indian Penal Code – a set of criminal laws). This was done to prevent the CJM from being released. The District Superintendent of Police didn't take immediate action. Instead, he claimed he had gone somewhere else and stayed in the government Rest House there. However, the Rest House register showed that the entry about his stay was changed later. The police officers argued that: (1) the Supreme Court didn't have the power to punish the police officers, even if they were guilty. They said their actions weren't contempt of court (disrespecting the court). They said that Articles 129 and 215 of the Constitution (the set of laws that governs India) divided the power between the Supreme Court and the High Courts. The Supreme Court's power under Article 129 only applied to contempt of itself, and it couldn't punish someone for contempt of a lower court. (2) Even if the Supreme Court is a court of record (a court whose proceedings are written down and serve as proof), it can't take action for contempt of a Chief Judicial Magistrate's court. Neither the Constitution nor any law gives the Supreme Court that power. The High Court has the power to oversee the lower courts. Section 15 of the Contempt of Courts Act, 1971 (a law about contempt of court) gives the High Court the power to take action for contempt of lower courts. (3) Under Entry 77 of List I of the Seventh Schedule (a list of subjects that the central government can make laws about), Parliament (the Indian legislature) can make a law that limits the Supreme Court's power. Section 15 of the Contempt of Courts Act 1971 limits the Supreme Court's inherent power (power it has automatically) to deal with contempt of lower courts. Inherent powers are always protected, but they don't allow a court to give itself power that isn't given by law. (4) The idea that the Supreme Court can take action for contempt of lower courts based on Article 129 of the Constitution has already been rejected by the Federal Court (a court that existed before the Supreme Court) in *K.L. Gauba vs The Honable the Chief Justice and Judges of the High Court o] ' judicature at Lahore & Anr., AIR 1942 FC 1*. The Supreme Court, as the successor to the Federal Court, is bound by the Federal Court's decisions under Article 374(2) of the Constitution. (5) In India, no court has unlimited power. The power of all courts, including the Supreme Court, is limited. (6) Article 142(1) doesn't allow the Court to make any order that goes against the law. (7) The findings of the Commission (the report about what happened) can't be used as evidence because they violate Article 20(3) of the Constitution (which protects people from being forced to testify against themselves). The Attorney General (the government's lawyer) argued that the power to punish contempt is a special power that belongs to a Court of record. A superior court of record has the inherent power to punish for contempt of itself. This includes the power to punish for contempt committed against lower courts. A superior court of record that can correct the orders of a lower court has the power to protect that court by punishing those who interfere with its work. He also argued that the recognizes and protects the existing power of a court of record to punish for contempt of lower courts. The Act hasn't limited the Supreme Court's inherent power as a court of record, which is protected by Article 129. Since the Court has taken the case of contempt that arose from the incident that is being tried in the criminal court, the Court has the power under Article 142 of the Constitution to make any order necessary to do justice and prevent abuse of the court system. There is no limit on the Court's power under Article 142 to cancel a criminal case pending in a lower court. The main questions the Court had to answer were: (a) Does the Supreme Court have the inherent power to punish for contempt of lower courts under Article 129 of the Constitution? (b) Is the Supreme Court's inherent power limited by the ? (c) Did the incident interfere with the administration of justice and amount to contempt of court? and (d) What punishment should be given to those found guilty of contempt? The Court decided the writ petitions (requests to the court), Criminal Miscellaneous Petitions (requests related to criminal cases), and contempt petitions. HELD (the Court's decision): 1.1 Contempt of court is an action that interferes with the administration of justice. It includes civil and criminal contempt. Bowen L.J. in *Helmore vs Smith*, at 455, was mentioned. 1.2 The definition of criminal contempt is broad enough to include any action by someone that interferes with the administration of justice or lowers the respect for the court. The public has a strong interest in the effective and orderly administration of justice. The Court has a duty to protect the community's interest in the administration of justice. That's why it has the power to punish for contempt of court—not to protect the dignity of the Court from insults, but to protect the public's right to make sure that justice is not twisted, harmed, blocked, or interfered with. *Offutt vs U.S.* was mentioned. 1.3 The power to punish contempt is given to judges not just for their personal protection, but to protect public justice. Public justice requires that decency and respect are maintained in courts. Those who have to do their jobs in a court are protected by the law. Any deliberate interference with their work, either in court or outside the court, by attacking the court officials, is criminal contempt. The courts must take such actions seriously. The purpose of punishing contempt for interfering with the administration of justice is not to protect the dignity of the judge or magistrate, but to protect the authority of the courts and ensure order in society. *Attorney General vs Times Newspapers*, (1974] A.C. 273 at p. 302, was mentioned. 1.5 The Chief Judicial Magistrate is the head of the magistrates in the district. They administer justice to protect the rights of citizens. The lower courts at the district level provide justice to the people at the local level. Most people have their disputes resolved in lower courts. It's in the public interest that the authority of lower courts is protected. If the CJM is tricked by dishonest police officers and is attacked, handcuffed, and tied up, the public will lose faith in the courts. This would destroy the basic structure of an orderly society. If this is allowed, the rule of law (government by laws) will be replaced by police rule. 1.6 The police officers' actions in this case, in attacking and humiliating the CJM, brought disrespect to the authority and administration of justice. This affected the public's confidence in the justice system. 1.7 The incident clearly interfered with the administration of justice and lowered its authority. Its effect wasn't limited to one district or state. It could affect the entire judiciary in the country. The incident showed a dangerous trend: if the police are angry with the orders of a court official, they might arrest that official on made-up charges to publicly humiliate them, as happened in this case. 1.8 The facts of this case show that a court official can be arrested and humiliated on made-up charges, which could affect the administration of justice. To avoid this in the future, it's necessary to create guidelines for the arrest and detention of a Judicial Officer (a judge or magistrate). 1.9 Because it's very important to protect the independence of the judiciary while also making sure that violations of the law are properly investigated, these guidelines should be followed: (a) If a judicial officer is going to be arrested for a crime, the District Judge or the High Court should be notified. (b) If the situation requires the immediate arrest of a judicial officer, a technical or formal arrest can be made. (c) The District and Sessions Judge of the district and the Chief Justice of the High Court must be told about the arrest immediately. (d) The Judicial Officer who is arrested should not be taken to a police station without the prior order or direction of the District & Sessions Judge of the district, if available. (e) The Judicial Officer must be given immediate access to communicate with their family, lawyers, and other Judicial Officers, including the District & Sessions Judge. (f) No statement should be taken from the Judicial Officer who is under arrest, and no *panchnama* should be prepared, and no medical test should be conducted unless the Judicial Officer's lawyer or another Judicial Officer of equal or higher rank is present, if available. (g) A Judicial Officer should not be handcuffed. However, if they violently resist arrest or there is an immediate need to physically arrest them to prevent danger to life, the person resisting arrest can be overpowered and handcuffed. In this case, a report must be made immediately to the District & Sessions Judge and the Chief Justice of the High Court. But the police must prove that it was necessary to physically arrest and handcuff the Judicial Officer. If it's shown that the physical arrest and handcuffing of the Judicial Officer was unjustified, the police officers responsible will be guilty of misconduct and will also be personally responsible for compensation and/or damages, as decided by the High Court. 1.10 These guidelines are not complete, but they are the minimum safeguards that should be followed when a Judicial Officer is arrested. These should be put in place by the State Governments and the High Courts. 1.11 No judicial officer should visit a Police Station on their own unless it's for official and judicial duties and functions, and only after telling the District and Sessions Judge. 2.1 The Supreme Court, as the highest court, is the protector of justice throughout the country. Therefore, it has the right and duty to protect the courts whose orders can be corrected, from contempt. This right and duty is not removed just because the High Court also has the right and duty to protect the lower courts. The powers are shared, not exclusive. 2.2 Article 136 gives the Supreme Court broad powers to grant special permission to appeal from any judgment, decree (official order), determination, sentence, or order made by any court or tribunal (a body that resolves disputes) in India, except a court or tribunal created under a law about the Armed Forces. The Court's appellate power (power to hear appeals) under Article 136 is unlimited. It can hear any appeal by granting special permission against any order made by any Magistrate, Tribunal, or other lower court. The extent of this power is not affected by the practice of requiring the person appealing to first use the remedies available under the law before the appellate authority of the High Court. Self-imposed restrictions don't take away the Court's broad powers to hear any appeal against any order or judgment made by any court or tribunal in the country without using the alternative remedy before the appellate authority or the High Court. The Court's power under Article 136 is not affected by Articles 132, 133, and 134(A) because of the phrase "notwithstanding anything in this Chapter" in Article 136. *Durga Shankar Mehta vs Thakur Raghuraj Singh & Ors.*, [1955] 1 SCR 267 and *Arunachalam vs P.S.R. Sadhananthm & Anr.* were mentioned. 2.3 In addition to the appellate power, the Supreme Court has special power to hear appeals against any order of any court in the country. The Court's unlimited power to grant permission and hear appeals against any order of a court or Tribunal gives it the power to oversee all the courts and Tribunals in India, including lower courts of Magistrate and District Judge. Therefore, the Court has supervisory power over all courts in India. 2.4 Article 129 says that the Supreme Court will be a court of record and will have all the powers of such a court, including the power to punish for contempt of itself. Article 215 has a similar provision for the High Court. Both the Supreme Court and the High Courts are courts of record with the power to punish for contempt, including the power to punish for contempt of themselves. 2.5 The Constitution doesn't define "Court Of Record." A "Court of Record" is a court where actions and judicial proceedings are written down on parchment for a permanent record. These writings are called the 'record' of the court and are proof of what is recorded in them. *Wharton's Law Lexicon: Words & Phrases* (Permanent Edition) vol. 10 p. 429 and *Halsbury's Laws of England* Vol. 10 p. 319 were mentioned. 2.6 Before the Contempt of Courts Act, 1926 (a law about contempt of court), the High Court's power over contempt of lower courts was controlled by the principles of Common Law of England. The High Courts, without a law, used the power of contempt to protect the lower courts based on the inherent power of a Court of Record. *Rex vs Aimon*; *Rainy vs The Justices of Seirra Leone*, 8 Moors PC 47 at 54; *Surendra Nath Banerjee vs The Chief Justice and Judges of the High Court at Fort William in Bengal*, ILR to Calcutta 109; *Rex vs Parke*, [1903] 2 K.B. 432 at 442; *King vs Davies*; *King vs Editor of the Daily Mail*; *Attorney General vs B.B.C.*; *Venkat Rao*; *Mohandas Karam Chand Gandhi* [1920] 22 Bombay Law Reporter 368; *Abdul Hassan Jauhar's* AIR 1926 Allahabad 623; *Shantha Nand Gir vs Basudevanand*, AIR 1930 Allahabad 225 FB; *Mr. Hirabai vs Mangal Chand*, AIR 1935 Nagpur 46; *Harkishan Lal vs Emperor*, AIR 1937 Lahore 497; *Mohammad Yusuf vs Imtiaz Ahmad Khan*, AIR 1939 Oudh, 131 and *Legal Remembrancer vs Motilal Ghosh*, ILR were mentioned. 2.7 The Kings Bench in England and High Courts in India, as superior Courts of Record with judicial power to correct orders of lower courts, had the inherent power of Contempt to protect the lower courts. The Supreme Court, as a Court of Record under Article 129 with broad power to oversee all the courts in the country, must have and use similar power as the High Courts had before the Contempt Legislation in 1926. Inherent powers of a superior Court of Record have remained unchanged even after laws about Contempt were written down. *Sukhdev Singh Sodhi vs The Chief Justice and Judges of the PEPSU High Court* and *R.L. Kapur vs State of Tamil Nadu* were mentioned. 2.8 The was created to define and limit the powers of Courts in punishing contempts of courts and to regulate their procedure. It doesn't have any provision that limits the Supreme Court's power over contempt of lower courts. Section 15 refers to the Court's power to take action for contempt of lower courts. The section describes how the High Court and Supreme Court can take notice of criminal contempt. It's not a law that gives power to the High Court or the Supreme Court to take action for contempt of its lower courts. The purpose of describing the procedures for taking notice in Section 15 is to prevent the High Court and the Supreme Court from wasting time on unimportant complaints of contempt of court. Section 15(2) doesn't restrict the High Court's power to take notice of contempt of itself or a lower court on its own, even though the Section doesn't say that. *S.K. Sarkar, Member, Board of Revenue, U.P. Lucknow vs Vinay Chandra Misra* was mentioned. 3.1 Under Entry 77 of List I of the Seventh Schedule with Article 246, Parliament can make a law about the Supreme Court's powers related to 'contempt of itself.' Such a law can describe the procedure to be followed, the maximum punishment that can be given, and provide for appeals and other matters. But the Central Legislature can't limit or remove the power given to the Supreme Court under Article 129. Parliament's power to make laws about contempt related to the Supreme Court is limited. Therefore, the doesn't affect the Supreme Court's power over contempt of lower courts under Article 129. 3.2 Article 129 says that the Supreme Court is a court of record and that it has all the powers of such a court, including the power to punish for contempt of itself. The phrase used in Article 129 is not restrictive, but broad. If the Framers of the Constitution meant that the Supreme Court should only have the power to punish for contempt of itself, there was no need to include the phrase "including the power to punish for contempt of itself." 3.3 Article 129 gives the Supreme Court the power to punish for contempt of itself. In addition, it gives some extra power related to contempt, as shown by the word "including." Courts have interpreted the word "including" to extend and widen the scope of power. The clear language of the Article shows that the Supreme Court, as a Court of record, has the power to punish for contempt of itself and also something else that falls within the inherent power of a court of record. 3.4 When interpreting the Constitution, it's not allowed to use a meaning that makes any phrase unnecessary. 3.5 When understanding Article 129, it's not allowed to ignore the meaning and impact of the included power given to the Supreme Court. 3.6 Giving the Court appellate power by a law, section 19 of the , doesn't affect the broad inherent powers of the Court under Article 129 of the Constitution. *K.L. Gauba vs The Honable the Chief Justice and Judges of the High Court of Judicature at Lahore & Anr AIR 1942 FC 1* was distinguished (shown to be different). 4.1 Article 374(2) is a temporary provision to deal with the situation when the Federal Court was abolished and the Supreme Court was created. It doesn't say that the decisions of the Federal Court are binding on the Supreme Court. The decisions of the Federal Court and the Privy Council (a court in England that heard appeals from India) made before the Constitution are respected, but they are not binding on the Supreme Court. The Supreme Court can take a different view. *Om Prakash Gupta vs The United Provinces*, AIR 1951 Allahabad 205 and *State of Bombay vs Gajanan Mahadev Badley*, AIR 1954 Bombay 352 were approved (agreed with). *The State of Bihar vs Abdul Majid* and *Shrinivas Krishnarao Kango vs Narayan Devji Kango & Ors.* were mentioned. *K.L. Gauba vs The Hon'ble the Chief Justice and Judges or the High Court of Judicature at Lahore & Anr.*, AIR 1942 FC 1 and *Purshottam Lal Jaitly vs The King Emperor* were explained and distinguished. The Federal Court had limited power given to it by the Government of India Act 1935. The question of the Supreme Court's inherent power as a Court of Record over contempt of lower courts was not raised or discussed in its decisions. The Federal Court said that if the High Court and the Federal Court both had the power to deal with contempt, it could lead to conflicting judgments. That might be true under the Government of India Act because the High Court and the Federal Court didn't have shared power, but under the Constitution, the High Court and the Supreme Court both have shared power in some matters, but there are no conflicting consequences. 4.2 The Federal Court didn't have the broad powers that the Supreme Court has under the Constitution. There are big differences in the structure, power, and extent of powers used by the two courts. In addition to civil and criminal appellate power, the Supreme Court has broad powers under Article 136 over all the courts and Tribunals in the country. The Federal Court didn't have that power. It had appellate power, but it could only be used if the High Court issued a certificate. The Federal Court was a court of record under Section 203, but it didn't have unlimited appellate power over all the courts in India like the power given to the Supreme Court under Article 136 of the Constitution. Therefore, the Federal Court didn't have judicial control over lower courts. 4.3 Freedom and the Constitution have made big changes in the administration of justice, requiring a new approach to the courts. The Constitution has given the Constitutional Courts a new role to ensure the rule of law in the country. These changes have brought new ideas. When interpreting the Constitution, the social, economic, and political changes, the needs of the community, and the independence of the judiciary must be considered. The Court can't be helpless and bound by old cases from colonial times that are no longer relevant. It's time to look at the old cases again and to make law with the changed ideas, keeping in mind the Constitution. 5.1 Courts created under a law made by Parliament or the State Legislature have limited power. They can't take power in a matter that is not specifically given to them. But that's not true for a superior court of record created by the Constitution. It doesn't have limited power. Instead, it has the power to decide its own power. No matter is outside the power of a superior court of record unless the Constitution says so. Without any express provision in the Constitution, the Supreme Court, as a Court of record, has power in every matter. If there is any doubt, the Court has the power to decide its power. If the High Court makes that decision, it can be appealed to the Supreme Court. But if the Supreme Court decides, it's final. *Naresh Shridhar Mirajkar & Ors. vs State of Maharashtra* and *Ganga Bishan vs Jai Narain* were mentioned. 5.2 Since the Supreme Court has the power to oversee and control all the courts and Tribunals in the country, it has a duty to protect the interests of lower courts to ensure that justice flows freely in the courts without any interference from anyone. Lower courts don't have enough power under the law to protect themselves. Therefore, the Supreme Court should protect them. Under the Constitution, it has a special role in the administration of justice. The powers given to it under Article 32, 136, 141, and 142 are part of the basic structure of the Constitution. The Court's power under these Articles can't be limited by laws made by the Central or State Legislature. 5.3 The Supreme Court and the High Court both have shared power under the Constitution in matters related to fundamental rights under Articles 32 and 226 of the Constitution. Therefore, the Court's power to take action for contempt of lower courts would not be inconsistent with the Constitution. 5.4 The Supreme Court is duty-bound to take effective steps within the Constitution to ensure a free and fair administration of justice throughout the country. For that purpose, it must have the power to take action for contempt of lower courts. Usually, the High Court would protect the lower courts from any attacks on their independence. But in exceptional cases where the entire judiciary is affected, the Supreme Court can directly take notice of contempt of lower courts. 5.5 The Supreme Court will rarely use its inherent power to take notice of contempt of lower courts, because matters related to contempt of lower courts must be dealt with by the High Courts. This case is exceptional because the incident created a situation where the functioning of the lower courts all over the country was affected, and the administration of justice was paralyzed. Therefore, the Court took notice of the matter. 6.1 Although there is no provision like section 482 of the Criminal Procedure Code (a law about criminal procedure) that gives the Supreme Court express power to cancel any criminal proceeding pending in a criminal court to prevent abuse of the court system, the Court has the power to cancel any such proceeding using its powers under Article 136 of the Constitution. This power can be used if the facts don't show that the accused committed a crime, or if the proceedings are started on made-up facts, or if the proceedings are started for unfair purposes. Once the Supreme Court is satisfied that the criminal proceedings are an abuse of the court system, it will cancel those proceedings to ensure justice. *State of West Bengal & Ors. vs Swapan Kumar Guha & Ors.* and *Madhavrao Jivajirao Scindia & Ors. vs Sambhajirao Chandrojirao Angre & Ors.* were mentioned. 6.2 The inherent power of the Supreme Court under Article 142, combined with the powers under Articles 32 and 136, includes the power to cancel criminal proceedings pending in any court to do complete justice in the matter before the Court. If the court is satisfied that the proceedings in a criminal case are being used for unfair purposes, or if they are continued on false evidence, or if no case is made out on the facts, it would be just to cancel the criminal proceeding. It's wrong to suggest that in that situation, the Court should be helpless. 6.3 The Court's power under Article 142(1) to do "complete justice" is different and of a higher level. Any prohibition or restriction in ordinary laws can't limit the constitutional power of the Court. Once the Court has taken a case, it has the power to make any order necessary to do "complete justice" in the matter. This constitutional power can't be limited by provisions in laws. 6.4 What is needed for "complete justice" in a case depends on the facts of each case. When using that power, the Court considers the express provisions of a substantive statute (a law that creates rights and responsibilities). Once the Court has taken a case, it has the power to make any order necessary to do complete justice in the matter. *Prem Chand Garg vs Excise Commissioner, U.P. Allahabad*, [1963] Supp. 1 SCR 885 and *A.R. Antulay vs R.S. Nayak & Anr.* were mentioned. In this case, the criminal trial of CJM NL Patel is based on facts that have been found to be false. It would be just and would do complete justice to cancel the criminal proceedings. 7.1 Article 20(3) of the Constitution says that no person accused of a crime can be forced to be a witness against themselves. To use the protection of Article 20(3), three things must be true: First, the person must be accused of a crime. Second, they must be forced to be a witness. Third, it must be against themselves. All three things must be true for Article 20(3) to apply. If any of these things are not true, Article 20(3) can't be used. *Balkishan Devidayal vs State of Maharashtra* was mentioned. 7.2 Just issuing a notice or having contempt proceedings doesn't trigger Article 20(3) because the people who received the notices were not accused of any crime. A criminal contempt is punishable by the superior courts with a fine or imprisonment, but it has many features that make it different from a regular crime. 7.3 The power to take proceedings for contempt of Court is an inherent power of a Court of record. The Criminal Procedure Code doesn't apply to these proceedings. Since contempt proceedings are not criminal proceedings for a crime, having contempt proceedings can't be seen as criminal proceedings just because they might result in punishment for the person in contempt. A person in contempt is not in the position of an accused person. The Court can cross-examine the person in contempt. Even if the person is found guilty of contempt, the Court can accept an apology and cancel the notice of contempt. However, offering an apology is not a defense to the trial of a criminal offense. This feature makes contempt proceedings different from criminal proceedings. In a criminal trial where a person is accused of a crime, there is a public prosecutor who prosecutes the case on behalf of the prosecution against the accused. But in contempt proceedings, the court is both the accuser and the judge. *Debabrata Bandopadhyaya's case* was mentioned. 7.4 In this case, the people in contempt are not in the position of a "person accused of an offense" just because they received a notice of contempt from the Court. The Commission, which was acting for the Court, had the power to record their testimony. Therefore, there has been no violation of Article 20(3) of the Constitution, and the Commission's findings are not violated. 8.1 When deciding what punishment to give to people found guilty of contempt, the degree of their involvement must be considered. 8.2 In this case, Sharma, the Police Inspector, was the main person involved in the entire incident. He planned the entire episode to humiliate the CJM in public. Therefore, he is the main culprit and deserves the maximum punishment. The Sub Inspector took an active part in attacking and tying the CJM at the Police Inspector's order. The Head Constable and Constable also took an active part in handcuffing and tying the CJM with ropes, but they acted under the orders of the superior officers. The Mamlatdar was a friend of the Police Inspector. He had no reason to harm the CJM, but he acted under the Police Inspector's influence. As for the DSP, he helped with the attack on the CJM. The people in contempt are held guilty of contempt and given punishment. 8.3 The Police Inspector is sentenced to simple imprisonment (jail) for six months and must pay a fine of Rs. 2,000. The Sub Inspector is sentenced to simple imprisonment for five months and must pay a fine of Rs. 2,000. If they don't pay, they must serve one month of simple imprisonment. The Head Constable and Constable are each sentenced to simple imprisonment for two months and must pay a fine of Rs. 500. If they don't pay, they must serve 15 days of simple imprisonment. The Mamlatdar is sentenced to simple imprisonment for two months and must pay a fine of Rs. 1,000. If they don't pay, they must serve one month of simple imprisonment. The DSP is sentenced to imprisonment for one month and must pay a fine of Rs. 1,000. If they don't pay, they must serve 15 days of simple imprisonment. The other people who received notices are not found guilty because there isn't enough evidence. The contempt notices are canceled for them. 9.1 The Court expressed its disapproval of the DGP's actions. As the head of the Police in the State, he should have intervened and ensured effective action against the police officers who had done wrong. He was indifferent to the news that a CJM was arrested, handcuffed, tied up, and attacked. He took this news as routine without taking any steps to find out the facts for effective action against the police officers. If the head of the State Police Administration shows such indifference to a serious matter that shook the entire judicial system in the State, nothing better can be expected from his subordinate officers. The State Government should take departmental action based on the findings recorded by the Commission.
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Subsequently, a number of petitions were filed under Article 32 of the Constitution of India for taking action against the Police Officers and also for quashing the criminal proceedings initiated by the Police against N.L. On 25.9. Sharma the Police Inspector, D.K. The objections were filed by the Police Officers and the contemners disputing the findings recorded by the Commissioner, On 12.12.1989, when the matter came up for final dispos al the Court issued notices to the Attorney General and Advocate General of the State of Gujarat. Sharma, Police Inspector and other police officers had not been taken. On 13.2. The learned Commissioner has considered the evidence as well as the circumstances in support of his findings that Patel had been invited by Sharma to visit the Police Station and he had sent a Police jeep on which Patel went to the Police Station. If Patel had gone on the invitation of Sharma on Police jeep and not in the manner as alleged by Sharma, Patel could not be drunk and there appears no reason as to why he would have assaulted Sharma as alleged by the Police. Patel, the CJM filed two complaints against Police Officers of Nadiad Police Station and the Inspectors, and forwarded it to the District Superintendent of Police on 19th and 24th July, 1989 for taking action against them. (6) The Police version that Patel had consumed liquor before coming to the Police Station and that he assaulted the Police Inspector Sharma and misbehaved with him at the Police Station is a cooked up story. Patel was handcuffed and tied with rope, and he received injuries at the Police Station, he was assaulted and forced to consume liquor after he was tied to the chair on which he was sitting, Police Inspector Sharma, Sub In spector Sadia, Head Constable Valjibhai Kalabhai and Consta ble Pratap Singh took active part in this episode. (7) On the direction of Sharma, Police Inspector, Patel was handcuffed at the Police Station and he was further tied up with a thick rope by the Police Inspector, Sharma, Sadia, Sub Inspector, Valjibhai Kalabhai, Head Constable and Pratap Singh, Constable. Patel, CJM, as M.B. A summary form of trial is held in the case of civil contempt and also in the case of criminal contempt where the act is committed in the actual view of the court or by an officer of justice. Proceedings for contempt of Court are not taken in the exercise of original criminal jurisdiction. This Court. Section 5 of the Code of Criminal Procedure lays down that nothing contained in this Code shall, in the absence of a specific provision to the contrary, affect any special or local law for the time being in force, or any special jurisdiction or power conferred, or any special form of procedure prescribed, by any other law for the time being in force. The power to take proceedings for the contempt of Court is an inherent power of a Court of record, the Criminal Procedure Code does not apply to such proceedings. Nariman contended that this Court has no jurisdiction or power to indict the Police Officers even if they are found to be guilty as their conduct does not amount to contempt of this Court. 967 This COurt 's Jurisdiction under Article 129 is confined to the contempt of itself only and it has no jurisdiction to intict a person for contempt of an inferior court subordi nate to the High Court. The Constitutional and statutory provisions confer exclusive power on the High Court for taking action with regard to contempt of inferior or subor dinate court, and the Supreme Court has no jurisdiction in the matter. A superior court of record has inherent power to punish for contempt of itself and it necessarily includes and carries with it the power to punish for contempt committed in respect of subordinate or inferior courts. Article 129 provides that the Supreme Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself. Both the Supreme Court as well as High Courts are courts of record having powers to punish for contempt in cluding the power to punish for contempt of itself. In the case of courts not expressly declared to be courts of record, the answer to the question whether a court is a court of record seems to depend in general upon whether it has power to fine or imprison, by statute or otherwise, for contempt of itself or other substantive offences; if it has such power, it seems that it is a court of record. In England a superior court of record has been exercised power to indict a person for the contempt of its authority and also for the contempt of its subordinate and inferior courts in a summary manner 972 without the aid and assistance of Jury. The judgment proceeded on the assumption that the superior Common Law Courts did have the power to indict a person for contempt of court, by following a summary proce dure on the principle that this power was 'a necessary incident to every court of justice '. In India, the courts have followed the English practice in holding that a court of record has power of summarily punishing contempt of itself as well as of subordinate courts. The Court after considering Privy Council and High Courts decisions held that the High Court being a court of record has inherent power to punish for contempt of subordinate courts. Mr. Nariman contended that even if the Supreme Court is a court of record, it has no power to take action for the contempt of a Chief Judicial Magistrate 's court as neither the Constitution nor any statutory provision confer any such jurisdiction or power on this Court. He further urged that so far as the High Court is concerned, it has power of judicial and administrative superintendence over the subor dinate courts and further Section 15 of the Act expressly confers power of the High Court to take action for the contempt of subordinate courts. This Court being a court of record has limited jurisdiction to take action for contempt of itself under Article 129 of the Constitution, it has no jurisdiction to indict a person for the contempt of subordi nate or inferior courts. In Attorney General vs B.B.C., ; 1 the House of Lords proceeded on the assumption that a court of record possesses protective jurisdiction to indict a person for interference with the administration of justice in the inferior courts but it refused to indict as it held that this protection is available to a court exercising judicial power of the State and not to a Tribunal even though the same may be inferior to the court of record. In India prior to the enactment of the Contempt of Courts Act, 1926, High Court 's jurisdiction in respect of contempt of subordinate and inferior courts was regulated by the principles of Common Law of England. The Act resolved the doubt by recognising to the power of High Courts in regard to contempt of subordinate courts, by enacting Section 2 which expressly stated that the High Courts will continue to have jurisdiction and power with regard to contempt of subordinate courts as they exercised with regard to their own contempt. The only excep tion to this power, was made in subsection (3) of Section 2 which provided that no High Court shall take cognizance of a contempt alleged to have been committed in respect of a court subordinate to it where such contempt is an offence punishable under the Indian Penal Code. The Parliamen tary legislation did not confer any new or fresh power or jurisdiction on the High Courts in respect of contempt of courts subordinate to it, instead it reaffirmed the inherent power of a Court of Record, having same jurisdiction, power and authority as it has been exercising prior to the enact ments. The effect of these statutory provisions was consid ered by this Court in Sukhdev Singh Sodhi 's case, and the Court held that contempt jurisdiction was a special one inherent in the very nature of a court of record and that jurisdiction and power remained unaffected even after the enactment of 1926 Act as it did not confer any new jurisdic tion or create any offence, it merely limited the amount of punishment which could be awarded to a contemner. Kapur vs State of Tamil Nadu, ; the Court again emphasised that in view of Article 215 of the Constitution, the High Court as a court of record possesses inherent power and jurisdiction, which is a special one, not arising or derived from Contempt of Courts Act and the provisions of Section 3 of 1926 Act, do not affect that power or confer a new power or jurisdic tion. The Kings Bench in England and High Courts in India being superior Court of Record and having judicial power to correct orders of subordinate courts enjoyed the inherent power of contempt to protect the subordinate courts. The Supreme Court being a Court of Record under Article 129 and having wide power of judicial supervision over all the courts in the country, must possess and exer cise similar jurisdiction and power as the High Courts had prior to Contempt Legislation in 1926. Section 10 like Section 2 of 1926 Act and Section 3 of 1952 Act reiterates and reaffirms the jurisdiction and power of a High Court in respect of its own contempt and of subordinate courts. We have scanned the provisions of the 1971 Act, but we find no provision therein curtailing the Supreme Court 's power with regard to contempt of subordinate courts, Section 15 on the other hand expressly refers to this Court 's power for taking action for contempt of subordinate courts. Cognizance of criminal contempt in other cases (1) In the case of a criminal contempt, other than a contempt referred to in Section 14, the Supreme Court or the High Court may take action on its own motion or a motion made by (a) the Advocate General, or (b) any other person, with the con sent in writing of the Advocate General (or) (c) in relation to the High Court for the Union Territory of Delhi, such Law Officer as the Central Government may by notification in the official Gazette, specify in this behalf or any other person, with the consent in writing of such Law Officer. (2) In the case of any criminal contempt of subordinate 978 court, the High Court may take action on a reference made to it by the subordinate Court or on a motion made by the Advocate General or, in, relation to a Union Territory, by such Law Officer as the Central Government may, by notification in the official Gazette, specify in this behalf. Thus Section 15 prescribes modes for taking cognizance of criminal contempt by the High Court and Supreme Court, it is not a substantive provision conferring power or jurisdiction on the High Court or on the Supreme Court for taking action for the contempt of its subordinate courts. Since, the Supreme Court is designed by the Constitution as a court of record and as the Founding Fathers were aware that a superi or court of record had inherent power to indict a person for the contempt of itself as well as of courts inferior to it, the expression "including" was deliberately inserted in the Article. Disputing the inherent power of this Court with regard to the contempt of subordinate courts, Mr. Nariman contended that inherent powers are always preserved, but they do not authorise a court to invest itself with jurisdiction when that jurisdiction is not conferred by law. vs S.P. No doubt this Court has appellate jurisdiction under Section 19 of the Act, but that does not divest it of its inherent power under Article 129 of the Constitution The conferment of appellate power on the court by a statute does not and cannot affect the width and ampli tude of inherent powers of this Court under Article 129 of the Constitution. We have already discussed a number of decisions holding that the High Court being a court of record has inherent power in respect of contempt of itself as well as of its subordinate courts even in the absence of any express provi sion in any Act. A fortiori the Supreme Court being the Apex Court of the country and superior court of record should possess the same inherent jurisdiction and power for taking action for contempt of itself, as well as, for the contempt of subordinate and inferior courts. It was contended that since High Court has power of superintendence over the subordinate courts under Article 227 of the Constitution, therefore, High Court has power to punish for the contempt of subordinate courts. Since the Supreme Court has no super visory jurisdiction over the High Court or other subordinate courts, it does not possess powers which High Courts have under Article 215. Once there is power of judicial superintendence, all the Courts whose orders are amenable to correction by this Court would be subordinate courts and therefore this Court also possesses similar inherent power as the High Court has under Article 215 with regard to the contempt of subordinate courts. Article 374 made provision for the continuance of Federal Court Judges as the Judges of the Supreme Court on the commencement of the Constitution and it also made 983 provisions for transfer of the proceedings pending in the Federal Court to the Supreme Court. Clause (2) of Article 374 is as under: "All suits, appeals and proceedings, civil or criminal, pending in the Federal Court at the commencement of this Constitution shall stand removed to the Supreme Court, and the Supreme Court shall have jurisdiction to hear and determine the same, and the judgments and orders of the Federal Court delivered or made before the commencement of this Constitution shall have the same force and effect as if they had been delivered or made by the Supreme Court. " On the promulgation of the Constitution, Federal Court ceased to exist and the Supreme Court was set up and with a view to meet the changed situation, provisions had to be made with regard to the matters pending before the Federal Court. In Purshottam Lal Jaitly 's case an application purporting to 985 invoke extraordinary original jurisdiction of the Federal Court under Section 2 10(2) of the Government of India Act, 1935 was made with a prayer that the Federal Court should itself deal directly with an alleged contempt of a Civil Court, subordinate to the High Court. Under the Indian Law the High Courts have power to deal with contempt of any Court subordinate to them as well as with contempt of the High Courts. In the case of K.L. Sub section (2) provid ed that Federal Court shall have power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents or the investiga tion or "punishment of any contempt of court", which any High Court has power to make as respects the territory within its jurisdiction, and further the Federal Court shall have power to award costs and its orders shall be enforce able by all courts. The Federal Court was a court of record under Section 203 but it did not possess any plenary or residuary appellate power over all the courts functioning in the territory of India like the power conferred on this Court under Article 136 of the Constitution, therefore, the Federal Court had no judicial control or superintendence over subordinate courts. The Supreme Court and the High Court both exercise concurrent jurisdiction under the constitutional scheme in matters relating to fundamental rights under Article 32 and 226 of the Constitution, therefore this Court 's jurisdiction and power to take action for contempt of subordinate courts would not be inconsistent to any constitutional scheme. Article 129 as well as the do not confer,any express power to this Court with regard to contempt of the subordinate courts, this Court cannot by construing Article 129 assume jurisdiction in the matter which is not entrusted to it by law. It is true that courts constituted under a law enacted by the Parliament or the State Legislature have limited jurisdiction and they cannot assume jurisdiction in a matter, not expressly as signed to them, but that is not so in the case of a superior court of record constituted by the Constitution. In the absence of any express provision in the Constitution the Apex court being a court of record has jurisdiction in every matter and if there be any doubt, the Court has power to determine its jurisdiction. If such determination is made by High Court, the same would be subject to appeal to this Court, but if the jurisdiction is determined by this Court it would be final. We therefore hold that this Court being the Apex Court and a superior court of record has power to determine its jurisdiction under Article 129 of the Constitution, and as discussed earlier it has jurisdiction to initiate or entertain proceedings for contempt of subor dinate courts. In the instant case, Patel, CJM, was assaulted, arrested and handcuffed by Police Inspector Sharma and other Police Officers. Patel. We agree with the findings recorded by the Commission that there was no justi fication for this extraordinary and unusual behaviour of Police Inspector Sharma and other Police Officers although they made an attempt to justify their unprecedented, dehuma nising behaviour on the ground that Patel was drunk, and he was behaving in violent manner and if he had not been hand cuffed or tied with ropes, he could have snatched Sharma 's revolver and killed him. Patel. We have already recorded findings that Sharma, Police Inspector, Nadiad had preplanned the entire scheme, he deliberately invited Patel to visit Police Station where he was forced to consume liquor and on his refusal he was assaulted, arrested, handcuffed and tied with rope S.R. Sharma, K.H. Dhagal, the then District Superintendent of Police, Kheda, we have already recorded findings that he was hand in glove with Sharma, Police Inspector. Sharma. Learned counsel, appearing on behalf of the State of Gujarat and the Police Officers, urged that in the present proceedings this Court has no jurisdiction or power to quash the criminal proceedings pending against N.L. Patel, CJM. He further urged that this Court has no power to quash a trial pending before the criminal court either under the Code of Criminal Procedure or under the Constitution, therefore, the criminal proceedings pend ing against Patel should be permitted to continue. Before we proceed to consider the width and amplitude of this Court 's power under Article 142 of the Constitution it is necessary to remind ourselves that though there is no provision like Section 482 of the Criminal Procedure Code conferring express power on this Court to quash or set aside any criminal proceedings pending before a criminal court to prevent abuse of process of the court, but this Court has power to quash any such proceedings in exercise of its plenary and residuary power under Article 136 of the Consti tution, if on the admitted facts no charge is made out against the accused or if the proceedings are initiated on concocted facts, or if the proceedings are initiated for oblique purposes. If the court is satisfied that the proceeding in a criminal case are being utilised for oblique purposes or if the same are continued on manufactured and false evidence or if.no case is made out on the admitted facts, it would be in the ends of justice to set aside or quash the criminal proceedings. This has been the consistent view of this Court as would appear from the decisions of this Court in State of U.P. vs R.R. Patel is based on the facts which have already been found to be false, it would be in the ends of justice and also to do complete justice in the cause to quash the criminal proceedings. Sawant, Mamlatdar was friendly to Sharma, Police Inspector, he had no axe to grind against the CJM but he acted under the influence of Sharma, Police Inspector. (A) If a judicial officer is to be arrested for some offence, it should be done under intimation to the District Judge or the High Court as the case may be.
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In April 1989, the CJM filed two complaints with the police against the Police Inspector and other police officials in Nadiad. At 8:35 p.m. that day, the Police Inspector sent a police jeep to the CJM's house, and the CJM went to the police station. The police officers argued that: (1) the Supreme Court didn't have the power to punish the police officers, even if they were guilty. The Supreme Court's power under Article 129 only applied to contempt of itself, and it couldn't punish someone for contempt of a lower court. (2) Even if the Supreme Court is a court of record (a court whose proceedings are written down and serve as proof), it can't take action for contempt of a Chief Judicial Magistrate's court. Section 15 of the Contempt of Courts Act, 1971 (a law about contempt of court) gives the High Court the power to take action for contempt of lower courts. (4) The idea that the Supreme Court can take action for contempt of lower courts based on Article 129 of the Constitution has already been rejected by the Federal Court (a court that existed before the Supreme Court) in *K.L. Since the Court has taken the case of contempt that arose from the incident that is being tried in the criminal court, the Court has the power under Article 142 of the Constitution to make any order necessary to do justice and prevent abuse of the court system. There is no limit on the Court's power under Article 142 to cancel a criminal case pending in a lower court. The main questions the Court had to answer were: (a) Does the Supreme Court have the inherent power to punish for contempt of lower courts under Article 129 of the Constitution? The purpose of punishing contempt for interfering with the administration of justice is not to protect the dignity of the judge or magistrate, but to protect the authority of the courts and ensure order in society. In this case, a report must be made immediately to the District & Sessions Judge and the Chief Justice of the High Court. Both the Supreme Court and the High Courts are courts of record with the power to punish for contempt, including the power to punish for contempt of themselves. The High Courts, without a law, used the power of contempt to protect the lower courts based on the inherent power of a Court of Record. 2.7 The Kings Bench in England and High Courts in India, as superior Courts of Record with judicial power to correct orders of lower courts, had the inherent power of Contempt to protect the lower courts. The Supreme Court, as a Court of Record under Article 129 with broad power to oversee all the courts in the country, must have and use similar power as the High Courts had before the Contempt Legislation in 1926. It doesn't have any provision that limits the Supreme Court's power over contempt of lower courts. It's not a law that gives power to the High Court or the Supreme Court to take action for contempt of its lower courts. 3.2 Article 129 says that the Supreme Court is a court of record and that it has all the powers of such a court, including the power to punish for contempt of itself. The Federal Court was a court of record under Section 203, but it didn't have unlimited appellate power over all the courts in India like the power given to the Supreme Court under Article 136 of the Constitution. They can't take power in a matter that is not specifically given to them. For that purpose, it must have the power to take action for contempt of lower courts. 5.5 The Supreme Court will rarely use its inherent power to take notice of contempt of lower courts, because matters related to contempt of lower courts must be dealt with by the High Courts. This case is exceptional because the incident created a situation where the functioning of the lower courts all over the country was affected, and the administration of justice was paralyzed. 6.1 Although there is no provision like section 482 of the Criminal Procedure Code (a law about criminal procedure) that gives the Supreme Court express power to cancel any criminal proceeding pending in a criminal court to prevent abuse of the court system, the Court has the power to cancel any such proceeding using its powers under Article 136 of the Constitution. If the court is satisfied that the proceedings in a criminal case are being used for unfair purposes, or if they are continued on false evidence, or if no case is made out on the facts, it would be just to cancel the criminal proceeding. 7.3 The power to take proceedings for contempt of Court is an inherent power of a Court of record. 7.4 In this case, the people in contempt are not in the position of a "person accused of an offense" just because they received a notice of contempt from the Court.
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Civil Appeal No. 3498 of 1991. From the Judgment dated 17/18.7.1991 of the Bombay High Court in writ petition No. 2038 of 1991. G. Ramaswamy, Attorney General, V.R. Reddy, Addl. Solicitor General, Anil B. Divan, K.S. Cooper and T.R. Andyaranjina, R.F. Nariman, S.A. Divan, B.R. Agrawala, Vinod B. Agarwala, P.N. Kapadia, Pramod B. Agarwala, section Krishnachandani, Dr. Sumat Bhardwaj, Ms. Sandhaya Mehta for M/s Gagret & Co., Ms. Sushma Suri, A.M. Khanwilkar, M.P. Bharucha, R. Karanjawala, Mrs. M. Karanjawala, Mrs. V.S. Rekha, A.R. Amin, K.J. John, Dr. A.M. Singhvi and Ajit Pudussery for the appearing parities. 493 The Judgment of the court was delivered by THOMMEN, J. The question which aries in this appeal from the judgment of the Bombay High Court in writ petition No. 2038 of 1991 is, when does a company become liable to pay interest under section 73 (2A) of the (the "Act"). The answer to it depends on the answer to the more fundamental and far more difficult question, i.e. when does a company become liable to repay the money received from applicants for shares or debentures in excess of the aggregate of the application money relating to the allotted shares or debentures. If such excess application money is not repaid within eight days from the days on which the company and every director `who is an officer in default ' is liable to pay insterest at the specified rates. The period of eight days has to be reckoned in accordance with section 74. But it is not clear when exactly does the liability to repay the excess money arise. Does it arise on the date of the allotment, as found by the High Court, or on the expiry of 10 weeks from the date of closing of the subscription lists, referred to in sub section (1A) of section 73, or, as contended by the company, on the expiry of the period mentioned in the prospectus? Whichever is the correct date, interest becomes payable by the company and its directors `in default ', if the excess money is not repaid within the period of grace of eight days from the date on which the company becomes liable to pay it. When does that liability arise is the crucial question. We shall presently examine the relevant provisions of the section, but before we do so, it may be of interest to refer briefly to the circumstances in which the alleged liability of the appellant company has arisen. The appellant is a company registered under the provisions of the . The company obtained the consent of the Government of India vide its Order dated May 31, 1990 to issue 7,20,00,000 equity shares of Rs. 10 each at par and 33, 90,000 fourteen per cent secured redeemable non convertible debentures of Rs. 100 each at par. This Order was, made by the Government in exercise of its power under the . One of the conditions attached to the order reads: "The company shall scrupulously adhere to the time limit of 10 weeks from the date of closure of the subscription list for allotment of all securities and despatch of allotment letters/certificates and refund orders. " A prospectus was issued by the company on 12th July, 1990 for the issue of the aforesaid shares and debentures. The prospectus stated, amongst 494 other things, that the company had sought the permission of the stock exchanges at Indore, Ahmedabad, Bombay, Calcutta and Delhi for dealing in equity shares and debentures in terms of the prospectus; that interest at the rate of 15 % per annum on the excess application money will be paid to the applicants as per the guidelines issued by the Ministry of Finance on July 21, 1983 and September 27, 1985; that the public issue will open on August 20, 1990 and close on August 23, 1990; and that it would not be extended beyond August 31, 1990. When the issue thus opened on August 20, 1990, it received overwhelming response as a result of which it was about 40 times over subscribed. The company received 26,32,894 applications for equity shares together with an aggregate sum of Rs. 225,25,51,247 in respect of a public issue of Rs. 25 crores. In view of this public response, the share issue was close on 23rd August, 1990. On October 15, 1990 the board of directors of the company approved the allotment of shares. Shortly thereafter, it secured the requisite permissions of the stock exchanges at Indore, Ahmedabad, Bombay, Calcutta and Delhi to deal in the shares offered in the prospectus. These permissions were obtained prior to November 1, 1990. The company had to despatch 25,50,604 refund orders of an aggregate value of well over Rs. 200 crores. These orders which were printed in Bombay were meant to be despatched from Delhi. The company despatched 8,55,226 refund orders from the Sarojini Nagar Post Office , New Delhi at the rate of approx. 1,00,000 refund orders per day. On 26th October, 1990 a consignment of 6,69,999 refund orders had been despatched from Bombay to Delhi in a brake van of the Paschim Express. A fire broke out on the way in the brake van as a result of which many refund orders were destroyed. Almost 50 % of the consignment was missing after the accident. In consultation with the Madhya Pradesh Stock Exchange and the Company 's Bank,instructions were issued by the Company to stop payment of all refund orders with a view to avoiding any possible fraud or misuse. As a result of the countermanding of all the multi colored refund orders and the printing of new refund orders with distinctive colours etc., delay occurred in the despatch of newly printed orders. At the request of the company, the Madhya Pradesh Stock Exchange granted it extension of time till November 30,1990 for issuing the refund orders. Time for this purpose was further extended by that stock exchange till 19th December, 1990. The Bombay Stock Exchange, however, refused to grant extension of time. It further informed the company that it was bound to pay interest by reason of the delay in the despatch of refund orders. The Securities and Exchange Board of India, the second respondent, called upon the company by its letter dated March 13,1991 to pay interest to the investors at varying rates for the period from 1st November (which is when the period of 10 weeks from the date of the closure of the subscription lists expired) till the date of posting of 495 the refund orders. The refund orders were not despatched until 12th November, 1990. The Government of India and the Securities and Exchange Board of India insisted that the company should pay interest to the investors for the period of the delay in making the refund in accordance with the provisions of section 73. Apprehending that the Government might direct the stock exchanges to delist the shares of the company by reason of its failure to pay interest, and also initiate actions against it, the company filed a petition in the High Court under Article 226 of the Constitution, but it was dismissed by the impugned judgment. The Bombay Stock Exchange seems to have understood that the liability of the company arose on the expiry of 10 weeks after the date of closure of the subscription lists. Paragraph 23.2 of its publication of March 1991 quotes the condition mentioned in the Order of the Government of India dated 31.5.1990(which we have extracted above)to the effect that the liability of the company for despatch for refund orders arose only at the end of 10 weeks from the date of closure of the subscription lists. In the High Court, the Union of India and the Securities and Exchange Board of India appeared to have taken a divergent stand on the question. While the Government of India submitted (as disclosed in its affidavit, and as referred to by the High Court in the impugned judgment) that the liability to pay the excess amounts arose on the expiry of 10 weeks from the date of closure of the subscription lists, the Securities and Exchange Board of India contended that the liability arose on the date of allotment. In the present appeal, however, the Union of India support the stand of the Securities and Exchange Board of India. On the other hand, the company contended that, on the facts of this case, the liability arose only at the end of the period as extended by the Stock Exchange at Indore in terms of the prospects. The High Court held: ". In our judgment, there is no difficulty in fixing the date from which the liability of the company to make repayment arises. In a case where the allotment is completed before expiry of the 10 weeks, then from the date of allotment and in case where the allotment is not completed till the expiry of ten weeks from the date of closure of the subscription list, then from the date of expiry of ten weeks. " The reason stated by the High Court for coming to this conclusion is that the company knew that the excess amount was on the date of allotment and there was no reason why the company should delay payment till the end of 10 weeks in case the allotment was made earlier. The High Court says 496 ". In cases where the allotment is completed before expiry of ten weeks, then the Company very well knows the excess amount, which is to be repaid and consequently the liability accrues forthwith to repay the said amount. In case the Company fails to repay the amount within the grace period of eight days, then the Company would be liable to pay interest to the investor inspite of the fact that period of ten weeks from the date of closure of the subscription list is not over. " The High Court thus held that the company was liable to pay interest at the prescribed rates for the period of delay and the liability for the same arose on the expiry of 8 days from the date of allotment of the shares, and not from the date of expiry of 10 weeks, where allotment was made earlier to that date. The High Court did not accept the contention of the company that the time having been extended by the Madhya Pradesh Stock Exchange till 19th December, 1990 in accordance with the relevant provisions of the prospectus, the company had no liability to pay interest. The question for consideration, therefore, is whether the High Court was right in discarding, for computation of interest, the time limit of 10 weeks running from the date of closure of the subscription lists, notwithstanding that the allotment had been made, as in the present case, prior to the date of expiry of 10 weeks. `Listing means the admission of the securities of a company to trading privileges on a Stock Exchange. The principal objectives of listing are to provide ready marketability and impart liquidity and free negotiability to stocks and shares; ensure proper supervision and control of dealings therein; and protect the interests of shareholders and of the general investing public. (See para 1.1. of the `Stock Exchange Listing ', publication of Bombay Stock Exchange of March, 1991). A public limited company has no obligation to have its shares listed on a recognised stock exchange. But if the company intends to offer its shares or debentures to the public for subscription by the issue of a prospectus, it must, before issuing such prospectus, apply to one or more recognised stock exchanges for permission to have the shares or debentures intended to be so offered to the public to be dealt with in each such stock exchange in terms of section 73. We shall now read the provisions of section 73 insofar as they are material: Sub section (1) of section 73 read: 497 "section 73 (1). Every company intending to offer shares or debentures to the public for subscription by the issue of a prospectus shall, before such issue, make an application to one or more recognised stock exchanges for permission for the shares or debentures intending to be so offered to be dealt with in the stock exchange or each such stock exchange. " This sub section was inserted by the Companies (Amendment) Act, 1988 with effect from 15.6.1988. It has application only to a company intending to offer shares or debentures to the public for subscription by the issue of a prospectus. Until this sub section was inserted, listing of public issues was not compulsory. This original sub section (1) was substituted by the Companies (Amendment) Act, 1974 with effect from 1.2.1975, and substituted again and renumbered as the present sub section (1A) with effect from 15.6.1988 by the Companies (Amendment) Act, 1988. Sub section (1A) reads: "73(1A). Where a prospectus, whether issued generally or not, states that an application under sub section (1) has been made for permission for the shares or debentures offered thereby to be dealt in one or more recognised stock exchanges, such prospectus shall state the name of the stock exchange or, as the case may be, each such stock exchange, and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of ten weeks from the date of the closing of the subscription lists: Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the shares or debentures to be dealt in on that stock exchange has been preferred under section 22 of the (42 of 1956), such allotment shall not be void until the dismissal of the appeal. " This provision makes it necessary for the company to state in its prospectus the name of each of the recognised stock exchanges whose permission for listing has been sought by the company. Any allotment of shares will become void if permission is not granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of 10 weeks from the date of the closing of the subscription lists. The validity of the allotment is thus made dependent on securing the requisite 498 permission of each stock exchange whose permission has been sought. The liability to repay the application money arises only upon refusal of the stock exchange to grant the permission sought by the company before the expiry of 10 weeks from the date of closing of the subscription lists. This is clear from sub section (1A) read with sub section (5). There is a deemed refusal if permission is not granted by the stock exchange before the expiry of 10 weeks from the date of closing of the subscription lists, and upon the expiry of that date, any allotment of shares made by the company becomes void. However , from the decision of the stock exchange refusing permission, an appeal will lie under section 22 of the . Pending the decision in appeal, the allotment made would not be void, and the decision of the concerned stock exchange is made dependent on the result of the appeal. What is significant is that it is the legislative intent to delay the result postulated under sub section (IA), i.e., rendering the allotment void, until the said period of 10 weeks has expired or until the dismissal of the appeal. Sub section (2), as amended in 1988, reads: "section 73(2). Where the permission has not been applied under sub section (I) or, such permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money." This sub section requires the company to repay `forthwith ' all money received from applicants in response to the company 's prospectus either where the company has not applied for permission of the recognised stock exchange for listing or where permission has been applied for but not granted. If the company has issued a prospectus without seeking permission for listing, it has clearly acted in violation of the mandatory provisions of the Act, and the company has no right to receive or retain any amount by way of subscription in pursuance of its prospectus. On the 499 other hand, where permission has been sought, but has not been obtained within 10 weeks from the date of closing of the subscription lists, thereby rendering void any allotment made, the company is bound to repay all such money forthwith, but without interest. In the event of such money not being repaid within 8 days after the liability to repay arose, the company and every director of the company who is `an officer in default ' are made jointly and severally liable to pay the principal amount as well as interest thereon from the date of expiry of the said 8 days. The interest is payable at the prescribed rates varying from 4% to 15%, dependent on the length of the period of delay in making such repayment. This sub section thus postulates two circumstances in which interest becomes payable, namely, where the permission has not been applied for before issuing the prospectus and the company had thus acted in violation of the law or where permission, though applied for, has not been granted. In the former case, apart from the other consequences which may flow from the company 's disobedience of the law, the liability to pay interest arises as from the date of receipt of the amounts, for the company ought not to have received any such amount in response to the prospectus issued by the company in disobedience of the requirements of sub section (I). In the latter case, the liability to pay interest does not arise until the expiry of 8 days after the company became liable to repay the amounts received by reason of its failure to obtain the necessary permission as referred to in sub section (IA). It may be mentioned in this connection that, prior to the amendment of 1988, sub section (2) did not make the company liable to pay interest on the amounts repayable by it in terms thereof, but only the directors were liable for payment of such interest, apart from the principal amounts. The proviso to the sub section as it stood prior to 1988 exempted a director from such liability if the default was not caused by his misconduct or negligence. As a result of substitution of a proviso of the sub section by the Amendment Act of 1988, the company and every director of the company `who is an officer in default ' are made jointly and severally liable for payment of the principal amount as well as interest. We shall now read the crucial provision which is sub section (2A): "S.73 (2A). Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the application moneys relating to the shares or debentures in respect of which 500 allotments have been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if such money is not repaid within eight days, from the date the company becomes liable to pay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed having regard to the length of the period of delay in making the repayment of such money". Sub section (2A) was inserted by the Companies (Amendment) Act, 1974 which came into force w.e.f. 1.2.1975. Section 73, as it stood prior to 1975, contained no specific provision compelling the company or its directors to repay the amounts received in excess of the aggregate of the application money relating to the shares or debentures in respect of which allotments have been made. Sub section(2A) was inserted to cover cases where permission of the stock exchange has been obtained, but the shares or debentures have been over subscribed and the company is consequently in possession of excess amounts. The sub section, as inserted in 1975, made the company liable to repay the excess amounts forthwith, but did not make the company liable to pay interest on such excess amounts. But a liability was cast on the directors. If the excess amount was not repaid within 8 days from the day the company became liable to repay it, the directors were made jointly and severally liable to repay such amount with interest. The proviso to sub section (2A), which like the proviso to sub section (2), as they stood prior to 1988, provided that a director was not liable to repay the money with interest if he proved that the default in payment of the money was not on account of any misconduct or negligence on his part. Owing to the absence of a specific provision imposing liability on the company to pay interest on the over subscribed amounts, and also owing to the absence of any provision to exempt directors who were not directly in charge of the administration of the company and the need to make listing of public issues compulsory, further amendments to the section became necessary. Accordingly the Amendment Act of 1988 introduced several amendments to section 73, one of them being the substitution of a part of sub section (2A) making the company and every director of the company who is `an officer in default ' jointly and severally liable to repay the excess money with interest. A `director of a company who is an officer in default ' appearing in sub section (2A) must be understood with reference to 501 the definition of `an officer who is in default ' contained in section 2(31) read with section 5. This definition includes the managing director or the wholetime director of a company. So understood, the liability imposed under sub section (2A) on a director of the company falls only upon a director who is `an officer in default ', as defined under section 2(31) read with section 5(a) (b), and not upon any other director. The nominees of the Government or financial institutions on the board of directors of the company, but not directly in charge of its administration as full time directors, are exempted from personal liability. The rate of interest payable under sub section (2A) is, an seen above, not less than 4 per cent and not more than 15 per cent. The sub section requires the company to repay the over subscribed amounts. These amounts are paid by persons who have responded to the prospectus which was issued by the company after making an application for permission in accordance with sub section (1). But when the subscription lists are closed, the excess money is ascertained with reference to the actual allotments made and so it becomes repayable as the company has no right to retain it. The question is, for the purpose of computing interest, did it become repayable upon the date of allotment, as found by the High Court and as contended by the respondents, or on some other day. The Additional Solicitor General, appearing for the Union of India, Mr. K.S. Cooper, for the Securities & Exchange Board of India, Mr. T.R. Andhyarujina, for the Bombay Stock Exchange and Dr. A.M. Singhvi, for one of the interveners, submit that the liability to repay the excess amount arises on the date of allotment of the shares, for the statute says that the liability arises forthwith and any delay beyond the period of 8 days from the day on which the liability arose attracts interest. The expression `forthwith ' has to be understood as an immediate liability ascertainable with reference to the date of allotment, but subject to a period of grace of 8 days. Mr. Anil B. Dewan, appearing for the company, on the other hand, contends that the company is entitled to retain the excess amount for the period mentioned in the prospectus and consequently no liability to pay interest can arise until the expiry of that period. Prospectus is an instrument registered under section 60 of the Act and all statements contained in it are matters permitted to be inserted by the statue. The terms of the prospectus are binding not only upon the company but also upon persons who deal with the company in pursuance of the prospectus. One of those terms concerns the repayment of excess money. It reads: ". In case an application is rejected in full, the whole of the 502 application money received will be refunded and where an application is rejected in part, the balance, if any, after adjusting money due in the manner provided earlier in this Prospectus on Equity Shares/Debentures allotted will be refunded to the applicants within ten weeks of the date of closing of the Subscription List or in the event of unforeseen circumstances within such further time as may be allowed by the Stock Exchange at Indore" (emphasis supplied) In the present case, counsel points out, time for refund had been extended by the Madhya Pradesh Stock Exchange till 19th December, 1990. Accordingly the liability of the company to repay the excess amount did not arise until then. In the circumstances, interest became payable only after 8 days from the expiry of the period as extended by the Madhya Pradesh Stock Exchange. If Mr. Dewan 's argument were to be accepted, the company would have incurred no liability to pay interest, for time had been extended by the Madhya Pradesh Stock Exchange. But this argument is clearly contrary to the provisions contained in sub section (4) of section 73 of the Act which reads:_ "section 73(4). Any condition purporting to require or bind any applicant for shares or debentures to waive compliance with any of the requirements of this section shall be void". In the teeth of that sub section, Mr. Dewan 's argument on the point is totally without merit. Even if sub section (4) had not been inserted in section 73, Mr. Dewan 's argument in this respect would have been equally unsustainable, for no agreement can defeat or circumvent a mandatory requirement of the statute. This is all the more so in view of section 9 which specifically provides that the provisions of the Act override the memorandum or articles of association of the company or any agreement executed or resolution passed by it. The statute requires the company to pay interest in terms of sub section (2A). That provision says that the company should pay excess money forthwith, failing which interest becomes payable at the end of 8 days therefrom. Any inconsistent provision in the prospectus is unenforceable and it can be of no avail to the company. It is true that the expression `forthwith ' does not necessarily and always mean instantaneous. The expression has to be understood in the context of the statute. Where, however, the statute prescribes the payment 503 of money and the accrual of interest thereon at certain points of time, the expression `forthwith ' must necessarily be understood to be immediate or instantaneous, so as to avoid any ambiguity or uncertainty. The right accrues or liability arises exactly as prescribed by the statute. Decisions such as Keshave Nilkanth Joglekar vs The Commissioner of Police, Greater Bombay, , and Salim vs State of West Bengal, ; , deal with the expression `forthwith ' in the context of preventive detention demanding a liberal or reasonable construction. But that is not the construction which has to be adopted when `forthwith ' is used for determining the time and mode of payment of the principal and interest. The legislature intended the expression `forthwith ' to refer to a particular day on which the liability to repay the principal amount arose, and that is the day from which the period of 8 days has to be computed, and on the expiry of that period, interest begins to accrue. It is further contended on behalf of the company that in any view interest is payable as a penalty and, therefore, a reasonable and rational construction has to be placed upon the statute in regard to the commencement of the liability of the company to repay the excess amount. Relevant circumstances which caused the delay must be taken into account in this regard. There is no substance in this contention. As stated earlier, sub section (2A) provides for the accrual of interest and the rates thereof. Unlike sub section (2B) provides for punishment by imposition of fine or imprisonment, sub section (2A) speaks only of interest which is in contradiction to punishment and is not penal in character. It merely provides a mode of calculation of the amounts payable. Any consideration with reference to a penal provision is of no relevance to the liability of the company or its directors to pay interest in terms of sub section (2A). Sub section (2B) on the other hand provides for punishment. It reads: "S.73(2B). If default is made in complying with the provisions of sub section (2A), the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees, and where repayment is not made within six months from the expiry of the eighth day, also with imprisonment for a term which may extend to one year". This sub section concerns solely with default of compliance with the requirement of sub section (2A) namely, repayment of excess money. Failure to repay the excess money as required by sub section (2A) visits the company and every officer of the company who is in default (as 504 defined under section 5) with the stipulated punishment. This is, of course, in addition to the payment of interest prescribed under sub section (2A). Sub section (5), as it stood prior to 1.2.1975, read: "section 73(5). For the purpose of this section permission shall not be deemed to be refused if it is intimated that the application for permission though not at present granted, will be given further consideration". This sub section was substituted by the Companies (Amendment) Act, 1974 with effect from 1.2.1975 reading as follows: "S.73(5). For the purposes of this section, it shall be deemed that permission has not been granted if the application for permission, where made, has not been disposed of within the time specified in sub section (1). " Sub section (1) referred to in sub section (5), as substituted on 1.2.1975, is in fact the present sub section (1A), for, as stated earlier, the original sub section (1) was amended and renumbered as sub section (1A) when the present sub section (1) was inserted by the Companies (Amendment) Act, 1988 w.e.f. 15.6.1988. Consequently, the words `the time specified in sub section (1) ' appearing in sub section (5), as inserted w.e.f. 1.2.1975, denote the period of 10 weeks mentioned in the present sub section (1A). This means that the permission for listing is deemed not to have been granted, i.e., impliedly refused, if the application for permission filed by the company has not been disposed of before the expiry of 10 weeks from the date of the closing of the subscription lists, as mentioned under sub section (1A). Sub section (1A) postulates that any allotment made becomes void at the end of 10 weeks from the date of the closing of the subscription lists if by that time the requisite permission of the stock exchange has not been obtained. But this consequence is postponed till the dismissal of any appeal preferred under section 22 of the (see the proviso to sub section (1A) of section 73 of the Act). Nevertheless, the permission, if not obtained within 10 weeks, is deemed not to have been granted. If the permission for listing sought under sub section (1) is not granted, the interest payable under sub section (2) is attracted. Sub section (2) says that the liability to repay the money received from applicants arises forthwith either where the permission has not been sought or, having been 505 sought, it has not been granted. The fact that an appeal is pending does not postpone the result contemplated in sub section (2) in regard to the liability to repay the amounts and the interest accruing thereon if the amounts are not repaid within 8 days after the liability arose. The accrual of interest under sub section (2) is not dependent or consequent on the nullity postulated in sub section (1A). In this connection, reference may be made to sub section (3) which reads: "S.73(3). All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled bank until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2), and if default is made in complying with this sub section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees." (emphasis supplied) This sub section refers to the obligation of the company to keep all amounts received from the subscribers in a separate bank account maintained with a Scheduled bank. Such money must so remain in the bank until the permission has been granted by the stock exchange or until the disposal of an appeal preferred against refusal to grant permission. Where the permission has not been sought, the company has, as seen above, acted in disobedience of the law, and the amounts received from the investors must be credited to the separate bank account and immediately returned to them together with the interest which accrued for the period. But where permission has been sought, but not granted, the amounts so kept in the bank have to be repaid within the time specified in sub section (2). Default of compliance with this requirement will make the company and every officer in default (as defined under section 5) liable to be punished with fine. This will, of course, be in addition to the liability for payment of interest in terms of sub section (2). The right or obligation of the company to keep the money in the bank is only for the period preceding the decision of the stock exchange on the company 's request for permission to list. Once the permission is 506 expressly or impliedly refused, the money has to be returned to the applicants, notwithstanding the pendency of the company 's appeal. The earlier part of the sub section about depositing the money in the bank is controlled by the latter provision in the sub section for returns of the money as required by sub section (2). This is particularly so by reason of the penalty specially provided in sub section (3) in the event of default of compliance with the requirement of that sub section. Sub section (3) may at the first blush appear to be contradictory, but it is really not so, considering the legislative intent to protect the legitimate claim of the applicants for interest on the money paid by them. The interest provided under sub section (2) is payable to the applicants in terms of that sub section, unless the money is returned to them within the specified time, not withstanding the pendency of an appeal mentioned in the proviso to sub section (1A). Sub section (3) has to be so understood to be in harmony with the other provisions of section 73. This is all the more explicit from sub section (3A). Sub section (3A) says that the company shall not utilise the amounts held in the separate bank account for any purpose other than what is permitted by sub section (3A). Sub section (3A) provides: "S.73(3A). Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely: (a) adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus; or (b) repayment of moneys received from applicants in pursuance of the prospectus, where shares have not been permitted to the dealt in on the stock exchange or each stock exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share". The money credited to the separate bank account can be utilised for only two purposes: (1) for adjustment against allotment of shares where listing is permitted; or (2) for repayment where listing is not permitted or the company is otherwise unable to allot shares. The company has no right to deal with the money in any other manner or keep it longer than permitted by the section. 507 The money so kept in the separate bank account is held by the company for and on behalf of the subscribers in a fiduciary capacity. Such amount do not form part of the general assets of the company. The relationship between the applicants and the company in respect of the application money so held in accordance with sub section (3) is that of `bailers and bailee and not of creditors and debtor '. See Palmer 's Company Law, 24th ed. para 24.31; ,1085. Interest does not begin to run under sub section (2) until 8 days have elapsed from the date of expiry of the period of 10 weeks commencing on the date of closure of the subscription lists. The fact that the legislature has so provided in cases where permission has been refused expressly or by reason of the deeming provision is sufficient indication of the legislative intent to give the company reasonable time to repay the money. Companies generally make allotments as soon as practicable after the necessary application has been made to the recognised stock exchange for permission for listing. Upon the issue of the prospectus after making such application, amounts are received from the public in consideration of which allotments are made in anticipation of the requisite permission. Greater the reputation of the company, larger are the amounts likely to be received. If permission is not granted, the entire amounts received from the public have to be forthwith repaid. On the other hand, if permission is obtained, but the amounts received from the public are in excess of the aggregate of the application money relating to the allotted shares or debentures, such excess amounts are forthwith repayable. Whether or not permission will be obtained cannot be ascertained until the period prescribed for the purpose has expired namely, 10 weeks from the date of closing of the subscription lists. Until the expiry of those 10 weeks, neither the subscribing public nor the company will be in a position to decide whether or not the allotments made are valid. This is a period of uncertainty and it is for that reason that the legislature has, in a case of refusal to grant permission, provided that the liability to repay the application money arises upon the expiry of 10 weeks. The possibility of an appeal being allowed is, as stated above, not a ground to delay repayment. It should make no difference whether it is as a result of the permission having been refused, or permission having been granted and excess amounts are received by reason of over subscription, that repayment of money has to be made by the company. In either event, the liability to repay the amounts arises forthwith on the expiry of 10 weeks from the date of closure of the subscription lists, and the interest will begin to accrue thereon on the expiry of 8 days therefrom. This construction is, in our view, just and reasonable from the point of view of both the investor and 508 the company, and has the advantage of certainty, uniformity and easy application. The condition attached to the Order of the Government of India dated 31st May, 1990, which we have extracted above, indicates that the time limit of 10 weeks from the date of closure of the subscription lists applied to refund orders as well as to allotment of all securities and despatch of allotment letters/certificates. The Government of India thus understood that the liability of the company to repay the amounts in terms of section 73 arose only at the end of 10 weeks from the date of closure of the subscription lists. This condition presumably applies to repayment under sub section (2) as well as under sub section (2A) of section 73. This is fully borne out by the averments contained in the affidavit filed in the High Court on behalf of the Union of India as well as by the oral submissions on its behalf before the High Court on the point. Similar appears to be the stand of the Bombay Stock Exchange, as seen from its publication of March 1991 (para 23.2). The letter dated March 13, 1991 sent by the Securities and Exchange Board of India, the 2nd respondent, to the appellant company stating that interest was payable from 1st November, 1990, which is the date of expiry of the period of 10 weeks from the date of closure of the subscription lists, roughly indicates how the 2nd respondent construed the provision shortly before the proceedings commenced in the High Court. The section is not free from ambiguities and doubts. Having been amended in several respect, it has not finally emerged with the clarity that admits of easy construction. But the contemporaneous construction placed upon an ambiguous section by the administrators entrusted with the task of executing the statute is extremely significant. This construction is, in our view, perfectly consistent with the language and the object of the statute. It is a practical and reasonable construction, particularly because it affords the company reasonably sufficient time to complete the formalities for despatch of the refund orders. And the investor who has responded to the invitation contained in the prospectus is not unduly kept waiting for the return of the excess amounts due to him. See Desh Bandhu Gupta & Co. & Ors. vs Delhi Stock Exchange Association Ltd., ; and K.P. Varghese vs Income Tax Officer, Ernakulam & Anr., ; See also Crawford 's Interpretation of Laws, 1989 Ed. Neither the date of allotment, as found by the High Court, nor the date specified in the prospectus, as contended by the company, is relevant to the commencement of liability for payment of interest on the excess money. 509 The liability of a company to repay the excess money under section 73(2A) of the Act arises on the expiry of 10 weeks from the date of the closing of the subscription lists, and the interest begins to accrue thereon at the end of 8 days therefrom. Accordingly the liability to repay the excess money in the present case arose on 1.11.1990 which was admittedly the date of expiry of 10 weeks from the date of the closing of the subscription lists, and consequently the liability to pay interest at the rate specified in sub section (2A) arose on the expiry of 8 days from 1.11.1990. MOHAN, J. I had the advantage of perusing the draft judgment of my learned brother. I concur with him. However, some important points require to be amplified. The points that arises for determination are: (i) the scope of liability under Section 73 (2A) of the . (ii) Meaning of the word "forthwith" (iii) Whether the payment of interest is penal in nature? (iv) Whether administrative inconvenience could be pleaded to avoid the statutory liability? Section 73 occurs under Para III of the (Central Act of 1/1956 hereinafter referred to as the Act). This section deals with the allotment of shares and debenturs. It has undergone important amendments in 1975 and 1988. Prior to amendment in 1975, Section 73 read as under :_ "Allotment of shares and debentures to be dealt in on stock exchanges. (1) Where a prospectus, whether issued generally or not states that application has been or will be made for permission for the shares or debentures offered thereby to be dealt in on a recognised stock exchange, any allotment made on an application in pursuance of the prospectus shall, whenever made, be void, if the permission has not been applied for before the tenth day after the first issue of the prospectus or, if the permission has not been granted before the expiry of (four weeks) be notified to the applicant for permission by or on behalf of the stock exchange. (2) Where the permission has not been applied for as aforesaid, or has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from ap 510 plicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of five per cent per annum from the expiry of the eighth day: Provided that a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part. (3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank so long as the company may become liable to repay it under sub section (2) ; and if default is made in complying with this sub section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees. (4) Any condition purporting to require or bind any applicant for shares or debentures to waive compliance with any of the requirements of this section shall be void. (5) For the purpose of this section (it shall not be deemed that permission has not been granted) if it is intimated that the application for permission though not at present granted, will be given further consideration. (6) This section shall have effect : (a) in relation to any shares or debentures agreed to be taken by a person underwriting an offer thereof by a prospectus, as if he had applied, therefor in pursuance of the prospectus; and (b) in relation to a prospectus offering shares for sale, with the following modifications namely (i) reference to sale shall be substituted reference to allotment; (ii) the persons by whom the offer is made, and not the company, shall be liable under sub section (2) to repay money received from applicants, and reference to the company 's liability under that sub section shall be construed accordingly; and (iii) for the reference in sub section (3) to the company and every officer of the company who is in default, there 511 shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the default. (7) No prospectus shall state that application has been made for permission that the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange". After amendment in 1975, Section 73 read as follows: "Allotment of shares and debentures to be dealt in on stock exchanges. (1) Where a prospectus whether issued generally or not states that an application has been, or will be, made for permission for the shares or debentures offered thereby to be dealt in on one or more recognised stock exchanges, such prospectus shall state the name or the stock exchange or, as the case may be, each such stock exchange, and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been applied for before the 10th day after the first issue of the prospectus, or, whether such permission has been applied for before that day, if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of 10 weeks from the date of the closing of the subscription lists : Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the share or debentures to be dealt in on that stock exchange has been preferred under section 22 of the (42 of 1956), such allotment shall not be void until the dismissal of the appeal. (2) Where the permission has not been applied for as aforesaid, substituted for "or has not been granted as aforesaid" by the Companies (Amendment) Act, 1974, w.e.f. 1.2.1975 substituted for "five per cent" ibid. (2A) Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the applicant moneys relating to the shares or debentures 512 in respect of which allotment has been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if such money is not repaid within eight days, from the day the company becomes liable to pay it, the Directors of the Company shall be jointly and severally liable to repay the money with interest at the rate of twelve per cent per annum from the expiry of the said eighth day : Provided that a Director shall not be liable if he proves the the default in the payment of the money was not due to any misconduct or negligence on his part. (2B) If default is made in complying with the provisions of sub section (2A), the company and every officer of the company who is in default he shall be punishable with fine which may extend to five thousand rupees, and where repayment is not made within six months from th expiry of the eighth day, also with imprisonment for a term which may extend to one year. (3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank (until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2); and default is made in complying with this sub section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees. (3A) Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely: (a) Adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus; or (b) Repayment of moneys received from applicants in pursuance of the prospectus, where shares have not been permitted to be dealt in on the stock exchange or each stock 513 exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share. (4) Any condition purporting to require or bind applicant for shares or debentures, to waive compliance with any of the requirement of the section shall be void. (5) For the purpose of this section it shall be deemed that permission has not been granted if the application for permission, where made, has not been imposed of within the time specified in sub section (1). (6) This section shall have effect (a) In relation to any shares or debentures agreed to be taken by a person underwriting an offer thereof by a prospectus, as if he had applied therefor in pursuance of the prospectus; and (b) In relation to a prospectus offering shares for sale, with the following modifications namely (i) References to sale shall be substituted for references to allotment; (ii) The persons by whom the offer is made, and not the company, shall be liable under sub section (2) to repay money received from applicants, and references to the company 's liability under that sub section shall be construed accordingly; and (iii) For the reference in sub section (3) to the company and every officer of the company who is in default, there shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of or wilfully authorises or permits, the default. (7) No prospectus shall state that application has been made for permission for the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange. " After amendment in 1988, Section 73 reads as under: "Allotment of shares and debenture to be dealt in on stock exchange. Every company, intending to offer shares or debentures to the public for subscription by the issue of a 514 prospectus shall before such issue, make an application to one or more recognised stock exchanges for permission for the shares or debentures intending to the so offered to be dealt with in the stock exchange or each such stock exchange. (1A) Where a prospectus, whether is issued generally or not, states that an application under sub section (1) has been made for permission for the shares or debentures offered thereby to be dealt in one or more recognised stock exchange, such prospectus shall state the name of the stock exchange and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of ten weeks from the date of the closing of the subscription lists : Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the shares or debentures to be dealt in on that stock exchange has been preferred under section 22 of the Securities Contracts (Regulations) Act, 1956 (42 of 1956), such allotment shall not be void until the dismissal of the appeal. (2) Where the permission has not been applied for under sub section (1) or, such permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company become liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen pr cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money. (2A) Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the application moneys relating to the shares or debentures in respect of which allotments have been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if 515 such money is not repaid within eight days, from the day the company becomes liable to pay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money. (2B) If default is made in complying with the provisions of sub section 2(A), the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees, and where repayments is not made within six months from the expiry of the eighth day, also with imprisonment for a term which may extend to one year. (3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2) and if default is made in complying with this sub section, the company and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees. (3A) Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely : (a) adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus ; or (b) repayment of moneys received from applicants in pursuance of the prospectus where shares have not been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share. (4) Any condition purporting to require or bind any applicant 516 for shares or debentures to waive compliance with any of the requirement of this section shall be void. (5) For the purposes of this section, it shall be deemed that permission has not been granted if the application for permission, where made, has not been disposed of within the time specified in sub section (1). (6) This section shall have effect (a) in relation to any shares or debentures agreed to be taken by a person under writing an offer thereof by a prospectus, as if he had applied therefore in pursuance of the prospectus; and (b) in relation to a prospectus offering shares for sale, with the following modifications, namely (i) reference to sale shall be substituted for references to allotment; (ii) the persons by whom the offer is made, and not the company, shall be liable under sub section (2) to repay money received from applicants, and references to the company 's liability under that sub section shall be construed accordingly; and (iii) for the reference in sub section (3) to the company and every officer of the company who is in default, there shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the default. (7) No prospectus shall state that application has been made for permission for the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange". As the section reads now, every company is required while it offers for public subscription issues of shares or debentures by means of a prospectus, to make an application for listing the security in one or more recognised stock exchanges. Should the stock exchange not grant the permission for listing, before the expiry of 10 weeks from the date of closing the subscription lists, no allotment could be made. In other words, the stock exchange has a say in the matter of listing. It also requires to be stated that the company, besides the Director, is made liable for failure to repay the application money or the excess application money along with interest. 517 Notes on clauses read as under : "Clause 10 provides for compulsory listing of all public issues with recognised stock exchanges. Presently, listing of public issues is not compulsory. Further , as per the existing provisions only the directors are liable for failure to repay the application money or the excess application money within the specified time, if the company fails to pay". "It is proposed to make the company in addition to the directors who commit the default liable to repay the application money or excess application money alongwith interest at a rate between 4% to 15% depending upon the period of delay with a view to ensuring that ordinary directors like nominee of govt. financial institutions do not attract penal provisions, it is further proposed that only the directors who is an officer in default should be liable for prosecution". As per provision to sub section (1), an appeal may be preferred under section 22 of the Stock Securities Contracts (Regulations) Act, 1956. Such an appeal may be (i) against the decision of stock exchange refusing permission ; and (ii) if the stock exchange fails to dispose of the application for permission within 10 weeks from the date of closing of the subscription lists. This 10 weeks become important because of the deemed rejection under sub section (5). Sub section (1A) mentions the date of closing of the subscription lists. Thus, it is a crucial date for determining the expiry of 10 weeks for the grant of permission by stock exchange. Equally that becomes the crucial date for calculating the time for preferring an appeal under section 22 of the , as aforesaid against the refusal of permission. No doubt, neither in this section nor elsewhere it is stated as to when the company is required to close subscription lists. Of course, that will depend upon the facts of each case. Section 69 of the Act states that unless minimum subscription is received, no allotment shall be made of any share capital of the company offered to the public for subscription. In fact, sub section 5 of the said section states categorically as follows : "If the conditions aforesaid have not been complied with on the expiry of one hundred and twenty days after the first issue of the prospectus, all moneys received from applicants for shares shall be forthwith repaid to them without interest; and if 518 any such money is not so repaid within one hundred and thirty days after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of six per cent per annum from the expiry of the one hundred and thirtieth day : Provided that a director shall not be so liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part". One thing that is striking as far as the sub section is concerned is, the repayment without interest before the expiry of 150 days after the first issue of the prospectus and the repayment with interest within 130 days after the issue of the prospectus or specific in their terms unlike Section 73. It cannot be gain said that the prospectus of the company is an important document provided for under the statute. Section 2(36) defines "prospectus" as follows : "prospectus" means any document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchases of any shares in, or debentures of, a body corporate". SEction 60 deals with registration of prospectus. Under sub section (3) it is provided that the Registrar shall not register a prospectus unless the requirements of sections 55, 56, 57 and 58 and sub sections (1) and (2) have been complied with. Section 62 deals with civil liability for misstatements in prospectus, while section 63 deals with criminal liability for misstatement in prospectus. In the background of the legal provisions section 73 will have to be analysed with regard to the liability to pay interest. The date of allotment, according to Mr. Andhyarujina and Mr. Cooper is the relevant date. Therefore, according to the learned counsel, the crucial issue is the allotment. It is also submitted that when permission is granted, it is only a categorisation. It has already been seen that under section 69(5), specific dates have been mentioned as 120 and 130 respectively. Sub section 2(A) of Section 73 does not mention any specific day. It also requires to be noticed under sub section 1(A) of this very section "10 weeks from the date of closing of the subscription lists" is mentioned. Both under sub section (2) and 2(A), no such time has been prescribed. Prior to 1988, sub section (1) contemplated two situations (i) application to stock exchange being made after issue within 10 days of issue or (ii) 519 application made before the issue and 10 weeks for stock exchange to grant the application. Of course, if the application is not granted within 10 weeks, there will be deemed rejection under sub section (5). But, unfortunately, after the amendment of sub section (1) and 1(A), sub section (2) has not been amended with reference to these amended provisions. As the law stands at present, the question of issue of prospectus without an application to stock exchange cannot arise at all. As careful reading of sub section 2(A) will clearly disclose that the said section comes into operation only where permission has been granted by the recognised stock exchange or exchanges. These words "where permission has been granted" are of great significance. Therefore, the contention that on the date of allotment the liability to pay interest arises may not be correct. Nor again, it would be correct to contend that the mechanics of refund liability to pay arises on the date of allotment since there is a failure of consideration in respect of shares not allotted. On allotment, the money may become due. Thereafter the money is held in a fiduciary capacity. But the more important question is does it become payable? We will, now, refer to Black 's Legal Dictionary as to the meaning of the word "due" and "payable" (5th Ed. 448) are as under : "Due" Just; proper; regular; lawful; sufficient; reasonable, as in the phrases "due care", "due process of owing; payable; justly owed. That which one contracts to pay or perform to another; that which law or justice requires to be paid or done. Owed, or owing, as distinguished from payable. A debt is often said to be due from a person where he is the party owing it, or primarily bound to pay, whether the time for payment has or has not primarily bound to pay, whether the time for payment has or has not arrived. The same thing is true of the phrase "due and owing". Payable. A bill or note is commonly said to be due when the time for payment of it has arrived. The word "due" always imports a fixed and settled obligation or liability, but with reference to the time for its payment there is considerable ambiguity in the use of the term, the precise signification being determined in each case from the context. It may mean that the debt or claim in question is now (presently or immediately) matured and enforceable, or that it matured at some time in the past and yet remains unsatisfied, or that it is fixed and certain but the day appointed for its payment has not yet arrived. But commonly, and in the absence of any qualifying expressions, the word "due" is re 520 stricted to the first of these meanings, the second being expressed by the term "overdue" and the third by the word "payable". "Payable" Capable of being paid; suitable to be paid; admitting or demanding payment; justly due legally enforceable. A sum of money is said to be payable when a person is under an obligation to pay it. Payable may therefore signify an obligation to pay at a future time, but, when used without qualification, term normally means that the debt is payable at once, as opposed to "owing". As a matter of fact, these words assumed great significance under section 60 of Transfer of Property Act. The section was amended by Act 20 of 1929. The word "due" in the section has been substituted for the word "payable" in order to make it clear that a mortgagor cannot redeem within the term of the mortgage". "When the right of redemption arises the right of redemption arises when the principal money secured by the mortgage that has become due and may be exercised at any time thereafter, subject of course to the law of limitation. In English law, the mortgagor cannot redeem before the time fixed for payment. Nevertheless there were a considerable number of Indian cases in which it was held that the time fixed in the deed was fixed for the convenience of the mortgagor and that he could redeem before that time unless there was an express stipulation to the contrary. These cases are bad law, for th view taken in other case that the mortgagor cannot redeem before the time fixed for payment is confirmed by the decision of Judicial Committee in Bhaktawar Begam vs Husaini Khanam, [1914] 36 All. 195. 41 I.A. 84, followed in Bir Mohammad vs Nagoor, , 25 I.C. 576 which treats Rose Ammal vs Rajarathnam, [1900] 23 Mad. 23 as overruled". In in Baroda Board & Paper Mills Ltd. vs Income Tax Officer. Circle I, Warde E, Ahmedabad and others, it is held as under : "Mr. A.L. Shah who appears for the liquidator in O.J. Appeal No. 2 of 1975 has urged before us that the legislature has used in the context of the priority of debts two distinct sets of words "debt due" and "due and payable" and proper meaning should be given to these sets of words, namely, "debt due" and "due and payable" and distinction must be made when the legislature has used two different terminologies, namely, "due" in the beginning of the clause and "due and payable" at the end of the clause. He also wants us to dissect the phrase "due and 521 payable" and he wants to emphasize that the debt must have become due in the narrower sense of the word of having come into existence and having been payable with reference to enforceability of payment and, in this sense, relying upon the decision of D.A. Desai J., he has urged before us that the debt must be existing at the relevant date and the event which brought the debt into existence must have occurred within the twelve months preceding the relevant date and it must also have become payable, meaning thereby that its payment could have been enforced against the company, within the twelve months before the relevant date. In view of the decisions that we have already referred to, particularly the passage from People vs Arguello as approved by the Supreme Court in Kesoram Industries ' case and in Raman Iron Foundry 's case, it is not possible for us to accept this contention of Mr. Shah. In our opinion, the only meaning that could be attached to the word "due" occurring in section 530 is that it must be presently due and the words "due and payable" mean the same thing, namely , that it must be presently payable. Therefore, so far as section 530(1) (a) is concerned, the revenue, taxess or rate, due from the company to the Central or State Government or to a local authority must be presently payable, that is, that the liability could be enforced as at the relevant date and, secondly, it must have so become presently payable within the twelve months immediately preceding the relevant date". In this connection we may refer to the case in Union of India vs Air Foam Industries (P) Ltd., ; & 1271 (para 7), which reads as follows : "The first thing that strikes one on looking at Clause 18 is its heading which reads; "Recovery of Sums Due". It is true that a heading cannot control the interpretation of a clause if its meaning is otherwise plain and unambiguous, but it can certainly be referred to as indicating the general drift of the clause and affording a key to a better understanding of its meaning. The heading of Clause 18 clearly suggests that this clause is intended to deal with the subject of recovery of sums due. Now a sum would be due to the purchaser when there is an existing obligation to pay it in present. It would be profitable in this connection to refer to the concept of a `debt ' for a sum due is to be found in Webb vs Stenton, where Lindley. L. J., ". a debt is a sum of money which is now payable or will become payable in the future by reason of a 522 present obligation". There must be debitum in presenti; solvendum may be in presenti or in future that is immaterial. There must be an existing obligation to pay a sum of money now or in future. The following passage from the judgment of the Supreme Court of California in People vs Arguello, [1869] 37 Calif 524, which was apporoved by this Court in Kesoram Industies vs Commr. of Wealth Tax, ; 1966 SC 1370), clearly brings out the essential characteristics of a debt. "Standing alone, the word `debt ' is as applicable to a sum of money which has been promised at a future day as to a sum now due and payable. If we wish to distinguish between the two, we say of the former that it is a debt owing, and of the latter that it is a debt due". This passage indicates that when there is an obligation to pay a sum of money at a future date, it is a debt owing but when the obligation is to pay a sum of money in praesenti it is a debt due. A sum due would, therefore, mean a sum for which there is an existing obligation to pay in presenti, or in other words, which is presently payable. Recovery of such sums is the subject matter of Clause 18 according to the heading, That is the dominant idea running through the entire Clause 18". We will now refer to Venkataramiya 's Law Lexicon and Legal Maxims Vol, I, 713, 714. "Due" means payable immediately or a debt contracted but payable at a future time. In Wharton 's Law Lexicon, 14th Edn., it s meaning is stated to be "anything owing. That which one contracts to pay or perform to another; that which law or justice requires to be paid or done. It should be observed that a debt is said to be `due ' the instant that it has existence as a debt; it may be payable at a future time". Therefore, it cannot be contended on the strength of Section 530 `due ' and `payable ' is one and the same even under S.732 (A). However, as contended, if the liability to pay interest arises from the date of allotment and the grace period after eight days, what is to happen in cases where permission is refused by the stock exchange? For the grant of such permission 10 weeks are available. Therefore, a company making allotment prior to the grant of permission cannot be mulcted with the liability when the section itself comes into play upon the grant of permission. Therefore, some definite date is required. It cannot be lost sight of that where permission is refused in the first instance there is also the right of appeal under Section 22 of the Securities Contracts (Regulations) Act, 1956. This too, has got an important bearing. It cannot be held that after allotment the mechanics 523 of refund would come into play and again after rejection of permission, the money on all applications should be refunded once over again. Equally, the contention of Mr. Anil Divan that the stock exchange will have power to extend the time cannot be accepted. It may be a practice to do so. But it does not mean the stock exchange can act contrary to clear wording to this section. More so, when Sub section (4) is clear in its terms. Merely because the intending applicants agree to abide by the prospectus that cannot be binding in the teeth of this Sub section. For the sake of competition, reference may be made to the corresponding provision of English Law. Buckley on the Companies Acts, 14th Ed. I, while dealing with Section 51 which is the corresponding provision state as follows : "The Act does not require the prospectus to fix any time for closing the subscription lists and, unless and until an issue is fully subscribed, there is nothing in law to require the company to close the lists. It is the common practice, however, at any rate in the case of prospectuses issued generally, to state in the prospectus that the lists will be closed on or before a particular date. In any case to which this section applies the company will, by reason of sub s(3), be unable to employ any money received from shareholders until either permission to be listed has been obtained, or the lists have been closed and the period indicated in sub section (1) has expired without the permission having been refused. Note that the sub section does not say, 'if the permission has not been granted before the expiration of three weeks etc. ' Presumable in practice the stock exchange, when it has an application for permission to be listed under consideration and has not either granted or refused permission within the three weeks period indicated above, will notify the applicant under sub section (1) of an extension of the period. An allotment within this section is void, not voidable as in an allotment in breach of Section 47" sub section (3) in Re Nanwa Gold Mines, Ballantyne vs Nanwa Gold Mines Ltd. applications to subscribe for shares were invited on the footing that, if a resolution for reduction of capital was not passed or not confirmed by the court, the application moneys would be refunded and meanwhile would be retained in a separate account. The moneys were in fact put in a separate account in the names of the company and its registrars. The conditions 524 were not fulfilled and shortly afterwards a receiver was appointed in a debenture holders ' action. Harman J. held that the moneys in the separate account were repayable to the subscribers in full, basing his decision on the terms of the invitation and not on the provisions of this sub section; but he expressed the view that the payment into a separate account in compliance with the sub section would probably have the same effect". Palmer 's Company Law, 1982, Vol I, 264 states as follows: "Refusal of Application to Deal Where a prospectus states that application has been or will be made for the shares or debentures to be dealt with on the stock exchange, any allotment made on an application under the prospectus shall be void. (1) if permission has not been applied for before the third day after the first issue of the prospectus; or (2) if permission is refused before the expiration of three weeks (subject to the extension by the stock exchange to six weeks from the date of the closing of the subscription lists (Sec. 51 (1). It should be noted that under case (2) above, the allotment is not void if the stock exchange merely defers the decision on permission to deal, or does not arrive at a decision within the stated time. During the periods stated in cases (1) and (2) above, the application money received by the company from shareholders who applied for shares has to be kept on separate account (Sec. 51 (3) ; "that appears", as Harman J. observed in Re Nanwa Gold Mines Ltd, "to be an attempt to erect, so to speak, by statute a kind of trust for applicant", consequently, the application money thus kept on separate account does not form part of the general assets of the company which are charged by a debenture secured by a floating charge. The relationship between the applicants and the company which holds the application moneys on separate account is that if bailers and bailee, and not of creditors and debtor". Now, we will refer to the case in Nanwa Gold Mines Ltd. Ballantyne vs Nanwa Gold Mines Ltd., [1955] I W.L.R. 1080 @ 1085. "Sub section (3) provides that where money is sent in on a provisional application: "All money received as "aforesaid shall 525 be kept in a separate bank account so long as the company may become liable to repay it under the last foregoing sub section; and, if default is made in complying with this sub section, the company and every officer of the company who is in default shall be liable to a fine not exceeding five hundred pounds". That appears to be an attempt to erect so to speak, by statute a kind of trust for applicants in a case of this sort. It is irrelevant here, because in this case the directors promised to do this very thing; No doubt that was only a compliance with the statute; but they did promise to do so and I think that their promise is of contractual effect, so I need not consider whether, if there was no promise but only the statutory obligation, the position would be the same. I incline to think it would be so, and that the object of section 51(3) was to provide protection for persons who pay money on the faith of promises of this kind". As to the present position with regard to the liability to refund under Sec. 73 2(A) it is important to bear in mind that two notifications have come to be issued in exercise of powers conferred under Section 642. Notification No. GSR 614 (E) dated 3rd October, 1991, called the Companies (Central Government 's) General Rules and Forms (Second Amendment), 1991, which came into force on 1st November, 1991. In the above notification it is stated as under: "If the company does not receive application money for at least 90% of the issued amount, the entire subscription will be refunded to the applicants within ninety days from the date of closure of the issue. If there is delay in the refund of application money by more than 8 days after the company becomes liable to pay the excess amount, the company will pay interest for the delayed period, at prescribed rates in sub section (2) and (2A) of Section 73. No statement made in this Form shall contravene any of the provisions of the , and the rules made thereunder". "Signature of Directors" Again, notification No. S.O. 666(E) dated October 3, 1991 issued under sub section (1) of Section 641 with amendments in Schedule II to the said Act, under Part I General Information, stated as under: "(f) Declaration about the issue of allotment letters/refunds within a period of 10 weeks and interest in case of any delay 526 in refund at the prescribed rate under Section 73(2)/2A" Thus, the liability of the company to repay the excess amount under section 73(2A) will arise only on the expiry of 10 weeks from the date of the closure of subscription lists. The interest begins to accrue thereupon at the end of 8 days. As the meaning of the word "forthwith", we will now refer to Bouvier 's Law Dictionary for the meaning of the word "forthwith". "FORTHWITH. As soon as by reasonable exertion, confined to the object, it may be accomplished. (Approved in Dickerman vs Trust Co., ; 176 U.S. 193, , This is the import of the term; it varies, of course, with every particular cases; 4 Tyrwh. 837; Edwards vs Ins Co., See Seammon vs Ins. Co., 101, III 621; ; Bannect vs Ins 67 N.Y. 274; Pennsylvanis R. Co. vs Reichert, ; Meriden Silver Plate Co. vs Flory , It is not as promptly as immediately; in some cases it might mean within a reasonable time; We will also refer to 193 Soutern Reporter, 339 and 16 Soutern Reporter 33 @ 35 Col I. "As regards compliance with statute requiring petition for judicial review of an executive committee 's denial of primary election contest to be filled "forthwith" the term "forthwith" is a relative one and means within such time as to permit that which is to be done, to be done lawfully and according to the practical and ordinary course of things to be performed or accomplished, and it is not to be used by way of a penalty when accidental interventions of which party is not to be charged with foresight have upset what otherwise would have been reasonable calculations regarding available time. Laws 1035, exhibit Secs c. 10". "Forthwith" is not susceptible of a fixed time definition, and the surrounding facts and circumstances must be taken into consideration in determining the question, and forthwith may be minutes, hours, days or even weeks". Therefore it cannot be said that "forthwith" means E.O. instanti. It cannot but be held that the payment of interest is only compensatory and not penal. Merely because clause 10 to which a reference has already been made uses the word "penal" it cannot be amount to penalty. As useful reference can be made in Mahalaxmi Sugar Mills Co. Ltd. vs Commissioner of Income Tax, Delhi, New Delhi; , "4. Penalties if any person defaults in payment of excess imposed under sub section (1) of Sec. 3, or , contravenes any provision of any rule made under this Act, he shall without prejudice to his liability therefore under sub section (5) of Sec. 3 be liable to imprisonment upto six months or to a fine not exceeding rupees five thousand or both and in the case of continuing contravention in to a further fine not exceeding rupees five thousand or both and in the case of continuing contraventio in to a further fine not exceeding rupees one thousand 527 for each day during which the contravention continues". It is apparent that section 3(2) requires the payment of cess on the date prescribed under the rules. Rule 4 of the U.P. Sugarcane Cess Rules, 1956 provides that the cess due on the sugarcane entering into the premises during the first fortnight to each calendar year must be deposited in the government treasury by the twenty second day of that month and the cess due for the remainder of the month must be deposited before the seventh day of the next following month. If the cess is not paid by the specified date, then by virtue of section 3(3) the arrear of cess will carry interest at the rate of six per cent per annum from the specified date to the date of payment. Section 3(5) is a very different provision. It does not deal with the interest paid on the arrears of cess but provides for an additional sum recoverable by way of penalty from a person who default in making payment of cess. It is a thing apart from an arrear of cess and the interest due thereon. Now, the interest payable on an arrear of cess under section 3(3) is in reality part and parcel of the liability to pay cess. It is an accretion to the cess. The arrear of cess "carries" interest; if the cess is not paid within the prescribed period a larger sum will become payable as cess. The enlargement of the cess liability is automatic under section 3(3). No specific order is necessary in order that the obligation to pay interest is as certain as the liability to pay cess. As soon as the prescribed date is crossed without payment of the cess, interest begins to accrue. It is not a penalty for which provisions has been separately made by section 3(5). Nor is it a penalty within the meaning of section 4, which provides for a criminal liability and a criminal prosecution. The penalty payable under section 3(5) lies in the discretion of the collecting officer or authority. In the case of the penalty under section 4, no prosecution can be instituted unless, under section 5(1), a complaint is made by or under the authority of the Cane Commissioner of the District Magistrate. There is another consideration distinguishing the interest payable under section 3(3) from the penalty imposed under section 3(5). Section 3(6) provides that the officer or authority empowered to collect the cess may forward to the Collector a certificate under his signature specifying the amount of arrears including interest due from any person, and on receipt of such certificate the Collector is required to proceed to recover the amount specified from such person as if it were an arrear of land revenue. The words used in section 3(6) are "specifying the amount of arrears including interest", that is to say that the interest is part of the arrear of cess. In the case of a penalty imposed under section 3(5), a separate provision for recovery has been made under section 3(7). Although the manner of recovery of a penalty provided by section 3(7) is the same as the manner of recovery provided by section 3(6) of the arrears of cess, the Legislature dealt with it as something distinct from the recovery of the arrears of cess including 528 interest. In truth, the interest provided for under s.3(3) is in the nature of compensation paid to the Government for delay in the payment of cess. It is not by way of penalty. The provision for penalty as a civil liability has been made under section 3(5) and for penalty as a criminal offence under s.4. The Delhi High Court proceeded entirely on the basis that the interest bore the character of a penalty. It was according to the learned Judges "penal interest". The learned Judge failed to notice section 3(5) and s.4 and the other provisions of the Cess Act". The last question will be that in view of the clear terms of the statute whether the administrative inconvenience could be pleaded. This could be decided with reference to the case in Sanjeev Coke Manufacturing Co. vs Bharat Coking Coal Ltd. & Another, ; @ 1029, as follows: ". But in the ultimate analysis, we are not really to concern ourselves with the hollowness or the self condemnatory nature of the statements made in the affidavits filed by the respondents to justify and sustain the legislation. The deponents of the affidavits filed into Court may speak for the parties on whose behalf they swear to the statement. They do not speak for the Parliament. No one may speak for the Parliament and Parliament has said what it intends to say, only the Court may say what it the Parliament meant to say. None else. Once a statute leaves Parliament House, the Court 's is the only authentic voice which may echo (interpret) the Parliament. This the court will do with reference to the language of the statute and other permissible aids. The executive Government may place before the court their understanding or misunderstanding of what Parliament has said or intended to say or what they think was Parliament 's object and all the facts and circumstances which in their view led to the legislation. When they do so, they do not speak for Parliament. No Act of Parliament may be struck down because of the understanding of Parliamentary intention by the executive government or because their (the Government 's) spokesmen do not bring out relevant circumstances but indulge in empty and self defeating affidavits. They do not and they cannot bind Parliament. Validity of legislation is not to be judged merely by affidavits filed on behalf of the State, but by all the relevant circumstances which the court may ultimately find and more especially by what may be gathered from what the legislature has itself said. " 529 Therefore, it has to be held that administrative inconvenience can hardly be any ground. Viewing the statutory provisions form the above perspective, I agree with my learned brother that the liability to repay the excess amount arose on November 1, 1990 and the liability to pay interest arose on the expiry of eight days from November 1, 1990. ORDER For the reasons stated by us in our separate but concurring judgments dated 4.2.1992, we allow the appeal to the limited extent indicated by us and the judgment of the High Court shall stand altered accordingly. In the circumstances of this case, we make no order as to costs. V.P.R. Appeal allowed.
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The company making the appeal was officially registered. It got permission from the Indian government to sell 72 million shares for 10 rupees each, and about 3.4 million bonds for 100 rupees each. One condition of the permission was that the company had to send out all the shares and bonds, or refund money, within 10 weeks of when people stopped signing up to buy them. On July 12, 1990, the company released a document saying they had asked the stock markets in Indore, Ahmedabad, Bombay, Calcutta, and Delhi for permission to trade the shares and bonds. They also said they would pay 15% interest on extra money they received, as instructed by the Ministry of Finance. The offer to the public would start on August 20, 1990, and end on August 23, 1990, and wouldn't last past August 31, 1990. The offer started on August 20, 1990. The company got over 2.6 million requests for shares, adding up to more than 225 crore rupees, even though they only wanted to raise 25 crore rupees. The share offer closed on August 23, 1990. On October 15, 1990, the company's leaders agreed on who would get the shares. Before November 1, 1990, they got permission from the stock markets to trade the shares. The company had to send out over 2.5 million refunds, which were printed in Bombay but were supposed to be sent from Delhi. The company sent about 855,000 refunds from New Delhi, about 100,000 each day. On October 26, 1990, about 670,000 refunds were sent from Bombay to Delhi. A fire broke out during the trip, destroying many refunds, and about half of them were lost. The company talked to the Madhya Pradesh Stock Exchange and their bank and decided to cancel all the refunds to prevent fraud. Because they canceled the refunds and had to print new ones, there was a delay in sending them out. The Madhya Pradesh Stock Exchange gave the company more time to send the refunds, first until November 30, 1990, and then until December 19, 1990. The Bombay Stock Exchange refused to give more time and told the company they had to pay interest because of the delay. The refunds weren't sent until November 12, 1990. The Indian government and the Securities and Exchanges Board of India said the company had to pay interest to the investors for the delay, as required by law, from November 1 (10 weeks after the offer closed) until the refunds were mailed. The company filed a legal paper in the High Court because they were worried the government would tell the stock markets to stop trading their shares and take other actions against them. In the High Court, the government said the company had to pay the extra money after 10 weeks from when the offer closed. The Securities and Exchanges Board of India said the company had to pay from the date the shares were assigned. The company argued that they only had to pay after the deadline given by the Stock Exchange at Indore. The High Court said the company had to pay interest for the delay, starting 8 days after the shares were assigned, not 10 weeks after the offer closed. The company then appealed to a higher court, asking whether the High Court was wrong to ignore the 10-week deadline when figuring out the interest, even though the shares were assigned before that deadline. The company argued that they could keep the extra money for the time mentioned in the document they released, and therefore didn't have to pay interest until that time was up. They also said that because the Madhya Pradesh Stock Exchange gave them until December 19, 1990, to send the refunds, they didn't have to repay the money until then, and that interest was like a penalty, so the law should be interpreted reasonably, taking into account the reasons for the delay. The government argued that the company had to repay the money when the shares were assigned, and any delay past 8 days meant they had to pay interest. The higher court allowed the company's appeal. 1. 01 Justice T.K. Thommen said that a public company doesn't have to list its shares on a stock exchange. But if the company wants to offer shares or bonds to the public, they must ask a stock exchange for permission to trade them there before releasing any documents about the offer. 2. 02 Section 73, part 1 of the law only applies to companies offering shares or bonds to the public. Before this section was added, listing public offers wasn't required. 3. 03 Section 73, part 1A of the law says the company must state in its documents which stock exchanges they have asked for permission to list their shares. 4. 04 If a stock exchange doesn't give permission within 10 weeks of when the offer closes, any shares assigned become invalid. The validity of the share assignment depends on getting permission from each stock exchange. 5. 05 The company only has to repay the money if the stock exchange refuses permission within 10 weeks of when the offer closes. 6. 06 If the stock exchange doesn't give permission within 10 weeks, it's considered a refusal, and any shares assigned become invalid. 7. 07 Section 73, part 1A says that any shares assigned become invalid after 10 weeks if the stock exchange's permission hasn't been obtained. However, this is delayed until any appeal is decided. Still, if permission isn't obtained within 10 weeks, it's considered not to have been granted. 8. 08 The law is meant to delay making the share assignment invalid until 10 weeks have passed or any appeal is decided. In this case, the company had to repay the money by November 1, 1990, which was 10 weeks after the offer closed, and therefore had to pay interest 8 days after that. 9. 01 A company can appeal a stock exchange's decision under Section 22 of the Securities Contracts (Regulation) Act, 1956. 10. 02 While the appeal is being decided, the share assignment isn't invalid, and the stock exchange's decision depends on the result of the appeal. 11. 03 The fact that an appeal is happening doesn't delay the requirement to repay the money and the interest if the money isn't repaid within 8 days. 12. 01 Section 73, part 1A says that interest becomes payable in two situations: first, if the company didn't ask for permission before making the offer, breaking the law; or second, if they asked for permission but didn't get it. In the first case, the company has to pay interest from the date they received the money because they shouldn't have received any money without permission. In the second case, they don't have to pay interest until 8 days after they were supposed to repay the money because they didn't get permission. 13. 02 Before 1975, Section 73 didn't specifically require the company or its leaders to repay any extra money they received. Section 73, part 2A was added to cover cases where the stock exchange gave permission, but the offer was oversubscribed, and the company had extra money. The updated section required the company to repay the extra money immediately but didn't require them to pay interest. However, the company's leaders were required to pay interest if the money wasn't repaid within 8 days, unless they could prove the delay wasn't their fault. 14. 03 Because there wasn't a specific rule requiring the company to pay interest on oversubscribed amounts, and because there wasn't a rule protecting leaders who weren't directly in charge, and because listing public offers needed to be required, Section 73 was updated again in 1988. One of the updates was changing part 2A to make the company and every leader who was "an officer in default" responsible for repaying the extra money with interest. 15. 04 A "leader of a company who is an officer in default" should be understood based on the definition in Section 2 (31) along with Section 5. This includes the managing director or a full-time leader of the company. 16. 05 The responsibility under Section 73, part 2A only applies to a leader who is "an officer in default," not to any other leader. For example, government representatives or financial institutions on the company's board who aren't directly in charge of running the company aren't personally responsible. 17. 06 Section 73, part 2A explains how interest is calculated. Unlike Section 73, part 2B, which deals with fines or imprisonment, part 2A only deals with interest, which isn't a penalty. It's just a way to calculate the amounts owed. Any arguments about a penalty don't apply to the company's or its leaders' responsibility to pay interest under Section 73, part 2A. 18. 07 Section 73, part 2B only deals with not following Section 73, part 2A, which is repaying the extra money. If the company doesn't repay the extra money as required by Section 73, part 2A, the company and every leader who is in default will face a punishment, in addition to paying the interest required by Section 73, part 2A. 19. 08 The interest under Section 73, part 2 is payable to the applicants unless the money is returned to them within the specified time, even if there's an appeal happening as mentioned in Section 73, part 1A. Section 73, part 3 should be understood in a way that fits with the other parts of Section 73. 20. 09 If permission for listing under Section 73, part 1 isn't granted, the interest under Section 73, part 2 is required. Section 73, part 2 says that the money received from applicants must be repaid immediately if permission hasn't been asked for, or if it has been asked for but not granted. 21. 10 The interest under Section 73, part 2 doesn't depend on whether the share assignment is invalid under Section 73, part 1A. 22. 01 "Immediately" doesn't always mean instantly. The word has to be understood in the context of the law. However, when the law requires money to be paid and interest to be added at certain times, "immediately" must mean right away to avoid any confusion. The right or responsibility happens exactly as the law says. 23. 02 When "immediately" is used to determine when and how to pay the money and interest, it shouldn't be interpreted loosely. The lawmakers meant "immediately" to refer to a specific day when the responsibility to repay the money arose, and that's the day from which the 8-day period is calculated, after which interest starts to add up. 24. 01 Justice Mohan agreed that Section 73, part 2A only applies when permission has been granted by the stock exchange. The words "where permission has been granted" are important. Therefore, the argument that the responsibility to pay interest arises on the date the shares are assigned might not be correct. Also, it wouldn't be correct to argue that the responsibility to repay arises when the shares aren't assigned. 25. 02 The company's responsibility to repay the extra money under Section 73 (2A) only arises after 10 weeks from the date the offer closes. The interest then starts to add up after 8 days. 26. 01 The word "due" in Section 73 has been used to make it clear that a borrower can't repay a loan before the agreed-upon time. The right to repay arises when the loan is due and can be used at any time after that, subject to the law. 27. 02 "Due" means payable immediately or a debt that exists but is payable later. It can't be argued that "due" and "payable" mean the same thing. 28. It can't be said that the payment of interest is a penalty. Just because the word "penalty" is used, it doesn't mean it's a penalty. 29. Administrative issues can't be used as an excuse when the law is clear. 30. "Immediately" doesn't have a fixed definition, and the surrounding facts must be considered. It can mean minutes, hours, days, or even weeks. 31. It can't be said that "immediately" means instantly. 32. The money put in the separate bank account can only be used for two things: (1) to pay for shares if listing is allowed; or (2) to repay the money if listing isn't allowed or the company can't assign shares. The company can't use the money in any other way or keep it longer than allowed by the law. 33. Interest doesn't start to add up under Section 73, part 2 until 8 days have passed from the end of the 10-week period that starts when the offer closes. The fact that the law says this is enough to show that the lawmakers wanted to give the company a reasonable amount of time to send the refunds. 34. Companies usually assign shares as soon as possible after asking the stock exchange for permission to list them. After making the offer, they receive money from the public and assign shares, expecting to get permission. The better the company's reputation, the more money they're likely to receive. If permission isn't granted, all the money received must be repaid immediately. On the other hand, if permission is granted, but the money received is more than the money needed for the shares, the extra money must be repaid immediately. Whether permission will be granted can't be known until the 10-week period has passed. Until those 10 weeks have passed, neither the public nor the company can know whether the share assignments are valid. This is a time of uncertainty, and that's why the law says that if permission is refused, the money must be repaid after 10 weeks. 35. The possibility of an appeal doesn't delay repayment. It shouldn't matter whether the money has to be repaid because permission was refused, or because permission was granted but there was extra money. In either case, the money must be repaid after 10 weeks from when the offer closed, and interest will start to add up 8 days after that. This makes sense for both the investor and the company and is clear, consistent, and easy to apply. 36. Section 73 isn't perfectly clear. It has been changed several times and still isn't easy to understand. However, the way the law was understood by the people in charge of enforcing it at the time is very important. This understanding fits with the words and purpose of the law. It's a practical and reasonable understanding because it gives the company enough time to send the refunds, and the investor doesn't have to wait too long for their money back.
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2038 of 1991 is, when does a company become liable to pay interest under section 73 (2A) of the (the "Act"). Does it arise on the date of the allotment, as found by the High Court, or on the expiry of 10 weeks from the date of closing of the subscription lists, referred to in sub section (1A) of section 73, or, as contended by the company, on the expiry of the period mentioned in the prospectus? The High Court thus held that the company was liable to pay interest at the prescribed rates for the period of delay and the liability for the same arose on the expiry of 8 days from the date of allotment of the shares, and not from the date of expiry of 10 weeks, where allotment was made earlier to that date. Where a prospectus, whether issued generally or not, states that an application under sub section (1) has been made for permission for the shares or debentures offered thereby to be dealt in one or more recognised stock exchanges, such prospectus shall state the name of the stock exchange or, as the case may be, each such stock exchange, and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of ten weeks from the date of the closing of the subscription lists: Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the shares or debentures to be dealt in on that stock exchange has been preferred under section 22 of the (42 of 1956), such allotment shall not be void until the dismissal of the appeal. " Any allotment of shares will become void if permission is not granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of 10 weeks from the date of the closing of the subscription lists. There is a deemed refusal if permission is not granted by the stock exchange before the expiry of 10 weeks from the date of closing of the subscription lists, and upon the expiry of that date, any allotment of shares made by the company becomes void. Where the permission has not been applied under sub section (I) or, such permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money." As a result of substitution of a proviso of the sub section by the Amendment Act of 1988, the company and every director of the company `who is an officer in default ' are made jointly and severally liable for payment of the principal amount as well as interest. Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the application moneys relating to the shares or debentures in respect of which 500 allotments have been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if such money is not repaid within eight days, from the date the company becomes liable to pay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed having regard to the length of the period of delay in making the repayment of such money". It is further contended on behalf of the company that in any view interest is payable as a penalty and, therefore, a reasonable and rational construction has to be placed upon the statute in regard to the commencement of the liability of the company to repay the excess amount. Any consideration with reference to a penal provision is of no relevance to the liability of the company or its directors to pay interest in terms of sub section (2A). Sub section (1) referred to in sub section (5), as substituted on 1.2.1975, is in fact the present sub section (1A), for, as stated earlier, the original sub section (1) was amended and renumbered as sub section (1A) when the present sub section (1) was inserted by the Companies (Amendment) Act, 1988 w.e.f. If the permission for listing sought under sub section (1) is not granted, the interest payable under sub section (2) is attracted. All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled bank until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2), and if default is made in complying with this sub section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees." Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely: (a) adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus; or (b) repayment of moneys received from applicants in pursuance of the prospectus, where shares have not been permitted to the dealt in on the stock exchange or each stock exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share". (1) Where a prospectus, whether issued generally or not states that application has been or will be made for permission for the shares or debentures offered thereby to be dealt in on a recognised stock exchange, any allotment made on an application in pursuance of the prospectus shall, whenever made, be void, if the permission has not been applied for before the tenth day after the first issue of the prospectus or, if the permission has not been granted before the expiry of (four weeks) be notified to the applicant for permission by or on behalf of the stock exchange. (2) Where the permission has not been applied for as aforesaid, or has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from ap 510 plicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of five per cent per annum from the expiry of the eighth day: Provided that a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part. (6) This section shall have effect : (a) in relation to any shares or debentures agreed to be taken by a person underwriting an offer thereof by a prospectus, as if he had applied, therefor in pursuance of the prospectus; and (b) in relation to a prospectus offering shares for sale, with the following modifications namely (i) reference to sale shall be substituted reference to allotment; (ii) the persons by whom the offer is made, and not the company, shall be liable under sub section (2) to repay money received from applicants, and reference to the company 's liability under that sub section shall be construed accordingly; and (iii) for the reference in sub section (3) to the company and every officer of the company who is in default, there 511 shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the default. (1) Where a prospectus whether issued generally or not states that an application has been, or will be, made for permission for the shares or debentures offered thereby to be dealt in on one or more recognised stock exchanges, such prospectus shall state the name or the stock exchange or, as the case may be, each such stock exchange, and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been applied for before the 10th day after the first issue of the prospectus, or, whether such permission has been applied for before that day, if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of 10 weeks from the date of the closing of the subscription lists : Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the share or debentures to be dealt in on that stock exchange has been preferred under section 22 of the (42 of 1956), such allotment shall not be void until the dismissal of the appeal. (2A) Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the applicant moneys relating to the shares or debentures 512 in respect of which allotment has been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if such money is not repaid within eight days, from the day the company becomes liable to pay it, the Directors of the Company shall be jointly and severally liable to repay the money with interest at the rate of twelve per cent per annum from the expiry of the said eighth day : Provided that a Director shall not be liable if he proves the the default in the payment of the money was not due to any misconduct or negligence on his part. (3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank (until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2); and default is made in complying with this sub section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees. (3A) Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely: (a) Adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus; or (b) Repayment of moneys received from applicants in pursuance of the prospectus, where shares have not been permitted to be dealt in on the stock exchange or each stock 513 exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share. (1A) Where a prospectus, whether is issued generally or not, states that an application under sub section (1) has been made for permission for the shares or debentures offered thereby to be dealt in one or more recognised stock exchange, such prospectus shall state the name of the stock exchange and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of ten weeks from the date of the closing of the subscription lists : Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the shares or debentures to be dealt in on that stock exchange has been preferred under section 22 of the Securities Contracts (Regulations) Act, 1956 (42 of 1956), such allotment shall not be void until the dismissal of the appeal. (2) Where the permission has not been applied for under sub section (1) or, such permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company become liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen pr cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money. (2A) Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the application moneys relating to the shares or debentures in respect of which allotments have been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if 515 such money is not repaid within eight days, from the day the company becomes liable to pay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money. (3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2) and if default is made in complying with this sub section, the company and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees. (3A) Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely : (a) adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus ; or (b) repayment of moneys received from applicants in pursuance of the prospectus where shares have not been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share. (6) This section shall have effect (a) in relation to any shares or debentures agreed to be taken by a person under writing an offer thereof by a prospectus, as if he had applied therefore in pursuance of the prospectus; and (b) in relation to a prospectus offering shares for sale, with the following modifications, namely (i) reference to sale shall be substituted for references to allotment; (ii) the persons by whom the offer is made, and not the company, shall be liable under sub section (2) to repay money received from applicants, and references to the company 's liability under that sub section shall be construed accordingly; and (iii) for the reference in sub section (3) to the company and every officer of the company who is in default, there shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the default. In fact, sub section 5 of the said section states categorically as follows : "If the conditions aforesaid have not been complied with on the expiry of one hundred and twenty days after the first issue of the prospectus, all moneys received from applicants for shares shall be forthwith repaid to them without interest; and if 518 any such money is not so repaid within one hundred and thirty days after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of six per cent per annum from the expiry of the one hundred and thirtieth day : Provided that a director shall not be so liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part". "Sub section (3) provides that where money is sent in on a provisional application: "All money received as "aforesaid shall 525 be kept in a separate bank account so long as the company may become liable to repay it under the last foregoing sub section; and, if default is made in complying with this sub section, the company and every officer of the company who is in default shall be liable to a fine not exceeding five hundred pounds". 666(E) dated October 3, 1991 issued under sub section (1) of Section 641 with amendments in Schedule II to the said Act, under Part I General Information, stated as under: "(f) Declaration about the issue of allotment letters/refunds within a period of 10 weeks and interest in case of any delay 526 in refund at the prescribed rate under Section 73(2)/2A" Thus, the liability of the company to repay the excess amount under section 73(2A) will arise only on the expiry of 10 weeks from the date of the closure of subscription lists.
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One condition of the permission was that the company had to send out all the shares and bonds, or refund money, within 10 weeks of when people stopped signing up to buy them. The Bombay Stock Exchange refused to give more time and told the company they had to pay interest because of the delay. The Indian government and the Securities and Exchanges Board of India said the company had to pay interest to the investors for the delay, as required by law, from November 1 (10 weeks after the offer closed) until the refunds were mailed. In the High Court, the government said the company had to pay the extra money after 10 weeks from when the offer closed. The High Court said the company had to pay interest for the delay, starting 8 days after the shares were assigned, not 10 weeks after the offer closed. The company argued that they could keep the extra money for the time mentioned in the document they released, and therefore didn't have to pay interest until that time was up. They also said that because the Madhya Pradesh Stock Exchange gave them until December 19, 1990, to send the refunds, they didn't have to repay the money until then, and that interest was like a penalty, so the law should be interpreted reasonably, taking into account the reasons for the delay. The government argued that the company had to repay the money when the shares were assigned, and any delay past 8 days meant they had to pay interest. Thommen said that a public company doesn't have to list its shares on a stock exchange. But if the company wants to offer shares or bonds to the public, they must ask a stock exchange for permission to trade them there before releasing any documents about the offer. 03 Section 73, part 1A of the law says the company must state in its documents which stock exchanges they have asked for permission to list their shares. 05 The company only has to repay the money if the stock exchange refuses permission within 10 weeks of when the offer closes. 07 Section 73, part 1A says that any shares assigned become invalid after 10 weeks if the stock exchange's permission hasn't been obtained. In this case, the company had to repay the money by November 1, 1990, which was 10 weeks after the offer closed, and therefore had to pay interest 8 days after that. 03 The fact that an appeal is happening doesn't delay the requirement to repay the money and the interest if the money isn't repaid within 8 days. In the first case, the company has to pay interest from the date they received the money because they shouldn't have received any money without permission. Any arguments about a penalty don't apply to the company's or its leaders' responsibility to pay interest under Section 73, part 2A. If the company doesn't repay the extra money as required by Section 73, part 2A, the company and every leader who is in default will face a punishment, in addition to paying the interest required by Section 73, part 2A. 08 The interest under Section 73, part 2 is payable to the applicants unless the money is returned to them within the specified time, even if there's an appeal happening as mentioned in Section 73, part 1A. Section 73, part 3 should be understood in a way that fits with the other parts of Section 73. 09 If permission for listing under Section 73, part 1 isn't granted, the interest under Section 73, part 2 is required. Section 73, part 2 says that the money received from applicants must be repaid immediately if permission hasn't been asked for, or if it has been asked for but not granted. 01 Justice Mohan agreed that Section 73, part 2A only applies when permission has been granted by the stock exchange. 02 The company's responsibility to repay the extra money under Section 73 (2A) only arises after 10 weeks from the date the offer closes. 01 The word "due" in Section 73 has been used to make it clear that a borrower can't repay a loan before the agreed-upon time. The money put in the separate bank account can only be used for two things: (1) to pay for shares if listing is allowed; or (2) to repay the money if listing isn't allowed or the company can't assign shares. Interest doesn't start to add up under Section 73, part 2 until 8 days have passed from the end of the 10-week period that starts when the offer closes. On the other hand, if permission is granted, but the money received is more than the money needed for the shares, the extra money must be repaid immediately. This is a time of uncertainty, and that's why the law says that if permission is refused, the money must be repaid after 10 weeks.
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Civil Appeals Nos. 2567, 2818 20, 2648, 3277, 2817, 2918, 3079 83, 3001 04, 3543 48, 2810 16, 3375, 2864 2917, 2989 3000, 3084 3088, 3268 71, 3253 54, 3399 3400 of 1982. Appeals by special leave from the Judgments and orders dated the 30th April, 1982, 5th, 6th, 7th, 10th, 11th, 12th, 13th, 15th, May, 1982, 3rd, 17th, 23rd, August, 1982 of the Patna High Court in C.W.J.C Nos. 1788, 3726, 3727, 4529 of 1981, 253, 688, 1473 of 1982, 2771/81, 96/82, 1233, 1498, 1907, 1986 of 81, 1042, 1043, 1121, 1044 of 1982, 3198, 3197, 3195, 3147, 3146, 3148, 1573, 1377, 1802, 1852, 1800, 1950, 1776 of 1981, 1038 of 1982, 1300, 1301, 1303, 1329, 1334, 1383, 1648 of 1981, 255 of 1982, 1193, 1198, 1204, 1206, 1209, 1211, 1213, 1214, 1262 64, 1273, 1282, 1283, 1287, 1331, 1355 1382, 1384, 1386, 1431, 1432, 1484, 1488, 1489, 1548, 1645, 1734, 1833 of 1981, 78 of 1982, 1154, 1160, 1168, 1169. 1186, 1187, 1191, 1549, 1556, 1557 58, 1415, 1461, 1465, 1487 of 1981, 251 of 1982, 228, 1321 of 1981, 394, 1478 of 1982, 1320/81, 902, 565/82, 1775, 1177, 1801 of 1981, 503/82, 1804/81, 1, 3, 4, 6 & 7 of 1982, 3079, 3528 of 1981, 1947/82, 1254/82, 2922/81, 1372/82, 1408 & 1482 of 1981. AND Special Leave Petitions Nos. 10744 53, 9554 58, 9788, 9821 22, 10907, 9095, 1202 05, 9886 88, 9500 02, 9753, 9523, 10912, 11069, 10754 56, 10797 10812, 10891, 9702, 9782, 9561, 14001, 14364 66 of 1982, 1393 96, 1422 23, 1472 73 of 1983. From the Judgments and orders dated the 30th April, 1982, 3rd May, 5th, 6th, 7th, 10th, 11th, 12th, 13th May, 19th August 9th & 15th September, 8th & 18th October 1982, 20th & 21st January, 1983 of the Patna High Court in C.W.J.C. Nos. 1176, 1516 139 1435, 1177, 1618, 1469 & 1252 of 1982, 3398/81, 1355/82, 525182, 3640, 3641, 3642, 3743 & 3745 of 1982, 1326, 1784, 1405, 1854, 3337, A 1656 of 1981, 349, 1108, 1148, 4073, 4074, 4075 of 1982, 3118, 3080, 1161, 1374, 2804, 3035 of 1981, 4213/82, 1517/82, 1278, 1414, 1290, 1291, 1292, 1297, 1306, 1200, 1212, 1256, 1276, 1277, 1485 of 1981, 484, 509/82, 1517, 1578, 1450, 4037, 2944, 1788, 2889 of 1981, 1547, 506, 507, 508, 4931, 1253, 1431, 1432, 207 & 214 of 1982 & 182 & 203 of 1983. WITH Writ Petitions Nos. 9266, 10055 56, 7002 09, 7019 23, 7024, 7921 22, 7996.97, 8508 10, 9680 92, 9322, 7647 53, 8005, 8067, 7160 of 1982, 415 76 78, 640 41, 652 of 1983 (Under article 32 of the Constitution of India) A.B. Divan, A.K. Sen, Shankar Ghose, P.R. Mridul, Hardev Singh & S.T. Deasi, Talat Ansari, Ashok Sagar, Sandeep Thakore, Ms. Rainu Walia, D.N. Misra, D.P. Mukherjee, B.R. Agarwala, Miss Vijayalakshmi Menon, U.P. Singh, B.B. Singh. B.S. Chauhan, Anil Kumar Sharma, Praveen Kumar, A.T. Patra, Vineet Kumar, A.K. Jha, M.P. Jha, R.S. Sodhi, A. Minocha, Mrs. Indu Goswamy, S.K. Sinha, Vinoo Bhagat, P.N. Misra, KK. Jain and Pramod Dayal for the Appellants. K Parasaran, Solicitor General, R.B. Mahto, Addl. Advocate General. Bihar. Pramod Swarup and U.S. Prasad for the Respondents. The Judgment of the Court was delivered by SEN, J. These are appeals by special leave from a judgment and order of the High Court of Patna dated April 30, 1982 by which the High Court upheld the constitutional validity of sub section (I) of s.5 of the Bihar Finance Act, 1981 ("Act ' for short) which provides for the levy of a surcharge on every dealer whose gross turnover during a year exceeds Rs. 5 lakhs, in addition to the tax payable by him, at such rate not exceeding 10 per centum of the total amount of tax, and of sub section (3) of section 5 of the Act which prohibits such dealer from collecting the amount of surcharge payable by him from the purchasers. 140 The Bihar Finance Act 1981, is not only an Act for the levy A of a tax on the sale or purchase of goods but also is an Act to consolidate and amend various other laws. We are here concerned with section S of the Act which finds place in Part I of the Act which bears the heading "Levy of tax on the sale and, purchase of goods in Bihar and is relatable to Entry 54 of List II of the Seventh Schedule. By two separate notifications dated January 15, 1981 the State Government of Bihar in exercise of the powers conferred by sub section (I) section S of the Act appointed January, IS; 1981 to be the date from which surcharge under section 5 shall be leviable and fixed the rate of surcharge at 10 per centum of the total amount of the tax payable by a dealer whose gross turnover during a year exceeds Rs. 5 lakhs, in addition to the tax payable by him. The Act was reserved for the previous assent of the President and received his assent on April 20, 1981. There is no point raised as regards the validity of the notifications in question and therefore there is no need for us to deal with it. The principal contention advanced by the appellants in these appeals is that the field of price fixation of essential commodities in general, and drugs and formulations in particular, is an occupied field by virtue of various control orders issued by the Central Government from time to time under sub section (I) of section 3 of the which allows the manufacturer of producer of goods to pass on the tax liability to the consumer and therefore the State Legislature of Bihar had no legislative competence to enact sub section (3) of section S of the Act which interdicts that no dealer liable to pay a surcharge, in addition to the tax payable by him, shall be entitled to collect the amount of surcharge, and thereby trenches upon a field occupied by a law made by Parliament. Alternatively, the submission is that if sub s (3) of section 5 of the Act were to cover all sales including sales of essential commodities whose prices are fixed by the Central Government by various control orders issued under the Essential commodities Act, then there will be repugnancy between the State law and the various control orders which according to section 6 of the must prevail. There is also a subsidiary contention put forward on behalf of the appellants that sub section (I) of section S of the Act is ultra vires the State Legislature in as much as the liability to pay surcharge is on a dealer whose gross turnover during a year exceeds Rs. 5 lakhes or more i.e. inclusive of transactions relating to Sale or purchase of goods which have taken place in the course of inter state trade or commerce or outside the State or in the course of import into, or 141 export of goods outside the territory of India. The submission is that such transactions are covered by article 286 of the Constitution and A therefore are outside the purview of the Act and thus they cannot be taken into consideration for computation of the gross turnover as defined in section 2 (j) of the Act for the purpose of bearing the incidence of surcharge under sub section (1) of section 5 of the Act. It will be convenient, having regard to the course taken in the arguments, to briefly refer to the facts as are discernible from the records in Civil Appeal No. 2567 of 1982 Messrs Hoechst Pharmaceuticals Limited & Another vs The State of Bihar & others, and Civil Appeal No. 3277 of 1982 Messrs Glaxo laboratories (India) Limited vs The State of Bihar & others. Messrs Hoechst Pharmaceuticals Limited and Messrs Glaxo Laboratories (India) Limited are companies incorporated under the engaged in the manufacture and sale of various medicines and life saving drugs throughout India including the State of Bihar. They have their branch or sales depot at Patna registered as a dealer under section 14 of the Act and effect sales of their manufactured products through wholesale distributors or stockists appointed in almost all the districts of Bihar who, in their turn, sell them to retailers through whom the medicines and drugs reach the consumers. Almost 94% of the medicines and drugs sold by them are at the controlled price exclusive of local taxes under the Drugs (Price Control) order, 1979 issued by the Central Government under sub section (1) of section 3 of the and they are expressly prohibited from selling these medicines and drugs in excess of the controlled price so fixed by the Central Government from time to time which allows the manufacturer or producer to pass on the tax liability to the consumer. The appellants have placed on record their printed price lists of their well known medicines and drugs manufactured by them showing the price at which they sell to the retailers as also the retail price, both inclusive of excise duty. It appears therefrom that one of the terms of their contract is that sales tax and local taxes will be charged wherever applicable. These appellants have also placed on record their orders of assessment together with notices of demand, for the assessment years 1980 81 and 1981 82. For the assessment year 1980 81, the Commercial Taxes officer, Patna Circle, Patna determined the gross turnover of sales in the State of Bihar through their branch office at Patna of Messrs Hoechst Pharmaceuticals Limited on the basis of the return 142 filed by them at Rs. 3,13,69,598,12p. and the tax payable thereon at Rs. 19,65,137.52.p. The tax liability for the period from January 15, 1981 to March 31, 1981 comes to Rs. 3,85,023.33.p. and the surcharge thereon at 10% amounts to Rs. 38,503.33p. Thus the total tax assessed of Messrs Hoechst Pharmaceuticals Limited including surcharge for the assessment year 1980 81 amounts to Rs. 20,03,640.85p. The figures for the assessment year 1981 82 are not available. Foe the assessment years 1980 81 and 1981 82 the annual returns filed by Messrs Glaxo Laboratories (India) Limited show the gross turnover of their sales in the State of Bihar through their branch at Patna at Rs. 5,17,83,985.76p. and Rs. 5,89,22,346.64p. respectively. They have paid tax along with the return amounting to Rs. 34,06,809.80p. and Rs. 40,13,057.28p. inclusive of surcharge at 10% of the tax for the period from January 15, 1981 to March 31, 1981 and April 1981 to January 19, 1982 amounting to Rs. 34,877.62p. and Rs. 3,09,955.86p. respectively. There is excess payment of Rs. 55,383.98p. in the assessment year 1980 81 and Rs. 13,112.35p. in the year 1981 82. These figures show the magnitude of the business carried on by these appellants in the State of Bihar alone and their capacity to bear the additional burden of surcharge levied under sub section (I) of section 5 of the Act. The High Court referred to the decision in section Kodar vs State of Kerala(1) where this Court upheld the constitutional validity of sub section (2) of section 2 of the Tamil Nadu Additional Sales Tax Act, 1970 which is in pari materia with sub section 3 of section S of the Act and which interdicts that no dealer referred to in sub section (l) shall be entitled to collect the additional tax payable by him. It held that the surcharge levied under sub section (1) of section 5 is in reality an additional tax on the aggregate of sales effected by a dealer during a year and that it was not necessary that the dealer should be enabled to pass on the incidence of tax on sale to the purchaser in order that it night be a tax on the sale of goods. Merely because the dealer is prevented by sub section (3) of section 5 of the Act from collecting the surcharge, it does not cease to be a surcharge on sales tax. It held relying on Kodar 's case, supra, that the charge under sub section (I) of section 5 of the Act falls at a uniform rate of 10 per centum of the tax on all dealers falling within the class specified therein i. e. whose gross turnover during a year exceeds Rs. 5 lakhs, and is therefore not discriminatory and violative of article 14 of the Constitution, nor is it possible to say that 143 because a dealer is disabled from passing on the incidence of surcharge to the purchaser, sub section (3) of section 5 imposes an unreasonable A restriction on the fundamental right guaranteed under article 19 (1) (g). As regards the manufacturers and producers of medicines and drugs, the High Court held that there was no irreconcilable conflict between sub section (3) of section 5 of the Act and paragraph 21 of the Drugs (Price Control) order 1979 and both the laws are capable of being obeyed. Undeterred by the decision of this Court in Kodar 's case, supra, the appellants have challenged the constitutional validity of sub section (3) of section 5 of the Act in these appeals on the ground that the Court in that case did not consider the effect of price fixation of essential commodities by the Central Government under sub s (I) of section 3 of the which, by reason of section 6 of that Act, has an overriding effect notwithstanding any other law inconsistent therewith. These appeals were argued with much learning and resource particularly with respect to federal supremacy and conflict of powers between the Union and State Legislatures and as to how if there is such conflict, their respective powers can be fairly reconciled. In support of these appeals, learned counsel for the appellants have advanced the following contentions viz: (1) The opening words of article 246 (3) of the Constitution "Subject to clauses (1) and (2)" make the power of the Legislature of any State to make laws for such State or any part thereof with respect to any of the matters enumerated in List II of the Seventh Schedule subject to the Union power to legislate with respect to any of the matters enumerated in List I or List III. That is to say, sub section (3) of section 5 of the Act which provides that no dealer shall be entitled to collect the surcharge levied on him must therefore yield to section 6 of the which provides that any order made under section 3 of the Act shall have effect notwithstanding anything inconsistent therewith contained in any enactment other then the Act or any instrument having effect by virtue of any enactment other than the Act. The entire submission proceeds on the doctrine of occupied field and the concept of federal supremacy. In short, the contention is that the Union power shall prevail in a case of conflict between List II and List III. (2) sub section (3) of section 5 of the Act which provides that no dealer shall be entitled to collect the amount of surcharge levied on him, clearly falls within Entry 54 of List II of the Seventh Schedule and it collides with, and or is inconsistent with, or repugnant to, the scheme of Drugs (Price Control) order? 1979 generally so far as 144 price fixation of drugs is concerned and particularly with paragraph 21 which enables the manufacturer or producer of drugs to pass on the liability to pay sales tax to the consumer. If that be so, then there will be repugnancy between the State law and the Control order which according to section 6 of the , must prevail. It is the duty of the Court to adopt the rule of harmonious construction to prevent a conflict between both the laws and care should be taken to see that both can operate in different fields without encroachment. It is therefore submitted that there is no question of repugnancy and it can be avoided by the principle of reconciliation. That is only possible by giving full effect to the non obstante clause in section 6 of the . (3) The provisions contained in sub section (3) of section 5 of the Act is ex facie and patently discriminatory. The treats certain controlled commodities and their sellers in a special manner by fixing controlled prices. The sellers so treated by this Central law are so circumstanced that they cannot be equated with other sellers not effected by any control orders. The class of dealers who can raise their sale prices and absorb the surcharge levied under sub section (1) of section 5 and a class of dealers like the manufacturers andproducers of medicines and drugs who cannot raise their sale prices beyond the controlled price are treated similarly. Once the fact of different classes being separate is taken, than a State law which treats both classes equally and visits them with different burdens, would be violative of article 14. The State cannot by treating unequals as equals impose different burden on different classes. (4) The restriction imposed by sub section (3) of section 5 of the Act which prevents the manufacturers of producers of medicines and drugs from passing on the liability to pay surcharge is confiscatory and casts a disproportionate burden on such manufacturers and producers and constitutes an unreasonable restriction on the freedom to carry on their business guaranteed under article 19 (1) (g). (5) Sub s (1) section 5 of the Act is ultra vires the State Legislature of Bihar insofar as for the purpose of the levy of surcharge on a certain class of dealers, it takes into account his gross turnover as defined in section 2 (j) of the Act. It is urged that the State Legislature was not competent under Entry 54 of List II of the Seventh Schedule to enact a provision like sub section (1) of section S of the Act which makes the grass turnover of a dealer as defined in section 2 (j) to be the basis for the levy of a surcharge i. e. inclusive of transactions relating to sale or purchase of goods which have taken place in the course of inter state trade or commerce or outside the territory of India. Such transactions are outside the purview of the Act and therefore they cannot be taken 145 into consideration for computation of the gross turnover as defined in section 2 (j) of the Act for the purpose of bearing the incidence of surcharge. The contention to the contrary advanced by the learned Solicitor General appearing on behalf of the State of Bihar is that there is no inconsistency between sub section (3) of section 5 of the Act and paragraph 21 of the Control order and both the laws are capable of being obeyed. According to him, the question of repugnancy under article 254(1) between a law made by Parliament and a IdW made by the State Legislature arises only in case both the legislations occupy the same field with respect to one of the matters enumerated in the Concurrent list, and there is direct conflict between the two laws. It is only when both these requirements are fulfilled that the State law will to the extent of repugnancy, become void. The learned Solicitor General contends that the question has to be determined not by the application of the doctrine of occupied field but by the rule of 'pith and substance '. He further contends that the appellants being manufacturers or producers of drugs are not governed by paragraph 21 of the Control order which relates to retail sale but by paragraph 24 thereof which deals with sale by a manufacturer or producer to wholesale distributor. Under paragraph 24 of the Control order, the manufacturer or producer is not entitled to pass on the liability to pay sales tax and the price that he charges to the wholesaler or distributor is inclusive of sales tax. He also contends that the controlled price of an essential commodity particularly of medicines and drugs fixed by a control order issued by the Central Government under sub section (1) of s: 3 of the is only the maximum price thereof and there is nothing to prevent a manufacturer or producer of medicines and drugs to sell it at a price lower than the controlled price. All that will happen, the learned Solicitor General reasons, is that the levy of surcharge under sub section (1) of section 5 of the Act will cut into the profits of the manufacturer or producer but that will not make the State law inconsistent with the Central law. As regards medicines and drugs, the surcharge being borne by the manufacturers or producers under sub section (3) of section 5 of the Act, the controlled price of such medicines and drug to the consumer will remain the same. Lastly, the Solicitor General submits that there is no material placed by the, appellants to show that the levy of surcharge under sub section (I) of section 5 of the act would impose a burden disproportionate to the profits 146 earned by them or that it is confiscatory in nature. There is, our opinion, considerable force in these submissions. Before proceeding further it is necessary to mention that the contentions raised on behalf of manufacturers and producers of medicines and drugs can govern only those appellants who are dealers in essential commodities, the controlled price of which is exclusive of sales tax as filed by control orders issued by the Central Government under sub section (1) of section 3 of the , but cannot be availed of by the other appellants who are dealers in other commodities. The case of such appellants would be squarely governed by the decision of this Court in Kodar 's case, supra, and their liability to pay surcharge under sub section (1) of section 5 of the Act must be upheld, irrespective of the contentions raised in these appeals, on based on the opening words "Subject to clauses (1) and (2)" in article 246(3) of the Constitution and on section 6 of the . It is therefore necessary to first deal with the principle laid down in Kodar 's case, supra. In Kodar 's case, supra, this Court upheld tho Constitution validity of the Tamil Nadu Additional Sales Tax Act, 1970 which imposes additional sales tax at 5% on a dealer whose annual gross turnover exceeds Rs. 10 lakhs. The charging provision in sub section (1) of section 2 of that Act is in terms similar to sub section (1) of section 5 of the Act, and provides that the tax payable by a dealer whose turnover for a year exceeds Rs. 10 lakhs shall be increased by an additional tax 5% of the tax payable by him. Sub section (2) of that Act is in pari materia with sub section (3) of section 5 of the Act and provides that no dealer referred to in sub section (I) shall be entitled to collect the additional tax payable by him. The Court laid down that: (l) The additional tax levied under sub section (I) of section 2 of that Act was in reality a tax on the aggregate of sales effected by a dealer during a year and therefore the additional tax was really a tax on the sale of goods and not a tax on the income of a dealer and therefore falls within the scope of Entry 54 of List II of the Seventh Schedule. (2) Generally Speaking, the amount or rate of tax is a matter exclusively within the legislative judgment and so long as a tax retains its avowed character and does not confiscate property to the State under the guise of a tax, its reasonableness cannot be questioned by the Court The imposition of additional tax on a dealer whose annual turnover exceeds Rs. 10 lakhs is not an unreasonable restriction on the fundamental rights guaranteed under article 19(1)(g) or (f) as the tax 147 is upon the sale of goods and was not shown to be confiscatory. (3) It is not an essential chracteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the Legislature to impose a tax on sales conditional on its making a provision for seller to collect the tax from the purchasers. Merely because sub section (2) of section 2 of that Act prevented a dealer from passing on the incidence of additional tax to the purchaser, it cannot be said that the Act imposes an unreasonable restriction upon the fundamental rights under article 19(1)(g) or (f). The Act was not violative of article 14 of the Constitution as classification of dealers on the basis of their turnover for the purpose of levy of additional tax was passed on the capacity of dealers who occupy position of economic superiority by reason of their greater volume of businesses i.e. On capacity to pay and such classification for purposes of the levy was not unreasonable. In order to appreciate the implications of the wide ranging contentions advanced before us, it is necessary to set out the relevant statutory provisions. Sub section (1) of section 5 of the Act provides for the levy of surcharge on every dealer whose gross turnover during a year exceeds Rs. 5 lakhs and, the material provisions of which are in the following terms: "5. Surcharge (I) Every dealer whose gross turnover during a year exceeds rupees five lakhs shall, in addition to the tax payable by him under this Part, also pay a surcharge at such rate not exceeding ten per centum of the total amount of the tax payable by him, as may be fixed by the State Government by a notification published in the official Gazette: Provided that the aggregate of the tax and surcharge payable under this Part shall not exceed, in respect of goods declared to be of special importance in inter State trade or commerce by section 14 of the central Sales Tax Act, 1256 (Act 74 of 1956), the rate fixed by section 15 of the said Act: The expression "gross turnover" as defined in section 2(j) Of the Act insofar as material reads: 148 "2(j) "gross turnover" means (i) for the purposes of levy of sales tax, aggregate of sale prices received and receivable by a dealer, during any given period, in respect of sale of goods (including the sale of goods made outside the State or in the course of inter State trade or commerce or export) but does not include sale prices of goods or class or classes or description of goods which have borne the incidence of purchase tax under section 4. " Sub section (3) of section 5 of the Act, the constitutional validity of which is challenged, provides: "5(3) Notwithstanding anything to the contrary contained in this Part, no dealer mentioned in sub section (1), who is liable to pay surcharge shall be entitled to collect the amount of this surcharge. " It is fairly conceded that not only sub section (1) of section 5 of the Act which provides for the levy of surcharge on dealers whose gross turnover during a year exceeds Rs. 5 lakhs, but also sub section (3) of section 5 of the Act which enjoins that no dealer who is liable to pay a surcharge under sub section (I) shall be entitled to collect the amount of surcharge payable by him, are both relatable to Entry 54 of List II of the Seventh Schedule which reads: "54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92A of List I." There can be no doubt that the Central and the State legislations operate in two different and distinct fields. The provides for the regulation, production, a supply distribution and pricing of essential commodities and is relatable to Entry 33 of List III of the Seventh Schedule which reads: "33. Trade and commerce in, and the production, supply and distribution of, . (a) the products of any industry where the control of such industry by the Union is declared by Parliament 149 by law to be expedient in the public interest, and imported goods of the same kind as such products. " The definition of "essential commodities" in section 2(a) of the now includes 'drugs ' by the insertion of cl. (iva) therein by Act 30 of 1974. Sub section (I) of section 3 of the provides: B "3. Powers to control production, supply, distribution, etc., of essential commodities (1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof. and trade and commerce therein. " Sub section (2) lays down without prejudice to the generality of the powers conferred by sub section (1), an order made therein may provide for the matters enumerated in cls. (a) to (f). (c) of sub section (2) provides: "For controlling the price at which an essential com modify may be bought or sold. " section 6 of the which has an important bearing on these appeals is in these terms: "6. Effect of orders inconsistent with other enactments Any order made under section 3 shall have effect not withstanding anything inconsistent therewith contained in any enactment other than this Act or any instrument having effect by virtue of any enactment other than this Act. " The Drugs (Price Control) order, 1979 issued by the Central Government in exercise of the powers conferred under section 3 of the provides for a comprehensive scheme of price fixation both as regards bulk drugs as well as 150 formulations. The expressions "bulk drug" and "formulation" are A defined in paragraph 2(a) and 2(f ) as: "2. In the order, unless the context otherwise requires, (a) "bulk drug" means any substance including pharmaceutical, chemical, biological or plant product or medicinal gas conforming to pharmacopoeal or other standards accepted under the , which is used as such or as an ingredient in any formulations; (f) "formulations" means a medicine processed out of, or containing one or more bulk drug or drugs, with or without the use of any pharmaceutical aids for internal or external use for, or in the . diagnosis, treatment, mitigation or prevention of disease in human beings or animals, but shall not include We are here concerned with the impact of sub section (3) of section 5 of the Act on the price structure of formulation, but non the less much stress was laid on fixation of price of bulk drugs under paragraph 3(2) which allows a reasonable return to the manufacture under sub paragraph (3) thereof. A manufacturer or producer of such bulk drugs is entitled to sell it at a price exceeding the price notified under sub paragraph (1), plus local taxes, if any, payable. What is of essence is the price fixation of formulations and the relevant provisions are contained in paragraph, 10 to 15, 17, 20, 21 and 24. Paragraph 10 provides for a formula according to which the retail price of formulation shall be calculated and it reads: "10. Calculation of retail price of formulations The retail price of a formulation shall be calculated in accordance with the following formula, namely: R.P.=(M.C+C.C+P.M.+P.C) X 1 + MU / 100 + ED Where "R.P." means retail price. 151 "M C." means material cost and includes the cost of drugs and other pharmaceutical aids used including h overages, if any, and process loss thereon in accordance with such norms as may be specified by the Government from time to time by notification in official Gazette in this behalf. "C.C." means conversion cost worked out in accordance with such norms as may be specified by the Government from time to time by notification in the official Gazette in this behalf. "P.M." means the cost of packing material including process loss thereon worked out in accordance with such norms as may be specified by the Government from time to time by notification in the official Gazette in this behalf. "P.C." means packing charges worked out in accordance with such norms as may be specified by the Government from time to time by notification in the official Gazette in this behalf. "M.U." means mark up referred to in paragraph 11. "E.D." means excise duty: Provided that in the case of an imported formulation the landed cost shall from the basis for fixing its price along with such margin as the Government may allow from time to time. Provided further that where an imported formulation is re packed, its landed cost plus the cost of packing materials and packing charges as worked out in accordance with such norms as may be specified by the Government from time to time, by notification in the official Gazette, shall form the basis for fixing its price. Explanation For the purposes of this paragraph, "landed cost" shall mean the cost of import of drug inclusive of customs duty and clearing charges". 152 The expression "mark up" referred to above is dealt within A paragraph 11 and it provides: "11. Mark up referred to in paragraph 10 includes the distribution cost, outward freight, promotional expenses, manufacturers margin and the trade commission and shall not exceed (i) forty percent in the case of formulations specified in Category I of the Third Schedule; (ii) fifty five percent in the case of formulations specified in Category II of the said Schedule: (iii) one hundred per cent in the case of formulations specified in Category III of the said Schedule. " It is unnecessary for our purposes to reproduce the provisions of paragraphs 12 to 14 which formulate a detailed scheme of price fixation. Paragraph 15 confers power of revision of prices and it reads: "15. Power to revise prices of formulations Not withstanding anything contained in this order . (a) The Government may, after obtaining such information as it may consider necessary from a manufacturer or an importer, fix or revise the retail price of one or more formulations marketed by such manufacturer or importer, including a formulation not specified in any of the categories of the Third Schedule in such manner as the pre tax return on the sales turnover of such manufacturer or importer does not exceed the maximum pre tax return specified in the Fifth Schedule; (b) the Government may, if it considers necessary so to do in public interest, by order, revise the retail price of any formulation specified in any of the categories of the Third Schedule. " 153 Paragraph 17 Casts a mandatory duty on the Central Government to maintain 'Drugs Prices Equalisation Account ' to which shall be credited (a) by the manufacturer, importer or distributor, as the case may be (i) the amount determined under sub paragraph (2) of paragraph 7; (ii) the excess of the common selling price or, as the case may be, pooled price over his retention price; (b) such other amount of money as the Central Government may, after due appropriation made by Parliament by law in this behalf, grant from time to time. The amount credited to the Drugs Prices Equalisation Account is meant to compensate a manufacturer, importer or distributor the short fall between his retention price and the common selling price or, as the case may be, the pooled price for the purpose of increasing the production, or securing the equitable distribution and availability at fair prices, of drugs after meeting the expenses incurred by the Government in connection therewith. Every manufacturer, importer or distributor is entitled to make a claim for being compensated for the short fall. Paragraph 19 interdicts that every manufacturer or importer of a formulation intended for sale shall furnish to the dealers, State Drug Controllers and the Government, a price list showing the price at which the formulation is sold t.) a retailer inclusive of excise duty. Every such manufacturer or retailer has to give effect to the change in prices as approved by the Government. Every dealer is required to display the price list at a conspicuous part of the premises. It is, however, necessary to reproduce paragraphs 20, 21 and 24 as they are of considerable importance for our purposes and they read: "20. Retail price to be displayed on label of container Every manufacturer, importer or distributor of a formulation intended for sale shall display in indelible 154 print mark on the label of the container of the formulation or the minimum pack thereof offered for retail sale, the maximum retail price of that formulation with the words "retail price not to exceed" preceding it, and "local taxes extra" succeeding it." "21. Control of sale prices of formulations specified in Third Schedule No retailer shall sell any formulation specified in any of the categories in the Third Schedule to any person at a price exceeding the price specified in the current price list or the price indicated on the label of the container or pack thereof, whichever is less, plus the local taxes, if any, payable. Explanation For the purpose of this paragraph, "local taxes" includes sales tax and octroi actually paid by the retailer under any law in force in a particular area." "24. Price to the wholesaler and retailer (a) No manufacturer, importer or distributor shall sell a formulation to a wholesaler unless otherwise permitted under the provisions of this order or any other order made thereunder at a price higher than: (a) the retail price minus 14 per cent thereof, in the case of ethical drugs, and (b) the retail price minus 12 percent thereof, in the case of non ethical drugs. (2) No manufacturer, importer, distributor or wholesaler shall sell a formulation to a retailer unless otherwise permitted under the provisions of this order or any order made thereunder, at a price higher than: (a) the retail price minus 12 percent thereof, in the case of ethical drugs, and (b) the retail price minus 10 percent thereof, in the case of non ethical drugs. 155 Explanation For the purposes of this paragraph (i) "ethical drugs" shall include all drugs specified in Schedule C, entries Nos. 1, 2, 3, 7, 8 and 9 of Schedule C(l), Schedule E, Schedule G, Schedule and Schedule L, appended to the Drugs and Cosmetics Rules, 1945 made under the , (23 of 1940); and (ii) "non ethical drugs" shall mean all drugs other than ethical drugs. (3) Notwithstanding anything contained in sub para graphs (1) and (2), the Government may, by a general or special order, fix, in public interest, the price to the wholesaler or retailer in respect of any formulation the price which has been fixed or revised under this order. " Much emphasis was laid on fixation of price of bulk drugs under paragraph 3 which provides by sub paragraph (1) that the Government may, with a view to regulating the equitable distribution of an indigenously manufactured bulk drug specified in the First Schedule or the Second Schedule and making it available at a fair price and subject to the provisions of sub paragraph (2) and after making such inquiry as it deems fit, fix from time to time, by notification in the official Gazette, the maximum price at which such bulk drug shall be sold. Sub paragraph (2) enjoins that while filing the price of a bulk drug under sub paragraph (1), the Government may take into account the average cost of production of each bulk drug manufactured by efficient manufacturer and allow a reasonable return on net worth. Explanation thereto defines the expression "efficient manufacturer" to mean a manufacturer (i) whose production of such bulkdrug in relation to the total production of such bulk drug in the country is large, or (ii) who employs efficient technology in the production of such bulk drug. Sub paragraph (3) provides that no person shall sell a bulk drug at a price exceeding the price notified under sub paragraph (1), plus local taxes, if any, payable. It is urged that while fixing the price of bulk drug, the Government has to take into account the average cost of production 156 of that bulk drug by a particular manufacturer, by taking into A consideration the cost to a manufacturer who employs efficient methods and allowing a reasonable return on the net worth of the drug manufactured. Otherwise, every manufacturer will show a figure as cost of production, which may not be acceptable. The average cost of production of an efficient manufacturer is made the standard for fixing the price but such fixation of the price of bulk drug allows a reasonable return to the manufacturer. Under sub paragraph (3) the manufacturer or producer of such bulk drug is entitled to sell it at a price not exceeding the price so fixed plus local tax if any, payable. Much stress is laid that the average cost of an efficient manufacturer allows a reasonable return on net worth of the drug manufactured and the price so fixed is exclusive of local taxes i.e. sales tax. It is further urged that the term "local taxes" in sub paragraph (3) means and includes sales tax leviable in a State and attention is drawn to Explanation to paragraph 21 for that purpose. We fail to appreciate the relevance of sub paragraph (3) of paragraph 3 which relates to a manufacturer or producer of bulk drugs or of paragraph 21 of the Control order which fixes the controlled price of formulations specified in the Third Schedule exclusive of local taxes i.e. sales tax. The appellants are manufacturers or producers of medicines and drugs and are governed by paragraph 24. Under paragraph 24, a manufacturer or producer is not entitled to sell a formulation to a wholesaler at a price higher than the retail price minus 14% thereof in case of ethical drugs and minus 12% in case of non ethical drugs. It is quite clear upon the terms of paragraph 24 that the price chargeable by the appellants as manufacturers or producers is a price inclusive of sales tax. The entire argument built upon sub paragraph (3) of paragraph 3 and paragraph 21 of the Control order showing that the controlled price is exclusive of sales tax and thereof is in conflict with sub s (3) of section S of the Act appears to be wholly misconceived. It is urged that the appellants in their price lists have a term embodied that sales tax would be chargeable from a wholesaler or distributor and therefore they are entitled to recover sales tax on the sale of their medicines and drugs cannot possibly prevail. Such a term would be in clear violation of para graph 24 of the Control order which is an offence punishable under section 7 of the . It cannot be doubted that a surcharge partakes of the nature of sales tax and therefore it was within the competence of the State 157 Legislature to enact sub section (I) of section S of the Act for the purpose of levying surcharge on certain class of dealers in addition to the tax payable by them. When the State Legislature had competence to levy tax on sale or purchase of goods under Entry 54, it was equally competent to select the class of dealers on whom the charge will fall. If that be so, the State Legislature could undoubtedly have enacted sub section (3) of section S of the Act prohibiting the dealers liable to pay a surcharge under sub section (I) thereof from recovering the same from the purchaser. It is fairly conceded that sub section (3) of section S of the Act is also relatable to Entry 54. The contention however is that there is conflict between paragraph 21 of the Control order which allows a manufacturer or producer of drugs to pass on the liability to pay sales tax and sub section (3) of section S of the Act which prohibits such manufacturers or producers from recovering the surcharge and therefore it is constitutionally void. It is said that the Courts should try to adopt the rule of harmonious construction and give effect to paragraph 21 of the Control order as the impact of sub section (3) of section S of the Act is on fixation of price of drugs under the Drugs (Price Control) order and therefore by reason of section 6 of the , paragraph 21 of the Control order which provides for the passing on of tax liability must prevail. The submission rests on a construction of article 246 (3) of the Constitution and it is said that the power of the State Legislature to enact a law with respect to any subject in List II is subject to the power of Parliament to legislate with respect to matters enumerated in Lists I and III. It is convenient at this stage to deal with the contention of the appellants that if sub section (3) of section 5 of the Act were to cover all sales including sales of essential commodities whose prices are controlled by the Central Government under the various control orders issued under sub section (I) of section 3 of the , then there will be repugnancy between the State law and such contral orders which according to section 6 of the must prevail. In such a case, the State law must yield to the extent of the repugnancy. In Hari Shankar Bagla & Anr. vs State of Madhya Pradesh(1) the Court had occasion to deal with the non obstante clause in section 6 of the Essential Supplies (Temporary Powers) Act, 1946 which was in pari materia with section 6 of the and it was observed: 158 "The effect of section 6 certainly is not to repeal any one of these laws or abrogate them. Its object is simply to by pass them where they are inconsistent with the provisions of the Essential Supplies (Temporary Powers) Act, 1946, or the orders made thereunder. In other words, the orders made under section 3 would he operative in regard to the essential commodity covered by the Textile Control order wherever there is repugnancy in this order with the existing laws and to that extent the existing laws with regard to those commodities will not operate. By passing a certain law does not necessarily amount to repeal or abrogation of that law. That law remains unrepealed but during the continuance of the order made under section 3 it does not operate in that field for the time being. " The Court added that after in order is made under section 3 of that Act, section 6 then steps in wherein Parliament has declared that as soon as such an order comes into being that will have effect notwithstanding any inconsistency therewith contained in any enactment other than that Act. Placing reliance on the observations in Hari Shankar Bagla 's case, supra, it is urged that the effect of the non obstante clause in section 6 of the is to give an overriding effect to the provisions of paragraph 21. It is further urged that paragraph 21 of the Control order having been issued by the Central Government under sub section (1) of s 3 of the which permits the manufacturer or producer to pass on the liability to pay sales tax must prevail and sub section (3) of section S of the Act which is inconsistent therewith is by passed. The contention appears to be misconceived. The appellants being manufacturers or producers of formulations are not governed by paragraph 21 of the Control order but by paragraph 24 thereof and therefore the price chargeable by them to a wholesaler or distributor is inclusive of sales tax. There being no conflict between sub section (3) of section S of the Act and paragraph 24 of the Control order, the question of non obstante clause to section 6 of the coming into play does not arise. Even otherwise i. e. if some of the appellants were governed by paragraph 21 of the Control order, that would hardly make any difference. Under the scheme of the Act, a dealer is free to pass 159 on the liability to pay sales tax payable under section 3 and additional sales tax payable under section 6 to the purchasers. Sub section (3) of section S of A the Act however imposes a limitation on dealers liable to pay surcharge under sub section (1) thereof from collecting the amount of surcharge payable by them from the purchasers which only means that surcharge payable by such dealers under sub section (I) of section S of the Act will cut into the profits earned by such dealers. The controlled price or retail price of medicines and drugs under paragraph 21 remains the same, and the consumer interest is taken care of in as much as the liability to pay surcharge sub section (3) of section 5 cannot be passed on. That being so, there is no conflict between sub section (3) of section S of the Act and paragraph 21 of the Control order. The entire sub mission advanced by learned counsel for the appellants proceeds on the hypothesis that the various control orders issued under sub section (1) of section 3 of the are for the protection of the manufacturer or producer. There is an obvious fallacy in the argument which fails to take into account the purpose of the legislation. Where the fixation of price of an essential commodity is necessary to protect the interests of consumers in view of the scarcity of supply, such restriction cannot be challenged as unreasonable on the ground that it would result in the elimination of middleman for whom it would be unprofitable to carry on business at fixed rate or that it does not ensure a reasonable return to the manufacturer or producer on the capital employed in the business of manufacturing or producing such an essential commodity. The contention that in the field of fixation of price by a control order issued under sub section (1) of section 3 of the , the Central Government must have due regard to the securing of a reasonable return on the capital employed in the business of manufacturing or producing an essential commodity is entirely misconceived. The predominant object of issuing a control order under sub section (1) of section 3 of the Act is to secure the equitable distribution and availability of essential commodities at fair prices to the consumers, and the mere circumstance that some of those engaged in the field of industry, trade and commerce may suffer a loss is no ground for treating such a regulatory law to be unreasonable, unless the basis adopted for price fixation is so unreasonable as to be in excess of the power to fix the price, or there is a statutory obligation to ensure a fair return to the industry. In Shree Meenakshi Mills 160 Ltd. vs Union of India(l) Ray, J speaking for the Court rejected the A contention that the controlled price must ensure a reasonable return on the capital employed in the business of manufacturing or producing essential commodities in these words : "In fixing the prices, a price line has to be held in order to give preference or predominant consideration to the interests of the consumers or the general public over that of the producers in respect of essential commodities. The aspect of ensuring availability of the essential commodities to the consumer equitably and at fair price is the most important consideration." In Prag Ice & Oil Mills & Anr. etc. vs Union of India(a) Chandrachud, J. (as he then was) negatived a similar contention that fixation of a price without ensuring a reasonable return to the producers or dealers was unconstitutional. In repelling the contention, Chandrachud J. speaking for the Court referred to the two earlier b decisions in Panipat Cooperative Sugar Mills vs Union of India(3) and Anakapalle Cooperative Agricultural & Industrial Society Ltd. vs Union of India(4) and observed: "The infirmity of this argument, as pointed out in Meenakshi Mills 's case, is that these two decisions turned on the language of s 3 (3C) of the under which it is statutorily obligatory to the industry a reasonable return on the capital employed in the business of manufacturing sugar. These decisions can therefore have no application to cases of price fixation under section 3 (1) read with section 3 (2) (c) of the Act. Cases falling under sub sections (3A), (3B) and (3C) of section 3 of the Act belong to a different category altogether. " The learned Chief Justice then observed: "The dominant purpose of these provisions is to ensure the availability of essential commodities to the consumers at a fair price. And though patent injustice to 161 the producer is not to be encouraged, a reasonable return on investment or a reasonable rate of profit is not the sine qua non of the validity of action taken in furtherance of the powers conferred by section 3 (1) and section 3 (2) (c) of the . The interest of the consumer has to be kept ill the forefront and the prime consideration that an essential commodity ought to be made available to the common man at a fair price must rank in priority over every other consideration. " The contention advanced does not take note of the distinction between the controlled price fixed under cl. (c) of sub section (2) of section 3 of the Act read with sub section (I) thereof and the procurement price fixed under sub sections (3A), (3B) and (3C). In fixing a procurement price under sub sections (3A), (3B) and (3C), there is a statutory obligation cast on the Central Government to ensure a fair return to the producers or dealers of essential commodities. while in fixing the controlled price under c]. (c) of sub section (2) of section 3 read with sub section (1) thereof, the predominant factor is the basis to secure the equitable distribution and availability of essential commodities at fair prices to the consumers and a reasonable return on investment or a reasonable rate of profit to the manufacturer or producer i. not a relevant criterion although it should not ordinarily work patent injustice to a manufacturer or producer. Just as the industry cannot complain of rise and fall of prices due to economic factors in open market, it cannot similarly complain of some increase in, or reduction of, prices as a result of an order issued under sub section (I) of section 3 of the essential commodities Act, or a cut in the margin of profits brought about by a provision like sub section (3) of section 5 of the Act which provides that a manufacture or producer shall not be entitled to recover the surcharge levied on him under sub section (I) of section S of the Act because such increase or reduction is also based on economic factors. The principal point in controversy is: Whether there is repugnancy between sub section (3) of section 5 of the Act and paragraph 21 of the Control order and therefore sub section (3) of section 5 must yield to that extent. The submission is that if Parliament chooses to occupy the field and there is price fixation of an essential commodity with liberty to pass on the burden of tax to the consumer by a law made by Parliament under Entry 33 of List III of the Seventh Schedule, then it is not competent for the State Legislature to enact a provision 162 like sub section (3) of section S of the Act while enacting a law under Entry 54 of List II prohibiting the passing on of liability of tax to the purchaser. The true principle applicable in judging the constitutional validity of sub section (3) of section S of the Act is to determine whether in its pith and substance it is a law relatable to Entry 54 of List II of the Seventh Schedule and not whether there is repugnancy between sub section (3) of section S of the Act and paragraph 21 of the Drugs {Price Control) order made under sub section (1) of section 3 of the , is therefore void. In dealing with the question, we must set out article 246 of the Constitution which is based on section 100 of the Government of India Act, 1935 and it reads: "246(1) Notwithstanding anything in clauses (2) and t (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List"). (2) Notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the "Concurrent List"). (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List"). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not 9 included in a State notwithstanding that such matter is a matter enumerated in the State List. " It is obvious that article 246 imposes limitations on the legislative powers of the Union and State Legislatures and its ultimate analysis would reveal the following essentials: 1. Parliament has exclusive power to legislate with respect to any of the matters enumerated in List I 163 notwithstanding anything contained in cls. (2) and (3). The non obstante clause in article 246(1 ) provides for predominance or supremacy of Union Legislature. This power is not encumbered by anything contained in cls. (2) and (3) for these causes them selves are expressly limited and made subject to the non obstante clause in article 246(1). The combined effect of the different clauses contained in article 246 is no more and no less than this: that in respect of any matter falling within List I, Parliament has exclusive power of legislation. The State Legislature has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II of the Seventh Schedule and it also has the power to make laws with respect to any matters enumerated in List III. The exclusive power of the State Legislature to . legislate with respect to any of the matters enumerated in List II has to be exercised subject to cl. (l) i.e. the exclusive power of Parliament to legislate with respect to matters enumerated in List I. As a con sequence, if there is a conflict between an entry in List I and an entry in List II which is not capable of reconciliation, the power of Parliament to legislate with respect to a matter enumerated in List TI must supersede pro tanto the exercise of power of the State Legislature. Both Parliament and the State Legislature have con current powers of legislation with respect to any of the matters enumerated in List III. article 254 provides for the method of resolving conflicts between a law made by Parliament and a law made by the Legislature of a State with respect to a matter falling in the Concurrent List and it reads: "254(1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, 164 subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. (2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall if it has been reserved for the consideration of the President and has received his assent, prevail in that State. Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State. " We find it difficult to subscribe to the proposition advanced on behalf of the appellants that merely because of the opening words of article 246(3) of the Constitution "Subject to clauses (I) and (2)" and the non obstante clause in article . 246(1) ' 'Notwithstanding . anything in clauses (2) and (3)", sub section (3) of section 5 of the Act which provides that no dealer shall be entitled to collect the amount of surcharge must be struck down as ultra vires the State Legislature inasmuch as it is in consistent with paragraph 21 of the drugs (Price Control) order issued by the Central Government under sub section (I) of section 3 of the which enables the manufacturer or producer of drugs to pass on the liability to pay sales tax to the consumer. The submission is that sub section (3) of section 5 of the Act enacted by the State Legislature while making a law under Entry 54 of List II of the Seventh Schedule which interdicts that a dealer liable to pay surcharge under sub section (1) of section 5 of the Act shall not be entitled to collect it from the purchaser, directly trenches upon Union power to legislate with respect to fixation of price of essential commodities under Entry 33 of List Ill. It is said that if both are valid, then ex hypothesi the law made by Parliament must prevail and the State law pro tanto must yield. We are afraid, the contention cannot prevail in view of the well accepted principles, 165 The words "Notwithstanding anything contained in clauses (2) and (3) ' in article 246 (l) and the words "Subject to clauses A (I.) and (2)" in article 246(3) lay down the principle of Federal supremacy viz. that in case of inevitable conflict between Union and State powers, the Union power as enumerated in List T shall prevail over the State power as enumerated in List II and III. and in case of overlapping between List 11 and III, the 13 former shall prevail. But the principle of Federal supremacy laid down in article 246 of the Constitution cannot be resorted to unless there is an "irreconcilable" conflict between the Entries in the Union and State Lists. In the case of a seeming conflict between the Entries in the two lists, the Entries should be read together without giving a narrow and restricted sense to either of them. Secondly, an attempt should be made to see whether the two Entries cannot be reconciled so as to avoid a conflict of jurisdiction. lt should be considered whether a fair reconciliation can be achieved by giving to the language or the Union Legislative List a meaning which, if less wide than it night in another context bear, is yet one that can properly be given to it and equally giving to the language of the State Legislative List a meaning which it can properly bear. The non obstante clause in article 246(l) must operate only if such reconciliation should prove impossible. Thirdly, no question of conflict between the two lists will arise if the impugned legislation, by the application of the doctrine of "pith and substance" appears to fall exclusively under one list, and the encroachment upon another list is only incidental. Union and State Legislatures have concurrent power with respect to subjects enumerated in List III, subject only to the pro vision contained in cl. (2) of article 254 i.e. provided the provisions of the State Act do not conflict with those of any (Central Act on the subject. However, in case of repugnancy between a State Act and a Union Law on a subject enumerated in List III, the State law must yield to the Central law unless it has been reserved for the assent of the President and has received his assent under article 254(2). The question of repugnancy arises only when both the Legislatures are competent to legislate in the same field i.e. when both the Union and the State laws relate to a subject specified in List III and occupy the same field. As regards the distribution of legislative powers between the Union and the States, article 246 adopts with immaterial alterations the 166 scheme for the distribution of legislative powers contained in section 100 A of the Government of India Act, 1935. Our Constitution was not written on a clean slate because a Federal Constitution had been established by the Government of India Act, 1935 and it still remains the framework on which the present Constitution is built. The provisions of the Constitution must accordingly be read in the light of the provisions of the Government of India Act, 1935 and the principles laid down in connection with the nature and interpretation of legislative power contained in the Government of India Act, 1935 are applicable, and have in fact been applied, to the interpretation of the Constitution. In the matter of the Central Provinces & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938(1) Gwyer, C.J. referred to the two decision of the Privy Council in Citizen Insurance Company vs Wiliam Parsons(2) and Attorney General for the Province of Ontario vs Attorney General for the Dominion of Canada(3) which in his opinion had laid down 'most clearly the principles which should be applied by Courts in the matter of deciding upon the competence of the two rival Legislatures that have been set up under the Indian Federal system. With regard to the interpretation of the non obstante clause in section 100(l) of the Government of India Act, 1935 Gwyer, C.J. observed: "It is a fundamental assumption that the legislative powers of the Centre and Provinces could not have been intended to be in conflict with one another and, therefore, we must read them together, and interpret or modify the language in which one is expressed by the language of the other." "In all cases of this kind the question before the Court", according to the learned Chief Justice is not "how the two legislative powers are theoretically capable of being construed, but how they are to be construed here and now." The general scheme of the British North America Act, 1867 with regard to the distribution of legislative powers, and the general 167 scope and effect of sections 91 and 92, and their relations to each other were fully considered and commented upon in the case of Citizen Insurance Company 's case, supra. Sir Montague Smith delivering the judgment for the Board evolved the rule of reconciliation observing: "In these cases it is the duty of the Courts, however difficult it may be, to ascertain in what degree and to what extent, authority to deal with matters Falling within these classes of subjects exists in each legislature, and to define in the particular case before them the limits of their respective power. It could not have been the intention that a conflict should exist; and, in order to prevent such a result, the two sections must be read together and the language of one interpreted and, where necessary, modified by that of the other. In this way it may, in most cases, be found possible to arrive at a reasonable and practical construction of the language of the Section, so as to reconcile the respective powers they contain and give effect to all of them. Earl Loreburn, L.C. delivering the judgment of the Judicial Committee in Attorney General for the Province of Ontario 's case, (supra) observed that in the interpretation of sections 91 and 92 of the E: British North America Act: "If the text is explicit, the text is conclusive alike for what it directs and what it forbids. " When the text is ambiguous, as for example when the words establishing two mutually exclusive jurisdictions are wide enough to bring a particular power within either, recourse must be had to the context and scheme of the Act. In A.L.S.P.P. Subrahmanyan Chettiar vs Muttuswami Goundan(l) Gwyer, C.J. reiterated that the principles laid down by the Privy Council in a long line of decisions in the interpretation of sections 91 and 92 of the British North America Act, 1867 must be accepted as a guide for the interpretation of section 100 of the Government of India Act, 1935: 168 "It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that build adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the Legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its 'pith and substance ' or its true nature and character for the purpose of determining whether it is legislation in respect of matters in this list or in that. " It has already been stated that where the two lists appear to conflict with each other, an endeavour should be made to reconcile them by reading them together and applying the doctrine of pith and substance. It is only when such attempt to reconcile fails that the non obstante clause in article 246(1) should be applied as a matter of last resort. For, in the words of Gwyer, C.J. in C.P. & Berar Taxation Act 's case, supra: "For the clause ought to be regarded as a last re source, a witness to the imperfections of human expression and the fallibility of legal draftsmanship. " The observations made by the Privy Council in the Citizen 's Insurance Company 's case, supra, were quoted with approval by Gwyer, C.J. in C.P. & Berar Taxation Act 's case, supra, and he observed that an endeavour should be made to reconcile apparently conflicting provisions and that the general power ought not to be construed as to make a nullity of a particular power operating in the same field. The same duty of reconciling apparently conflicting provisions was reiterated by Lord Simonds in delivering the judgment of the Privy Council in Governor General in Council vs Province of Madras(1): "For in a Federal constitution in which there is a division of legislative powers between Central and Provincial Legislatures, it appears to be inevitable that controversy should arise whether one or other legislature 169 is not exceeding its own, and encroaching on the other 's constitutional legislative power, and in such a controversy it is a principle, which their Lordships do not hesitate to apply in the present case, that it is not the name of the tax but its real nature, its "pith and substance" as it has sometimes been said, which must determine into what category it falls. " B Their Lordships approved of the decision of the Federal Court in The Province of Madras vs Messrs Boddu Paidanna & Sons(l) where it was held that when there were apparently conflicting entries the correct approach to the question was to see whether it was possible to effect a reconciliation between the two entries so as to avoid a conflict and overlapping. In Prafulla Kumar Mukherjee & Ors. vs Bank of Commerce Ltd., Khulna(1) Lord Porter delivering the judgment of the Board laid down that in distinguishing between the powers of the divided jurisdictions under list I, II and III of the Seventh Schedule to the Government of India Act, 1935 it is not possible to make a clean cut between the powers of the various Legislatures. They are bound to overlap from time to time, and the rule which has. been evolved by the Judicial Committee whereby an impugned statute is examined to ascertain its pith and substance or its true character for the purpose of determining in which particular list the legislation falls, applies to Indian as well as to Dominion legislation. In laying down that principle, the Privy Council observed: "Moreover, the British Parliament when enacting the Indian Constitution had a long experience of the working of the British North America Act and the Australian Commonwealth Act and must have known that it is not in practice possible to ensure that the powers entrusted to the several legislatures will never overlap." The Privy Council quoted with approval the observations of Gwyer, C.J in Subramanyan Chettiar 's case, supra, quoted above, and observed: 170 "No doubt experience of past difficulties has made A the provisions of the Indian Act more exact in some particulars, and the existence of the Concurrent List has made it easier to distinguish between. those matters which are essential in determining to which list particular provision should be attributed and those which are merely incidental. But the overlapping of subject matter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions. Subjects must still overlap, and where they do, the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found. If these questions could not be asked, much beneficent legislation would be stifled at birth. and many of the subjects entrusted to provincial legislation could never effectively be dealt with. " It would therefore appear that apparent conflict with the Federal power had to be resolved by application of the doctrine of pith and substance and incidental encroachment. Once it is found that a law made by the Provincial Legislature was with respect to one of the matters enumerated in the Provincial List, the degree or extent of the invasion into the forbidden field was immaterial. "The invasion of the provinces into subjects in the Federal List", in the words of Lord Porter, "was important": " . not . because the validity of an Act can be determined by discriminating between degrees of invasion, but for the purpose of determining as to what is the pith and substance of the impugned Act. Its pro visions may advance so far into federal territory as to show that its true nature is not covered with Provincial matters, but the question is not, has it trespassed more or less, but is the trespass, whatever it be, such as to show that the pith and substance of the impugned Act is not money lending but promissory notes or banking ? once that question is determined the Act falls on one or the other side of the line and can be seen as valid or invalid according to its true content. " The passage quoted above places the precedence according to the three lists in its proper perspective. In answering the objection that 171 view does not give sufficient effect to the non obstante clause in section 100(1) of the Government of India Act, 1935, as between the three lists, the Privy Council observed: "Where they come in conflict, List I has priority over Lists III and II and List III has priority over List II." But added: "The priority of the Federal Legislature would not prevent the Provincial Legislature from dealing with any matter within List II though it may incidentally affect any item in List I." It would therefore appear that the constitutionality of the law is to be judged by its real subject matter and not by its incidental effect on any topic of legislation in another field. The decision of the Privy Council in Prafulla Kumar Mukherjee 's case, supra, has been repeatedly approved by the Federal Court and this Court as laying down the correct rule to be applied in resolving conflicts which arise from overlapping powers in mutually exclusive lists. It may be added as a corollary of the pith and substance rule that once it is found that in pith and substance an impugned Act is a law on a permitted field any incidental encroachment on a forbidden field does not affect the competence of the legislature to enact that Act; Ralla Ram vs Province of East Punjab(2), State of Bombay vs Nerothamdas Jethabai & Anr(2), State of Bombay vs F. N. Balsara(3), A. section Krishna vs State of Madras(4), M. Karunanidhi vs Union of India(5), Union of India vs H.S. Dhillon(6) and Southern Pharmaceuticals & Chemicals Trichur & Ors. etc. vs State of Kerala & Ors. etc.(7) In Laskin 's Canadian Constitutional Law, 4th edn. , it is observed at p. 24 that the doctrine of paramountcy Is tied up with 172 the "trenching" doctrine in the first of the four propositions formulated by Lord Tomlin in Attorney General for Canada vs Attorney General for Britain Columbia & Ors.(1) case, and then he goes into the question,: "What is the basis of the paramountcy doctrine ?" Laskin quotes from Lefroy 's Canada 's Federal System at p. 126: "But the rule as to predominance of Dominion legislation it may be confidently said, can only be invoked in cases of absolutely conflicting legislations in pari materia, when it would be an impossibility to give effect to both the Dominion and the provincial enactments. " The learned author refers two the two decisions of the Privy Council in Attorney General of Ontario vs Attorney General of Canada(2) and City of Montreal vs Montreal Street Railway(3) laying down that: "There must be a real conflict between the two Acts, that is, the two enactments 'must come into collision '. . or 'comes into conflict . over a field of jurisdiction common to both '. " Laskin observes that the "conflict" test espoused by these authorities seems clear enough in principle even if it raises problems in application. He then at p. 26 notices that there is a recent trend in the decisions of the Supreme Court of Canada to the strict view of paramountcy reflected in the conflict or collision test, which he describes as the test of operating incompatibility and observes at p. 27 : . "It is necessary to be reminded at all times that no issue of paramountcy can arise unless there is in existence federal and provincial legislation which, independently considered, is in each case valid. If either piece of legislation, standing alone, is invalid there is no occasion to consider whether the field has been occupied. The issue that will have been resolved in such case would be the anterior one of the "matter embraced by the legislation, whether of Parliament or of the provincial legislature, as the case may be. " 173 At p. 28, he states: "The doctrine of occupied field applies only where there is a clash between Dominion legislation and provincial legislation within an area common to both. " Here there is no such conflict. The Union and the State laws operate on two different and distinct fields and both the laws are capable of being obeyed. Questions of conflict between the jurisdiction of Parliament of the Dominion and of the Provincial Legislature have frequently come up before the Privy Council and we may briefly refer to the decisions relied upon though they are of little assistance to the appellants. In Grand Trunk Railway Company of Canada vs Attorney General of Canada(1), Lord Dunedin observed: The construction of the provisions of the British North America Act has been frequently before their Lordships. It does not seem necessary to recapitulate the decisions. But a comparison of two cases decided in the year 1894 viz. , Attorney General of Ontario vs Attorney General of Canada(2) and Tennant vs Union Bank of Canada(3) seem to establish these two propositions First, that there can be a domain in which provincial and Dominion legislation may overlap, in which case neither legislation will be ultra vires, if the field is clear; and secondly, that if the field it not clear, and in such a domain the two legislations meet, then the Dominion legislation must prevail. " In a later decision of the Privy Council in Attorney General for Canada vs Attorney General for British Columbia & Ors. case, supra, Lord Tomlin summarized in four propositions the result of the earlier decisions of the Board on the question of conflict between the Dominion and Provincial Legislatures. The third proposition is to the effect that it is within the competence of the Dominion Parliament to provide for matters which, though otherwise within the 174 legislative competence of the Provincial Legislature, are necessarily incidental to effective legislation by Parliament of the Dominion upon a subject of legislation expressly enumerated in section 91. The fourth proposition on which the entire argument of learned counsel for the appellants proceeds is based upon the dictum of Lord Dunedin in Grand Trunk Railway Company 's case, supra, set out above. It is well settled that the validity of an Act is not affected if lt incidentally trenches upon matters outside the authorized field and therefore it is necessary to inquire in each case what is the pith and substance of the Act impugned. If the Act, when so viewed, substantially falls within the powers expressly conferred upon the legislature which enacted it, then it cannot be held to be invalid merely because it incidentally encroaches on matters which have been assigned to another Legislature. In Board of Trustees of the Lethbrige Northern Irrigation District & Anr. vs Independent order of Foresters(1), Viscount, Caldecote, L.C. Observed: "These sections have been the subject of repeated examination in the Judicial Committee, and there can no longer be any doubt as to the proper principles to their interpretation, difficult though they may be in application. Lord Haldane, in delivering the judgment of the Judicial Committee in, Great West Saddlary Co. vs The King(2) said "The rule of constraction is that general language in the heads of section 92 yields to particular expressions in section 91, where the latter are unambiguous. " In a later decision of the Judicial Committee, Attorney General for Canada vs Attorney General for British Columbia, supra, Lord Tomlin summarized in four propositions the result of the earlier decisions of the Board on questions of conflict between the Dominion and the Provincial Legislatures. The first proposition is to the effect that the legislation of the Provincial Parliament of the Dominion, so long as it strictly relates to subjects of legislation expressly enumerated in section 91, is of paramount authority, even though it trenches upon matters assigned to the Provincial 175 Legislatures by section 92, Lord Tomlin referred to Tennant vs Union Bank of Canada, supra, as the authority for this statement." Viscount Caldecote then observed: "In applying these principles, as their Lordships propose to do, an inquiry must first be made as to the "true nature and character of the enactment in question" Citizen Insurance Co. Of Canada vs Wiliam Parsons) (supra) or, to use Lord Watson 's words in delivering the judgment of the Judicial Committee in Union Colliery Company of British Columbia vs Bryden(1) as to their "pith and substance". Their Lordships now address themselves to that inquiry." "Legislation", said Lord Maugham in delivering the judgment of the Privy Council in Attorney General for Alberta vs Attorney General for Canada,(2) "given in pith and substance within one of the classes specially enumerated in section 91 is beyond the legislative competence of the Provincial Legislature under section 91". At p. 370 of the Report, Lord Maugham laid down on behalf of the Privy Council: "Since 1894 it has been a settled principle that if a subject of legislation by the Province is only incidental or ancillary to one of the classes of subjects enumerated in section 91 and is properly within one of the subjects enumerated in section 92, then legislation by the Province is competent unless and until the Dominion Parliament chooses to occupy the field by legislation." (Emphasis supplied.) Lord Maugham 's reference to the year 1894 points to the decision of the Privy Council in Attorney General for Ontario vs Attorney General for Canada, supra. In Attorney General for Canada vs Attorney General for the Province of Quebed,(3) Lord Porter in delivering the judgment of the Board drew attention to these principles and then observed: 176 "In calling attention to these principles their Lordships are but repeating what has many times been set forth in the judgments of the Board, and it only remains to apply them to the individual case under consideration. ' The rule of pith and substance laid down by the Privy Council was reaffirmed by Viscount Simon in Attorney General of Sasketchewan vs Attorney General of Canada & Ors (1) This was emphasized very clearly by Lord Atkin while dealing with the validity of the Milk and Milk Products Act (Northern Ireland) which was impugned as violating section 4 of the Government of Ireland Act, 1920 in Gallahagher vs Lynn(2) in his own terse language: "It is well established that you are to look at the "true nature and character" of the legislation; Russell vs The Queen(3) "the pith and substance of the legislation". If on the view of the statute a, whole, you find that the substance of the legislation is within the express powers, then it is now invalidated if incidentally it affects matters which are outside the authorized field. " Much stress is laid on the fourth propositions formulated by Lord Tomlin in Attorney General for Canada vs Attorney General for British Columbia & Ors., (supra) based on the dictum of Lord Dunedin in Grand Trunk Railway Company of Canada 's case, supra, which, even at the cost of repetition, we may set out below: "4. There can be a domain in which provincial and Dominion legislation may overlap, in which case neither legislation will be ultra vires if the field is clear, but if the field is not clear and the two legislations meet, the Dominion legislation must prevail: see Grand Trunk R. of Canada vs Attorney General of Canada, (supra). " The question is whether the field is not clear and the two legislations meet and therefore on the doctrine of Federal supremacy sub s (3) 177 of section S of the Act must be struck down as ultra vires The principle deducible from the dictum of Lord Dunedin as applied to the distribution of legislative powers under Art 246 of the Constitution, is that when the validity of an Act is challenged as ultra vires, the answer lies to the question, what is the pith and substance of the impugned Act ? No doubt, in many cases it can be said that the enactment which is under consideration may be regarded from more than one angle and as operating in more than one field. If however, the matter dealt with comes within any of the classes of subjects enumerated in List II, then it is under the terms of article 246 (3) not to be deemed to come within the classes of subjects assigned exclusively to Parliament under article 246 (1) even though the classes of subjects looked at signly overlap in many respects. The whole distri bution of powers must be looked at as Gwyer, C. J. Observed in C.P. & Berar Taxation Act 's case, supra, in determining the question of validity of the Act in question. Moreover, as Gwyer, C.J. Laid down in Subrahmaniyan Chettiar 's case, (supra), and affirmed by their Lordships of the Privy Council in Prafulla Kumar Mukherjee 's case, (supra) it is within the competence of the State Legislature under article 246 (3) to provide for matters which, though within the competence of Parliament, are necessarily incidental to effective legislation by the State Legislature on the subject of legislation expressly enumerated in List II. We must then pass on to the contention advanced by learned counsel for the appellants that there is repugnancy between sub s (3) of section S of the Act and paragraph 21 of the Drugs (Price Control) order and therefore sub section (3) of section 5 of the Act is void to that extent. Ordinarily, the laws could be said to be repugnant when they involve impossibility of obedience to them simultaneously but there may be cases in which enactments may be inconsistent although obedience to each of them may be possible without disobeying the other. The question of "repugnancy" arises only with reference to a legislation falling in the Concurrent List but it can be cured by resort to article 254 (2). As we have endeavoured so far, the question raised as to the constitutional validity of sub section (3) of section S of the Act has to be determined by application of the rule of the pith and substance whether or not the subject matter of the impugned legislation was competently enacted under article 246, and therefore tho question of repugnancy under article 254 was not a matter in issue. The submission 178 put forward on behalf of the appellants however is that there is direct collision and/or irreconciliable conflict between sub section (3) of section 5 of the Act which is relatable to Entry 54 of List II of the Seventh Schedule and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the which is relatable to Entry 33 of List III. It is sought to be argued that the words "a law made by Parliament which Parliament is competent to enact" must be construed to mean not only a law made by Parliament with respect to one of the matters enumerated in the Concurrent List but they are wide enough to include a law made by Parliament with respect to any of the matters enumerated in the Union List. The argument was put in this form. In considering whether a State law is repugnant to a law made by Parliament, two questions arise: First, is the law made by Parliament viz. the , a valid law ? For, if it is not, no question of repugnancy to a State law can arise. If however it is a valid law, the question as to what constitutes repugnancy directly arises. The Second question turns on a construction of the words "a law made by Parliament which Parliament is competent to enact" in article 254 (1). Strong reliance is placed on the judgment of the High Court of Australia in Clyde Engineering Company Limited vs Cowburn(1) and to a passage in Australian Federal Constitutional Law by Colin Howard, 2nd edn. at pp. 34 35. Our attention is also drawn to two other decisions of the High Court of Australia: Ex parte Mc Lean(2) and Stock Motor Ploughs Limited vs Forsyth.(3) The decision in Clyde Engineering Company 's cases, supra, is an authority for the proposition that two enactments may be inconsistent where one statute takes away the rights conferred by the other although obedience to each one of them may be possible without disobeying the other. The contention is that paragraph 21 of the Control order confers a right on the manufacturers and producers of medicines and drugs to pass on the liability for sales tax while sub section (3) of section 5 of the Act prohibits such manufacturers or producers from passing on such liability. The argument cannot prevail for two obvious reasons viz (1) Entry 54 of List II is a tax entry and therefore there is no question of repugnancy between sub section (3) of section 5 of the Act which is a 179 law made by the State Legislature for the imposition of tax on sale or purchase of goods relatable to Entry 54 and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the which is a law made by Parliament relatable to Entry 33 of List III. And (2). The question of 'repugnancy ' can only arise in connection with the subjects enumerated in the Concurrent List as regards which both the Union and the State Legislatures have concurrent powers so that the question af conflict between laws made by both Legislatures relating to the same subject may arise. This Court has considered the question of repugnancy in several cases and in Deep Chand vs The State of Uttar Pradesh & Ors.(1) the result of the authorities was thus stated by Subba Rao, J.: "Nicholas in his Australian Constitution, 2nd edn., p. 303, refers to three tests of inconsistency or repugnancy: 1. There may be inconsistency in the actual terms of the competing statutes; 2. Though there may be no direct conflict, a State law may be inoperative because the Commonwealth law, or the award of the Commonwealth Court, is intended to be a complete exhaustive Code; and 3. Even in the absence of intention, a conflict may arise when both State and Commonwealth seek to exercise their powers over the same subject matter." In Ch. Tika Ramji & Ors. vs The State of Uttar Pradesh & Ors.(2) the Court accepted the above three rules evolved by Nicholas, among others, as useful guides to test the question of repugnancy. article 254 of the Constitution makes provision first, as to what would happen in the case of conflict between a Central and State 180 law with regard to the subjects enumerated in the Concurrent List, and secondly, for resolving such conflict. article 254(1) enunciates the normal rule that in the event of a conflict between a Union and a State law in the concurrent field, the former prevails over the latter. (1) lays down that if a State law relating to a concurrent subject is 'repugnant ' to a Union law relating to that subject, then, whether the Union law is prior or later in time, the Union law will prevail and the State law shall, to the extent of such repugnancy, be void. To the general rule laid down in cl. (1), cl. (2) engrafts an exception, viz., that if the President assents to a State law which has been reserved for his consideration, it will prevail notwithstanding its repugnancy to an earlier law of the Union, both laws dealing with a concurrent subject. In such a case, the Central Act will give way to the State Act only to the extent of inconsistency between the two, and no more. In short, the result of obtaining the assent of the President to a State Act which is inconsistent with a previous Union law relating to a concurrent subject would be that the State Act will prevail in that State and override the provisions of the Central Act in their applicability to that State only. The predominance of the State law may however be taken away if Parliament legislates under the proviso to cl. The proviso to article 254(2) empowers the Union Parliament to repeal or amend a repugnant State law, either directly, or by itself enacting a law repugnant to the State law with respect to the 'same matter '. Even though the subsequent law made by Parliament does not expressly repeal a State law, even then, the State law will become void as soon as the subsequent law of Parliament creating repugnancy is made. A State law would be repugnant to the Union law when there is direct conflict between the two laws. Such repugnancy may also arise where both laws operate in the same field and the two cannot possibly stand together. : See: Zaverbhai Amaidas vs State of Bombay(1), M. Karunanidhi vs Union of India(2) and T. Barai vs Henry Ah Hoe d: Anr.(2) We may briefly refer to the three Australian decisions relied upon. As stated above, the decision in Clyde Engineering Company 's case (supra), lays down that inconsistency is also created when one statute takes away rights conferred by the other. In Ex Parte McLean 's case, supra, Dixon J. laid down another test viz., two 181 statutes could be said to be inconsistent if they, in respect of an identical subject matter, imposed identical duty upon the subject, but provided for different sanctions for enforcing those duties. In Stock Motor Ploughs Limited 's case, supra, Evatt, J. held that even in respect of cases where two laws impose one and the same duty of obedience there may be inconsistency. As already stated the controversy in these appeals falls to be determined by the true nature and character of the impugned enactment, its pith and substance, as to whether it falls within the legislative competence of the State Legislature under article 246(3) and does not involve any question of repugnancy under article 254(1). We fail to comprehend the basis for the submission put forward on behalf of the appellants that there is repugnancy between sub section (3) of section 5 of the Act which is relatable to Entry 54 of List II of the Seventh Schedule and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the relatable to Entry 33 of List III and therefore sub section (3) of section 5 of the Act which is a law made by the State Legislature is void under article 254(1). The question of repugnancy under article 254(1) between a law made by Parliament and a law made by the State Legislature arises only in case both the legislations occupy the same field with respect to one of the matters enumerated in the Concurrent List, and there is direct conflict between the two laws. It is only when both these requirements are fulfilled that the State law will, to the extent of repugnancy become void. article 254(1) has no application to cases of repugnancy due to overlapping found between List II on the one hand and List I and List III on the other. If such overlapping exists in any particular case, the State law will be ultra vires because of the non obstante clause in article 246(1) read with the opening words "Subject to" in article 246(3). In such a case, the State law will fail not because of repugnance to the Union law but due to want of legislative competence. It is no doubt true that the expression "a law made by Parliament which Parliament is competent to enact" in article 254(1) is susceptible of a construction that repugnance between a State law and a law made by Parliament may take place outside the concurrent sphere because Parliament is competent to enact law with respect to subjects included in List III as well as 'List I" But if article 254(1) is read as a whole, it will be seen that it is expressly made subject to cl. (2) which makes reference to repugnancy in the field of Concurrent List in other words, if cl. (2) is to be the guide in the determination of scope of cl. (1), the 182 repugnancy between Union and State law must be taken to refer only to the Concurrent field. article 254(1) speaks of a State law being repugnant to (a) a law made by Parliament or (b) an existing law. There was a controversy at one time as to whether the succeeding words "with respect to one of the matters enumerated in the Concurrent List" govern both (a) and (b) or (b) alone. It is now settled that the words "with respect to" qualify both the clauses in article 254(1) viz. a law made by Parliament which Parliament is competent to enact as well as any provision of an existing law. The under lying principle is that the question of repugnancy arises only when both the Legislatures are competent to legislate in the same field i.e. with respect to one of the matters enumerated in the Con current List. Hence, article 254(1) can not apply unless both the Union and the State laws relate to a subject specified in the Con current List, and they occupy the same field. This construction of ours is supported by the observations of Venkatarama Ayyar, J. speaking for the Court in A. section Krishna 's case, supra, while dealing with section 107(1) of the Government of India Act, 1935 to the effect: "For this section to apply, two conditions must be fulfilled: (1) The provisions of the Provincial law and those of the Central legislation must both be in respect of a matter which is enumerated in the Concurrent List, and (2) they must be repugnant to each other, It is only when both these requirements are satisfied that the Provincial law will, to the extent of the repugnancy, become void." In Ch. Tika Ramji 's case, supra, the Court observed that no question of repugnancy under article 254 of the Constitution could arise where parliamentary legislation and State legislation occupy different fields and deal with separate and distinct matters even though of a cognate and allied character and that where, as in that case, there was no inconsistency in the actual terms of the Acts enacted by Parliament and the State Legislature relatable to Entry 33 of List III, the test of repugnancy would be whether Parliament and State Legislature, in legislating on an entry in the Concurrent List, exercised their powers over the same subject matter or whether the laws enacted by Parliament were intended to be exhausted as to cover the entire field, and added: 183 "The pith and substance argument cannot be imported here for the simple reason that, when both the Centre as well as the State Legislatures were operating in the con current field, there was no question of any trespass upon the exclusive jurisdiction of the Centre under Entry 52 of List I, the only question which survived being whether put in both the pieces of legislation enacted by the Centre and the State Legislature, there was any such repugnancy. " This observation lends support to the view that in cases of overlapping between List II on the one hand and Lists I and III on the other, there is no question of repugnancy under article 254(1). Subba Rao. J. speaking for the Court in Deep Chand 's case, supra, interpreted article 254(1) in these terms: "article 254(1) lays down a general rule. Clause (2) is an exception to that Article and the proviso qualified the said exception. If there is repugnancy between the law made by the State and that made by the Parliament with respect to one of the matters enumerated in the Con current List, the law made by Parliament shall prevail to the extent of the repugnancy and law made by the State shall, to the extent of such repugnancy, be void. " In all fairness to learned counsel for the appellants, it must be stated that they did not pursue the point any further in view of these pronouncements. We are unable to appreciate the contention that sub section (3) of section 5 of the Act being a State law must be struck down as ultra vires as the field of fixation of price of essential commodities is an occupied field covered by a central legislation. It is axiomatic that the power of the State Legislature to make a law with respect to the levy and imposition of a tax on sale or purchase of goods relatable to Entry 54 of List 11 of the Seventh Schedule and to make ancillary provisions in that behalf, is plenary and is not subject to the power of Parliament to make a law under Entry 33 of List III. There is no warrant for projecting the power of Parliament to make a law under. Entry 33 of List III into the State 's power of taxation under Entry 54 of List II. Otherwise, Entry 54 will have to be read as: 'Taxes on the sale or purchase of goods other than essential commodities etc 184 cetra '. When one entry is made 'subject to ' another entry, all that it means is that out of the scope of the former entry, a field of legislation covered by the latter entry has been reserved to be specially dealt with by the appropriate Legislature. Entry 54 of List II of the Seventh Schedule is only subject to Entry 92A of List I and there can be no further curtailment of the State 's power of taxation. It is a well established rule of construction that the entries in the three lists must be read in a broad and liberal sense and must be given the widest scope which their meaning is fairly capable of because they set up a machinery of Government. The controversy which is now raised is of serious moment to the States, and a matter apparently of deep interest of the Union. But in its legal aspect, the question lies within a very narrow compass. The duty of the Court is simply to determine as a matter of law, according to the true construction of article 246(3) of the Constitution, whether the State 's power of taxation of sale of goods under Entry 54 of List II and to make ancillary provisions in regard thereto, is capable of being encroached upon by a law made by Parliament with respect to one of the matters enumerated in the Concurrent List. The contention fails to take into account that the Constitution effects a complete separation of the taxing power of the Union and of the States under article 246. It is equally well settled that the various entries in the three lists are not 'powers of legislation, but 'fields ' of legislation. The power to legislate is given by article 246 and other Articles of the Constitution. Taxation is considered to be a distinct matter for purposes of legisla tive competence. Hence, the power to tax cannot be deduced from a general legislative entry as an ancillary power. Further, the element of tax does not directly flow from the power to regulate trade or commerce in, and the production, supply and distribution of essential commodities under Entry 33 of List III, although the liability to pay tax may be a matter incidental to the Centre 's power of price control. "Legislative relations between the Union and the States inter se with reference to the three lists in Schedule VII cannot be under stood fully without examining the general features disclosed by the entries contained in those Lists: "Seervai in his Constitutional Law of India, 3rd edn. 1 at pp. 81 82. A scrutiny of Lists I and II of the Seventh Schedule would show that there is no overlapping 185 anywhere in the taxing power and the Constitution gives independent sources of taxation to the Union and the States. Following the scheme of the Government of India Act, 1935, the Constitution has made the taxing power of the Union and of the States mutually exclusive and thus avoided the difficulties which have arisen in some other Federal Constitutions from overlapping powers of taxation. It would therefore appear that there is a distinction made between general subjects of legislation and taxation. The general subjects of legislation are dealt with in one group of entries and power of taxation ill a separate group. In M.P. Sundararamier & Co. vs The State of Andhra Pradesh & Anr.(1) This Court dealt with the scheme of the separation of taxation powers between the Union and the States by mutually exclusive lists. In List I, Entries 1 to 81 deal with general subjects of legislation; Entries 82 to 92A deal with taxes. In List 11, Entries 1 to 44 deal with general subjects of legislation; Entries 45 to 63 deal With taxes. This mutual exclusiveness is also brought out by the fact that in List Ill, the Concurrent Legislative List, there is no entry relating to a tax, but it only contains an entry relating to levy of fees in respect of matters given in that list other then court fees. Thus, in our Constitution, a conflict of the taxing power of the Union and of the States cannot arise. That being so, it is difficult to comprehend the submission that there can be intrusion by a law made by Parliament under Entry 33 of List III into a forbidden field viz. the State s exclusive power to make a law with respect to the levy and imposition of a tax on sale or purchase of goods relatable to Entry 54 of List II of the Seventh Schedule. It follows that the two laws viz. sub section (3) of section 5 of the Act and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the , operate on two separate and distinct fields and both are capable of being obeyed. There is no question of any clash between the two laws and the question of repugnancy does not come into play. The remaining part of the case presents little difficulty. It would be convenient to deal with the contention based on articles 14 and 19 (1) (g) of the Constitution together as the submissions more or less proceed on the similar lines. It is urged that the provision contained in sub section (3) of section 5 of the act is violative of article 14 of the Constitution inasmuch as it is wholly arbitrary and irrational and it 186 treats "unequals as equals". It is urged that the treats certain controlled commodities and their sellers in a special manner by fixing controlled prices. The dealers so treated by this Central law are so circumstanced that they cannot be equated with other dealers who can raise their sale prices and absorb the surcharge levied under sub section (1) of section 5 of the act and a class of dealers like manufacturers and producers of medicines and drugs and other dealers of essential commodities who cannot raise their sale prices beyond the controlled price are being treated similarly without any rational basis. Once the fact of different classes being separate is taken, then a State law which treats both classes equally and visits them with different burdens would be violative of article 14. The State cannot by treating 'equals as unequals ' impose different burdens on different classes. It is submitted that the restriction imposed by sub section 3 of section 5 of the act which prevents the manufacturers and producers of medicines and drugs and other essential commodities from passing on the liability to pay surcharge is confiscatory and imposes a disproportionate burden on such manufacturers and producers or other dealers. These two abstract questions have been convassed on the basis that each of the appellants was a dealer having a gross turnover of Rs. 5 lakhs or more in a year and therefore liable to pay surcharge, in addition to the tax payable by him, under sub section (1) of section 5 of the Act. It is lamentable that there is no factual foundation laid to support the contention that the levy of surcharge under sub section (1) of section 5 of the Act imposes a disproportionate burden on a certain class of dealers such as manufacturers or producers of drugs and pharmaceuticals or dealers engaged in the business of distribution and sale of motor trucks etc. to support the assertion that sub section (3) of section 5 of the Act which prohibits such persons from passing on the liability to pay surcharge is arbitrary or irrational, or that it treats 'unequals as equals ' and thus infringes article 14 of the Constitution or is confiscatory in nature. There is no ground whatever for holding that sub section (3) of section 5 of the Act is arbitrary or irrational or that it treats 'unequals as equals ', or that it imposes a disproportionate burden on a certain class of dealers. It must be remembered that sub section (1) of section 5 of the Act provides for the levy of a surcharge having a gross turnover of Rs 5 lakhs or more in a year at a uniform rate of 10 per centum of the tax payable by them, irrespective whether they are dealers in essential 187 commodities or not. A surcharge in its true nature and character is nothing but a higher rate of tax to raise revenue for general purposes. The levy of surcharge under sub section (1) of section 5 of the Act falls uniformly on a certain class of dealers depending upon their capacity to bear the additional burden. From a fiscal point of view, a sales tax on a manufacturer or producer involves the complication of price structure. It is apt to increase the price of the commodity, and tends to be shifted forward to the consumer. The manufacturers or producers often formulate their prices in terms of certain profit targets. Their initial response would be to raise prices by the full amount of the tax. Where the conventional mark up leaves substantial unrealized profits, successful tax shifting is possible regardless of the nature of the tax. If, on the other hand, the tax cannot be passed on to the consumer, it must be shifted backwards to owners inputs. Despite theoretical approach of economists, businessmen always Regard the tax as a cost and make adjustments accordingly, and this is brought out by John C. Winfrey on Public Finance at p. 402 in the following passage: "The businessman . . has been skeptical regarding the entire approach of marginal cost pricing. His position has been that taxes are treated as a cost when determining prices, be it as part of a full cost pricing" rule? by application of a conventional mark up rate defined net of tax, or by pricing to meet a net of tax target rate of return. According to these formulas, a change in tax rate leads to an adjustment in price. The profits tax becomes a quasi sales tax. The fact that such a price policy is not consistent with the usual concepts of profit maximization does not disprove its existence. " Pausing here for a moment, we may observe that a surcharge being borne by the manufacturers and producers of medicines and drugs under sub section (3) of section 5 of the Act, the controlled price of such medicines and drugs to the consumer will remain the same. From the figures set out above, it will be seen that the business carried on by the appellants in the State of Bihar alone is of such magnitude that they have the capacity to bear the additional burden of surcharge levied under sub section (1) of section 5 of the Act. It roughly works out to one paisa per rupee of the sale price of the manufactured commodity. There is no material placed on record that the surcharge levied under sub section (1) of section 5 of the Act imposes a 188 disproportionate burden on the appellants or that it is confiscatory in nature. The argument of arbitrariness is an argument of despair. Sub section (1) of section Of the Act levies surcharge on dealers whose gross turnover in a year exceeds Rs. 5 lakhs irrespective of whether such dealers deal in essential commodities or not. lt is a general tax and all dealers falling within the class defined under sub section (1) of section 5 of the Act have been levied the surcharge at a uniform rate of 10 per centum of the tax. It will be noticed that first proviso to sub section (1) of section 5 enjoins that the aggregate of the tax and surcharge payable under the Act shall not exceed, in respect of goods declared to be of special importance in inter State trade or commerce by section 14 of the , the rate fixed by section 15 thereof. Under section 14 of the Act, almost all commodities which are essential to the life of the community are declared to be goods of special importance in inter State trade or commerce and therefore the maximum sales tax leviable on sale or purchase of such goods cannot exceed 4 per cent. It would therefore appear that generally dealers having a gross turnover of Rs. 5 lakhs in a year dealing in commodities covered by section 14 will not have to bear the burden of surcharge under sub section (1) of section 5 of the Act. It is the misfortune of these appellants that medicines and drugs are not declared to be of special importance in respect of inter State trade or commerce by section 14 of the . That apart, the appellants as manufacturers or producers of drugs under paragraph 24(1) have to bear the burden of sales tax on the controlled price that they cannot charge to a wholesaler a price higher than (a) the retail price minus 14 per cent thereof, in the case of ethical drugs; and (b) the retail price minus 12 per cent thereof, in the case of non ethical drugs. Under paragraph 24(2) they cannot sell to a retailer at a price higher than (a) the retail price minus 12 per cent thereof, in the case of ethical drugs; and (b) the retail price minus 10 per cent thereof, in the case of non ethical drugs. These provisions merely indicate that there is a margin of 14 per cent to the wholesaler in the case of ethical drugs and of 12 per cent in the case of non ethical drugs,. and the wholesaler has a margin of 2 per cent in either case when he sells to the retailer. In contrast, the profit margins of manufacturers and producers of medicines and drugs is considerably higher. Under the scheme of the Drugs (Price Control) order, the calculation of the retail price of formulations under paragraph 10 has to be accordance with the formula set out therein. One of the elements that enters 189 into the price structure is the 'mark up ' which is defined in paragraph 11 to include distribution cost, outward freight, promotional expenses, manufacturers margin and trade commission. Clauses (1) to (3) of the Third Schedule show that the mark up ranges from 40% in the case formulations specified in category (i), 55% in the case of formulations specified in category (ii) and 100% in the case of formulations specified in category (iii). This gives an indication of the extent of profits earned by the manufacturers and producers of formulations. In Market situations where uncertainty about demand prevails and mark up pricing is practised, the usual response is to attempt to shift taxes to the consumer. Musgrave in his Public Finance in Theory and Practice observes that economists like to think of business behaviour as being rational, in the sense of following a maximising rule, but businessmen may not act rationally. They regard the tax as a cost and make adjustments accordingly: "One of these is the practice of markup or margin pricing. Under this rule, costs are "marked up" to allow for a customary ratio of profits to costs, or price is set such as to leave profits (i.e., sales minus cost) a customary fraction of sales. Whether this gives rise to shifting depends on how costs and margins are defined. Shifting occurs if the tax is included as a cost, or if the margin if defined net of tax. " It would therefore appear that businessmen are skeptical regarding the entire approach of marginal cost pricing. their position is that taxes are treated as a cost when determining prices, be it as part of a "full cost pricing" rule, by application of a conventional mark up rate defined net of tax, or by pricing to meet a net of tax target rate of return. According to these formulae, a change in tax rate leads to an adjustment in price. If the appellants find that the levy of surcharge under sub section Of section 5 of the Act cannot be borne within the present price structure of medicines and drugs, they have the right to apply to the Central Government for revision of the retail price of formulations under paragraph 15 of the Control order. It was a startling proposition advanced by learned counsel for the appellants that the Court was wrong in Kodar 's case in 190 justifying on the basis of economic superiority the burden of additional sales tax on a certain class of dealers. It was held by the Court relying upon the dissenting opinion of Cardozo, J. in Stewart Dry Goods Co. vs Lewis ; that a gross sales tax graduated at increasing rates with the volume of sales on a certain class of dealers does not offend against article 14 of the Constitution. The contention that ability to pay is not a relevant criterion for upholding the validity of sub section (3) of section 5. Of the Act cannot be accepted. To say the least, there is no basis for this submission. It is beyond the scope of this judgment to enter into intricacies of public finance viz. Objectives and criteria of a tax, problems of shifting et cetera. Nor is it necessary for us to enter into a discussion of the so called benefit principle, or the alternative approach of ability to pay. There is probably widespread agreement now that taxes that fall on the 'better off ' rather than the worse off ' and are progressive rather tean proportional, are to be preferred. The concept of 'ability to pay ' implies both equal treatment of people with equal ability, however measured, and the progressive rate structure. The 'ability to pay ' doctrine has strong affinities to egalitarian social philosophy, both support measures designed to reduce inequalities of wealth and income. On questions of economic regulations and related matters, the Court must defer to the legislative judgment. When the power to tax exists, the extent of the burden is a matter for discretion of the law makers. It is not the function of the Court to consider the propriety or justness of the tax, or enter upon the realm of legislative policy. If the evident intent and general operation of the tax legislation is to adjust the burden with a fair and reasonable degree of equality, the constitutional requirement is satisfied. The equality clause in article 14 does not take from the State power to classify a class of persons who must bear the heavier burden of tax. The classification having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety or because in practice it results in some inequalities. In Kodar 's case, supra, the constitutional validity of a similar levy was upheld on the capacity to pay. It was observed: "The large dealer occupies a possition of economic superiority by reason of his greater volume of his business. And to make his tax heavier, both absolutely and relatively, is Dot arbitrary discrimination,, but an attempt 191 to proportion the payment to capacity to pay and thus to arrive in the end at more genuine equality. " The economic wisdom of a tax is within the exclusive province of the Legislature. The only question for the Court to consider is whether there is rationality in the belief of the Legislature that capacity to pay the tax increases by and large with an increase of receipts. The view taken by the Court in Kodar 's case, supra, is in consonance with social justice in an egalitarian State and therefore the contention based on article 14 of the Constitution must fail. The contention that sub section (3) of section 5 of the Act imposes an unreasonable restriction upon the freedom of trade guaranteed under article 19 (1) (g) of the Constitution proceeds on the basis that sales tax being essentially an indirect tax, it was not competent for the Legislature to make a provision prohibiting the dealer from collecting the amount of surcharge cannot prevail. It is urged that the surcharge does not retain its avowed character as sales tax but in its true gature and character is virtually a tax on income, by reason of the limitation contained in sub section (3) of section 5 of the Act. We are not impressed with the argument. Merely because a dealer falling within the class defined under sub section (1) of section 5 of the Act is prevented from collecting the surcharge recovered from him, does not affect the competence of the State Legislature to make a provision like sub section (3) of section 5 of the Act nor does it become a tax on his income. It is not doubt true that a sales tax is, according to the accepted notions, intended to be passed on to the buyer, and the provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation. But it is not an essential characteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the Legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. Whether a law should be enacted, imposing a sales tax, or validating the imposition of sales tax, when the seller is not in a position to pass it on to the consumer, is a matter of policy and does not effect the competence of the legislature: see: The Tata Iron & Steel Co. Ltd. vs The State of Bihar(1): M/s. J.K. Jute Mills Co. Ltd. vs The State of Uttar Pradesh & Anr.(2) 5. Kodar vs State of Kerala.(3) The contention based on the article 19 (1) (g) cannot therefore be sustained. 192 There was quite some discussion at the Bar as to whether the assent of the President is justiciable. rt was submitted that since not only sub section (1) of section 5 of the Act which provides for the levy of a surcharge on dealers having a gross turnover of Rs. 5 lakhs in a year but also sub section (3) thereof which interdicts that no such dealer shall be entitled to recover the amount of surcharge collected from him, are both relatable to Entry 54 of List II of the Seventh Schedule, there was no occasion for the Governor to have referred the Bill under article 200 to the President for his assent. It is some what strange that this argument should be advanced for the first time after a lapse of 30 years of the inauguration of the Constitution. Immediate provocation for this argument appears to be an obiter dictum of Lord Diplock while delivering the judgment of the Judicial Committee in Teh Cheng Poh @, Char Meh vs Public Prosecutor, Malaysia(1) that "the Courts are not powerless when there is a failure to exercise the power of revocation of a Proclamation of Emergency "issued by the Ruler of Malaysia under section 47 (2) of the Internal Security Act. The ultimate decision of the Privy Council was that since by virtue of s 47 (2) of that Act the security area proclamation remained lawful until revoked by resolutions of both Houses of Parliament or by the Ruler, it could not be deemed to lapse because the conditions upon which the Ruler had exercised his discretion to make the Proclamation were no longer in existence. That being so, the decision in Teh Cheng Poh 's case, supra, is not an authority for the proposition that the assent of the President is justiciable nor can it be spelled out that that Court can enquire into the reasons why the Bill was reserved by the Governor under article 200 for the assent of the President nor whether the President applied his mind to the question whether there was repugnancy between the Bill reserved for his consideration and received his assent under article 254 (2). The constitutional position of a Governor is clearly defined. The Governor is made a component part of the Legislature of a State under article 168 because every Bill passed by the State Legislation has to be reserved for the assent of the Governor under article 200. Under that Article, the Governor can adopt one of the three courses, namely: (1) He may give his assent to it, in which case the Bill becomes a law; or (2) He may except in the case of a 'Money Bill ' withhold his assent therefrom, in which cases the Bill falls through unless the procedure indicated in the first proviso is followed 193 i. e. return the Bill to the Assembly for consideration with a message, or (3) He may "on the advice of the Council of Ministers" reserve the Bill for the consideration of the President, in which case the President will adopt the procedure laid down in article 201. The first proviso to article 200 deals with a situation where the Governor is bound to give his assent and the Bill is reconsidered and passed by the Assembly. The second proviso to that Article makes the reservation for the Consideration of the President obligatory where the Bill would, "if it becomes law, dergoate from the powers of the High Court". Under article 201, when a Bill is reserved by the Governor for the consideration of the President, the President can adopt two courses, namely: (1) He may give his assent to it in which case again the Bill becomes a law; or (2) He may except where the Bill is not a 'Money Bill ', direct the Governor to return the Bill to the House or, as the case may be, the Houses of the Legislature of the State together with such message as is mentioned in the first proviso to article 200. When a Bill is so reserved by the President, the House or Houses shall reconsider it accordingly within a period of six months from the date of receipt of such message and if it is again passed by the House or Houses with or without amendment, it shall be presented again to the President for his consideration. Thus, it is clear that a Bill passed by the State Assembly may become law if the Governor gives his assent to it or if, having been reserved by the Governor for the consideration of the President, it is assented to by the President There is no provision in the Constitution which lays down that a Bill which has been assented to by the President would be ineffective as an Act if there was no compelling necessity for the Governor to reserve it for the assent of the President. A Bill which attracts article 254 (2) or article 304 (b) where it is introduced or moved in the Legislative Assembly of a State without the previous sanction of the President or which attracted article 31 (3) as it was then in force, or falling under the second proviso to article 200 has necessarily to be reserved for the consideration of the President. There may also be a Bill passed by the State legislature where there may be a genuine doubt about the applicability of any of the provisions of the Constitution which require the assent of the President to be given to it in order that it may be effective as an Act. In such a case, it is for the Governor to exercise his discretion and to decide whether he should assent to the Bill or should reserve it for consideration of the President to avoid any furture complication Even if it ultimately turns out that there was no necessity for the Governor to have 194 reserved a Bill for the consideration of the President, still he having done so and obtained the assent of the President, the Act so passed cannot be held to be unconstitutional on the ground of want of proper assent. This aspect of the matter, as the law now stands, is not open to scrutiny by the courts. In the instant case, the Finance Bill which ultimately became the Act in question was a consolidating Act relating to different subjects and perhaps the Governor felt that it was necessary to reserve it for the assent of the President. We have no hesitation in holding that the assent of the President is not justiciable, and we cannot spell out any infirmity arising out of his decision to give such assent. There still remains the contention that for the purpose of levying surcharge it is impermissible to take into account the method of computation of gross turnover, the turnover representing sales in the course of inter State trade and outside the State and sales in the course of export out of India. It is urged that the non obstante clause in section 7 of the Act has the effect of taking these transactions out of the purview of the Act with the result that a dealer is not required nor is he entitled to include them in the calculations of his turnover liable to tax thereunder. The submission is that sub section (1) of section 5 of the Act is ultra vires the State Legislature in so far as for purposes of levying the charge, the incidence of liability of a dealer to pay such surcharge depends on his gross turnover as defined in section 2 (j) of the Act. In support of the contention, reliance was placed on the following passage in the judgment of this Court in A. V. Fernandez vs State of Kerala(1): "There is a broad distinction between the provisions contained in the statute in regard to the exemptions of tax or refund or rebate of tax on the one hand and in regard to the non liability to tax or non imposition of tax on the other. In the former case, but for the provisions as regards the exemptions or refund or rebate of tax, the sales or purchases would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed. In the latter case, the 195 sales or purchases are exempted from taxation altogether. The legislature cannot enact a law imposing or authorising the imposition of a tax thereupon and they are not liable to any such imposition of tax. If they are thus not liable to tax, no tax can be levied or imposed on them and they do not come within the purview of the act at all. The very fact of their non liability to tax is sufficient to exclude them from the calculation of the gross turnover as well as the net turnover on which sales tax can be levied or imposed. The submission appears to proceed on a misapprehension of the principles laid down in Fernandez 's case, supra. To understand the ratio deducible in Fernandez 's case, supra, a few facts have to be stated. The business of the assessee in that case consisted in the purchase of copra, manufacture of coconut oil and cake therefrom and sale of oil and cake to parties inside the State and sale of oil to parties outside the State. In 1951, the Travancore Cochin General Sales Tax Act, 1125 was amended by addition of section 26 which incorporated the ban of article 286 of the Constitution and was in pari materia with section 7 of the Act. For the year 1951 52, the Sales Tax officer assessed the assessee to sales tax on a net assessable turnover by taking the value of the whole of the copra purchased by him, adding thereto the respective values of the oil and cake sold inside the State and. deducting only the value of the copra relatable to the oil sold inside the State. It was contended by the assessee that in the calculation of the net turnover, he was entitled to include the total value of the oil sold by him, both inside and outside the State, and deduct therefrom the total value of the copra purchased by him and further, under the overriding provision of section 26 of the Act, he was entitled to have the value of the oil sold outside the State deducted. The main controversy between the parties centered around the method of computation of the net turnover. The contention advanced by the assessee was rejected by the High Court, which limited the deduction to purchase of copra relatable to the sales inside the State. In affirming that decision, this Court observed that so far as sales of coconut oil outside the State were concerned, they were, as it were, by reason of section 26 of the Act read in conjunction with article 286, taken out of the purview of the Act, and that they had the effect of setting at naught and obliterating in regard thereto the provisions contained in the Act relating to the imposition of tax on the sale or purchase of such goods and in 196 particular the provision contained in the charging section, section 3, and the provisions contained in r. 20(2) and other provisions which were incidental to the process of levying such tax. The aforementioned passage relied upon cannot be read out of context in which it appears and if so read, it is hardly of any assistance to the appellants. In the penultimate paragraph in Fernandez 's case, supra, the Court after laying down that the non obstante clause in section 26 had the effect of taking sales in the course of inter State trade and outside the State out of the purview of the Act with the result that the dealer was not required nor entitled to include them in computation e of the turnover liable to tax thereunder, observed: "This position is not at all affected by the provision with regard to registration and submissions of returns of the sales tax by the dealers under the Act. The legislature, in spite of its disability in the matter of the imposition of sales tax by virtue of the provisions of article 286 of the Constitution, may for the purposes of the registration of a dealer and submission of the returns of sales tax include these transactions in the dealer 's turnover. Such inclusion, however, for the purposes aforesaid would not affect the non liability of these transactions to levy or imposition of sales tax by virtue of the provisions of article 286 of the Constitution and the corresponding pro vision enacted in the Act, as above. " The decision in Fernandez 's case, supra, is therefore clearly an authority for the proposition that the State Legislature notwithstanding article 286 of the Constitution while making a law under Entry 54 of List II of the Seventh Schedule can, for purposes of the registration of a dealer and submission of returns of sales tax, include the transactions covered by article 286 of the Constitution That being so, the constitutional validity of sub section (1) of section 5 of the Act which provides for the classification of dealers whose gross turnover during a year exceeds Rs. 5 lakhs for the purpose of levy of surcharge, in addition to the tax payable by him, is not assailable. So long as sales in the course of inter State trade and commerce or sales outside the State and sales in the course of import into, or export out of the territory of India are not taxed, there is nothing to prevent the State Legislature while making a law for the levy of a surcharge under Entry 54 of List II of the Seventh 197 Schedule to take into account the total turnover of the dealer within the State and provide, as has been done by sub section (1) of section 5 of the Act, that if the gross turnover of such dealer exceeds Rs. 5 lakhs in a year, he shall, in addition to the tax, also pay a surcharge at such rate not exceeding 10 per centum of the tax as may be provided. The liability to pay a surcharge is not on the gross turnover including the transactions covered by article 286 but is only on inside sales and the surcharge is sought to be levied on dealers who have a position of economic superiority. The definition of gross turnover in section 2(j) of the Act is adopted not for the purpose of bringing to surcharge inter State sales or outside sales or sales in the course of import into, or export of goods out of the territory of India, but is only for the purpose of classifying dealers within the State and to identify the class of dealers liable to pay such surcharge. The underlying object is to classify dealers into those who are economically superior and those who are not. That is to say, the imposition of surcharge is on those who have the capacity to bear the burden of additional tax. There is sufficient territorial nexus between the persons sought to be charged and the State seeking to tax them. Sufficiency of territorial nexus involves a consideration of two elements viz.: (a) the connection must be real and not illusory, and (b) the liability sought to be imposed must be pertinent to that territorial connection: State of Bombay vs R.M.D. Chamarbaugwala(1), The Tata Iron & Steel Co. Ltd. vs State of Bihar(2), and International Tourist Corporation etc. vs State of Haryana & Ors.(3) The gross turnover of a dealer is taken into account in sub section (1) of section 5 of the Act for the purpose of identifying the class of dealers liable to pay a surcharge not on the gross turnover but on the tax payable by them. For these reasons, these appeals and the connected writ petitions and special leave petitions are dismissed with no order as to costs. H.L.C. Appeals dismissed.
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Section S, part (l) of the Bihar Finance Act from 1981 says that a special tax, called a surcharge, will be added to the regular tax. This applies to businesses that make more than 5 lakhs (500,000) rupees in a year. Part (3) of that section says these businesses cannot collect the surcharge from their customers. The government used this section to set the surcharge at 10% of the total tax a business owes. In this case, two companies are appealing. They make and sell medicine all over India. Their offices in Bihar are registered as businesses there. They sell their products through distributors in almost every district of Bihar. Their sales in the state are worth crores of rupees. Most of the medicines they sell are controlled by the Drugs (Price Control) Order of 1979. This order, under the Essential Commodities Act, says they can't sell these medicines for more than the price set by the government. But, they were allowed to pass on the sales tax to the customer. In the years 1980-81 and 1981-82, they had to pay the 10% surcharge under the Bihar Finance Act. The companies argued that part (3) of section 5 was not legal under the Constitution. But the High Court disagreed, referring to a previous case, Kodar vs State of Kerala. The companies argued: (i) That part (3) of section S of the Act, which is a state law, says that businesses cannot collect the surcharge. This goes against paragraph 21 of the Drugs (Price Control) Order 1979, which is a Union law, that lets drug companies pass sales tax to the customer. (ii) That laws made by Parliament should include laws about anything in the Union List. So, part (3) of section 5 is against Paragraph 21 of the Control Order and is therefore void. (iii) That if both part (1) and part (3) of section 5 relate to Entry 54 of List II, then there was no need for the Governor to have referred the Bihar Finance Bill, 1981 to the President for his approval. (iv) That drug companies can't raise their prices. So they shouldn't be treated the same as other businesses that can raise prices and absorb the surcharge. Treating "unequals as equals" is unfair and violates article 14 of the Constitution. (v) That sales tax is meant to be paid by the customer. So, the government can't stop businesses from collecting the surcharge. The surcharge is really a tax on income, which is against the freedom of trade guaranteed under article 19(1)(g). (vi) That part (3) of section S of the Act, a State law, goes against paragraph 21 of the Drugs (Price Control) Order, which is under a Union law. So the Union law should win. (vii) That the definition of "gross turnover" includes sales between states. This makes the surcharge illegal because the state legislature does not have the authority to regulate commerce that takes place in other states or countries. The court dismissed the appeals, and HELD: 1. (a) The surcharge is like a sales tax. So, the state legislature could make part (1) of section 5 to add a surcharge on certain businesses. If the state could tax the sale of goods, it could also choose which businesses would pay the surcharge. If so, the state could make part (3) of section S, stopping those businesses from collecting it from customers. (b) The state's power to tax sales under Entry 54 of List II is complete. It's not limited by Parliament's power under Entry 33 of List III. Parliament's power under Entry 33 of List III does not change the state's power to tax under Entry 54 of List II. Otherwise, Entry 54 of List II would have to say: "Taxes on sale or purchase of goods other than essential commodities, etc." When one entry is "subject to" another, it just means that part of the first entry is reserved for the second. Entry 54 of List II is only "subject to" Entry 92A of List I, and there are no other limits on the state's taxing power. (c) The Constitution separates the taxing powers of the Union and the states. The entries in the lists are "fields of legislation," not "powers of legislation." Taxation is a separate matter for deciding who can make laws. So, the power to tax can't come from a general entry as an extra power. Also, the power to tax doesn't come directly from the power to control trade in essential goods. But, the tax may be related to the government's power to control prices. (d) Looking at Lists I and II shows that there's no overlap in taxing power. The Constitution gives the Union and the states their own taxes. There's a difference between general laws and taxes. In List I, entries 1 to 81 are general laws, and entries 82 to 92A are taxes. In List II, entries 1 to 44 are general laws, and entries 45 to 63 are taxes. This separation is also shown by the fact that List III doesn't have an entry for a tax, only for fees. So, the Union and the states can't have a conflict over taxing power. The two laws here, part (3) of section S of the Act and paragraph 21 of the Drugs (Price Control) order, work in different areas and can both be followed. There's no conflict between them. (e) The words in article 246 say that Union power is supreme. If there's a conflict between Union and state powers, the Union power in List I wins over the state power in Lists ll and III. If there's overlap between Lists li and III, List li wins. But, the principle of Federal Supremacy only applies if there's an "irreconcilable" conflict between the Union and State Lists. The non obstante clause must only be used if there's no way to reconcile the lists. Also, there's no conflict if the law mainly falls under one List, and any effect on another List is just incidental. (f) The real test for part (3) of section S of the Act is whether it mainly relates to Entry 54 of List II. It doesn't matter if there's conflict between it and paragraph 21 of the Drugs (Price Control) order. The law's legality is judged by its main purpose, not by its side effects on another area. Once it's found that the law mainly deals with a permitted area, any side effects on a forbidden area don't matter. A law can be seen from different angles and as working in different areas. But, if it falls under List II, it's not considered to fall under Parliament's exclusive powers in article 246(1). The whole distribution of powers must be considered to decide if the law is valid. The state legislature can make laws about things that are necessary for the state to make effective laws on subjects in List II, even if those things are also within Parliament's power. 2.(a) Repugnancy under article 254(1) happens only if both laws are about the same thing in the Concurrent List, and there's a direct conflict. Only then does the State law become void to the extent of the conflict. article 254(1) doesn't apply to overlaps between List ll and List I or List Ill. If such overlap exists, the State law is illegal because of the non obstante clause in article 246(1). The State law fails not because it conflicts with Union law, but because the state lacked the power to make it. (b) The words "a law made by Parliament which Parliament is competent to enact" in article 254(1) could mean that conflict between a State law and a law made by Parliament can happen outside the Concurrent sphere. This is because Parliament can make laws about things in List III as well as List I. But, article 254(1) is subject to cl. (2), which refers to conflict in the Concurrent List. So, conflict between Union and State law must only refer to the Concurrent field. article 254(1) talks about a State law being repugnant to a law made by Parliament or an existing law. The words "with respect to" apply to both clauses in article 254(1). The main idea is that conflict only happens when both legislatures can make laws in the same area, which is the Concurrent List. (c) Entry 54 of List II is about taxes. So, there's no conflict between part (3) of section 5 of the Act and paragraph 21 of the Control order. Conflict can only happen with subjects in the Concurrent List, where both the Union and the State have power. 3. Articles 200 and 201 say that a Bill becomes law if the Governor approves it, or if the President approves it after the Governor sends it to the President. There's no rule saying a Bill approved by the President is invalid if the Governor didn't need to send it to the President. It's up to the Governor to decide whether to approve the Bill or send it to the President to avoid problems. Even if the Governor didn't need to send the Bill to the President, the law is still valid once the President approves it. Courts can't question this decision. In this case, the Finance Bill was a combination of different subjects. The Governor may have felt it was necessary to send it to the President. The President's approval can't be questioned, and the Court can't find anything wrong with his decision. 4. (a) There's no reason to say part (3) of section 5 of the Act is unfair or treats "unequals as equals." It doesn't put a disproportionate burden on any group of businesses. A surcharge is just a higher tax to raise money for general purposes. The surcharge under part (l) of section S falls equally on a group of businesses, based on their ability to pay the extra tax. The economic wisdom of a tax is up to the legislature. The Court only needs to consider whether it's reasonable to believe that the ability to pay increases with income. The view in Kodar's case, that making larger businesses pay more tax isn't unfair discrimination, but an attempt to make payments equal to ability to pay, is in line with social justice. (b) There's no reason to think the Court was wrong in Podar's case. The idea that ability to pay isn't relevant to part (3) of section 5 can't be accepted. For economic regulations, the Court must respect the legislature's decision. If the power to tax exists, the amount of the tax is up to the lawmakers. The Court doesn't decide if a tax is proper or fair. It doesn't make policy. If the tax law tries to adjust the burden fairly, the Constitution is satisfied. The equality clause doesn't stop the State from classifying people who must pay more tax. If the classification is reasonable, it's not against the clause just because it's not perfect or because it leads to some inequalities. (c) There's no proof that the surcharge puts a disproportionate burden on drug companies. The appellants' business in Bihar is large enough that they can afford the surcharge. Also, drug companies have higher profit margins than wholesalers. If the appellants can't afford the surcharge under the current prices, they can ask the government to revise the retail price. 5. Sales tax is usually passed on to the buyer. Laws usually let the seller collect the tax from the buyer. But, it's not essential that the seller can pass it on to the consumer. The legislature's power to tax sales doesn't depend on allowing sellers to collect the tax. Whether to tax sales when the seller can't pass it on is a policy decision. It doesn't affect the legislature's power. So, the argument based on article 19(1)(g) fails. 6. (a) The appellants make 'formulations' and are governed by paragraph 24, not paragraph 21, of the Control order. So, their prices to wholesalers include sales tax. There's no conflict between part (3) of section 5 and paragraph 24 of the Control order. The non obstante clause in section 6 of the Essential Commodities Act doesn't apply. (b) Even if some appellants were governed by paragraph 21, it wouldn't matter. Under the Act, businesses can pass on sales tax under section 3 and additional sales tax under section 6 to the buyers. Part (3) of section 5 stops businesses paying the surcharge under part (I) from collecting it from buyers. This just means the surcharge will reduce the profits of those businesses. The controlled price of medicines remains the same, and consumers are protected because the surcharge can't be passed on. So, there's no conflict between part (3) of section 5 of the Act and paragraph 21 of the Control order. The main goal of the Control order is to ensure fair prices and distribution of essential goods. The fact that some businesses may lose money doesn't make the law unreasonable, unless the price-fixing is unfair or there's a law requiring a fair return to the industry. 7. The Fernandez case says that a state can include transactions covered by article 286 for registering a business and submitting sales tax returns. So, part (I) of section 5 is valid. It classifies businesses with a gross turnover of over Rs. 5 lakhs for the surcharge. As long as sales between states or outside India aren't taxed, the state can consider the total turnover within the state. It can say that businesses with a gross turnover over Rs. 5 lakhs must pay a surcharge in addition to the tax. The surcharge isn't on the gross turnover, but only on sales within the state. The surcharge is meant to be paid by businesses with more money. The definition of gross turnover is used to classify businesses within the state and identify those who must pay the surcharge. There's enough of a connection between the people being taxed and the state taxing them.
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These are appeals by special leave from a judgment and order of the High Court of Patna dated April 30, 1982 by which the High Court upheld the constitutional validity of sub section (I) of s.5 of the Bihar Finance Act, 1981 ("Act ' for short) which provides for the levy of a surcharge on every dealer whose gross turnover during a year exceeds Rs. The principal contention advanced by the appellants in these appeals is that the field of price fixation of essential commodities in general, and drugs and formulations in particular, is an occupied field by virtue of various control orders issued by the Central Government from time to time under sub section (I) of section 3 of the which allows the manufacturer of producer of goods to pass on the tax liability to the consumer and therefore the State Legislature of Bihar had no legislative competence to enact sub section (3) of section S of the Act which interdicts that no dealer liable to pay a surcharge, in addition to the tax payable by him, shall be entitled to collect the amount of surcharge, and thereby trenches upon a field occupied by a law made by Parliament. The submission is that such transactions are covered by article 286 of the Constitution and A therefore are outside the purview of the Act and thus they cannot be taken into consideration for computation of the gross turnover as defined in section 2 (j) of the Act for the purpose of bearing the incidence of surcharge under sub section (1) of section 5 of the Act. Almost 94% of the medicines and drugs sold by them are at the controlled price exclusive of local taxes under the Drugs (Price Control) order, 1979 issued by the Central Government under sub section (1) of section 3 of the and they are expressly prohibited from selling these medicines and drugs in excess of the controlled price so fixed by the Central Government from time to time which allows the manufacturer or producer to pass on the tax liability to the consumer. Undeterred by the decision of this Court in Kodar 's case, supra, the appellants have challenged the constitutional validity of sub section (3) of section 5 of the Act in these appeals on the ground that the Court in that case did not consider the effect of price fixation of essential commodities by the Central Government under sub s (I) of section 3 of the which, by reason of section 6 of that Act, has an overriding effect notwithstanding any other law inconsistent therewith. (2) sub section (3) of section 5 of the Act which provides that no dealer shall be entitled to collect the amount of surcharge levied on him, clearly falls within Entry 54 of List II of the Seventh Schedule and it collides with, and or is inconsistent with, or repugnant to, the scheme of Drugs (Price Control) order? If that be so, then there will be repugnancy between the State law and the Control order which according to section 6 of the , must prevail. It is urged that the State Legislature was not competent under Entry 54 of List II of the Seventh Schedule to enact a provision like sub section (1) of section S of the Act which makes the grass turnover of a dealer as defined in section 2 (j) to be the basis for the levy of a surcharge i. e. inclusive of transactions relating to sale or purchase of goods which have taken place in the course of inter state trade or commerce or outside the territory of India. According to him, the question of repugnancy under article 254(1) between a law made by Parliament and a IdW made by the State Legislature arises only in case both the legislations occupy the same field with respect to one of the matters enumerated in the Concurrent list, and there is direct conflict between the two laws. The case of such appellants would be squarely governed by the decision of this Court in Kodar 's case, supra, and their liability to pay surcharge under sub section (1) of section 5 of the Act must be upheld, irrespective of the contentions raised in these appeals, on based on the opening words "Subject to clauses (1) and (2)" in article 246(3) of the Constitution and on section 6 of the . Surcharge (I) Every dealer whose gross turnover during a year exceeds rupees five lakhs shall, in addition to the tax payable by him under this Part, also pay a surcharge at such rate not exceeding ten per centum of the total amount of the tax payable by him, as may be fixed by the State Government by a notification published in the official Gazette: Provided that the aggregate of the tax and surcharge payable under this Part shall not exceed, in respect of goods declared to be of special importance in inter State trade or commerce by section 14 of the central Sales Tax Act, 1256 (Act 74 of 1956), the rate fixed by section 15 of the said Act: The expression "gross turnover" as defined in section 2(j) Of the Act insofar as material reads: 148 "2(j) "gross turnover" means (i) for the purposes of levy of sales tax, aggregate of sale prices received and receivable by a dealer, during any given period, in respect of sale of goods (including the sale of goods made outside the State or in the course of inter State trade or commerce or export) but does not include sale prices of goods or class or classes or description of goods which have borne the incidence of purchase tax under section 4. " Much emphasis was laid on fixation of price of bulk drugs under paragraph 3 which provides by sub paragraph (1) that the Government may, with a view to regulating the equitable distribution of an indigenously manufactured bulk drug specified in the First Schedule or the Second Schedule and making it available at a fair price and subject to the provisions of sub paragraph (2) and after making such inquiry as it deems fit, fix from time to time, by notification in the official Gazette, the maximum price at which such bulk drug shall be sold. It cannot be doubted that a surcharge partakes of the nature of sales tax and therefore it was within the competence of the State 157 Legislature to enact sub section (I) of section S of the Act for the purpose of levying surcharge on certain class of dealers in addition to the tax payable by them. It is said that the Courts should try to adopt the rule of harmonious construction and give effect to paragraph 21 of the Control order as the impact of sub section (3) of section S of the Act is on fixation of price of drugs under the Drugs (Price Control) order and therefore by reason of section 6 of the , paragraph 21 of the Control order which provides for the passing on of tax liability must prevail. It is convenient at this stage to deal with the contention of the appellants that if sub section (3) of section 5 of the Act were to cover all sales including sales of essential commodities whose prices are controlled by the Central Government under the various control orders issued under sub section (I) of section 3 of the , then there will be repugnancy between the State law and such contral orders which according to section 6 of the must prevail. The submission is that if Parliament chooses to occupy the field and there is price fixation of an essential commodity with liberty to pass on the burden of tax to the consumer by a law made by Parliament under Entry 33 of List III of the Seventh Schedule, then it is not competent for the State Legislature to enact a provision 162 like sub section (3) of section S of the Act while enacting a law under Entry 54 of List II prohibiting the passing on of liability of tax to the purchaser. The true principle applicable in judging the constitutional validity of sub section (3) of section S of the Act is to determine whether in its pith and substance it is a law relatable to Entry 54 of List II of the Seventh Schedule and not whether there is repugnancy between sub section (3) of section S of the Act and paragraph 21 of the Drugs {Price Control) order made under sub section (1) of section 3 of the , is therefore void. In dealing with the question, we must set out article 246 of the Constitution which is based on section 100 of the Government of India Act, 1935 and it reads: "246(1) Notwithstanding anything in clauses (2) and t (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List"). (2) Notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the "Concurrent List"). article 254 provides for the method of resolving conflicts between a law made by Parliament and a law made by the Legislature of a State with respect to a matter falling in the Concurrent List and it reads: "254(1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, 164 subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. (2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall if it has been reserved for the consideration of the President and has received his assent, prevail in that State. anything in clauses (2) and (3)", sub section (3) of section 5 of the Act which provides that no dealer shall be entitled to collect the amount of surcharge must be struck down as ultra vires the State Legislature inasmuch as it is in consistent with paragraph 21 of the drugs (Price Control) order issued by the Central Government under sub section (I) of section 3 of the which enables the manufacturer or producer of drugs to pass on the liability to pay sales tax to the consumer. The submission is that sub section (3) of section 5 of the Act enacted by the State Legislature while making a law under Entry 54 of List II of the Seventh Schedule which interdicts that a dealer liable to pay surcharge under sub section (1) of section 5 of the Act shall not be entitled to collect it from the purchaser, directly trenches upon Union power to legislate with respect to fixation of price of essential commodities under Entry 33 of List Ill. The same duty of reconciling apparently conflicting provisions was reiterated by Lord Simonds in delivering the judgment of the Privy Council in Governor General in Council vs Province of Madras(1): "For in a Federal constitution in which there is a division of legislative powers between Central and Provincial Legislatures, it appears to be inevitable that controversy should arise whether one or other legislature 169 is not exceeding its own, and encroaching on the other 's constitutional legislative power, and in such a controversy it is a principle, which their Lordships do not hesitate to apply in the present case, that it is not the name of the tax but its real nature, its "pith and substance" as it has sometimes been said, which must determine into what category it falls. " Laid down in Subrahmaniyan Chettiar 's case, (supra), and affirmed by their Lordships of the Privy Council in Prafulla Kumar Mukherjee 's case, (supra) it is within the competence of the State Legislature under article 246 (3) to provide for matters which, though within the competence of Parliament, are necessarily incidental to effective legislation by the State Legislature on the subject of legislation expressly enumerated in List II. The submission 178 put forward on behalf of the appellants however is that there is direct collision and/or irreconciliable conflict between sub section (3) of section 5 of the Act which is relatable to Entry 54 of List II of the Seventh Schedule and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the which is relatable to Entry 33 of List III. The argument cannot prevail for two obvious reasons viz (1) Entry 54 of List II is a tax entry and therefore there is no question of repugnancy between sub section (3) of section 5 of the Act which is a 179 law made by the State Legislature for the imposition of tax on sale or purchase of goods relatable to Entry 54 and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the which is a law made by Parliament relatable to Entry 33 of List III. We fail to comprehend the basis for the submission put forward on behalf of the appellants that there is repugnancy between sub section (3) of section 5 of the Act which is relatable to Entry 54 of List II of the Seventh Schedule and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the relatable to Entry 33 of List III and therefore sub section (3) of section 5 of the Act which is a law made by the State Legislature is void under article 254(1). The question of repugnancy under article 254(1) between a law made by Parliament and a law made by the State Legislature arises only in case both the legislations occupy the same field with respect to one of the matters enumerated in the Concurrent List, and there is direct conflict between the two laws. It is no doubt true that the expression "a law made by Parliament which Parliament is competent to enact" in article 254(1) is susceptible of a construction that repugnance between a State law and a law made by Parliament may take place outside the concurrent sphere because Parliament is competent to enact law with respect to subjects included in List III as well as 'List I" But if article 254(1) is read as a whole, it will be seen that it is expressly made subject to cl. This construction of ours is supported by the observations of Venkatarama Ayyar, J. speaking for the Court in A. section Krishna 's case, supra, while dealing with section 107(1) of the Government of India Act, 1935 to the effect: "For this section to apply, two conditions must be fulfilled: (1) The provisions of the Provincial law and those of the Central legislation must both be in respect of a matter which is enumerated in the Concurrent List, and (2) they must be repugnant to each other, It is only when both these requirements are satisfied that the Provincial law will, to the extent of the repugnancy, become void." Tika Ramji 's case, supra, the Court observed that no question of repugnancy under article 254 of the Constitution could arise where parliamentary legislation and State legislation occupy different fields and deal with separate and distinct matters even though of a cognate and allied character and that where, as in that case, there was no inconsistency in the actual terms of the Acts enacted by Parliament and the State Legislature relatable to Entry 33 of List III, the test of repugnancy would be whether Parliament and State Legislature, in legislating on an entry in the Concurrent List, exercised their powers over the same subject matter or whether the laws enacted by Parliament were intended to be exhausted as to cover the entire field, and added: 183 "The pith and substance argument cannot be imported here for the simple reason that, when both the Centre as well as the State Legislatures were operating in the con current field, there was no question of any trespass upon the exclusive jurisdiction of the Centre under Entry 52 of List I, the only question which survived being whether put in both the pieces of legislation enacted by the Centre and the State Legislature, there was any such repugnancy. " The duty of the Court is simply to determine as a matter of law, according to the true construction of article 246(3) of the Constitution, whether the State 's power of taxation of sale of goods under Entry 54 of List II and to make ancillary provisions in regard thereto, is capable of being encroached upon by a law made by Parliament with respect to one of the matters enumerated in the Concurrent List. sub section (3) of section 5 of the Act and paragraph 21 of the Control order issued by the Central Government under sub section (1) of section 3 of the , operate on two separate and distinct fields and both are capable of being obeyed. It must be remembered that sub section (1) of section 5 of the Act provides for the levy of a surcharge having a gross turnover of Rs 5 lakhs or more in a year at a uniform rate of 10 per centum of the tax payable by them, irrespective whether they are dealers in essential 187 commodities or not. If the appellants find that the levy of surcharge under sub section Of section 5 of the Act cannot be borne within the present price structure of medicines and drugs, they have the right to apply to the Central Government for revision of the retail price of formulations under paragraph 15 of the Control order. The decision in Fernandez 's case, supra, is therefore clearly an authority for the proposition that the State Legislature notwithstanding article 286 of the Constitution while making a law under Entry 54 of List II of the Seventh Schedule can, for purposes of the registration of a dealer and submission of returns of sales tax, include the transactions covered by article 286 of the Constitution That being so, the constitutional validity of sub section (1) of section 5 of the Act which provides for the classification of dealers whose gross turnover during a year exceeds Rs. So long as sales in the course of inter State trade and commerce or sales outside the State and sales in the course of import into, or export out of the territory of India are not taxed, there is nothing to prevent the State Legislature while making a law for the levy of a surcharge under Entry 54 of List II of the Seventh 197 Schedule to take into account the total turnover of the dealer within the State and provide, as has been done by sub section (1) of section 5 of the Act, that if the gross turnover of such dealer exceeds Rs.
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Section S, part (l) of the Bihar Finance Act from 1981 says that a special tax, called a surcharge, will be added to the regular tax. This order, under the Essential Commodities Act, says they can't sell these medicines for more than the price set by the government. The companies argued that part (3) of section 5 was not legal under the Constitution. The companies argued: (i) That part (3) of section S of the Act, which is a state law, says that businesses cannot collect the surcharge. This goes against paragraph 21 of the Drugs (Price Control) Order 1979, which is a Union law, that lets drug companies pass sales tax to the customer. (iii) That if both part (1) and part (3) of section 5 relate to Entry 54 of List II, then there was no need for the Governor to have referred the Bihar Finance Bill, 1981 to the President for his approval. (vi) That part (3) of section S of the Act, a State law, goes against paragraph 21 of the Drugs (Price Control) Order, which is under a Union law. (a) The surcharge is like a sales tax. So, the state legislature could make part (1) of section 5 to add a surcharge on certain businesses. (b) The state's power to tax sales under Entry 54 of List II is complete. Parliament's power under Entry 33 of List III does not change the state's power to tax under Entry 54 of List II. Entry 54 of List II is only "subject to" Entry 92A of List I, and there are no other limits on the state's taxing power. So, the power to tax can't come from a general entry as an extra power. This separation is also shown by the fact that List III doesn't have an entry for a tax, only for fees. So, the Union and the states can't have a conflict over taxing power. The two laws here, part (3) of section S of the Act and paragraph 21 of the Drugs (Price Control) order, work in different areas and can both be followed. If there's a conflict between Union and state powers, the Union power in List I wins over the state power in Lists ll and III. It doesn't matter if there's conflict between it and paragraph 21 of the Drugs (Price Control) order. But, if it falls under List II, it's not considered to fall under Parliament's exclusive powers in article 246(1). The state legislature can make laws about things that are necessary for the state to make effective laws on subjects in List II, even if those things are also within Parliament's power. The State law fails not because it conflicts with Union law, but because the state lacked the power to make it. (b) The words "a law made by Parliament which Parliament is competent to enact" in article 254(1) could mean that conflict between a State law and a law made by Parliament can happen outside the Concurrent sphere. This is because Parliament can make laws about things in List III as well as List I. So, there's no conflict between part (3) of section 5 of the Act and paragraph 21 of the Control order. A surcharge is just a higher tax to raise money for general purposes. The surcharge under part (l) of section S falls equally on a group of businesses, based on their ability to pay the extra tax. The idea that ability to pay isn't relevant to part (3) of section 5 can't be accepted. The Court doesn't decide if a tax is proper or fair. But, it's not essential that the seller can pass it on to the consumer. The legislature's power to tax sales doesn't depend on allowing sellers to collect the tax. Whether to tax sales when the seller can't pass it on is a policy decision. So, their prices to wholesalers include sales tax. There's no conflict between part (3) of section 5 and paragraph 24 of the Control order. Under the Act, businesses can pass on sales tax under section 3 and additional sales tax under section 6 to the buyers. So, there's no conflict between part (3) of section 5 of the Act and paragraph 21 of the Control order. It can say that businesses with a gross turnover over Rs. The surcharge isn't on the gross turnover, but only on sales within the state. The definition of gross turnover is used to classify businesses within the state and identify those who must pay the surcharge.
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ns Nos. 31, 50, 52, 54, 81 and 82 of 1964. Petitions under article 32 of the Constitution of India for the enforcement of Fundamental Rights. R. Gopalakrishnan, for the petitioners (in W.P. Nos. 31 and 52 of 1964). G. C. Kasliwal, Advocate General, State of Rajasthan, K. K. Jain (for W. P. No. 31 of 1964 only) and R. N. Sachthey, for the respondent (in W. P. Nos. 31 and 52 of 1964). C. K. Daphtary, Attorney General and R. H. Dhebar, for the Union of India. M. C. Setalvad, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for intervener No. 1. G. section Pathak, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for intervener No. 2. Dipak Dutta Chaudhuri and A. K. Nag, for the petitioners (in W. P. No. 50 of 1964). B. K. Khanna and R. N. Sachthey, for the respondent (in W. P. No. 50 1964). section K. Mehta, K. L. Mehta, for the petitioners (in W. P. No. 54 of 1964). B. K. Khanna and R. N. Sachthey, for respondents Nos.1 to 3 (in W. P. No. 54 of 1964). R. V. section Mani, for the petitioners (in W. P. Nos. 81 and 82 of 1964). 937 C. K. Daphtary, Attorney General, B. Sen and R. H. Dhebar, for respondent No. 1 (W. P. No. 81 of 1964). C. K. Daphtary, Attorney General, R. K. P. Shankardass and R. H. Dhebar, for respondent No. 1 (in W. P. No. 82 of 1964). N. Krishnaswamy Reddy, Advocate General, State of Madras, A. Ranganadham Chetty and A. V. Rangam, for respondent No. 2 (in W. P. Nos. 81 and 82 1964). K. section Chawla and R. V. section Mani, for intervener No. 3. The Judgment of P. B. GAJENDRAGADKAR C.J., K. , N. WANCHOO and RAGHUBAR DAYAL JJ. was delivered by GAJENDRAGADKAR C.J. M. HIDAYATULLAH and J. R. MUDHOLKAR JJ. delivered separate judgments. Gajendragadkar C.J. These six writ petitions which have been filed under article 32 of the Constitution, seek to challenge the validity of the Constitution (17th Amendment) Act, 1964. The petitioners are affected by one or the other of the Acts added to the 9th Schedule by the impugned Act, and their contention is that the impugned Act being constitutionally invalid, the validity of the Acts by which they are affected cannot be saved. Some other parties who are similarly affected by other Acts added to the 9th Schedule by the impugned Act, have intervened at the hearing of these writ petit ions, and they have joined the petitioners in contending that the impugned Act is invalid. The points raised in the present proceedings have been elaborately argued before us by Mr. Setalvad and Mr. Pathak for the interveners and Mr. Mani for the petitioners. We have also heard the Attorney General in reply. The impugned Act consists of three sections. The first section gives its short title. Section 2(i) adds a proviso to cl. (1) of article 31A after the existing proviso. This proviso reads thus "Provided further that where any law makes any provision for the acquisition by the State of any estate and where any land comprised therein is held by a person under his personal cultivation, it shall not be lawful for the State to acquire any portion of such land as is within the ceiling limit applicable to him under any law for the time being in force or any building or structure standing thereon or appurtenant thereto, unless the law relating to the acquisition of such land, building or structure, provides for payment of compensation at a rate which shall not be less than the market value thereof". 938 Section 2 (ii) substitutes the following sub clause for sub cl. (a) of cl. (2) of article 31A: "(a) the expression "estate" shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area and shall also include (i) any jagir, inam or muafi or other similar grant and in the States of Madras and Kerala, any janmam, right; (ii) any land held under ryotwari settlement; (iii) any land held or let for purposes of agriculture or for purposes ancillary thereto, including waste land, forest land, land for pasture or sites of buildings and other structures occupied by cultivators of land, agricultural labourers and village artisans". Section 3 amends the 9th Schedule by adding 44 entries to it. That is the, nature of the provisions contained in the impugned Amendment Act. In dealing with the question about the validity of the impugned Act, it is necessary to consider the scope and effect of the provisions contained in article 368 of the Constitution, because a large part of the controversy in the present writ petitions turns upon the decision of the question as to what the true scope and effect of article 368 is. Let us read article 368 : "368. An amendment of this Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two thirds of the members of that House present and voting, it shall be presented to the President for his assent and upon such assent being given to the Bill, the Constitution shall stand amended in accordance with the terms of the Bill : Provided that if such amendment seeks to make any change in (a) Article 54, Article 55, Article 73, Article 162 or Article 241, or (b) Chapter IV of Part V, Chapter V of Part VI, or Chapter 1 of Part XI, or 939 (c) any of the Lists in the Seventh Schedule, or (d) the representation of States in Parliament, or (e) the provisions of this Article, the amendment shall also require to be ratified by the Legislatures of not less than one half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent". It would, thus, appear that the broad scheme of article 368 is that if Parliament proposes to amend any provision of the Constitution not enshrined in the proviso, the procedure prescribed by the main part of the Article has to be followed. The Bill introduced for the purpose of making the amendment in question, has to be passed in each House by a majority of the total membership of that House and by a majority of not less than two thirds of the members of that House present and voting. This requirement postulates that a bill seeking to amend the relevant provisions of the Constitution should receive substantial support from members of both the Houses. That is why a two fold requirement has been prescribed in that behalf. After the bill is passed as aforesaid, it has to be presented to the President for his assent and when he gives his assent, the Constitution shall stand amended in accordance with the terms of the bill. That is the position in regard to the amendment of the provisions of the Constitution to which the proviso does not apply. If Parliament intends to amend any of the provisions of the Constitution which are covered by clauses (a) to (e) of the proviso, there is a further requirement which has to be satisfied before the bill car. be presented to the President for his assent. Such a bill is required to be ratified by the Legislatures of not less than one half of the States by Resolutions to that effect passed by them. In other words, in respect of the Articles covered by the proviso, the further safeguard prescribed by the proviso is that the intended amendment should receive the approval of the Legislatures of not less than one half of the States. That means that at least half of the States constituting the Union of India should by a majority vote, approve of the proposed amendment. It is obvious that the fundamental rights enshrined in Part III are not included in the proviso, and so, if Parliament intends to amend any of the provisions contained in Articles 12 to 35 which are included in Part III, it is not necessary to take recourse to the proviso and to satisfy the additional requirements prescribed by it. 940 Thus far, there is no difficulty. But in considering the scope of article 368, it is necessary to remember that article 226, which is included in Chapter V of Part VI of the Constitution, is one of the constitutional provisions which fall under cl. (b) of the proviso; and so, it is clear that if Parliament intends to amend the provisions of article 226, the bill proposing to make such an amendment must satisfy, the requirements of the proviso. The question which calls for our decision is : what would be the requirement about making an amendment in a constitutional provision contained in Part III, if as a result of the said amendment, the powers conferred on the High Courts under article 226 are likely to be affected ? The petitioners contend that since it appears that the powers prescribed by article 226 are likely to be affected by the intended amendment of the provisions contained in Part III the bill introduced for the purpose of making such an amendment, must attract the proviso, and as the impugned Act has admittedly not gone through the procedure prescribed by the proviso, it is invalid; and that raises the question about the construction of the provisions contained in article 368 and the relation between the substantive part of article 368 with its proviso. In our opinion, the two parts of article 368 must on a reasonable construction be harmonised with each other in the sense that the scope and effect of either of them should not be allowed to be unduly reduced or enlarged. It is urged that any amendment of the fundamental rights contained in Part III would inevitably affect the powers of the High Court, prescribed by article 226, and as such, the bill proposing the said amendment cannot fall under the proviso; otherwise the very object of not including Part III under the proviso would be defeated. When the Constitution makers did not include Part III under the proviso, it would be reasonable to assume that they took the view that the amendment of the provisions contained in Part III was a matter which should be dealt with by Parliament under the substantive provisions of article 368 and not under the proviso. It has no doubt been suggested that the Constitution makers perhaps did not anticipate that there would be many occasions to amend the fundamental rights guaranteed by Part M. However that may be, as a matter of construction, there is no escape from the conclusion that article 368 provides for the amendment of the provisions contained in Part III without imposing on Parliament an obligation to adopt the procedure prescribed by the proviso. It is true that as a result of the amendment of the fundamental rights, the area over which the powers prescribed by article 226 would operate may be reduced, but apparently, the ,Constitution makers took the view that the diminution in the area 941 over which the High Courts ' powers under article 226 operate, would not necessarily take the case under the proviso. On the other hand, if the substantive part of article 368 is very liberally and generously construed and it is held that even substantial modification of the fundamental rights which may make a very serious and substantial inroad on the powers of the High Courts under article 226 can be made without invoking the proviso, it may deprive cl. (b) of the proviso of its substance. In other words, in construing both the parts of article 368, the rule of harmonious construction requires that if the direct effect of the amendment of fundamental rights is to make a substantial inroad on the High Courts ' powers under article 226, it would become neces sary to consider whether the proviso would cover such a case or not. If the effect of the amendment made in the fundamental rights on the powers of the High Courts prescribed by article 226, is indirect, incidental, or is otherwise of an insignificant order, it may be that the proviso will not apply. The proviso would apply where the amendment in question seeks to make any change, inter alia, in article 226. and the question in such a case would be : does the amendment seek to make a change in the provisions of article 226 ? The answer to this question would depend upon the effect of the amendment made in the fundamental rights. In dealing with constitutional questions of this character, courts generally adopt a test which is described as the pith and substance test. In Attorney General for Ontario vs Reciprocal Insurers and others(1), the Privy Council was called upon to consider the validity of the Reciprocal Insurance Act, 1922 (12 & 13 Geo. 5, Ont., c. 62) and section 508c which had been added to the Criminal Code of Canada by sections 7 & 8 Geo. 5, c. 29 Dom. Mr. Justice Duff, who spoke for the Privy Council, observed that in an enquiry like the one with which the Privy Council was concerned in that case, "it has been formally laid down in judgments of this Board, that in such an inquiry the Courts must ascertain the 'true nature and character ' of the enactment : Citizens ' Insurance Co. vs Parsons(1); its 'pith and substance ' : Union Colliery Co. vs Bryden(3); and it is the result of this investigation, not the form alone, which the statute may have assumed under the hand of the draughtsman, that will determine within which of the categories of subject matters mentioned in sections 91 and 92 the legislation falls; and for this purpose the legislation must be 'scrutinised in its entirety ' "Great West Saddlery Co. vs The King" (4). It is not (1) (2) [1881] 7 App. Cas 96. (3) (4) , 117. 942 necessary to multiply authorities in support of the proposition that in considering the constitutional validity of the impugned Act, it would be relevant to inquire what the pith and substance of the impugned Act is. This legal position can be taken to be established by the decisions of this Court which have consistently adopted the view expressed by Justice Duff, to which we have just referred. What then is the pith and substance of the impugned Act ? For answering this question, it would be necessary to recall very briefly the history of Articles 31A and 31B. Articles 31A and 3 1 B were added to the Constitution with retrospective effect by section 4 of the Constitution (First Amendment) Act, 1951. It is a matter of general knowledge that it became necessary to add these two provisions in the Constitution, because it was realised that legislative measures adopted by certain States for giving effect to the policy of agrarian reform which was accepted by the party in power, had to face a serious challenge in the courts of law on the ground that they contravened the fundamental rights guaranteed to the citizens by Part III. These measures had been passed in Bihar, Uttar Pradesh and Madhya Pradesh, and their validity was impeached in the High Courts in the said three States. The High Court of Patna held that the relevant Bihar legislation was unconstitutional, whilst the High Courts at Allahabad and Nagpur upheld the validity of the corresponding legislative measures passed in Uttar Pradesh and Madhya Pradesh respectively. [See Kameshwar vs State of Bihar(1) and Surya Pal vs U. P. Government(1). The parties aggrieved by these respective decisions had filed appeals by special leave before the Supreme Court. At the same time, petitions had also been preferred before the Supreme Court under article 32 by certain other zamindars, seeking the determination of the same issues. It was at this stage that Parliament thought it necessary to avoid the delay which would necessarily have been involved in the final decision of the disputes pending before the Supreme Court, and introduced the relevant amendments in the Constitution by adding Articles 31A and 31B. 'Mat was the first step taken by Parliament to assist the process of legislation to bring about agrarian reform by introducing Articles 31A and 31B. The second step in the same direction was taken by Parlia ment in 1955 by amending article 31A by the Constitution (Fourth Amendment) Act, 1955. The object of this amendment was to widen the scope of agrarian reform and to confer on the legislative measures adopted in that behalf immunity from a possible attack (1) A.I.R. 1951 Pat. 91. (2) A.I.R. 1951 AU. 674. 943 that they contravened the fundamental rights of citizens. In other words, this amendment protected the legislative measures in respect of certain other items of agrarian and social welfare legislation, which affected the proprietary rights of certain citizens. That is how the second amendment was made by Parliament. At the time when the first amendment was made, article 31B expressly provided that none of the Acts and Regulations specified in the 9th Schedule, nor any of the provisions thereof, shall be deemed to be void or ever to have become void on the ground that they were inconsistent with or took away or abridged any of the rights conferred by Part III, and it added that notwithstanding any judgment, decree or order of any Court or tribunal to the contrary, each of the said Acts and Regulations shall subject to the power of any competent legislature to repeal or amend, continue in force. At this time, 19 Acts were listed in Schedule 9, and they were thus effectively validated. One more Act was added to this list by the Amendment Act of 1955, so that as a result of the second amendment, the Schedule contained 20 Acts which were validated. It appears that notwithstanding these amendments, certain other legislative measures adopted by different States for the purpose of giving effect to the agrarian policy of the party in power, were effectively challenged. For instance, in Karimbil Kunhikoman vs State of Kerala(1), the validity of the Kerala Agrarian Relations Act (IV, of 1961) was challenged by writ petitions filed under article 32, and as a result of the majority decision of this Court, the whole Act was struck down. This decision was pronounced on December 5, 1961. In A. P. Krishnaswami Naidu, etc. vs The State of Madras (2 the constitutionality of the Madras Land Reforms (Fixation of Ceiling on Land) Act (No. 58 of 1961) was put in issue, and by the decision of this Court pronounced on March 9, 1964, it was declared that the whole Act was invalid. It appears that the Rajasthan Tenancy Act HI of 1955 and the Maharashtra Agricultural Lands (Ceiling and Holdings) Act 27 of 1961 have been similarly declared invalid, and in consequence, Parliament thought it necessary to make a further amendment in article 31B so as to save the validity of these Acts which had been struck down and of other similar Acts which were likely to be struck down, if challenged. With that object in view, the impugned Act hasenpfeffer s.3 by which 44 Acts have been added to Schedule 9. If the impugned Act is held to be valid and the amendment made (1) [1962] Supp. 1 S.C.R. 829. (2) [1964]7 S.C.R. 82 944 in the Schedule is found to be effective, these 44 Acts would have to be treated as valid. Thus, it would be seen that the genesis of the amendments made by Parliament in 1951 by adding Articles 31A and 31B to the Constitution, clearly is to assist the State Legislatures in this country to give effect to the economic policy in which the party in power passionately believes to bring about much needed agrarian reform. It is with the same object that the second amendment was made by Parliament in 1955, and as we have just indicated, the object underlying the amendment made by the impugned Act is also the same. Parliament desires that agrarian reform in a broad and comprehensive sense must be introduced in the interests of a very large section of Indian citizens who live in villages and whose financial prospects are integrally connected with the pursuit of progressive agrarian policy. Thus, if the pith and substance test is applied to the amendment made by the impugned Act, it would be clear that Parliament is seeking to amend fundamental rights solely with the object of removing any possible obstacle in the fulfilment of the socioeconomic policy in which the party in power believes. If that be so, the effect of the amendment on the area over which the High Courts ' powers prescribed by article 226 operate, is incidental and in the present case can be described as of an insignificant order. The impugned Act does not purport to change the provisions of article 226 and it cannot be said even to have that effect directly or in any appreciable measure. That is why we think that the argument that the impugned Act falls under the proviso, cannot be sustained. It is an Act the object of which is to amend the relevant Articles in Part III which confer fundamental rights on citizens and as such it falls under the substantive part of article 368 and does not attract the provisions of cl. (b) of the proviso. If the effect of the amendment made in the fundamental rights on article 226 is direct and not incidental and is of a very significant order, different considerations may perhaps arise. But in the present case, there is no occasion to entertain or weigh the said considerations. Therefore the main contention raised by the petitioners and the interveners against the validity of the impugned Act must be rejected. Then, it is urged that the true purpose and object of the impugned Act is to legislate,in respect of land, and legislation in respect of land falls within the jurisdiction of the State Legislatures under Entry 18 of List II. The argument is that since the State Legislatures alone can make laws in respect of land, Parliament had no right to pass the impugned Act. This argument is 945 based on the assumption that the impugned Act purports to be, and in fact is, a piece of land legislation. The same argument is placed before us in another form. It is urged that the scheme of Articles 245 and 246 of the Constitution clearly shows that Parliament has no right to make a law in respect of land, and since the impugned Act is a legislative measure in relation to land, it is invalid. This argument, in our opinion, is misconceived. In dealing with this argument, again, the pith and substance test is relevant. What the impugned Act purports to do is not to make any land legislation but to protect and validate the legislative measures in respect of agrarian reforms passed by the different State Legislatures in the country by granting them immunity from attack based on the plea that they contravene fundamental rights. Parliament, in enacting the impugned Act, was not making any provisions of land legislation. It was merely validating land legislations already passed by the State Legislatures in that behalf. It is also urged that inasmuch as the impugned Act purports in substance to set aside the decisions of courts of competent jurisdiction by which some of the Acts added to the Ninth Schedule have been declared to be invalid, it is unconstitutional. We see no substance in this argument. It is hardly necessary to emphasize that legislative power to make laws in respect of areas entrusted to the legislative jurisdiction of different legislative bodies, can be exercised both prospectively and retrospectively. The constituent power conferred by article 368 on the Parliament can also be exercised both prospectively and retrospectively. On several occasions, legislatures think it necessary to validate laws which have been declared to be invalid by Courts of competent jurisdiction and in so doing, they have necessarily to provide for the intended validation to take effect notwithstanding any judgment, decree or order passed by a court of competent jurisdiction to the contrary. Therefore, it would be idle to contend fiat by making the amendment retrospective, the impugned Act has become constitutionally invalid. It has also been contended before us that in deciding the question as to whether the impugned Act falls under the proviso, we should take into account the operative words in the proviso. The proviso takes in cases where the amendment sought to be made by the relevant bill seeks to make any change in any of the Articles specified in clauses (a) to (e) of the proviso, and it is urged that on a fair reading of clauses (b) and (c), it would follow that the impugned Act purports to do nothing else but to seek to amend the provisions contained in article 226. It is not 946 easy to appreciate the strength or validity of this argument. This argument is really based on the assumption that the legislative mechanism adopted by the Parliament in passing the impugned Act introduces this infirmity. The argument obviously assumes that it would have been open to Parliament to make appropriate changes in the different Articles of Part III, such as Articles 14 and 19, and if such a course had been adopted, the impugned Act would have been constitutionally valid. But inasmuch as the impugned Act purports to amend only articles 31A and 31B and seeks to add several Acts to the Ninth Schedule, it does not amend any of the provisions in Part III, but is making an independent provision, and that, it is said, must take the case within the scope of the proviso. It is clear that what the impugned Act purports to do is to amend article 3 1 A, and Article 3 1 A itself is included in Part III. If Parliament thought that instead of adopting the cumbersome process of amending each relevant Article in Part III, it would be more appropriate to add Articles 3 1 A and 3 1 B, and on that basis, it passed the material provisions of the Constitution (First Amendment) Act, it would not be reasonable to suggest that this method brings the amendment within the proviso. What the Parliament did in 1951, has afforded a valid basis for further amendments made in 1955 and now in 1964. It would be clear that though the arguments which have been urged before us in the present proceedings have been put in different forms, basically. they involve the consideration of the main question whether the ' impugned Act falls within the scope of the proviso or not; and the answer to this question, in our opinion, has to be against the petitioners by the application of the doctrine of pith and substance. Then, it is urged that the power to amend, which is conferred by article 368, does not include the power to take away the fundamental rights guaranteed by Part III. The contention is that the result of the material provisions of the impugned Act is to take away a citizen 's right to challenge the validity of the Acts added to the Ninth Schedule, and that means that in respect of the said Acts, the relevant fundamental rights of the citizens are taken away. We do not think there is any substance in this argument. it is true that the dictionary meaning of the word "amend" is to ,correct a fault or reform; but in the context, reliance on the dictionary meaning of the word is singularly inappropriate. because what article 368 authorises to be done is the amendment of the provisions of the Constitution. It is well known that the amendment of a law may in a proper case include the deletion of any one or more of the provisions of the law and substitution in their 947 place of new provisions. Similarly, an amendment of the Constitution which is the subject matter of the power conferred by article 368, may include modification or change of the provisions or even an amendment which makes the said provisions inapplicable in certain cases. The power to amend in the context is a very wide power and it cannot be controlled by the literal dictionary meaning of the word "amend". The question about the validity of the Constitution (First Amendment) Act has been considered by this Court in Sri Sankari Prasad Singh Deo vs Union of India and State of Bihar(1). In that case, the validity of the said Amendment Act was challenged on several grounds. One of the grounds was that the newly inserted Articles 31A and 31B sought to make changes in Articles 132 and 136 in Chapter IV of Part V and article 226 in Chapter V of Part VI 'and so, they required ratification under cl. (b) of the proviso to article 368. This contention was rejected by this Court. Patanjali Sastri J., as he then was, who spoke for the unanimous Court, observed that the said Articles "did not either in terms or in effect seek to make any change in article 226 or in Articles 132 and 136", and he added that it was not correct to say that the powers of the High Courts under article 226 to issue writs for the enforcement of any of the rights conferred by Part HI or of this Court under Articles 132 and 136 to entertain appeals from orders, issuing or refusing to issue such writs were in any way affected. In the opinion of the Court, the_ said powers remained just the same as they were before; only a certain class of cases had been excluded from the purview of Part Ill. The fact that the courts could not exercise their powers in respect of the said class of cases, did not show that the powers of the courts were curtailed in any way or to any extent. It only meant that certain area of in which the said powers could have been exercised, had been withdrawn. Similarly, the argument that the amendments were invalid because they related to legislation in respect of land, was also rejected on the ground that the impugned Articles 31A and 31B were essentially amendments of the Constitution which Parliament alone had the power to make. It would thus appear that in substance the points urged before us in the present proceedings are really concluded by the decision of this Court in Sankari Prasad 's case(1). It was, however, urged before us during the course of the hearing of these writ petitions that we should reconsider the matter and review our earlier decision in Sankari Prasad 's case. It is true that the Con (1) ; Supp.1/65 948 stitution does not place any restriction on our powers to review our earlier decisions or even to depart from them and there can be no doubt that in matters relating to the decision of constitutional points which have a significant impact on the fundamental rights of citizens, we would be prepared to review our earlier decisions in the interest of public good. The doctrine of stare decisis may not strictly apply in this context and no one can dispute the position that the said doctrine should not be pemiitted to perpetuate erroneous decisions pronounced by this Court to the detri ment of general welfare. Even so, the normal principle that judgments pronounced by this Court would be final, cannot be ignored and unless considerations of a substantial and compelling character make it necessary to do so, we should be slow to doubt ,,the correctness of previous decisions or to depart from them. It is universally recognised that in regard to a large number of constitutional problems which are brought before this Court for its decision, complex and difficult questions arise and on many of such questions, two views are possible. Therefore, if one View has been taken by this Court after mature deliberation, the fact that another Bench is inclined to take a different view may not justify the Court in reconsidering the earlier decision or in departing from it. The problem of construing constitutional provisions cannot be reasonably solved merely by adopting a literal construction of the words used in the relevant provisions. The Constitution is an organic document and it is intended to serve as a guide to the solution of changing problems which the Court may have to face from time to time. Naturally, in a progressive and dynamic society the shape and appearance of these problems are bound to change with the inevitable consequence that the relevant words used in the Constitution may also chance their meaning and significance. That is what makes the task of dealing with constitutional problems dynamic rather than static. Even so, the Court should be reluctant to accede to the suggestion that its earlier ,decisions should be lightheartedly reviewed and departed from. ' In such a case the test should be : is it absolutely necessary and essential that the question already decided should be re opened ? The answer to this question would depend on the nature of the infirmity alleged in the earlier decision, its impact on public good, and the validity and compelling character of the considerations urged in support of the contrary view. If the said decision has been followed in a large number of cases, that again is a factor ,which must be taken into account. In the present case, if the arguments urged by the petitioners 949 were to prevail, it would lead to the inevitable consequence that the amendments made in the Constitution both in 1951 and 1955 would be rendered invalid and a large number of decisions dealing with the validity of the Acts included in the Ninth Schedule which have been pronounced by different High Courts ever since the decision of this Court in Sankari Prasad 's(1) case was declared, would also be exposed to serious jeopardy. These are consideration, which are both relevant and material in dealing with the plea urged by the petitioners before us in the present proceedings that Sankari Prasad 's case should be re considered. In view of the said plea, however, we have deliberately chosen to deal with the merits of the contentions before referring to the decision itself. In our opinion, the plea made by the petitioners for reconsidering Sankari Prasad 's case is wholly unjustified and must be rejected. In this connection, we would like to refer to another aspect of the matter. As we have already indicated, the principal point which has been urged before us in these proceedings is, that the impugned Act is invalid for the reason that before presenting it to the President for his assent, the procedure prescribed by the proviso to article 368 has not been followed, though the Act was one which fell within the scope of the proviso. In other words, it was not disputed before us that article 368 empowers Parliament to amend any provision of the Constitution, including the provisions in respect of the fundamental rights enshrined in Part M. The main contention was that in amending the relevant provisions of the Constitution, the procedure prescribed by the proviso should have been followed. But it appears that in Sankari Prasad 's case, another argument was urged before this Court in challenging the validity of the Constitution (First Amendment) Act, and since we are expressing our concurrence with the said decisions, we think it is necessary to refer to the said argument and deal with it, even though this aspect of the matter has not been urged before us in the present proceedings. In Sankari Prasad 's case, it was contended that though It may be open to Parliament to amend the provisions in respect of the fundamental rights contained in Part III, the amendment, if made In that behalf, would have to be tested in the light of the provisions contained in article 13(2) of the Constitution. The argument was that the law to which article 13(2) applies, would include a law passed by Parliament by virtue of its constituent power to amend ' the Constitution, and so, its validity will have to be tested by article 13(2) itself. It will be recalled that article 13(2) prohibits (1) ; 950 the State from making any law which, takes away or abridges the rights conferred by Part III, and provides that any law made in contravention of clause (2) shall, to the extent of the contravention, be void. In other words, it was urged before this Court in Sankari Prasad 's(1) case that in considering the question as to the validity of the relevant provisions of the Constitution (First Amendment) Act, it would be open to the party challenging the validity of the said Act to urge that in so far as the Amendment Act abridges or takes away the fundamental rights of the citizens, it is void. This argument was, however, rejected by this Court on the ground that the word "law" used in article 13 "must be taken to mean rules or regulations made in exercise of ordinary legislative power and not amendments to the Constitution made in exercise of constituent power with the result. that article 13 (2) does not affect amendments made under article 368". It is significant that Patanjali Sastri J. as he then was, who spoke for the Court, described as attractive the argument about the applicability of article 13 (2) to Constitution Amendment Acts passed under article 368, examined it closely, and ultimately rejected it. It was noticed in the judgment that certain constitutions make certain rights "eternal and inviolate", and by way of illustration, reference was made to article 11 of the Japanese Constitution and article 5 of the American. Federal Constitution. It was also noticed that the word "law" in its literal sense, may include constitutional law, but it was pointed out that "there is a clear demarcation between ordinary law, which is made in exercise of legislative power, and constitutional law which is made in exercise of constituent power". The scheme of the relevant provisions of the Constitution was then examined, and ultimately, the Court reached the conclusion that though both Articles 13 and 368 are widely phrased, the harmonious rule of construction requires that the word "law" in article 13 should be taken to exclude law made in exercise of the constituent power. In our opinion, this conclusion is right, and as we are expressing our full concurrence with the decision in Sankari Prasad 's(1) case, we think it is necessary to indicate our reasons for agreeing with the conclusion of the Court on this point, even though the coffectness of this conclusion has not been questioned before us in the course of arguments. If we had felt a real difficulty in accepting this part of the conclusion, we would have seriously considered the question as to whether the matter should not be referred to a larger Bench for a further examination of the problem. (1) ; 951 The first point which falls to be considered on this aspect of the matter is the construction of article 368 itself. Part XX which contains only article 368 is described as a Part dealing with the Amendment of the Constitution; and article 368 which prescribes the procedure for amendment of the Constitution, begins by saying that an amendment of this Constitution may be initiated in the manner there indicated. In our opinion, the expression "amendment of the Constitution plainly and unambiguously means amendment of all the provisions of the Constitution. It would, we think, be unreasonable to suggest that what article 368 provides is only the mechanics of the procedure to be followed in amending the Constitution without indicating which provisions of the Constitution can be amended and which cannot. Such a restrictive construction of the substantive part of article 368 would be clearly untenable. Besides, the words used in the proviso unambiguously indicate that the substantive part of the article applies to all the provisions of the Constitution. It is on that basic assump tion that the proviso prescribes a specific procedure in respect of the amendment of the articles mentioned in clauses (a) to (e) thereof. Therefore, we feel no hesitation in holding that when article 368 confers on Parliament the right to amend the Constitution the power in question can be exercised over all the provisions of the Constitution. How the power should be exercised, has to be determined by reference to the question as to whether the proposed amendment falls under the substantive part of article 368, or attracts the provisions of the proviso. It is true that article 13(2) refers to any law in general, and literally construed, the word "law" may take in a law made in exercise of the constituent power conferred on Parliament; but having regard to the fact that a specific, unqualified and unambiguous power to amend the Constitution is conferred on Parliament, it would be unreasonable to hold that the word "law" in article 13 (2) takes in Constitution Amendment Acts passed under article 368. If the Constitution makers had intended that any future amendment of the provisions in regard to fundamental rights should be subject to article 13 (2), they would have taken the precaution of making a clear provision in that behalf. Besides, it seems to us, very unlikely that while conferring the power on Parliament to amend the Constitution, it was the intention of the Constitutionmakers to exclude from that comprehensive power fundamental rights altogether. There is no doubt that if the word "law" used in article 13(2) includes a law in relation to the amendment of the 952 Constitution, fundamental rights can never be abridged or taken away, because as soon as it is shown that the effect of the amendment is to take away or abridge fundamental rights, that portion of the law would be void under article 13 (2). We have no doubt that such a position could not have been intended by the Constitution makers when they included article 368 in the Constitution. In construing the word "law" occurring in article 13(2), it may be relevant to bear in mind that, in the words of Kania C.J. in A. K. Gopalan vs The State of Madras(1), "the inclusion of article 13 (1) and (2) in the Constitution appears to be a matter of abundant caution. Even in their absence, if any of the fundamental rights was infringed by any legislative enactment, the Court has always the power to declare the enactment, to the extent it transgresses the limits, invalid". The importance and significance of the fundamental rights must obviously be recognised and in that sense, the guarantee to the citizens contained in the relevant provisions of Part III, can justly be described as the very foundation and the comer stone of the democratic way of life ushered in this country by the Constitution. But can it be said that the fundamental rights guaranteed to the citizens are eternal and inviolate in the sense that they can never be abridged or amended? It is true that in the case of A. K. Gopalan(1) Patanjali Sastri, as he then was, expressed the view that "there can be no doubt that the people of India have, in exercise of their sovereign will as expressed in the Preamble, adopted the democratic ideal which assures to the citizen the dignity of the individual and other cherished human values as a means to the full evolution and expression of his personality, and in delegating to the legislature, the executive and the judiciary the irrespective powers in the Constitution. reserved to themselves certain fundamental rights, so called, I apprehend, because they have been retained by the people and made paramount to the delegated powers, as in the American model" (p. 198). This hypothesis may, prima facie, tend to show that the right to amend these fundamental rights vested not in Parliament, but in the people of India themselves. But it is significant that when the same learned Judge had occasion to consider this question more elaborately in In re The , (1) etc. he has emphatically expressed the view that it is established beyond doubt that the Indian Legislature, when acting within the limits circumscribing its legislative power, has and was intended to have (1) ; , at p. 100. (2) ; , at pp. 883 84. 953 plenary of legislation as large and of the same nature as those of the British Parliament itself and no constitutional limitation on the delegation of legislative power to a subordinate unit is to be found in the Indian Councils Act, 1861, or the Government of India Act, 1935, or the Constitution of 1950. The suggestion that the legislatures, including the Parliament, are the delegate of the people of India in whom sovereignty vests, was rejected by the learned Judge when he observed that "the maxim 'delegates ten protest delegate ' is not part of the Constitutional law of India and has no more force than a political precept to be acted upon by legislatures in the discharge of their function of making laws, and the courts cannot strike down an Act of Parliament as unconstitutional merely because Parliament decides in a particular instance to entrust its legislative power to another in whom it has confidence or, in other words, to exercise such power through its appointed instrumentality, however repugnant such entrustment may be to the democratic process. What may be regarded, as politically undesirable is constitutionally competent". It would thus appear that so far as our Constitution is concerned, it would not be possible to deal with the question about the powers of Parliament to amend the Constitution under article 368 on any theoretical concept of political science that sovereignty vests in the people and the be statures are merely the delegate of the people. Whether or not Parliament has the power to amend the Constitution must depend solely Upon the question as to whether the said power is included in article 368. The question about the reasonableness, or expediency or desirability of the amendments in question from a political point of view would be irrelevant in construing the words of article 3 6 8. Incidentally, we may also refer to the fact that the Constitutionmakers had taken the precaution to indicate that some amendments should not be treated as amendments of the Constitution for the purpose of article 368. Take, for instance article 4(2) which deals with law made by virtue of article 4(1). article 4(2) provides that no such law shall be deemed to be an amendment of the Constitution for the purposes of article 368. Similarly, article 169(3) provides that any law in respect of the amendment of the existing legislative apparatus by the abolition or creation of Legislative Councils in State ,; shall not be deemed to be an amendment of the Constitution for the purposes of article 368. In other words, laws falling within the purview of Articles 4(2) and 169(3) need not be passed subject to the restrictions imposed by 'article 368, even though. in effect they may amount to the amendment of the relevant provisions of the Constitution. If the Constitution makers took the 954 precaution of making this specific provision to exclude the applicability of article 368 to certain amendments, it would be reasonable to assume that they would have made a specific provision if they had intended that the fundamental rights guaranteed by Part HI should be completely outside the scope of article 368. Apart from the fact that the words used in article 368 are clear and unambiguous in support of the view that we are taking, on principle also it appears unreasonable to suggest that the Constitution makers wanted to provide that fundamental rights guaranteed by the Constitution should never be touched by way of amendment. It must not be forgotten that the fundamental rights guaranteed, by article 19, for instance, are not absolute; the scheme of this article itself indicates that the fundamental rights guaranteed by subclauses (a) to (g) of clause (1), can be validly regulated in the light of the provisions contained in clauses (2) to (6) of article 19. In other words, the broad scheme of article 19 is two fold; the fundamental rights of the citizens are of paramount importance, but even the said fundamental rights can be regulated to serve the interests of the general public or other objects mentioned respec tively in clauses (2) to (6), and that means that for specified purposes indicated in these clauses, even the paramountcy of fundamental rights has to yield to some regulation as contemplated by the said clauses. It is hardly necessary to emphasise that the purposes for which fundamental rights can be regulated which are specified in clauses (2) to (6), could not have been assumed by the Constitution makers to be static and incapable of expansion. The Constitution makers must have anticipated that in dealing with socioeconomic problems which the legislatures may have to face from time to time, the concepts of public interest and other important considerations which are the basis of clauses (2) to (6), may change and may even expand; and so, it is legitimate to assume that the Constitution makers know that Parliament should be competent to make amendments in these rights so as to meet the challenge of the problems which may arise in the course of spcio economic progress and development of the country. That is why we think that even on principle, it would not be reasonable to proceed on the basis that the fundamental rights enshrined in Part III were intended to be finally and immutably settled and determined once for all and were beyond the reach of any future amendment. Let us illustrate this point by reference to some of the provisions of the Constitution (First Amendment) Act, 1951 itself. By this Act, Articles 15, 19 and 31 were amended. One has merely to 955 recall the purpose for which it became necessary to amend Articles 15 and 19 to be satisfied that the changing character of the problems posed by the words used in the respective articles could not have been effectively met unless amendment in the relevant provisions was effected; and yet, if the argument that the fundamental rights are beyond the reach of article 368 were valid, an these amendments would be constitutionally impermissible. That, we think is not the true purport and effect of article 368. We are, therefore, satisfied that this Court was right in rejecting the said argument in the case of Sankari Prasad(1). This question can be considered from another point of view. The argument that the fundamental rights guaranteed by Part in are eternal, inviolate, and beyond the reach of article 368, is based on two assumptions. The first assumption is that on a fair and reasonable construction of article 368, the power to amend the fundamental rights cannot be held to be included within the constituent powers conferred on Parliament by the said Article. We have already held that a fair and reasonable construction of article 368 does not justify this assumption. The other assumption which this argument makes, and must of necessity make, is that if the power to amend the fundamental rights is not included in article 368 as it stands, it cannot ever be included within its purview; because unless it is assumed that the relevant power can never be included in article 368, it would be unrealistic to propound the theory that the fundamental rights are eternal, inviolate, and not within the reach of any subsequent constitutional amendment. It is clear that article 368 itself can be amended by Parliament, though cl. (e) of the proviso requires that before amending article 368, the safeguards prescribed by the proviso must be satisfied. In other words, even if the powers to amend the fundamental rights were not included in article 368, Parliament can, by a suitable amendment of article 368, take those powers. Thus, the second assumption underlying the argument about the immutable character of the fundamental rights is also not well founded. There is one more point to which we would like to refer. In the case of Sankari Prasad(1) this Court has observed that the question whether the latter part of article 31B is too widely expressed, was not argued before it, and so, it did not express any opinion upon it. This question has, however, been argued before us, and so, we would like to make it clear that the effect of the last clause in article 31B is to leave it open to the respective legislatures to repeal (1) ; 956 or amend the Acts which have been included in the Ninth Schedule. In other words, the fact that the said Acts have been included in the Ninth Schedule with a view to make them valid, does not mean that the legislatures in question which passed the said Acts have lost their competence to repeal them or to amend them. That is one consequence of the said provision. The other inevitable quince of the said provision is that if a legislature amends any of the provisions contained in any of the said Acts, the amended provision would not receive the protection of article 31B and its validity may be liable to be examined on the merits. Before we part with this matter, we would like to observe that Parliament may consider whether it would not be expedient and reasonable to include the provisions of Part III in the proviso to article 368. It is not easy to appreciate why the Constitution makers did not include the said provisions in the proviso when article 368 was adopted. In In re : the Berubari Union and Exchange of Enclaves(1), this Court had pointed out that amendment of article 1 of the Constitution consequent upon the cession of any part of the territory of India in favour of a foreign State, does not attract the safeguard prescribed by the proviso to article 368, because neither article 1 nor article 3 is included in the list of entrenched provisions of the Constitution enumerated in the proviso; and it was observed that it was not for this Court to enquire or consider whether it would not be appropriate to include the said two articles under the proviso, and that it was a matter for Parliament to consider and decide. Similarly, it seems somewhat anomalous that any amendment of the provisions contained in article 226 should fall under the proviso but, not an amendment of article 32. Article 226 confers on High Courts the power to issue certain writs, while article 32, which itself is a guaranteed fundamental right, enables a citizen to move this Court for similar writs. Parliament may consider whether the anomaly which is apparent in the different modes prescribed by article 368 for amending Articles 226 and 32 respectively, should not be remedied by including Part HI itself in the proviso. If that is done, difficult questions as to whether the amendment made in the provisions of Part III substantially, directly and materially affects the jurisdiction and powers of the High Courts under article 226 may be easily avoided. In the result, we hold that the impugned Act is constitutionality valid. The petitions, accordingly, fail and are dismissed. There will be no order as to costs. (1) 957 Hidayatullah J. I have had the privilege of reading the judgment just delivered by my lord the Chief Justice. I agree, with him that there is no force in the contention that the 17th Amendment required for its valid enactment the special procedure, laid down in the proviso to article, 368. It would, of course, have, been necessary if the amendment had sought to make a change in article 226. This eventuality cannot be said to have arisen. Article 226 remains unchanged after the amendment. The proviso comes into play only when the article is directly changed or its ambit as such is sought to be changed. What the 17th amendment does is to enlarge the meaning of the word 'estate ' in article 31 A and ' to give protection to some Acts passed by the State Legislatures by including them in the Ninth Schedule under the shield of article 31 B. These Acts promoted agrarian reform and but for the inclusion in the Ninth Schedule they might be assailed by the provisions of Articles 14, 19 or 31 of the Constitution. Some of the Acts were in fact successfully assailed but the amendment makes them effective and invulnerable to the three articles notwithstanding article 13 of the Constitution. In Sri Sankari Prasad 's(1) case when the Constitution (First Amendment) Act was passed and Articles 3 I A and 31 B and Ninth Schedule were introduced, the effect of that amendment on article 226 was considered and it was held that the Amendment had not the effect visualised by the proviso to article 368. The reasoning in that case on this point applies mutatis mutandis to the 17th Amendment. I find, however, some difficulty in accepting a part of the reasoning in Sankari Prasad 's case and my purpose in writing a separate judgment is to say that I decide the present cases without, the assistance of that reasoning. I shall briefly indicate what that reasoning is and why I have doubts. In Sankari Prasad 's case it was contended that by article 13(2) the Fundamental Rights in Part III of the Constitution were put beyond the reach of article 368 and outside the power of amendment conferred on Parliament by article 368. This argument was considered "attractive ', but was rejected because of certain "important considerations" which it was held pointed "to the opposite conclusion". Two reasons alone appear to have weighed with this Court. The first is that as constitutional law is distinguishable from other municipal laws and as there is no "clear indication" to be found that the Fundamental Rights are "immune from constitutional amendment", only the invasion of the Fundamental Rights by laws other than constitutional laws (1) ; 958 must be the subject of the prohibition in article 13 (2). article 13 may to be quoted at this stage : "13. Laws inconsistent with or in derogation of the fundamental rights. (1) All laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void. (2) The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void. (3) In this article, unless the context otherwise requires, (a) "law" includes any Ordinance, order, bye law, rule, regulation, notification, custom or usage having in the territory of India the force of law; (b) It is true that there is no complete definition of the word "law" in the article but it is significant that the definition does not seek to exclude constitutional amendments which it would have been easy to indicate in the definition by adding "but shall not include an amendment of the Constitution". The meaning is also sought to be enlarged not curtailed. The meaning of article 13 thus depends on the sense in which the word "law" in article 13(2) is to be understood. If an amendment can be said to fall within the term "law", the Fundamental Rights become "eternal and inviolate" to borrow the language of the Japanese Constitution. Article 13 is then on par with article 5 of the American Federal Constitution in its immutable prohibition as long as it stands. But the restricted meaning given to the word "law" prevents this to be held. There is a priori reasoning without consideration of the text of the articles in Part M. The Articles use the language of permanency. I am of opinion that there are indications in the Constitution which needed to be considered and I shall mention some of them later as illustrations. The next reason was that article 368 was "perfectly general" and allowed amendment of "the Constitution, without any exception whatsoever" and therefore article 13 (2) did not cover a constitutional ;amendment. It was observed in this connection that if it was con 959 sidered necessary to save Fundamental Rights a clear proviso in article 368 would have conveyed this intention without any doubt. To my mind the easiest and most obvious way was to say that the word "law" in article 13 did not include an amendment of the Constitution. It was finally concluded as follows : "In short, we have here two articles each of which is widely phrased, but conflicts in its operation with the other. Harmonious construction requires that one should be read as controlled and qualified by the other. Having regard to the considerations adverted to above, we are of opinion that in the context of article 13 'law ' must be taken to mean rules or regulations made in exercise of ordinary legislative power and not amendments to the Constitution made in exercise of constituent power, with the result that article 1. 3 (2) does not affect amendments made under article 368. " At the hearing reliance was not placed on article 13 (2) but emphasis was laid on the amendment of article 226. Mr. R. V. section Mani did, however, refer to the provision for the suspension of Fundamental Rights as showing that unless suspended in an emergency, Part III must stand unchanged and he referred to article 32(4). For the disposal of these cases I indicate my view that on, the arguments before us I must hold that as decided in Sankari Prasad 's(1) case article 226 is not sought to be changed by the 17th Amendment. But I make it clear that I must not be understood ' to have subscribed to the view that the word "law" in article 13(2) does not control constitutional amendments. I reserve my opinion on that case for I apprehend that it depends on how wide is the word "law" in that Article. The prohibition in that article may have to be read in the light of declarations in the various articles in Part III to find out the proper meaning. Though I do not express a final opinion I give a few examples. Take for instance article 32. It reads : "32. Remedies for enforcement of rights. (1) The right to move the Supreme Court by appropriate proceedings for the enforcement of the rights conferred by this Part is guaranteed. (2) The Supreme Court shall have power to issue directions or orders or writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, whichever may be appropriate, for the (1) ; 960 enforcement of any of the rights conferred by this, Part. (3) Without prejudice to the powers conferred on the Supreme Court by clauses (1) and (2), Parliament may by law empower any other court to exercise within the local limits of its jurisdiction all or any of the powers exercisable by the Supreme Court under clause (2). (4) The right guaranteed by this article shall not be suspended except as otherwise provided for by the Constitution. " It is prima facie at least, reasonable to think that if cls. (1) and (4) of this Article were included in Part XX (Amendment of the Constitution) that would have made the guarantee absolute against any amendment. It is a matter for consideration whether this guarantee is any the less because the article.is in another Part ? The first clause assures a guaranteed remedy. That guarantee is equally against legislative and executive actions. Part III is fun of declarations of what the legislature can do and what it cannot do. The guarantee covers all those actions which are not open to the legislature and the executive. If it be held that the guarantee is inviolable would not the guarantee of the remedy make the rights 'equally protected ? Another provision, namely, the Preamble of the Constitution is equally vital to our body politic. In In re : The Berubart Union and Exchange of Enclaves(1) it is held that although the preamble is the key to the mind of the Constitution makers, it does not form part of the Constitution. Perhaps, in one sense, it does not but, in another sense, it does. Our preamble is more akin in nature to the American Declaration of Independence (July 4, 1776) than to the preamble to the Constitution of the United States. It does not make any grant of power but it gives a direction and purpose to the Constitution which is reflected in Parts III and IV. Is it to be imagined that a two thirds majority of the two Houses at any time is all that is necessary to alter it without even consulting the States ? It is not even included in the, proviso to article 368 and it is difficult to think that as it has not the protection of the proviso it must be within the main part of article 368. Again, article 13 (1) rendered void the laws in force in the territory of India which conflicted with Part III. Can it be said that article 13 may be repealed retrospectively and all those statutes (1) 961 brought back to life ? Because of successive amendments we have seen many faces of article 31 A. It is for consideration whether article 13 was not intended to streamline all existing and future laws to the basic requirements of Part 111. Or is the door left open for reversing the policy of our Constitution from time to time by legislating with a bigger majority at any given time not directly but by constitutional amendments ? It is possible to justify such amendments with the aid of the provisos in article 19 which permit the making of laws restricting the freedoms but not by ignoring article 13 and relying solely on article 368. I am aware that in A. K. Gopalan vs State of Madras(1) Kania C.J. said the inclusion of article 13(1) and (2) in the Constitution appears to be a matter of abun dant caution. Even in their absence, if any of the fundamental rights was infringed by any legislative enactment, the Court has always the power to declare the enactment, to the extent it transgresses the limits invalid. " The observation is not clear in its meaning. There was un doubtedly a great purpose which this article achieves. It is probable that far from belittling the importance of article 13 the learned Chief Justice meant rather to emphasize the importance and the commanding position of Fundamental Rights in that even without article 13 they would have the same effect on other laws. To hold that article 13 is framed merely by way of abundant caution, and serves no additional or intrinsic function of its own, might, by analogy persuade us to say the same of article 32 ( 1 ) because this Court would do its duty under article 32(2) even in the absence of the guarantee. I would require stronger reasons than those given in Sankari Prasad 's (2) case to make me accept the view that Fundamental Rights were not really fundamental but were intended to be within the powers of amendment in common with the other parts of the Constitution and without the concurrence of the States. No doubt article 19 by clauses numbered 2 to 6 allows a curtailment of rights in the public interest. This shows that Part III is not static. It as change and progress but at the same time it preserves the individual rights. There is hardly any measure of reform which cannot be introduced reasonably, the guarantee of individual liberty notwithstanding. Even the agrarian reforms could have been partly carried out without Article 31 A and 31 B but they would have cost (1) ; at p. 100. (2) 962 more to the public exchequer. The rights of society are made paramount and they are placed above those of the individual. This is as it should be. But restricting the Fundamental Rights by resort to cls. 2 to 6 of article 19 is one thing and removing the rights from the Constitution or debilitating them by an amendment is quite another. This is the implication of Sankari Prasad 's case. It is true that such things would never be, but one is concerned to know if such a doing would be possible. It may be said that the words of article 368 are quite explicit. article 368 does not give power to amend "any provision" of the Constitution. At least the article does not say so. Analysed by the accepted canons of interpretation it is found to lay down the manner of the amendment of "this Constitution" but by "this Constitution" it does not mean each individual article wherever found and whatever its language and spirit. The Constitution itself indicates in some places a contrary intention expressly (See Articles 4, 169 and the former article 240) and in some others by implication (See article 1 1). What article 368 does is to lay down the manner of amendment and the necessary conditions for the effectiveness of the amendment. The contrast between the opening part and the proviso does not show that what is outside the proviso is necessarily within the powers of amendment. The proviso merely puts outside the exclusive Power of Parliament to amend those provisions 'on which our federal structure rests. It makes it incumbent that a majority of the States should also agree. The proviso also preserves the structure of the higher judiciary so vital to a written Constitution and to a Democracy such as ours ' But the article no where says that the preamble and every single article of the Constitution can be amended by two thirds majority despite any permanency in the language and despite any historical fact or sentiment. The Constitution gives so many assurances in Part III that it would be difficult to think that they were the play things of a special majority. To hold this would mean prima facie that the most solemn parts of our Constitution stand on the same footing as any other provision and even on a less firm ground than one on which the articles mentioned in the proviso stand. The anamoly that article 226 should be somewhat protected but not article 32 must give us pause. Article 32 does not erect a shield against private conduct but against state conduct including the legislatures (See article 12). Can the legislature take away this shield ? Perhaps by adopting a literal construction of article 368 one can say that. But I am not inclined to play a grammarian 's role. As at present advised I can only say that the power to make amendments ought not 963 ordinarily to be a means of escape from absolute constitutional restrictions. For these reasons though I agree with the order proposed, I would not like to be understood to have expressed a final opinion on the aspect of the case outlined above. Mudholkar J. I have seen the judgments of my Lord the Chief Justice and my brother Hidayatullah J. and I agree that the, Writ Petitions should be dismissed. Of the various contentions raised in Sankari Prasad Singh De& vs Union of India and State of Bihar(1) in which the Constitution (First Amendment) Act, 1951 was challenged before this Court only two would be relevant in the context of the Constitution (Seventeenth Amendment) Act, 1964. They are : (a) whether the Amendment Act in so far as it purports to take away or abridge the rights conferred by Part III of the Constitution falls within the prohibition of article 13(2) and (b) whether articles 31A and 31B seek to make changes in articles 132, 136 or 226 or in any of the Lists in the Seventh Schedule and, therefore, the requirements of the proviso to article 368 had to be satisfied. Both these contentions were negatived by this Court. The first contention has not been raised in the arguments before us and the attack on the Seventeenth Amendment Act was based only on the second contention. Most of the grounds which learned counsel urged before us were the same as those urged in the earlier case. Some additional arguments were also urged before us but, as my Lord the Chief Justice has pointed out, they are unsubstantial. An attempt was made by Mr. Mani, learned counsel for the petitioners, to persuade us to reconsider the decision in the earlier case with regard to the second contention. As, however, no case was made out by him for reconsideration of that decision we intimated to him that we do not. propose to reconsider it. Since my Lord the Chief Justice in his judgment has dealt with the first contention also and expressed the view that the previous decision is right I think it necessary to say, partly for the reasonsstated by my learned brother Hidayatullah J. and partly for some other reasons, that I would reserve my opinion on this question and that I do not regard what this Court has held in that case as the last word. It seems to me that in taking the view that the word "law" occurring in article 13 (2) of the Constitution does not include an amend (1) ; L2Sup./65 18 964 ment to the Constitution this Court has not borne in mind some important considerations which would be relevant for the purpose. The language of article 368 is plain enough to show that the action of Parliament in amending the Constitution is a legislative act like one in exercise of its normal legislative power, The only difference in respect of an amendment of the Constitution is that the Bill amending the Constitution has to be passed by a special majority (here I have in mind only those amendments which do not attract the proviso to article 368). The result of a legislative action of a legislature cannot be other than 'law ' and, therefore, it seems to me that the fact that the legislation deals with the amendment of a provision of the Constitution would not make its result ,any the less a 'law '. Article 3 6 8 does not say that when Parliament makes an amendment to the Constitution it assumes a different capacity, that of a constituent body. As suggested by my learned brother Hidayatullah J. it is open to doubt whether this Article confers any such power upon Parliament. But even assuming that it does, it can only be regarded as an additional legislative power. Then again while the Constitution as originally framed can only be interpreted by a court of law and the validity of no provision therein can be challenged the same cannot be said of an amendment to the Constitution. For an amendment to be treated as a part of the Constitution it must in fact and in law have become a part of the Constitution. Whether it has become a part of the Constitution is thus a question open to judicial review. It is obvious that an amendment must comply with the requirements of the Constitution and should not transgress any of its provisions. Where, therefore, a challenge is made before the Court on the ground that no amendment had in fact been made or on the ground that it was 'not a valid amendment it will be both the duty of the Court as well as be and within its power to examine the question and to pronounce upon it. This is precisely what a Court is competent to do in regard to any other law, the validity of which is impugned 'before it. Neither of these matters appears to have been considered in Sankari Prasad 's case(") and I think that they do merit consideration. My Lord the Chief Justice has observed that though in A. K. Gopalan vs The State of Madras (2) Patanjali Sastri J., (as he then 'was) has said that fundamental rights are those rights which the people have reserved for themselves that learned Judge has emphati (1) ; (2) [1950] S.C.R. St. 965 cally stated in In re The Delhi Laws Act, 1912(1) that Parliament, acting within the limits of its legislative power, has plenary powers of legislation which are as large and which are of the same nature as those of the British Parliament and rejected the suggestion that, Parliament is the. delegate of the people in whom the sovereignty rests. But does it follow that the learned Judge has departed from his earlier view ? No reference was made by him in. Sankari Prasad 's case (2) to his observations though they needed to be explained. In the case(1) he has undoubtedly said that Parliament enjoys plenary powers of legislation. That Parliament has plenary powers of legislation within the circumscribed limits of its legislative power and cannot be regarded as a delegate of the people c while exercising its legislative powers is a well accepted position. The fact, however, remains that unlike the British Parliament our Parliament, like every other organ of the State, can function only within the limits of the powers which the Constitution has conferred upon it. This would also be so when, in the exercise of its legislative power, it makes an amendment to the Constitution or to any of its provisions. It would, therefore, appear that the earlier observation of Patanjali Sastri J., cannot be regarded as inconsistent with what he has said in the case(1). At any rate, this is an aspect of the matter which requires further consideration, particularly because the same learned Judge has not adverted to those observations in Sankari Prasad 's case (2). It is true that by virtue of section 8 of the Indian Independence Act, 1947 it was upon the Constituent Assembly which framed the Constitution and not upon the people of India that sovereignty devolved after the withdrawal of the British power. But both the "Objectives Resolution" adopted by the Constituent Assembly on January 22, 1947 and the Preamble to the Constitution show that this sovereign body framed the Constitution in the name of the people of India and by virtue of the powers derived from them. In the circumstances it would have to be considered whether Patanjali Sastri J., was not right in saying that the fundamental rights are the minimum rights reserved by the people to themselves and they are, therefore, unalterable. It is true that the Constitution does not directly prohibit the amendment of Part III. But it would indeed be strange that rights which are considered to be fundamental and which include one which is guaranteed by the Constitution (vide article 32) should be more easily capable of being abridged or restricted than any of the matters referred to in the proviso to article 368 some of which (1) ; (2) ; 966 are perhaps less vital than fundamental rights. It is possible, as suggested by my learned brother, that article 368 merely lays down the procedure to be followed for amending the Constitution and does not confer a power to amend the Constitution which, I think, has to be ascertained from the provision sought to be amended or other relevant provisions or the preamble. The argument that if fundamental rights are regarded as unchangeable it will hamper legislation which the changing needs of a dynamic society may call for in future is weighty enough and merits consideration. It is possible that there may be an answer. The rights enumerated in article 19(1) can be subjected to reasonable restrictions under cls. (2) to (6) of article 19 and the other fundamental rights or at least many of them can perhaps be adapted to meet the needs of a changing society with the aid of the directive principles. For, article 37, the second Article in Part IV which deals with 'Directive Principles of States Policy ', imposes a duty on the State to apply those directive principles in making laws. These principles are also fundamental in the governance of the country and the provisions of Part III of the Constitution must be interpreted harmoniously with those principles. This is also an aspect of the matter which requires consideration. We may also have to bear in mind the fact that ours is a written Constitution. The Constituent Assembly which was the repository of sovereignty could well have created a sovereign Parliament on the British model. But instead it enacted a written Constitution, created three organs of State, made the union executive responsible to Parliament and the State executives to the State legislatures; erected a federal structure and distributed legislative power between Parliament and the State legislatures; recognised certain rights as fundamental and provided for their enforcement; prescribed forms of oaths of office or affirmations which require those who subscribe to them to owe true allegiance to the Constitution and further require the members of the Union Judiciary and of the higher judiciary in the States, to uphold the Constitution. Above all, it formulated a solemn and dignified preamble which appears to be an epitome of the basic features of the Constitution. Can it not be said that these are indicate of the intention of the Constituent Assembly to give a permanency to the basic features of the Constitution ? It is also a matter for consideration whether making a change in a basic feature of the Constitution can be regarded merely as an amendment or would it be, in effect, rewriting a part of the 967 Constitution; and if the latter, would it be within the purview of article 368 ? The Constitution has enjoined on every member of Parliament before entering upon his office to take an oath or make an affirmation to the effect that he will bear true faith and allegiance to the Constitution. On the other hand under article 368 a procedure is prescribed for amending the Constitution. If upon a literal interpretation of this provision an amendment even of the basic features of the Constitution would be possible it will be a question for consideration as to how to harmonise the duty of allegiance to the Constitution with the power to make an amendment to it. Could the two be harmonised by excluding from the procedure for amendment, alteration of a basic feature of the Constitution ? It would be of interest to mention that the Supreme Court of Pakistan has, in Mr. Fazlul Quader Chowdhry vs Mr. Mohd. Abdul Haque(1) held that franchise and form of government are fundamental features of a Constitution and the power conferred upon the President by the Constitution of Pakistan to remove difficulties does not extend to making an alteration in a fundamental feature of the Constitution. For striking down the action of the President under, what he calls 'sub constitutional power ' Cornelius C.J., relied on the Judges ' oath of office. After quoting the following passage from Cooley 's Constitutional Limitations: "For the constitution of the State is higher in authority than any law, direction, or order made by anybody or any officer assuming to act under it, since such body or officer must exercise a delegated authority, and one that must necessarily be subservient to the instrument by which the delegation is made. In any case of conflict the fundamental law must govern, and the act in conflict with it must be treated as of no legal validity. " the learned Chief Justice observed "To decide upon the question of constitutional validity in relation to an act of a statutory authority, how highso ever, is a duty devolving ordinarily upon the superior Courts by virtue of their office, and in the absence of any bar either express or implied which stands in the way of that duty being performed in respect of the Order here in question it is a responsibility which cannot be avoided." (p. 506) (1) 968 The observations and the passage from Cooley, quoted here for convenience support what I have said earlier regarding the power of the Courts to pronounce upon the validity of amendments to the Constitution. The Constitution indicates three modes of amendments and assuming that the provisions of article 368 confer power on Parliament to amend the Constitution, it will still have to be considered whether as long as the preamble stands unmended, that power can be exercised with respect to any of the basic features of the Constitution. To illustrate my point, as long as the words 'sovereign democratic republic ' are there, could the Constitution be amended so as to depart from the democratic form of Government or its republic character ? If that cannot be done, then, as long as the words "Justice, social economic and political etc. ," are there could any of the rights enumerated in articles 14, to 19, 21, 25, 31 and 32 be taken away ? If they cannot, it will be for consideration whether they can be modified. It has been said, no doubt, that the preamble is not a part of our Constitution. But, I think, that if upon a comparison of the preamble with the broad features of the Constitution it would appear that the preamble is an epitome of those features or, to put it differently if these features are an amplification or concretisation of the concepts set out in the preamble it may have to be considered whether the preamble is not a part of the Constitution. While considering this question it would be of relevance to bear in mind that the preamble is not of the common run such as is to be found in an Act of a legislature. It has the stamp of deep deliberation and is marked by precision. Would this not suggest that the framers of the Constitution attached special significance to it ? In view of these considerations and those mentioned by my learned brother Hidayatullah J. I feel reluctant to express a definite opinion on the question whether the word 'law ' in article 13 (2) of the Constitution excludes an Act of Parliament amending the Constitution and also whether it is competent to Parliament to make any amendment at all to Part III of the Constitution. In so far as the second contention is concerned I generally agree with what my Lord the Chief Justice has said but would only like to add this : Upon the assumption that Parliament can amend Part III of the Constitution and was, therefore, competent to enact therein Articles 31A and 31B as also to amend the definition of 'estate ', the question still remains whether it could validate a State 969 law dealing with land. I take it that only that legislature has power to validate a law which has the power to enact that law. Since the agrarian laws included in the Ninth Schedule and sought to be protected by article 31B could not have been enacted by Parliament, would it be right to say that Parliament could validate them ? If Parliament could amend Part III it could, indeed, remove the impediment in the way of the State. Legislatures by enacting article 3 1A and amending the definition of 'estate. But could it go to the extent it went when it enacted the First Amendment Act and the Ninth Schedule and has now added 44 more agrarian laws to it ? Or was it incompetent to it to go beyond enacting article 31A in 1950 and now beyond amending the definition of estate ? This, however, does not appear to have been considered in Sankari Prasad 's case(1) nor was such an argument advanced before us in this case. I am only mentioning this to make It clear that even in so far as the second contention is concerned I base my decision on the narrow ground that upon the arguments advanced before us no case has been made out for striking down the Seventeenth Amendment. As indicated in the judgment of my Lord the Chief Justice an amendment made by resort to the first part of article 368 could be struck down upon a ground such as taking away the jurisdiction of the High Courts under article 226 or of this Court under article 13 6 without complying with the requirements of the proviso. To this I would like to add that if the effect of an amendment is to curtail substantially, though indirectly, the jurisdiction of High Courts under AA. 226 or of this Court under article 136 and recourse has not been had to the proviso to article 368 the question whether the amendment was a colorable exercise of power by Parliament will be relevant for consideration. Before I part with this case I wish to make it clear that what I have said in this judgment is not an expression of my final opinion but only an expression of certain doubts which have assailed me regarding a question of paramount importance to the citizens of our country : to know whether the basic features of the Constitution under which we live and to which we owe allegiance are to endure for all time or at least for the foreseeable future or whether the yard no more enduring than the implemental and subordinate provisions of the Constitution. Petitions dismissed.
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In 1951, some state laws about land reform were challenged in court. To help state governments carry out this land reform, Articles 31A and 31B were added to the Constitution in 1951. This was done through the Constitution (First Amendment) Act. Article 31B said that the laws listed in the Ninth Schedule (a list of laws) of the Constitution would be considered valid, as if they had always been valid. In 1955, Article 31A was changed by the Constitution (Fourth Amendment) Act. Even with these changes, some state laws about land reform were still challenged in court. To protect these laws, and others that might be struck down, Parliament passed the Constitution (Seventeenth Amendment) Act in 1964. This act changed Article 31A again and added 44 more laws to the Ninth Schedule. The people who filed the lawsuits in the Supreme Court were affected by these laws. They argued that the laws affecting them were not valid because the Constitution (Seventeenth Amendment) Act was unconstitutional (not allowed by the Constitution). They claimed that: (i) Because the Seventeenth Amendment might affect the power of the High Courts under Article 226, the special procedure in Article 368 should have been followed. This procedure requires approval from at least half of the states. (ii) The Supreme Court's earlier decision in the *Sri Sankari Prasad Singh Deo* case, which said this wasn't necessary for the First Amendment, should be reconsidered. (iii) The Seventeenth Amendment was a law about land, and Parliament doesn't have the power to make laws about land, so the Act was invalid. (iv) The Act tried to overrule decisions made by courts, which is unconstitutional. The Supreme Court (Chief Justice Gajendragadkar, and Justices Wanchoo and Raghubar Dayal) decided that: (i) Article 368 and its special procedure should be balanced. One part shouldn't be used to weaken the other. This means that if changing fundamental rights (basic rights) greatly affects the High Court's power under Article 226, then the special procedure in Article 368 might be needed. If the effect is small or indirect, the special procedure might not apply. To decide this, the court must look at the main purpose of the law. In this case, the Seventeenth Amendment only changed fundamental rights to help with a social and economic goal. Its effect on Article 226 was small and indirect. So, the Act falls under the general part of Article 368 and doesn't need the special procedure. (ii) There was no good reason to reconsider the *Shankari Prasad* case. Even though the Constitution is meant to be a guide for solving new problems, the Court shouldn't lightly change its earlier decisions. The test is whether it's absolutely necessary to reopen a question that's already been decided. This depends on the problems with the earlier decision, its impact on the public good, and the strength of the arguments against it. If the petitioners' arguments were accepted, the changes made in 1951 and 1955, and many decisions about the laws in the Ninth Schedule, would be in danger. (iii) Parliament wasn't creating a new land law, but simply confirming that the land laws already passed by the state governments were valid. (iv) The power given to Parliament by Article 368 can be used for both future and past laws. Parliament can make laws valid even if courts have said they were invalid. (v) The power given by Article 368 includes the power to take away the fundamental rights. It also includes the power to change or modify those rights, or to make them not apply in certain situations. The power to change the Constitution is very broad and isn't limited to the dictionary definition of "amend." The words "amendment of the Constitution" mean changing any part of the Constitution. The words in the special procedure clearly show that the general part of Article 368 applies to all parts of the Constitution. The word "law" in Article 13(2) doesn't include a law passed by Parliament to change the Constitution. If the writers of the Constitution had wanted Article 13(2) to apply to any future changes to fundamental rights, they would have said so clearly. It wouldn't make sense to think that fundamental rights were meant to be permanent and unchangeable and beyond the reach of Article 368. The writers of the Constitution must have known that social and economic problems would change over time, and that ideas about public interest would evolve. So, they must have intended for Parliament to be able to change those rights to meet new challenges. Fundamental rights weren't meant to be untouchable because Parliament could always change Article 368 to gain the power to change fundamental rights. Article 226, which gives High Courts the power to issue writs (court orders), falls under the special procedure of Article 368. But Article 32, which guarantees the right to ask the Supreme Court to issue writs, falls under the general part of the section. Parliament might want to consider fixing this difference in how Articles 226 and 32 are changed, by including Part III (Fundamental Rights) in the special procedure. The Court followed its earlier decision in *Sri Sankari Prasad Singh Deo vs Union of India and State of Bihar*. The Court referred to the *A. K. Gopalan vs State of Madras* and *In re: The Delhi Laws Act* cases. (vi) It's not right to say that the Act only changes Articles 31A and 31B and adds laws to the Ninth Schedule, but doesn't change Part III. Parliament thought it would be easier to add Articles 31A and 31B instead of changing each relevant article in Part III. So, what Parliament did in 1951 was a valid basis for the changes in 1955 and 1964. (vii) Just because laws are added to the Ninth Schedule to make them valid doesn't mean that the state governments that passed those laws can't repeal or change them. However, if a state government changes any part of a law in the Ninth Schedule, that change won't be protected by Article 31B, and its validity can be challenged in court. Justices Hidayatullah and Mudholkar questioned: (i) Whether the word "law" in Article 13(2) of the Constitution excludes an act of Parliament that changes the Constitution. (ii) Whether Parliament has the power to make any changes at all to Part III of the Constitution. Justice Mudholkar said that a change made under the general part of Article 368 could be struck down if it took away the power of the High Courts under Article 226, or the Supreme Court under Article 136. It could also be struck down if the change greatly limited the power of those courts, even indirectly, and the special procedure of Article 368 wasn't followed. The question of whether Parliament was secretly misusing its power might be important in the second situation. The challenge to the Seventeenth Amendment Act was based on the same reasons that were used and rejected in the *Sankari Prasad Singh Deo* case, and on some other weak reasons. So, the petitioners haven't given a good reason to reconsider that decision or to strike down the Seventeenth Amendment. However, the following questions weren't considered in the *Sankari Prasad* case and deserve attention: (i) If a law changes a part of the Constitution, does it stop being a "law" under Article 13(2) just because it had to be passed by a special majority? (ii) If someone challenges a change to the Constitution, saying that no valid change was actually made, shouldn't the Court have the power and duty to examine the question and make a decision, just like it would for any other law? (iii) Is the statement in *A. K. Gopalan vs State of Madras* that fundamental rights are the minimum rights reserved by the people and therefore unchangeable, inconsistent with the statement in *In re* that Parliament has full power to legislate? (iv) If a change is made to the basic structure of the Constitution, is that just an amendment, or is it actually rewriting part of the Constitution? And if it's rewriting, is that allowed under Article 368? (v) Assuming that Parliament can change Part III of the Constitution and was allowed to create Articles 31A and 31B, and to change the definition of "estate," can Parliament then validate a state law about land? (vi) Did Parliament go too far when it passed the First Amendment and the Ninth Schedule, and now when it added 44 more land laws to it? Or was Parliament only allowed to create Article 31A in 1950, and now only allowed to change the definition of "Estate"?
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Petitions under article 32 of the Constitution of India for the enforcement of Fundamental Rights. R. V. section Mani, for the petitioners (in W. P. Nos. 1 (W. P. No. 1 (in W. P. No. In dealing with the question about the validity of the impugned Act, it is necessary to consider the scope and effect of the provisions contained in article 368 of the Constitution, because a large part of the controversy in the present writ petitions turns upon the decision of the question as to what the true scope and effect of article 368 is. An amendment of this Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two thirds of the members of that House present and voting, it shall be presented to the President for his assent and upon such assent being given to the Bill, the Constitution shall stand amended in accordance with the terms of the Bill : Provided that if such amendment seeks to make any change in (a) Article 54, Article 55, Article 73, Article 162 or Article 241, or (b) Chapter IV of Part V, Chapter V of Part VI, or Chapter 1 of Part XI, or 939 (c) any of the Lists in the Seventh Schedule, or (d) the representation of States in Parliament, or (e) the provisions of this Article, the amendment shall also require to be ratified by the Legislatures of not less than one half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent". That is the position in regard to the amendment of the provisions of the Constitution to which the proviso does not apply. It is obvious that the fundamental rights enshrined in Part III are not included in the proviso, and so, if Parliament intends to amend any of the provisions contained in Articles 12 to 35 which are included in Part III, it is not necessary to take recourse to the proviso and to satisfy the additional requirements prescribed by it. The question which calls for our decision is : what would be the requirement about making an amendment in a constitutional provision contained in Part III, if as a result of the said amendment, the powers conferred on the High Courts under article 226 are likely to be affected ? The petitioners contend that since it appears that the powers prescribed by article 226 are likely to be affected by the intended amendment of the provisions contained in Part III the bill introduced for the purpose of making such an amendment, must attract the proviso, and as the impugned Act has admittedly not gone through the procedure prescribed by the proviso, it is invalid; and that raises the question about the construction of the provisions contained in article 368 and the relation between the substantive part of article 368 with its proviso. It is urged that any amendment of the fundamental rights contained in Part III would inevitably affect the powers of the High Court, prescribed by article 226, and as such, the bill proposing the said amendment cannot fall under the proviso; otherwise the very object of not including Part III under the proviso would be defeated. When the Constitution makers did not include Part III under the proviso, it would be reasonable to assume that they took the view that the amendment of the provisions contained in Part III was a matter which should be dealt with by Parliament under the substantive provisions of article 368 and not under the proviso. It has no doubt been suggested that the Constitution makers perhaps did not anticipate that there would be many occasions to amend the fundamental rights guaranteed by Part M. However that may be, as a matter of construction, there is no escape from the conclusion that article 368 provides for the amendment of the provisions contained in Part III without imposing on Parliament an obligation to adopt the procedure prescribed by the proviso. It is a matter of general knowledge that it became necessary to add these two provisions in the Constitution, because it was realised that legislative measures adopted by certain States for giving effect to the policy of agrarian reform which was accepted by the party in power, had to face a serious challenge in the courts of law on the ground that they contravened the fundamental rights guaranteed to the citizens by Part III. At the time when the first amendment was made, article 31B expressly provided that none of the Acts and Regulations specified in the 9th Schedule, nor any of the provisions thereof, shall be deemed to be void or ever to have become void on the ground that they were inconsistent with or took away or abridged any of the rights conferred by Part III, and it added that notwithstanding any judgment, decree or order of any Court or tribunal to the contrary, each of the said Acts and Regulations shall subject to the power of any competent legislature to repeal or amend, continue in force. It is an Act the object of which is to amend the relevant Articles in Part III which confer fundamental rights on citizens and as such it falls under the substantive part of article 368 and does not attract the provisions of cl. The argument obviously assumes that it would have been open to Parliament to make appropriate changes in the different Articles of Part III, such as Articles 14 and 19, and if such a course had been adopted, the impugned Act would have been constitutionally valid. But inasmuch as the impugned Act purports to amend only articles 31A and 31B and seeks to add several Acts to the Ninth Schedule, it does not amend any of the provisions in Part III, but is making an independent provision, and that, it is said, must take the case within the scope of the proviso. It is clear that what the impugned Act purports to do is to amend article 3 1 A, and Article 3 1 A itself is included in Part III. Then, it is urged that the power to amend, which is conferred by article 368, does not include the power to take away the fundamental rights guaranteed by Part III. We do not think there is any substance in this argument. Similarly, an amendment of the Constitution which is the subject matter of the power conferred by article 368, may include modification or change of the provisions or even an amendment which makes the said provisions inapplicable in certain cases. Patanjali Sastri J., as he then was, who spoke for the unanimous Court, observed that the said Articles "did not either in terms or in effect seek to make any change in article 226 or in Articles 132 and 136", and he added that it was not correct to say that the powers of the High Courts under article 226 to issue writs for the enforcement of any of the rights conferred by Part HI or of this Court under Articles 132 and 136 to entertain appeals from orders, issuing or refusing to issue such writs were in any way affected. Similarly, the argument that the amendments were invalid because they related to legislation in respect of land, was also rejected on the ground that the impugned Articles 31A and 31B were essentially amendments of the Constitution which Parliament alone had the power to make. Therefore, if one View has been taken by this Court after mature deliberation, the fact that another Bench is inclined to take a different view may not justify the Court in reconsidering the earlier decision or in departing from it. In the present case, if the arguments urged by the petitioners 949 were to prevail, it would lead to the inevitable consequence that the amendments made in the Constitution both in 1951 and 1955 would be rendered invalid and a large number of decisions dealing with the validity of the Acts included in the Ninth Schedule which have been pronounced by different High Courts ever since the decision of this Court in Sankari Prasad 's(1) case was declared, would also be exposed to serious jeopardy. As we have already indicated, the principal point which has been urged before us in these proceedings is, that the impugned Act is invalid for the reason that before presenting it to the President for his assent, the procedure prescribed by the proviso to article 368 has not been followed, though the Act was one which fell within the scope of the proviso. In other words, it was not disputed before us that article 368 empowers Parliament to amend any provision of the Constitution, including the provisions in respect of the fundamental rights enshrined in Part M. The main contention was that in amending the relevant provisions of the Constitution, the procedure prescribed by the proviso should have been followed. But it appears that in Sankari Prasad 's case, another argument was urged before this Court in challenging the validity of the Constitution (First Amendment) Act, and since we are expressing our concurrence with the said decisions, we think it is necessary to refer to the said argument and deal with it, even though this aspect of the matter has not been urged before us in the present proceedings. In Sankari Prasad 's case, it was contended that though It may be open to Parliament to amend the provisions in respect of the fundamental rights contained in Part III, the amendment, if made In that behalf, would have to be tested in the light of the provisions contained in article 13(2) of the Constitution. The argument was that the law to which article 13(2) applies, would include a law passed by Parliament by virtue of its constituent power to amend ' the Constitution, and so, its validity will have to be tested by article 13(2) itself. In other words, it was urged before this Court in Sankari Prasad 's(1) case that in considering the question as to the validity of the relevant provisions of the Constitution (First Amendment) Act, it would be open to the party challenging the validity of the said Act to urge that in so far as the Amendment Act abridges or takes away the fundamental rights of the citizens, it is void. It is true that article 13(2) refers to any law in general, and literally construed, the word "law" may take in a law made in exercise of the constituent power conferred on Parliament; but having regard to the fact that a specific, unqualified and unambiguous power to amend the Constitution is conferred on Parliament, it would be unreasonable to hold that the word "law" in article 13 (2) takes in Constitution Amendment Acts passed under article 368. If the Constitution makers had intended that any future amendment of the provisions in regard to fundamental rights should be subject to article 13 (2), they would have taken the precaution of making a clear provision in that behalf. There is no doubt that if the word "law" used in article 13(2) includes a law in relation to the amendment of the 952 Constitution, fundamental rights can never be abridged or taken away, because as soon as it is shown that the effect of the amendment is to take away or abridge fundamental rights, that portion of the law would be void under article 13 (2). We have no doubt that such a position could not have been intended by the Constitution makers when they included article 368 in the Constitution. The Constitution makers must have anticipated that in dealing with socioeconomic problems which the legislatures may have to face from time to time, the concepts of public interest and other important considerations which are the basis of clauses (2) to (6), may change and may even expand; and so, it is legitimate to assume that the Constitution makers know that Parliament should be competent to make amendments in these rights so as to meet the challenge of the problems which may arise in the course of spcio economic progress and development of the country. One has merely to 955 recall the purpose for which it became necessary to amend Articles 15 and 19 to be satisfied that the changing character of the problems posed by the words used in the respective articles could not have been effectively met unless amendment in the relevant provisions was effected; and yet, if the argument that the fundamental rights are beyond the reach of article 368 were valid, an these amendments would be constitutionally impermissible. The first assumption is that on a fair and reasonable construction of article 368, the power to amend the fundamental rights cannot be held to be included within the constituent powers conferred on Parliament by the said Article. The other assumption which this argument makes, and must of necessity make, is that if the power to amend the fundamental rights is not included in article 368 as it stands, it cannot ever be included within its purview; because unless it is assumed that the relevant power can never be included in article 368, it would be unrealistic to propound the theory that the fundamental rights are eternal, inviolate, and not within the reach of any subsequent constitutional amendment. In other words, even if the powers to amend the fundamental rights were not included in article 368, Parliament can, by a suitable amendment of article 368, take those powers. Before we part with this matter, we would like to observe that Parliament may consider whether it would not be expedient and reasonable to include the provisions of Part III in the proviso to article 368. In In re : the Berubari Union and Exchange of Enclaves(1), this Court had pointed out that amendment of article 1 of the Constitution consequent upon the cession of any part of the territory of India in favour of a foreign State, does not attract the safeguard prescribed by the proviso to article 368, because neither article 1 nor article 3 is included in the list of entrenched provisions of the Constitution enumerated in the proviso; and it was observed that it was not for this Court to enquire or consider whether it would not be appropriate to include the said two articles under the proviso, and that it was a matter for Parliament to consider and decide. What the 17th amendment does is to enlarge the meaning of the word 'estate ' in article 31 A and ' to give protection to some Acts passed by the State Legislatures by including them in the Ninth Schedule under the shield of article 31 B. In Sri Sankari Prasad 's(1) case when the Constitution (First Amendment) Act was passed and Articles 3 I A and 31 B and Ninth Schedule were introduced, the effect of that amendment on article 226 was considered and it was held that the Amendment had not the effect visualised by the proviso to article 368. In Sankari Prasad 's case it was contended that by article 13(2) the Fundamental Rights in Part III of the Constitution were put beyond the reach of article 368 and outside the power of amendment conferred on Parliament by article 368. But I make it clear that I must not be understood ' to have subscribed to the view that the word "law" in article 13(2) does not control constitutional amendments. It is a matter for consideration whether this guarantee is any the less because the article.is in another Part ? It is not even included in the, proviso to article 368 and it is difficult to think that as it has not the protection of the proviso it must be within the main part of article 368. This is as it should be. They are : (a) whether the Amendment Act in so far as it purports to take away or abridge the rights conferred by Part III of the Constitution falls within the prohibition of article 13(2) and (b) whether articles 31A and 31B seek to make changes in articles 132, 136 or 226 or in any of the Lists in the Seventh Schedule and, therefore, the requirements of the proviso to article 368 had to be satisfied. The language of article 368 is plain enough to show that the action of Parliament in amending the Constitution is a legislative act like one in exercise of its normal legislative power, The only difference in respect of an amendment of the Constitution is that the Bill amending the Constitution has to be passed by a special majority (here I have in mind only those amendments which do not attract the proviso to article 368). Then again while the Constitution as originally framed can only be interpreted by a court of law and the validity of no provision therein can be challenged the same cannot be said of an amendment to the Constitution. For an amendment to be treated as a part of the Constitution it must in fact and in law have become a part of the Constitution. Where, therefore, a challenge is made before the Court on the ground that no amendment had in fact been made or on the ground that it was 'not a valid amendment it will be both the duty of the Court as well as be and within its power to examine the question and to pronounce upon it. This would also be so when, in the exercise of its legislative power, it makes an amendment to the Constitution or to any of its provisions. It is possible, as suggested by my learned brother, that article 368 merely lays down the procedure to be followed for amending the Constitution and does not confer a power to amend the Constitution which, I think, has to be ascertained from the provision sought to be amended or other relevant provisions or the preamble. It is also a matter for consideration whether making a change in a basic feature of the Constitution can be regarded merely as an amendment or would it be, in effect, rewriting a part of the 967 Constitution; and if the latter, would it be within the purview of article 368 ? If upon a literal interpretation of this provision an amendment even of the basic features of the Constitution would be possible it will be a question for consideration as to how to harmonise the duty of allegiance to the Constitution with the power to make an amendment to it. It has been said, no doubt, that the preamble is not a part of our Constitution. In view of these considerations and those mentioned by my learned brother Hidayatullah J. I feel reluctant to express a definite opinion on the question whether the word 'law ' in article 13 (2) of the Constitution excludes an Act of Parliament amending the Constitution and also whether it is competent to Parliament to make any amendment at all to Part III of the Constitution. In so far as the second contention is concerned I generally agree with what my Lord the Chief Justice has said but would only like to add this : Upon the assumption that Parliament can amend Part III of the Constitution and was, therefore, competent to enact therein Articles 31A and 31B as also to amend the definition of 'estate ', the question still remains whether it could validate a State 969 law dealing with land. 226 or of this Court under article 136 and recourse has not been had to the proviso to article 368 the question whether the amendment was a colorable exercise of power by Parliament will be relevant for consideration. Before I part with this case I wish to make it clear that what I have said in this judgment is not an expression of my final opinion but only an expression of certain doubts which have assailed me regarding a question of paramount importance to the citizens of our country : to know whether the basic features of the Constitution under which we live and to which we owe allegiance are to endure for all time or at least for the foreseeable future or whether the yard no more enduring than the implemental and subordinate provisions of the Constitution.
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In 1951, some state laws about land reform were challenged in court. To protect these laws, and others that might be struck down, Parliament passed the Constitution (Seventeenth Amendment) Act in 1964. They argued that the laws affecting them were not valid because the Constitution (Seventeenth Amendment) Act was unconstitutional (not allowed by the Constitution). They claimed that: (i) Because the Seventeenth Amendment might affect the power of the High Courts under Article 226, the special procedure in Article 368 should have been followed. (ii) The Supreme Court's earlier decision in the *Sri Sankari Prasad Singh Deo* case, which said this wasn't necessary for the First Amendment, should be reconsidered. (iii) The Seventeenth Amendment was a law about land, and Parliament doesn't have the power to make laws about land, so the Act was invalid. This means that if changing fundamental rights (basic rights) greatly affects the High Court's power under Article 226, then the special procedure in Article 368 might be needed. If the effect is small or indirect, the special procedure might not apply. In this case, the Seventeenth Amendment only changed fundamental rights to help with a social and economic goal. So, the Act falls under the general part of Article 368 and doesn't need the special procedure. Even though the Constitution is meant to be a guide for solving new problems, the Court shouldn't lightly change its earlier decisions. (iii) Parliament wasn't creating a new land law, but simply confirming that the land laws already passed by the state governments were valid. If the writers of the Constitution had wanted Article 13(2) to apply to any future changes to fundamental rights, they would have said so clearly. So, they must have intended for Parliament to be able to change those rights to meet new challenges. Fundamental rights weren't meant to be untouchable because Parliament could always change Article 368 to gain the power to change fundamental rights. Parliament might want to consider fixing this difference in how Articles 226 and 32 are changed, by including Part III (Fundamental Rights) in the special procedure. (vi) It's not right to say that the Act only changes Articles 31A and 31B and adds laws to the Ninth Schedule, but doesn't change Part III. (vii) Just because laws are added to the Ninth Schedule to make them valid doesn't mean that the state governments that passed those laws can't repeal or change them. However, if a state government changes any part of a law in the Ninth Schedule, that change won't be protected by Article 31B, and its validity can be challenged in court. Justices Hidayatullah and Mudholkar questioned: (i) Whether the word "law" in Article 13(2) of the Constitution excludes an act of Parliament that changes the Constitution. (ii) Whether Parliament has the power to make any changes at all to Part III of the Constitution. Justice Mudholkar said that a change made under the general part of Article 368 could be struck down if it took away the power of the High Courts under Article 226, or the Supreme Court under Article 136. It could also be struck down if the change greatly limited the power of those courts, even indirectly, and the special procedure of Article 368 wasn't followed. The challenge to the Seventeenth Amendment Act was based on the same reasons that were used and rejected in the *Sankari Prasad Singh Deo* case, and on some other weak reasons. However, the following questions weren't considered in the *Sankari Prasad* case and deserve attention: (i) If a law changes a part of the Constitution, does it stop being a "law" under Article 13(2) just because it had to be passed by a special majority? (ii) If someone challenges a change to the Constitution, saying that no valid change was actually made, shouldn't the Court have the power and duty to examine the question and make a decision, just like it would for any other law? (iii) Is the statement in *A. K. Gopalan vs State of Madras* that fundamental rights are the minimum rights reserved by the people and therefore unchangeable, inconsistent with the statement in *In re* that Parliament has full power to legislate? (iv) If a change is made to the basic structure of the Constitution, is that just an amendment, or is it actually rewriting part of the Constitution? And if it's rewriting, is that allowed under Article 368? (v) Assuming that Parliament can change Part III of the Constitution and was allowed to create Articles 31A and 31B, and to change the definition of "estate," can Parliament then validate a state law about land?
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eal No. XXXIV of 1950. Appeal by special leave from an Award of the All India Industrial Tribunal (Bank Disputes) Bombay, dated 1st Janu ary, 1950. The facts of the case are set out in the judg ment. Dr. Bakshi Tek Chand (Veda Vyas and S.K. Kapur, with him) for the appellant. B. Sen for the respondents. Alladi Krishnaswami Aiyar (Jindra Lal, with him) for the Union of India. 1950. May 26. The Court delivered judgment as follows : KANIA C.J I have read the judgments prepared by Messrs. Fazl Ali, Mahajan and Mukherjea JJ. 461 in this case. As the views in those judgments in respect of the nature of the duties and functions of the Industrial Tribunal do not show agreement I consider it necessary to add a few words of my own. In my opinion, the functions and duties of the Indus trial Tribunal are very much like those of a body discharg ing judicial functions, although it is not a Court. The rules framed by the Tribunal require evidence to be taken and witnesses to be examined, cross examined and re exam ined. The Act constituting the Tribunal imposes penalties for incorrect statements made before the Tribunal. While the powers of the Industrial Tribunal in some respects are different from those of an ordinary civil Court and it has jurisdiction and powers to give reliefs which a civil Court administering the law of the land (for instance, 'ordering the reinstatement of a workman) does not possess in the discharge of its duties it is essentially working as a judicial body. The fact that its determination has to be followed by an order of the Government which makes the award binding, or that in cases where Government is a party the legislature is permitted to revise the decision, or that the Government is empowered to fix the period. of the opera tion of the award do not, to my mind, alter the nature and character of the functions of the Tribunal. Having consid ered all the provisions of the Act it seems to me clear that the Tribunal is discharging functions very near those of a Court, although it is not a Court in the technical sense of the word. The next question is whether under article 136 the Court has jurisdiction to entertain an application for leave to appeal against the decision of such a body. It is not dis puted that the Court has power to issue writs of certiorari and prohibition in respect of the work of the Tribunal. The only question is whether there is a right of appeal also. In my opinion the wording of article 136 is wide enough to give jurisdiction to the Court to entertain an application for leave to appeal, although it is obvious that having regard to the nature of the functions of the Tribu nal, this Court will be very reluctant to entertain such an application. 462 As regards the merits, I do not think this is a case in which I would admit the appeal. The aggrieved parties may apply for redress by adopting other appropriate proceedings. The appeal therefore should be dismissed with costs. FAZL ALl J. The important question to be decided in this case is whether the present appeal lies at all to this Court. The question is not free from difficulty, but on the whole I am inclined to think that 'the appeal does lie. It is fully recognized that the scope article 136 of the Constitution is very wide, but the significance of the language used in the section can be appreciated only by comparing it with the articles which precede it. Article 132 deals with the appellate jurisdiction of the Supreme Court in cases involving a substantial question of law as to the interpretation of the Constitution, and the words used in that article are: "appeal. from any judgment, decree or finalorder." Article 133 deals with appeals in civil matters and the same words are used here also. Arti cle 134 deals with appeals in criminal matters, and the words used in it are: "appeal. from any judgment, final order or sentence." In article 136, the words "judg ment" and "decree," which are used in articles 132 and 133 are retained. Similarly, the words "judgment" and "sen tence" occurring in article 134 are also retained. But the expression "final order" becomes "order," and, instead of the High Court, reference is made to "any court. " Cer tain other words are also used in the article which seem to me to have a special significance, these being "determina tion," "cause or matter" and "tribunal. " It is obvious that these words greatly widen the scope of article 136. They show that an appeal will lie also from a determination or order of "any tribunal" in any cause or matter. Can we then say that an Industrial Tribunal does not fall within the scope of article 136 ? If we go by a mere label, the answer must be in the affirmative. But we have to look further and see what are the main functions of the Tribunal and how it proceeds to discharge those functions. This is necessary because 463 I take it to be implied that before an appeal can. lie to this Court from a tribunal it must perform some kind of judicial function and partake to some extent of the charac ter of a Court. Now there can be no doubt that the Industrial Tribunal has, to use a well known expression, "all the trappings of a Court" and performs functions which cannot but be regarded as judicial. This is evident from the rules by which the proceedings before the Tribunal are regulated. It appears that the proceeding before it commences on an application which in many respects is in the nature of a plaint. It has the same powers as are vested in a civil Court under the Code of Civil Procedure when trying a suit, in respect of discovery, inspection, granting adjournment, reception of evidence taken on affidavit, enforcing the attendance witnesses, compelling the production of documents, issuing commissions, etc. It is to be deemed to be a civil Court within the meaning of sections 480 and 482 of the Criminal Procedure Code, 1898. It may admit and call for evidence at any stage of the proceeding and has the power to administer oaths. The parties appearing before it have the right of examination, cross examination and re examination and of addressing it after all evidence has been called. A party may also be represented by a. legal practitioner with its permission. The matter does not rest there. The main function of this Tribunal is to adjudicate on industrial disputes which implies that there must be two or more parties before it with conflicting cases, and that it has also to arrive at a conclusion as to how the dispute is to be ended. Prima facie, therefore, a Tribunal like this cannot be excluded from the scope of article 136, but before any final conclu sion can be expressed on the subject certain contentions which have been put forward on behalf of the respondents have to be disposed of. The first contention is that the Industrial Tribunal cannot be said to perform a judicial or quasi judicial function. since it is not required to be guided by any recognized substantive law in deciding disputes 464 which come before it. On the other hand, in deciding industrial disputes, it has to override contracts and create rights which are opposed to contractual rights. In these circumstances, it is said that the very questions which arose before the Privy Council in Moses vs Parker Ex parte Mose (1) arise in this case, these questions being : (1) How can the propriety of the Tribunal 's decision be tested on appeal, and (2) What are the canons by which the appellate Court is to be guided in deciding the appeal ? Their Lordships of the Privy Council undoubtedly felt that these were serious questions, but they had no hesitation in saying that "if it were clear that appeals ought to be allowed. such difficulties would doubtless be met somehow. " This, in my opinion, is a sufficient answer to the difficul ty raised. The Tribunal has to adjudicate in accordance with the provisions of the . It may sometimes override contracts, but so can a Court which has to administer law according to the Bengal or Bihar Money lenders Act, Encumbered Estates Act and other similar Acts. The Tribunal has to observe the provisions of the special law which it has to administer though that law may be dif ferent from the law which an ordinary Court of justice administers. The appellate Court, therefore, can at least see that the rules according to which it has to act and the provisions which are binding upon it are observed, and its powers are not.exercised in an arbitrary or capricious manner. The second contention, which is a more serious one, is that the adjudication of the Tribunal has not all the at tributes of a judicial decision, because the adjudication cannot bind the parties until it is declared to be binding by the Government under section 15 of the Industrial Dis putes Act. It is said that the adjudication is really in the nature of an advice or report which is not effective until made so by the Government. It appears that a similar objection was raised in Rex vs Electricity Commissioner 's, London Electricily ' (1) Joint Committee Co. (1920) Ex Parte (1) for the purpose of deciding whether a writ of certiorari should be Issued in the circumstances of the case but was dis. posed of in these words : "It is necessary, however, to deal with what i think was the main objection of the Attorney General. In this case he said the Commissioners come to no decision at all. They act merely as advisers. They recommend an order embodying a scheme to the Minister of Transport, who may confirm it with or without nodifications. Similarly the Minister of Trans port comes to no decision. He submits the order to the Houses of Parliament, who may approve it with or without modifications. The Houses of Parliament may put anything into the order they please, whether consistent with the Act of 1919, or not. Until they have approved, nothing is decided, and in truth the whole procedure, draft scheme, inquiry, order, confirmation, approval, is only part of a process by which Parliament is expressing its will, and at no stage is subject to any control by the Courts. It is unnecessary to emphasize the constitutional importance of this contention. . In the provision that the final decision of the Commissioners is not to be operative until it has been approved by the two Houses of Parliament I find nothing inconsistent with the view that in arriving at that decision the Commissioners themselves are to act judicially and within the limits prescribed by Act of Parliament, and that the Courts have power to keep them within those limits. It is to be noted that it is the order of the Commissioners that eventually takes effect; neither the Minister of Trans port who confirms, nor the Houses of Parliament who approve, can under the statute make an order which in respect. of the matters in question has any operation. I know of no author ity which compels me to hold that a proceeding cannot be a judicial proceeding subject to prohibition or certiorari because it is subject to confirmation or approval, even where the approval has to be that of the Houses of Parlia ment. The authorities are to the contrary. ' ' (1) 466 It is well known that a writ of certiorari can issue only against an order of a judicial or quasi judicial tribu nal and if it is permissible for the High Court to. issue a writ of certiorari against an Industrial Tribunal, which fact was not seriously disputed before us, I find it diffi cult to hold that the tribunal does not come with in the purview of article 136. If a subordinate Court acts in excess of its jurisdiction or assumes a jurisdiction which it does not possess, the appellate Court can always interfere and do what is contemplated to be done by a writ of certiorari. It is to be noted that under section 15 of the , in cases where the appropriate Govern ment is not a party to the dispute, all that the Government has to do on receiving the award of the Tribunal is to declare it to be binding and to state from what date and for what period it will be binding. Section 15.(2) is mandatory and it provides: "On receipt of such award, the appropriate Government shall by order in writing declare the award to be binding. . " Thus the Government cannot alter, or cancel, or add to the award, but the award must be declared to be binding as it is. In substance, therefore, the adjudication of the Tribunal amounts to a final determination of the dispute which binds the parties as well as the Government. Our attention was however drawn to the proviso to section 15 (2), which runs as follows: "Provided that where the appropriate Government is a. party to the dispute and in its opinion it would be inexpe dient on public grounds to give effect to the whole or any part of the award, it shall on the first available opportu nity lay the award together with the statement of its rea sons for not making a declaration as aforesaid before the Legislative Assembly of the Province, or where the appropri ate Government is the Central Government, before the Central Legislative Assembly, and shall, as soon as may be, cause to be moved therein a resolution for the consideration of the 467 award, and the Legislative Assembly may, by its resolution, confirm, modify, or reject the award. " This proviso was relied upon by the respondents to show that the right to appeal from the award could not have been contemplated in any case. But the Act itself makes a dis tinction between cases in which the Government is a party and those in which the Government is not a party. The proviso relates to a very special type of case and as at present advised I do not wish to express any opinion as to whether an appeal lies to this Court or not in such a case, but, in my judgment, where the Government has only to de clare the award to be binding, an appeal shall lie. It is necessary here to say a few words as to the scope of the appeal. As was pointed out by this Court in Pritam Singh vs The State(1), the power under article 136 of the Constitution being a special power is to be exercised only in special cases. The rule so laid down is bound to re strict the scope of the appeal in practice in almost all the cases which fall under article 136. But in some cases a limitation will be imposed on the scope of the appeal by the very nature of the case and of the tribunal from which an appeal is sought to be brought, and a case under the Indus trial Disputes Act seems to be an example of such a case. Dealing now with the merits of the appeal, I am not prepared to hold that this is a proper case for interference with the adjudication of the Tribunal. The power of this Court was invoked by the appellants on four grounds. These grounds have been elaborately examined by Mahajan J. and two of them have been pronounced to be wholly inadequate for justifying our interference. My view with regard to these two grounds is identical with that of Mahajan J. and I do not wish to add to what he has already said on the subject. The remaining two grounds also are, in my opinion, wholly insufficient to justify the exercise of our special power under article 136. One of these grounds is that the award of the Tribunal is based on no evidence whatsoever. I do not, however, find that this ground (1) ; 60 468 was urged in this form in the application for special leave to appeal to this Court. All that was intended to be urged was that the appellants wanted to adduce evidence but were not allowed to do so. From the decision of the Tribunal however, it appears that the evidence that was shut out related to one isolated point only and the Tribunal might well have been justified in not allowing evidence to be admitted on a point which in its opinion had no direct bearing on the issue before them. After hearing the re spondents on this particular point, I am not disposed to hold that the Tribunal has committed such an error as would justify the interference of this Court. The last ground urged is that the award has been signed by only two members of the Tribunal though it originally consisted of three persons and though the entire hearing of the dispute had taken place before all the three persons. This objection does not appear to me to be fatal to the jurisdiction of the Tribunal, because under section 8 of the Act it is not obligatory on the Government to appoint a new member to fill a vacancy if one of the members ceases to be available at any time during the proceedings. Under that section, if the Chairman ceases to be available, the Govern ment must appoint his successor, whereas if a member ceases to be available the Government may or may not appoint any one to fill his place. In the present case, our attention was drawn to some correspondence which shows that one of the members was called upon to act as a member of another Tribu nal and the award in question was pronounced after informing the Government of the procedure which the Chairman and the remaining members intended to adopt. In the view I have taken, this appeal must fail, and I would accordingly dismiss it with costs. MAHAJAN J. This is an appeal by special leave from the determination of an industrial dispute by the Industrial Tribunal appointed under Ordinance VI of 1949. Bharat Bank Limited, Delhi, the appellant, is a company registered under the Indian Companies Act. 469 Its employees made certain demands and as a result of an unfavourable response from the bank it appears that they struck work on the 9th March, 1949. The bank in its turn served notices on them to resume work and proceeded to discharge a number of them between the 19th March and 24th March as they failed to do so. The Central Government constitued a Tribunal consisting of three persons for the adjudication of industrial disputes in banking companies under section 7 of the (XIV of 1947), The disputes mentioned in schedule II of the notifi cation were referred under section 10 of the Act to this Tribunal. Item 18 of this schedule reads as follows : "Retrenchment and victimization (Specific cases to be cited by employees). " The dispute under this item between the Bharat Bank and its employees was heard by the Tribunal at Delhi and its award was made on the 19th January, 1950. It was published in the Government of India Gazette dated 4th February, 1950, and was declared to be binding for a period of one year. The award of the Tribunal was signed by two out of its three members. A preliminary objection was raised on behalf of the Central Government as well as on behalf of the respondents that this Court had no jurisdiction to grant special leave to appeal against the determination of an Industrial Tribu nal inasmuch as it did not exercise the judicial powers of the State and that its determination was not in the nature of a judgment, decree or order of a Court so as to be ap pealable. This being the first case in which special leave was granted from the determination of an Industrial Tribu nal, it is necessary to examine the provisions of the Con stitution dealing with this matter and if possible, to define the limits of the jurisdiction of this Court under article 136. This article is in these terms : "(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order m any cause or matter passed 470 or made by any court or tribunal in the territory of India. (2) Nothing in clause (1) shall apply to any judgment, determination, sentence or order passed or made by any court or tribunal constituted by or under any law relating to the Armed Forces. " The article occurs in Chapter IV of Part V of the Consti tution: "The Union Judiciary. " Article deals with the establishment and constitution of the Supreme Court. Article 131 confers original jurisdiction on this Court in certain disputes arising between the Government of India and the States etc. Articles and 133 deal with the appellate juris diction of the Court in appeals from High Courts within the territory of India in civil matters. By article 134 limited right of appeal in criminal cases has been allowed. The Judicial Committee of the Privy Council which was the high est Court of appeal for India prior to 10th October, 1949, was not a Court of criminal appeal in the sense in which this Court has been made a Court of criminal appeal under article 134. It could only entertain appeals on the crimi nal side in exercise of the prerogative of the King. Article 135 empowers this Court to hear all appeals which under existing laws could be heard by the Federal Court of India. By the Abolition of Privy Council Jurisdiction Act, 1949,which came into force on the 10th October, 1949, all the powers that were possessed by the Judicial Committee of the Privy Council in regard to cases or matters arising in India became exercisable by the Federal Court of India whether those powers were exercisable by reason of statutory authority or under the prerogative of the King. The powers of the Judicial Committee were conferred upon it by the Judicial Committee Act, 1844 (7 & 8 Vict., C. 69). Appeals lay to His Majesty in Council from judgments, sentences, decreesor orders of any Court of justice within any British colony or possession abroad. Closely following article 135 which confers all the powers of the Judicial Committee on the Supreme Court comes article 136. The language employed in this article is very wide and is of a comprehensive character. Powers given 471 are of an overriding nature. The article commences with the words "Notwithstanding anything in this Chapter. " These words indicate that the intention of the Constitution was to disregard in extraordinary cases the limitations contained in the previous articles on this Court 's power to entertain appeals. These articles dealt with the right of appeal against final decisions of High Courts within the territory of India. Article 136, however, overrides that qualification and empowers this Court to grant special leave even in cases where the judgment has not been given by a High Court but has been given by any Court in the territory of India; in other words, it contemplates grant of special leave in cases where a Court subordinate to a High Court has passed or made any order and the situation demands that the order should be quashed or reversed even without having recourse to the usual procedure provided by law in the nature of an appeal, etc. The word "order" in article 136 has not been qualified by the word "final. " It is clear, therefore, that the power to grant special leave under this article against an order of a Court could be exercised with respect to interlocutory orders also. Another new feature introduced in article 136 is the power given to grant special leave against orders, and determinations etc. of any tribunal in the territory of India. This word did not find place in the Judicial Committee Act, where the phrase used was "a Court of jus tice. " It is the introduction of this new expression in article 136 that has led to considerable argument as to its scope. Another expression that did not find place in the Judicial Committee Act but has been introduced in article 136 is the word "determination." A question has been raised as to the meaning to be given to these words in the article. On the one hand, it was contended that the words "determina tion" and "tribunal" were introduced in the article in order to bring within the scope of the applellate jurisdiction of this Court all orders of tribunals of different varieties and descriptions. On the other hand, it was said that the words "determination" and "tribunal" were added in the article by way of abundant caution and 472 the intention was that if a tribunal exercised the judicial powers of the State and the decision was passed in the exercise of that power, this Court as the highest judicial Court in the Republic would have power, if it considered, necessary in the ends of justice, to grant special leave. Clause (2) of article 136 excludes the jurisdiction of this Court in respect of military Courts. or Tribunal. It is interesting to observe that in articles 138, 139 and 140 the Constitution has conferred powers on Parliament for further enlargement of the powers of this Court. Two points arise for determination in this case: (1) whether the word "tribunal" in this article has been used in the same sense as "Court," or whether it has been used in a wider sense, and (2) whether the word "determination" in the article includes within its scope the determinations made by Industrial Tribunals or other similarly constituted bodies or whether it has reference only to determinations of a Court or a tribunal of a purely judicial character. It was conceded by the learned counsel appearing for the Cen tral Government, Mr. Alladi Krishnaswami Aiyar, that if any tribunal, whether administrative, domestic or quasi judi cial, acts in excess of its jurisdiction, then it can be controlled by the High Courts under the powers conferred on them by article 226 by the issue of a writ of certiorari. It was said that if the Industrial Tribunal in this case could be proved to have trespassed beyond the limits 0 its statutory jurisdiction, then the remedy lies elsewhere and not by a petition of special leave under article 136. Mr. Alladi 's contentions may be briefly summarized as follows: (1) The expression "tribunal " means seat of a judge, or a court of justice. Its necessary attribute is that it can give a final judgment between two parties which carries legal sanction by its own force. That the word "tribunal" in juxtaposition to the word "court" could only mean a tribunal 'which exercised judicial functions of the State and did not include within its ambit a tribunal which had quasi judicial or administrative powers. (2) The kinds of orders against which special leave to appeal could be given under article 136 473 have to be of the same nature as passed by a Court , ' in other words, it was said that unless there was a judicial determination of a controversy between two parties, the order would not be appealable. That in the case of an Industrial Tribunal what gives binding force to the award is the declaration of the government, that the spark of life to it is given by that declaration and without that, the award of the Tribunal is lifeless and has no enforceability and hence cannot be held to be of an appealable nature. It was further said that in cases between the Government and its employees, by the procedure prescribed in the Act the award could also be rejected, and that being so, by its own deter mination a tribunal could not impose a liability or affect rights. Dr. Bakshi Tek Chand, appearing for the bank, on the other hand argued that whenever a tribunal, whether exercis ing judicial or quasi judicial functions, determined a matter in a judicial manner, then such a determination is within article 136. It was said that an Industrial Tribunal has no administrative or executive functions, that its duty is to adjudicate on an industrial dispute, i.e., to act as a Judge, on certain kinds of disputes between employers and employees and that its functions are of a judicial nature, though the ambit of the powers conferred is larger than that of an ordinary Court of law inasmuch as it can grant reliefs which no Court of law could give, but that is because of the powers conferred on it by law. It was argued that the plain words of the article should not be given a narrow meaning when the intention of the Constitution was to confer the widest power on this Court. It was further contended that as between private employers and employees and even in certain cases between Government and its employees the decision of the Tribunal was binding on the Government and Government had no power either to affirm, modify or reject it. All that it was authorised to do was to announce it and by its declaration give it enforceability; that fact, howev er, could not affect the question of appealability of the determination under article 136. It was finally argued that powers should be exercised by this Court wherever there is a miscarriage 474 of justice by a determination of any tribunal and that if the intention of the Constitution by use of the word "tribunal"was in the same sense as "court," then it was not necessary to import it in article 136, because all tribunals that exercise judicial functions fall within the definition of the word "court" though they may not have been so de scribed. After considerable thought I have reached the conclusion that the preliminary objection should be overruled. I see no cogent reasons to limit the plain words of the statute and to place a narrow interpretation on words of widest ampli tude used therein. In construing the articles of the Con stitution it has always to be remembered that India has been constituted into a sovereign democratic republic in order to ensure justice to all its citizens. In other words, the foundations of this republic have been laid on the bedrock of justice. To safeguard these foundations so that they may not be undermined by injustice occurring anywhere this Court has been constituted. By article S2 of the Constitu tion the Court is empowered to see that the fundamental rights conferred on the citizens by the Constitution are not in any way affected. By article 136 it has been given overriding power to grant special leave to appeal against orders of courts and tribunals which go against the princi ple of natural justice and lead to grave miscarriage of justice. The exercise of these, powers could only have been contemplated in cases which affect the rights of people living within the territory of India in respect of their person, property or status. The question, therefore, for consideration is whether the jurisdiction conferred by use of unambiguous phraseology and by words which have a plain grammatical meaning and are of the widest amplitudeshould be limited and restricted on considerations suggested by Mr. Alladi. The construction suggested by the learned counsel, if accepted, would in the first instance make the use of certain words in the article unnecessary and redundant and would run counter to the spirit of the Constitution. It must be presumed that the draftsmen of the Constitution knew well the fact that there were a number of tribunals consti tuted in this country 475 previous to the coming into force of the Constitution which were performing certain administrative, quasi judicial or domestic functions, that some of them had even the trap pings of a Court but in spite of those trappings could not be given that description. It must also be presumed that the Constitution makers were aware of the fact that the highest Courts in this country had held that all tribunals that discharged judicial functions fell within the definition of the expression "Court. " If by the use of the word "tribu nal" in article 136 the intention was to give it the same meaning as "Court," then it was redundant and unnecessary to import it in the article because, by whatever name de scribed, such a tribunal would fall within the definition of the word "Court. " The word "Court" has a well known meaning in legislative history and practice. As pointed out in Halsbury 's Laws of England, the word "Court" originally meant the King 's Palace but subsequently acquired the meaning of (1) a place where justice was admin istered, and (2) the person or persons who administer it. In the Indian Evidence Act it is defined as including all judges and magistrates and all persons except arbitrators legally authorized to take evidence. This definition is by no means exhaustive and has been framed only for the pur poses of the Act. There can be no doubt that to be a Court, the person or persons who constitute it must be entrusted with judicial functions, that is, of deciding litigated questions according to law. However, by agreement between parties arbitrators may be called upon to exercise judicial powers and to decide a dispute according to law but that would not make the arbitrators a Court. It appears to me that before a person or persons can be said to constitute a Court it must be held that they derive their powers from the State and are exercising the judicial powers of the State. In R.v. London County Council (1), Saville L.J. gave the following meaning to the word "Court" or "judicial authori ty" : (1) [1931]2K.B. 215. 61 476 "It is not necessary that it should be a Court in the sense that this Court is a Court, it is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition; and it is not necessary to be strictly a Court if it is a tribuna which has to decide rightly after hearing evidence and opposition. " As pointed out in picturesque language by Lord Sankey L.C. in Shell Co. of Australia vs Federal Commissioner of Taxation(1), there are tribunals with many of the trappings of a Court which, nevertheless, are not Courts in the strict sense of exercising judicial power. It seems to me that such tribunals though they are not full fledged Courts, yet exercise quasi judicial functions and are within the ambit of the word "tribunal" in article 136 of the Constitution. It was pointed out in the above case that a tribunal is not necessarily a Court in this strict sense because it gives a final decision, nor because it hears witnesses oath nor because two or more contending parties appear before it between whom it has to decide, nor because it gives deci sions which affect the rights of subjects nor because there is an appeal to a Court, nor because it is a body to which a matter is referred by another body. The intention of the Constitution by use of the word "tribunal" in the article seems to have been to include within the scope of article 136 tribunals adorned with similar trappings as Court but strictly not coming within that definition. Various defi nitions of the phrase "judicial power" have been given from time to time. The best definition of it on high authority is the one given by Griffith C.J. in Huddart, Parker & Co. vs Moorehead(2), wherein it is defined as follows : "The words 'judicial power ' as used in section 71 the Constitution mean the power which every sovereign author ity must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property. The exer cise of this power does not begin [19311 A. C. 275. (2) ; , 357. 477 until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action. " It was conceded that a tribunal constituted under the , exercises quasi judicial powers. That phrase implies that a certain content of the judicial power of the State is vestedit and it is called upon to exercise it. An attempt was made to define the words "judicial" and "quasi judicial" in the case of Cooper vs Wilson (1). The relevant quotation reads thus : "A true judicial decision presupposes an existing dis pute between two or more parties, and then involves four requisites : (1) The presentation necessarily orally) of their case by the parties to the dispute; (2) if the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal argument by the parties, and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law. A quasi judicial decision equally presup poses an existing ' dispute between two or more parties and involves (1) and (2), but does not necessarily involve (3) and never involves (4). The place of (4)is in fact taken by administrative action, the character of which is determined by the Minister 's free choice. " The extent of judicial power exercised by an ]industrial Tribunal will be considered hereinafter in the light of the observations cited above. Reference was made to certain passages from Professor Allen 's book on Law and Order, Chapter IV, page 69, where mention is made of the kinds of administrative tribunals functioning in various countries today. Porter on Adminis trative Law, 1929 Edn., (1) , at p. 340. 478 page 194, was also relied upon. There can be no doubt that varieties of administrative tribunals and domestic tribunals are known to exist in this country as well as in other countries of the world but the real question to decide in each case is as to the extent of judicial power of the State exercised by them. Tribunals which do not derive authority from the sovereign power cannot fall within the ambit of article 136. The condition precedent for bringing a tribu nal within the ambit of article 136 is that it should be constituted by the State. Again a tribunal would be outside the ambit of article 136 if it is not invested with any part of the judicial functions of the State but discharges purely administrative or executive duties. Tribunals, however, which are found invested with certain functions of a Court of justice and have some of its trappings also would fall within the ambit of article 136 and would be subject to the appellate control of this Court whenever it is found neces sary to exercise that control in the interests of justice. It is now convenient to consider whether a tribunal constituted under the , exer cises all or any one of the functions of a Court of justice and whether it discharges them according to law or whether it can act as it likes in its deliberations and is guided by its own notions of right and wrong. The phrase "industrial dispute" has been defined in section 2 clause (k) of the Act as follows : "any dispute or difference between employers and em ployees, or between employers and workmen, or between work men and workmen, which is connected with the employment or non employment or the terms of employment or with the condi tions of labour, of any person. " Such a dispute concerns the rights of employers and employees. Its decision affects the terms of a contract of service or the conditions of employment. Not only may the pecuniary liability of an employer be considerably affect ed by the adjudication of such dispute but it may even result in the imposition of punishments on him. It may adversely 479 affect the employees as well. Adjudication of such a dis pute affects valuable rights. The dispute and its result can always be translated in terms of money. The point for decision in the dispute usually is how much money has to pass out of the pocket of the employer to the pocket of the employee in one form or another and to what extent the right of freedom of contract stands modified to bring about indus trial peace. Power to adjudicate on such a dispute is given by section 7 of the statute to an Industrial Tribunal and a duty is cast on it to adjudicate it in accordance with the provisions o Act. The words underlined clearly imply that the dispute has to be adjudicated according to law and not in any other manner. When the dispute has to be adjudicated in accordance with the provisions of the Act, it follows that the tribunal has to adhere to law, though that law may be different from the law that an ordinary Court of justice administers. It is noteworthy that the tribunal is to consist of experienced judicial officers and its award is defined as a determination of the dispute. The expression "adjudication" implies that the tribunal is to act as a judge of the dispute; in other words, it sits as a Court of justice and does not occupy the chair of an administrator. It is pertinent to point out that the tribunal is not given any executive or administrative powers. In section 38 of the Act power is given to make rules for the purpose of giving effect to the provisions of the Act. Such rules can provide in respect of matters which concern the powers and procedure of tribunals including rules as to the summoning of witness es, the production of documents relevant to the subject matter and as to appearance of legal practitioners in pro ceedings under this Act. Rule 3 of these rules provides that any application for the reference of an industrial dispute to a tribunal shall be made in form (A) and shall be accompanied by a statement setting forth, inter alia, the names of the parties to the dispute and the specific matters of dispute. It is in a sense in the nature of a plaint in a suit. In rule 13 power is given to administer oaths. Rule 14 provides as follows : "A tribunal may accept, admit or call for 480 evidence at any stage of the proceedings before it and in such manner as it may think fit. " Rule 17 provides that at its first sitting the tribunal is. to call upon the parties to state their case. In rule 19 provision has been made for proceedings ex parte. Rule 21 provides that in addition to the powers conferred by sub section (3) of section 11 of the Act, a tribunal shall have the same powers as are vested in a civil Court under the Code of Civil Procedure when trying a suit, in respect of the following matters, namely, (a) discovery and inspection; (b) granting of adjournment; (c) reception of evidence taken on affidavit; and that the tribunal may summon and examine suo motu any person whose evidence appears to it to be material. It further says that the tribunal shall be deemed to be a civil Court within the meaning of sections 480 and 482 of the Code of Criminal Procedure, 189S. Rule 21 says that the representatives of the parties, appearing before a tribunal, shall have the right of examination, cross exami nation and re examination and. of addressing the Court or Tribunal when all evidence has been called. In rule 30 it is provided that a, party to a reference may be represented by a legal practitioner with the permission of the tribunal and subject to such conditions as the tribunal may impose. In section 11 (3) it is laid down that a tribunal shall have the same powers as are vested in a civil Court under the Code of Civil Procedure when trying a suit, in respect of the following matters, namely, (a) enforcing the attendance of any person and examining him on oath; (b) compelling the production of documents and material objects; (c) issuing commissions for the examination of witnesses; (d) in respect of such other matters as may be prescribed; and every in quiry or investigation by a tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code. It is difficult to conceive in view of these provisions that the Industrial Tribunal per forms any funCtions other than that of a judicial nature. The tribunal has certainly the first three requisites and characteristics of a Court as defined above. It has cer tainly a considerable element of the fourth also inasmuch as. 481 the tribunal cannot take any administrative action, the character of which is determined by its own choice. It has to make the adjudication in accordance with the provisions of the Act as laid down in section 7. It consists of persons who are qualified to be or have been judges. It is its duty to adjudicate on a serious dispute between employers and employees as affecting their right of freedom of contract and it can impose liabilities of a pecuniary nature and disobedience of its award is made punishable. The powers exercisable by a tribunal of this nature were considered in a judgment ' of the Federal Court of India in Western India Automobile Association vs Industrial Tribunal, Bombay (x), and it was observed that such a tribunal can do what no Court can, namely, add to or alter the terms or condi tions of the contract of service. The tribunal having been entrusted with the duty of adjudicating a dispute of a peculiar character, it is for this reason that it is armed with extraordinary powers. These powers, however, are derived from the statute. These are the rules of the game and it has to decide according to these rules. The powers conferred have the sanction of law behind it and are not exercisable by reason of any discretion vested in the members of the tribunal. The adjudication of the dispute has to be in accordance with evidence legally adduced and the parties have a right to be heard and being represented by a legal practitioner. Right to examine and cross examine witnesses has been given to the parties and finally they can address the tribunal when evidence is closed. The whole procedure adopted by the Act and the rules is modelled on the Code of Civil Procedure. In my opinion, therefore, the Industrial Tribunal has all the necessary attributes of a Court of justice. It has no other function except that of adjudicating on a dispute. It is no doubt true that by reason of the nature of the dispute that they have to adju dicate the law gives them wider powers than are possessed by ordinary Courts of law, but powers of such a nature do not affect (1) [1949]] F.C.R. 321. 482 the question that they are exercising judicial power. Stat utes like the Relief of Indebtedness Act, or the Encumbered Estates Act have conferred powers on Courts which are not ordinarily known to law and which affect contractual rights. That circumstance does not make them anything else but tribunals exercising judicial power of the State, though in a degree. different from the ordinary Courts and. to an extent which is also different from that enjoyed by an ordinary Court of law. They may rightly be described as quasi judicial bodies because they are out of the hierarchy of the ordinary judicial system but that circumstance cannot affect the question of their being within the ambit of article 136. It may also be observed that the tribunal is deemed to be a civil Court for certain purposes as laid down in rule 21 of the rules above cited and in section 11(3) of the Act. As a civil Court if it exercises any of the powers contem plated by this section its decisions would become subject to appeal to a District Judge and a fortiori this Court 's power under article 136. would at once be attracted in any case in respect of these matters. Again, in Chapter VI of the Act breach of the terms of an award has been made punishable by section 29 of the Act. The result therefore, is that disobedience of the terms of an award is punishable under the Act. That being so, a determination of the tribu nal not only affects the freedom of contract and imposes pecuniary liability on the employer or confers pecuniary benefits on the employees, but it also involves serious consequences as failure to observe those terms makes a person liable to the penalties laid down in Chapter VI. An award which has these serious consequences can hardly be said to have been given by a tribunal which does not exer cise some of the most important judicial functions of the State. Considerable stress was laid by Mr. Alladi on the provi sions of sections 15 and 19 of the Act. Section 15 enacts as follows : "(1) Where an industrial dispute has been referred to a Tribunal for adjudication, it shall hold its 483 proceedings expeditiously and shall, as soon as practicable on the conclusion thereof, submit its award to the appropri ate Government. (2) On receipt of such award, the appropriate Govern ment shall by order in writing declare the award to be binding. Provided that where the appropriate Government is a party to the dispute and in its opinion it would be inexpe dient on public grounds to give effect to the whole or any part of the award, it shall on the first available opportu nity lay the award together with the statement of its rea sons for not making a declaration as aforesaid before the Legislative Assembly of the province, or where the appropri ate Government, is the Central Government, before the Cen tral Legislature, an d shall, as soon as may be, cause to be moved therein a resolution for the consideration of the award; and the Legislative Assembly or as the case may be, the Central Legislature, may by its resolution confirm, modify or reject the award. (3) On the passing of a resolution under the proviso to sub section (2), unless the award is rejected thereby, the appropriate Government shall11 by order in writing declare the award as confirmed or modified by the resolution, as the case may be, to be binding. (4) Save as provided in the proviso to subsection (3) of section 19, an award declared to be binding under this section shall not be called in question in any manner. " As regards clause (4), it was conceded rightly that a law dealing with industrial disputes and enacted in the year 1947 could not in any way,affect the provisions of the Constitution laid down in article 136. It was however, strenuously urged that the award of the tribunal had no binding force by itself and unless the appropriate Govern ment made a declaration in writing under clause (2) of section 15, this award was a lifeless document and had no sanction behind it and therefore it could not have been contemplated that if would be appealable even by special leave. In my opinion, this contention is unsound. The provisions of clause (2) of 484 section 15 leave no discretion in the Government either to affirm, modify or reject the award. It is bound to declare it binding. It has no option in the matter. In such a situation it is the determination by the tribunal that matters. Without that determination Government cannot function. It does not possess the power either to adjudi cate the dispute or to alter it in any manner whatsoever. That power vests in the tribunal alone. The rights of the parties are really affected by the adjudication contained in the award, not by the Government 's declaration which is automatic. It is no doubt true that announcement of the award by the Government gives it binding force but that does not affect the question of the appealability of the determination under article 136 of the Constitution. The apposite answer to this contention may be given in the language of the decision in Rex vs Electricity Commissioners (1). The relevant passage runs thus : "It is necessary, however, to deal with what I think was the main objection of the Attorney General. In this case he said the Commissioners come to no decision at all. They act merely as advisers. They recommend an order embodying a scheme to the Minister of Transport, who may confirm it with or without modifications. Similarly the Minister of Trans port comes to no decision. He submits the order to the Houses of parliament, who may approve it with or without modifications. The Houses of Parliament may put anything into the order they please, whether consistent with the Act of 1919, or not. Until they have approved, nothing is decided, and in truth the whole procedure, draft scheme, inquiry, order, confirmation, approval, is only part of a process by which Parliament is expressing its will, and at no stage is subject to, any control by the Courts. It is unnecessary to emphasize the constitutional importance of this contention. Given its full effect, it means that the checks and safeguards which have been imposed by Act of Parliament, including the freedom from compulsory taking, can be removed, and new and onerous and (1) , at 207. 485 inconsistent obligations imposed without an Act of Parlia ment, and by simple resolution of both Houses of Parliament. I do not find it necessary to determine whether, on the proper construction of the statute, resolutions of the two Houses of Parliament could have the effect claimed. In the provision that the final decision of the Commissioners is not to be operative until it has been approved by the two Houses of Parliament I find nothing inconsistent with the view that they act judicially and within the limits pre scribed by Act of Parliament, and that the Courts have power to keep them within those limits. It is to be noted that it is the order of the Commissioners that eventually takes effect, neither the Minister of Transport who confirms, nor the Houses of Parliament who approve. can under the statute make an order which in respect of the matters in question has any operation. I know of no authority which compels me to hold that a proceeding cannot be a judicial proceeding subject to confirmation or approval, even where the approval has to be that of the Houses of Parliament. The authorities are to the contrary The observations, though they relate to a case which concerns the issue of a writ of prohibition and certiorari, have application to the present case. Here no discretion whatsoever has been left in the Government in ordinary cases to either modify or t0 reject the determination of the tribunal. The fact that the Government has to make a decla ration after the final decision of the tribunal is not in any way inconsistent with the view that the tribunal acts judicially. It may also be pointed out that within the statute itself a clue has been provided which shows that the circumstance that the award has to be declared by an order of Government to be binding does not affect the question of its appealability. In article 136 clause (2) express provi sion has been made for excepting from the ambit of article 136 the decisions of military courts and tribunals. It follows that but for the exception it was considered that these would be within article 136 clause (1). It is quite clear from the various provisions of the Army Act that the decisions of military tribunals or courts are subject to confirmation either by 486 the Commander in Chief or various other military authori ties. It is only after such confirmation that 'that can operate. It has never been considered that fact in any way affects the question of their appealability. Rex vs Minister of Health (1) also supports this view. There by the Housing Act, 1925, by section 40, a local authority which had prepared an improvement scheme was required to present a petition to the Minister praying that an order should be made confirming such scheme. Sub section (3) provided that the Minister after considering the peti tion may cause a local inquiry to be made and may by order confirm the scheme with or without conditions or modifica tions. In sub section (5) it was stated that the order of the Minister when made shall have effect as if enacted in this Act. It was held be the Court of Appeal that as the order made by the Minister was made without the statutory conditions having been complied with it was ultra vires and therefore a writ of certiorari should issue for the purpose of quashing it. Reliance was placed by Scrutton L.J. on Rex vs Electricity Commissioners (2). The same.view was ex pressed in Minister of Health vs The King (3). It was observed that judicial review by prohibition or a writ of certiorari was permissible if the Minister of Health in confirming the order exceeded his statutory powers. It is clear therefore that simply because an order has to be confirmed by a Minister or by the Government it in any way affects the power of judicial review. Reference may also be made to the observations in Smith vs The Queen (4). At page 623 it was observed that it is a common principle in every case which has in itself the character of a judicial pro ceeding that the party against whom a judgment is to operate shall have an opportunity of being heard. In this sense it can hardly be disputed that the proceeding before an indus trial Tribunal is a judicial proceeding. In my judgment, therefore, the contention raised by Mr. Alladi that this (1) (3) [1931] A.C. 494; (2) (4) 3 A.C. 245. 487 Court cannot exercise its powers under article because the decision of the tribunal has no force till a declaration is made by the Government cannot be sustained. As regards section 19, it was contended that an award declared by the appropriate Government under section 15 to be binding can only come into operation on such date as may be specified by the appropriate Government and can only remain in operation for such period not exceeding one year, as may be fixed by that Government and it was said that herein the Government had the power to state the period from which the award was to commence and the time for which it was to remain in force. This section does not, in my opin ion, affect the question of the appealability of the deter mination of the tribunal. Government has certain functions to perform in its own sphere after the award is made. In certain cases it is bound to declare that award binding. In other cases, when it is itself a party to the dispute, it has certain overriding powers and these overriding powers are that if it considers that the award is not in public interests it may refer it to the legislature. The legisla ture, however, has the power to modify, accept or reject the award. These overriding powers presuppose the existence of a valid determination by a tribunal. If that determina tion is in excess of jurisdiction or otherwise proceeds in a manner that offends against the rules of natural justice and is set aside by exercise of power under article 136, then no occasion arises for exercise of governmental power under the Act. Given a valid award, it could not be denied that the Government could exercise its powers in any manner it con sidered best and the exercise of that power is outside the constitution of this Court. In this connection reference was made to Moses vs Parker (1). The passage on which emphasis was laid reads as follows : "The Court has been substituted for the commissioners to report to the governor. The difference is that their report is to be binding on him. Probably it was (1) [1896] A.C. 488 thought that the status and training of the judges made them the most proper depositaries of that power. But that does not make their action a judicial action in the sense that it can be tested and altered by appeal. It is no more judicial than was the action of the commissioners and the governor. The Court is to be guided by equity and good conscience and the best evidence. So were the commissioners. So every public officer ought to be. But they are expressly exoner ated from all rules of law and equity, and all legal forms. How then can the propriety of their decision be tested on appeal ? What are the canons by 'which this Board is to be guided in advising Her Majesty whether the Supreme Court is right or wrong ? It seems almost impossible that decisions can be varied except by reference to some rule, whereas the Court making them is free from rules. If appeals were allowed, the certain result would be to establish some system of rules, and that is the very thing from which the Tasmanian Legislature has desired to leave the Supreme Court free and unfettered in each case. If it were clear that appeals ought to be allowed such difficulties would doubt less be met somehow. But there are strong arguments to show that the matter is not of an appreciable nature. " One would have expected that after this opinion the decision would have been that the Judicial Committee had no jurisdiction to entertain the appeal but their Lordships proceeded to base their decision not on this ground but on the ground that this was not a fit case for the exercise of the prerogative of the King. In my opinion, the observations made in that case have no apposite application to the provi sions of the statute with which we are concerned. I do not see any difficulty in this case in testing the propriety of the determination of the tribunal. This Court is not to substitute its decision for the determination of the tribu nal when granting relief under article 136. When it chooses to interfere in the exercise of these extraordinary powers, it does so because the tribunal has either exceeded its jurisdiction or has approached the questions referred to it in a manner which is likely to 489 result in injustice or has adopted a procedure which runs counter to the well established rules of natural justice. In other words, if it ,has denied a hearing to a party or has refused to record his evidence or has acted in any other manner, in an arbitrary or despotic fashion. In such cir cumstances no question arises of this Court constituting itself into a tribunal and assuming powers of settling a dispute. All that the Court when it entertains an appeal would do is to quash the award and direct the tribunal to proceed within the powers conferred on it and approach the adjudication of the dispute according to principles of natural justice. This Court under article 136 would not constitute itself into a mere court of error. Extraordinary powers have to be exercised in rare and exceptional cases and on well known principles. Considered in the light of these principles, there is no insuperable difficulty in the present case of the nature pointed out in the passage cited above. It was conceded that the High Court could exercise powers under section 226 and could quash an award but it was said that under article 136 this power should not be exer cised in an appeal. I do not see why ? Particularly when after the High Court has passed any decision on an applica tion made to it in exercise of the powers under section 226, that decision could be brought to this Court in appeal. In the matter of an industrial dispute where expedition is the crux of the matter, it is essential that any abuse of powers by such tribunals is corrected as soon as possible and with expedition. It may be mentioned that it is no novel practice for a court empowered to grant special leave to exercise its powers even though there may be intermediate rights of appeal or other remedies available, if it is considered essential to do so in extraordinary situations. Vide Bent wick 's Privy Council Practice, 3rd Edn., page 125. Therein it is stated as follows : "In several cases from Jamaica, the Privy Council grant ed leave to appeal to the Queen in Council directly from the Supreme Court, without an intermediate appeal (which would have been attended with much 490 expense and delay) to the Court of Error in the island, there being in each of those cases manifestly some point of law raised which deserved discussion. " The cases were In Re Barnett(1), Harrison vs Scott (2), and Attorney General of Jamacia vs Manderson (s). The phraseology employed in article 136 itself justifies this course. The article empowers this Court to grant special leave against sentences or orders made by any court. In all other articles of the Constitution right of appeal is con ferred against final decisions of the highest court of appeal in the country but under this article power is given to this Court to circumvent that procedure if it is considered necessary to do so. I am, therefore, of the opinion that the mere circumstance that a remedy in the nature of a writ of certiorari is open to the petitioners does not necessarily lead to the conclusion that the power of this Court under article 136 is circumscribed by that circumstance. Whenever judicial review is permissible in one form or another, this Court as the highest Court in the land can exercise its special powers and circumvent ordinary procedure by granting special leave. What it has to ulti mately decide it can decide earlier. I now proceed to examine some of the cases to which reference was made by Mr. Alladi. Three Australian cases were cited which concern the construction of sections 51, 71 and 72 of the Australian Constitution (63 and 64 Vict., c. 12). Section 72 requires that every Justice of the High Court and every Justice of any other Court created by the Parliament of the Common wealth shall subject to the power of removal contained in the section be appointed for life. Section 71 confers the whole judicial power of the Commonwealth upon the Courts therein mentioned and no other tribunal or body can exercise that power. Every Court referred to in section 71 has to be constituted in the manner provided by section 72. The ques tion in these cases was as to the meaning of the phrase "judicial power of the Commonwealth. " Similar (1) 4 Moo. 453. (2) 5 Moo. 357. (3) 6 Moo. 239. 491 phraseology has not been used in any part of the Constitu tion of India and in these circumstances it is difficult to derive any assistance from these decisions in solving the problem before us. The Constitution of India is not mo delled on the Constitution of Australia and that being so, any observations made in decisions given under that Consti tution cannot be held to be a safe guide in the interpreta tion of language employed in a Constitution differently drafted. The first of these cases is Waterside Workers ' Federa tion of Australia vs J.W. Alexander Ltd. (1). Therein it was held that the power conferred by the Commonwealth Concilia tion and Arbitration Act 1904 1915 upon the Commonwealth Court of Conciliation and Arbitration to enforce awards made by it is part of "the judicial power of the Commonwealth "within the meaning of section 71 of the Constitution, and can only be vested in the courts mentioned in that section. Mr. Alladi placed reliance on a passage at page 467 in the judgment of Isaacs and Rich JJ., which reads as follows : "The arbitral part of the Act, therefore, is quite within the power of pl. xxxv, and is not intended by the Act to be exercised by an ordinary Court of Justice, which, it is suggested, Parliament by some strange perversity proceed ed to destroy at birth. It is true that enforcement provi sions are found. . But all this was in imitation of the State Acts of Arbitration, and not in reliance on the Judi cature Chapter of the Federal Constitution. The arbitral portion of the Act is, in our opinion, perfectly good, subject to its severability from any other portion which may be bad. " It was argued that the Industrial Tribunal here was an arbitration tribunal of the same kind as in Australia and exercises similar functions. It is however pertinent to observe that the phraseology employed in section 15 of the Indian Act is different from that used in the Australian statute. The Indian statute has constituted different bodies for different purposes. An Industrial Tribunal has been constituted (1) 25 C.L.R. 63 492 only to discharge one function of adjudication. It is not described as an arbitral tribunal. The Act has avoided the use of the word "arbitration" either in preamble or in any of its relevant provisions though the determination has been named as an award. In these circumstances it is unsafe to seek any guidance from observations made in this case. The next case to which reference was made is Rola Co. (Australia) Proprietary Ltd. vs The Commonwealth (1). The question here was whether the Women 's Employment Board constituted under the Women 's Employment Act, 1942, did not exercise the judicial power of the Commonwealth. It was held that the Board exercised functions which were arbitral in character. Emphasis was laid on a passage occurring in page 198 of the report which reads as follows : "An industrial award lays down rules of conduct for the future. It does not purport to ascertain and enforce exist ing rights; it is directed to the creation of new rights. It is urged on behalf of the plaintiff that a determination of the Committee does not create a rule of conduct binding the parties for the future, but that it authoritatively deter mines a possibly controverted question of fact and that the making of such an authoritative determination is necessarily an exercise of judicial power. Reference is made to the frequently quoted statement of Griffith C.J. in Huddart Parker & Co. Pty. Ltd. vs Moorehead (2), approved by the Privy Council in Shell Co. of Australia Ltd. vs Federal Commissioner of Taxation (8):__ "I am of opinion that the words 'judicial power ' as used in section 71 of the Constitution mean the power which every sovereign authority must of necessity have to decide controverises between its subjects or between itself and its subjects, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a binding and authori tative decision (whether subject to appeal or not) is called upon to take action." (1) ; (2) a C.L.R. 330 at 357. (3) 493 Reg. 5C gives Committees power. to decide controversies between subjects relating to their rights and the regulation purports to make those decisions binding and authoritative. I am not satisfied that the words of Griffith C.J. are properly interpreted when it is said that they mean that a power to make binding and authoritative decisions as to facts is necessarily judicial power. I direct attention to the concluding words " is called upon to take action. " In my opinion these words are directed to action to be taken by a tribunal which has power to give a binding and authorita tive decision. The mere giving of the decision is not the action to which the learned Chief Justice referred. If a body which has power to give a binding and authoritative decision is able to take action so as to enforce that deci sion, then, but only then, according to the definition quoted, all the attributes of judicial power are plainly present. I refer to what I say more in detail hereafter, that the Privy Council, in the Shell case (1), in which approval was given to the definition quoted, expressly held that a tribunal was not necessarily a Court because it gave decisions (even final decisions) between contending parties which affected their rights. In Huddart Parker 's case (2), Isaacs 1. referred to the statement of Palles C.B. in R.v. Local Government Board for Ireland (3) "to erect a tribunal into a 'Court ' or 'juris diction ', so as to make its determinations judicial, the essential element is that it should have power, by its determination within jurisdiction, to impose liability or affect rights." "By this," said the learned Chief Baron, "I mean that the liability is imposed, or the right affected by the determination only, and not by the fact determined, and so that the liability will exist, or the right will be affected, although the determination be wrong in law or in fact. It is otherwise of a ministerial power. If the existence of such a power depends upon a contingency, al though it may be necessary for the officer to determine whether (1) (2) ; at 383. (3) at p. 373. 494 the contingency has happened, in order to know whether he shall exercise the power, his determination does not bind. The happening of the contingency may be questioned in an action brought to try the the act done under the alleged exercise of the power. But where the determination binds, although it is based on an erroneous view of facts or law, then the power authorizing it is judicial. There we get a modern use of the term 'judicial power '. " This state ment of the characteristics of judicial power looks to what, in Waterside Workers ' Federation of Australia vs Gilchrist, Watt & Sanderson Ltd.(1), Isaacs and Rich JJ. referred to as the creation of instant liability in specified persons as distinct from laying down a rule or standard of conduct for the future. The decision of an ordinary Court that B is bound to pay money to A applies a pre existing standard of rights and duties not created by the Court itself, with the result that there is an immediately enforceable liability of B to pay to A the sum of money in question. The decision of the Wom en 's Employment Board does not create any such liability, nor does the determination of a Committee of Reference create any such liability. In order to impose an immediale ly enforceable liability upon any employer, for example, to pay wages to a particular female, it would be necessary for the female or some person on her behalf (see reg. 9A) to sue in a court of competent jurisdiction. If such a proceeding succeeded there would then be a liability created by the determination of the court. such a proceeding the determina tion of the Committee of Reference would be evidence of the facts to which it related, but that determination would not in itself create "liability. " The concluding words of the passage quoted above at once distinguish the present case from the Australian case. The award given by an Industrial Tribunal in respect either of bonus or higher wages, etc. is enforceable by its own force and by the coercive machienary of the Act and it is not merely a declaration of a character that furnishes a cause of action to the employee to bring a suit on its foot to recover the C.L.R. 482, 512. 495 wages. An arbitral tribunal 's decision cannot be enforced unless it has the sanction of a Court of justice behind it but the award of the Tribunal is enforceable under the Act itself by the coercive machinery provided therein. It is the terms of the award that are enforceable and not the terms of the order made by the Government. It is the breach of the terms of the award that is punishable and not any breach of Government 's order. The Government itself is bound to declare the award binding and it has no option whatsoever in the matter. It is no doubt true that the tribunal has not only to decide the existing rights and liabilities of the parties and it can lay down rules of conduct for the future but it does so because by law it is authorised to do so. Its decision carries the sanction with it. The Government is bound to give effect to it and the statute enforces it by coercive machinery. In my view, therefore, this decision again has no relevancy to the present case. The third case to which reference was made is Shell Co. of Australia vs Federal Commissioner of Taxation (1). That was an income tax matter and the decision has been consid ered in an earlier part of this judgment. Reference was also made to Mohammad Ahmad vs Governor General in Council ("), in which it was held that an improvement trust was not a civil Court subordinate to the High Court under section 115 of the Code of Civil Procedure. That has no bearing to the matter in issue here. Similar point was discussed in Hari vs Secretary of State for India (3). Labour Relations Board vs John East Iron Works Ltd. (4) is a Canadian case and the decision proceeded on the same lines as in the Australian cases. Mr. Sen appearing for the respondents placed reliance on O 'Connor vs Waldron (5). The relevant passage occurs at page 81 which runs thus : The law as to judicial privilege has in process of time developed. Originally it was intended for the protection of judges sitting in recognised Courts of (1) (3) I.L.R. (2) I.L.R. (4) A.I.R. 1949 P.C. 129. (5) , 496 Justice established as such. The object no doubt was that judges might exercise their functions free from any danger that they might be called to account for any words spoken as judges. The doctrine has been extended to tribunals exer cising functions equivalent to those of an established Court of Justice. In their Lordships ' opinion the law on the subject was accurately stated by Lord Esher in Royal Aquari um etc. Ltd. vs Parkinson (1), where he says that the privi lege applies wherever there is an authorized inquiry which, though not before a Court of Justice, is before a tribunal which has similar attributes. This doctrine has never been extended further than to Courts of Justice and tribunals acting in a manner similar to that in which such Courts act '" The learned counsel contended that the. word "tribunal" in article 136 could only have reference to those tribunals which exercise functions equivalent to that of a Court of Justice. I have no hesitation in holding that the Industrial Tribunal has similar attributes as that of a Court of Jus tice in view of the various provisions to which I have made reference. Reference was also made to certain passages occuring in pages 422 and 428 of Toronto Corporation vs York Corporation (2). That was a case of the Municipal Board of Ontario. It was held there that the Board was merely an administrative tribunal. Next reliance was placed on R.v. National Arbitration Tribunal, Ex parte Horatio Crowther & Co. Ltd.(3). That dealt with the powers of tile National Arbitration Tribunal. In my opinion this citation also is not of much assistance. It was again urged by Mr. Alladi that the word "tribu nal" was introduced in the article to provide for cases of tribunals like the Board of Revenue. The suggestion does not appear to be sound, because a Revenue Board has all the attributes of a Court of justice and falls within the defi nition of the word "Court" in matters where it adjudicates on rights of parties. (6) (7) [1938] A.C. &15. (8) 497 The word "tribunal" has been used in previous legisla tion in a number of statutes and it is difficult to think that the Constitution when it introduced this word in arti cle 136 intended to limit its meaning to only those tribu nals which though not described as Courts strictly speaking, were discharging the same or analogous functions as were being discharged by Courts. For the reasons given above I am of the opinion that the word "tribunal" in article 136 has to be construed liberally and not in any narrow sense and an Industrial Tribunal inasmuch as it discharges functions of a judicial nature in accordance with law comes within the ambit of the article and from its determination an application for spe cial leave is competent. The question now to determine is whether the exercise of overriding powers of this Court can be justified on any ground whatsoever in the present case. As I have already said, exceptional and extraordinary powers of this character can only be justifiably used where there has been a grave miscarriage of justice or where the procedure adopted by the Tribunal is such that it offends against all notions of legal procedure. Dr. Bakshi Tek Chand for the petitioner bank urged four grounds justifying exercise of the special jurisdiction of this Court. Firstly, he contended that the word "victimiza tion" used in clause 18 of the reference had been interpret ed in such a manner by the Tribunal that it had usurped jurisdiction to decide disputes which were never referred to it. In my view this is not a matter which can justify the exercise of the powers under article 136. This Court is not a mere Court of error. The word "victimization" has not been defined in the statute and is not in any sense a term of law or a term of article It is an ordinary English word which means that a certain person has become a victim, in other words, that he has been unjustly dealt with. It was argued that the word has acquired a special meaning in regard to industrial disputes and connotes a person who becomes a victim of the employer 's wrath by reason of his trade union activities and that the word cannot relate to a person who has been merely unjustly dismissed. Be that as it may. 498 The determination of the Tribunal has not been materially affected by this interpretation of the word to any large extent and that being so, it does not call for the exercise of the special power. The second ground urged was that the Tribunal has erred in ordering reinstatement of persons who were guilty of an illegal strike. It was contended that section 23 (b) of the Act has been wrongly construed by it and as a result of this misconstruction persons who were guilty of a wrong and who could not have been reinstated have been reinstated. In brief, the argument was that under section 23(b) when a matter has been referred to a tribunal in respect of an earlier strike, any strike during the pendency of that dispute is an illegal strike and that was the situation here. The employees of the bank had struck work in December, 1948. That dispute had been referred to an Industrial Tribunal. It was during the pendency of that dispute that another strike took place which led to the dismissal of the employees who have now been reinstated by the present award. The Calcutta High Court has held that a strike during the pendency of the period of truce and during the pendency of an earlier dispute before a tribunal is illegal even if it is brought about as a result of fresh and new demands which are not covered by the earlier dispute. One of the members of the Tribunal thought that the decision laid down the law correctly on the point, but the other member thought that the decision was erroneous. Both of them, however, agreed that whether the strike was legal or illegal that point did not in any way affect the question that they had to decide under issue 18. The consequences of an illegal strike are laid down in the Act and certain penalties are provided therein. The Act nowhere states that persons guilty of illegal strike cannot be reinstated. Be that as it may. The reference to the Tribunal was made by the Government in respect of an illegal. strike and the Tribunal was bound to give its decision on the reference. Item 18 of schedule II clearly empowers the tribunal to deal with cases of victimi zation as a result of the third strike which the petitioner described as illegal. The Tribunal may be 499 wrong in the view they have taken but it seems to me this is again not a question of that vital character which would justify the grant of special leave under article 136. The next question raised by the learned counsel that the award of the Tribunal is based on no evidence whatsoever. This contention requires serious consideration. I have examined the proceedings of the Tribunal and it appears that all ' it did was that as required by rule 17 at the first sitting it called upon the parties to state their cases. Mr. Parwana on behalf of the employees stated their respec tive cases and Mr. Ved Vyas who represented the bank stated the bank 's case and after the cases had been stated the proceedings terminated and both parties addressed arguments and the Tribunal proceeded to give its award. Whether the charge of victimization in individual cases was proved or not depended on proof of certain facts which had to be established by evidence. The onus of proving victimization clearly rested on the employees. No evidence whatsoever was led on their behalf. The statement of the case by Mr. Parwana was not on oath. There was no examination or cross examination of Mr. Parwana. No affidavit supporting the facts stated by Mr. Parwana was filed by him or by any employee. Mr. Parwana produced an abstract of the corre spondence but the original correspondence was not produced. The bank disputed the facts stated by Mr. Parwana by means of a lengthy affidavit. It seems no reference was made even to this affidavit by the Tribunal. No counter affidavit was filed in reply to the facts stated in this 'affidavit. The bank wanted to call some evidence. Particular reference was made in respect of a scurrilous letter issued by one Bhatta charya on behalf of the employees and distributed by them, which it is alleged considerably shook the credit of the bank. This opportunity was denied to it. It was contended before us that the bank wanted to lead evidence on certain matters and that the opportunity to lead it was denied. There is nothing on the record to support this contention. The result therefore is that the facts on the basis of which allegations of victimization have been 64 500 made are neither supported by an affidavit nor by any evi dence and the award is based on no evidence whatsoever. The Act as well as the rules framed under it contemplate a proper hearing, discovery and inspection of documents and production of evidence, etc. None of this procedure was followed by the Tribunal. It is difficult to see on what material the Tribunal has given its award as there is none existing on the present record and the respondents ' counsel could not point out to any such material. At one time during the argument I was inclined to think that possibly both parties by agreement consented to treat the statement of case as evidence in the case and did not wish to produce any other evidence, but the affidavit filed on behalf of the bank disputes all the facts stated by Mr. Parwana. The only evidence on the record is the bank 's affidavit and if the facts contained in the affidavit are accepted, then the determination made by the Tribunal cannot stand. It seems to me therefore that the procedure adopted by the Tribunal was against all principles of natural justice and the award is thereby vitiated and should be set aside. It happens that when the safeguard of an appeal is not provided by law the tendency sometimes is to act in an arbitrary manner like a benevolent despot. Benevolent despotism, however, is foreign to a democratic Constitution. The members of the Tribunal seem to have thought that having heard the state ment of the cases of the parties they could proceed to a judgment on their own view of its right or wrong unaided by any material. That kind of procedure to my mind is unwar ranted by the statute and is foreign to a democratic Consti tution. In these circumstances it is the compelling duty of this Court to exercise its extraordinary powers and to quash such an award. The last contention raised by Bakshi Tek Chand was that though a Tribunal consisting of three persons was appointed to adjudicate on the dispute, the award has only been signed by two of them. Reference in this connection was made to section 16 of the Act which says that the award of a Tribu nal shall be in writing and shall be signed by all the members of the 501 Tribunal and that nothing in the section shall be deemed to prevent any member of the Tribunal from recording a minute of dissent. The provisions of the section are mandatory and have not been complied with. It is common ground that the case was stated by the parties at a sitting when all the members of the Tribunal were present and the arguments were heard by all of them. No sitting took place subsequent to this which would have necessitated the carrying on of pro ceedings by two members of the Tribunal by a quorum. When the matter has been heard by all the three members, the award should have been given by all of them. Therefore the award given by two of them is not the award of the Tribunal constituted by the Government. It is therefore vitiated and has to be quashed. Reference in this connection was made to section 8 of the Act which reads as follows : "If the services of the chairman of a Board or of the chairman or other member of a Court or Tribunal cease to be available at any time the appropriate Government shall, in the case of a chairman, and may in the case of any other member, appoint another independent person to fill the vacancy, and the proceedings shall be continued before the Board, Court or Tribunal so reconstituted. " The Tribunal was never reconstituted by the Government by any notification. Under section 7 a Tribunal has to be constituted in accordance with the provisions of the Act by the Government. The Government having constituted a Tribunal of three persons it had power under section 8 to reconsti tute it but did not exercise that power. The result there fore is that the Tribunal as originally constituted was not the Tribunal which gave the award in this reference. Only two members have given the award. It was said that one of the members ceased to be available and the Government was not bound to fill up that vacancy. There is no material on the record to prove whether any member became unavailable and if so, when. But even if a member becomes unavailable and the Government does not choose to fill up the vacancy, still the Government has to reconstitute the Tribunal by saying that 502 two members will now constitute the Tribunal. An affidavit with two telegrams annexed was filed before "us on behalf of the respondents which disclosed that Mr. Chandrasekhara Aiyar who was one of the members of the Tribunal, in Novem ber, 1949, was appointed a member of the Boundary Commission in Bengal and that the other two members sent a telegram to the Labour Ministry asking it to fill up the vacancy or to reconstitute the Tribunal. The advice given by the Ministry was that they could proceed as they were and that the Gov ernment would later on, if necessary, fill up the vacancy. We are not concerned whether the advice given was right or wrong. But the fact remains that the Tribunal was never reconstituted and it was not denied that Mr. Chandrasekhara Aiyar is now sitting in the same Tribunal without being again nominated to it and the Tribunal is hearing the same reference under the other issues referred to it. Moreover, I do not see why after having heard the reference he could not give the award even if he was in Calcutta or sign the award given by the other two members. The idea of three persons hearing a case and two of them deciding it is repug nant to all notions of fairness. It may well have been that the opinion of the third may have influenced the other two or the decision arrived at may have been quite different. It so happened in this case that two members of the Tribunal differed on an important question of law but somehow adjust ed their differences and gave a unanimous award. The presence of the third in such a situation may have very vitally affected the result. After a good deal of thought I feel that it would be most dangerous for this Court to condone proceedings of this character. If exceptional powers are not exercised even when a body legally constitut ed under the statute does not function according to the statute, then they defeat the very purpose of the Constitu tion. Reference in this connection may be made to the deci sion of their Lordships of the Privy Council in Fakira vs King Emperor (1). In that case section 377 (1) A.I.R. 1937 P.O. 119. 503 of the Code of Criminal Procedure as modified and as ap plicable to Hyderabad stood as follows : "In every case so submitted, the confirmation of the sentence or order passed by the Court of the Resident at Hyderabad shall, when such Court consists of two or more Judges, be made, passed and signed by at least two of them." In Fakira 's case the order of confirmation was only made, passed and signed by one of them, though the Court of the Resident consisted of two Judges. Their Lordships held that the peremptory provisions of section 377 had not been complied with and that the sentence passed had not been validly confirmed. The appeal was allowed and the case was remitted to the Court of the Resident. The provisions of section 18 of the are also of a peremptory nature. Reference may also be made to a case arising under the Bar Councils Act reported in In re An Advocate, Madras(1), where one member of the tribunal under that Act had died and had not signed the report. It was held that the tribunal ceased to be properly constituted and that the report could not be considered. For the reasons given above I would quash this award and direct that the Tribunal which is still functioning should readjudge item 18 of the reference and then submit its award on this point to Government. The employees cannot be held responsible for the method of procedure adopted by two members of the Tribunal. Each party will have to bear their own costs in this Court. The appeal is allowed to the extent indicated above. MUKHERJEA J. This appeal, which has come up before us on special leave, is directed against an award made by the All India Industrial Tribunal, dated the 19th of January, 1950. The Tribunal was constituted by the Central Govern ment under section 7 of the and a large number of disputes (1) A.I.R. 1942 Mad. 504 between several Banking companies and their emiployees were referred to it for adjudication. Amongst these Banking companies were the Bharat Bank Limited, the appellants before us, and the disputes between them and their employ ees, who are respondents in this appeal, related inter alia to a number of cases of retrenchment and victimization which the latter alleged against the former. The Tribunal held its enquiry in Delhi in respect to the cases which were connected with the Delhi Branch of the appellants and as a result of the same, made their award on 19th January, 1950, holding that 26 persons, who were employees under the appel lants, were improperly dismissed by the latter and should be reinstated. Further directions were given in the award regarding the salaries and allowances that were to be paid to the dismissed employees. This award was declared to be binding in terms of the provisions of sections 15 and 19 of the by the Central Government on 30th of January, 1950, and it was directed to remain in operation for a period of one year. It is against this award that the present appeal has been preferred. On behalf of the Indian Union which appeared as an intervener in this appeal, as also on behalf of the respond ents, a preliminary objection was taken challenging the competency of the appeal. The contention put forward by Sir Alladi Krishnaswami Aiyar, who appeared for the inter vener, in substance, is that article 136 of the Indian Constitution, under which special leave was prayed for and obtained by the appellants in this case, does not contem plate or include within its scope an appeal against an award of an Industrial Tribunal which is not vested with, and cannot exercise, judicial powers, and the decision of which cannot, therefore, rank as a judicial determination. The Industrial Tribunal, it is said, is an administrative body exercising quasi judicial functions and this Court cannot be called upon to exercise the powers of an appellate Court in respect to the decision of a tribunal which is really a part of the administrative machinery of the Govern ment. 505 In reply to this objection, it has been urged by Sir Tek Chand that the Tribunal constitutedunder the is really and in substance, a Court or judicial tribunal which is invested with the power and authority to exercise judicial functions; and in any event, the language of article 136 of the Constitution is wide enough to include an appeal from the award or determination of any tribunal, be it judicial or not. There are two questions which require consideration on this preliminary point. The first is, whether the award or decision of an Industrial Tribunal constituted under the is a judicial decision in the proper sense of the expression or is it the pronouncement of an administrative or quasi judicial body which may exercise some of the functions of a Court of law but is really not so ? The other question turns upon the construction to be put upon article 136 of the Constitution particularly on the meaning to be given to the words 'tribunal ' and 'determina tion ' occurring therein; and the question is whether the language is wide enough to include an adjudication or award of an Industrial Tribunal. As regards the first question, it is to be noticed that owing to the intricate and complex system of Government that exists in a modern State and the vast expansion of social legislation of all sorts that have taken place in England and in other countries including our own, within the last few decades, the so called administrative and quasi judicial tribunals have come to be a permanent feature of our social and political system. They function as adjudicating bodies in disputes concerning a large number of economic and. social affairs. In a sense they are governmental bodies appertaining to the executive and not to the judicial branch of the State, though in various matters they are armed with judicial powers analogous to those normally carried out by Courts of law. The question is, what are the tests or distinguishing features, if any, which distinguish an admin istrative tribunal from a Court of law. Once we are able to formulate these tests, we would be 506 in a position to determine whether a Tribunal functioning under the is or is not a judicial tribunal properly so called. Whether a particular function or activity is judicial or not is often a difficult question to decide. The point was elaborately dealt with by Lord Sankey who delivered the judgment of the Privy Council in Shell Co. of Australia vs Federal Commissioner of Taxation (1). The question raised in that case was whether the Board of Review, which was set up in 1925 under the Commonwealth Income Tax legislation, was a Court exercising judicial powers of the Commonwealth ? The High Court of Australia decided by a majority that it was an administrative and not a judicial tribunal and this majority judgment was affirmed in appeal by the Privy Council. Lord Sankey remarked in course of his judgment that "the decided cases show that there are Tribunals which possess many of the trappings of a Court but which, nevertheless, are not Courts in the strict sense of exercising judicial power. Mere externals do not make a direction by an ad hoc tribunal to an administrative officer, an exercise by a Court of judicial power. " The actual decision in the case rested on the ground that the Board of Review could not be a judicial tribunal, as its orders were not conclusive for any purpose whatsoev er. The decision, it seems, has only a negative value. The Lord Chancellor enumerated a series of negative propositions which stated inter alia that a tribunal is not necessarily a Court because two or more contending parties appear before it, nor because it hears witnesses, or gives a final deci sion which affects the right of the parties. What the real or positive test is, the Privy Council did not care to formulate, though the judgment quoted, with approval, cer tain observations of Griffith C.J. given in another Austra lian case, namely, Huddart Parker & Co. vs Moorehead(" '), which to some extent neutralised the effect of the negative tests enumerated in the judgment. The observations of Grif fith C.J. are as follows : (1) (2) ; , at p. 357. 507 "I am of opinion that the words 'judicial power '. mean the power which every sovereign authority must have of necessity to decide controversies between its subjects, or between itself and its subjcets, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action. " It may be stated that the authority to hear and decide on evidence between a proposal and an opposition though it is one of the most essential of judicial powers, may be present is an administrative tribunal also. In the majority of cases, administrative bodies are also armed with the powers of a Court of Justice in summoning witnesses, admin istering oaths and punishing disobedience to its order made for the purpose of effecting its enquiries (1). As a matter of fact, it is usual to find that those features which were at one time attached exclusively to activities carried on in a Court of law are being extended to committees, commissions or boards conducting enquiries under directions or supervi sion of the Government. The presence or absence of these features, therefore, does not furnish any conclusive test to determine whether a particular body is a judicial body or not. In the observations of Griffith C.J. quoted above, the learned Chief Justice laid stress on the power to make a binding and authoritative decision as the essential element in the exercise of judicial power. The exact meaning and implication of these expressions were the subject matter of discussion in later Australian cases and it was held by the majority of the Judges in Rola Co. (Australia) Pty. Limited vs The Commonwealth (2), that t. hey do not simply mean that if an authority is given power to decide controverted ques tions of fact and its determination is made binding on the parties to the controversy, it would be sufficient to show that judicial power was entrusted to such authority. A determination, it was pointed out, may be binding on the parties (1) Vide W F. O 'Connor vs Waldron at p, 82. ; 508 in the same sense as a contract is binding on them. What is necessary is that the determination by its own force and without the aid or instrumentality of any other authority or power must affect the rights and obligations of the parties; or in other words, the decision itself irrespective of the facts decided, must create rights and impose obligations; and it should be enforceable as such under the ordinary law of the land. This undoubtedly is one of the fundamental tests which distinguishes a judicial body from one which exercises administrative or quasi judicial functions. Some times the decision or report of the administrative tribunal becomes operative after it is accepted by the head of the department under which the tribunal conducted its enquiries and it is then enforced by some sort of administrative process; or it might create rights between the parties which have to be sued upon in the ordinary way in a Court of law and it is only on the basis of a judgment or decree that is obtained in such action that relief could be had by the party. The essence of judicial determination is that nothing further remains to be done except the enforcement of the judgment, a step which is compelled automatically by the law of the land. The other fundamental test which distinguishes a judicial from a quasi judicial or administrative body is that the former decides controversies according to law, while the latter is not bound strictly to follow the law for its decision. The investigation of facts on evidence adduced by the parties may be a common feature in both judicial and quasi judicial tribunals, but the difference between the two lies in the fact that in a judicial proceeding the Judge has got to apply to the facts found, the law of the land which is fixed and uniform. The quasi judicial tribunal on the other hand gives its decision on the differences between the parties not in accordance with fixed rules of law but on principles of administrative policy or convenience or what appears to be just and proper in the circumstances of a particular case. In other words, the process employed by an administrative tribunal in coming to its decision is not what is known as 'judicial 509 process ' (x). Sir Maurice Gwyer in his deposition before the Committee on Minister 's Powers appointed by the English Parliament in 1929 stated that "a clear distinction is to be drawn between judicial and quasijudicial powers. " The 'judicial power ' was defined by the witness as a power to decide a question of legal right in a dispute between par ties involving either a finding of fact or the application of a fixed rule or principle of law or involving both. "The quasi judicial power," he defined as meaning "the power of giving decisions on questions of differences of an adminis trative and not justiciable character which cannot be deter mined by reference to any fixed law or principle of law but are matters of administrative discretion and judgment "(2). In Cooper vs Wilson (3), Scott L.J. quoted with approval and adopted as the basis of his judgment the following passage from the report of the above committee: "A true judicial decision presupposes an existing dis pute between two or more parties, and then involves four requisites : (1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) if the dispute between them is a question of fact, the ascertain ment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal argument by the parties; and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and an application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law. A quasi judicial decision equally presupposes an existing dispute between two or more parties and involves (1) and (2) but does not necessarily involve (3) and never involves (4). The place of (4) is in fact taken by administrative action, the character of which is determined by the Minister 's free choice. " (1) See Robson 's Justice and Administrative Law, p. 74. (2) Vide Committee of Minister 's Powers, Minutes of Evd., Vol. II, pages 15 16 and also Robson 's Justice and Adminis trative Law, p. 319. (3) 510 In our opinion these statements correctly bring out the distinction between a judicial tribunal and an administra tive body which exercises quasi judicial functions. These being the essential features which distinguish the two classes of tribunals, we would have to ascertain with refer ence to the provisions of the , which class or category of tribunals an Industrial Tribunal comes under. The object of the , as set out in the preamble, is "to make provisions for investigation and settlement of industrial disputes and for certain other purposes hereinafter appearing. " The word "settlement" suggests the idea of establishing compromise between the interests of disputing parties. There are three classes 'of authorities provided for by the Act who are entrusted with the powers and duties of investigation and settlement of industrial disputes. First of all, there are conciliation officers or Boards of Concil iation, whose duties mainly are to induce parties to come to a fair and amicable settlement amongst themselves. Second ly, there are Courts of Enquiry and though they are ' de scribed as Courts, their duties end with investigation into the matters referred to them and submitting reports there upon to the appropriate Government. Lastly, there are Industrial Tribunals composed of independent persons who either are or had been Judges of a High Court or District Judges or are qualified for appointment as High Court Judges. It will be seen from the descriptions given above that the Board of Conciliation or Court of Enquiry constituted under the could, on no account, be regarded as judicial tribunals. To enable them to investi gate facts they are however armed with certain powers of compelling attendance of witnesses and production of docu ments etc. These provisions are to be found in section 11 of the Act. The significant thing to note is, that there is no distinction made in this respect between Conciliation Boards and Courts of Enquiry on the One hand and Industrial Tribunals on the other. The same powers are conferred 511 the three classes of authorities without any distinction whatsoever and sub section (3) of section 11 further lays down that any enquiry or investigation by a Board, Court of Enquiry or Tribunal shall be deemed to be a judicial pro ceeding within the meaning of sections 193 and 228 of the Indian Penal Code. This means that proceedings before an Industrial Tribunal or for the matter of that before the other two bodies also could be deemed to 'be judicial pro ceedings only for certain specified purposes. The express provision making the proceedings judicial proceedings for those purposes only emphasises that they are not judicial proceedings otherwise. Under section 15 (1), the Industrial Tribunal has got to submit its award to the appropriate Government and sub section (2) lays down that on receipt of such an award, the appropriate Government shall by order in writing declare the award to be binding. A different provision has been made in regard to cases where the Government itself figures as a party to the dispute. In such cases, if the Government considers it inexpedient on public grounds to give effect to the award either in whole or in part, it may, at the earli est opportunity, lay the award for consideration before the Provincial or Central Legislative Assembly as the case may be and the Legislative Assembly may. by its resolution confirm, modify or reject the award. After the resolution is passed, the Government is to declare the award so con firmed or modified to be binding [see sub section (3)]. Sub section (4) of section 15 expressly lays down that an award declared to be binding under any two of the previous sub sections shall not be called into question in any manner whatsoever. The Government is not merely to declare the award binding but under section 19 (3), it has got to speci fy the date when the award would come into force and also to fix the period during which it would remain binding, and this period shall not exceed one year. It will be seen, therefore, that there is nothing in the from which it could be inferred that the Industrial Tribunal really functions as a Court exercis ing judicial functions. Regarding 512 the trappings or the external indicia of a Court, its i position is almost the same as that of the Board of Con ciliation or Court of Enquiry and Bakshi Sir Tek Chand concedes that the latter are not judicial tribunals at all. The powers of an Industrial Tribunal are certainly wider than those of the other bodies, but it has no power to make a final pronouncement which would proprio vigore be binding on, and create rights and obligations between the parties. It is for the appropriate Government to declare the award to be binding and the part which the Government plays in such matters is not a mechanical part merely, for the award can really become operative only when the date of its commence ment and the period of its duration are fixed, and it is for the Government and Government alone to. fix the same. With regard to the other class of cases, where the Government itself is one of the parties to the dispute, the position is still worse. An award in such cases is always subject to the contingency of being rejected or modified by the legis lature before whom it could be placed for consideration at the option of the Government. Where a contingency like this is attached to an award, it can never be regarded as a final or binding decision which is of the essence of a judicial proceeding. The fact that in cases of disputes between private employers and their workmen, the Government has to accept the award as it is, makes no difference in principle. Possibly, this rule was made in consideration of the status and training of the people who constitute the Tribunal, but nevertheless the determination cannot acquire any authority or force, so long as the appropriate Government does not make the declaration and fix the time of its operation as mentioned above. In regard to the other class of awards, where the Government is one of the disput ing parties, the award on the face of it is neither the final nor the authoritative pronouncement on the matter in dispute, and it is always in the powers. of one of the disputing parties to subject it to further scrutiny at the hands of the legislature who can reject the whole award or effect such changes in it as it considers proper. This shows the real nature of the Tribunal and it is not and 513 could not be suggested that the Industrial Tribunal is a Tribunal which exercises judicial functions when the dispute is only between private employers and their workmen, and it ceases to be such when the employer is the Government it self. We would now examine the process by which an Industrial Tribunal comes to its decisions and I have no hesitation in holding that the process employed is not judicial process at all. In settling the disputes between the employers and the workmen, the function of the Tribunal is not confined to administration of justice in accordance with law. It can confer rights and privileges on either party which it con siders reasonable and proper, though they may not be within the terms of any existing agreement. It has not merely to interpret or give effect to the contractual rights and obligations of the parties. It can create new rights and obligations between them which it considers essential for keeping industrial peace. An industrial dispate as has been said on many occasions is nothing but a trial of strength between the employers on the one hand and the workmen 's organization on the other and the Industrial Tribunal has got to arrive at some equitable arrangement for averting strikes and lock outs which impede production of goods and the industrial development of the country. The Tribunal is not bound by the rigid rules of law. The process it employs is rather an extended form of the process of collective bargaining and is more akin to administrative than to judi cial function. In describing the true position of an Industrial Tribu nal in dealing with labour disputes, this Court in Western India Automobile Association vs Industrial Tribunal, Bom bay, and others(1) quoted with approval a passage from Ludwig Teller 's well known work on the subject, where the learned author observes that "industrial arbitration may involve the extension of ,existing agreement or the making of a new one or in general the creation of new obligations or modification of old ones, while commercial arbitration generally (1) at p. 345. 514 concerns itself with interpretation of existing obligations and disputes relating to existing agreements. " The views expressed in these observations were adopted in its entire ty by this Court. Our conclusion, therefore, is that an Industrial Tribunal formed under the is not a judicial tribunal and its determination is not a judicial determination in the proper sense of these expres sions. We now come to the other question as to whether an appeal could be taken to this Court against an award of an Industrial Tribunal by special leave under article 136 of the Constitution. Article 136 is a part of Chapter IV of the Constitution which deals with the Union Judiciary. The different jurisdictions of the Supreme Court have been prescribed in a series of articles commencing from article 131. Article 131 defines the original jurisdiction of the Supreme Court. Article 132 deals with its appellate powers in cases where substantial questions of law as to the inter pretation of the Constitution are involved. Article 133 contains the provision relating to appeals in civil cases from judgments, decrees and orders of the High Courts;and article 134 makes provisions relating to criminal appeals. Article 135 lays down that the Supreme Court shall have jurisdiction and powers with respect to any matter not covered by articles 133 and 134, if such jurisdiction and power could have been exercised by the Federal Court prior to the coming into force of the present Constitution. Then comes article 136 which runs as follows: "(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India. " The article is worded in the widest terms possible. It vests in the Supreme Court a plenary jurisdiction in the matter of entertaining and hearing appeals by granting of special leave against any kind of judgment, decree or order made by any Court or tribunal in any 515 cause or matter and the powers could be exercised in spite of and overriding the specific provisions for appeal con tained in the previous articles. The controversy so far as the present case is concerned mainly centers round the interpretation to be put upon two words, namely, "determi nation" and "tribunal" used in the article. Does the word "tribunal" mean a judicial tribunal only and is the expres sion "determination" restricted to what is known as "judi cial determination"? Sir Alladi 's contention is that in interpreting these words we should follow the principle of ejusdent generis. "Determination," he says, must be taken to be judicial determination which is of the same nature as decree, judg ment, order or sentence; and "tribunal" associated with the word" Court" could not but mean "judicial tribunal. " Bakshi Sir Tek Chand on the other hand lays stress on the fact that the word "determination" was not in the origi nal draft Constitution, and it was subsequently added, presumably with a view to widen the scope of article 136 and include within it, the decisions of administrative and quasi judicial tribunals also. He points out that according to the definition given in section 2 (b) of the , "award" means a determination either interim or final of an industrial dispute by an Industrial Tribunal. There is undoubtedly something to be said in favour of both these views. The difficulty, in our opinion, arises from the fact that neither of these terms "determination" or "tribunal" has a fixed or definite connotation in ordinary language. The word "determination" means and signifies the ending of a controversy or litigation by the decision of a Judge or Arbitrator. It cannot be said that it is restrict ed exclusively to proceedings in court. Likewise, the dictionary meaning of the word "tribunal" is 'court of justice ' or 'seat of a Judge. ' By 'Judge ' we mean some authority by which contested matters are decided between rival parties. Here again, it is not possible to say that the expression is applicable only to a 66 516 regular court of law. If the tribunal is a full fledged judicial tribunal, it is not disputed that its decisions would be proper subject matter of appeal under article ,136 of the Constitution. The question is whether this article includes within its scope the determinations of quasi judicial tribunals as well. Our view is that ordinarily we should not put any re stricted interpretation upon the plain words of an article in the Constitution and thereby limit our powers of granting special leave for appeals, which the Constitution for best of reasons did not choose to fetter or circumscribe in any way. At the same time, we must admit that some sort of restricted interpretation may be unavoidable in view of the context in which particular words appear; and certain re strictions may be implicit in the very purpose for which article 136 has been framed. Article 136 empowers us in our discretion to hear appeals from pronouncements of all infe rior courts and tribunals. With regard to law courts, no difficulty arises. As regards tribunals which are not courts in the proper sense of the expression, it may not be proper, in our opinion, to lay down a hard and fast rule that no appeals could, on any account, be allowed against determina tions of such tribunals. There are numerous varieties of these adjudicating bodies, whose structures vary greatly in character and composition and so do the powers and functions which they exercise. The best thing to do would be to examine each type of cases as it arises and if we find that with regard to determinations emanating from certain tribu nals it is not possible for us to exercise fully and effec tively the powers of an appellate Court, such determinations must be held to lie outside the purview of article 136 of the Constitution. This disability in the matter of exercising our powers as an appellate Court might arise from the fact that the rules and principles by which we ordinarily judge the sound ness or otherwise of judicial decisions are not capable of being applied to the determinations of certain administra tive tribunals. It might also arise from the fact that the law under which the 517 tribunal functions prevents us from making any effective order which would be binding and operative of its own force without the intervention of some other power or authority; or there may be some kind of contingency attached to it. In our opinion, these difficulties do confront us in the entertaining or hearing of an appeal against the decision of an Industrial Tribunal. In the first place, as we have said above, the determination of an Industrial Tribunal does not become complete and binding unless and until it is declared to be so by the appropriate Government. Till the Government makes such declaration, neither of the parties to the dis pute can have any real reason for filing an appeal. An appeal, if it lies, could be filed after the determination has been declared binding. But in such cases, is it the determination of the Tribunal merely which is challenged by way of appeal or is it ' the determination by the Tribunal to which has been super added a declaration by the Government ? The decision in the appeal would undoubtedly affect not merely the decision of the Tribunal but that of the Govern ment as well which is certainly not a tribunal within the meaning of article 136. Assuming again that the award is set aside and we substitute our own determination in place of the award given by the Tribunal, will our award be enforce able by itself or will it require a declaration by the Government to make it binding ? If Government is itself a party to the dispute, will it be open to Government to place our decision for consideration by the Legislative Assembly? And will the Legislative Assembly be competent to reject or modify our award ? These problems arise because under sec tion 15 the award under the Act becomes binding only when the Government declares it to be so and if our judgment takes the place of the award of the Tribunal, all the in firmities that attach to the award must necessarily attach to our judgment also. The other difficulty is no less formidable. As said above, the Tribunal is not bound to decide the disputes by application of the ordinary law of the land. A good deal depends upon questions of policy 518 and public convenience. It is not possible for us to.judge the propriety of the decision by a reference to some stand ard or fixed rules and we think that the very policy of the law prevents us from interfering with the discretion exer cised by the Tribunal. Where the direction is committed to any body or a tribunal exercising quasi judicial functions which are not lettered by ordinary rules of law, the tribunal should in the absense of any provision to the contrary be deemed to have the final authority in the exercise of that discretion. We cannot sit in appeal over their decision and substitute our own discre tion for theirs. ,Questions, however, may and do arise where such quasi judicial body attempts to usurp jurisdiction which it does not possess. It may assume jurisdiction under a mistaken view of law or refuse to exercise jurisdiction properly by adoption of extraneous or irrelevant considera tions;or there may be cases where in its proceedings the tribunal violates the principles of natural justice. In all such cases the most proper and adequate remedy would be by writs of certiorari or prohibition and the Court having authority may direct that the decision of the body or tribu nal might be brought up to be quashed for lack of jurisdic tion or for mistake apparent on the face of it; and if the proceedings had not terminated at that time, a writ of prohibition may also be issued for preventing the tribunal from exceeding its jurisdiction. The issuing of such writs would not be an exercise of appellate powers which means the rehearing of the case and passing of such judgment which in the opinion of the appellate Court the original tribunal should have made. The object of these writs is simply to keep the exercise of powers by these quasi judicial tribu nals within the limits of jurisdiction assigned to them by law and torestrain them from acting in excess of their authority. These principles are well settled and require no elucidation(1). Our conclusion, therefore, is that article 136 of the Constitution does not contemplate a determination given by the Industrial Tribunal. (1) Rex vs Electricity Commissioners ; Board of Education vs Rice 519 Even assuming for argument 's sake that we have got jurisdiction under article 136, the exercise of which would depend upon the circumstances of each case, in view of the reasons which we have set out above, this is not an appeal which, in our opinion, should be admitted even if we have the power to do so. The result is that the preliminary objection succeeds and the appeal fails and is dismissed with costs. PATANJALI SASTRI ' J. I entirely agree with the judgment just now delivered by Mukherjea J. and I have nothing to add. Appeal dismissed. Agent for the Union of India: P.A. Mehta.
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The court, led by Chief Justice KANIA with Justices FAZL ALl and MAHAJAN agreeing (but Justices MUKH ERJEA and PATANJALI SASTRI disagreeing), said this: The Industrial Tribunal's job is like a court's job, even though it's technically not a court. So, the Supreme Court can hear appeals from the Tribunal under Article 136 of the Constitution. However, the Supreme Court won't always take these cases. Justice MUKERJEA, with Justice PATANJALI SASTRI agreeing, said this: An Industrial Tribunal is not really a court. The types of decisions it makes, and what it uses to make those decisions, are not things an appeals court can easily review. Therefore, the Supreme Court can't hear appeals from it under Article 136 of the Constitution. Even if the Supreme Court could hear appeals, this specific case isn't right for an appeal from the Tribunal's decision. [Regarding the actual case, Chief Justice KANlA and Justices FAZL ALl, PATANJALI SASTRI, and MUKHERJEA thought there was no reason to hear the appeal. Justice MAHAJAN thought the Tribunal's decision was wrong and should be canceled.]
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461 in this case. The fact that its determination has to be followed by an order of the Government which makes the award binding, or that in cases where Government is a party the legislature is permitted to revise the decision, or that the Government is empowered to fix the period. The only question is whether there is a right of appeal also. Article 132 deals with the appellate jurisdiction of the Supreme Court in cases involving a substantial question of law as to the interpretation of the Constitution, and the words used in that article are: "appeal. They show that an appeal will lie also from a determination or order of "any tribunal" in any cause or matter. Now there can be no doubt that the Industrial Tribunal has, to use a well known expression, "all the trappings of a Court" and performs functions which cannot but be regarded as judicial. The main function of this Tribunal is to adjudicate on industrial disputes which implies that there must be two or more parties before it with conflicting cases, and that it has also to arrive at a conclusion as to how the dispute is to be ended. The first contention is that the Industrial Tribunal cannot be said to perform a judicial or quasi judicial function. In these circumstances, it is said that the very questions which arose before the Privy Council in Moses vs Parker Ex parte Mose (1) arise in this case, these questions being : (1) How can the propriety of the Tribunal 's decision be tested on appeal, and (2) What are the canons by which the appellate Court is to be guided in deciding the appeal ? The appellate Court, therefore, can at least see that the rules according to which it has to act and the provisions which are binding upon it are observed, and its powers are not.exercised in an arbitrary or capricious manner. The second contention, which is a more serious one, is that the adjudication of the Tribunal has not all the at tributes of a judicial decision, because the adjudication cannot bind the parties until it is declared to be binding by the Government under section 15 of the Industrial Dis putes Act. ' (1) 466 It is well known that a writ of certiorari can issue only against an order of a judicial or quasi judicial tribu nal and if it is permissible for the High Court to. It is to be noted that under section 15 of the , in cases where the appropriate Govern ment is not a party to the dispute, all that the Government has to do on receiving the award of the Tribunal is to declare it to be binding and to state from what date and for what period it will be binding. The proviso relates to a very special type of case and as at present advised I do not wish to express any opinion as to whether an appeal lies to this Court or not in such a case, but, in my judgment, where the Government has only to de clare the award to be binding, an appeal shall lie. But in some cases a limitation will be imposed on the scope of the appeal by the very nature of the case and of the tribunal from which an appeal is sought to be brought, and a case under the Indus trial Disputes Act seems to be an example of such a case. A preliminary objection was raised on behalf of the Central Government as well as on behalf of the respondents that this Court had no jurisdiction to grant special leave to appeal against the determination of an Industrial Tribu nal inasmuch as it did not exercise the judicial powers of the State and that its determination was not in the nature of a judgment, decree or order of a Court so as to be ap pealable. This article is in these terms : "(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order m any cause or matter passed 470 or made by any court or tribunal in the territory of India. (2) Nothing in clause (1) shall apply to any judgment, determination, sentence or order passed or made by any court or tribunal constituted by or under any law relating to the Armed Forces. " The Judicial Committee of the Privy Council which was the high est Court of appeal for India prior to 10th October, 1949, was not a Court of criminal appeal in the sense in which this Court has been made a Court of criminal appeal under article 134. Article 136, however, overrides that qualification and empowers this Court to grant special leave even in cases where the judgment has not been given by a High Court but has been given by any Court in the territory of India; in other words, it contemplates grant of special leave in cases where a Court subordinate to a High Court has passed or made any order and the situation demands that the order should be quashed or reversed even without having recourse to the usual procedure provided by law in the nature of an appeal, etc. A question has been raised as to the meaning to be given to these words in the article. On the other hand, it was said that the words "determination" and "tribunal" were added in the article by way of abundant caution and 472 the intention was that if a tribunal exercised the judicial powers of the State and the decision was passed in the exercise of that power, this Court as the highest judicial Court in the Republic would have power, if it considered, necessary in the ends of justice, to grant special leave. or Tribunal. Two points arise for determination in this case: (1) whether the word "tribunal" in this article has been used in the same sense as "Court," or whether it has been used in a wider sense, and (2) whether the word "determination" in the article includes within its scope the determinations made by Industrial Tribunals or other similarly constituted bodies or whether it has reference only to determinations of a Court or a tribunal of a purely judicial character. That the word "tribunal" in juxtaposition to the word "court" could only mean a tribunal 'which exercised judicial functions of the State and did not include within its ambit a tribunal which had quasi judicial or administrative powers. (2) The kinds of orders against which special leave to appeal could be given under article 136 473 have to be of the same nature as passed by a Court , ' in other words, it was said that unless there was a judicial determination of a controversy between two parties, the order would not be appealable. That in the case of an Industrial Tribunal what gives binding force to the award is the declaration of the government, that the spark of life to it is given by that declaration and without that, the award of the Tribunal is lifeless and has no enforceability and hence cannot be held to be of an appealable nature. It was further said that in cases between the Government and its employees, by the procedure prescribed in the Act the award could also be rejected, and that being so, by its own deter mination a tribunal could not impose a liability or affect rights. It was said that an Industrial Tribunal has no administrative or executive functions, that its duty is to adjudicate on an industrial dispute, i.e., to act as a Judge, on certain kinds of disputes between employers and employees and that its functions are of a judicial nature, though the ambit of the powers conferred is larger than that of an ordinary Court of law inasmuch as it can grant reliefs which no Court of law could give, but that is because of the powers conferred on it by law. It was further contended that as between private employers and employees and even in certain cases between Government and its employees the decision of the Tribunal was binding on the Government and Government had no power either to affirm, modify or reject it. It was finally argued that powers should be exercised by this Court wherever there is a miscarriage 474 of justice by a determination of any tribunal and that if the intention of the Constitution by use of the word "tribunal"was in the same sense as "court," then it was not necessary to import it in article 136, because all tribunals that exercise judicial functions fall within the definition of the word "court" though they may not have been so de scribed. It appears to me that before a person or persons can be said to constitute a Court it must be held that they derive their powers from the State and are exercising the judicial powers of the State. 61 476 "It is not necessary that it should be a Court in the sense that this Court is a Court, it is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition; and it is not necessary to be strictly a Court if it is a tribuna which has to decide rightly after hearing evidence and opposition. " The relevant quotation reads thus : "A true judicial decision presupposes an existing dis pute between two or more parties, and then involves four requisites : (1) The presentation necessarily orally) of their case by the parties to the dispute; (2) if the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal argument by the parties, and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law. When the dispute has to be adjudicated in accordance with the provisions of the Act, it follows that the tribunal has to adhere to law, though that law may be different from the law that an ordinary Court of justice administers. It may also be observed that the tribunal is deemed to be a civil Court for certain purposes as laid down in rule 21 of the rules above cited and in section 11(3) of the Act. It was however, strenuously urged that the award of the tribunal had no binding force by itself and unless the appropriate Govern ment made a declaration in writing under clause (2) of section 15, this award was a lifeless document and had no sanction behind it and therefore it could not have been contemplated that if would be appealable even by special leave. It may also be pointed out that within the statute itself a clue has been provided which shows that the circumstance that the award has to be declared by an order of Government to be binding does not affect the question of its appealability. 487 Court cannot exercise its powers under article because the decision of the tribunal has no force till a declaration is made by the Government cannot be sustained. As regards section 19, it was contended that an award declared by the appropriate Government under section 15 to be binding can only come into operation on such date as may be specified by the appropriate Government and can only remain in operation for such period not exceeding one year, as may be fixed by that Government and it was said that herein the Government had the power to state the period from which the award was to commence and the time for which it was to remain in force. Given a valid award, it could not be denied that the Government could exercise its powers in any manner it con sidered best and the exercise of that power is outside the constitution of this Court. One would have expected that after this opinion the decision would have been that the Judicial Committee had no jurisdiction to entertain the appeal but their Lordships proceeded to base their decision not on this ground but on the ground that this was not a fit case for the exercise of the prerogative of the King. It was conceded that the High Court could exercise powers under section 226 and could quash an award but it was said that under article 136 this power should not be exer cised in an appeal. Particularly when after the High Court has passed any decision on an applica tion made to it in exercise of the powers under section 226, that decision could be brought to this Court in appeal. In all other articles of the Constitution right of appeal is con ferred against final decisions of the highest court of appeal in the country but under this article power is given to this Court to circumvent that procedure if it is considered necessary to do so. An Industrial Tribunal has been constituted (1) 25 C.L.R. It is no doubt true that the tribunal has not only to decide the existing rights and liabilities of the parties and it can lay down rules of conduct for the future but it does so because by law it is authorised to do so. It was held there that the Board was merely an administrative tribunal. For the reasons given above I am of the opinion that the word "tribunal" in article 136 has to be construed liberally and not in any narrow sense and an Industrial Tribunal inasmuch as it discharges functions of a judicial nature in accordance with law comes within the ambit of the article and from its determination an application for spe cial leave is competent. In my view this is not a matter which can justify the exercise of the powers under article 136. Be that as it may. That dispute had been referred to an Industrial Tribunal. Be that as it may. The reference to the Tribunal was made by the Government in respect of an illegal. I have examined the proceedings of the Tribunal and it appears that all ' it did was that as required by rule 17 at the first sitting it called upon the parties to state their cases. It seems no reference was made even to this affidavit by the Tribunal. It is common ground that the case was stated by the parties at a sitting when all the members of the Tribunal were present and the arguments were heard by all of them. When the matter has been heard by all the three members, the award should have been given by all of them. Therefore the award given by two of them is not the award of the Tribunal constituted by the Government. Under section 7 a Tribunal has to be constituted in accordance with the provisions of the Act by the Government. In that case section 377 (1) A.I.R. The contention put forward by Sir Alladi Krishnaswami Aiyar, who appeared for the inter vener, in substance, is that article 136 of the Indian Constitution, under which special leave was prayed for and obtained by the appellants in this case, does not contem plate or include within its scope an appeal against an award of an Industrial Tribunal which is not vested with, and cannot exercise, judicial powers, and the decision of which cannot, therefore, rank as a judicial determination. The Industrial Tribunal, it is said, is an administrative body exercising quasi judicial functions and this Court cannot be called upon to exercise the powers of an appellate Court in respect to the decision of a tribunal which is really a part of the administrative machinery of the Govern ment. 505 In reply to this objection, it has been urged by Sir Tek Chand that the Tribunal constitutedunder the is really and in substance, a Court or judicial tribunal which is invested with the power and authority to exercise judicial functions; and in any event, the language of article 136 of the Constitution is wide enough to include an appeal from the award or determination of any tribunal, be it judicial or not. The first is, whether the award or decision of an Industrial Tribunal constituted under the is a judicial decision in the proper sense of the expression or is it the pronouncement of an administrative or quasi judicial body which may exercise some of the functions of a Court of law but is really not so ? Some times the decision or report of the administrative tribunal becomes operative after it is accepted by the head of the department under which the tribunal conducted its enquiries and it is then enforced by some sort of administrative process; or it might create rights between the parties which have to be sued upon in the ordinary way in a Court of law and it is only on the basis of a judgment or decree that is obtained in such action that relief could be had by the party. quoted with approval and adopted as the basis of his judgment the following passage from the report of the above committee: "A true judicial decision presupposes an existing dis pute between two or more parties, and then involves four requisites : (1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) if the dispute between them is a question of fact, the ascertain ment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal argument by the parties; and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and an application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law. This shows the real nature of the Tribunal and it is not and 513 could not be suggested that the Industrial Tribunal is a Tribunal which exercises judicial functions when the dispute is only between private employers and their workmen, and it ceases to be such when the employer is the Government it self. Our conclusion, therefore, is that an Industrial Tribunal formed under the is not a judicial tribunal and its determination is not a judicial determination in the proper sense of these expres sions. We now come to the other question as to whether an appeal could be taken to this Court against an award of an Industrial Tribunal by special leave under article 136 of the Constitution. Article 135 lays down that the Supreme Court shall have jurisdiction and powers with respect to any matter not covered by articles 133 and 134, if such jurisdiction and power could have been exercised by the Federal Court prior to the coming into force of the present Constitution. Then comes article 136 which runs as follows: "(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India. " It vests in the Supreme Court a plenary jurisdiction in the matter of entertaining and hearing appeals by granting of special leave against any kind of judgment, decree or order made by any Court or tribunal in any 515 cause or matter and the powers could be exercised in spite of and overriding the specific provisions for appeal con tained in the previous articles. It might also arise from the fact that the law under which the 517 tribunal functions prevents us from making any effective order which would be binding and operative of its own force without the intervention of some other power or authority; or there may be some kind of contingency attached to it. But in such cases, is it the determination of the Tribunal merely which is challenged by way of appeal or is it ' the determination by the Tribunal to which has been super added a declaration by the Government ? The decision in the appeal would undoubtedly affect not merely the decision of the Tribunal but that of the Govern ment as well which is certainly not a tribunal within the meaning of article 136.
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The court, led by Chief Justice KANIA with Justices FAZL ALl and MAHAJAN agreeing (but Justices MUKH ERJEA and PATANJALI SASTRI disagreeing), said this: The Industrial Tribunal's job is like a court's job, even though it's technically not a court. So, the Supreme Court can hear appeals from the Tribunal under Article 136 of the Constitution. However, the Supreme Court won't always take these cases. Justice MUKERJEA, with Justice PATANJALI SASTRI agreeing, said this: An Industrial Tribunal is not really a court. The types of decisions it makes, and what it uses to make those decisions, are not things an appeals court can easily review. Therefore, the Supreme Court can't hear appeals from it under Article 136 of the Constitution. Even if the Supreme Court could hear appeals, this specific case isn't right for an appeal from the Tribunal's decision. [Regarding the actual case, Chief Justice KANlA and Justices FAZL ALl, PATANJALI SASTRI, and MUKHERJEA thought there was no reason to hear the appeal. Justice MAHAJAN thought the Tribunal's decision was wrong and should be canceled.]
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Appeals Nos. 1056 and 1057 of 1963. Appeals by special leave from the judgment and order dated September 30, 1963 of the Mysore High Court in Writ Petitions Nos. 1592 and 1522 of 1963. section K. Venkataranga Iyengar and R. Gopalakrishnan, for the appellants (in both the appeals). C. K. Daphtary, Attorney General, B. R. L. lyengar and B. R. G. K. A char, for the respondents (in both the appeals) January 29, 1964. The Judgment of B. P. Sinha, C.J., K. Subba Rao, N. Rajagopala Ayyangar and Raghubar Dayal JJ. was delivered by Subba Rao J. Mudholkar J. delivered a dissenting opinion. SUBBA RAO J. These two appeals raise the question of the validity, of the orders made by the Government of Mysore in respect of admissions to Engineering and Medical Colleges in the State of Mysore. The facts may be briefly stated: in the State of Mysore there are a number of Engineering and Medical Colleges most of them are Government Colleges and a few of them are Government aided Colleges. The State Government appointed a common selection committee for settling admissions to the Engineering Colleges and another common selection committee for settling admissions to Medical Colleges. The Government by an order dated July 26, 1963, marked as exhibit C in the 373 High Court, defined backward classes and directed that 30 per cent of the seats in professional and technical colleges and institutions shall be reserved for them and 18 per cent. to the Scheduled Castes and the Scheduled Tribes. On July 6, 1963, the Government sent a letter to the Director of Technical Education in Mysore, Bangalore, informing him that it had been decided that 25 per cent of the maximum marks for the examination in the optional subjects taken into account for making the selection of candidates for admission to Engineering Colleges shall be fixed as interview marks; it also laid down the criteria for allotting marks in the interview. It appears that a similar order was issued in respect of Medical Colleges. The selection committee converted the total of the marks in the optional subjects to a maximum of 300 marks and fixed the maximum marks for interview at 75. On the basis of the marks obtained by the candidates in the examination and those obtained in the interview, selections were made for admission to Engineering and Medical Colleges. Some of the candidates whose applications for admission to the said colleges were rejected filed petitions under article 226 of the Constitution in the High Court of Mysore for quashing the orders issued by the Government in the matter of admissions to the said Colleges and for a direction that they shall be admitted in the Colleges strictly in the order of merit. The High Court, after considering the various contentions raised by the petitioners, held that the orders defining backwardness were valid and that the criteria laid down for interview of students were good; but it held that the selection committee had abused the powers conferred upon it and on that finding set aside the interviews held and directed that the applicants shall be interviewed afresh in accordance with the scheme laid down by the Government in Exs. C and D and in Annexure IV, subject to the directions given by it. Two of the petitioners have filed the present appeals against the said order of the High Court. We shall now proceed to deal with the various contentions raised by learned counsel for the appellants. Learned counsel for the appellants contends that the Government did not issue any order to the selection corn 374 mittee in charge of admissions to Medical Colleges prescrib ing the marks for interview or fixing the criteria for allotting the said marks. Annexure IV dated July 6, 1963, relates to award of marks for the interview of candidates, seeking admission to Engineering Colleges and Technical Institutions. It was a letter written by the Secretary to the Government of Mysore, Education Department, to the Director of Technical Education in Mysore Bangalore. Therein the Government fixed the percentage of marks to be allotted at the interview. The selection committee was authorised to allot marks to the candidates, having regard to the following factors: (1) General Knowledge. (2) Aptitude and personality. (3) Previous academic career, including special distinctions, etc. (4) N . C.C., A.C.C., etc. (5) Extra curricular activities including sports, social service, debating, dramatics, etc. But at the time of arguments no letter written by the Government in respect of admissions to Medical Colleges was placed before us. There is no definite allegation in either of the two affidavits filed by the appellants that no such order was issued by the Government in respect of Medical Colleges. But, in the petition filed by Chitralekha in para 22 the following statement is found: "As the order empowering them to award 75 marks as interview marks has so far remained secret in that it has not been made available, this Hon 'ble Court may be pleased to send for the same, as the order falls to be quashed. " This averment assumes that such an order was made. In the counter affidavit filed by Dr. Dharmaraj, Dean, Medical College, and Chairman of the selection committee for admission to Medical Colleges, it is stated that the Govern ment by its letter directed that the said selection committee shall interview candidates and allot marks the maximum of which shall be 25 per cent of the maximum marks for the optional subjects and laid down the criteria for allotting marks in the interview. In the paper book as typed the description of the letter is omitted. But the learned; Attorney General stated that in the original the description is given and that is, PLM 531 MNC 63 dated 12th July, 1963. In the counter affidavit filed by B. R. Verma, Deputy Secretary to the Government of Mysore, Education Depart ment, Bangalore, after referring to Annexure IV, it is stated that a similar letter was sent by the Government to the Selection Committee for admission to Medical Colleges. It does not appear from the judgment of the High Court that learned counsel for the appellants denied the existence of such a communication in respect of Medical Colleges, but Proceeded with his argument on the basis that a communi cation similar to Annexure IV issued in connection with admissions to Engineering Colleges existed in the case of Medical Colleges also. But before us the learned counsel for the appellants heavily relied upon the fact that the said order was not filed in the court and was not willing to accept the assurance given by the Attorney General on instructions that such an order existed. In the circumstances we directed the Attorney General to file the said order. A copy of the letter written by the Government has since be en filed and it clearly shows that the relevant instructions were issued in, respect of admission to Medical Colleges also. We, therefore, hold that the Government sent a letter similar in terms. to annexure IV to the selection committee for admission to, Medical Colleges. The next contention advanced is that Annexure IV was invalid as it did not conform to the requirements of article 166 of the Constitution. As the argument turns upon the for= of the said annexure it will be convenient to read the material part thereof. "sir, Sub : Award of marks for the "interview" of the candidates seeking admission to Engineering Colleges and Technical Institutions. With reference to your letter No. AAS. 4.ADW/63/2491, dated the 25th June, 1903, on the subject 376 Mentioned above, I am directed to state that Government have decided that 25 per cent of the maximum marks Yours faithfully, Sd/ section NARASAPPA, Under Secretary to Government, Education Department. " Ex facie this letter shows that it was a communication of he order issued by the Government under the signature of the Under Secretary to the Government, Education Department. Under article, 166 of the Constitution an executive action of the Government of a State shall be expressed to be taken in the name of the Governor, and that orders made in the name of the Governor shall be authenticated in such, manner as may be specified in rules to be made by be Governor and the validity of an order which is so authenticated shall not be called in question on the ground hat it is not an order made by the Governor. If the conditions laid down in this Article are complied with, the order cannot be called in question on the ground hat it is not an order made by the Governor. It is con tended that as the order in question was not issued in the name of the Governor the order was void and no interviews could be held pursuant to that order. The law on the subject is well settled. In Dattatreya Moreshwar Pangarkar vs The State of Bombay (1) Das J., as he then was, observed: "Strict compliance with the requirements of article 166 gives an immunity to the order in that it cannot be challenged on the ground that it is not an order made by the Governor. If, therefore, the requirements of that article are not complied with, the resulting immunity cannot be claimed by the State. This, however, does not vitiate the order itself action to be expressed and authenticated in the manner therein laid down but an (1) ; , 625. 377 omission to comply with those provisions does not render the executive action a nullity. Therefore ' all that the procedure established by law requires is that the appropriate Gov ermnent must take a decision as to whether the detention order should be confirmed or not under section 11(1). " The same view was reiterated by this Court in The State of Bombay vs Purshottam Jog Naik(1), where it was pointed out that though the order in question then was defective in form it was open to the State Government to prove by other means that such an order had been validly made. This view has been reaffirmed by this Court in subsequent decisions: see Ghaio Mall and Sons vs The State of Delhi (2), and it is, therefore, settled law that provisions of article 166 of the Constitution are only directory and not mandatory in character and, if they are not complied with, it can be es tablished as a question of fact that the impugned order was issued in fact by the State Government or the Governor. The judgment of this Court in Bachhittar Singh vs The State of Punjab(3) does not help the appellants, for in that case the order signed by the Revenue Minister was not communicated to the party and, therefore, it was held that there was no effective order. In the light of the aforesaid decisions, let us look at the facts of this case. Though Annexure IV does not conform to the provisions of article 166 of the Constitution, it ex facie says that an order to the effect mentioned therein was issued by the Government and it is not denied that it was communicated to the selection committee. In neither of the affidavits filed by the appellants there was any specific averment that no such order was issued by the Government. In the counter affidavit filed by B. R. Varma, Deputy Secre tary to the Government of Mysore, Education Department, there is a clear averment that the Government gave the direction contained in Annexure IV and a similar letter was (1) ; (2)[1959] section C. R. 1424. (3) [1962] SUPP. 3 section C. R. 713. 378 issued to the selection committee for admissions to Medical Colleges and this averment was not denied by the appellants by filing any affidavit. In the circumstances when there are no allegations at all in the affidavit that the order was not made by the Government, we have no reason to reject the averment made by the Deputy Secretary to the Government that the order was issued by the Government. There are no merits in this contention. It is then contended that the Government has no power to appoint a selection committee for admitting students to colleges on the basis of higher or different qualifications than those prescribed by the University and, therefore, the orders made by the Government in respect of admission were illegal. The first argument is. that co ordination and determination of standards of a university is a Union subject and, therefore, the State Legislature has no constitutional competency to make a law for maintaining the standards of university education. As the State Government 's executive power extends to matters with respect to which the Legislature of the State has power to make laws, the argument proceeds, the Government of the State cannot make an order or issue directions for maintaining the standards of the University. The further argument is that prescribing higher marks for admission to a College is for the purpose of maintaining the standards of University education and therefore the State Government is not empowered to do so. In support of this contention reliance is placed upon the judgment of this Court in Gujarat University vs Shri Krishna(1). There, one of the questions raised related to alleged conflict between entry 11 of List II and entry 66 of List I of the Seventh Schedule to the Constitution. By item No. 11 of List II of the Seventh Schedule to the Constitution, the State Legislature has power to legislate in respect of education including Universities subject to the provisions of items 63, 64, 65 and 66 of List I and 25 of List III. By item 66 power is entrusted to Parliament to legislate on co ordination and determination of standards in institutions for higher education or research and scientific and technical institutions. (1) [1963] SUPP. 1 S.C. R. 112 379 The question was whether medium of instruction was comprehended by either of those entries or whether it fell under both. In that context it was observed at p. 715 716: "The State has the power to prescribe the syllabi and courses of study in the institutions named in entry 66 (but not falling within entries 63 to 65) and as an incident thereof it has the power to indicate the medium in which instruction should be imparted. But the Union Parliament has an overriding legislative power to ensure that the syllabi and courses of study prescribed and the medium selected do not impair standards of education or render the co ordi nation of such standards either on an All India or other basis impossible or even difficult. " This and similar other passages indicate that if the law made by the State by virtue of entry II of List II of the Seventh Schedule to the Constitution makes impossible or difficult the exercise of the legisiative power of the Parliament under the entry "Co ordination and determination of standards in institutions for higher education or research and scientific and technical institutions" reserved to the Union, the State law may be bad. This cannot obviously be decided on speculative and hypothetical reasoning. If the impact of the State law providing for such standards on entry 66 of List I is so heavy or devastating as to wipre out or appreciably abridge the central field, it may be struck down. But that is a question of fact to be ascertained in each case. It is not possible to hold that if a State legislature made a law prescribing a higher percentage of marks for extra curricular activities in the matter of admission to colleges, it would be directly encroaching an the field covered by entry 66 of List I of the Seventh Schedule to the Constitution. If so, it is not disputed that the State Government would be within its rights to prescribe qualifications for admission to colleges so long as its action does not contravene any other law. It is then said that the Mysore University Act conferred power to prescribe rules for admission to Colleges on the University and the Government cannot exercise that power. 380 It is true that under section 23 of the Mysore University Act, 1956, the Academic Council shall have the power to prescribe the conditions for admission of students to the University and, in exercise of its power, it has prescribed the percentage of marks which a student shall obtain for getting admission in medical or engineering colleges. The orders of the Government do not contravene the minimum qualifications prescribed by the University; what the Government did was to appoint a selection committee and prescribe rules for selection of students who have the minimum qualifications prescribed by the University. The Government runs most of the medical and engineering colleges. Excluding the State aided colleges for a moment, the position is as follows: The Colleges run by the Government, having regard to financial commitments and other relevant considerations, can only admit a specific number of students to the said Colleges. They cannot obviously admit all the applicants who have secured the marks prescribed by the University. It has necessarily to screen the applicants on some reasonable basis. The aforesaid orders of the Govemment only prescribed criteria for making admissions to Colleges from among 'students who secured the minimum qualifying marks prescribed by the University. Once it is conceded, and it is not disputed before us, that the State Government can run medical and engineering colleges, it cannot be denied the power to admit such qualified students as pass the reasonable tests laid down by it. This is a power which every private owner of a College will have, and the Government which runs its own Colleges cannot be denied that power. Even so it is argued that the same power cannot be exercised by the Government in respect of private Colleges though they are receiving aid from the State. But the management of aided institutions have not raised any objections. Indeed, from the year 1960 admissions were made to the Colleges by the selection committees constituted by the Government. The High Court, after considering the material placed before it, held that, with the consent of the management of the various professional and technical colleges, the Government took over the responsibility of regulating admission of students to the colleges in question. 381 Nothing has been placed before us to prove that the selec tion committees were constituted against the wishes of the management of the aided colleges. In the circumstances. we cannot disturb the finding of the High Court in this regard. We, therefore, hold that the Government has power to prescribe a machinery and also the criteria for admission of qualified students to medical and engineering colleges run by the Government and, with the consent of the management of the Government aided colleges, to the said colleges also. It is then contended that the system of selection by interviews and viva voce examination is illegal inasmuch as it enables the interviewers to act arbitrarily and to mani pulate the results and, therefore, it contravenes article 14 of the Constitution. To appreciate this contention it is necessary to notice how the interview is held and the criteria laid down for the selection committee to adopt. The Government by its order dated May 17, 1963 constituted a committee consisting of the following members for selection to Government Medical Colleges: (1) The Dean, Medical College, Mysore Chairman. (2) The Dean, Medical College, Bangalore Member. (3) The Dean, Medical College, Hubli Member. So too, highly qualified educationists were appointed to the selection committee for the Engineering Colleges. By notification dated July 6, 1963, in respect of the Engineer ing Colleges and a similar notification issued in respect of the Medical Colleges, the Government prescribed that in addition to the examination marks in optional subjects there should be an interview of students for which the maximum mark prescribed shall be 25 per cent of the maximum marks of the optional subjects. The selection committee has to allot marks, having regard to general knowledge, aptitude and personality, previous academic career, including special distinctions etc. , N.C.C., A.C.C. etc., extra curricular activities including sports, social service, debating, dramatics etc. It is, therefore, clear that the Government by its order not only laid down a clear policy and prescribed definite criteria in the matter of giving marks at the interview but 382 also appointed, competent men to make the selection on that basis. The order of the Government does not in any way contravene article 14 of the Constitution. But learned counsel for the appellants raised a larger question that selection by interviews is inherently repugnant to the doctrine of equality embodied in article 14 of the Constitution, for, whatever may be the objective test laid down, in the final analysis the awarding of marks is left to the subjective satisfaction of the selection committee and, therefore, it gives ample room for discrimination and manipulation. We cannot accept such a wide contention and condemn one of the well accepted modes of selection in educational institutions. James Hart in his "An Introduction to Administrative Law" observes, at p. 180 thus: "A test or examination, to be competitive, must employ an objective standard of measure. Where the standard or measure is wholly sub jective to the examiners, it differs in effect in no respect from an uncontrolled opinion of the examiners and cannot be termed competitive." In the field of education there are divergent views as regard the mode of testing the capacity and calibre of students in the matter of admissions to colleges. Orthodox educationists stand by the marks obtained by a student in the annual examination. The modern trend of opinion insists upon other additional tests, such as interview, performance in extra curricular activities, personality test, psychiatric tests etc. Obviously we are not in a position to judge which method is preferable or which test is the correct one. If there can be manipulation or dishonesty in allotting marks at interviews, there can equally be manipulation in the matter of awarding marks in the written examinations. In the ultimate analysis, whatever method is adopted its success depends on the moral standards of the members constituting the selection committee and their sense of objectivity and devotion to duty. This criticism is more a reflection on the examiners than on the system itself. The scheme of selection, however perfect it may be on paper, may be abused in practice. That it is capable of abuse is 383 not a ground for quashing it. So long as the order lays down relevant objective criteria and entrusts the business of selection to qualified persons, this Court cannot obviously have any say in the matter. In this case the criteria laid down by the Government are certainly relevant in the matter of awarding marks at the interview. Learned counsel contends that the ability of a student on the basis of the said criteria can be better judged by other methods like certificate from the N.C.C. Commander or a medical board or a psychatrist and should not be left to a body like the selection committee which cannot possibly arrive at the correct conclusion in a short time that would be available to it. This criticism does not affect the validity of the criteria, but only suggests a different method of applying the criteria .than that adopted by the Committee. It is not for us to say which method should be adopted: that must be left to the authority concerned. If in any particular case the selection committee abuses its power in violation of article 14 of the Constitution, that may be a case for setting aside the result of a particular interview, as the High Court did in ,this case. We cannot, therefore, hold without better and more scientific material placed before us that selection by interview in addition to the marks obtained in the written examination is itself bad as offending article 14 of the Constitution. Lastly it is contended that though the High Court did not quash the order of the Government embodied in exhibit C, it held that it was not a perfect classification and also indicated its mind that the Government should have adopted the caste test as well as the residence test in making the classification. If the observations of the learned Judge, the argument proceeds, are not corrected, the State may be bound by such observations in the matter when it finally prescribes the criteria for ascertaining the backward classes under article 15 (4) of the Constitution. In exhibit C the Government laid down that classification of socially and educationally backward classes should be made on the following basis: (1) economic condition; and (2) occupation. According to that order a family whose income is Rs. 1,200 per annum or less and persons or classes following occupations of agriculture petty business, inferior services, crafts or other 384 occupations involving manual labour. are in general, socially, economically and educationally backward. The Government lists the following occupations as contributing to social backwardness: (1) actual cultivator; (2) artisan; (3) petty businessmen; (4) inferior services (i.e., Class IV in Government services and corresponding class or service in private employment) including casual labour; and (5) any other occupation involving manual labour. It is, therefore, manifest that the Government, as a temporary measure pending an elaborate study, has taken into consideration only the economic condition and occupation of the family concerned as the criteria for backward classes within the meaning of article 15 (4) of the Constitution. The order does not take into consideration the caste of an applicant as one of the criteria for backwardness. Learned counsel does not attack the validity of the said order. But in the High Court conflicting arguments were advanced in support of this order as well as against it. The High Court heavily relied upon the decision of this Court in M. R. Balaji vs The State of Mysore(1) and came to the conclusion that, the scheme adopted by the State was a very imperfect scheme and that in addition to the occupation and poverty tests, the State should have adopted the "caste" test as well as the 'residence" test in making the classification. It also observed that the decision in Balaji 's case says that "the `caste ' basis is undoubtedly a relevant, nay an important basis in determining the classes of backward Hindus but it should not be made the sole basis". It concluded that part of the discussion with the following observation: "But I earnestly hope that soon the State will make a more appropriate classification lest its bonafides should be questioned. " Learned counsel contends that these observations are not supported by the decision in Balajis case, and that they are in conflict with the observations made therein. We shall, therefore, consider the exact scope of the observations in the said decision of this Court. There, 68 per cent of seats in Colleges were reserved for the alleged backward communities. It was argued before this Court on behalf of the peti (1) [1963] Supp. 1 section C. R. 439. 385 tioners therein that the impunged order, which was passed under article 15(4) of the Constitution, was not valid because the basis adopted by the order in specifying and enumerating the socially and educationally backward classes of citizens in the State was unintelligible and irrational, and the classification made on the said basis was inconsistent with and outside the provisions of article 15 (4) of the Constitution. In considering the said question, Gajendragadkar J., speaking for the Court, made the following observations, at p. 658: "The backwardness under article 15 (4) must be social and educational. It is not either social or educational, but it is both social and educational; and that takes us to the question as to how social and educational backwardness has to be determined. " Adverting to the expression "classes" of citizens in article 15(4) of the Constitution, the learned Judge proceeded to state: The group of citizens to whom article 15(4) applies are described as "classes of citizens not as castes of citizens. A class according to the dictionary meaning, shows division of society according to, status, rank of caste. . to whether any class of citizens is socially backward or not, it may not be irrelevant to consider the caste of the said group of citizens. In this connection it is, however, necessary to bear in mind that the special provision is contemplated for classes of citizens and not for individual citizens as such, and so, though the caste of the group of citizens may be relevant, its importance should not be exaggerated. If the classification of backward classes of citizens was based solely on the caste of the citizen, it may not always be logical and may perhaps contain the vice of perpetuating the castes themselves. 134 159 S.C. 25 386 Besides, if the caste of the group of citizens was made the sole basis for determining the social backwardness of the said group that test would inevitably break down in relation to many sections of Indian Society which do not recognise castes in the conventional, sense known to Hindu society. . . That is why we think that though castes in relation to Hindus may be a relevant factor to consider in determining the social backwardness of groups Or classes of citizens, it cannot be made the sole or the dominant test in that behalf." Two principles stand out prominently from the said obser vations, namely, (i) the caste of a group of citizens may be a relevant circumstance in ascertaining their social back wardness; and (ii) though it is a relevant factor to determine the social backwardness of a class of citizens, it cannot be the sole or dominant test in that behalf. The observations extracted in the judgment of the High Court appear to be in conflict with the observations of this Court. While this Court said that caste is only a relevant circumstance and that it cannot be the dominant test in ascertaining the backwardness of a class of citizens, the High Court said that it is an important basis in determining the class of backward Hindus and that the Government should have adopted caste as one of the tests. As the said observations made by the High Court may lead to some confusion in the mind of the authority concerned who may be entrusted with the duty of prescribing the rules for ascertaining the backwardness of classes of citizens within the meaning of article 15(4) of the Constitution, we would hasten to make it clear that caste is only a relevant circumstance in ascertaining the backwardness of a class and there is nothing in the judgment of this Court which precludes the authority concerned from determining the social backwardness of a group of citizens if it can do so without reference to caste. While this Court has not excluded caste from ascertaining the backwardness of a class of citizens, it has not made it one of the compelling circumstances affording a basis for the ascertainment of backwardness of a class. To put it differently, the authority concerned may take caste into consideration in ascertaining 387 the backwardness of 'a group of persons; but, if it does not, its order will not be bad on that account, if it can ascertain the backwardness of a group of persons on the basis of other relevant criteria. The Constitution of India promises Justice, social, economic and political; and equality of status and of opportunity,. among others. Under article 46, one of the Articles in Part IV headed "Directive Principles of State Policy", the State shall promote with special care the educational and economic interests of the weaker sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes, and shall protect them from social injustice and all forms of exploitation. Under article 341, "The President may with respect to any State or Union territory, and where it is a State after consultation with the Governor thereof, by public notification specify the castes, races or tribes or parts of or groups within castes, races or tribes which shall for the purposes of this Constitution be deemed to be Scheduled Castes in relation to that State or Union territory, as the case may be." Under article 342, in the same manner, the President may specify the tribes or tribal communities as Scheduled Tribes. Article 15(4) says: "Nothing in this article or in clause (2) of article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes." These provisions form a group of Articles which have relevance in the making of a special provision for the advancement of any socially and educationally backward classes of citizens in the matter of admissions to colleges. These provisions recognize the factual existence of backward classes in our country brought about by historical reasons and make a sincere attempt to promote the welfare of the weaker sections thereof. They shall be so construed 388 as to effectuate the said policy but not to give weightage to progressive sections of our society under the false colour of caste to which they happen to belong. The important factor to be noticed in article 15 (4) is that it does not speak of castes, but only speaks of classes. If the makers of the Constitution intended to take castes also as units of social and educational backwardness, they would have said so as they have said in the case of the Scheduled Castes and the Scheduled Tribes. Though it may be suggested that the wider expression 'classes" is used in cl. (4) of article 15 as there are communities without castes, if the intention was to equate classes with castes, nothing prevented the makers of the Constitution from using the expression "backward classes or castes". The juxtaposition of the expression "backward classes" and "Scheduled Castes" in article 15 (4) also leads to a reasonable inference that the expression "classes" is not synonymous with castes. It may be that for ascertaining whether a particular citizen or a group of citizens belong to a backward class or not, his or their caste may have some relevance, but it cannot be either the sole or the dominant criterion for ascertaining the class to which he or they belong. This interpretation will carry out the intention of the Constitution expressed in the aforesaid Articles. It helps the really backward classes instead of promoting the interests of individuals or groups who, though they belong to a particular caste a majority whereof is socially and educationally backward, really belong to a class which is socially and educationally advanced. To illustrate, take a caste in a State which is numerically the largest therein. It may be that though a majority of the people in that caste are socially and educationally backward, an effective minority may be socially and educationally far more advanced than another small sub caste the total number of which is far less than the said minority. If we interpret the expression "classes" as "castes", the object of the Constitution will be frustrated and the people who do not deserve any adventitious aid may get it to the exclusion of those who really deserve. This anomaly will not arise if, without equating caste with class, caste is taken as only one of the considerations to ascertain whether a person belongs to a backward 389 class or not. I On the other hand, if the entire sub caste, by and large, is backward, it may be included in the Scheduled Castes by following the appropriate procedure laid down by the Constitution. We do not intend to lay down any inflexible rule for the Government to follow. The laying down of criteria for ascertainment of social and educational backwardness of a class is a complex problem depending upon many circumstances which may vary from State to State and even from place to place in a State. But what we intend to emphasize is that under no circumstances a "class" can be equated to a "caste", though the caste of an individual or a group of individual may be considered along with other relevant factors in putting him in a particular class. We would also like to make it clear that if in a given situation caste is excluded in ascertaining a class within the meaning of article 15(4) of the Constitution, it does not vitiate the classification if it satisfied other tests. In the result, the appeals fail and are dismissed. There will be no order as to costs. MUDHOLKAR I. The appellants in these appeals had challenged before the High Court of Mysore the validity of the mode of selection of candidates for admission to the Medical Colleges in that State by preferring petitions before the High Court under article 226 of the Constitution. They pointed out in their petitions that the selection committee, instead of selecting persons for admission on the basis of merit, chose to interview the candidates and made the ultimate selection by adding marks upto 75 to the marks actually secured by the candidate at the Pre University Course examination (herein referred to as P.U.C. Examination) on the basis of the interview. Their contentions are that in the absence of any Government order there was no basis upon which marks at the interview could be added to the marks secured in the P.U.C. examination, that the so called order on which reliance was placed on behalf of the State is not a Government order at all as the document produced does not comply with the requirements of article 166 of the Constitution, that no criteria were laid down for allotting marks TO the candidates at the interview, that this was a violation of article 14 of the Constitution, that the Govern 390 ment was constitutionally incompetent to prescribe qualifications for admission to Colleges under the University different from those prescribed by the University and that under the Mysore University Act the University alone had the power to prescribe rules for admission to Colleges affiliated to the University. The High Court held against the appellants on all these points. But upon the view that the Selection Committee had "misused" the powers conferred upon it and had wrongly interpreted the Government Order, quashed the results of the interview and directed that after interviewing the petitioners before it afresh their cases should be considered for admission by the Selection Committee in accordance with the Government Order. In the course of its order the High Court has found fault with the Government for not taking the castes of the candidates into consideration while exercising its powers under article 15(4) and making provision for the advancement of backward classes and made certain remarks to which objection has been taken on behalf of the appellants. My learned brother Subba Rao J. whose judgment I have had the opportunity of seing has upheld the judgment of the High Court but has not agreed with the observations made by it suggesting that the caste of candidates should also have been taken into consideration while determining the social and educational backwardness of a class. I regret my in ability to agree with many of the conclusions reached by my learned brother and I am of opinion that the appeals ought to be allowed. Even assuming for the time being that the Government of Mysore had the power both under the Constitution and under a law enacted by the Legislature to prescribe qualifications for admission to any Colleges in the State, including colleges imparting technical or professional education, the first question is whether there was in fact a Government Order justifying the course adopted by the Selection Com mittee. It may be mentioned that the document which was filed in the High Court as being the Government Order was merely a communication addressed on behalf of the Government by one of its Secretaries to the selection Committee and signed by an Under Secretary. But this document only 391 refers to the interview prescribed for making selections of candidates for admission: to Engineering Colleges. At the hearing in this Court the Attorney General who appeared for the State of Mysore stated that there was a Government. Order also as regards admission to Medical Colleges that it was actually brought to the notice of the High Court and that he may be permitted to produce that order. Leave was granted by us to him to do so. On December 20, 1963, that is, after judgment had been reserved Mr. Achar, Assistant Government Advocate, placed on record, what according to the State, is the Government Order. This document, however, was not a part of the record of the writ petitions and the only manner in which the so called Government Order relating to admission to Medical Colleges was brought to the notice of the High Court was by specifying in Dr. Dharmaraj 's affidavit, the number of the letter addressed by a Secretary to the Government to the Selection Committee dealing with admissions to the Medical Colleges. It is desirable to reproduce in extenso the document which has been filed now in this Court. It runs thus: "GOVERNMENT OF MYSORE CONFIDENTIAL: No. PLM Mysore Government Secretariat, Vidhana Soudha, Bangalore, dated 12th July, From The Secretary to Government of Mysore, PH. Labour & Munl. Department, Bangalore. TO The Chairman, Selection Committee & Dean, Medical College, Mysore. Sir, SUBJECT. Award of marks for the interview of thE 392 candidates seeking admission to Medical Col leges in the State. I am directed to state that Government have decided that 25 per cent of the maximum marks for the examination in the optional subjects taken into account for making the selection of candidates for admission to Medical Colleges, shall be fixed as interview marks. I am further to state that the Selection Committee is authorised to allot marks for the interview of the candidates as fixed above, having regard to the following factors: 1. General Knowledge. Aptitude and personality. section Previous academic career including special distinctions, etc. 4. N.C.C., A.C.C., etc. Extra curricular activities including sports, social service, debating, dramatics, etc. I am also to state that Government have decided that students with exceptional merit in games and sports State and inter State standard may be selected upto a maximum of two per cent of the total number of seats. Yours faithfully, Sd./ L. G. DESAI, Under Secretary to Government, PH. Labour & Munl. Attested Sd./ H. L. LINGARAJ URS, Dy. Secretary to Government, PH. Lb. & M1. 393 This is nothing more than a communication emanating from a secretary to the Government of Mysore to the Chairman, and addressed to the Selection Committee and Dean, Medical College, Mysore. It is thus not an order of the kind contemplated by article 166 of the Constitution. That Article lays down that all executive actions of the Government of a State shall be expressed to be taken in the name of the Governor and that the orders made and executed in the name of the Governor shall be authenticated in such manner as may be specified in the rules made by the Governor. It further provides that where an order is authenticated in the manner prescribed in the rules made by the Governor, its validity shall not be called in question on the ground that it is not an order made by the Governor. The essence of article 166, however, is that executive action of the Government of a State shall be expressed to be taken in the name of the Governor. The document placed before us does not show that the action, to wit, prescribing an interview, allotting marks for it and laying down the criteria to be observed by the Selection Committee in allotting marks even purports to emanate from the Governor. All that the Secretary on whose behalf some Under Secretary has signed, says is that he is "directed to state" that the Government has taken a certain decision. This document thus is not that decision. What that decision is, how it is worded, when it was taken and whether it is expressed in the name of the Governor, we do not know. The cases in which it has been held by this Court that the provisions of article 166(2) are directory and not mandatory are of no help because here what we are concerned with is about the actual existence of an order made by the Governor. No doubt, where there is merely non compliance with the provisions of article 166(1) or of the rules framed by the Governor in the matter of authentication of an order, evidence aliunde could be led to establish that in fact an order was made by the Governor. This clearly, does not mean that the existence of a Government order need not be established. On the contrary these decisions accept the position that the making of a Government Order is sine qua non for justifying any action which is purported to be taken by an officer of the Government on its behalf. Here the Secretary has said a certain procedure. was to be followed by the Selection Committee. He has himself 394 no power to order that to be done de hors an order of the Government. It is for this reason that he has made a refer ence to such an order. But that order is not before us. It was said by the learned Attorney General that the existence of the order was not denied by the appellants. But that is not correct. Right from the beginning they have been saying that there was no "Government Order" in so far as admission to the Medical Colleges was concerned. What was relied on behalf of the State was the letter addressed to the Selection Committee concerned with the applications of persons for admission to Engineering Colleges. But since both the appellants were applicants for admission to a Medi cal College it was not necessary for them to say further that what was relied on was not a Government Order even in regard to Engineering Colleges. In reply to the appellants ' averment reliance was placed upon an affidavit by Dr. Dharamraj in which reference is made to the very com munication which I have reproduced earlier as being the "Govemor 's Order". If that is what is claimed to be the Govemor 's Order, then the State must fail on the short ground that it is not expressed to be made in the name of the Governor and is thus prime facie not the Governors Order. In Bachittar Singh vs The State of Punjab(1) one of the questions which arose for consideration was whether what a Minister wrote on the file of a case and initialled amounted to an Order of the Governor within the meaning of article 166. This Court negatived the contention on the ground that since what he had said there was not expressed in the name of the Governor, it cannot be regarded as the Govemor 's Order. ' It is true that in that case there was no communication of the Minister 's so called order to the party in whose favour it was made but mention was made of this fact in the judgment only to emphasise that what was said in the note of the Minister had not attained any finality. The view taken in Bachittar Singh 's(1) case does not run counter to any decisions of this court; but on the other hand is supported by that taken in the State of Punjab vs Sodhi Sukhdev Singh(2). The appellant 's s first contention must succeed and it must be held that the addition of (1)[1962] Supp. 3 S.C.R. 713. (2)[1962] 2 section C. R. 371. 395 marks for interview by the Selection Committee was without any validity or legal authority. Learned Attorney General seemed to suggest that the decision of this Court in Bachittar Singh 's case is contrary to at least three other decisions of this Court. The first of them is Dattatraya Moreshwar Pangarkar vs The State of Bombay and Ors.(1). In that case the petitioner who had been detained under the had challenged the legality of the detention on two grounds. One of those grounds was that the order of confirmation of detention under section 11(1) was not expressed to be made in the name of the Governor as required by article 166(1) of the Constitution. Dealing with the argument Das J. (as he then was) with whom Patanjali Sastri C.J. agreed has observed as follows at p. 623: "Section 11(1) plainly requires an executive decision as to whether the detention order should or should not be confirmed. The continuation of the detention as a physical fact automatically follows as a consequence of the decision to confirm the detention order and for reasons stated above, does not require any further executive decision to continue the detention. It follows, therefore, that the contemplates and require the taking of an executive decision either for confirming the detention order under section 11(1) or for revoking or modifying the detention order under section 13. But the Act is silent as to the in which the executive decision, whether it is described as an order or an executive action is to be taken. No particular form is prescribed by the Act at all and the requirements of the Act will be fully satisfied if it can be shown that the executive decision has in fact been taken. it is at this stage that learned counsel for the petitioner passes on to Article 166 of the Constitution and contends that all executive action of the Government of a State must be expressed (1)[1952] S.C.R. 612. 396 and authenticated in the manner, therein pro vided. The learned Attorney General points out that there is a distinction between the taking of an executive decision and giving formal expression to the decision so taken. Usually executive decision is taken on the office files by way of notings or endorsements made by the appropriate Minister or officer. If every executive decision has to be given a formal expression the whole governmental machinery, he contends, will be brought to a standstill. I agree that every executive decision need not be formally expressed and this is particularly so when one superior officer directs his subordinate to act or forbear from acting in a particular way, but when the executive decision affects an outsider or is required to be officially notified or to be communicated it should normally be expressed in the form mentioned in Article 166(1) i.e, in the name of the Governor." Thus according to the learned Judge where an order affects an outsider it must normally be made in the name of the Governor. Here, what is said to be an order is intended to affect outsiders in that the selection committee was required to hold interviews and allot marks to the candidates under different heads. Further it affects the candidates seeking admission to the Medical College. Moreover this 'order ' has not remained merely on the files of the Government for enabling its officers to take certain action but was specifically intended to govern the actions of the Selection Committee. That is an additional reason why it was necessary to express it in the name of the Governor. After saying what I have already quoted, the learned Judge proceeded to observe in his judgment: "Learned Attorney General then falls back upon the plea that an omission to make and authenticate an executive decision in the form mentioned in Article 166 does not make the decision itself illegal, for the provisions of that Article, like their counterpart in the Government of India 397 Act, are merely directory and not mandatory as held in J. K. Gas Plant Manufacturing Co. (Rampur) Ltd., and Ors. vs The KingEmperor(1). In my opinion, this contention of the learned Attorney General must prevail. It is well settled that generally speaking the provisions of a statute creating public duties are directory and those conferring private rights are imperative. When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the legislature, it has been the practice of the Courts to hold such provisions to be directory only, the neglect of them not affecting the, validity of the acts done." Thus, even upon the view taken by him that the provisions are merely directory the learned Judge has clearly taken the view that it has to be shown that the decision upon which reliance is placed on behalf of the Government was in fact taken. In the case before him he found as a fact that such a decision had been taken. There is no material in this case on the basis of which it could be said that in the present case any decision had at all been taken by the Government in so far as interviews for admission to Medical Colleges were concerned. According to Mukherjea J. (as he then was) with whom Chandrasekhara Aiyar J., agreed, while cl. (1) relates to the mode of expression of an executive order, cl. (2) lays down the manner in which such order is to be authenticated and that when both the requirements are complied with the order would be immune from challenge in a court of law on the ground that it had not been made or executed by the Governor. Also, according to him, the provisions of (1) ,,154 9. 398 cl. (1) are directory and not imperative in their character. In the course of the judgment the learned Judge observed: ". . . I agree with the learned Attorney General that non compliance with the provisions of either of the clauses would lead to this result that the order in question would lose the protection which it would otherwise enjoy, had the proper mode for expression and authentication been adopted. could be challenged in any court of law even on the ground that it was not made by the Governor of the State and in case of such challenge the onus would be upon the State authorities to show affirmatively that the order was in fact made by the Governor in accordance with the rules framed under Article 166 of the Constitution" (p. 632). Mahajan J., (as he then was) expressed no opinion upon this point, which was the second point raised in the case, as according to him, the detention was invalid because the Government had at the time of confirming the order omitted to specify the period during which the detention should con tinue. It will thus be clear that all the teamed Judges who have dealt with, the provisions of article 166 of the Constitution have definitely held that where the existence of a Government Order is itself challenged by a person who is affected by it the burden is upon the Government to establish that an order was in fact made by the Governor in the manner provided for in the rules of business framed by the Governor under cl. (3) of article 166. Even my learned brother does not say that in a case like the present the existence of the Governor 's order is not required to be established by the State. But according to him here the petitioners have not in fact denied the existence of the Governor 's Order. In para 20 of the writ petition of Chitralekha she has definitely averred: "Even the Government Order enabling them to award 75 marks is not made available"; and again in para 22 she stated: "As the order, empowering them to award 75 marks as interview marks has so far remained secret in that is has not been made available, this 399 Hon 'ble Court may be pleased to send for the same, as the order falls to be quashed." In reply to these averments a counter affidavit was filed by Dr. J. J. Dharmaraj, Dean, Medical College and Chairman of the Selection Committee for admission to Medical Colleges. In para 4 thereof he has stated as follows: "The Government by its letter No. PLM dated the 12th July, 1963 directed that the Selection Committee shall interview the candi dates and allot marks the maximum of which shall be 25 per cent of the maximum marks for optional subjects and laid down the criteria for allotting marks in the interview. " It is abundantly clear from this that reliance was placed not upon any order of the Governor but upon a direction con tained in a certain communication addressed to the Selection Committee. Mr. Varma, Deputy Secretary to the Government also filed a counter affidavit in para 36 of which he has stated as follows: "The Government gave a direction by its letter No. SD 25 THL 63, dated 6th July, 1963 to the Director of Technical Education (copy of which is marked as, Annexure IV) that in addition to the examination marks in the Optional sub jects, there should be an interview of candidates in which the maximum marks allotted would be 25 per cent of the maximum for the optional subjects. A similar letter was sent by the Government to the Selection Committee for admission to Medical Colleges. " Thus, here again, there is no positive averment that the Governor had made an order providing for interview of candidates who, had applied for admission to Medical Col leges. The only other place where the appellants ' allega tions are dealt with is para 44 of Mr. Varma 's a affidavit: "The Allegations made in some of the petitions that only the first Government Order embodied the decision of the Government and the second Government Order did not embody the decision 400 of the Government but only the decision of the Minister for Education, is untenable. When an order is issued in the name of the Governor, I submit it is not permissible to enquire whether any advice, and if so, what advice, was tendered by any Minister to the Governor. " Here, what the Deputy Secretary has done is merely to state the legal position without affirming definitely that an order had in fact been made in the name of the Governor. It may be mentioned that the two orders dealing with the classification of backward classes and reserving seats in technical institutions were in fact issued in the name of the Governor on July 26, 1963 and copies of those orders have been placed on record. They are in the appropriate form. If a similar order had actually been made by the Governor there is no reason why it should not have been filed. Even in this Court the Assistant Government Advocate has filed on behalf of the State only a copy of the letter sent by a Secretary to the Government and has not only not produced a copy of the Governor 's Order but has not even alleged that such order exists. Nor again, during the arguments did the learned Attorney General make a categorical statement that the Governor had made an order in regard to the interviews. That may be because he has not been instructed to say that such order in fact exists. We have given no opportunity to the appellants to file any further affidavit after the production before us of the Secretary 's letter. In this state of the material on record can it then be said that the burden which was upon the State to establish the existence of an order of the Governor has been discharged? I do not think that we can ignore the omission of the State to aver categorically that there is in existence an order of the Governor or to make any attempt to produce it or to seek an opportunity to establish its existence by other evidence. If there is an order of the Governor dealing with the matter nothing would have been easier than saying so and either to produce the original or its copy or to establish its existence by other evidence. The whole tenor of the affidavits filed on behalf of the State as well as of the argument advanced before us leaves no doubt in my mind that an that there is on the subject is the aforesaid letter of the 401 Secretary to the Selection Committee and nothing more. In no case has this Court held that such a document can be treated as the Governor 's order or even evidence of the ex istence of the Govrnor 's order. The two other cases of this Court on which reliance was placed are: The State of Bombay vs Purshottam Jog Naik(1) and Ghaio Mail and Sons vs The State of Delhi (2) which purport to follow Pangarkar 's case(3) also underline the necessity of proof of the existence of the Governor 's Order when what is relied upon is defective in form. It is these reasons which impel, me to differ from my learned brother on the second point dealt with by him in his judgment. What I have said above is sufficient for the purpose of disposing of both the appeals. But in view of the import ance of one of the other points on which my learned brother has expressed his opinion, I would say a few words. That point concerns the power of the Government of a State to prescribe by an executive order the standards for selection of candidates for admission to technical institutions affiliated to a university. In Gujrat University vs ShriKrishna(4) the question which was raised in this Court was whether the Gujrat University could lay down and impose Gujrati and/or Hindi in Devnagari script as exclusive media of instruction and examination in institutions other than those maintained by the University and institutions affiliated to the University and Constituent colleges. One of the important arguments raised in that case was that under Entry 166 of List 1 of the Seventh Schedule the power of co ordination and determination of standards in institutions for higher education or research in scientific and technical institutions. was conferred upon Parliament and that these matters must be regarded as having been excluded from entry 11 of List 11 of that schedule, which runs thus: "Education, including universities, subject to the Pro visions of Entries 63, 64, 65 and 66 of List 1 and Entry 25 of List III." (1) ; (2) [1959] S.C.R.1424. (3) ; (4) [1963] Supp. 1 S.C.R.112. 134 159 S.C. 26 402 In the course of his judgment, Shah Y., speaking for the majority (my learned brother Subba Rao J., dissenting) observed: "It is manifest that the extensive power vested in the Provincial Legislatures to legislate with respect to higher scientific and technical education and vocational and technical training of labour, under the Government of India Act is under the Constitution controlled by the five items in List 1 and List III mentioned in item II of List H. Items 63 to 66 of List I are carved out of the subject of education and in respect of these items the power to legislate is vested exclusively in the Parliament Power of the State to legislate in respect of education including Universities must to the extent to which it is entrusted to the Union Parliament, Whether such power is exercised or not, be deemed to be restricted. If a subject of legislation is covered by items 63 to 66 even if it otherwise falls within the larger field of 'education including universities power to legislate on that subject must lie with the Parliament. The plea raised by counsel for the University and for the State of Gujarat that legislation prescribing the medium or media in which instruction should be imparted in institutions of higher education and in other institutions always falls within item II of List II has no force Item II of List II and item 66 of List I must be harmoniously construed. The two entries undoubtedly overlap: but to the extent of overlapping, the power conferred by item 66 of List I must prevail over the power of the State under item 11 of List 11. It is manifest that the excluded heads deal primarily with education in institutions of national or special importance and institutions of higher education including research, sciences, technology and vocational training of labour. . . Power to legislate in respect of 403 medium of instruction is, however not a distinct legislative head; it resides with the State legislatures in which the power to legislate on education is vested, unless it is taken away by necessary intendment to the contrary. Under items 63 to 65 the power to legislate in respect of medium of instruction, having regard to the width of those items, must be deemed to vest in the Union. Power to legislate in respect of medium of instruction, in so far it has a direct bearing and impact upon the legislative head of co ordination and determination of standards in institutions of higher education or research and scientific and technical institutions, must also be deemed by item 63 of List I to be vested in the Union." (p. 715). (italics mine) What I have quoted above and particularly the words occur ring in the earlier part of the quotation and those in italics would make it clear that this Court has emphatically laid down that where the question of co ordination and determination of standards in certain institutions like a medical college is concerned the power is vested in the Parliament and even though Parliament may not have exercised that power the State Legislature cannot step in and provide for the determination and co ordination of standards. It seems to me that by requiring the Selection Committee to add to the marks secured by the candidates at the P.U.C. Examination the marks awarded by the Selection Committee for the interviews and prepare a fresh order of merit on the basis of the total marks so arrived at the State would be quite clearly interfering with the standards for admission laid down by the University. It seems to me that the standard of any educational institution would certainly be affected by admitting to it candidates of lower academic merit in preference to those with higher academic merit by using the devious method of adding to the qualifications of less meritorious candidates marks at the discretion of the selectors on the basis of interviews. This is not a universal practice in institutions of higher or technical education in the country and by adopting it the State of Mysore has provided 404 a standard of its own for admission of students to such ins titutions. It is evidently with a view to prevent the happening of such things that our Constitution has excluded matters pertaining to standards in institutions of higher education and some other institutions from the purview of the State legislatures. The second portion in italics by me in the above quotation makes it clear that according to the majority of this Court the power to legislate in respect of matters such as the medium of instruction which have a direct bearing and impact upon the legislative head of coordination and determination of standards in the institutions referred to in item 66 of List I is vested in the Union. Therefore, in each case it will be for the Court to consider whether what is being sought to be done by a State legislature will have a direct impact upon entry 66 of List 1. In my judgment where any law of the State legislature seeks to vary academic standards for admission to institutions of the kind referred to in Entry 66 its action has a direct bearing upon that entry and the power in this regard is excluded from the purview of entry 11 of List 11. I may quote a part of paragraph 24 of the majority judgment which my learned brother has quoted. It reads thus: "The State has the power to prescribe the syllabi and courses of study in the institutions named in entry 66 (but not falling within entries 63 to 65) and as an incident thereof it has the power to indicate the medium in which instruction should be imparted. But the Union Parliament has an over riding legislative power to ensure that the syllabi and courses of study prescribed and the medium selected do not impair standards of education or render the co ordi nation of such standards either on an All India or other basis impossible or even difficult. " Can it be said that this and other passages in this judgment show that according to the majority the law made by the State Legislature by virtue of entry 1 1 of List II would be bad only if it makes it impossible or difficult for Parliament to exercise its legislative power under entry 66 of List I? Does the judgment mean that it has to be ascertained in each case whether the impact of the State law providing for such standards is so great on entry 66 of List I as to abridge appreciably the central field or, does it not follow from the judgment that if a State Legislature has made a law prescribing a different, even higher, percentage of marks or prescribing marks for extra curricular activities, it would be directly encroaching on the field covered by entry 66 of List I ? The majority judgment after saying what has been quoted above proceeds thus: "Though the powers of the Union and the State are in the exclusive lists, a degree of overlapping is inevitable. It is not possible to lay down any general test which would afford a solution for every question which might arise on this head. On the one hand, it is certainly within the province of the, State Legislature to prescribe syllabi and courses of study and of course to indicate the medium or media of instruction. On the other hand, it is also within the power of the Union to legislate in respect of media of instruction so as to ensure co ordination and determination of standards, that is, to ensure maintenance or improvement of standards. The fact that the Union has not legislated, or refrained from legislating to the full extent of its power does not invest the State with the power to legislate in respect of a matter assigned by the Constitution to the Union. It does not, however, follow that even within the permitted relative fields there might not be legislative provisions in enactments made each in pursuance of separate exclusive and distinct powers which may conflict. Then would arise the question of repugnancy and paramountcy which may have to be resolved on the application of the 'doctrine of pith and substance of the impunged enactment. . the validity of State legislation would depend upon whether it prejudicially affects co ordination and determination of standards, but not upon the existence 406 of some definite Union legislation directed to achieve that purpose." (p. 716). These observations do not seem to justify the conclusion that it is only where the State law makes it impossible or difficult for Parliament to exercise its legislative power under entry 66 that the State law would be bad. According to the decision of the majority the validity of a State legislation would depend upon whether it prejudicially affects the coordination and determination of standards and that if it does so, that is enough to invalidate that legislation. Interference with academic standards would of necessity affect coordination and determination of standards amongst institutions of similar type all over the country and, therefore, upon the view taken in the Gujarat University case(1) State legislation embodying previsions of the kind referred to in the letter of the Secretary to the Government to the Selection Committee would be bad. As I understand the decision what it means when it says that regard must be had to the pith and substance of a State law to see whether it is in conflict with the powers of Parlia ment is that conflict must be the direct result of the State law and not one which is merely incidental. It does not mean that for ascertaining whether there is a conflict one has to gauge the force of the impact of a State law on Parliament 's power. Thus where a law is in pith and substance ,one which will directly affect Parliament 's power to coordinate and determine standards in the institutions comprised in entry 66 of List I it will be directly in conflict with it and the extent or force of such conflict will make no difference. Now just as prescribing a medium of instruction for being adhered to in those institutions would, if it has the effect of affecting the standards, which must mean, the academic standard of their institutions, produce a direct impact on Parliament 's power under the aforesaid entry, so would prescribing interviews for admissions to these institutions, since admissions would thereby be made to depend on standards other than purely academic. I fail to see how else can the impact of the State law on Parliament 's power can be characterised. The fact that raising of the interview marks from 25 in the. past to 75 now (which we are told (1) [1963] SUPP. S.C.R. 112. 407 represents 25% of the total marks for the P.U.C. Examina tion) has raised a furore, only highlights the directness of the impact which was there even when the interview marks were 25%. To hold otherwise would mean that where interview marks are low in comparison with the total marks for the P.U.C. Examination the impact would be merely oblique or indirect but by some process it will become direct, if the marks are raised to a higher percentage, say 50 per cent or even 100 per cent of the P.U.C. Examination marks. Surely the directness of the impact would not depend upon its intensity. Again, the addition of interview marks to the marks secured at the P.U.C. examination by a candidate for admission to an institution of the kind comprised in entry 66 of List I cannot but be said to affect the standard in such institution. An illustration would make it clear. Suppose the maximum P.U.C. marks are 300 and interview marks are 600. Could there be a doubt that the academic standard of the institution would remain unaffected and that the impact on entry 66 is direct ? Now, instead of 600, if the, interview marks are only 30, would not the standard still be affected? May be that the effect on academic merit would be much less than when the maximum interview marks were 600 but still there would be some effect. In ,either case the effect is the direct consequence of the additional requirement of an interview and therefore the impact of the State law would be direct in both cases. It is not as if a consequence which is direct can be regarded as oblique or indirect just because it is less significant by reason of the fact that the proportion of interview marks to the P.U.C. marks is low. Therefore, whether the State law affects the standards of such institutions materially or only slightly has no relevance for the purpose of determining whether it operates in an excluded field or not. The only test is whether or not the effect it has on the standards is direct. That is how I understand the majority decision of this Court. Even upon the view that for a State law to be bad, its impact must be "so heavy or devastating as to wipe out the central field", I think that it is in fact of that kind in this 408 case. Already by reserving 48 per cent of the total number of seats for scheduled castes and tribes and backward classes the seats available for meritorious candidates have been reduced to 52 per cent. By providing in addition, for dilution of academic merit by bringing in considerations of the kind set out in the Secretary 's letter, meritorious candidates are likely to be placed in a further disadvantageous position. According to that letter the matters to be considered at the interview are: (1) General knowledge. (2) Aptitude and personality. (3) Previous academic career, including special distinctions, etc. (4) N.C.C., A.C.C. etc. (5) Extra curricular activities including sports, social service, debating, dramatics, etc. While the first and the third of these matters would be of some relevance in deciding who should be allowed a chance to be future doctors what relevance the other three matters have it is difficult to appreciate. Further "aptitude and personality" would be a matter entirely for the subjective satisfaction of the selectors and is in itself quite vague. Then again the total marks under these heads are as high as 75 and there is no allocation of marks under the different heads. Thus if the selectors choose to allocate say 30 or 40 marks for "personality" many meritorious candidates may go far down in the list prepared on the basis of the total of marks at the interview and the P.U.C. Examination. Since the number of marks for the interview is high and according marks for interviews and allocating marks under different heads is left entirely for the Selection Committee to decide, the impact of the alleged directive on the central field must necessarily be regarded as heavy. For, its effect would be to lower further the already alarmingly low standards in our educational institutions. Again, here what we have is not a State law but merely what is claimed to be an executive fiat. It is true that article 162 says that the executive power of the State is co exten sive with the power of the legislature to legislate and 409 this Court has held in Rai Sahib Ram Jawaya Kapur & Ors. vs The State of Punjab (1) that the power of the State is not confined to matters over which legislation his already been passed. But neither article 162 nor the decision of this Court goes so far as to hold that the State 's power can be exercised in derogation of a law made by a competent legislature. On the other hand the Court appears to have approved of the view taken by two learned Judges of the Allahabad High Court in Motilal vs The Government of the State of Uttar Pradesh (2) that an act would be within the executive power of the State if it is not an act which has been assigned by the Constitution to other authorities or bodies and is not contrary to the provisions of any law and does not encroach on the legal rights of any member of the public. Here we have the Mysore University Act, section 23 of which provides that the Academic Council shall have power to prescribe the conditions for admission of students to the University. Now since a competent legislature has conferred this power on a particular body the State cannot encroach upon that power by its executive act. Thus this is a case where there is not merely an absence of legislative sanction to the action of the State but there is an implied limitation on its executive power in regard to this matter. Moreover, while the Constitution permits the State without the necessity of any law empowering it to do so to make reservations of seats for the benefit of backward classes and scheduled castes and tribes there is no provision either in the Constitution or in any other law which empowers the State Government to issue directions to selection committees charged with the consideration of applications for admission to any colleges as to what should be the basis of making admissions. It was said that most of the medical Colleges are owned by the State and the State as the owner of those Colleges was entitled to give directions to its officers as to the mode of selection of persons for admission to those Colleges. But it seems to me that the matter is not quite as simple as that. Educational institutions which are affiliated to the University must conform to the pattern evolved by the University and the proprie (1) [1955]2 section C. R. 225 (2) A. I. R. 1951 All. 257 (F. B) 410 tors or the governing bodies of those institutions can claim no right to adopt a different pattern. The pattern set by the University would necessarily be affected if the standards of admission, teaching, etc., are varied by those who run those institutions. It is not material to consider whether either the object or effect of the addition of an interview for selecting candidates for admission to the institutions is to improve upon the standards fixed by the Academic Council For, it is to that body to which the legislature has entrusted the whole matter. It was said that no objection to the Government 's action was taken by the University. What is important is not whether no objection was taken by the University but whether it consented to the action of the Government. That it did not consent would appear from the consent memo filed. in the High Court on behalf of the University a copy of which has been filed in this Court after our judgment was reserved. Therein the counsel for the University has stated; "Under section 23(b) and section 43 of the Mysore University Act read with section 2(a) of the same Act, the Academic Council alone can prescribe qualifications for admission. 'Me University is not consulted about either Exhibit 'D ' or increasing the interview marks to 25 per cent as per letter dated 6.7.1963. Interview marks must also be treated as marks given to a subject. " There is thus no substance in the plea made on behalf of the, State. This is an additional reason why I think that the provision for interviews is not valid. My learned brother has dealt at length with the question as to the value of interviews in the matter of making admissions to educational institutions. I do not think it necessary to pronounce any opinion upon that question in this case and would reserve it for a future occasion. I would also likewise reserve my opinion on the other points upon which he has expressed him self excepting one, that is, as to the relevance of the consideration of caste in deter mining the classes which are socially and educationally backward. I would only say this that it would not be in accordance 411 either with cl. (1) of article 15 or cL (2) of article 29 to require the consideration of the castes of persons to be borne in mind for determining what are socially and educationally backward classes. It is true that cl. (4) of article 15 contains ,a non obstante clause with the result that power conferred by that clause can be exercised despite the provisions of cl. (1) of article 15 and cl. (2) of article 29. But that does not justify the inference that castes have any relevance in determining what are socially and educationally backward ,communities. As my learned brother has rightly pointed out the Constitution has used in cl. (4) the expression "classes" and not "castes". Upon the view which I have taken on the two points I have discussed the appeals must be allowed and a direction be issued to the Selection Committee to make the selection ,of candidates solely on the basis of the result of P.U.C. examination. I would allow them with costs here as well as in the High Court. ORDER BY COURT In view of the judgment of the majority, the appeals fail and are dismissed. There will be no order as to costs.
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The government of Mysore made a rule about who is considered "backward" and said that 30% of spots in colleges for certain careers like engineering would be saved for them. Also, 18% of spots would be saved for certain other groups called Scheduled Castes and Scheduled Tribes. The rule said that deciding which groups are "socially and educationally backward" should be based on how much money they have and what jobs they do. The government sent a letter saying that when students are tested to get into these colleges, 25% of their score would come from an interview. The people doing the interviews would be the heads of the colleges. They would give points based on how much the students know, their personality, and what they do outside of school. Based on these rules, students were picked to get into engineering and medical colleges. Some students who didn't get in then went to the High Court of Mysore. They asked the court to cancel the government's rules and to order the colleges to let them in based only on how well they did in school. The High Court said that the students' legal arguments were wrong. But, they did find that the people doing the interviews had not used their power fairly. So, the court ordered the students to be interviewed again and said that admissions should be based on the government's rules and letter, which the court said were valid. Before the Supreme Court, it was argued that the government's letter was not valid because it didn't follow the rules in Article 166 of the Constitution (a set of rules for how the government makes decisions). Another argument was that the government didn't have the power to pick students for colleges based on qualifications that were higher or different from what the university required. Another argument was that picking students through interviews was against the law because it allowed the interviewers to be unfair, which goes against Article 14 of the Constitution (which says everyone should be treated equally). Finally, it was argued that the High Court said that the way the government defined "backward" wasn't perfect because they didn't consider a person's caste (social group) along with their economic situation. It was argued that this could mislead the government. The Supreme Court decided: (i) The rules in Article 166 of the Constitution are just guidelines, not strict requirements. If they're not followed, it can still be proven that the government or governor actually made the order. In this case, even though the order didn't follow Article 166 exactly, it said that the government had made the order. And, the people arguing against it didn't deny that the government made the order or that it was sent to the interview committee. So, the order is valid. (ii) If a state law about education standards goes too far and interferes with the central government's power over education (listed in entry 66 of List I), it can be struck down. But, this has to be decided on a case-by-case basis. If a state law gives more points for activities outside of school when students are applying to colleges, that doesn't necessarily mean it's interfering with the central government's power. The government's orders in this case don't go against the minimum qualifications set by the Mysore University. The government just appointed a committee to pick students who met those minimum qualifications. Since they can't let in everyone who meets the minimum score, they had to pick students based on some fair criteria. So, the state government has the right to set up a system and rules for letting qualified students into government-run medical and engineering colleges, and with the agreement of the schools, into government-funded colleges as well. (iii) Using interviews to pick students is a method that some education experts prefer over written tests. It's not up to the court to say which method should be used; that's up to the people in charge. Just because a method could be used unfairly doesn't mean it should be banned as a violation of Article 14. If the interview committee uses its power unfairly in a specific case, violating Article 14, then the selection will be considered invalid and overturned, like the High Court did in this case. (iv) Defining "backward classes" based on their economic situation and job is not wrong and doesn't violate Article 15(4) (which allows for special provisions for backward classes). A person's caste can be a relevant factor in figuring out if they're socially backward. But, it can't be the only or main factor. If caste is not considered when figuring out who is in a backward class under Article 15(4), that doesn't make the classification wrong if it meets other requirements. The High Court's statement that the classification wasn't perfect because the government didn't consider caste is not correct in law or in how the Supreme Court's earlier rulings should be interpreted. (v) Different parts of the Constitution, like Articles 15, 29, 46, 341, and 342, recognize that backward classes exist and try to help them. These parts should be interpreted in a way that helps those groups, not in a way that gives advantages to more privileged groups just because they happen to belong to a certain caste. A "class" can never be the same thing as a "caste," even though a person's caste can be a relevant factor in deciding which class they belong to. If caste is not considered when figuring out who is in a backward class under Article 15(4), that doesn't make the classification wrong if it meets other requirements. If an entire sub-caste is generally backward, it can be included in the Scheduled Castes by following the correct procedure in the Constitution. Justice Mudholkar disagreed: (i) Previous Supreme Court decisions about Article 166 of the Constitution have said that if someone challenges whether a government order actually exists, the government has to prove that the governor actually made the order in the way required by the rules for how the government works, as laid out in Article 166(3). (ii) In this case, it's not correct to say that the people arguing against the order didn't deny that it existed. From the beginning, they've been saying that there was no "Government Order" about admissions to the Medical College. Since they were only concerned with admissions to the Medical College, they didn't need to deny the existence of a government order about admissions to an Engineering College. The document that the state is using to prove that there was a government order is just a letter from a government secretary to the interview committee and the deans of the Medical College in Mysore. It's not the kind of order that Article 166 is talking about. Besides a statement in the letter that the Under Secretary is "directed to state" that the government made a decision, there's no proof that the governor made an order about interviews. The Supreme Court has never said that a document like this can be considered the Governor's Order or even proof that the Governor's Order exists. (iii) The Supreme Court's decision in Gujarat University vs. Shri Krishna says that the power to set standards for certain institutions like medical colleges belongs to the central government. Even if the central government hasn't used that power, the state government can't step in and set standards by requiring that students applying to those institutions be given marks based on interviews, like they did in this case. That interferes with the admission standards set by the university. (iv) The state government's power, which is as broad as its power to make laws under Article 162 of the Constitution, can't be used in a way that goes against the law or that has been given to other authorities or groups. Section 23 of the Mysore University Act says that the Academic Council has the power to set the conditions for admission to the University. So, the government can't take over that power. (v) It wouldn't be in line with Article 15(1) or Article 29(2) to consider a person's caste when deciding who is socially and educationally backward.
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1056 and 1057 of 1963. These two appeals raise the question of the validity, of the orders made by the Government of Mysore in respect of admissions to Engineering and Medical Colleges in the State of Mysore. The facts may be briefly stated: in the State of Mysore there are a number of Engineering and Medical Colleges most of them are Government Colleges and a few of them are Government aided Colleges. On July 6, 1963, the Government sent a letter to the Director of Technical Education in Mysore, Bangalore, informing him that it had been decided that 25 per cent of the maximum marks for the examination in the optional subjects taken into account for making the selection of candidates for admission to Engineering Colleges shall be fixed as interview marks; it also laid down the criteria for allotting marks in the interview. Some of the candidates whose applications for admission to the said colleges were rejected filed petitions under article 226 of the Constitution in the High Court of Mysore for quashing the orders issued by the Government in the matter of admissions to the said Colleges and for a direction that they shall be admitted in the Colleges strictly in the order of merit. But at the time of arguments no letter written by the Government in respect of admissions to Medical Colleges was placed before us. In the counter affidavit filed by Dr. Dharmaraj, Dean, Medical College, and Chairman of the selection committee for admission to Medical Colleges, it is stated that the Govern ment by its letter directed that the said selection committee shall interview candidates and allot marks the maximum of which shall be 25 per cent of the maximum marks for the optional subjects and laid down the criteria for allotting marks in the interview. In the counter affidavit filed by B. R. Verma, Deputy Secretary to the Government of Mysore, Education Depart ment, Bangalore, after referring to Annexure IV, it is stated that a similar letter was sent by the Government to the Selection Committee for admission to Medical Colleges. It does not appear from the judgment of the High Court that learned counsel for the appellants denied the existence of such a communication in respect of Medical Colleges, but Proceeded with his argument on the basis that a communi cation similar to Annexure IV issued in connection with admissions to Engineering Colleges existed in the case of Medical Colleges also. But before us the learned counsel for the appellants heavily relied upon the fact that the said order was not filed in the court and was not willing to accept the assurance given by the Attorney General on instructions that such an order existed. to annexure IV to the selection committee for admission to, Medical Colleges. 4.ADW/63/2491, dated the 25th June, 1903, on the subject 376 Mentioned above, I am directed to state that Government have decided that 25 per cent of the maximum marks Yours faithfully, Sd/ section NARASAPPA, Under Secretary to Government, Education Department. " Under article, 166 of the Constitution an executive action of the Government of a State shall be expressed to be taken in the name of the Governor, and that orders made in the name of the Governor shall be authenticated in such, manner as may be specified in rules to be made by be Governor and the validity of an order which is so authenticated shall not be called in question on the ground hat it is not an order made by the Governor. If the conditions laid down in this Article are complied with, the order cannot be called in question on the ground hat it is not an order made by the Governor. In Dattatreya Moreshwar Pangarkar vs The State of Bombay (1) Das J., as he then was, observed: "Strict compliance with the requirements of article 166 gives an immunity to the order in that it cannot be challenged on the ground that it is not an order made by the Governor. This view has been reaffirmed by this Court in subsequent decisions: see Ghaio Mall and Sons vs The State of Delhi (2), and it is, therefore, settled law that provisions of article 166 of the Constitution are only directory and not mandatory in character and, if they are not complied with, it can be es tablished as a question of fact that the impugned order was issued in fact by the State Government or the Governor. Though Annexure IV does not conform to the provisions of article 166 of the Constitution, it ex facie says that an order to the effect mentioned therein was issued by the Government and it is not denied that it was communicated to the selection committee. In the circumstances when there are no allegations at all in the affidavit that the order was not made by the Government, we have no reason to reject the averment made by the Deputy Secretary to the Government that the order was issued by the Government. It is then contended that the Government has no power to appoint a selection committee for admitting students to colleges on the basis of higher or different qualifications than those prescribed by the University and, therefore, the orders made by the Government in respect of admission were illegal. As the State Government 's executive power extends to matters with respect to which the Legislature of the State has power to make laws, the argument proceeds, the Government of the State cannot make an order or issue directions for maintaining the standards of the University. The further argument is that prescribing higher marks for admission to a College is for the purpose of maintaining the standards of University education and therefore the State Government is not empowered to do so. It is not possible to hold that if a State legislature made a law prescribing a higher percentage of marks for extra curricular activities in the matter of admission to colleges, it would be directly encroaching an the field covered by entry 66 of List I of the Seventh Schedule to the Constitution. 380 It is true that under section 23 of the Mysore University Act, 1956, the Academic Council shall have the power to prescribe the conditions for admission of students to the University and, in exercise of its power, it has prescribed the percentage of marks which a student shall obtain for getting admission in medical or engineering colleges. We, therefore, hold that the Government has power to prescribe a machinery and also the criteria for admission of qualified students to medical and engineering colleges run by the Government and, with the consent of the management of the Government aided colleges, to the said colleges also. The selection committee has to allot marks, having regard to general knowledge, aptitude and personality, previous academic career, including special distinctions etc. 385 tioners therein that the impunged order, which was passed under article 15(4) of the Constitution, was not valid because the basis adopted by the order in specifying and enumerating the socially and educationally backward classes of citizens in the State was unintelligible and irrational, and the classification made on the said basis was inconsistent with and outside the provisions of article 15 (4) of the Constitution. While this Court said that caste is only a relevant circumstance and that it cannot be the dominant test in ascertaining the backwardness of a class of citizens, the High Court said that it is an important basis in determining the class of backward Hindus and that the Government should have adopted caste as one of the tests. As the said observations made by the High Court may lead to some confusion in the mind of the authority concerned who may be entrusted with the duty of prescribing the rules for ascertaining the backwardness of classes of citizens within the meaning of article 15(4) of the Constitution, we would hasten to make it clear that caste is only a relevant circumstance in ascertaining the backwardness of a class and there is nothing in the judgment of this Court which precludes the authority concerned from determining the social backwardness of a group of citizens if it can do so without reference to caste. It may be that for ascertaining whether a particular citizen or a group of citizens belong to a backward class or not, his or their caste may have some relevance, but it cannot be either the sole or the dominant criterion for ascertaining the class to which he or they belong. The appellants in these appeals had challenged before the High Court of Mysore the validity of the mode of selection of candidates for admission to the Medical Colleges in that State by preferring petitions before the High Court under article 226 of the Constitution. Their contentions are that in the absence of any Government order there was no basis upon which marks at the interview could be added to the marks secured in the P.U.C. examination, that the so called order on which reliance was placed on behalf of the State is not a Government order at all as the document produced does not comply with the requirements of article 166 of the Constitution, that no criteria were laid down for allotting marks TO the candidates at the interview, that this was a violation of article 14 of the Constitution, that the Govern 390 ment was constitutionally incompetent to prescribe qualifications for admission to Colleges under the University different from those prescribed by the University and that under the Mysore University Act the University alone had the power to prescribe rules for admission to Colleges affiliated to the University. My learned brother Subba Rao J. whose judgment I have had the opportunity of seing has upheld the judgment of the High Court but has not agreed with the observations made by it suggesting that the caste of candidates should also have been taken into consideration while determining the social and educational backwardness of a class. Even assuming for the time being that the Government of Mysore had the power both under the Constitution and under a law enacted by the Legislature to prescribe qualifications for admission to any Colleges in the State, including colleges imparting technical or professional education, the first question is whether there was in fact a Government Order justifying the course adopted by the Selection Com mittee. It may be mentioned that the document which was filed in the High Court as being the Government Order was merely a communication addressed on behalf of the Government by one of its Secretaries to the selection Committee and signed by an Under Secretary. This document, however, was not a part of the record of the writ petitions and the only manner in which the so called Government Order relating to admission to Medical Colleges was brought to the notice of the High Court was by specifying in Dr. Dharmaraj 's affidavit, the number of the letter addressed by a Secretary to the Government to the Selection Committee dealing with admissions to the Medical Colleges. I am directed to state that Government have decided that 25 per cent of the maximum marks for the examination in the optional subjects taken into account for making the selection of candidates for admission to Medical Colleges, shall be fixed as interview marks. It further provides that where an order is authenticated in the manner prescribed in the rules made by the Governor, its validity shall not be called in question on the ground that it is not an order made by the Governor. All that the Secretary on whose behalf some Under Secretary has signed, says is that he is "directed to state" that the Government has taken a certain decision. The cases in which it has been held by this Court that the provisions of article 166(2) are directory and not mandatory are of no help because here what we are concerned with is about the actual existence of an order made by the Governor. It was said by the learned Attorney General that the existence of the order was not denied by the appellants. But since both the appellants were applicants for admission to a Medi cal College it was not necessary for them to say further that what was relied on was not a Government Order even in regard to Engineering Colleges. This Court negatived the contention on the ground that since what he had said there was not expressed in the name of the Governor, it cannot be regarded as the Govemor 's Order. ' One of those grounds was that the order of confirmation of detention under section 11(1) was not expressed to be made in the name of the Governor as required by article 166(1) of the Constitution. But the Act is silent as to the in which the executive decision, whether it is described as an order or an executive action is to be taken. it is at this stage that learned counsel for the petitioner passes on to Article 166 of the Constitution and contends that all executive action of the Government of a State must be expressed (1)[1952] S.C.R. Thus, even upon the view taken by him that the provisions are merely directory the learned Judge has clearly taken the view that it has to be shown that the decision upon which reliance is placed on behalf of the Government was in fact taken. There is no material in this case on the basis of which it could be said that in the present case any decision had at all been taken by the Government in so far as interviews for admission to Medical Colleges were concerned. (2) lays down the manner in which such order is to be authenticated and that when both the requirements are complied with the order would be immune from challenge in a court of law on the ground that it had not been made or executed by the Governor. could be challenged in any court of law even on the ground that it was not made by the Governor of the State and in case of such challenge the onus would be upon the State authorities to show affirmatively that the order was in fact made by the Governor in accordance with the rules framed under Article 166 of the Constitution" (p. 632). It will thus be clear that all the teamed Judges who have dealt with, the provisions of article 166 of the Constitution have definitely held that where the existence of a Government Order is itself challenged by a person who is affected by it the burden is upon the Government to establish that an order was in fact made by the Governor in the manner provided for in the rules of business framed by the Governor under cl. A similar letter was sent by the Government to the Selection Committee for admission to Medical Colleges. " Even in this Court the Assistant Government Advocate has filed on behalf of the State only a copy of the letter sent by a Secretary to the Government and has not only not produced a copy of the Governor 's Order but has not even alleged that such order exists. That point concerns the power of the Government of a State to prescribe by an executive order the standards for selection of candidates for admission to technical institutions affiliated to a university. 134 159 S.C. 26 402 In the course of his judgment, Shah Y., speaking for the majority (my learned brother Subba Rao J., dissenting) observed: "It is manifest that the extensive power vested in the Provincial Legislatures to legislate with respect to higher scientific and technical education and vocational and technical training of labour, under the Government of India Act is under the Constitution controlled by the five items in List 1 and List III mentioned in item II of List H. Items 63 to 66 of List I are carved out of the subject of education and in respect of these items the power to legislate is vested exclusively in the Parliament Power of the State to legislate in respect of education including Universities must to the extent to which it is entrusted to the Union Parliament, Whether such power is exercised or not, be deemed to be restricted. Power to legislate in respect of medium of instruction, in so far it has a direct bearing and impact upon the legislative head of co ordination and determination of standards in institutions of higher education or research and scientific and technical institutions, must also be deemed by item 63 of List I to be vested in the Union." Examination the marks awarded by the Selection Committee for the interviews and prepare a fresh order of merit on the basis of the total marks so arrived at the State would be quite clearly interfering with the standards for admission laid down by the University. The second portion in italics by me in the above quotation makes it clear that according to the majority of this Court the power to legislate in respect of matters such as the medium of instruction which have a direct bearing and impact upon the legislative head of coordination and determination of standards in the institutions referred to in item 66 of List I is vested in the Union. Does the judgment mean that it has to be ascertained in each case whether the impact of the State law providing for such standards is so great on entry 66 of List I as to abridge appreciably the central field or, does it not follow from the judgment that if a State Legislature has made a law prescribing a different, even higher, percentage of marks or prescribing marks for extra curricular activities, it would be directly encroaching on the field covered by entry 66 of List I ? As I understand the decision what it means when it says that regard must be had to the pith and substance of a State law to see whether it is in conflict with the powers of Parlia ment is that conflict must be the direct result of the State law and not one which is merely incidental. Now just as prescribing a medium of instruction for being adhered to in those institutions would, if it has the effect of affecting the standards, which must mean, the academic standard of their institutions, produce a direct impact on Parliament 's power under the aforesaid entry, so would prescribing interviews for admissions to these institutions, since admissions would thereby be made to depend on standards other than purely academic. marks are 300 and interview marks are 600. Thus if the selectors choose to allocate say 30 or 40 marks for "personality" many meritorious candidates may go far down in the list prepared on the basis of the total of marks at the interview and the P.U.C. On the other hand the Court appears to have approved of the view taken by two learned Judges of the Allahabad High Court in Motilal vs The Government of the State of Uttar Pradesh (2) that an act would be within the executive power of the State if it is not an act which has been assigned by the Constitution to other authorities or bodies and is not contrary to the provisions of any law and does not encroach on the legal rights of any member of the public. Thus this is a case where there is not merely an absence of legislative sanction to the action of the State but there is an implied limitation on its executive power in regard to this matter. Moreover, while the Constitution permits the State without the necessity of any law empowering it to do so to make reservations of seats for the benefit of backward classes and scheduled castes and tribes there is no provision either in the Constitution or in any other law which empowers the State Government to issue directions to selection committees charged with the consideration of applications for admission to any colleges as to what should be the basis of making admissions. It is not material to consider whether either the object or effect of the addition of an interview for selecting candidates for admission to the institutions is to improve upon the standards fixed by the Academic Council For, it is to that body to which the legislature has entrusted the whole matter. in the High Court on behalf of the University a copy of which has been filed in this Court after our judgment was reserved. Interview marks must also be treated as marks given to a subject. " I would only say this that it would not be in accordance 411 either with cl. Upon the view which I have taken on the two points I have discussed the appeals must be allowed and a direction be issued to the Selection Committee to make the selection ,of candidates solely on the basis of the result of P.U.C.
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The government of Mysore made a rule about who is considered "backward" and said that 30% of spots in colleges for certain careers like engineering would be saved for them. The government sent a letter saying that when students are tested to get into these colleges, 25% of their score would come from an interview. They asked the court to cancel the government's rules and to order the colleges to let them in based only on how well they did in school. But, they did find that the people doing the interviews had not used their power fairly. So, the court ordered the students to be interviewed again and said that admissions should be based on the government's rules and letter, which the court said were valid. Before the Supreme Court, it was argued that the government's letter was not valid because it didn't follow the rules in Article 166 of the Constitution (a set of rules for how the government makes decisions). Another argument was that the government didn't have the power to pick students for colleges based on qualifications that were higher or different from what the university required. Finally, it was argued that the High Court said that the way the government defined "backward" wasn't perfect because they didn't consider a person's caste (social group) along with their economic situation. In this case, even though the order didn't follow Article 166 exactly, it said that the government had made the order. And, the people arguing against it didn't deny that the government made the order or that it was sent to the interview committee. If a state law gives more points for activities outside of school when students are applying to colleges, that doesn't necessarily mean it's interfering with the central government's power. The government's orders in this case don't go against the minimum qualifications set by the Mysore University. Since they can't let in everyone who meets the minimum score, they had to pick students based on some fair criteria. So, the state government has the right to set up a system and rules for letting qualified students into government-run medical and engineering colleges, and with the agreement of the schools, into government-funded colleges as well. Just because a method could be used unfairly doesn't mean it should be banned as a violation of Article 14. A person's caste can be a relevant factor in figuring out if they're socially backward. If caste is not considered when figuring out who is in a backward class under Article 15(4), that doesn't make the classification wrong if it meets other requirements. The High Court's statement that the classification wasn't perfect because the government didn't consider caste is not correct in law or in how the Supreme Court's earlier rulings should be interpreted. These parts should be interpreted in a way that helps those groups, not in a way that gives advantages to more privileged groups just because they happen to belong to a certain caste. A "class" can never be the same thing as a "caste," even though a person's caste can be a relevant factor in deciding which class they belong to. If caste is not considered when figuring out who is in a backward class under Article 15(4), that doesn't make the classification wrong if it meets other requirements. (ii) In this case, it's not correct to say that the people arguing against the order didn't deny that it existed. The document that the state is using to prove that there was a government order is just a letter from a government secretary to the interview committee and the deans of the Medical College in Mysore. It's not the kind of order that Article 166 is talking about. Besides a statement in the letter that the Under Secretary is "directed to state" that the government made a decision, there's no proof that the governor made an order about interviews. The Supreme Court has never said that a document like this can be considered the Governor's Order or even proof that the Governor's Order exists. Even if the central government hasn't used that power, the state government can't step in and set standards by requiring that students applying to those institutions be given marks based on interviews, like they did in this case. (iv) The state government's power, which is as broad as its power to make laws under Article 162 of the Constitution, can't be used in a way that goes against the law or that has been given to other authorities or groups. (v) It wouldn't be in line with Article 15(1) or Article 29(2) to consider a person's caste when deciding who is socially and educationally backward.
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Appeal No. 109 of 1957. Appeal by special leave from the judgment and order dated March 1, 1956, of the Bombay High Court in Appeal No. 20 of 1956. G. section Pathak, K. H. Bhabha, H. M. Vakeel and I. N. Shroff, for the appellants. C. K. Daphtary, Solicitor General of India, B. K. Khanna and P. D. Menon, for the respondents. 724 C. K. Daphtary Solicitor General of India section N. Andley, Rameshwar Nath and P. L. Vohra, for the Interveners. April 11. The Judgment of Sinha C. J., Ayyangar, Madholkar and Aiyar, JJ., was delivered by Ayyangar, J., Subha Rao, J. delivered a separate judgment. AYYANGAR, J. This is an appeal by special leave from the judgment of a Division Bench of the Bombay High Court affirming the judgment of a learned Single Judge whereby a petition filed under Article 226 of the constitution by the appellants was dismissed. By their petition, the appellants challenged the validity of a notification issued by Forward Markets Commission a statutory body created by the Forward Markets Regulation Act 1952 (LXXIV of 1952) (hereinafter referred to as the Act) to the authorities of the East India Cotton Association, Bombay (which will be referred to as the Association) intimating to them that the continuation of trading in certain types of forward contracts in cotton including that known as "hedge contracts" was "detrimental to the interest of the trade and the public interest and to the larger interests of the economy of India" and directed these contracts to be closed out, to be settled at prices fixed in the notification. It is necessary to set out briefly certain facts in order to appreciate the points raised by the appeal. The fast India Cotton Association is an "association" which has been recognised by the Central Government under a. 6 of the Act. The three appellants are members of the Association carrying on business in partnership. The appellants had, prior to December 1955, entered into "hedges contracts" in respect with other members of the Association for settlements in February and May 1956. There was no dispute that these 725 contracts were in accordance with the bye laws of the Association as they stood at the date when the contracts were entered into. The terms and conditions of forward contracts in cotton including "hedge contracts", and the manner of their implementation, were governed by the provisions contained in certain bye laws of the Association and of these that relevant to the consideration of the matters in this appeal was bye law 52AA which on the date when the appellants entered into their contracts ran as follows: "52 A.A. (1) whether or not the prices at which the cotton may be bought or sold are at any time controlled under the provisions of the Essential Commodities Act, 1055, if the Textile Commissioner with the concurrence of the Forward Markets Commission and after consultation with the Chairman (of the Board), be of opinion that the continuation of hedge trading is likely to result in a situation detrimental to the larger interests of the economy of India and so informs the Board, the Board shall forthwith cause a notice to be posted on the Notice Board to that effect and on the posting of such notice and notwithstanding anything to be contrary contained in these bye laws or in any hedge or on call contract made subject to these Bye laws, the following provisions shall take effect. (2)Every hedge contract and every on call contract in so far as the cotton is uncalled thereunder or "in so far as the price has not been fixed thereunder entered into between a member and a member or between a member and a non member then outstanding shall be deemed closed out at such rate, appropriate to such contract as shall be fixed by the Textile Commissioner and the provisions 726 of Clauses (3), (4) and (6) of Bye laws 52A in so far as they apply to hedge and on call contracts, shall apply as if they formed part of this Bye law. After the affixation of the said Notice on the Notice Board trading in hedge and on call contracts shall be prohibit ed until the Textile Commissioner with the concurrence of the Forward Markets Commission and after consultation with the Chairman, permits resumption". Towards the end of 1955 the Chairman of the Association appears to have apprehended that the forward Market in cotton was heading for a crisis which was in part due to the transacting of unbridled option business, which though prohibited by the Act and also by the bye laws of the Association was ever the less indulged in on a large scale. The hairman brought this situation to the notice of the members of the Board of the Association at a meeting held on December 16, 1955, and suggested that they should give serious thought to this vital problem. It may be mentioned that the government also were anxiously considering the steps to the taken to solve or avert the crisis. The action which the government took in this matter is reflected in a notification issued by them on December 23, 1955, by which in exercise of the powers conferred in them by section 14 of the Act they directed the Association to suspend its business in Indian cotton edge contracts for delivery in February 1956 and May 1956 for a period of 7 days with effect from the date of the notification. The situation did not apparently improve as a result of this temporary suspension so that before the expiry of the work fortnight, action under the same provision was gain taken under a notification dated December 10, 1955, by which the period of 7 days was exten ded by a further period of 7 days i. e. till 6, 1. 56A meeting of the Board of Association was held on 727 January 6, 1956, i. e., the day on which the suspension of forward business expired when the following , resolution was unanimously passed: " 'In view of the suspension of forward trading by government the Board hereby resolves under bye law 52 that an emergency has arisen or exists and prohibits until further notice, subject to the concurrence of the Forward Markets Commission as from Saturday, the 7th January, 1956, trading in hedge contracts for February and May 1956, deliveries above a maximum rate of Rs. 700/ per candy Thereupon a suit (numbered as suit 2/1956) was filed by a member of the Association as representing himself and all other members, on the original side of the High Court, Bombay against the Association and its Board, challenging the validity of the notification of Government suspending forward trading, as also of the resolution of the 'Board, just now extracted. An application for the grant of interim stay was made for restraining the Board from giving effect to its resolution but this was refused by the learned trial Judge and an appeal was filed against the refusal. While things were in this state the Central Government, in exercise of the powers conferred on them by section 12 of the Act, made anew bye law which was published in a Gazette of India Extra. ordinary dated January 21, 1956, in substitution of bye law 52 AA set out earlier. The new bye law ran. "152 AA (1) Whether or not prices at which cotton may be bought or sold are at any time controlled under the provisions of the , if the Forward Markets Commission is of the opinion 728 that continuation of trading in hedge contrac ts for any delivery or deliveries is detrimental to the. interest of the trading or the public interest or to the larger interests of the economy of India and so notifies the Chairman, then notwithstanding anything to the contrary contained in these bye laws or in any hedge or on call contract made subject to these bylaws the following provisions shall take effect. (2)Every hedge contract and every on call contract in so far as the cotton is uncalle d thereunder or in so far as the price has not been fixed thereunder and relating to the delivery or deliveries notified under clause (1) entered into between a member and a member or between a member and a non member then outstanding shall be deemed closed out at such rate appropriate to such contract and with effect from such date as shall be fixed by the Forward Markets Commission and the provisions of clauses (3), (4) and (0) of Byelaws 52 A in so far as they apply to hedge and on call contracts shall apply as if they formed part of this Bye law". This bye law was communicated to the Board of the Association on January 23, 1956. We might here state that the validity of this new bye law has been impugned on various grounds and the alleged invalidity of this We law serves as the main foundation for challenging the validity of the notification of the Forward Markets Commission issued under the powers conferred by it. On January 24, 1956, the appeal from the order refusing the interim injunction in Suit No. 2 of 1956 was settled between the parties on , theme terms : "(1) The impugned resolution dated January 6, 1956, declared to be valid, 729 (2)The Board of Directors to meet on January 25, 1958, and consider under bye laws 52 (2) whether the rate of Rs. 700 fixed under the said resolution should continue or whether it should be waived. 'In considering the same the Board will apply its own mind and exercise its own judgment". On the same day, i.e. January 24, 1956, the Forward Markets Commission took action under the powers vested in them under the new bye law 52 AA which had been made by government three days earlier. By a communication addressed to the Chairman of the Association, the Commission stated : " 'In pursuance of cl. (1) of the bye law 52AA of the Bye laws of the E.I.C.A. Ltd., Bombay I hereby notify to you that the For. ward Markets Commission is of the opinion that continuation of trading in the hedge contracts for February and May 1956 delivery is detrimental to the interests of the trade and the public interest and the larger interest of the economy of India and fixed under cl. (2) of the said bye law; that the rates prevailing at the time at which the trading in the said contracts closed On January 24, 1956, viz., Rs. 700/ for February and Rs. 686/8/ for May delivery as the rates at which and January 25, 1956 as the date with effect from which the hedge contracts and on call contracts in so far as the cotton is uncalled thereunder or in so far as the price has not been fixed thereunder relating to the said delivery shal l be deemed to be closed out". Thereupon the three appellants who are partners carrying on business in cotton under the name and style of Indramani Pyarelal Co. moved the High Court of Bombay by a petition under article 226 of the Constitution on January 27, 1956, for a writ of mandamus or a direction in the nature of 730 mandamus against the members of the Forward Markets Commission who were individually impleaded as respondents to the petition, ordering them to cancel or withdraw the notification dated January 24, 1956, whose validity was impugned on various grounds. The petition was heard by a learned single Judge who dismissed it by his order dated February 23, 1956. An appeal was filed therefrom to a, Bench of the High Court and when this was also dismissed the petitioners moved for a certificate of fitness to appeal to this Court but the same having been rejected, they applied for. and obtained special leave from this Court, and that is bow the matter is now before us. The submissions of Mr. Pathak learned Counsel for the appellant in support of the appeal may be classified under three main heads : (1) The notification dated 24th January, 1956, served on the Board of the Association by the Forward Markets Commission was ultra vires for the reason that bye law 52AA, as amended by the Central Government on January 21, 1956, was invalid. (2) Assuming the byelaw to be valid it could not operate retrospectively or be availed of retrospectively so as to affect rights under existing contracts subsisting on the day the amended bye law was notified in the Gazette but that it could if at all, be validly applied only to Forward hedge contracts entered into thereafter. (3) The notification by the Forward Markets Commission was improper and malafide and was therefore invalid. It would be convenient to deal with these points in that order : (1) The first of the points raised raises the question of the validity of bye law 52 AA as amended by the Central Government on January 21, 1956. Learned Counsel divided his submission on this matter into two sub heads (a) that the Forward Markets Commission could not, on a proper construction of the Act, be validly vested 731 with the power with which it was clothed by the amended bye law, and (b) that it was beyond the power of the Association to have conferred the power which it purported to do under the amended bye law 52AA. Put in other words, the objections were that the Forward Markets Commission could not, having regard to the terms of the statute under which it was created, be a proper recipient of the power 'with which it was vested by the bye law and secondly that the Association was in law incapable of conferring that power on the Forward Markets Commission or on any other body. We shall first take up for consideration the argument that the Forward Markets Commission was in law incapable of being the recipient of the power conferred by the bye law under which it was empowered to issue the impugned notification. For this purpose it is necessary to examine in detail the relevant provisions of the Act. Section 2 (b) defines 'Commission ' as meaning "The Forward Markets Commission" established under section 3. Section 3 (1) enacts : "3. The Central Government may, by notification in the Official Gazette establish a Commission to be called the Forward Markets Commission for the purpose of exercising such functions and discharging such duties as may be assigned to the Commission by or under this Act. " The point urged by learned Counsel was that the function or the duty cast upon it by the amended bye law 52 AA was not such as could be assigned to the Commission "by or under this Act." The meaning of the words by or under ' and the extent and nature of the duties assigned to the Commission by the Act will therefore require careful examination. Section 4 relates to the functions of the Commission and it is the proper construction of this 732 section that has loomed large in the arguments on this point. It is, therefore, necessary to set this out in full : "4. The functions of the Commission shall be (a)to advise the Central Government in respect of the recognition of, or the withdrawal of recognition from any association or in resPect of any other matter arising out of the administration of this Act ; (b)to keep forward markets under observation and to draw the attention of the Central Government or of any other prescribed autho rity to any development taking place, in or in relation to, such markets which, in the opinion of the commission is of sufficient importance to deserve the attention of the Central Government and to make recommendations thereon ; (e)to collect and whenever the Commission thinks it necessary publish information regar ding the trading conditions in respect of goods to which any of the provisions of this Act is made applicable, including information regarding supply, demand and prices, and to submit to the Central Government periodical reports on the operation of this Act and on the working of forward markets relating to such goods ; (d)to make recommendations generally with a view to improving the Organisation and working of forward markets ; (e)to undertake the inspection of the accounts and other documents of any recognished association whenever it considers it necessary ; and 733 (f)to perform such other duties and exercise such other powers as may be assigned to the Commission by or under this Act, or as may be prescribed". Pausing here it is necessary to add that the expression prescribed" found at the end of cl. (f) has been defined by section 2(h) of the Act to mean "Prescribed by rules made under the Act". Before considering the points urged as regards the construction of this section taken in conduction with the terms of s.3(1) we shall refer to a few other provisions which are of some relevance in the present context. Section 3(2) which confers power on the Central Government to call for periodical returns from Recognised Associations and to direct such enquiries as they consider necessary to be made, empowers the government to direct the Commission to inspect the accounts and other documents of any recognised Association or of any of its members and submit its report thereon to the Central Government [vide section 3(2) (c)]. Sub section (4) of this section enacts : "8(4). Every recognised association and every member thereof shall maintain such books of account and other documents as the Commission may specify and the books of account and other documents so specified shall be preserved for such period not exceeding three years as the Commission may specify and shall be subject to inspection at all reasonable times by the Commission". Section 28 reads : "28. (1) The Central Government may, by Notification in the Official Gazette, make rules for the purpose of carrying into effect the objects of this Act. 734 (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for (a) the terms and conditions of service of members of the Commission; (b) the manner in which applications for recognition may be made under section 5 and th e levy of fees in respect thereof ; (c) the manner in which any inquiry for the purpose of recognising any association may be made and the form in which recognition shall be granted ; (d) the particulars to be contained in the annual reports of recognised associations ; (e) the manner in which the bye laws to be made, amended or revised under this Act shall, before being so made, amended or revised be published for criticism ; (f) the constitution of the advisory commit. tees established under section 26, the terms of office of and the manner of filling vacancies among members of the committee ; the interval within which meetings of the advisory committee may be held and the procedure to be followed at such meetings ; and the matters which may be referred by the Central Govern ment to the advisory committee for advice ; (g) any other matter which is to be or may be prescribed. " The argument on this part of the case was briefly this : The Forward Markets Commission is a statutory body specially created for the purposes of the Act. The powers which mat be conferred upon the Commission and the duties which it may be called on to discharge are therefore subject to the provisions of the Act. No more power can be conferred upon this body than what the Act allows 735 and the power under the amended bye law 52AA is not one which is contemplated by the Act as conferable on it. Section 4 defines the functions of the Commission under five general heads (a) to (e) with a residuary clause contained in cl. The powers or duties dealt with in cls. (a) to (e) are in their essence either recommendatory or advisory. In the context therefore #,,the other" duties or ' ,other" powers which may be assigned to the Commission under cl. (f) must be either ejuesdem generis with advisory or recommendatory powers or of a nature similar to those enumerated in the previous subclauses. In support of these submissions learned Counsel invited our attention to several decisions in which ancillary powers which might be implied from the grant of certain express powers were referred to. In particular it was submitted that the Court would not imply a power which it was not absolu tely necessary to effectuate on express grant or was need to prevent the nullification of an express power that was granted. In our opinion, these decisions afford no assistance for resolving the controversy before us. There is no question here of deducing an implied power from the grant of an express one. What we are concerned with is the scope of an express power or rather whether the grant of the power conferred upon the Commission by the bye. law could be held to be a power which could be assigned to the Commission under cl. So far as the terms of el, (f) are concerned, there is no limitation upon the nature of the power that might be conferred except, of course, that which might flow from its having to be one in relation to the regulation of forward trading in goods which the Act is designed to effectuate. Any limitation therefore would have to be deduced from outside cl.(f) of section 4. Taking each of the clauses (a) to (e), it is not possible to put them positively under one genus in order 736 that there might be scope for the application of the ejusdem generis rule of construction. Negatively, no doubt it might be said that none of these five clauses confer an executive power such as has been vested in them by the amended bye law 52AA but this cannot be the foundation for attracting the rule of construction on which learned Counsel relies. On the other hand, if there is no common positive thread running through cls.(a) to (e) such as would bring them under one genus and negatively they do not expressly include any administrative or executive functions, that itself might be a reason why the expression "other" occurring in cl. (f) should receive the construction that it is intended to com prehend such a function. Learned Counsel further suggested that even if the rule of ejusdem generis did not apply, the allied rule referred to at page 76 of the report of Western India Theatres Ltd. vs Municipal Corporation of Poona, that the matters expressly referred to might afford some indication of the kind and nature of the power, might be invoked, but we consider that, in the context, there is no scope for the application of this variant either. What we are here concerned with is whether it is legally competent to vest a particular power in a statutory body, and in regard to this the proper rule of interpretation would be that unless the nature of the power is such as to be incompatible with the purpose for which the body is created, or unless the particular power is contra indicated by any specific provision of the enactment bringing the body into existence, any power which would further the provisions of the Act could be legally conferred on it. Judged by this test it would be obvious that the power conferred by the bye law is one which could be validly vested in the Commission. A more serious argument was advanced by learned Counsel based upon the submission that a 737 power conferred by a bye law framed under section 11 or 12 was not one that was conferred ""by or under the Act or as may be prescribed". Learned Counsel is undoubtedly right in his submission that a power conferred by a bye law is not one conferred "by the Act", for in the context the expression "conferrod by the Act" would mean "conferred expressly or by necessary implication by the Act itself". It is also common ground that a bye law framed under section II or 12 would not fall within the phraseology "as may be prescribed", for the "expression" 'Prescribed ' has been defined to mean " 'by rules under the Act", those framed under section 28 and a bye law is certainly not within that description. The question therefore is whether a power conferred by a bye law could be held to be a power ",conferred under the Act". The meaning of the word ",under the Act" is well known. "By" an Act would mean by a provision directly enacted in the statute in question and which is gatherable from its express language or by necessary implication therefrom. The words under the Act " would, in that context, signify what is not directly to be found in the statute itself but is conferred or imposed by virtue of powers enabling this to be done; in other words, by laws made by a subordinate law making authority which is empowered to do so by the parent Act. This distinction is thus between what is directly done by the enactment and what is done indirectly by rule making authorities which are vested with powers in that behalf by the Act. (vide Hubli Electricity Company Ltd. vs Province of Bombay, and Narayanaswami Naidu vs Krishna Murthi. That in such a sense bye laws would be subordinate legislation " 'under the Act" is clear from terms of sections 11 and 12 themselves. Section 11 (1) enacts: "11. (1) Any recognised association may, subject to the previous approval of the Central (1) 76 I.A. 57, 66. (2) I.L.R. , 547. 738 Government. make bye laws for the regulation and control of forward contracts", and sub section (2) enumerates the matters in respect of which bye laws might make provision. Sub section (3) refers to the bye laws as the se made under this section and the provisions of sub section (4) puts this matter beyond doubt by enacting: "11 (4) Any bye laws made under this section shall be subject to such conditions in regard to previous publication as may be prescribed, and when approved by the Central Government, shall be published in the Gazette of India and also in the Official Gazette of State in which the principal office of the recognised association is situate ; Section 12 under which the impugned bye law was made states in sub section (2) : "12 (2) where, in pursuance of this section, any bye laws have been made or amended, the bye laws so made or amended shall be published in the Gazette of India and also in the Official Gazette of the State in which the principal office of the recognized association is situate, and on the publication thereof in the Gazette of India the bye laws so made or amended shall have effect as if they had been made or amended by the recognised associations, and in sub section (4): "12. The making or the amendment or revision of any bye laws under this section shall in all cases be subject to the condition of previous publication", Having regard to these provisions it would not be 739 possible to contend that notwithstanding that the bye laws are rules made by an Association under section 11 or compulsorily made by the Central Government for the Association as its bye laws under section 18, they are not in either case Subordinate legislation under section 11 or 12 as the case may be, of the Act and they would therefore squarely fall within the words , under the Act" in s 4(f). Indeed, we did not understand Mr. Pathak to dispute this proposition. His contention however was that when cl. (f) specifically made provision for powers conferred by "rules" by the employment of the pbrase "or as may be prescribed" and, so to speak, took the "rules" out of the reach of the words " 'under the Act" it must necessarily follow that every power confered by Subordinate law making body must be deemed to have been excepted from the content of that expression and that consequently in the Content the word ,, 'by the Act" should be held to mean ,,directly by the Act" i.e., by virtue of positive enactment, of the words "under the Act" should be held to be a reference to powers gatherable by necessary implication from the provisions of the Act. As an instance learned Counsel referred us to the power of the Central Government to direct the Commission to inspect the accounts and other documents of any recognised association or of any of its members and submit its report thereon to the Central Government under section 8 (2)(c) and suggested that this would be a case of a power or duty which would be covered by the words "under the Act". We find ourselves wholly unable co accept this. If without the reference to the phrase "as may be prescribed" the words " 'under the Act" would comprehend powers which might be conferred under "bye laws" as well as those under "rules" we are unable to appreciate the line of reasoning by which powers conferred by bye laws have to be excluded, because of the specific reference to powers conferred by rules". 740 Undoubtedly, there is some little tautology in the use of the expression "as may be prescribed" after the comprehensive reference to the powers conferred "under the Act", but in order merely to avoid redundancy you cannot adopt a rule of construction which cuts down the amplitude of the words used except, of course to avoid the redundancy. Thus the utmost that could be that though normally and in their ordinary signification the words ,under the Act" would include both "rules" framed under s.28 as well as "bye laws" under section 11 or 12, the reference to "rules" might be eliminated as tautlogous since they have been specifically provided by the words that follow. But beyond that to claim that for the reason that it is redundant as to a part, the whole content of the words "under the Act" should be discarded, and the words "by the Act" should be read in a very restricted and, if one may add, in an unnatural sense as excluding a power confered by necessary implication, when such a power would squarely fall within the reach of these words would not, in our opinion, be any reasonable con struction of the provision We need only add that the construction we have reached of s.4 (f) is reinforood by the language of section 3 (1) which is free from the ambiguity created by the occurrence of the expression " 'as may be prescribed" in the former. We have therefore no hesitation in holding that there was no incompetency in the Forward Markets Commission being the recipient of the power which was conferred upon them by bye law 52AA as amended. The next part of the submission in relation to this matter was that it was not competent for the Association to have framed this bye law and that the powers of the Central Government under section 12 and of the Association under section 11 in regard to the framing of bye law being co extensive, the bye law framed was not competent to confer any power on the commission. 741 This contention was urged with reference to two considerations: (a) that a bye law of the type now in controversy was not within section II of the Act, and (b) that having regard to the provision contained in the Articles of Association of the Association the bye law was beyond the powers of the Association to frame. These we should deal in that order. The first objection naturally turns upon whe ther the bye law is one which could be comprehended with section 11 of the Act. Its first sub section enacts; " 11 (1) any recognised association may, subject to the previous approval of the Central Government, make bye laws for the regulation and control of forward contract. " That the impugned bye law is one for the regulation and control of forward contracts cannot be disputed, and the terms being very general would include a bye law of the type now impugned. In this connection reference may be made to byelaw 52AA which the impugned bye law amended, under which power was vested in the Textile Commissioner with the concurrence of the Forward Markets Commission, (though after consultation with the Chairman of the Board) to direct the enclosure of hedge contracts and fix the rates at which such contracts might be closed out a provision whose validity was not impugned in the present proceedings. Mr. Pathak no doubt submitted that he was not precluded from challenging before us even the earlier bye law for the purpose of sus taining his argument that the amended bye law was ultra vires. Nevertheless it must be apparent that it was always assumed that bye laws which vest in authorities external to the Association the 742 power to interfere with forward dealing was within the scope of the bye law making powers under This general provision apart, sub section (2) of section 11 enact: "11(2). In particular, and without prejudice to the generality of the foregoing power, such bye laws may provide for (a). . . . . . (b). . . . . . (c). . . . . . (d)fixing, altering or postponing days for settlement; (e)determining and declaring market rates, including opening, closing, highest and lowest rates for goods; (f). . . . . (g). . . . . . . (h). . . . . . . (i). . . . . . . . (j). . . . . . . (k). . . . . . . . (1). . . . . . . . (m). . . . . . . . (n) the regulation of fluctuations in rates and prices; (o) the emergencies in trade which may arise and the exercise of powers in such eme regencies including the power to fix maximum prices; 743 As the power of the Central Government to make bye laws under section 12 is admittedly co extensive with the power of the Associations to frame byelaws, it is not necessary to refer to the terms of the latter sections Before considering in detail the argument on this part of the case we consider it useful to set out a few of the bye laws of the Association whose validity has not been challenged and which would show the manner in which the Association has been functioning in emergencies such as that for which the impugned bye law provides, Bye law 52 which still exists: "52.(1) If in the opinion of the Board an emergency has arised or exists, the Board may, by a resolution, (i) passed by a majority of not less than and (ii) confirmed prohibit, as from the date of such confirmation or from such later date as maybe fixed by the Board in the resolution referred to in sub clause (1), (a)trading in the Hedge Contract for any delivery or deliveries or (b) all trading in such contracts as are referred to in clause (a) for a specified period "52A. If the Board, at a meeting specially convened in this behalf, resolve that a state of emergency exists or is likely to occur such as shall in the opinion of the Board make free trading in forward contracts extremely difficult, the Board shall so inform the Forward Markets Commission and upon the 744 Forward Markets Commission intimating to the Board its agreement with such resolution, then notwithstanding anything to the contrary contained in these bye laws or in any forward contract made subject to these Byelaws, the following provisions shall take effect (1)The Board shall at a meeting specially convened in this behalf, (a)fix a date for the purpose hereinafter contained, (b)fix settlement process for forward con tracts, (c)fix a special Settlement Day. (2). . . Every hedge contract entered into between a member and a member or between a member and a non member outstanding on the date fixed under clause (1)(a) hereof shall be demand closed out at the rate appropriate to such contracts fixed under clause (1)(b) hereof. " 3 6 and then follows Bye law 52AAA. Apart for the amended bye law occurring in the group of existing bye laws making provision for emergencies to which sub clause (o)of s.11(2) refers, there is no dispute that there was an emergency in the forward market and that the impugned bye law was framed to meet such a contingency. It was not contended before us that the method by which the emergency was resolved by the impugned bye law viz., by closing out subsisting contract was not the usual method employed for the purpose. If therefore the bye law was provision for an emergency within s.11 (2)(o) then it would seem to follow that for the resolution of that emergency, 745 every one of the matters which could be included in such bye laws would be attracted to it, and so we find it impossible to accept Mr. Pathaks submission regarding the invalidity of the bye Law. An analysis of the impugned bye law 52AA and comparison of it with that which it replaced would show that the main point of difference is that whereas formerly action to stop forward trading and for closing out contracts and to fix the rate at which contracts were to be closed out was vested in the Textile Commissioner, acting with the concurrence of the Forward Markets Commission, under the amended bye law the power is directly vested in the Forward Markets Commission itself. The arguments addressed to us on this point are concerned not so much with the propriety as with the vires of a provisions by which the power to close out contracts by the issue of a notification is vested in the Commission. Apart from an argument immediately to be noticed, we do not see how, if such a power could validly be conferred upon a Textile Commissioner or even exercised by the Board of the Association under a bye law framed under section 11, the same would be beyond the power to make bye laws under section 11 by the mere fact that the authority vested with the power is the Forward Markets Commission. We are clearly of the opinion that bye law 52AA is well within the bye law making power under section 11 of the Act and therefore within 12. It was then said that the amended bye law 52AA wag invalid as in violation of the Articles of Association of the Association being an impermissible delegation of the powers vested in the board of the Association by its Memorandum of Articles. In this context Mr. Pathak placed reliance on cl. 64 of the Articles as laying down the limits within which 746 the Board might delegate their powers. He contended that the conferment of the power to take action on the Forward Markets Commission was thus contrary to and inconsistent with the powers of the Association under this Article. It would be seen that if learned Counsel is right, this would render invalid not merely bye law 52AA as now amended but even the bye law as it originally stood, but as already stated learned Counsel urged that he was not precluded from raising this contention. This point was not raised in the Court below but having beard arguments on it we shall pronounce upon it. We consider that there is no substance in this objection. Article 64 on which reliance was placed runs in these terms: "The Board may delegate any of their powers, authorities and duties to committees consisting of such members or member, of their body or consisting of such other members or members Associate Members, Special Associate Members or Temporary Special Associate Members of the Association not being Directors, or partly of Directors and partly of such other members and/or Associate Members, Special Associate Members or Temporary Special Asso ciate Members as the Directors may think fit. Any Committee so formed shall in the exercise of the powers so delegated conforms to any regulation that may from time to time be imposed on it by the Directors". In so far as the Memorandum is concerned, its paragraph III states the objects for which the Association was established, as being, inter alia " " (e) To make from time to time bye laws for opening and closing of markets in cotton and the 747 times during which they shall open or closed; the making performance and determination the prohibition of specified classes of dealings and the time during which such prohibition shall operate; the provision of an dealing with 'Croners ' or ,Bear Raids ' in any and every kind of cotton and cotton transactions so as to prevent or stop or mitigate undue speculation inimical to the trade as a whole; the course of business between Original Members inter be or between any of them on the one hand, and their constituents on the other hand, the forms of contracts between them and their rights and liabilities to each other in respect of dealings in The Articles dealing with bye laws, the manner in which they are to be made as well as the subject to which they might relate is to be found in Articles 73 and 74. The relevant portion of Article 73 runs: ""Under and in conformity with any Statutory provisions for the time being in force, the Board may pass and bring into effect such bye laws as may be considered in the interest of or conducive to the objects of the and Article 74 runs: "Without prejudice to the generality of the powers to make bye laws conferred by the Memorandum of Association and by these Articles and under or in the absence or any statute or statutes in force in that behalf, it is hereby expressly declared that the said powers to make, alter, add to, or rescined Bye laws including power to do so in regard to all or any of the following matters " Sub para (7) repeats inter alia the contents of 748 Paragraph III (e) of the Memorandum of Association which we have extracted, The entire argument of Mr. Pathak on Article 64 was based on the footing that the power to make a bye law was vested solely in the Board, because it is only the powers of the Board that are subject to the limitation imposed by Article 64. If however the power to make a bye law was not confined to the Board but bye laws might be framed by the Association itself, the argument based on Article 64 would be seen to have no validity. That the later is the true position is clear from Article 73 which reads: "The Board 's powers as aforesaid in relation to bye laws shall not derogate from the powers hereby conferred upon the Association who may also in the same way and for the same purpose from time to time pass and bring into effect new bye laws and rescind or alter or add to any existing bye law by resolution passed by a majority of two thirds at the least of the Members present and voting at the General Meeting previous to which at least fourteen day 's notice has been given that a Member intends at such meeting to propose the making of such bye law or the decision, alteration of or addition to a bye law or bye laws". If therefore a bye law could be made, by the Association it is manifest that there is no limitation upon its powers such as is to be found in Article 64 which applies only to the Board. The validity of the bye law therefore cannot be challenge by reference merely to the powers of the Board, because what is contemplated by section I I is the power of the "recognised Association" to frame the bye law. We have therefore no hesitation in rejecting the contention that the bye law as framed contravenes the rules of the Association. 749 Mr. Pathak next contended that the impugned bye law was invalid because it operated retrospectively. This argument he presented under two heads His first submission was that consistently with the rule that an, enactment 'would not be construed as. retrospective unless the same were to have that effect by express language or by necessary intendment, the impugned bye law should, be held to affect and close out only those contracts which were entered into after the date on which the byelaw came into operation and that if he was right in this construction the impugned notification had gone beyond the powers conferred on the Commission by the new bye law. We are wholly unable to accept this submission as to the construction of the bye law. The first paragraph of the ])ye .law by its list words points out the consequence of a notification by the Forward Markets Commision. It provides that if the Chairman were notiified that the continuation of trading in hedge contracts for any delivery etc. "was detrimental to the interests of the general public or the larger interests of the economy of rndia," then, notwithstanding, anything to the contrary contained the bye laws of the Association or in any hedge etc. contract the provisions contained in the second paragraph should have effect. , If one had regard only to paragraph and nothing more there might be ' some room for a plausible argument that subsisting contracts were not to be affected, though the expression "notwithstanding anything to the contrary contained in any bedge etc. contract" would undoubtedly militate against any such contention. But such ambiguity if any is cleared by the provision in paragraph 2 which has effect on the notification under paragraph 1, for by express terms it refers to "every hedde contract" and "every on call contract" "in so far as cotton is uncalled thereunder or in so far as the pride has not been fixed thereunder". This therefore places it beyond doubt that executory contracts 750 which were subsisting on the date of the notification were within its scope and were intended to be affected by it. And this, if anything more needed, is made more certain by the I reference in parts (2) to the provisions of old. (3), (4) and (6) of bye law 52A. Bye law 62A deals with cases where the Board of the Association resolves repeat its terms "that a state of emergency exists or is likely to occur which makes free trading in forward con. tracts difficult and on obtaining the concurrence of the Forward Markets Commission, then notwithstanding anything to the contrary contained in these Bye laws subject to these Bye laws. The following provision %hall have effect "(1) The Board shall at a meeting specially convened in this behalf, (a)fixa date for the purposes herein. after contained, (b)fix settlement prices for forward contracts, (c) fix a special Settlement Day. " Clause (3) of bye law 52A runs : "52A (3) All differences arising out of every such contract between members shall be paid through the Clearing House on the Settlement Day fixed under clause (1) (c) her Clause (4) "52A (4) All differences arising out of every such contract between a member and a non member shall become immediately due and payable." and Clause (6) "52A (6 In hedge and on call contracts entered into between a member and a non. member and in contracts to which clause (5) 751 applies, any margin received shall be adjusted and the whole or the balance thereof, as the case may be, shall be immediately refundable. It is thus clear that the entire machinery for resolving emergencies such as is contemplated by byelaw 52A includes the suspension of forward businow together with the closing out of forward contracts of hedge and on call types whose volume or nature had led to the emergency. It proceeds on the basis that the crisis could not be met unless subsisting contracts were closed out and, so to speak a new chapter begun. That is the ratio underlying the combined effect of bye laws 52AA and 52 A and in view of this circumstance the argument that on a reasonable construction of the amended bye law it would apply to contracts to be entered into in future and not to subsisting contracts must be rejected. If he was wrong in his argument that the byelaw on its proper construction did not affect subsisting contracts such as these of the Appellants, Mr. Pathak 's further submission was that the impugned bye law was invalid and ultra vires of the Act because it purported to operate retrospectively affecting vested rights under contracts which were subsisting on the day on which the bye law came into force. Mr. Pathak invited our attention to a passage in Craies ' Statute Law, 5th Ed. p. 366 reading: "Sometimes a statute, although not intended to he retrospective, will in fact have a retrospective operation. For instance if two persons enter into a contract, and afterwards a statute is passed which, as Cockburn, C. J., said in Duke of Devonshire vs Barrow, etc. , Co. , 289) "engrafts an enactment upon existing contracts ' and 752 thus operates so as to produce a result which is something quite different from the original intention of the contracting parties, such a statute has, in effect a retrospective operation. " The bye law in so far as it affects executors contracts requiring such contracts to be closed out on a (lay not originally: contracted for and at a price fixed by law is in the above sense undoubtedly retrospective. The submission of learned 'Counsel was that though a legislature which bad plenary power in this regard could enact a, havind a retrospective operation, Subordinate legislation, be it a rule, a bye law or a notification, could not be made so as to have retrospective operation and that to that extent the rule, bye law or notification would be ultra vires and would have to be struck down, relying for this position on the decision of the Mysore High Court reported in AIR 1960 Mys, 326. 'We do not however consider it necessary to canvass the correctness of this decision or the broad propositions laid down in it. It is clear law that a Statute which could validly enact a law with retrospective effect could in express terms validly confer upon a rule making, authority a power to make a rule or frame a: bye law having retrospective operation and we would add that we did not understand Mr. Pathak to dispute this position. If this were so the same result, would follow where the power to enact a rule or,a byelaw with "retrospective effect" so as to Affect PendinG transactions, is conferred not by express words but where the necessary intendment of I the Act confers such A power. If in the present case the power to make a byelaw so as to operate on contracts subsisting on the day the same was framed, would follow as; a necessary implication from the term of section 1 1, it would not be necessary to discuss the larger question as to whether and the 753 circumstances in which Subordinate legislation with retrospective effect could be validly made. Before proceeding further it is necessary to notice a submission that under the Act, far from there being a conferment of power to make a bye law, so as to affect rights under subsisting contracts, there was a contra indication of such a power being conferred. In, this connection Mr. Pathak invited, our attention to the: terms of sections 16 and 17 and 19 of the Act under which the Act has itself made special provision for affecting rights such as those, if the appellants in the present case. Detailing the conseqences of a notification under section 15, s.16 (a:) enacts "16 (a,,) Every forward contract for the sale or purchase of any goods specified in the notification, entered into before the date of the notification and remaining to be performed after the said, date and which is not in conformity with the provision of section 15, shall be deemed to be closed out at such rate as the Central Government may fix in this behalf. S.17 (3) enacts "17. (3) Where a notification has been issued under sub section (1), the provisions of section 16 shall, in the absence of anything to the contrary in the notification, apple to all forward contracts for the sale or purchase of any goods specified in the notification entered into before the date of the notification and remaining to be performed after the said date as they apply to all forward contracts for the sale or purchase, of any goods specified in the notification under section 15." and f 19 (2) runs: "19 (2). Any option in good which has been entered into ' before the date on which 754 this section comes into force and which re mains to be performed, whether wholly or in part, after the said date shall, to that extent, becomes void. " Based on these provisions the submission was that Act had made special provisions for retrospective operation of certain notifications so as to affect rights under subsisting contracts and that in cases where there was no such specific provision it was not intended that a bye law or a notification could have that effect. We see no force in this argument. The fact that the Act itself makes provision for subsisting contracts being affected, would in our opinion far from supporting the appellants indicate that in the context of a crisis in forward trading the closing out of contracts was a necessary method of exercising control and was the mechanism by which the enactment contemplated that normalcy could be restored and healthy trading resumed. If therefore we eliminate the provisions in as. 16, 17 and 19 as not containing any indication that a power to frame a bye law with retrospective effect was withheld from the Association, the question whether such bye law making power was conferred has to be gathered from the terms of section II itself. Thus considered we are clearly of the opinion that a power to frame a bye law for emergencies such as those for which a bye law like 52 AA is intended includes a power to frame one so as to affect subsisting contracts for resolving crisis in Forward Markets. We have already referred to the terms of bye law 52A which shows that when an emergency of the type referred to a. It (2) (a) arises it is not practicable to rescue a forward market from a crisis without (1) putting an end to forward trading, and (2) closing out subsisting contracts so as to start with a clean slate for the 755 future. When therefore under section 11 (2) power is conferred to frame a bye law to provide for: " (O) the emergencies in trade which may &rise and the exercise of power in such emergencies including the power to fix maximum and minimum prices;" & ad this is read in conunction with clause (g) reading: "regulating the entering into, making, per formance, rescission and termination of contra eta. . . If It is manifest that the section contemplates the making of a bye law regulating the performance of contracts, the rescission and termination of contracts and this could obviously refer only to the bye law affeding rights under contracts which are subsisting on the day the action is taken. It is therefore manifest that section 11 authorises the framing of a byelaw which would operate retrospectively in the sense that it affects rights of parties under subsisting contracts. Finally it should be borne in mind is that ultimately what we are concerned in a. 1 1 of the Act is the power of the Association to frame the bye law ' for if the Association could validly frame such a bye law the Central Government could under section 12 have a similar power. We did not hear any argument to establish that the Association had no such power. There is one other aspect in which the same problem might be viewed and it is this : The contract entered into by the respondents purported to be one under the bye laws for the time being in force and any change in the bye laws therefore would in to be contemplated and provided for by the contract itself, so that it might not be correct to speak of the new bye law as affecting any accrued 756 rights under a contract. For when those by laws were altered the changes would get incorporated into the contracts themselves, so as to afford no scope for the argument that there has been an infringement of a vested right. In the view however which we have taken about the validity of the bye law on the ground that it was well within the terms of as. ' 'II and 12 we do not consider it necessary to pursue this aspect further or to rest our decision on it. What remains to consider is the challenge to the notification based on the ground that it was vitiated by having been issued malafide. The ground of malafides alleged was that the impugned notification was issued in order to prevent the Board of Directors of the Association. from applying their minds and exercising their judgment which they were directed to do by the terms of the Consent Memo filed on which the appeal from the judgment in C.S. 2 of 1956 was disposed of on January 24, 195 . To the allegation made in this form in the petition the first respondent, the, Chairman: of the Forward Markets Commission, filed an affidavit in the course of which he pointed out that the continuance of trading in futures was in the circumstances then prevailing in the market detrimental to the interests of the trade and that a conclusion on this matter had,been reached by the Commission even before by law 52 AA was amended, that the question of closing out existing contracts was engaging the attention of even the Board of the Association from as early as the beginning of January 1956 and it was for the purpose of enabling the Commission to take action to set right matters that bye law 52AA was amended and that immediately the amended bye law came into force the Commission took action and issued: the notification now manugned. He also pointed out that the liberty given to the Association to consider the matter 757 under ' the terms of the Compromise Memo was a factor which had also boon taken into account before the notification had been issued. The learned Judges of the High Court accepted this explanation of the circumstances in which the notification came to be issued and considered that on the allegation in the petition no mala fides could be inferred. We are in entire agreement with the learned Judges of the High Court on this point. No personal motive or mala fided in that sense has been attributed to the members of the Commission and in these circumstances we consider that there is no basis for impugning the notification on the ground that it was not issued bonafide. This completes all the points urged by the learned Counsel for the appellants. We consider that there is no merit in the appeal which fails and is dismissed with costs. SUBBA RAO, J. I regret my inability to agree with the judgment prepared by my learned brother Rajagopala Ayyangar, J. As the fact, ; have been fully stated in the judgment of my learned brother, I need not repeat them except to the extent necessary to appreciate the two points on which I propose to express my opinion. The appellants carry on business in cotton under, the name and style of Indramani Pyarelal Gupta & Co. The said firm is a member of the East India Cotton Association Limited, which is a recognized Association within the meaning of the Forward Contracts (Regulation) Act, 1952, hereinafter called "the Act". The Association has been formed for the purpose of, inter alia, promoting and regulating trade in cotton and providing a cotton Exchange and a Clearing House. Under the Act a formed by the Central Government and respondent is its man and respondents 2 and 3 are its Members. 758 Prior to January 21, 1956, on behalf of themselves and their constituents, the appellants entered into hedge contracts in cotton for February 1956 and May, 1956 Settlements with other members of the Association in accordance with its bye laws. When the said contracts were effected, bye law 52 AA ran as follows : "(I) Whether or not the prices at which cotton may be bought or sold are at any time controlled under the provisions of the , if the Textile Commissioner with the concurrence of the Forward Markets Commission and after consultation with the Chairman, be of opinion that the continuation of hedge trading is likely to result in a situation detrimental to the larger interests of the economy of India and so informs the Board, the Board shall forthwith cause a notice to be posted on the Notice Board to that effect and on the posting of such notice and notwithstanding anything to the contrary contained in these Bye laws or in any hedge or on call contract made subject to these Bye law, the following provision shall take effect. (2)Every hedge contract and every on call contract in so far as the cotton is uncalled thereunder, or in so far as the price has not been fixed thereunder, entered into between a member and a member or between a member and a non member then outstanding shall be deemed closed out at such rate, appropriate to such contract, as shall be fixed by the Textile Commissioner and the provisions of clauses (3), (4) and (6) of Bye law 52 A, in so far as they apply to hedge and on call contracts shallapply as if the formed part of this Bye law. After the affixation of the said notice onthe Notice Board, trading in hedge 759 and on call contracts shall be prohibited until the Textile Commissioner with the concurrence of the Forward Markets Commission and after consultation with the Chairman, permits resumption". On January 21, 1956, the Central Government, in exercise of power conferred upon it by sub section (1) of section 12 of the Act, notified a new bye law 52 AA to be substituted in place of the earlier bye law 52 AA. The new bye law reads as follows : "(1) Whether or not prices at which cotton may be bought or sold are at any time controlled under the provisions of the , if the Forward Markets Commission is of the opinion that continuation of trading in hedge contract for any delivery or deliveries is detrimental to the interest of the trading or the public interest or the larger interests of the economy of India and so notified the Chairman, then notwithstanding anything to the contrary contained in these Bye laws or in any hedge or on call contract made subject to these Bye laws the following provisions shall take effect. (2) Every hedge contract and every on call contract in so far as cotton is uncalled thereunder and relating to the delivery or deliveries notified under clause (1) entered into between a member and a member or between a member and non member then outstanding shall be deemed closed out at such rate appropriate to such contract and with effect from such date as shall be fixed by the Forward Markets Commission and the provisions of Clauses (3), (4) and (6) of Bye law 52A in so far as they apply to hedge and on call contract" shall apply as if they formed part of this Bye law." 760 On January 24, 1956, the Forward Markets Commission, in exercise of the power conferred on it under the new bye law, issued a notification closing out all contracts of February 1956 and May 1956 Settlements at the rates mentioned in the said notification. The, petition for a writ of mandamus filed by the appellants in the High Court of Judi cature at Bombay for ordering the respondents to cancel or withdraw the said notification dated January 24, 1956, was dismissed in the first instance by Coyajee, J., and, the appeal preferred against the judgment of Coyajee, J., was also dismissed by a division Bench consisting of Chagla, C.J., and Tendolkar, T. Hence the appeal. I purpose, as I have already indicated, to consider the following two questions, as in the view I will be taking on those questions, the appeal will have to be allowed, and no other question, therefore, will arise for consideration. The said questions are : (1) Whether under section 12 (i) of the Act the Central Government. has power to make a bye law with retropective effect; and (21 whether under section 4 (f) of the Act, the Forward Markets Commission can exercise a, power assigned to it under a bye law made by the Government under section 12 of the Act. Before considering the scope of the power of the Central Government under section 12 (1) of the Act, it is necessary to consider whether the new byelaw notified on January 21, 1956, has retrospective There are material differences between the old bye law 52 AA and the new one substituted in its place Under the now bye law the important provision is that all hedge Contracts outstainding at the time it came into force shall be deemed to be closed out at such rates as shall be fixed by the Textile Commissioner. Whereas under the old by law the, Textile Commissioner had to form his opinion with the concurrence of the Forward Markets Commission and after consultation with 761 the Chairman, under the new bye law the said power of forming an opinion is conferred solely on the For ward Markets Commission where as under the old, bye law the opinion and was in regard to the question whether hedge trading was likely to result in a situation detrimental 'to the larger interests of the economy of; India under the new bye law the opinion is in respect of the question whether the continuation of trading in hedge contracts will be detrimental to the interests of trading or the public interest or the larger interests of the economy of India. While under the old byelaw the question to he considered was in regard to hedge trading as such, under the new bye law it is in respect of the continuation of trading in hedge contracts for any delivery or deliveries. While under the old bye, law the, said opinion was Communicated to the Board for action, under the new bye law it is notified to the Chairman. While under the old bye law trading, in hedge and on call contracts could be resumed if the Textile Commissioner, with the concurrence of the Forward Markets Commission and after consultation with the Chairman, permitted the resumption, under the now bye law the said provision for resumption is omitted. It is, therefore, manifest that the power of closing out a contract under the new bye law differs from that Under the old bye law in respect of the purpose of closing out, the authority empowered to order the close out and the consequences of such closing out. It is idle to contend that the new bye law makes only inconsequential changes in the old bye law. The new bye law operates upon an important term of a contract entered into before it came into force, namely, the mode of performance: it carries oil its face the vice of retroactivity. In Craies on Statutes, 5th Edn '. p, 366, the following passage appropriate to the question now raised is found. 762 renders the performance of a contract impo ssible, the rule of law is that the contract to frustrated by supervening impossibility, consequently in this case also the statute operates retrospectively. " The learned author proceeds to state at p. 367: "The principle of this case has been applied in later cases to contracts the performance of which in manner contemplated by the parties has been rendered impossible by reason of some change in the law. " It is, therefore, clear that the said bye law, in so far as it purports to effect the mode of performance of the preexisting contracts, is certainly retrospective in operation. I am assuming for the purpose of the present question that the bye law cannot be construed in such a way as to confine its operation only to contracts that are entered into after it came into force. If so, the question arises whether the Central Government had power to make a bye law under section 12 (1) of the Act with retrospective effect Section 12 (1) of the Act reads "The Central Government may, either on a request in writing received by it in this behalf from the governing body of a recognized association, or if in its opinion it is expedient so to do, make bye laws for all or any of the matters specified in section II or amend any bye laws made by such association under that section. ' Section 11 enumerates the matters in respect of which the recognized associations can make bye. laws for the regulation and control of forward contracts. Neither section 12 nor a. 11 expressly states that a bye law with retrospective operation can be made under either of those two sections. Full effect 763 can be given to both the sections by recognizing a power only to make bye laws prospective in operation, that is, bye laws that would not affect any vested rights. In the circumstances, can it be held that the Central Government to which the power to make bye laws is delegated by the Legislature without expressly conferring on it a power to give them retrospective operation can exercise a power thereunder to make such bye laws. Learned counsel for the respondents contends that, as the Legislature can make a law with retrospective operation, so too a delegated authority can make a bye law with the same effect. This argument ignores the essential distinction between a Legislature functioning in exercise of the powers conferred on it under the Constitution and a body entrusted by the said Legislature with power to make subordinate Legislation. In the case of the Legislature, article 246 of the Constitution confers a plenary power of Legislation subject to the limitations mentioned therein and in other provisions of the Constitution in respect of appropriate entries in the Seventh Schedule. This Court, in Union of India vs Madan Gopal Kabra (1), held that the Legislature can always Legislate retrospectively; unless there is any prohibition under the Constitution which has created it. But the same rule cannot obviously be applied to the Central Government exercising delegated Legislative power for the scope of their power is not co extensive with that of Parliament. This distinction is clearly brought out by the learned Judges of the Allahabad High Court in Modi Food Products Ltd. vs Commission of sales Tax, U. P. (2), wherein the learned Judges observed: "A Legislature can certainly give retrosp ective effect to pieces of Legislation passed by it but an executive Government exercising subordinate and delegated legislative (1) ; (2) A. T. R. 1956 All. 764 powers, cannot make legislation retrospective in effect unless that power is expressly conferred." In Strawboard Manufacturing Co. Ltd. vs Gutta Mill Workers Union (1) a question arose whether the Governor of U. P., who referred an industrial dispute to a person nominated by him with a direction that he should submit the award not later than a particular date could extend the date for a making of the award so as to validate the award made after the prescribed date. Reliance was placed upon section 21 of the U. P. General Clauses Act, 1904, in support of the contention that the power of amendment and modification conferred on the State Government under that section might be so exercised as to have retrospective operation. In rejecting that contention, Das, J., as he then was, observed : "It is true that the order of April 26, 1950, does not ex facie purport to modify the order of February 18, 1950, but, in view of the absence of any distinct provision in section 21 that the power of amendment and modification conferred on the State Government may be so exercised as to have retrospective operation the order of April 26, 1950, viewed merely as an order of amendment or modification cannot, by virtue of section 21, have that effect." This decision is, therefore, an authority for the position that unless a statute confers on the Government an express power to make an order with retrospective effect, it cannot exercise such a power. The Mysore High Court in a considered judgment in India Sugar & Refineries Ltd. vs State of Mysore (2) dealt with the question that now arises for consideration. There, the Government issued (1) ; 447 448. (2) A. 1. R. 1960 Mys. 3 765 there notifications dated 9 4 1956, 15 10 1957 and 13 2 1958 purporting to act under section 14 (1) of the Madras Sugar Factories Control Act, 1949, whereby cess was imposed on sugarcane brought and crushed in Petitioner 's factory for the crushing season 1955. 56, 1956 57 and 1957 58 respectively. One of the question raised was whether under the said section the Government had power to issue the notifications imposing a cess on sugarcane brought and crushed in petitioner 's factory for a period prior to the date of the said notifications. Das Gupta, C. J., deliver ing the judgment of the division Bench, held that it could not. The learned Advocate General, who appeared for the State, argued, as it is now argued before us, that in a case where power to make rules is conferred on the Government and if the provision conferring such a power does not expressly prohibit the making of rules with retrospective operation, the Government in exercise of that power can make rules with retrospective operation. In rejecting that argument, the learned Chief Justice, delivering the judgement of the division Bench, observed at p. 332: "In my opinion a different principle would apply to the case of an executive Government exercising subordinate and delegated legislative powers. In such oases, unless the power to act retrospectively is expressly conferred by the Legislature on the Government, the Government cannot act retrospectively. " With respect, I entirely agree with the said observations. The same question was again raised and the same view was expressed by the Kerala High Court in C. W. Motor Service (P) Ltd. vs State of Kerala (1). There the Regional Transport Authority, Kozhikode, granted a stage carriage permit to the third respondent therein in respect of a proposed (1) A. 1. R. (195) Ker. 347, 348. 766 Ghat route. The grant of the permit was challenged on the ground that when that order was passed there was no constituted Regional Transport Authority for the district. It was contended on behalf of the contesting respondent that the said defect was cured by a subsequent notification issued by the Government whereby Government ordered the continuance of the Road Transport Authority from the date of the expiry of the term of the said 'Authority till its successor was appointed. The High Court held that the notification with retrospective operation was bad. In that context, Varadaraja lyengar, J., observed : "The rule is well settled that even in a case where the executive Government acts as a delegate of a legislative authority, it has no plenary power to provide for retrospective operation unless and until that power is expressly conferred by the parent enactment." The House of Lords in Howell vs Folmouth Boat Construction Co. Ltd. (1) expressed the same opinion and also pointed cut the danger of conceding such a power to a delegated authority. There, a licence was issued to operate retrospectively and to cover works already done under the oral sanction of the authority. Their Lordships observed: "It would be a dangerous power to place in the hands of Ministers; and their subordinate officials to allow them, when. ever they had power to license, to grant the licence ex post facto; and a statutory power to license should not be construed as a power to authorise or ratify what has been done unless the special terms of the statutory provisions clearly warrant the construction. " It is true that this is a case of a licence issued by an (1) 767 authority in exercise of a statutory power conferred on it, but the same principle must apply to a byelaw made by an authority in exercise of a power conferred under a statute. Our Constitution promises to usher in a welfare State. It involves conferment of powers of subordinate legislation on government and governmental agencies affecting every aspect of human activity. The regulatory process is fast becoming an ubiquitouselement in our life. In a welfare State, perhaps,it is inevitable, for the simple reason that Parliament or Legislature cannot be expected to provide for all possible contingencies. But there is no effective machinery to control the rule making powers, or to prevent its diversion through authoritarian channels. If the conferment of power to make delegated Legislation proportion vigor carried with it to make a rule or bye law with retrospective operation, it may become an instrument of oppression. In these circumstances, it has been rightly held that the provision conferring such a power must be strictly construed and unless a statute expressly confers a powers to make a rule or bye law retrospectively, it must be held that it has not conferred any such power. It is said that such a strict construction may prevent a rule making authority from making a rule in an emergency, though the occasion demands or justifies a rule with retrospective effect. The simple answer to this alleged difficulty is that if the Legislature contemplates or visualizes such emergencies, calling for the making of such rules or bylaws with retrospective effect, it should expressly confer such power. It is also said that the Government can be relied upon to make such rules only on appropriate occasions. This Court cannot recognize implied powers pregnant with potentialities for mischief on such assumptions. That apart, the scope or ambit of a rule cannot be made to depend upon the status of a functionary entrusted with a 768 rule making power. In public interest the least the court can do is to construe provisions conferring such a power strictly and to confine its scope to that clearly expressed therein. Applying that rule of strict construction, I would hold that section 12 (1) does not confer a power on the Central Government to make a bye law with retrospective effect and, therefore, the new bye law made on January 21, 1956, in so far as it purports to operate retrospectively is invalid. Assuming that it is permissible to infer such a power by necessary implication, can it be said that it is possible to so imply under section 12 of the Act ? The phrase "necessary implication", as applied in the law of statutory construction means an implication that is absolutely necessary and unavoidable; that is to say, a court must come to the conclusion that unless such an implication is made, the provisions of the section could not be given full effect on the wording as expressed therein. Under section 12 of the Act, the Central Government may either on a request in writing received by it from the governing body of a recognized association, or if in its opinion it is expedient so to do, make byelaws for all or any of the matters specified in section 11 or amend any bye law made by such association under that section. Now section 11 says that any recognized association may, subject to the previous approval of the Central Government, make bye laws for the regulation and control of forward contracts; under sub a. (2) thereof, the association is authorized to make laws providing for any of the matters mentioned therein. A glance at those matters shows that all the bye laws providing for those matters could be framed without giving section 12 any retrospective effect. It is said that section II (o) gives an indication that a bye law contemplated by that sub clause must necessarily provide for its retrospective operation. It reads: 769 "the emergencies in trade which may arise and the exercise of powers in such emergencies including the power to fix maximum and minimum prices;" The learned Solicitor General contends that an occasion may arise when by a determined action of a "bear" or a "bull" the rates may about up beyond a reasonable level or fall down steeply below a particular point creating an emergency in the market and in that emergency it would be necessary for the authorities concerned to step in and close out the contracts, and unless the bye law is made retrospective such an emergency cannot be met and, therefore, the power to make a by law to meet an emergency contemplated in section 11(o) of the Act must necessarily imply a power to make a bye law retrospectively. There is an underlying fallacy in this argument. The conferment of a power on the Government to make a bye law with retrospective operation must be abso lutely necessary and unavoidable to provide for the matter mentioned in sub cl. (o) of section 11 or any other clause of sub section (2) of section 11. A bye law could certainly be made to provide for an emergency visualized by the learned Solicitor General or for any other emergency contemplated by that clause with only prospective operation. It cannot, there fore, be said that unless retrospective operation was given to the provisions of section 12, the objects of the legislation would be defeated or the purposes for which the power was conferred could not be fulfilled. therefore, hold that section 12(1) of the Act does not confer any such power on the Central Government by necessary implication. The second question turns upon the interpretation of a. 4 of the Act. It reads: "The function of the Commission shall be (a) to advise the Central Government in. 770 respect of the recognition of, or the with drawal of recognition from, any association or in respect of any other matter arising out of the administration of this Act; (b) to keep forward markets under observa tion and to take such action in relation to them as it may consider necessary, in exercise of the powers assigned to it by or under this Act; (c) to collect and whenever the Commission thinks it necessary publish information regarding the trading conditions in respect of goods to which any of the provisions of this Act is made applicable, including information regarding supply, demand and prices, and to submit to the Central Government periodical reports on the operation of this Act and on the working of forward markets relating to such goods; (d) to make recommendation generally with a view to improving the Organisation and working of forward markets; (e) to undertake the inspection of the acco unts and other documents of any recognized association or registered association or any member of such association when. ever it considers it necessary; and (f) to perform such other duties and exercise such other powers as may be assigned to the Commission by or under this Act, or as may be prescribed. " Two questions arise under this section, namely, (i) whether the duties imposed and the powers conferred on the Commission under cl. (f) of section 4 shall 771 be read ejusdem generis with those imposed or conferred under cls. (a) to (e), and (ii) whether the powers assigned to the Commission by or under a bye law can be performed by the Commission under cl. To appreciate the first question it would be necessary to know the constitution of the Commission and its rule in the scheme of control pro vided by the Act. Under a. 2(b), ",Commission ' means the Forward Markets Commission established under section 3. Section 3 empowers the Central Government to "establish a Commission to be called the Forward Markets Commission for the purpose of exercising such functions and discharging such duties as may be assigned to the Commission by or under this Act". Clauses (a) to (e) of section 4 show that the function of the Commission are wholly supervisory and advisory in nature. It keeps the forward markets under observation, collects and publishes information, undertakes the inspection of the accounts and other documents, and makes recommendations to the Central Government in respect of matters mentioned in that section. Under section 8(2)(c), the Central Government may also direct the Commission to inspect the accounts and other documents of any recognized association or any of its member,% and submit its report thereon to the Central Government. It is, therefore, manifest that the Commission has no administrative functions or powers of management or powers of interference in the internal management of the registered associations on the other hand, section 11 and the bye laws framed thereunder it is not necessary to go into them in detail show that the regulation and control of the business of forward contracts and other businesses is entirely in the hands of the Association. The doctrine of ejusdem generis is very well settled. The expression of ejusdem generis" means of the same kind ', and "it is only an illustration of specific application of the broader maxim noscuntur a sociia i. e., general and specific 772 words which are capable of an analogous meaning, being associated together, take colour from each other, so that the general words are restricted to a sense, analogous, to the less general". While to invoke the application of the doctrine of ejusdem generis there must be a distinct genus or category. , that is to say, the specific words preceding the general word must belong to the same class, the maxim noscuntur a sociis is of wider application. This Court in The Western India The acres Ltd. vs Municipal Corporation of the City of Poona, though did not expressly say so, in my view was dealing with the said two doctrines, and it observed therein: ". . . although the rule of construction based on the principle of ejusdem generis cannot be invoked in this case, for items (i) to (x) do not, strictly speaking, belong to the same genus, but they do indicate, to our mind the kind and nature of tax which the municipalties are authorized to impose." So, in the present case, it way be said that cls. (a) to (f) may not belong to the same class, but they indicate that the functions described in the said clauses, being supervisory and advisory in character, are so analogous to each other that they take colour from each other and therefore the general words following must be restricted to a sense ana logous to the said functions. It is said that cl.(f) provides for duties and powers, whereas cls. (a) to (e) only deal with functions and, therefore, cl. (f) must be deemed to provide for altogether a different subject matter. I cannot agree with this contention, for the heading of s.4 is "Function of the Commission", and the action opens out with the words "The functions of the Commission shall be" and the functions are mentioned in cls. (&) to 773 (f). It is, therefore, manifest that the duties and powers mentioned in cl.(f) are also functions. To put it differently, all the clauses deal with functions of the Commission. That apart, a power and a duty are, the two facts of the same concept. Clauses (a) to (e) also, though ex facto they read as if they impose only duties, on a closer scrutiny indicate that the duties cannot be exercised without the corresponding powers for the discharge of those duties. I would, therefore, hold that the duties and powers that may be assigned to the Commission under cl. (f) can be only supervisory or advisory functions other than those mentioned in cls.(a) to (e). The power conferred on the Commission under the bye law made by the Government to close out contracts and thus terminate the contracts is neither an advisory nor a supervisory power, and, therefore, the Commission cannot legally exercise the same. The second question turns upon the interpretation of the provisions of cl. (f) of s.4. The said clause reads: "to perform such duties and exercise such other powers as may be assigned to the Commission by or under this Act, or as may be prescribed. " The crucial words are ,by or under this Act, or as may be prescribed". Under section 2(h) of the Act "Prescribed" means "prescribed by rules made under this Act" ; an( a. 2 (k) defines "rules" thus ; "rules", with reference to the rules relating in general to the constitution and managemen t of an association, includes in the case of an incorporated association its memorandum and articles of association. " If read with the definition of the word "Prescribed" 774 cl. (f) indicates that the commission can perform the functions assigned to it by or under the Act, or as may be prescribed by the rules made under the Act. The specific mention of the rules made under the Act in the clause makes it abundantly clear that the phrase " 'under the Act" excludes a rule made in exercise of the power conferred under the Act, for if the said phrase takes in a rule, the word "Prescribed" becomes redundant. Such ineptitude and went of precision in drafting shall not be attributed to the Legislature, except for compelling reasons. If a rule was not comprehended by the phrase "Under the Act", it would be illogical to hold that it would take in a bye law. It would mean that the Legislature specially provided for a rule, which has certainly a higher status than a bye law in legislative practice, while it treated a bye law as a provision of Act: that cannot be. The other reason that may be suggested is that the word "Prescribed" was used in superabundant caution or by mistake. If superabundant caution was required to mention separately the rules, greater caution would have been necessary to provide separately for a bye law. A court ordinarily shall attempt to give meaning to every word used by the Legislature, unless it is impossible to do so. Here there is not only no such impossibility, but there is also a good reason for the Legislature in excluding the bye laws from the operation of cl.(f) of section 4 of the Act. Subordinate or delegated legislation takes different forms. Subordinate legislation is divided into two main classes, namely, (i) statutory rules, and (ii) bye laws or regulations made, (a) by authorities concerned with local government, and (b) by persons, societies, or corporations. The Act itself recognizes this distinction and provides both for making of the rules as well as bye laws. A comparative study of sections 11 and 12 whereunder 775 power is conferred on the Central Government and the recognized associations to make bye laws on the one hand, and section 28, whereunder the Central Government is empowered to make rules on the other, indicate that the former are intended for conducting the business of the association and the letter for the purpose of carrying into effect the objects of the Act. In considering the question raised in this case in this distinction will have to be borne in mind. It would be unreasonable to assume that a private association, though registered under the Act, could confer powers on a statutory authority ,under the Act. That is why under section 4(f), the Legislature did not think fit to provide for the assignment of a function to the commission in exercise of a power under a bye law. The nonmention of bye law in cl. (f) is not because of any accidental omission but a deliberate one, because of the incongruity of an assignment of a function to the Commission under a bye law. I would, therefore, construe the words "by or under this Act, or as may be prescribed" as follows : (by this Act" applies to powers assigned proportion vigor by the provisions of the Act ; 'under this Act" applies to an assignment made in exercise of an express power conferred under the provisions of the Act; and 'may be prescribed" takes in an assignment made in exercise of a power conferred under a rule. This construction gives a natural meaning to the plain words used in the section and avoids stretching, the language of a statutory provision to save an illegal bye law. In this context two decisions are cited at the Bar. The first is that of the Judicial Committee in Hubli Electricity Company Ltd. vs Province of Bombay (1). There, under section 3(2)(f) of the Indian Electricity Act (No. TX of 1910) "the provisions contained in (1)(1948) 26 I.A. 57. 776 the Schedule shall be deemed to be incorporated with, and to form part of, every licence granted under this Part". Under section 4(1)(a) of the said Act, ",The Provincial Government may, if in its opinion the public interest so requires, revoke a licence", inter alia, if "the licensee in the opinion of the Provincial Government makes wailful and unreasonably prolonged default in doing anything required of him by or under this Act". Under sub cl. (6) of the Schedule, a licensee had to comply with certain conditions. The Government revoked the licence on the ground that the licensee did not comply with the conditions laid down in Schedule VI, which were deemed to be incorporated in the licence by virtue of section 3(2), and therefore he did not do the thing required of him within the meaning of section 4 of that Act. The Privy Council held that the performance by the licensee of the conditions of the Schedule to the Act was clearly required to be made under the Act. This decision does not help us very much in the present case, as the question of bye law did not arise therein '. Nor the decision of the Madras High Court in Narayanaswamy vs Krishnamurthi (1) is of any assistance. There the question was whether the regulations framed by the Life Insurance Corporation by virtue of the powers vested in it by Act 31 of 1956 prohibiting the employees from standing for election fell within the meaning of the words ,under any law" in article 191 (1) (e) of the Constitution. The High Court held that the regulations were law made under the Act of Parliament. The conclusion was based on the principle that the rule made in pursuance of the delegated power has the same validity and has the same characteristic as a law made directly by the Parliament. Apart from the fact that the words to be construed there were different and in a sense wider than the words to be construed in the present case, the principle accepted in the decision is only (1) I.L.R. 777 of a general application and does not help to construe the specific words of cl. (f) of section 4 ; their meaning can be gathered only by interpreting the said words, having regard to the setting and the context in which they are used. For the foregoing reasons, I would hold that the Government had no power under section 12 of the Act to make a bye law assigning any function to the Commission. It follows that notification dated January 24, 1956, by the Forward Markets Commission was illegal and the appellants would be entitled to the issue of a writ of mandamus in the terms prayed for. In the result, the appeal is allowed with costs. ORDER In view of the Judgment of the majority, the appeal stands dismissed with costs.
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The people appealing this case were part of the East India Cotton Association. This group was officially recognized by the government under a law about trading called the Forward Markets Regulation Act of 1952. Before December 1955, these people had made "hedge contracts" for cotton. These contracts were for settlements (paying off the contract) in February and May of 1956. They followed the Association's rules when they made these contracts. Near the end of 1955, people thought the cotton market was going to have problems. So, the government told the Association to stop trading in these hedge contracts for short periods. This didn't fix the problem. On January 21, 1956, the government used its power under Section 12 of the Act. They made a new rule (called bye-law 52AA) that replaced the old one. This new rule said that the Forward Markets Commission (a group created by the Act) could close out all hedge contracts at prices they set. On January 24, 1956, the Commission said that all hedge contracts, even the ones that already existed, were closed. They also set the prices for settling these contracts. The people appealing argued that the new rule (bye-law 52AA) was not valid. They said the Commission shouldn't have the power to close hedge contracts. They also said the Association couldn't give that power to the Commission or anyone else. Finally, they argued that the new rule shouldn't apply to contracts that already existed. The court decided (with most judges agreeing, but one disagreeing) that the new rule (bye-law 52AA) was legal. It said the government had the power to make it, and it gave the Commission the power to close all cotton hedge contracts, even existing ones. Section 4 of the Act says one of the Commission's jobs is to do other duties and use other powers that are given to it "by or under the Act, as may be prescribed." This means the law can give the Commission other powers. The court said there's no limit to the kind of power that can be given under this section, as long as it relates to regulating the trading of goods. The court also said that to decide if a group can legally have a certain power, you have to see if the power goes against the reason the group was created. If the power helps the group do what it's supposed to do under the law, it can be legally given to them. The court decided that the power given by the new rule was valid for the Commission. The court said the power was given "under the Act." This means the power was given by rules made by a group that has the power to make those rules because of the Act. The court said the new rule was within the power to make rules given by Sections 11 and 12 of the Act. The court also said the new rule didn't go against Article 64 of the Association's rules. Article 64 only applies to the Board of the Association and doesn't limit the Association's power. The court also said that the new rule applies to both future contracts and existing ones. The court said that if a law can be made to apply to the past, then the power to make rules can also be given to apply to the past. In this case, the power to make rules that affect existing contracts is implied by Section 11 of the Act. There's nothing else in the Act that says this isn't allowed. The judge who disagreed said that Section 12 (1) of the Act doesn't give the government the power to make a rule that applies to the past. He said that the power to make rules should be understood strictly. Unless the law clearly says that a rule can apply to the past, it can't. He also said that even if it's possible to imply that a rule can apply to the past, it shouldn't be done in this case. He said that the purpose of the law wouldn't be ruined if the rule didn't apply to the past. He also said that the powers given to the Commission by the new rule can't be given under Section 4 (f) of the Act. He said that the other parts of Section 4 show that the Commission's job is mostly to watch over and give advice. The job described in Section 4 (f) should be similar to these. He said the Commission doesn't have the power to manage or interfere with the Association's internal affairs. These powers belong to the Association itself. He also said that the power given to the Commission wasn't given "under the Act." He said that this phrase doesn't include a rule, and it only applies to a power given directly by the Act. The government doesn't have the power under Section 12 to give any job to the Commission.
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By their petition, the appellants challenged the validity of a notification issued by Forward Markets Commission a statutory body created by the Forward Markets Regulation Act 1952 (LXXIV of 1952) (hereinafter referred to as the Act) to the authorities of the East India Cotton Association, Bombay (which will be referred to as the Association) intimating to them that the continuation of trading in certain types of forward contracts in cotton including that known as "hedge contracts" was "detrimental to the interest of the trade and the public interest and to the larger interests of the economy of India" and directed these contracts to be closed out, to be settled at prices fixed in the notification. The terms and conditions of forward contracts in cotton including "hedge contracts", and the manner of their implementation, were governed by the provisions contained in certain bye laws of the Association and of these that relevant to the consideration of the matters in this appeal was bye law 52AA which on the date when the appellants entered into their contracts ran as follows: "52 A.A. (1) whether or not the prices at which the cotton may be bought or sold are at any time controlled under the provisions of the Essential Commodities Act, 1055, if the Textile Commissioner with the concurrence of the Forward Markets Commission and after consultation with the Chairman (of the Board), be of opinion that the continuation of hedge trading is likely to result in a situation detrimental to the larger interests of the economy of India and so informs the Board, the Board shall forthwith cause a notice to be posted on the Notice Board to that effect and on the posting of such notice and notwithstanding anything to be contrary contained in these bye laws or in any hedge or on call contract made subject to these Bye laws, the following provisions shall take effect. (1) of the bye law 52AA of the Bye laws of the E.I.C.A. Learned Counsel divided his submission on this matter into two sub heads (a) that the Forward Markets Commission could not, on a proper construction of the Act, be validly vested 731 with the power with which it was clothed by the amended bye law, and (b) that it was beyond the power of the Association to have conferred the power which it purported to do under the amended bye law 52AA. Put in other words, the objections were that the Forward Markets Commission could not, having regard to the terms of the statute under which it was created, be a proper recipient of the power 'with which it was vested by the bye law and secondly that the Association was in law incapable of conferring that power on the Forward Markets Commission or on any other body. The functions of the Commission shall be (a)to advise the Central Government in respect of the recognition of, or the withdrawal of recognition from any association or in resPect of any other matter arising out of the administration of this Act ; (b)to keep forward markets under observation and to draw the attention of the Central Government or of any other prescribed autho rity to any development taking place, in or in relation to, such markets which, in the opinion of the commission is of sufficient importance to deserve the attention of the Central Government and to make recommendations thereon ; (e)to collect and whenever the Commission thinks it necessary publish information regar ding the trading conditions in respect of goods to which any of the provisions of this Act is made applicable, including information regarding supply, demand and prices, and to submit to the Central Government periodical reports on the operation of this Act and on the working of forward markets relating to such goods ; (d)to make recommendations generally with a view to improving the Organisation and working of forward markets ; (e)to undertake the inspection of the accounts and other documents of any recognished association whenever it considers it necessary ; and 733 (f)to perform such other duties and exercise such other powers as may be assigned to the Commission by or under this Act, or as may be prescribed". The question therefore is whether a power conferred by a bye law could be held to be a power ",conferred under the Act". Sub section (3) refers to the bye laws as the se made under this section and the provisions of sub section (4) puts this matter beyond doubt by enacting: "11 (4) Any bye laws made under this section shall be subject to such conditions in regard to previous publication as may be prescribed, and when approved by the Central Government, shall be published in the Gazette of India and also in the Official Gazette of State in which the principal office of the recognised association is situate ; Section 12 under which the impugned bye law was made states in sub section (2) : "12 (2) where, in pursuance of this section, any bye laws have been made or amended, the bye laws so made or amended shall be published in the Gazette of India and also in the Official Gazette of the State in which the principal office of the recognized association is situate, and on the publication thereof in the Gazette of India the bye laws so made or amended shall have effect as if they had been made or amended by the recognised associations, and in sub section (4): "12. The making or the amendment or revision of any bye laws under this section shall in all cases be subject to the condition of previous publication", Having regard to these provisions it would not be 739 possible to contend that notwithstanding that the bye laws are rules made by an Association under section 11 or compulsorily made by the Central Government for the Association as its bye laws under section 18, they are not in either case Subordinate legislation under section 11 or 12 as the case may be, of the Act and they would therefore squarely fall within the words , under the Act" in s 4(f). (f) specifically made provision for powers conferred by "rules" by the employment of the pbrase "or as may be prescribed" and, so to speak, took the "rules" out of the reach of the words " 'under the Act" it must necessarily follow that every power confered by Subordinate law making body must be deemed to have been excepted from the content of that expression and that consequently in the Content the word ,, 'by the Act" should be held to mean ,,directly by the Act" i.e., by virtue of positive enactment, of the words "under the Act" should be held to be a reference to powers gatherable by necessary implication from the provisions of the Act. As an instance learned Counsel referred us to the power of the Central Government to direct the Commission to inspect the accounts and other documents of any recognised association or of any of its members and submit its report thereon to the Central Government under section 8 (2)(c) and suggested that this would be a case of a power or duty which would be covered by the words "under the Act". But beyond that to claim that for the reason that it is redundant as to a part, the whole content of the words "under the Act" should be discarded, and the words "by the Act" should be read in a very restricted and, if one may add, in an unnatural sense as excluding a power confered by necessary implication, when such a power would squarely fall within the reach of these words would not, in our opinion, be any reasonable con struction of the provision We need only add that the construction we have reached of s.4 (f) is reinforood by the language of section 3 (1) which is free from the ambiguity created by the occurrence of the expression " 'as may be prescribed" in the former. 741 This contention was urged with reference to two considerations: (a) that a bye law of the type now in controversy was not within section II of the Act, and (b) that having regard to the provision contained in the Articles of Association of the Association the bye law was beyond the powers of the Association to frame. (n) the regulation of fluctuations in rates and prices; (o) the emergencies in trade which may arise and the exercise of powers in such eme regencies including the power to fix maximum prices; 743 As the power of the Central Government to make bye laws under section 12 is admittedly co extensive with the power of the Associations to frame byelaws, it is not necessary to refer to the terms of the latter sections Before considering in detail the argument on this part of the case we consider it useful to set out a few of the bye laws of the Association whose validity has not been challenged and which would show the manner in which the Association has been functioning in emergencies such as that for which the impugned bye law provides, Bye law 52 which still exists: "52. Apart from an argument immediately to be noticed, we do not see how, if such a power could validly be conferred upon a Textile Commissioner or even exercised by the Board of the Association under a bye law framed under section 11, the same would be beyond the power to make bye laws under section 11 by the mere fact that the authority vested with the power is the Forward Markets Commission. The relevant portion of Article 73 runs: ""Under and in conformity with any Statutory provisions for the time being in force, the Board may pass and bring into effect such bye laws as may be considered in the interest of or conducive to the objects of the and Article 74 runs: "Without prejudice to the generality of the powers to make bye laws conferred by the Memorandum of Association and by these Articles and under or in the absence or any statute or statutes in force in that behalf, it is hereby expressly declared that the said powers to make, alter, add to, or rescined Bye laws including power to do so in regard to all or any of the following matters " Sub para (7) repeats inter alia the contents of 748 Paragraph III (e) of the Memorandum of Association which we have extracted, The entire argument of Mr. Pathak on Article 64 was based on the footing that the power to make a bye law was vested solely in the Board, because it is only the powers of the Board that are subject to the limitation imposed by Article 64. If therefore a bye law could be made, by the Association it is manifest that there is no limitation upon its powers such as is to be found in Article 64 which applies only to the Board. retrospective unless the same were to have that effect by express language or by necessary intendment, the impugned bye law should, be held to affect and close out only those contracts which were entered into after the date on which the byelaw came into operation and that if he was right in this construction the impugned notification had gone beyond the powers conferred on the Commission by the new bye law. The submission of learned 'Counsel was that though a legislature which bad plenary power in this regard could enact a, havind a retrospective operation, Subordinate legislation, be it a rule, a bye law or a notification, could not be made so as to have retrospective operation and that to that extent the rule, bye law or notification would be ultra vires and would have to be struck down, relying for this position on the decision of the Mysore High Court reported in AIR 1960 Mys, 326. If in the present case the power to make a byelaw so as to operate on contracts subsisting on the day the same was framed, would follow as; a necessary implication from the term of section 1 1, it would not be necessary to discuss the larger question as to whether and the 753 circumstances in which Subordinate legislation with retrospective effect could be validly made. Detailing the conseqences of a notification under section 15, s.16 (a:) enacts "16 (a,,) Every forward contract for the sale or purchase of any goods specified in the notification, entered into before the date of the notification and remaining to be performed after the said, date and which is not in conformity with the provision of section 15, shall be deemed to be closed out at such rate as the Central Government may fix in this behalf. Based on these provisions the submission was that Act had made special provisions for retrospective operation of certain notifications so as to affect rights under subsisting contracts and that in cases where there was no such specific provision it was not intended that a bye law or a notification could have that effect. There is one other aspect in which the same problem might be viewed and it is this : The contract entered into by the respondents purported to be one under the bye laws for the time being in force and any change in the bye laws therefore would in to be contemplated and provided for by the contract itself, so that it might not be correct to speak of the new bye law as affecting any accrued 756 rights under a contract. To the allegation made in this form in the petition the first respondent, the, Chairman: of the Forward Markets Commission, filed an affidavit in the course of which he pointed out that the continuance of trading in futures was in the circumstances then prevailing in the market detrimental to the interests of the trade and that a conclusion on this matter had,been reached by the Commission even before by law 52 AA was amended, that the question of closing out existing contracts was engaging the attention of even the Board of the Association from as early as the beginning of January 1956 and it was for the purpose of enabling the Commission to take action to set right matters that bye law 52AA was amended and that immediately the amended bye law came into force the Commission took action and issued: the notification now manugned. When the said contracts were effected, bye law 52 AA ran as follows : "(I) Whether or not the prices at which cotton may be bought or sold are at any time controlled under the provisions of the , if the Textile Commissioner with the concurrence of the Forward Markets Commission and after consultation with the Chairman, be of opinion that the continuation of hedge trading is likely to result in a situation detrimental to the larger interests of the economy of India and so informs the Board, the Board shall forthwith cause a notice to be posted on the Notice Board to that effect and on the posting of such notice and notwithstanding anything to the contrary contained in these Bye laws or in any hedge or on call contract made subject to these Bye law, the following provision shall take effect. The new bye law reads as follows : "(1) Whether or not prices at which cotton may be bought or sold are at any time controlled under the provisions of the , if the Forward Markets Commission is of the opinion that continuation of trading in hedge contract for any delivery or deliveries is detrimental to the interest of the trading or the public interest or the larger interests of the economy of India and so notified the Chairman, then notwithstanding anything to the contrary contained in these Bye laws or in any hedge or on call contract made subject to these Bye laws the following provisions shall take effect. 760 On January 24, 1956, the Forward Markets Commission, in exercise of the power conferred on it under the new bye law, issued a notification closing out all contracts of February 1956 and May 1956 Settlements at the rates mentioned in the said notification. has power to make a bye law with retropective effect; and (21 whether under section 4 (f) of the Act, the Forward Markets Commission can exercise a, power assigned to it under a bye law made by the Government under section 12 of the Act. Before considering the scope of the power of the Central Government under section 12 (1) of the Act, it is necessary to consider whether the new byelaw notified on January 21, 1956, has retrospective There are material differences between the old bye law 52 AA and the new one substituted in its place Under the now bye law the important provision is that all hedge Contracts outstainding at the time it came into force shall be deemed to be closed out at such rates as shall be fixed by the Textile Commissioner. If so, the question arises whether the Central Government had power to make a bye law under section 12 (1) of the Act with retrospective effect Section 12 (1) of the Act reads "The Central Government may, either on a request in writing received by it in this behalf from the governing body of a recognized association, or if in its opinion it is expedient so to do, make bye laws for all or any of the matters specified in section II or amend any bye laws made by such association under that section. ' In the circumstances, can it be held that the Central Government to which the power to make bye laws is delegated by the Legislature without expressly conferring on it a power to give them retrospective operation can exercise a power thereunder to make such bye laws. It is true that this is a case of a licence issued by an (1) 767 authority in exercise of a statutory power conferred on it, but the same principle must apply to a byelaw made by an authority in exercise of a power conferred under a statute. Applying that rule of strict construction, I would hold that section 12 (1) does not confer a power on the Central Government to make a bye law with retrospective effect and, therefore, the new bye law made on January 21, 1956, in so far as it purports to operate retrospectively is invalid. Under section 12 of the Act, the Central Government may either on a request in writing received by it from the governing body of a recognized association, or if in its opinion it is expedient so to do, make byelaws for all or any of the matters specified in section 11 or amend any bye law made by such association under that section. 770 respect of the recognition of, or the with drawal of recognition from, any association or in respect of any other matter arising out of the administration of this Act; (b) to keep forward markets under observa tion and to take such action in relation to them as it may consider necessary, in exercise of the powers assigned to it by or under this Act; (c) to collect and whenever the Commission thinks it necessary publish information regarding the trading conditions in respect of goods to which any of the provisions of this Act is made applicable, including information regarding supply, demand and prices, and to submit to the Central Government periodical reports on the operation of this Act and on the working of forward markets relating to such goods; (d) to make recommendation generally with a view to improving the Organisation and working of forward markets; (e) to undertake the inspection of the acco unts and other documents of any recognized association or registered association or any member of such association when. ever it considers it necessary; and (f) to perform such other duties and exercise such other powers as may be assigned to the Commission by or under this Act, or as may be prescribed. " I would, therefore, construe the words "by or under this Act, or as may be prescribed" as follows : (by this Act" applies to powers assigned proportion vigor by the provisions of the Act ; 'under this Act" applies to an assignment made in exercise of an express power conferred under the provisions of the Act; and 'may be prescribed" takes in an assignment made in exercise of a power conferred under a rule.
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The people appealing this case were part of the East India Cotton Association. This group was officially recognized by the government under a law about trading called the Forward Markets Regulation Act of 1952. Before December 1955, these people had made "hedge contracts" for cotton. These contracts were for settlements (paying off the contract) in February and May of 1956. They followed the Association's rules when they made these contracts. Near the end of 1955, people thought the cotton market was going to have problems. So, the government told the Association to stop trading in these hedge contracts for short periods. On January 21, 1956, the government used its power under Section 12 of the Act. They made a new rule (called bye-law 52AA) that replaced the old one. This new rule said that the Forward Markets Commission (a group created by the Act) could close out all hedge contracts at prices they set. On January 24, 1956, the Commission said that all hedge contracts, even the ones that already existed, were closed. They also set the prices for settling these contracts. The people appealing argued that the new rule (bye-law 52AA) was not valid. They said the Commission shouldn't have the power to close hedge contracts. They also said the Association couldn't give that power to the Commission or anyone else. Finally, they argued that the new rule shouldn't apply to contracts that already existed. The court decided (with most judges agreeing, but one disagreeing) that the new rule (bye-law 52AA) was legal. It said the government had the power to make it, and it gave the Commission the power to close all cotton hedge contracts, even existing ones. Section 4 of the Act says one of the Commission's jobs is to do other duties and use other powers that are given to it "by or under the Act, as may be prescribed." This means the law can give the Commission other powers. The court said there's no limit to the kind of power that can be given under this section, as long as it relates to regulating the trading of goods. The court also said that to decide if a group can legally have a certain power, you have to see if the power goes against the reason the group was created. If the power helps the group do what it's supposed to do under the law, it can be legally given to them. The court decided that the power given by the new rule was valid for the Commission. The court said the power was given "under the Act." This means the power was given by rules made by a group that has the power to make those rules because of the Act. The court said the new rule was within the power to make rules given by Sections 11 and 12 of the Act. The court also said the new rule didn't go against Article 64 of the Association's rules. Article 64 only applies to the Board of the Association and doesn't limit the Association's power. The court also said that the new rule applies to both future contracts and existing ones. The court said that if a law can be made to apply to the past, then the power to make rules can also be given to apply to the past. In this case, the power to make rules that affect existing contracts is implied by Section 11 of the Act. There's nothing else in the Act that says this isn't allowed. The judge who disagreed said that Section 12 (1) of the Act doesn't give the government the power to make a rule that applies to the past. He said that the power to make rules should be understood strictly. Unless the law clearly says that a rule can apply to the past, it can't. He also said that even if it's possible to imply that a rule can apply to the past, it shouldn't be done in this case. He said that the purpose of the law wouldn't be ruined if the rule didn't apply to the past. He also said that the powers given to the Commission by the new rule can't be given under Section 4 (f) of the Act. He said that the other parts of Section 4 show that the Commission's job is mostly to watch over and give advice. The job described in Section 4 (f) should be similar to these. He said the Commission doesn't have the power to manage or interfere with the Association's internal affairs. These powers belong to the Association itself. He also said that the power given to the Commission wasn't given "under the Act." He said that this phrase doesn't include a rule, and it only applies to a power given directly by the Act. The government doesn't have the power under Section 12 to give any job to the Commission.
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on (Civil) No. 491 of 1991. (Under Article 32 of the Constitution of India) WITH TRANSFER PETITION (CIVIL) No, 278 of 1991. (Under Article 139 A(i) of the Constitution of India) WITH WRIT PETITION (CIVIL) Nos. 541,542 & 560/91 G. Ramaswamy, Attorney General, Altar Ahmad, Addl. Solicitor General, Shanti Bhushan, Ram Jethmalani, P.P. Rao, Kapil Sibal, P.R.Krishnan, Ms. Indira Jaisingh, Ashok Desai, Hardev Singh, P.S. Poti, Danial Latifi, Rajinder Sachhar, M.K. Ramamurthy, R.K. Garg, S.K. Dholakia, Santosh Hegde, V.N. Ganpule, Tapas Ray, N.B. Shetye, Jayant Bhushan, Mohan Rao, Prashant Bhushan, Ms. Kamini Jaiswal, A.K. Srivastava, Manoj Wad, Ms. Rashmi Kathpalia, Ms. Nina Dikshit, E.M.S. Anam, Rajiv K. Garg, N.D. Garg, G.D. Sharma, Sudhir Walia, A.M. Khanwilkar, Mrs. Anil Katiyar, Ms. A. Subhashini, R.S. Suri, M. Veerappa, K.R. Nambiar, Harish Uppal (appeared in person) and P.H. Parekh for the appearing parties. The Judgment of the Court was delivered by B.C. RAY, J. These writ petitions raise certain consti tutional issues of quite some importance bearing on the construction of Articles 121 and 124 of the Constitution of India and of the "The Judges 25 (Inquiry) Act, 1968" even as they in the context in which they are brought, are somewhat unfortunate. Notice was given by 108 members of the 9th Lok Sabha, the term of which came to an end upon its dissolution, of a Motion for presenting an Address to the President for the removal of Mr. Justice V.Ramaswami of this Court. On 12th March, 1991, the motion was admitted by the then Speaker of the Lok Sabha who also proceeded to constitute a Committee consisting of Mr. Justice P.B. Sawant, a sitting Judge of this Court, Mr. Justice P.D. Desai, Chief Justice of the High Court of Bombay, and Mr. Justice O. Chinappa Reddy, a distinguished jurist in terms of Section 3(2) of The . The occasion for such controversy as is raised in these proceedings is the refusal of the Union Government to act in aid of the decision of the Speaker and to decline to notify that the services of the two sitting Judges on the Committee would be treated as "actual service" within the meaning of Para 11(b) (i) of of the II Schedule to the Constitu tion. It is said that without such a notification the two sitting Judges cannot take time off from theft court work. The Union Government seeks to justify its stand on its understanding that both the motion given notice of by the 108 Members of the Lok Sabha for presenting an Address to the President for the removal of the Judge concerned as well as the decision of the Speaker of the 9th Lok Sabha to admit the motion and constitute a Committee under the provisions of the have lapsed with the dissolution of the 9th Lok Sabha. Constitutional issues of some importance, therefore, arise as to the constitutional and the legal position and status of a Motion for the removal of a Judge under a law made pursuant to Article 124(5) of the Constitution and as to whether the Doctrine of Lapse would apply to such a Motion upon the dissolution of the Lok Sabha and whether, in view of the contention that such motions for removal, im peachment etc. of holders of high constitutional offices are in their very nature politically introduced, debated and decided in the Houses of Parliament and not elsewhere, the matters arising out of or relating to a Motion for removal of a Judge in either House of the Parliament are at all justiciable before courts of law. It is also urged that even if these issues have some degree of adjudicative disposition and involve some justiciable areas, the Court should decline to exercise jurisdiction as its decision and its writ might become infructous in view of the fact that in the ultimate analysis, the final arbiter whether at all any Address is to be presented rests exclusively with the Houses of Parliament and which, are wholly outside the purview of the Courts. The foregoing serves to indicate broadly the com plexities of the constitutional issues on which the Court is invited to pronounce and, as in all constitutional litiga tion, the views inevitably tend to reflect a range of policy options in constitutional adjudications and, in some meas ure, value judgments. Writ Petition No. 491 of 1991 is by a body called the "SubCommittee on Judicial Accountability" represented by its convener, Sri Hardev Singh, a Senior Advocate of this Court. Petitioner body claims to be a Sub Committee consti tuted by an "All India Convention on Judicial Accountabili ty" "to carry forward the task of implementing the resolu tions of the conventions". Writ Petition No. 541 of 1991 is by the Supreme Court Bar Association represented by its Honorary Secretary. The Bar Association seeks to prosecute this petition "in the larger public interest and in particu lar in the interests of litigant public". The two prayers common to both the petitions are, first, that the Union of India be directed to take immediate steps to enable the Inquiry Committee to discharge its functions under the "The " and, secondly, that during the pendency of the proceedings before the Committee the learned Judge should be restrained from performing judicial func tions and from exercising Judicial powers. Writ Petition No. 542 is by a certain Harish Uppal. This writ petition is more in the nature of a counter to the second prayer in the WP No. 541/1991 and WP No. 491/1991. Petitioner, Sri Harish Uppal says that till the Inquiry Committee actually finds the learned Judge guilty of the charges there should be no interdict of his judicial func tions and that if such a finding is recorded then thereafter till such time as the Motion for the presentation of the Address for the removal of the Judge disposed of by the Houses of Parliament which petitioner says should not be delayed beyond 180 days the President may ask the Judge concerned to recuse from judical functions. In Writ Petition No. 560/1991 brought by Shyam Ratan Khandelwal, a practising Advocate, the constitutional valid ity of the is challenged as ultra vires Articles 100, 105, 118, 121 and 124(5) of the Consti tution of India. It also seeks a declaration that the Motion presented by 108 Members of Parliament for the removal of the Judge has lapsed with the dissolution of the 9th Lok Sabha. It also seeks quashing of the decision of the Speaker admitting the Motion on the ground that an opportunity of being heard had been denied to the Judge before the Speaker admitted the Motion and proceeded to constitute a Committee. On the question of the validity of The , 27 1968 the petitioner contends that the law properly construed vests the powers of admitting a Motion and of constituting a Committee under Section 3 in the Speaker in his capacity as Speaker of the House and subject to the well known and well settled principles of law. procedure and conventions of the Houses of Parliament and the statute does not depart from these principles. On the contrary, the statute admits of a construction which accords with the powers and privileges of the House and that the Motion even at that stage of admis sion would require to be debated by the House. It is urged that if that be ' the construction, which the language of the statute admits then there should be no vice of unconstitu tionality in it. But if the statute is construed to vest such power exclusively in the Speaker, to the exclusion of the House, the statute, on such constitution would be uncon stitutional as violative of Articles 100 (1), 105,118 and 121 of the Constitution. Transfer Petition No. 268/1991 is for the withdrawal by this Court to itself from the High Court of Delhi, the Writ Petition (Civil) No. 1061/1991 in the Delhi High Court where reliefs similar to those prayed for by Sri Khandelwal in WP (Civil) No. 560/1991 are sought. The prayer for trans fer has not yet been granted; only the further proceedings in the High Court are stayed. But full dress arguments in all these matters have been heard. It is appropriate that this writ petition should also be formally withdrawn and finally disposed of along with the present batch of cases. All that is necessary is to make a formal order withdrawing WP (Civil) No. 1061/1991 from the Delhi High Court, which we hereby do. Certain allegations of financial improprieties and irregularities were made against Justice V. Ramaswami, when he was the Chief Justice of the High Court of Punjab & Haryana. There were certain audit reports concerning certain items of purchases and other expenditure. The then Chief Justice of India, Justice Sabyasachi Mukharji, took note of the reports in this behalf and of representations submitted to him in this behalf and advised Justice Ramaswami to abstain from discharging judicial functions until those allegations were cleared. Thereafter, a Committee of three Judges was constituted by the then Chief Justice of India, to look into the matter and to advise him whether on the facts Justice Ramaswami might be embarrassed in discharging judicial functions as a Judge of this Court. The Committee tendered its advice to the Chief Justice. It noted that Justice Ramaswami had declined to acknowledge the jurisdic tion of any Committee to sit in judgment over his conduct. The Committee, accordingly, abstained from an inquiry on the charges but. on an evaluation of the matter before it, expressed the view that as long as the charges of 28 improper conduct involving moral turpitude were not estab lished in the various enquiries then pending the operation of the constitutional warrant appointing him a Judge of the Court could not be interdicted. Thereafter, in February, 1991, 108 Members of the Lok Sabha presented a Motion to the Speaker of the 9th Lok Sabha for Address to the President for the removal of the learned Judge under Article 124(4) of the Constitution read with the provisions of the . On 12.3.1991 the Speaker of the Lok Sabha in purported exercise of his powers under Section 3 of the said Act, admitted the Motion and constituted a Committee as aforesaid to investigate the grounds on which the removal was prayed for. Soon after the decision of the Speaker to admit the Motion and constitute a Committee to investigate the charges was made, the term of the Ninth Lok Sabha came to premature end upon its dissolution. The petitioners question the legality of the Speaker 's order and assert that, at all events, the Motion had lapsed with the dissolution of the House. This contention is supported by the Union of India. They say that the effect of dissolution of the Ninth Lok Sabha is to "pass a sponge across the Parliamentary slate" and all pending motions lapse. The motion for removal, it is urged, is no exception. 'We have heard Sri Shanti Bhushan, Sri Ram Jethmala ni, Sri P.P. Rao, Sri R.K. Garg and Ms. Indira Jaising learned senior counsel in support of the prayers in writ petitions Nos. 491 and 541 of 1991 filed by the Sub Commit tee on Judicial Accountability and the Supreme Court Bar Association respectively; Sri G. Ramaswamy, learned Attorney General for the Union of India; Sri Kapil Sibal for the petitioners in writ petition No. 560/91 and transfer peti tion No. 278/91. Sri Harish Uppal, petitioner in person in writ petition No. 542/91 has filed his written submissions. The arguments of the case covered a wide constitutional scheme relating to the removal of members of the superior judiciary in India and tO the problems of justiciability of disputes arising therefrom. We shall refer to the arguments when we assess the merits of these contentions. The contentions urged at the hearing in support of the petitions which seek enforcement of Speaker 's decision as well as those urged in support of the petitions which say that the Motion has lapsed can be summaried thus: 29 Contention A: The motion for removal of the Judge moved by 108 Members of Parliament as well as the purported decision of the Speaker to admit that motion and to constitute a committee to investigate into the grounds on which removal is sought have lapsed upon the dissolution of the 9th Lok Sabha. The general rule is that no House of Parliament can seek to bind its successor. All pending business at the time of dissolution of House lapses. A motion for removal of a judge is just another motion and perishes with the expiry of the term or the earlier dissolution of the House. The question whether the motion for the remov al of the judge has lapsed or not is a matter pertaining to the conduct of the business of the House of which the House is the sole and exclusive judge. No aspect of the matter is justiciable before Court. Contention B: The constitutional process of removal of a Judge, both in its substantive and procedural aspects, is a political process within the exclusive domain of the Houses of Parliament. The conduct of the Speaker in regulating the procedure and business of the House shall not be subject to the jurisdiction of any Court. The Speaker of the Lok Sabha in the exercise of his powers under the , 1%8, acts in an area outside the courts ' jurisdiction. There is nothing in the which detracts from this doctrine of lapse. On the contrary, the provi sions of the 'Act ' are consistent with this Constitutional position. Contention C: Article 124(5) pursuant to which the , is a mere enabling provi sion. Prior 'proof of misconduct is not a condition precedent before the bar under Article 121 against the discussion of the conduct of the Judge is lifted. Contention D: The action of the Speaker in admitting the notice of motion without reference to the House and constituting a committee for inves tigation without the support of the decision of the 30 House is ultra vires Articles 100(1), 105, 121 and the rules made under Article 118 of the Constitution. The provisions of the ; 1968 can be read consistently with the Consti tutional Scheme under the aforesaid Articles. But if the provisions of the Act are so con strued as to enable the Speaker to exercise and perform those powers and functions without reference to and independently of the House, then the provisions of the Act would be uncon stitutional. Contention E. The decision of the Speaker to admit the motion and to constitute a committee for investigation is void for failure to comply with the rules of natural justice as no oppor tunity, admittedly, was afforded to the Judge of being heard before the decision was taken. Contention F. ' The process of removal by means of a motion for address to the President is a political remedy. But the fundamental right to move the Supreme Court for enforcement of fundamental rights take within its sweep the right to access to a court comprising of Judges of sterling and unsullied reputation and integri ty which is enforceable. This judicial remedy is independent of the constitutional remedy and that the court has jurisdiction to decide as to its own proper constitution. In exercise of this jurisdiction it should examine the grounds of the alleged misbehaviour and re strain the Judge from judicial functioning. Contention G. ' The Speaker 's decision is vitiated by mala fides and oblique and collateral motives. Contention H. ' The Supreme Court Bar Association and the Sub Committee on Judicial Accountability the petitioners in Writ Petition No. 491 of 1991 and Writ Petition No. 541 of 1991, respective ly, do not have the requisite standing to sue and the writ petitions are, accordingly, not maintainable at their instance. 31 Contention L ' At all events, even if the Speaker is held to be a statutory authority acting under the Statute and not as part of the proceedings or business of the Lok Sabha and is amenable to the jurisdiction of the Court, any judgment rendered and writ issued by this Court have the prospect of being infructuous in view of the undisputed constitutional position that, in the ultimate analysis, the decision to adopt or turn down the motion is exclusively within the power of the House and the Court would have no jurisdiction over that area. The Court would, therefore, decline to exercise its jurisdiction on grounds of infructuousness. Before we discuss the merits of the arguments it is necessary to take a conspectus of the constitutional provi sions concerning the judiciary and its.independence. hi interpreting the constitutional provisions in this area the court should adopt a construction which strengthens the foundational features and the basic structure of the Consti tution. Rule of law is a basic feature of the Constitution which permeates the whole of the Constitutional fabric and is an integral part of the constitutional structure. Inde pendence of the judiciary is an essential attribute of Rule of law. Articles 124(2) and 217(1) require, in the matter of appointments of Judges, consultation with the Chief Jus tices. These provisions also ensure fixity of tenure of office of the Judge. The Constitution protects the salaries of Judges. Article 121 provides that no discussion shall take place in Parliament with respect to the conduct of any Judge of the Supreme Court or of a High Court in the dis charge of his duties except upon a motion for presenting an address to the President praying for the removal of the Judge as hereinafter provided. Articles 124(4) and 124(5) afford protection against premature determination of the tenure. Article i 24(4) says "a Judge of the Supreme Court shall not be removed from his office except" etc. The grounds for removal are again limited to proved misbehaviour and incapacity. It is upon a purposive and harmonious con struction and exposition of these provisions that the issues raised in these petitions are to be resolved. In construing the Constitutional provisions the law and procedure for removal of Judges in other countries afford a background and a comparative view. The solution must, of course, be found within our own Constitutional Scheme. But a comparative idea affords a proper perspective for the understanding and interpretation of the Constitu tional Scheme. 32 10. In England a Judge of the superior courts can be removed only on presentation of an address by both the Houses of Parliament to the Crown. Proceedings may be initi ated by a petition to either House of Parliament for an address to the Crown or by a resolution for an address to the Crown to appoint a committee of inquiry into the conduct of the person designated, though preferably they should be commenced in the House of Commons. Sometimes [as in Barring tons Case (1830)], a Commission of Inquiry is appointed and the matter is considered in the light of the report of the said Commission. The motion for removal is considered by the entire House. In case any enquiry is to be conducted into the allegations, it is either referred to a Select Committee of the House or to the Committee of the whole House Opportu nity is given to the Judge whose conduct is impugned to make defence on public inquiry. The report of the Committee and its recommendation are placed before the House where the matter is debated.(See: Halsbury 's Laws of England, 4th Ed. p. 1108). This process has been subjected to following criticism (i) legislative removal is coloured by political partisanship inasmuch as the initia tion of the process as well as the ultimate result may be dictated by political considera tions and process of fact finding and deliber ations also suffer from party spirit. (ii) the government has considerable control not only on the ultimate result of the pro ceedings but also on parliamentary time which enables them to prevent motions for an address from being adopted if it suits them. (iii) the legislative procedure is not adequate for adjudicative fact finding; and (iv) since Parliament is the master of its own procedure, the procedures and rules of evidence appropriate to judicial proceedings which would seem to be required in a case of judicial removal are unlikely to be allowed in Parliament. (See: Shetreet Judges on Trial (1976) p. 405 407) 12. The Justice Sub Committee on the Judiciary consid ered the question whether the existing process for removal by address of the Houses should be substituted for or sup plemented by a new mechanism designed to meet changing needs and conditions. The Sub Committee, in its 1972 Report, answered the said question in the affirmative and has pro posed a new procedure for removal of judges. The Sub Commit tee has recommended the establishment of an adhoc judicial commission to be ap 33 pointed by the Lord Chancellor, if he decides that the question of removing a judge is to be investigated. The Commission should include a majority of, and in any event not less than three, persons who hold or have held high judicial office. Members of Parliament or persons who hold or have held any political appointment would be excluded. Upon completing its inquiry the ad hoc Commission shall report the facts and recommend whether the question of removal of a judge should be referred to the Judicial Com mittee of the Privy Council. If the Commission so recommend ed, the Privy Council would consider the matter and if it concluded that the judge should be removed, it would so advise Her Majesty. [see: Shetreet 'Judges on Trial ', (1976); pp. 404 405]. Dr. Shetreet has suggested a via media and has favoured the establishment of a Judicial Commission for removal (but not for discipline short of removal) along the lines sug gested by the Sub Committee but has expressed the view that the existing process of address should also be preserved. [See: Shetreet 'Judges an Trial ', (1976); p. 409]. Similar view has been expressed by Margaret Brazier. (See: Rodney Brazier 'Constitutional Texts ' (1990) pp.606 607). In Canada, under section 99(1) of the Constitution Act of 1867, the judges of the superior courts hold office during good behaviour, and are removable by the Governor General on address of the Senate and House of Commons. On petition for removal submitted in 1868 and 1874 the matter was referred to a Select Committee of the House. In a third case in 1874 the judge died before any action could be taken on motion for appointment of a Select Committee. Recently in 1966 67, a motion for removal of Mr. Justice Leo Landreville of the Supreme Court of Ontario was moved and in that con nection a Royal Commission consisting of Mr. Justice Ivan C. Rand, a retired judge of the Supreme Court of Canada was appointed under the Inquiries Act R. section C. 1952 C. 154 to conduct an enquiry. After considering the report of the said Commission, a Joint Committee of the Houses recommended removal but the judge resigned while Parliament was prepar ing for his removal by joint address. Thereafter, Judges Act was enacted in 1971 whereby Canadian Judicial Council has been created. The functions of the said Council as set out in section 39(2) include making the enquiries and the investiga tion of complaints or allegations described in section 40. Sec tion 40 provides that the council may conduct an enquiry to determine whether a judge of superior, district or county court should be removed from office and it may recommend to the Minister of Justice of Canada that a Judge should be removed from office. The grounds on which such a recommenda tion can be made are set out in section 41(2) of the Act and they are: (a) age or infirmity, Co) having been 34 guilty of misconduct, (c) having failed in the due execution of his office, or (d) having been placed, by his conduct or otherwise, in a position incompatible with the due execution of his office. (Gall 'The Canadian Legal System ' ( 1983 ); pp. 184 186). In 1 '982 the matter of Mr. Justice Thomas Berger, a Judge of the Supreme Court of British Columbia, was investi gated by the Canadian Judicial Council prompted by certain remarks made by the judge. The Council concluded that the public expression of political views in the nature of those made by Mr. Justice Berger constituted an "indiscretion", but that they were not a basis for a recommendation that he be removed from office and on the basis of the said recom mendation, no further action was taken though Mr. Justice Berger tendered his resignation as a judge a few months later. (See: Gall. ' The Canadian Legal System, (1983) p. 189) 14. Under section 72(ii) of the Commonwealth of Austra lia Constitution Act, 1900, the justices of the High Court and of the other courts created by the Parliament cannot be removed except by the GovernorGeneral in Council, on an address from both Houses of the Parliament in the same session praying for such removal on the ground of proved misbehavior or incapacity. Similar provisions are contained in the Constitutions of the States with regard to removal of Judges of State Courts. Proceedings were initiated for removal of Mr. Justice Murphy of the High Court of Australia in 1984 under section 72(ii) of the Commonwealth of Australia Constitution Act. In connection with those proceedings at first a select Commit tee of the Senate was appointed to enquire and report into the matter. It consisted of six senators drawn from three political parties. The Committee by majority decision (3: 2, one undecided) found no conduct amounting to misbehaviour under section 72(ii). In view of the split vote a second Committee of four senators from the same three political parties was established and it was assisted by two retired judges one from the Supreme Court of Western Australia and the other from Supreme Court of the Australian Capital Territory and the said Committee recorded its finding but the judge did not appear before either of the committees. The judge was also prosecuted before the Central Criminal Court of New South Wales and was found guilty of an attempt to pervert the course of justice but the said verdict was set aside by the Court of Criminal Appeal. Fresh trial was held where under the judge was found not guilty. Thereafter, an ad hoc legislation, namely, Parliamentary Commission of Inquiry Act, 1986 was enacted by the Commonwealth Parliament and a Commission consisting of three retired judges respec tively of Supreme Court of Victoria, Supreme Court of Aus tralia Capital Territory 35 and the Federal Court and Supreme Court of South Australia was constituted to investigate into the allegations of misbehaviour. Before the said commission could give its report, the judge became gravely ill and the Act was re pealed [Lane 's Commentary on the Australian Constitution, (1986) p. 373]. In one other case, proceedings for removal were initiated against Mr. Justice Vasta of the Supreme Court of Queensland and for that purpose, the Queensland Legislature enacted the Parliamentary (Judges) Commission of Inquiry Act, 1988 whereby a commission comprised of three retired judges respectively of the High Court of Australia, Supreme Court of Victoria and the Supreme Court of New South Wales was constituted. In Australia, there has been criticism of the exist ing procedure with regard to removal of judges both by judges as well as by lawyers. Mr. Justice L.J. King, Chief Justice of the Supreme Court of South Australia, has ob served: "The concept of removal by an address of both Houses of Parliament is itself the subject of a good deal of criticism. Curiously, common criticism which are made are contradictory. One criticism is that the necessity for the involvement of the legislature ensures that the procedure will not be used and that the judges therefore have a practical immunity from removal. Removal by this means is cer tainly extremely tare. That may be, however, because in the countries in which this proce dure prevails, conditions are such that a judge who commits a serious act of judicial misconduct would certainly resign. That con sideration, together with the fact that stand ards of judicial conduct are generally very high in those countries, renders removal by the legislature a rarity. The opposite criti cism, however, is that there is no established procedure for the trial of a judge whose removal by the legislature is sought. It is assumed that the legislature would itself institute some form of inquiry at which the judge would be able to defend himself against the accusations, but that would be a matter for the legislature in each case. There are some who fear that a parliamentary majority, encouraged by inflamed public feeling about an unpopular judicial decision, might some day act to remove a judge, without due process. It is at least questionable whether the system of removal by an address of both Houses of Parliament accords to a judge the 30 degree of security which is required by the concept of judicial independence. [ 'Minimum Standards of Judicial Independence ' 1984 (58) ALl 340, at p. 345] Similarly, Mr. Justice M.H. Mclelland of the Supreme Court, of New South Wales has expressed the view: "In lieu of measures of the kinds already discussed, some permanent, and preferably Australia wide, machinery should be provided by legislation for the purpose of establishing an effective procedure for the determination by a judicial tribunal of the existence of misbehaviour or incapacity which could warrant a judge 's removal from office. The design of that ma chinery should be such as to produce as little damage to judicial independence, public confi dence in the judicial system, and the authori ty of the courts, as is consistent with its effective operation. It should also be such as to ensure to a judge both procedural fairness and protection from public vilification or embarrassment pending the making of the deter mination". (Disciplining Australian Judges, at p. 401) Mr. Justice Mclelland has also suggested that the tribu nal should be subject to the supervisory jurisdiction of, and an appeal should lie from the tribunal to, the High Court of Australia. In this context, he has stated: "Furthermore, the protection of judicial tenure and independence which the Act of Settlement provisions were intended to effect, has in the intervening period lost a great deal of its strength. In 1701, the Crown, the House of Lords and the House of Commons were three powerful but relatively independent entities. It was necessary for a judge to incur the displeasure of all three concurrent ly to be at risk of removal under the parlia mentary address procedure. The subsequent development of the party system and cabinet government (especially with modern ideas of strict party discipline) has radically altered the position. In modern times, the executive government and the lower house (and frequently the upper house, where there is one) are effectively under the control of a single individual or cohesive group, so that now a judge may be at risk of removal under the parliamentary address procedure if 37 he or she were to incur the sole displeasure of that individual or group." (Disciplining Australian Judges, 8 8 at p. 402 3) Sir Maurice Byers, former Solicitor General of the Commonwealth has also spoken in the same vein: "A federal system involves a tension between the High Court and the Parliament and the executive. Recent years have seen this in crease because interpretations of the Consti tution have become party dogma. The Court 's constitutional decisions are seen by many of the uninformed and quite a few of the informed as bearing upon party political questions. When, as in the case of Mr. Justice Murphy and to a much less degree Sir Garfield Barwick, a former political figure, hands down a judgment he attracts the animus and often the abuse of some in Parliament. Section 72 of the Consti tution leaves him exposed to the attack of his opponents and the often doubtful support of his former friends. Whether Parliament may itself decide the judicial question of his fitness for office or "proved misbehaviour or incapacity" is at the least doubtful. But the Court should not be exposed to this hazard, A Commission of Judges whose membership rotates is called for." (From the other side of the Bar Table: An Advocates ' view of the Judici ary; , at p. 185). A Constitutional Commission was set up in Australia for suggesting reforms in the Commonwealth Constitution. The said Commission has recommended that provision should be made by amendment to the Commonwealth Constitution for (a) extending the security of tenure provided by section 72 to all judges in Australia, and (b) establishing a national judicial tribunal to determine whether facts found by that tribunal are capable of amounting to misbehaviour or inca pacity warranting removal of a judge from office. (Mclelland 'Disciplining Australian Judges ', , at p. 403) 17. In the United States, the removal of a judge of the U.S. Supreme or a Federal judge is governed by the provisions of the U.S. Constitution wherein Article 11(4) provides for the removal from office of the President, Vice President and all civil officers of the United States on impeachment for, and conviction of, treason, bribery or other high crimes 38 and misdemeanours. Impeachment may be voted by a simple majority of the members of the House of Representatives, there being a quorum on the floor and trial is then held in the Senate, which may convict by a vote of two thirds of the members of the Senate present and voting, there being a quorum. With regard to state judiciary, the process of removal is governed by the State Constitutions. Majority of the States follow the federal pattern an4 provide for im peachment as the normal process of removal of appointed judges. In some States, provision is made for removal by an address of the Governor to both Houses of legislature or by a joint resolution of the legislature. In some States, the removal power is vested in the State Supreme Courts while in some states, special courts are provided to hear removal charges. In the State of New York, the Court is known as the Court on the judiciary. (See Henry J. Abraham: The Judicial Process, 3rd Ed. p.45). For judicial administration at the national level, there is Judicial Conference of the United States which consists of the Chief Justices of the United States, the chief judges of each of the eleven numbered circuits and of the District of Columbia and federal circuits but also, since 1957, a district judge representative from each circuit with the exception of the federal circuit, which lacks a trial court tier. By an Act of the Congress passed in 1932 (incorporated in Title 28 of the U.S. Code) the Judicial Conference is charged with the duty to make a comprehensive survey of the condition of business in the courts; to prepare plans for assignment of judge, ' to or from circuits or districts where necessary; and to submit suggestions and recommendations to the various courts to promote uniformity of management procedures and the expeditious conduct of court business. The work of the Judicial Conference is performed in special committees which include the special committee on judicial ethics. Another Act of Congress passed in 1939 makes provi sion for a judicial council for each circuit composed of circuit judges of the circuit who is empowered to make all necessary orders for the effective and expeditious adminis tration of the business of the courts within its circuit. The mandate of the Judicial Councils embraces the business of the judiciary in its institutional sense (administration of justice), such as avoiding of loss of public esteem and confidence in respect to the court system, from the actions of a judge or other person attached to the courts. The Judicial Councils have exercised the power of review of allegations of misconduct on the part of court personnel, officers and judges. In view of the increased number of judges, who can be removed only by the process of impeach ment, Congress has enacted the Judicial Councils Reform and Judicial Conduct and Disability Act of 1980 whereby the Judicial Councils have been explicitly empowered to receive complaints about judicial 39 conduct opaquely described as "prejudicial to the effective and expeditious administration of the business of the courts, or alleging that such a Judge or magistrate is unable to discharge all the duties of office by reason of mental or physical disability. " It prescribes an elaborate judicilised procedure for processing such complaints within the administrative system of the councils and the Judicial Conference. Should a Council determine that the conduct constitutes grounds for impeachment the case may be certi fied to the Judicial Conference of the United States which may take appropriate action and if impeachment is deemed warranted, the Conference is empowered to transmit the record and its determination to the House of Representa tives. In so far as the States are concerned, all the fifty States have central Institutions for disciplining their judges and in each a variously constituted commission is organised in either a single tier or in many tiers depending on the perceived desirability of separating fact finding from judgment recommendation tasks. Commission recommenda tions are transmitted to the State Supreme Court for its authoritative imprimatur, except in states where they are received by legislatures that retain judicial removal power. (See Robert J.Janosik Encyclopaedia of the American Judicial System, Vol. II pp.575 to 578). This study of the practice prevailing in the above mentioned countries reveals that in Canada, Australia and the United States, the process of removal of a judge incor porates an investigation and inquiry into the allegations of misconduct or incapacity against a judge by a judicial agency before the institution of the formal process of removal in the legislature. England is the only exception where the entire process is in Parliament but there also views are being expressed that it should be replaced by a judicial process of investigation by a judicial tribunal before the matter is taken up by the Houses of Parliament. This is also the trend of the recommendations in the resolu tions adopted by the United Nations General Assembly and international conferences of organisations of lawyers. International Bar Association at its 19th Biennial Conference held at New Delhi in October 1982 adopted Minimum Standards of Judicial Independence. Paras 27 to 32 relating to 'Judicial Removal and Discipline ' are as under: "27.The proceedings for discipline and removal of judges should ensure fairness to the judge, and adequate opportunity for hearing. 40 28. The procedure for discipline should be held in camera. The judge may however request that the heating be held in public, subject to final and reasoned disposition of this request by the Disciplinary Tribunal. Judgments in disciplinary proceedings whether held in camera or in public, may be published. (a) The grounds for removal of judges should be fixed by law and shall be clearly defined. (b) All disciplinary action shall be based upon standards of judicial conduct promulgated by law or in established rules of court. A judge shall not be subject to removal unless, by of a criminal act or through gross or repeated neglect or physical or mental incapacity, he has shown himself manifestly unfit to hold the position of judge. In systems where the power to discipline and remove judges is vested in an institution other than the Legislature, the tribunal for discipline and removal of judges shall be permanent and be composed predominantly of members of the Judiciary. The head of the court may legitimately have supervisory powers to control judges on administrative matters. The First World Conference on the Independence of Justice held at Montreal on June 10, 1983 adopted a UniVer sal Declaration on the Independence of Justice. It relates to international judges as well as national judges. The following paragraphs deal with 'Discipline and Removal ' in relation to national judges: "2.32 A complaint against a judge shall be processed expeditiously and fairly under an appropriate practice, and the judge shall have the opportunity to comment on the complaint at its initial stage. The examination of the complaint at its initial stage shall be kept confidential, unless otherwise requested by the judge. 2.33 (a) The proceedings for judicial removal or discipline, when such are initiated, shall be held before a court or a board predominant ly composed of members of the judiciary and selected by the judiciary. (b) However, the power of removal may be vested in the Legislature by impeachment or joint address, preferably upon a recommenda tion of a court or board as referred to in 2.33(a). 41 [Explanatory Note: In countries where the legal profession plays an indispensable role in maintaining the rule of law and judicial independence, it is recommended that members of the legal profession participate in the selection of the members of the court or board, and be included as members thereof. ] 2.34 All disciplinary action shall be based upon established standards of judicial con duct. 2.35 The proceedings for discipline of judges shall ensure fairness to the judge and the opportunity of a full hearing. 2.36 With the exception of proceedings before the Legislature, the proceedings for disci pline and removal shall be held in camera. The judge may, however, request that the hearing be held in public, subject to a final and reasoned disposition of this request by the Disciplinary Tribunal. Judgments in discipli nary proceedings, whether held in camera or in public, may be published. 2.37 With the exception of proceedings before the Legislature or in connection with them, the decision of a Disciplinary Tribunal shall be subject to appeal to a court. 2.38 A judge shall not be subject to removal except on proved grounds of incapacity or misbehaviour, rendering him unfit to continue in office. 2.39 In the event that a court is abolished judges serving in this court shall not be affected, except for their transfer to another court of the same status. The Seventh United Nations Congress on the Preven tion of Crime and the Treatment of Offenders held at Milan from August 26 to September 6, 1985 adopted the Basic Prin ciples on the Independence of the Judiciary. Paragraphs 17 to 20 dealing with 'Discipline, Suspension and Removal ' are as under: "17.A charge or complaint made against a judge in his/her judicial and professional capacity shall be processed expeditiously and fairly under an appropriate procedure, The judge shall have the right to a fair heating. The examination of the matter at its initial stage shall be kept confidential, unless otherwise requested by the judge. Judges shall be subject to suspension or removal only for reasons of incapacity or behaviour that renders them unfit to 42 discharge their duties. All disciplinary, suspension or removal proceedings shall be determined in accordance with established standards of judicial con duct. Decisions in disciplinary, suspension or removal proceedings should be subject to an independent review. This principle may not apply to the decisions of the highest court and those of the legislature in impeachment or similar proceedings. " The Congress Documents were endorsed by the U.N. General Assembly in its Resolution 40/32 on November 9, 1985 and Resolution 40/ 146 on December 13, 1985. Resolution 40/146 dated December 13, 1985 of the General Assembly specifically welcomed the Basic Principles on the Independence of the Judiciary and invited Government "to respect them and to take them into account within the framework of their nation al legislation and practice" (para 2). Unlike the judges of the Superior courts in England, the judges in the colonies did not enjoy the security of tenure as guaranteed under the Act of Settlement, 1700 and they held office at the pleasure of the Crown. (See: Terrell vs Secretary of State for the Colonies and Another, 1953(2), 482). The position was not different in India till the enactment of Government of India Act, 1935. In Clause (b) of the proviso to sub Section 2 of Section 200 of the said Act which related to judges of the Federal Court, it was pre scribed that "a judge may be removed from his office by order of the Governor General on the ground of misbehaviour or of infirmity of body or mind, if the Judicial Committee of the Privy Council, on reference being made to them, report that the judge ought on any such ground to be re moved". Similar provisions were made with regard to judges of the High Court in Section 220. It would thus appear that prior to the coming into force of the Constitution of India, it was necessary to have a determination by a judicial body about the alleged grounds of misbehaviour or infirmity of mind and body before a judge of the Federal Court or High Court could be removed. Does the Constitution seek to alter this position in a way, as to exclude investigation and proof of misbehaviour or incapacity by a judicial body and to rest the power of removal including the investigation and proof of misbehaviour or incapacity in Parliament alone. Basically, the process of removal or impeachment of a judge is a political process. A learned author in "The Impeachment of the Federal 43 Judiciary: ' [Wrisley Brown Harward Law Review 1912 1913 684 at page 698) says: ". Thus an impeachment in this country, though judicial in external form and ceremony. is political in spirit. It is directed against a political offence. It culminates in a polit ical judgment. It imposes a political forfei ture. In every sense, say that of administra tion, it is a political remedy, for the sup pression of a political evil, with wholly political consequences. This results in no confusion of the political and the judicial powers. The line of demarca tion is clearly discernible even through the labyrinth of formal non essentials under which ingenious counsel in various cases have sought to bury it. The judgment of the High Court of Parliament upon conviction of an impeachment automatically works a forfeiture of political capacity; but this is simply an effect of the judgment, which is to be distinguished from the judgment itself. " Mauro Cappelletti in 'The Judicial Process in Comparative Perspective '[Clarendon Press Oxford 1989 at page 731 says: "Two main features of this accountability type can be identified; first, the fact that ac count has to be given to 'political ' bodies, ultimately to the legislative and/or the executive branches by means of essentially 'po litical ', non judicial processes; second, and perhaps even more characteristically, the fact that account has to be given not, or not primarily, for 'legal ' violations, but rather for behaviour (and this might include private, out of office behaviour) which is evaluated on the basis of 'political ' criteria. Perhaps the best illustration of political accountability can be found in the systems of the common law tradition. In England, judges (like any other officials) can be impeached 'before the House of Lords, at the suit of the House of Commons ', although this practice has fallen into desuetude; moreover, higher court judges can be 'removed from office by the Crown on an address presented to Her Majesty by both Houses of Parliament '. The idea behind this 'address ' procedure is that judges are appointed 'during good behaviour ', hence, they can be removed upon breach of the condition. Misbehaviour includes such situations as 'the case of conviction upon an indictment for any infamous offence of such a nature as to render the 44 person unfit to exercise the office ', but also 'improper exercise of the functions appertain ing to the office, or non attendance, or neglect of or refusal to perform the duties of the office '. Of course the decision of the Houses and the Crown can only be an essential ly political one, not a purely juridical decision, even though we are informed that the removal procedure is subject to some extent 'to the rules of natural justice '. " 24. But the Constitutional scheme in India seeks to achieve a judicious blend of the political and judicial processes for the removal of Judges. Though it appears at the first sight that the.proceedings of the Constituent Assembly relating to the adoption of. clauses, (4) and (5) of Article 124 seem to point to the contrary and evince 'an intention to exclude determination by a judicial process of the correctness of the allegations of misbehaviour or inca pacity on a more careful examination this is not the correct conclusion. In the submissions of the learned counsel who contend against the manifestation of an intention to bring in a judicial element, reliance has been placed on the proceedings of the Constituent Assembly dated July 29, 1947 relating to adoption of Clause 18 of the report of the Union Constitution Committee relating to the Supreme Court. Shri Alladi Krishnaswami Ayyar had moved the said clause subject to modifications and conditions in the said clause which related to appointment and removal of judges of Supreme Court. It was provided that "a judge of the Supreme Court of India shall not be removed from his office except by the President on an address from both the Houses of Parliament of the Union in the same session for such removal on the ground of proved misbehaviour or incapacity. Further provi sion may be made by Federal law for the procedure to be adopted in this behalf '. Shri K. Santhanam had moved an amendment in the said Clause relating to removal of judges and he wanted the last sentence about further provision being made by Federal law for the procedure to be adopted in that behalf, to be omitted. Shri M.Ananthasayanam Ayyanagar proposed amendments suggesting two alternative clauses in the place of the Clause with regard to removal of the judges. In one clause, it was suggested that "a judge may be removed from office on the ground of misbehaviour or infirm ity of mind or body by an address presented in this behalf by both the Houses of the legislature to the President provided that a committee consisting of not less than 7 High Court Chief Justices chosen by the President, investigates and reports that the judge on any such ground be removed". The other alternative clause suggested by Shri M.Anantha sayanam Ayyangar was that "a judge of the Supreme Court may be removed from office by the President on the ground of misbehaviour or of infirmity of mind or body, if on refer ence being made to it (Supreme Court) by the President, a special 45 tribunal appointed by him for the purpose from amongst judges or exjudges of the High Courts or the Supreme Court, report that the" 'judge ought on any such grounds to be removed. " The Constituent Assembly adopted clause 18 with the amendments as proposed by Shri Alladi Krishnaswami Ayyar and rejected the amendments suggested by Shri M. Anantha sayanam Ayyangar. Shri Santhanam did not press his amendment and it was withdrawn. There is no doubt that in the amend ments which were suggested by Shri M.Ananthasayanam Ayyan gar, it was provided that there should be investigation into the allegations of misbehaviour or infirmity by a committee consisting of Chief Justices of the High Courts or the special tribunal consisting of judges or ex judges of the High Court or the Supreme Court, but the rejection of the said amendments moved by Shri Ayyangar does not mean that the Constituent Assembly was not in favour of determination about the correctness of such allegations by judicial body because Shri Alladi Krishnaswami Ayyar, while moving Clause 18 had emphasised the word 'proved misbehaviour ' and had stated: "While the ultimate power may rest with the two Houses, the Clause provides that the charges must be proved. How exactly to prove the charges will be provided for in the Feder al law. We need not be more meticulous or more elaborate, than the people who have tried a similar case in other jurisdictions. I chal lenge my friend to say whether there is any detailed provision for the removal of judges more than that in any other Constitution in the world. The general principle is laid down in the Constitution and later on the Federal law will provide for adequate machinery and that is the import of the clause". . There is sufficient safeguard in the reference "proved misbehaviour" and we might make elabo rate and adequate provision for the way in which ',he guilt could be brought home to a particular judge in any Federal law that may be passed but that is a different matter". "But I do not think that in a Constitution it is necessary to provide de tailed machinery as to the impeachment, the charges to be framed against a particular judge. To make a detailed machinery for all these could be a novel procedure to be adopted in any Constitution". (Constituent Assembly Debates, vols. I to VI at pp. 899 900) 25. Reference was also made to the debates of the Con stituent Assembly dated May 24, 1949 on Article 103 of the Draft Constitution. Shri Tajamul Hnsain moved an amendment in Clause (4) of Article 103 which related to the removal of a judge of Supreme Court and suggested an amendment in the said clause so as to provide that "a judge of the Supreme 46 Court shall not be removed from his office except by an order of the President passed, after a Committee consisting of all the judges of the Supreme Court had investigated the charge and reported on it to the President and etc. " The said amendment was negatived by the Constituent Assembly. (Constituent Assembly Debates, vol. VIII at pp. 243 and 262). The said amendment was similar to those moved by Shri M. Ananthasayanam Ayyangar at the stage of adoption of Clause 18 of the report of the Union Constitution Committee noticed earlier. The reasons which were given by Shri Alladi Krishnaswami Ayyar for opposing the said amendments would apply to this amendment also. The proceedings in the Constituent Assembly, there fore, do not give an indication that in adopting Clauses (4) and (5) of Article 124 of the Constitution, the intention of the Costituent Assembly was to exclude_ investigation and proof of misbehavior or incapacity of the judge sought to be removed, by a judicial body. Having regard to the views expressed by Shri Alladi Krishnaswami Ayyar, who was a member of the Drafting Committee, while opposing the amend ments proposed by Shri M.Ananthasayanam Ayyangar, it is possible to infer that the intention of the Constituent Assembly was that the provision with regard to the machinery for such investigation and proof was a matter which need not be contained in the Constitution and it is a matter for which provision could be made by Parliament by law. This is some of the historical material and back ground on the topic. We may now proceed to consider the merits of the contentions. RE: CONTENTION A: 28. This contention has two aspects: whether a motion for removal of a Judge lapses upon the dissolution of the House of Parliament and secondly, the question whether it so lapses or not is a matter within the exclusive domain and decision of that House itself. On the first aspect, the contention of the learned Attorney General and Shri Kapil Sibal, learned Senior Counsel, are similar. On the second aspect, the learned Attorney General would say that the question whether a motion lapsed or not is to be decided on the basis of the provisions of law guiding the matter and the House itself is not its final arbiter. Learned Attorney General would say that the Court alone has jurisdiction to examine and pronounce on the law of the matter. On the question of lapse reliance was placed on the classic treatise of Erskine May 's "The Law, Privileges, Proceedings and Usage 47 of Parliament" [Twenty first Edition, London Butterworths 1989]. A motion is described as a "proposal made for the purpose of illustrating the decision of the House". Accord ing to Erskine May, certain matters may be raised by only a substantive motion. He says: "Certain matters cannot be debated, except on a substantive motion which allows a distinct decision of the House. Amongst these are the conduct of the sovereign, the heir to the throne or other members of the Royal Family, a Governor General of an independent territory, the Lord Chancellor, the Speaker, the Chairman of Ways and Means, Members of either House of Parliament and judges of the superior courts of the United Kingdom, including persons holding the position of a judge, such as a judge in a court of bankruptcy and a county court, or a recorder. " 30. 'Sri Sibal placed strong reliance on the following statements in M.N.Kaul and S.L.Shakdher in "Practice and Procedure of Parliament" as to the effects of the dissolu tion of the House: "Dissolution, as already stated, marks the end of the life of a House and is followed by the constitution of a new House. Once the House has been dissolved, the dissolution is irrevo cable. There is no power vested in the Presi dent to cancel his order of dissolution and revive the previous House. The consequences of a dissolution are absolute and irrevocable. In Lok Sabha, which alone is subject to dissolu tion under the Constitution, dissolution "passes a sponge over the parliamentary slate". All business pending before it or any of its committees lapses on dissolution. No part of the records of the dissolved House can be carried over and transcribed into the records or registers of the new House. In short, the dissolution draws the final curtain upon the existing House". Adverting to the effect of dissolution on other business such as motions, resolutions etc. , the learned authors say: "All other business pending in Lok Sabha, e.g., motions, resolutions, amendments supple mentary demands for grants etc., at whatever stage, lapses upon dissolution, as also the petitions presented to the House which stand referred to the Committee on Petitions." Learned Attorney General urged that a combined reading of Articles 107, 108 and 109 leads irresistibly to the conclusion that upon dissolution 48 of the House, all bills will lapse subject only to the exception stipulated in Article 108. It is further urged that on first principle also it requires to be accepted that no motion should survive upon the dissolution of the House unless stipulated otherwise under the Rules of Procedure and conduct of business. The doctrine of lapse, it is urged, is a necessary concomitant of the idea that each newly consti tuted House is a separate entity having a life of its own unless the business of the previous House is carried over by the force of statute or rules of procedure. Both the learned Attorney General and Shri Kapil Sibal took us through the Rules of Procedure and Conduct of Business in Lok Sabha made under Article 118 of the Constitution to show that invaria bly all pending business come to an end with the expiry of the term of the House or upon its earlier dissolution. Shri Ram Jethmalani for the petitioner sub committee referred to the conventions of the British Parliament and urged that pending business lapses on prorogation and as a general practice the House is usually prorogued before it is dissolved. Learned counsel said that impeachment motions are sui generous in their nature and that they do not lapse. It is. however, necessary to distinguish the Indian Parliamen tary experience under a written Constitution from the Brit ish conventions. Indeed, referring to the doctrine of lapse this Court in Purushothaman Nambudiri vs The State of Kerala [1962] Suppl. 1 SCR 753 Gajendragadkar J said: ". In support of this argument it is urged that wherever the English parliamentary form of Government prevails the words "prorogation" and "dissolution" have acquired the status of terms of art and their significance and conse quence are well settled. The argument is that if there is no provision to the contrary in our Constitution the English convention with regard to the consequence of dissolution should be held to follow even in India. There is no doubt that, in English, in addition to bringing a session of Parliament to a close prorogation puts an end to all business which is pending consideration before either House at the time of such prorogation; as a result any proceedings either in the House or in any Committee of the house lapse with the session Dissolution of Parliament is invariably pre ceded by. prorogation, and what is true about the result of prorogation" is, it is said, a fortiori true about the result of dissolution. Dissolution of Parliament is sometimes de scribed as "a civil death of Parliament". Ilbert, in his work on 'Parliament ' has ob served that "prorogation means the end of a session (not of a Parliament)"; and adds that "like dissolution, it kills all bills which have not yet passed". He also describes disso lution as an "end of a Parliament (not merely of 49 a session) by royal proclamation", and ob serves that "it wipes the slate clean of all uncompleted bills or other proceedings". "[p.759 & 760]. After referring to the position in England that the dissolution of the House of Parliament brought to a close and in that sense killed all business of the House at the time of dissolution, the learned Judge said: " . . Therefore, it seems to us that the effect of cl. (5) is to provide for all cases where the principle of lapse on dissolution should apply. If that be so, a Bill pending assent of the Governor or President is outside cl. (5) and cannot be said to lapse on the dissolution of the Assembly." [p. 768] " . . In the absence of cl. (5) it would have followed that all pending business, on the analogy of the English convention, would lapse on the dissolution of the Legisla tive Assembly. It is true that the question raised before us by the present petition under Pal. 196 is not free from difficulty but, on the whole, we are inclined to take the view that the effect of cl. (5) is that all cases not falling within its scope are not subject to the doctrine of lapse of pending business on the dissolution of the Legislative Assem bly. In that sense we read cl. (5) as dealing exhaustively with Bills which would lapse on the dissolution of the Assembly. If that be the true position then the argument that the Bill which was pending assent of the President lapsed on the dissolution of the Legislative Assembly cannot be upheld." [P. 769] 31. It is true that Purushothaman Nambudiri case dealt with a legislative measure and not a pending business in the nature of motion. But, we are persuaded to the view that neither the doctrine that dissolution of a House "passes a sponge over parliamentary slate" nor the specific provisions contained in any rule or rules flamed under Article 118 of the Constitution determine the effect of dissolution on the motion for removal of a judge under Article 124. the reason is that Article 124(5) and the law made thereunder exclude the operation of Article 118 in this area. Section 3 of the Act provides: "3(1) If notice is given of a motion for presenting an address to the President praying for the removal of a Judge signed, (a) in the case of a notice given in the House of the People, by not less than one hundred members of that House; 50 (b) in the case of a notice given in the Council of States, by not less than fifty members of that Council; then, the Speaker or, as the case may be, the Chairman may, after consulting such persons, if any, as he thinks fit and after considering such materials, if any, as may be available to him, either admit the motion or refuse to admit the same. (2) If the motion referred to in sub section (1) is admitted, the Speaker or, as the case may be, the Chairman shall keep the motion pending and constitute, as soon as may be, for the purpose of making an investigation into the grounds on which the removal of a Judge is prayed for, a Committee consisting of three members of whom (a) One shall be chosen from among the Chief Justices and other Judges of the Supreme Court; Co) one shall be chosen from among the Chief Justices of the High Courts; and (c) one shall be a person who is, in the opinion of the Speaker or, as the case may be, the Chairman, a distinguished jurist; Proviso &) Omitted Sub sections) as (3) to (9)) unnecessary here. Section 6.(2) provides: "(2) If the report of the Committee contains a finding that the Judge is guilty of any misbe haviour or suffers from any incapacity, then, the motion referred to in sub section (1) of section 3 shall, together with the report of the Committee, be taken up for consideration by the House or the Houses of Parliament in which it is pending. " The effect of these provisions is that the motion shall be kept pending till the committee submits its report and if the committee finds the Judge guilty, the motion shall be taken up for consideration. Only one motion is envisaged which will remain pending. No words of limitation that the motion shall be kept pending subject to usual effect of dissolution of the House can or should be imported. The reason is that a law made by the Parliament and binding on the House can provide against the doctrine of lapse. The law envisaged in article 124(5) is Parliamentary law which is of higher quality and efficacy than rules made by the House for itself under Article 118. Such a law can, and under the present statute does 51 provide against the doctrine of lapse. Further, article 118 expressly states that each House of Parliament may make rules "for regulating, subject to the provisions of this Constitution". In State of Punjab vs Sat Pal Dang & Ors. ; this Court held that the law for purposes of Article 209 (analogues to Article 119) could even take the form of an Ordinance promulgated by the Governor of a State under Article 213 and that wherever there is repugnance between the Rules of Procedure framed under Article 208 (Article 118 in the ease of Parliament), the law made under Article 209 shall prevail. In the constitutional area of removal of a Judge, the law made under Article 124(5) must be held to go a little further and to exclude the operation of the Rules under Article 118. Indeed, no question of repugnance could arise to the extent the field is covered by the law under Article 124(5). Such a view would indeed obviate some anomalies which might otherwise arise. Rajya Sabha is not dissolved and a motion for presentation of address for the removal of the Judge can never lapse there. Section 3 applies to both the Houses of Parliament. The words "shall keep the motion pending" cannot have two different meanings in the two different contexts. It can only mean that the consideration of the motion shall be deferred till the report of the committee implying that till the happening of that event the motion will not lapse. We are of the view that the argument that such a motion lapses with the dissolution of the House of Parliament is not tenable. The second limb of Contention A is that the question whether a motion has lapsed or not is a matter pertaining to the conduct of the business of the House of which the House is the sole and exclusive master. No aspect of the matter, it is contended, is justificiable before a Court. Houses of Parliament, it is claimed, are privileged to be the exclu sive arbiters of the legality of their proceedings. Strong reliance has been placed on the decision in oft quoted decision in Bradlaugh vs Gosserr, There the exclusiveness of parliamentary jurisdiction on a matter related to the sphere where Parliament, and not the Court, had exclusive jurisdiction even if the matters were covered by a statute. But where, as in this country and unlike in England, there is a written constitution which constitutes the funda mental and in that sense a "higher law" and acts as a limi tation upon the Legislature and other organs of the State as grantees under the Constitution, the usual incidents of parliamentary sovereignty do not obtain and the concept is one of 'limited Government '. Judicial review is, indeed, an incident of and flows 52 from this concept of the fundamental and the higher law being the touchstone of the limits of the powers of the various organs of the State which derive power and, authori ty under Constitution and that the judicial wing is the interpreter of the Constitution and, therefore, of the limits of authority of the different organs of the State. It is to be noted that the British Parliament with the Crown is Supreme and its powers are unlimited and courts have no power of judicial review of legislation. This doctrine is in one sense the doctrine of ultra vires in the constitutional law. In a federal set up the judiciary becomes the guardian of the Constitution. Indeed, in A.K. Gopalan vs The State of Madras, ; Arti cle 13 itself was held to be ex abundante cautela and that even in its absence if any of the fundamental rights were infringed by any legislative enactment, the court had always power to declare the enactment invalid. The interpretation of the Constitution as a legal instrument and its obligation is the function of the Courts. "It is emphatically the province and duty of the judicial department to say what the law is". In Re: Special Reference Case; , Gajendragadkar, CJ said: ". .though our Legislatures have plenary powers, they function within the limits pre scribed by the material and relevant provi sions of the Constitution. In a democratic country governed by a written Constitution, it is the Constitution which is supreme and sovereig. . " But it is the duty of this Court to interpret the Con stitution for the meaning of which this Court is final arbiter. Shri Kapil Sibal referred us to the following obser vations of Stephen J. in Bradlaugh vs Gosserr, supra: ". It seems to follow that the House of Commons has the exclusive power of interpret ing the statute, so far as the regulation of its own proceedings within its own walls is concerned; and that even if that interpreta tion should be erroneous, this court has no power to interfere with it directly or indi rectly. " [p. 280 & 281] ". The House of Commons is not a Court of Justice; but the effect of its privilege to regulate its own internal concerns practically invest it with the judicial character when it has to apply to particular cases the provi sions of Acts of Parliament. 53 We must presume that it discharges this func tion properly and with due regard to the laws, in the making of which it has so great a share. If its determination is not in accord ance with law, this resembles the case of an error by a judge whose decision is not subject to appeal. There is nothing startling in the recognition of the fact that such an error is possible. If, for instance, a jury in a crimi nal case gives a perverse verdict, the law has provided no remedy. The maxim that there is no wrong without a remedy does not mean, as it is sometimes supposed, that there is legal remedy for every moral or political wrong. . " [p. 285] The rule in Bradlaugh vs Gossett, supra, was held not applicable to proceedings of colonial legislature governed by the written constitutions Barton vs Taylor, and Redillusion (Hong Kong) Ltd. vs Attorney General of Hong Kong, ; The principles in Bradlaugh is. that even a statutory right if it related to the sphere where Parliament and not the courts had exclusive jurisdiction would be a matter of the Parliament 's own concern. But the principle cannot be extended where the matter is not merely one of procedure but of substantive law concerning matters beyond the Parliamen tary procedure. Even in matters of procedure the constitu tional provisions are binding as the legislations are en forceable. Of the interpretation of the Constitution and as to what law is the Courts have the constitutional duty to say what the law is. The question whether the motion has lapsed is a matter to be pronounced upon the basis of the provisions of the Constitution and the relevant laws. In deed, the learned Attorney General submitted that the ques tion whether as an interpretation of the constitutional processes and laws, such a motion lapses or not is exclu sively for the courts to decide. The interpretation of the laws is the domain of the courts and on such interpretation of the constitutional provisions as well as the , it requires to be held that under the law such a motion does not lapse and the Courts retain jurisdiction to so declare. Contention A is answered accordingly. RE: CONTENTIONS (B), (C) AND (D): 34. These contentions have common and over lapping areas and admit of being deal with and disposed of together. On tile interpretative criteria apposite to the true meaning and scope of Articles 121, 124(4) and 124(5), indeed, three constructional options become avail able: 54 First: The entire power for taking all steps for the removal of a Judge, culminating in the presentation of an address by different Houses of Parliament to the Presi dent, is committed to the two Houses of Par liament alone and no initiation of any investigation is possible without the initiative being taken by the Houses them selves. No law made by Parliament under Article 124(5) could take away this power. The bar of Article 121 is lifted the moment any Member of Parliament gives notice of motion for the removal of a Judge and the entire allegations levelled by him would be open for discussion in the House itself. It will be for the majority of the Members of the House t decide if and how they would like to have the allegations investigated. Any abridging this power is bad. Second: Since a motion for presenting an address to the President referred to in Arti cles 121 and 124 (4) has to be on ground of "proved" misbehaviour and incapacity, no such motion can be made until the allegations relating to misbehaviour or incapacity have first been found to be proved in some forum outside either Houses of Parliament Law under Article 124(5) is mandatory and until the Parliament enacts a law and makes provision for an investigation into the alleged misbeha viour or incapacity and regulates the proce dure therefor, no motion for removal of a Judge would be permissible under Article 124(4) and the House of Parliament would not be brought into the picture till some authori ty outside the two Houses of Parliament has recorded a finding of misbehaviour or incapac ity. The emphasis is on the expression 'proved '. Third: That Article 124(5) is only an enabling provision and in the absence of any enactment by the Parliament under that provi sion it would be open to either House to entertain a motion for the removal of a Judge. However, it is open to the Parliament under Article 124(5) to enact a law to regulate the entire procedure starting with the investiga tion of the allegations against the Judge concerned and ending with the presentation of the address by the two Houses of Parliament. It would be open to the Parliament to desig nate any authority of its choice for investi gating the allegations and also to regulate the 55 procedure for the consideration of the matter in either House. As soon as a law has been enacted all its provisions would be binding on both Houses of Parliament and would even override any Rules flamed by the two Houses under Article 118 of the Constitution. It will not be permissible for either House to act contrary to the provi sions of such Act. The question as to when and in what circumstances motion would be allowed to be moved in either House of Parliament to lift the ban against the discussion of conduct of a Judge under Article 121 would be accord ing to such Act of Parliament. In regard to the first and the second alternative propo sitions, the deliberations of the Joint Select Committee would indicate a sharp divide amongst the eminent men who gave evidence. Particularly striking is the sharp contrast between the opinions of Mr. K.K. Shah and Mr. M.C. Setalvad. The first view would tend to leave the matter entirely with the House, which can adopt any procedure even differing from case to case. The matter would be entirely beyond judicial review. Then there is the inevitable ' element of political overtone and of contemporary political exacerbations arising from inconvenient judicial pronouncements thus endangering judicial independence. The third view would suffer from the same infirmities except that Parliament might itself choose to discipline and limit its own powers by enacting a law on the subject. The law enacted under Article 124(5) might be a greatly civi lized piece of legislation deferring to values of judicial independence. But then the Parliament would be free to repeal that law and revert hack to the position reflected in the first view. The third view can always acquire back the full dimensions of the first position at the choice of the Parliament. The second view has its own commendable features. It enables the various provisions to be read harmoniously and, together, consistently with the cherished values of judicial independence. It also accords due recognition to the word "proved" in Article 124(4). This view would also ensure uniformity of procedure in both Houses of Parliament and serve to eliminate arbitrariness in the proceedings for removal of a Judge. It would avoid duplication of the inves tigation and inquiry in the two Houses. Let us elaborate on this. 56 36. Article 121 ,and the material parts of Article 124 read as under: "121. Restriction on discussion in Parlia ment. No discussion shall take place in Parliament with respect to the conduct of any Judge of the Supreme Court or of a High Court in the discharge of his duties except upon a motion for presenting an address to the Presi dent praying for the removal of the Judge as hereinafter provided. Establishment and constitution of Supreme Court. (1). . . . . . (2) Every Judge of the Supreme Court shall be appointed by the President by warrant under his hand and seal after consultation with such of the Judges of the Supreme Court and of the High Courts in the States as the President may deem necessary for the purpose and shall hold office until he attains the age of sixty five years: Provided that in the case of appointment of a Judge other than the Chief Justice of India shall always be consulted: Provided further that (a) a Judge may, by writing under his hand addressed to the President, resign his office; (b) a Judge may be removed from his office in the manner provided in clause (4). (4) A Judge of the Supreme Court shall not be removed from his office except by an order of the President passed after an address by each House of Parliament supported by a majority of not less than two thirds of the members of that House present and voting has been pre sented to the President in the same session for such removal on the ground of proved misbehaviour or incapacity. (5) Parliament may by law regulate the proce dure for the presentation of an address and for the investigation and proof of the misbe haviour or incapacity of a Judge under clause (4). " Article 121 suggests that the bar on discussion in Parliament with respect to the conduct of any Judge is lifted 'upon a motion for presenting an address to the President praying for the removal of a Judge as hereinaf 57 provided '. The word 'motion ' and 'as hereinafter provid ed ' are obvious references to the motion for the purpose of clause (4) of Article 124 which in turn, imports the concept of "proved" misbehaviour or incapacity. What lifts the bar under Article 121 is the 'proved ' misbehaviour or incapaci ty. Then arises the question as to how the investigation and proof of misbehaviour or incapacity preceding the stage of motion for removal on the ground of "proved" misbehaviour or incapacity under Article 124(4) is to be carried on. Clause (5) of Article 124 provides for enactment of a law for this purpose. The seminal question is whether clause (5) is merely an enabling provision particularly in view of the use of the word 'may ' therein, or it incorporates a condition precedent on the power of removal of the parliament. In other words, can the function of removal under Article 124(4) be per formed without the aid of a law enacted under clause (5)?If it can be, then the power for investigation and proof of misbehaviour or incapacity of a Judge must be found in clause (4) itself and the scope of clause (5) limited only to enactment of a law for this limited purpose if the Par liament so desires and not otherwise. The other view is that clause (5) contains a constitutional limitation on the power of removal contained in clause (4) so that it can be exer cised only on misbehaviour or incapacity "proved" in accord ance with the law enacted under clause (5). In such situa tion, the power of the Parliament would become available only for enacting the law under clause (5) and if misbeha viour or incapacity is "proved" in accordance with such law. The motion which lifts the bar contained in Article 121 is really a motion for such removal under clause (4) of Article 124 moved in the House after the alleged misbehavior or incapacity has been proved in accordance with the law enact ed by the Parliament under clause (5) of Article 124. In this connection, the parliamentary procedure commences only after proof of misbehaviour or incapacity in accordance with the law enacted under clause (5), the machinery for investi gation and finding of proof of the misbehaviour or incapaci ty being statutory. governed entirely by provisions of the law enacted under clause (5). This also harmonises Article 121. The position would be that an allegation of misbeha viour or incapacity of a Judge has to be made, investigated and found proved in accordance with the law enacted by the Parliament under Article 124(5) without the Parliament being involved upto that stage; on the misbehaviour or incapacity of a Judge being found proved in the manner provided by that law, a motion for presenting an address to the President for removal of the Judge on that ground would be moved in each House under Article 124(4); on the motion being so moved after the proof of misbehaviour or incapacity and it being for presenting an address to the President praying for removal of the Judge, the bar. on 58 discussion contained in Article 121 is lifted and discussion can take place in the Parliament with respect to the conduct of the Judge; and the further consequence would ensue de pending on the outcome of the motion in a House of Parlia ment. If, however, the finding reached by the machinery provided in the enacted law is that the allegation is not proved, the matter ends and there is no occasion to move the motion in accordance with Article 124(4). If it be accepted that clause (4) of Article 124 by contains the complete power of removal and the enactment of a law under clause (5) is merely enabling and not a consti tutional limitation on the exercise of the power of removal under clause (4), then some other questions arise for con sideration. If clause (5) is merely an enabling provision, then it cannot abridge the scope of the power in clause (4) and, therefore, the power of a House of Parliament under clause (4) cannot be curtailed by a mere enabling law enact ed under clause (5) which can be made only for the purpose of aiding or facilitating exercise of the function under clause (4). In that situation, enactment of the enabling law under clause (5) would not take the sphere covered by the law outside the ambit of Parliament 's power under clause (4). The argument that without enactment of the law under clause (5), the entire process from the time of initiation till presentation of the address to the President, including investigation and proof of the misbehaviour or incapacity, is within the sphere of Parliament, but on enactment of a law under clause (5) that area is carved out of the Parlia ment 's sphere and assumes statutory character appears tenu ous. If the argument were correct, then clause (5), would merely contemplate a self abnegation. The other view is that clause (4) of Article 124 gives power to the Parliament to act for removal of the Judge on the ground of proved misbehaviour or incapacity in the manner prescribed if the matter is brought before it at this stage; and for reaching that stage the Parliament is required to enact a law under clause (5) regulating the procedure for that purpose. This means that making of the allegation, initiation of the proceedings, investigation and proof of the misbehaviour or incapacity of a Judge are governed entirely by the law enacted by the Parliament under clause (5) and when that stage is reached, the Parliament comes into the picture and the motion for removal of the Judge on the ground of proved misbehaviour or incapacity is moved for presentation of the address to the President in the manner prescribed. The matter not being before the Parliament prior to this stage is also indicated by Article 121 which lifts the bar on discussion in Parliament only upon a motion for presenting an address to the President as provided later in Article 124(4). The bar in 59 Article 121 applies to discussion in Parliament but investi gation and proof of misconduct or incapacity cannot exclude such discussion. This indicates that the machinery for investigation and proof must necessarily be outside Parlia ment and not within it. In other words, proof which involves a discussion of the conduct of the Judge must be by a body which is outside the limitation of Article 121. The word 'proved ' also denotes proof in the manner understood in our legal system i.e. as a result of a judicial process. The policy appears to be that the entire stage upto proof of misbehaviour or incapacity, beginning with the initiation of investigation on the allegation being made, is governed by the law enacted under Article 124(5) and in view of the restriction provided in Article 121, that machinery has to be outside the Parliament and not within it. If this be so, it is a clear pointer that the Parliament neither has any role to play till misconduct or incapacity is round proved nor has it any control over the machinery provided in the law enacted under Article 124(5). The Parliament comes in the picture only when a finding is reached by that machinery that the alleged misbehaviour or incapacity has been proved. The enacted under Article 124(5) itself indicates that the Parliament so understood the integrated scheme of Articles 121, 124(4) and 124(5). The general scheme of the Act conforms to this view. Some ex pressions used in the Act, particularly sections 3 and 6 to suggest that the motion is initiated in the House or is kept pending in the House during investigation can be reconciled, if this Constitutional Scheme is accepted. Those expressions appear to have been used since the authority tO entertain the complaint is 'Speaker/Chairman ', the complaint is de scribed as 'motion ' and the complaint can be made only by the specified number of Members of Parliament. In substance it only means that the specified number of M.Ps. alone can make such a complaint; the complaint must be made to the 'Speaker/Chairman '; on receiving such a complaint if the Speaker/Chairman form the opinion that there is a prima facie case for investigation, he will constitute the judi cial committee as prescribed; and if the finding reached is 'guilty ' then the Speaker/Chairman commences the parliamen tary process in accordance with Article 124(4) for removal of the Judge and the bar in Article 121 is lifted. If this be the correct position, then the validity of law enacted by the Parliament trader clause (5) of Arti cle 124 and the stage upto conclusion of the inquiry in accordance with that law being governed entirely by statute would be open to judicial review as the parliamentary proc ess under Article 124(4) commences only after a finding is recorded that the alleged misbehaviour or incapacity is proved in the inquiry conducted in accordance with the law enacted under clause (5). For this reason the argument based on exclusivity of Parliament 's jurisdiction over 60 the process and progress of inquiry under the Judges (in quiry) Act, 1968 and consequently exclusion of this Court 's jurisdiction in the matter at this stage does not arise. For the same reason, the question of applying the doctrine of lapse to the motion made to the Speaker giving rise to the constitution of the Inquiry Committee under the Act, also does not arise and there can be no occasion for the House to say so at any time. If the House is, therefore, not required to consider this question since the parliamentary process can commence only after a finding of guilt being proved, the further question of a futile writ also does not arise. The argument that the House can decide even after a finding of guilt that it would not proceed to vote for removal of the Judge is not germane to the issue since that is permissible in the Constitutional Scheme itself under Article 124(4) irrespective of the fact whether Article 124(5) is a mere enabling provision or a constitutional limitation on the exercise of power under Article 124(4). It is not the law enacted under Article 124(5) which abridges or curtails the parliamentary process or exclusive ly of its jurisdiction but the Constitutional Scheme itself which by enacting clauses (4) and (5) simultaneously indi cated that the stage of clause (4) is reached and the proc ess thereunder commences only when the alleged misbehaviour or incapacity is proved in accordance with the law enacted under clause (5). It is only then that the need for discussing a Judge 's conduct in the Parliament arises and, therefore, the bar under Article 121 is lifted. in short, the point of time when the matter comes first before the Parliament in the Constitutional Scheme, Article 121 provides that the bar is lifted. The other view creates difficulties by restricting discussion in Parliament on a motion which would be before it. The suggestion to develop a convention to avoid discus sion at that stage or to prevent it by any other device adopted by the Speaker after admitting the motion, does not appear to be a satisfactory solution or explanation. That this obvious situation could have been left unprovided for and the field left to a convention to be developed later, while enacting these provisions with extreme care and cau tion in a written Constitution, is extremely unlikely. This indicates that this area is not left uncovered which too is a pointer that the stage at which the bar in Article 121 is lifted, is the starting point of the parliamentary process i.e. when the misbehaviour or incapacity is proved; the stage from the initiation of the process by ' making the allegation, its mode, investigation and proof are covered by the law enacted under clause (5); in case the allegation is not proved, the condition precedent to invoke the Parlia ment 's jurisdiction under clause (4), does not exist, which is the reason for section 6 of 1968 Act saying so; and in case it is proved, the 61 process under clause (4) commences, culminating in the result provided in it. In Part V of the Constitution relating to 'The Union ', Article 124 is in 'Chapter IV The Union Judiciary ' while Articles 118 and 119 relating to Parliament 's power to make rules or enact a law to regulate its procedure and the conduct of its business are in 'Chapter II Parliament ' under the heading 'Procedure Generally ' wherein Article 121 also finds place. The context and setting in which clause (5) appears along with clause (4) in Article 124 indicate its nature connected with clause (4) relating to curtailment of a Judge 's tenure, clause (4) providing the manner of removal and clause (5) the pre requisite for removal distin guished from Articles 118, 119 and 121, all of which relate to procedure and conduct of business in Parliament. Article 124(5) does not, therefore, operate in the same field as Article 118 relating to procedure and conduct of business in Parliament. Accordingly, the scheme is that the entire process of removal is in two parts the first parts under clause (5) from initiation to investigation and proof of misbehaviour or incapacity is covered by an enacted law, Parliament 's role being only legislative as in all the laws enacted by it; and the second part only after proof under clause (4) is in Parliament, that process commencing only on proof in accordance with the law enacted under clause (5) Thus the first part is entirely statutory while the second part alone is the parliamentary process. The Constitution intended a clear provision for the first part covered fully by enacted law, the validity of which and the process thereunder being subject to judicial review independent of any political colour and after proof it was intended to be a parliamentary process. It is this synthesis made in our Constitutional Scheme for removal of a Judge. If the motion for presenting an address for removal is envisaged by Articles 121 and 124(4) 'on ground of proved misbehaviour or incapacity ' it presupposes that misbehaviour or incapacity has been proved earlier. This is more so on account of the expression 'investigation and proof used in clause (5) with specific reference to clause (4). This indicates that 'investigation and proof ' of misbehaviour or incapacity is not within clause (4) but within clause (5). Use of the expression 'same session ' in clause (4) without any reference to session in clause (5) also indicates that session of House has no significance for clause (5) i.e., 'investigation and proof ' which is to be entirely governed by the enacted law and not the parliamentary practice which may be altered by each Lok Sabha. 62 45.The significance of the word 'proved ' before the expression 'misbehaviour or incapacity ' in clause (4) of Article 124 is also indicated when the provision is compared with Article 317 providing for removal of a member of the Public Service Commission. The expression in clause (1) of Article 317 used for describing the ground of removal is 'the ground of behaviour ' while in clause (4) of Article 124, it is, 'the ground of proved misbehaviour or incapaci ty '. The procedure for removal of a member of the Public Service Commission is also prescribed in clause (1) which provides for an inquiry by the Supreme Court on a reference made for this purpose. In the case of a Judge, the procedure for investigation and proof is to be in accordance with the law enacted by the Parliament under clause (5) of Article 124. In view of the fact that the adjudication of the ground of misbehaviour under Article 317 (1) is to be by the Su preme Court, in the case of a Judge who is a higher consti tutional functionary, the requirement of judicial determina tion of the ground is re inforced by the addition of the word 'proved ' in Article 124(4) and the requirement of law for this purpose under Article 124(5). Use of the word 'may ' in clause (5) indicates that for the 'procedure for presentation of address ' it is an enabling provision and in the absence of the law the general procedure or that resolved by the House may apply but the 'investigation and proof ' is to be governed by the enacted law. The word 'may ' in clause (5) is no impediment to this view. On the other hand, if the word 'shall ' was used in place of 'may ' in clause (5) it would have indicated that it was incumbent on the Parliament to regulate even the proce dure for presentation of an address by enacting such a law leaving it no option even in the matter of its procedure after the misbehaviour or incapacity had been investigated and found true. 'Sometimes, the legislature uses the word "may" out of deference to the high status of the authority on whom the power and the obligation are intended to be conferred and imposed. ' (See: State of Uttar Pradesh vs Joginder Singh; , at 202. Indeed, when a provision is intended to effectuate a right here it is to effectuate a constituational protection to the Judges under Article 124 (4) even a provision as in Article 124 (5) which may otherwise seem merely enabling, becomes mandatory. The exercise of the powers is rendered obligatory. In Fred eric Guilder julius vs The Right Rev. The Lord Bishop of Oxford; the Rev. Thomas Tellsson Carter, [1879 80] 5 A.C. 214 at p. 24zt, Lord Blackburn said: ,.The enabling words are construed as compulsory whenever the object of the power is to effectuate a legal right. " 63 In Punjab Sikh Regular Motor Service, Moudhapura vs The Regional Transport ,Authority, Raipur & Anr, ; , this Court referring to the word 'may ' in Rule 63 (a) in Central Provinces and Berar Motor Vehicles Rules, 1940, observed: ". On behalf of the appellant attention was drawn to the expression 'may ' in Rule 63. But in the context and the language of the rule the word 'may ' though permissive in form, must be held to be obligatory. Under Rule 63 the power to grant renewal of the counter signa ture on the permit in the present case is conferred on the Regional Transport Authority, Bilaspur. The exercise of such power of renew al depends not upon the discretion of the authority but upon the proof of the particular cases out of which such power arises. 'Ena bling words are construed as compulsory when ever the object of the power is to effectuate a legal right '. (See: Julius vs Bishop of Oxford, 5 A.C. 214, 244). " If the word 'may ' in Article124 (5) is given any other meaning that sub Article would render itself, to be treated by the Parliament, as superfluous, redundant and otiose. The power to prescribe a procedure for the exercise of power under Article 124 (4) could otherwise also be available to the House. The law envisaged under Article 124(5) is not such a law; but one which would effectuate the constitution al policy and philosophy of the machinery for removal of Judges. The use of the word 'may ' does not, therefore, neces sarily indicate that the whole of clause (5) is an enabling provision leaving it to the Parliament to decide whether to enact a law even for the investigation and proof of the misbehaviour or incapacity or not. The mere fact that clause (5) does not form a part of clause (4) itself, as appears to have been considered at one stage when the constitution was being drafted, does not reduce the significance or content of clause (5). It is likely that the framers of the Constitution thought of clearly demarcating the boundaries and, therefore, indicated that upto the stage of proof of misbehaviour of incapacity the field is covered by a law enacted by the Parliament, the first pan being covered by clause (5) and the latter by clause (4) with the only difference that the Parliament was given the option to regulate even the procedure for the presentation of an address after the misbehaviour or inca pacity had been proved by enacting a law for the purpose to make it more definite and consistent. 64 48. Similarly, use of word 'motion ' to indicate the process of investigation and proof in the because the allegations have to be presented to the 'Speaker ' does not make it 'motion in the House ' not withstanding use of that expression in Section 6. Otherwise, section 6 would not say that no further step is to be taken in case of a finding of 'not guilty '. It only means that when the allegation is not proved, the Speaker need not commence the process under clause (4) which is started only in case it is proved. The Speaker is, therefore, a statutory authority under the Act chosen because the further process is parliamentary and the authority to make such a complaint is given to Members of Parliament. Moreover, to the enact ment under Article 124(5) cannot be a safe guide to deter mine the scope of Article 124(5). If this construction of the inter connection amongst Articles 118,121, 124 (4) and 124 (5) is the proper one to be placed on them, as indeed we so do, the provisions of the do not foul with the Constitutional Scheme. On scope of the law under Article 124(5), the idea of regulating procedure for (i) Presentation of the address; (ii) Investigation and proof of misbehaviour or incapacity admit of two possible options of interpretation. The idea of "Presentation of the address" may be confined to the actual presentation of address by both Houses of the Parliament; or may be held to cover the entire process from initiation by the motion in the House till the final act of delivery of the address. If the first view is correct the law under Article 124(5) would apply at the stage of investigation and proof of misbehaviour or incapacity and at the final stage of presentation of address after the motion is adopted by both the Houses. The motion and its consideration and adop tion by the House would be outside the ambit of such law and it would be regulated by the rule of procedure made under Article I 18. This view is too narrow. By bringing in the rules of procedure of the House made under Article 118 it introduces an element of uncertainty and might affect inde pendence of the judiciary. Second view is to be preferred. It enables the entire process of removal being regulated by a law of Par liament ensures uniformity and reduces chances of arbi trariness. Article I 18 is a general provision conferring on each House of Parliament the power to make its own rules of procedure. These rules are not binding on the House and can be altered by the House at any time. A breach of such rules amounts to an irregularity and is not subject to judicial review in view of Article 122. Article 124(5) is in the nature of a special provi sion intended to regulate the procedure for removal of a Judge under Article 124(4) which 65 iS not a part of the normal business of the House but is in the nature of special business. It covers the entire field relating to removal of a Judge. Rules made under Article 118 have no application in this field. Article 124(5) has no comparison with Article 119. Articles 118 and 119 operate in the same field viz. normal business of the House. It was, therefore, necessary to specifically prescribe that the law made under Article 119 shall prevail over the rules of procedure made under Article 118. Since Article 118 and 124(5) operate in different fields a provision like that contained in Article 119 was not necessary and even in the absence of such a provision, a law made under Article 124 (5) will override the rules made under Article 118 and shall be binding on both the Houses of Parliament. A violation of such a law would constitute illegality and could not be immune from judical scrutiny under Article 122(1). Indeed, the Act reflectS the constitutional philoso phy of both the judicial and political elementS of the process of removal. The ultimate authority remains with the Parliament in the sense that even if the Committee for investigation records a finding that the Judge is guilty of the charges it is yet open to the Parliament to decide not to present an address to the President for removal. But if the Committee records a finding that the Judge is not guilty, then the political element in the process of removal has no further option. The law is, indeed, a civilised piece of legislation reconciling the concept of accountability of Judges and the values of judicial independence. Indeed, the dissenting note of Dr. L.M. Singhvi, in the Report of the Joint Committee on the Judges (Inquiry) Bill, 1964 brings into sharp focus the thrust of the report of the majority. It is to be recalled that the 1964 Bill vested the power to initiate the process of removal with the Executive. That was found objectionable and inconsistent with the idea of judicial independence. However, as to the nature of the authority which was the repository of the power to investigate, the dissenting opinion, by necessary implication, emphasises the majority view which ultimately became the law. Dr. Singhvi in his dissent says: "10. The present Bill seeks to provide only the modality of a tribunal clothed in the nomenclature of a Committee. The Committee contemplated in the Bill may well be consid ered a tribunal or an "authority" within the meaning of Articles 226 and 227 of the Consti tution, rendering itS work subject to judicial review and supervision. What is more, the Parliament is not left with any choice in the matter and procedure of parliamen 66 tary committee has been wholly excluded. With this I am not in agreement. In both these matters in respect of which I have dissented from my esteemed colleagues in the Joint Select Committee, there appears to be an imprint on the provisions of the Bill of the now defunct Burmese Constitution, which provided that a notice of such resolution should be signed by not less than one fourth of the total membership of either Chamber of Parliament and further that the charge would be investigated by a special tribunal (section 143 of the Burmese Constitution). In the Burmese case, the special tribunal was to consist of the President or his nominee and the Speakers of the Chamber of Nationalities and the Cham ber of Deputies. I feel that the Burmese analogue is neither inspiring nor instructive, and that the more highly evolved procedures of other democratic constitutions which have been tried and tested for centuries would have served us better". Our conclusions, therefore, on contentions B, C and D are as under: The constitutional process for removal of a Judge upto the point of admission of the motion, constitution of the Committee and the recording of findings by the Committee are not, strictly, proceedings in the Houses of Parliament. The Speaker is a statutory authority under the Act. Upto that point the matter cannot be said to remain outside the Court 's jurisdiction. Contention B is answered accordingly. Prior proof of misconduct in accordance with the law made under Article 124(5) is a condition precedent for the lifting of the bar under Article 121 against discussing the conduct of a Judge in the Parliament. Article 124 (4) really becomes meaningful only with a law made under Article 124(5). Without such a law the constitutional scheme and process for removal of a Judge remains inchoate. Contention C is answered accordingly. The Speaker while admitting a motion and constituting a Committee to investigate the alleged grounds of misbehaviour or incapacity does not act as part of the House. The House does not come into the picture at this stage. The provisions of the are not unconstitutional as abridging the powers and privileges of the House. The is constitutional and is intra vires. Contention D is disposed of accordingly. 67 RE: CONTENTION (E) 56. It is urged by Shri Sibal that having regard to the serious consequences that flow from the admission of a motion by the Speaker and the decision to constitute a Committee for investigation, it is incumbent upon the Speak er to afford an opportunity to the Judge of being heard before such a decision is taken. It is urged that such decision has momentous conseqences both to the Judge and to the judicial system as a whole and that any politically motivated steps to besmear a Judge will not merely affect the Judge himself but also the entire system of administra tion of justice. If a motion brought up with collateral and oblique motives, it would greatly advance the objects and purposes of if the Judge con cerned himself is heard before a decision to admit a ,"notion which has shattering consequences so far as the Judge is concerned is taken. The minimum requirements of natural justice, appropriate in the context, says learned counsel, require that the Judge should have an opportunity of being heard. Shri Jethmalani, on the contrary, contended that it would be highly inappropriate that the Speaker should issue notice to a Judge and call upon him to appear before the Speaker. That apart, Shri Jethmalani said at that stage of the proceedings where the Speaker merely decides that the matter might bear investigation no decisions affecting the rights, interests or legitimate expectation can be said to have been taken. Shri Jethmalam sought to point out that these proceedings could not be equated with disciplinary or penal proceedings. The Speaker does not decide anything against the Judge at that stage. Referring to the nature and purpose of such preliminary proceedings Corpus Juris Secundum (Vol. 48A) says: "As a general rule, disciplinary or removal proceedings relating to Judges are sui generis and are not civil or criminal in nature; and their purpose is to inquire into judical conduct and thereby maintain standards of judicial fitness". [p.614] As to the stage at which there is a need for notice and opportunity to the Judge to be heard the statement of the law is: "The general rule is that before a Judge may be disciplined, as by removal, he is entitled to notice and an opportunity to defend even though there is no statute so requiring. Ordinarily, 68 the right to defend is exercised in a trial or hearing, as considered infra 51. More specifi cally the Judge is entitled to notice of the particular charges against him. In addition, notice of the charge should be given suffi ciently in advance of the time for presenting a defence to permit proper preparation of a showing in opposition". (pp. 613 614) But negativing the position that the Judge would be entitled to notice even at the preliminary stage it is stated: "Investigations may be conducted into matters relating to judicial conduct as a preliminary to formal disciplinary proceedings. A judiciary commission may conduct an investi gation into matters relating to judicial conduct as a preliminary to formal discipli nary proceedings, and a court may, under its general powers over inferior courts, appoint a special commissioner to preside over a prelim inary investigation. A court rule providing that a Judge charged with misconduct should be given a reasonable opportunity in the course of a preliminary investigation to present such matters as he may choose, affords him more protection than is required by constitutional provisions". [p. 615] 58. The position is that at the stage of the provisions when the Speaker admits the motion under section 3 of the , a Judge is not, as a matter of right, entitled to such notice. The scheme of the statute and rules made thereunder by necessary implication, exclude such a right. But that may not prevent the Speaker, if the facts and circumstances placed before him indicate that hearing the Judge himself might not be inappropriate, might do so. But a decision to admit the motion and constitute a Commit tee for investigation without affording such an opportunity does not, by itself and for that reason alone, vitiate the decision. Contention E is disposed of accordingly. RE:CONTENTION (F) 59. The substance of this contention as presented by the learned counsel for the petitioner, "Sub Committee" argued with particular emphasis by Shri R.K. Garg is that the constitutional machinery for removal of a Judge is merely a political remedy for judicial misbehaviour 69 and does not exclude the judicial remedy available to the litigants to ensure and enforce judicial integrity. It is urged that the right to move the Supreme Court to enforce fundamental rights is in itself a fundamental right and that takes within its sweep, as inhering in it, the right to an impartial judiciary with persons of impeccable integrity and character. Without (his the fundamental right to move court itself becomes barren and hollow. It is urged that the court itself has the jurisdiction nay a duty to ensure the integrity and impartiality of the members composing it and restrain any member who is found to lack in those essential qualities and attainments at which public confidence is built. It is true that society is entitled to expect the high est and most exacting standards of propriety in judicial conduct. Any conduct which tends to impair public confidence in the efficiency integrity and impartiality of the court is indeed forbidden. In Corpus Juris Secundum (Vol. 48A) refer ring to the standards of conduct, disabilities and privi leges of Judges, it is observed: "The State which creates a judicial office may set appropriate standards of conduct for a Judge who holds that office, and in many jurisdictions, courts acting within express or implied powers have adopted or have followed certain canons or codes of judicial conduct. The power of a particular court in matters of ethical supervision and the maintenance of standards for the judiciary may be exclusive. Guidelines for judicial conduct are found both in codes of judicial conduct and in general moral and ethical standards expected of judi cial officers by the community. Canons or codes are intended as a statement of general principles setting forth a wholesome standard of conduct for judges which will reflect credit and dignity on the profession and illsolar as they prescribe conduct which is malum in so as opposed to malum prohibitum they operate to restate those general prinici ples that have always governed judicial con duct. Although these canons have been held to be binding on judges and may have the force of law where promulgated by the courts, except as legislatively enacted or judicially adopted they do not of themselves have the force and effect of law". [pp. 593 594] the nature of prescribed conduct it is stated: 70 "A Judge 's official conduct should be free from impropriety and the appearance of impro priety and generally, he should refrain from participation in activities which may tend to lessen public respect for his judicial office. It is a basic requirement, under general guidelines and canons of judicial conduct, that a Judge 's official conduct be free from impropriety and the appearance of impropriety and that both his official and personal beha viour be in accordance with the highest standard society can expect. The standard of conduct is higher than that expected of lay people and also higher than that expected of attorneys. The ultimate standard must be conducted which constantly reaffirms fitness for the high responsibilities of judicial office and judges must so comfor '. themselves as to dignify the administration of justice and deserve the confidence and respect of the public. It is immaterial that the conduct deemed objectionable is probably lawful albeit unjudicial or that it is perceived as lowhu mored horseplay. In particular, a judge should refrain from participation in activities which may tend to lessen public respect for his judicial office and avoid conduct which may give rise to a reasonable belief that he has so participated. In fact even in his private life a judge must adhere to standards of probity and propriety higher than those deemed acceptable for oth ers. While a judge does have the right to entertain his personal views on controversial issues and is not required to surrender his rights or opinions as a citizen his right of free speech and free association are limited from time to time by his official duties and he must be most careful to avoid becoming involved in public controversies". 594~596] In Sampath Kumar & Ors. vs Union of India & Ors, [1985 ] 4 S.C.C. 458, dealing with the qualifications, accomplish ments and attainments of the members of the Administrative Tribunal, which were intended to substitute for the High Courts, this court emphasised the qualities essential for discharging judicial functions. But we are afraid the proposition that, apart from the constitutional machinery for removal of a Judge, the judiciary itself has the jurisdiction and in appropriate cases a duty to enquire into the integrity of one of its members and restrain the Judge from exercising judicial functions is beset with grave risks. The court would then indeed be acting as a tribunal1 for the removal of a Judge. Learned counsel supporting the proposition 71 stated that the effect of restraining a Judge from exercis ing judicial functions is not equivalent to a removal be cause the conditions of service such as salary etc. of a Judge would not be impaired. But we think that the general proposition that the court itself has such a jurisdiction is unacceptable. It is productive of more problems then it can hope to solve. The relief of a direction to restrain the Judge from discharging judicial functions cannot be granted. It is the entire Constitutional Scheme including the provisions relat ing to the process of removal of a Judge which are to be taken into account for the purpose of considering this aspect. It is difficult to accept that there can be any right in anyone running parallel with the Constitutional Scheme for this purpose contained in clauses (4) and (5) of Article 124 read with Article 121. No authority can do what the Constitution by necessary implication forbids. Inciden tally, this also throws light on the question of interim relief in such a matter having the result of restraining the Judge from functioning judicially on initiation of the process under the Judge (Inquiry) Act, 1968. The Constitu tional Scheme appears to be that unless the alleged misbeha viour or incapacity is 'proved ' in accordance with the provisions of the law enacted under Article 124(5) and a motion for presenting an address for removal of the Judge on the ground of proved misbehaviour or incapacity is made, because of the restriction contained in Article 121, there cannot be a discussion about the Judge 's conduct even in the Parliament which has the substantive power of removal under Article 124(4). If the Constitutional Scheme therefore is that the Judge 's conduct cannot be discussed even in the Parliament which is given the substantive power of removal, till the alleged misconduct or incapacity is 'proved ' in accordance with the law enacted for this purpose, then it is difficult to accept that any such discussion of the conduct of the Judge or any evaluation or inferences as to its merit is permissible according to law elsewhere except during investigation before the Inquiry Committee constituted under the statute for this purpose. The indication, therefore, is that interim direction of this kind during the stage of inquiry into the alleged misbehaviour or incapacity is not contemplated it being alien to our Constitutional Scheme. The question of propriety is, however, different from that of legality. The absence of a legal provision, like Article 3 17(2) in the case of a Member of Public Service Commission, to interdict the Judge faced with such an inquiry from contining to discharge judicial functions pending the outcome of the inquiry or in the event of a finding of misbehaviour or incapacity being proved till the process of removal under Article 124(4) is complete, does not necessarily indicate that the Judge shall continue to function during that period. That area is to be covered by the 72 sense of propriety of the learned Judge himself and the judicial tradition symbolised by the views of the Chief Justice of India. It should be expected that the learned Judge would be guided in such a situation by the advice of the Chief Justice of India, as a matter of convention unless he himself decides as an act of propriety to abstain from discharging judicial functions during the interregnum. Since the learned Judge would continue to hold the office of a Judge unless he resigns or is removed, an arrangement to meet the situation has to be devised by the Chief Justice. The Constitution while providing for the suspension of a Member of a Public Service Commission in Article 3 17 (2) in a similar situation has deliberately abstained from making such a provision in case of higher constitutional function aries, namely, the Superior Judges and President and Vice President of India, facing impeachment. It is reasonable to assume that the framers of Constitution had assumed that a desirable convention would be followed by a Judge in that situation which would not require the exercise of a power of suspension. Propriety of the desirable course has to be viewed in this perspective. It would also be reasonable to assume that the Chief Justice of India is expected to find a desirable solution in such a situation to avoid embarrass ment to the learned Judge and to the Institution in a manner which is conducive to the independence of judiciary and should the Chief Justice of India be of the view that the interests of the institution of judiciary it is desirable for the learned Judge to abstain from judicial work till the final outcome under Article 124(4), he would advise the learned Judge accordingly. It is further reasonable to assume that the concerned learned Judge would ordinarily abide by the advice of the Chief Justice of India. All this is, however, in the sphere of propriety and not a matter of legal authority to, permit any court to issue any legal directive to the Chief Justice of India for this purpose. Accordingly Contention F is rejected. RE:CONTENTION (G) 63. This relates to the mala fides alleged against the Speaker. The averments in this behalf are identical in both Raj Birbal 's and Sham Ratan Khandelwal 's peti tions. We may notice the relevant averments: "It is, therefore, disconcerting to note that the Speaker acted contrary to Constitutional practice. It is assumed that this high Consti tutional functionary would have known of the well settled and established constitutional practice in regard to the fact that motions lapse with the dissolution of the House. The action of the Speaker, therefore, in admitting the motion in the manner that he did, smacks of mala fides and, therefore, de 73 serves to be struck down. The action of the Speaker is mala fide on yet another count. The Speaker has not resigned from the primary membership of the Janta Dal. The petitioners verily believe that the first signatory to the motion is the erstwhile Prime Minister of India Shri V.P. Singh who happens also to be the leader of the Janta Dal. The signatories to the said motion, the petition ers verily believe, belong mostly to the Janta Dal, though the details of this fact are not precisely known to the petitioners. The Speak er, as has been indicated earlier, ought to have allowed parliament to look into the matter and discuss as to whether or not the motion ought to be admitted. The Speaker ought to have at least tabled the motion in the House to ascertain the views of the Members of parliament belonging to various Houses. The Speaker, to say the least, ought to have transmitted all materials to Justice Ramaswami and sought a response from him before attempt ing to admit the motion. The Speaker ought to have dealt with the motion much earlier and transmitted to Justice Rammaswami all the materials as well as the views that might have been expressed to him in the course of his consultations which enabled him to come to a decision. The Speaker in the very least ought to have ascertained the wishes of the House in this regard. The Speaker ought not to have decided to admit the motion in the manner he did on the last evening of the 9th Lok Sabha amidst din and noise, when what he spoke was also not entirely audible in the House. The Speaker is a high Constitutional functionary and ought to have exercised his functions in the highest traditions of the office of this high constitutional function ary. The Speaker ought also not to have dealt with the motion, the prime movers of which are members of his own party. 'the Speaker ought to have disqualified himself in this regard and placed the matter for the discussion of the House. The conduct of the Speaker in this entire episode was unbecoming of a high Con stitutional functionary. The action of the Speaker is mala fide and deserves to be struck down on this count alone." The averments as to mala fides are intermixed with and inseparable from touching the merits of certain constitu tional issues. Indeed, mala fides are sought to be impugned to the Speaker on the grounds that he did 74 not hear the Judge, did not have the motion discussed in the House etc. We have held these were not necessary. But a point was made that the Speaker not having entered appearance and denied these allegations on oath must be deemed to have admitted them. It appears to us that even on the allegations made in the petition and plea of mala fides which require to be established on strong grounds, no such case is made out. A case of mala fides cannot be made out merely on the ground of political affiliation of the Speaker either. That may not be a sufficient ground in the present context. At all events, as the only statutory au thority to deal with the matter, doctrine of statutory exceptions or necessity might be invoked. Contention G cannot therefore be accepted. RE :CONTENTION (H) 65. This pertains to the locus standi of "Sub Committee on the Judicial Accountability" and the Supreme Court Bar Association to maintain the proceedings. If this is true, then the petitioners in Transfer Petition No. 278 of 1991 and other writ petitions challenging the Speaker 's decision would not also have the necessary standing to sue. The law as to standing to sue in public interest actions had under gone a vast change over the years and liberal standards for determining locus standi are now recognised. The matter has come to be discussed at considerable care and length in S.P. Gupta & Ors. vs Union of India & Ors. etc. , [1982] 2 SCR 365. The present matter is of such nature and the constitutional issues of such nature and importance that it cannot be said that members of the Bar, and particularly the Supreme Court Bar Association have no locus standi in the matter. An elaborate re survey of the principles and prece dents over again is unnecessary. Suffice it to say that from any point of view the petitioners satisfy the legal equip ments of the standing to sue. We, therefore, reject the Contention H. 66. We are constrained to say that certain submissions advanced on the prayer seeking to restrain the learned judge from functioning till the proceedings of the committee were concluded lacked as much in propriety as in dignity and courtesy with which the learned judge is entitled. The arguments seemed to virtually assume that the charges had been established. Much was sought to be made of the silence of the Judge and his refusal to be drawn into a public debate. If we may say so with respect, learned judge was entitled to decline the invitation to offer his explanation to his detractors, No adverse inference as to substance and validity of the 75 charges could be drawn from the refusal of the learned judge to recognise these forums for his vindication. While the members of the bar may claim to act in public interest they have, at the same time, a duty of courtesy and particular care that in the event of the charges being found baseless or insufficient to establish any moral turpitude, the judge does not suffer irreparably in the very process. The ap proach should not incur the criticism that it was calculated to expose an able and courteous judge to public indignity even before the allegations were examined by the forum constitutionally competent to do so. We wish the level of the debate both in and outside the Court was more decorous and dignified. Propriety required that even before the charges are proved in the only way in which it is permitted to be proved, the Judge should not be embarrassed. The constitutional protection to Judges is not for theft person al benefit; but is one of the means of protecting the judi ciary and its independence and is, / therefore, in the larger public interest. Recourse to constitutional methods ' must be adhered to, if the system were to survive. Learned Judge in his letter to the Registrar General which he de sired to be placed the Court had, indeed, expressed deep anguish at the way the petitioners had been permitted them selves to sit in judgment over him and deal with him the way they did. RE: CONTENTION (I) 67. This argument suggests that the court should, having regard to the nature of the area the decision of the court and its writ is to operate in, decline to exercise its jurisdiction, granting it has such jurisdiction. It is urged that any decision rendered or any writ issued might, in the last analysis, become futile and infructuous as indeed the Constitution of and investigation by the committee are not, nor intended to be, an end by themselves culminating in any independent legal consequences but only a proceeding prelim inary to and preceding the deliberations of the House on the motion for the presentation of an address to the President for the removal of a Judge. The latter, it is urged, is indisputably with in the exclusive province of the Houses of parliament over which courts exercise no control or juris diction. The constitution of and the proceedings before the committee are, it is urged, necessarily sequential to and integral with the proceedings in the Houses of Parliament. SinCe the committee and its investigations have neither any independent existence nor separate legal effect otherwise than as confined to, and for the purposes and as part of the possible prospective proceedings in the Houses of Parlia ment, the court should decline to exercise jurisdiction on a matter which is of no independent legal consequence of its own and which, in the last analysis, falls and remains entirely in an area outside the courts ' jurisdiction. It is urged 76 that both from the point of view of infructuousness, propri ety and futility, the court should decline the invitation to interfere even though that part of the proceedings pertain ing to the constitution of the committee might not strictly be within the exclusive area of Parliament. Courts, it is urged, would not allow its process to expect in a matter which will eventually merge in something over which it will have no jurisdiction. The elements of infructuousness, it is suggested, arise in two areas. The first is, as is posited, what should happen if the Houses of Parliament choose to say that in their view the motion has lapsed? Would the court then go into the legality of the proceedings of the Houses of Par liament and declare the decision of the House void? The second area of the suggested source of infructuous ness is as to the consequences of the position that the Houses of Parliament would, notwithstanding the report of the committee, be entitled to decide not to present an address to the President to remove the Judge. It is, it is said, for the House of Parliament to discipline the Govern ment if the House is of the view that Government is guilty of an illegal inaction on the Speaker 's decision as ulti mately the House has dealt with the committee 's report. On the first point there is and should be no diffi culty. The interpretation of the law declared by this court that a motion under section 3(2) of the , does not lapse upon the dissolution of the House is a binding declaration. No argument based on an assumption that the House would act in violation of the law need be entertained. If the law is that the motion does not lapse, it is erroneous to assume that the Houses of Parliament would act in violation of the law. The interpretation of the law is within the exclusive power of the courts. So far as the second aspect is concerned, what is now sought by the petitioners who seek the enforcement and implementation of the Speaker 's decision is not a direction to the committee to carry out the investigation. Such a prayer may raise some issues peculiar to that situation. But here, the Union. Government has sought to interpret the legal position for purposes of guiding its own response to the situation and to regulate its actions on the Speaker 's decision. That understanding of the law is now found to be unsound. All that is necessary to do is to declare the correct constitutional position. No specific writ of direction need issue to any authority. Having regard to the nature of the subject matter and the purpose it is ultimately intended to serve all that is necessary is to declare the legal and constitu 77 tional position and leave the different organs of the State to consider matters falling within the orbit of their re spective jurisdiction and powers. Contention I is disposed of accordingly. In the result, for the foregoing reasons, Writ Petition Nos. 491 and 541 of 1991 are disposed of by the appropriate declarations of the law as contained in the judgment. Writ Petition Nos. 542 and 560 of 1991 are dismissed. Transfer Petition No. 278 of 1991 is allowed. Writ Petition No. 1061 of 1991 is withdrawn from the Delhi High Court. The transferred writ petition is also dismissed. SHARMA, J. I have gone through the erudite Judgment of my learned Brothers, and I regret that I have not been able to persuade myself to share their views. In my opinion, all these petitions are fit to be dismissed. The stand of the petitioners in W.P. (C) Nos. 491 of 1991 and 541 of 1991 is that the inquiry with respect to the alleged misbehaviour of Mr. Justice V. Ramaswami, the third respondent in W.P. (C) No. 491 of 1991, which was referred to a Committee under the provisions of the ought to proceed and accordingly the Union of India must take all necessary steps. The main arguments on their behalf have been ad dressed by Mr. Shanti Bhushan, Mr. Ram Jethmalani and Mr. R.K.Garg, all appearing for the petitioners in W,P. (C) No. 491 of 1991, which has been treated as the main case. Al though in substance their stand is similar, they are not consistent on some of the points debated during the heating of the case. They have been supported in general terms by Ms. Indira Jaising and Mr. P.P. Rao, the learned counsel representing the Supreme Court Bar Association, the peti tioner in W.P. (C) No. 541 of 1991, and for the sake of convenience the petitioners in these two cases shall be hereinafter referred to as the petitioners. The opposite point of view has been pressed by Mr. Kapil Sibal, on behalf of Mrs. Raj Birbal, the petitioner in T.P. (C) No. 278 of 1991, Mr. V.R.Jayaraman intervenor in W.P. (C) No. 491 of 1991 and Mr. Shyam Ratan Khandelwal, the petitioner in W.P.(C) No. 560 of 1991; and in view of their stand, they shall be referred to as respondents in this judgment. The Committee for the investigation into the alleged misbehaviour of the third respondent was constituted on 12.3.1991 under the provi 78 sions of the (hereinafter re ferred to as the Act) by Shri Rabi Ray, the then Speaker of the Lok Sabha, not a party in W.P. (C) Nos. 491 of 1991 and 541 of 1991, but impleaded by Mr. Shyam Ratan Khandelwal as respondent No. 1 in W.P. (C) No. 560 of 1991. The Lok Sabha was dissolved the very next day, i.e. 13.3.1991. Mr. Attorney General appearing on behalf of the Union of India has contended that this Court should affirm the views expressed by the Union of India in its affidavit that on dissolution of the last Lok Sabha, the Motion against the third respondent lapsed and the matter cannot proceed further. According to the case of the petitioners, once the Committee was constituted, the entire inquiry must be com pleted in accordance with the provisions of the Act, and the stand of the Union Government that the Motion in this regard lapsed on the dissolution of the House is fit to be reject ed. The Union Government, in the circumstances, is under a duty to act in such manner by way of providing funds et cetera, that it may be practically possible for the Commit tee to complete its task. Since the obligation to act ac cordingly, arises under the Act, this Court has full author ity to enforce the performance of the statutory duty; and having regard to the circumstances in the present case it is appropriate to exercise that power. The petitioners further pray that in the meantime the third respondent should not undertake to dispose of judicial matters, and since he has not himself refrained from so doing, no judicial work should be allotted to him. The Chief Justice of India has also been impleaded as a party respond ent but this Court while issuing Rule Nisi after hearing learned counsel for the parties, did not consider it expedi ent to issue notice to the Chief Justice. A prayer for interim direction in this regard was also rejected. During the hearing of the cases another application to the same effect was filed and was heard at considerable length and ultimately rejected by a reasoned order. Mr. Sibal, the learned counsel for the respondents has challenged the maintainability of the writ petitions, on the ground that the matter is not justiciable. It was fur ther argued that since the Speaker proceeded to admit the Notice of Motion initiated by 108 Members of the Lok Sabha without reference to the House, the order of the Speaker was void, and the constitution of the Committee is ultra vires. The Speaker 's order has been challenged also on the grounds of violation of principles of natural justice and mala fides. So far as the effect of the dissolution of the 79 last Lok Sabha is concerned the respondents have supported the stand of the Union Government that the Motion has lapsed, but consistent with their plea. of non justiciabili ty, Mr. Sibal has indicated that it is for the House to decide this issue. Long arguments were addressed by the learned counsel for the parties on the correct interpretation of Article 124(4) and (5) and the Act, and Mr. Sibal has contended that if the construction suggested by him of the provisions of the Act are not accepted, the Act has to be struck down either in its entirety or in part as ultra vires the Constitution. In W.P. (C) No. 560 of 1991 Mr. Shyam Ratan Khandelwal has, inter alia, prayed for declaring the and the Rules framed thereunder as ultra vires Article 121 and 124(5) of the Constitution; for quashing the decision of the Speaker; and, for issuing a Writ of Mandamus to the Committee not to embark upon or proceed with the inquiry. He also wants a declaration that the Chief Justice of India cannot withhold allocation of work to the third respondent for discharging his judicial functions, and seeks for consequential directions in this regard. During the course of his argument, Mr. Sibal, in reply to a query from the Bench, clarified the position that if his plea of non justiciability is accepted, all the petitions may have to be dismissed. It is appropriate that the point relating to the jurisdiction of this Court, and for that matter of any court in India, is considered first. If the stand of the respond ents is correct on this issue, it may not be necessary to deal with the other questions raised by the parties. In support of his argument, Mr. Sibal has relied upon the provisions of Article 122(2) of the Constitution read with Article 93, and has urged that the present matter relates to the conduct of the business of the Lok Sabha and is included within the functions of regulating its procedure, and as such the Speaker who is a Member and officer of the Parlia ment cannot be subjected to the jurisdiction of any Court in respect of the exercise of those powers. The questions whether the Motion on the basis of which the present inquiry by the Committee has been ordered has lapsed or not and whether the inquiry should further proceed or not are for the House to determine, and its decision will be final. Reference was also made to Article 100, but the learned counsel clarified his stand that in the present context a special majority as indicated in Article 124(4) will have to be substituted for a simple majority mentioned in Article 100(1). It has been contended that the Speaker was not free to take a decision by himself to refer the matter to the Committee for inquiry and that too without hearing the Judge concerned; and in any event his order is subject to any decision 80 to the contrary of the House arrived at, at any stage. Emphasis was laid on the concept of Separation of State powers amongst its three wings, and it was claimed that all matters within the House including moving of motions, ad journment motions and debates are beyond the purview of judicial scrutiny. Counsel said that it does not make any difference that in the present case it is the Union Govern ment, which has taken a decision for itself on the disputed issue; and the petitioners cannot use this as an excuse for approaching the Court. The Court should refuse to entertain the writ petitions on this ground, as it cannot be persuaded to do indirectly what it cannot do directly. The crux is that the matter is in the exclusive domain of the Parlia ment. Although in my final conclusion I agree with the respondents that the courts have no jurisdiction in the present matter, I do not agree with Mr. Sibal 's contention based on an assumption of the very wide and exclusive juris diction of the Parliament in the general terms, as indicated during his argument. His stand that the Speaker could not have taken a decision singly also does not appear to be well founded. He strenuously argued that since the matter relat ing to the removal of a Judge is from the very beginning within the exclusive control of one of the Houses of the Parliament every decision has to be taken by the entire House and if necessary a debate will have to be permitted. As a result, the bar on discussion in the House on the Judges ' conduct will disappear from the initial stage it self, but that cannot be helped. He relied upon the inter pretation of Mr. M.C.Setalvad on clauses 4 & 5 of Article 124 as stated by him before the Joint Committee on the Judges (inquiry) Bill, 1964 (being Bill No. 5 of 1964 which was ultimately dropped) and his view that the desired object of avoiding debate on the conduct of a Judge in the Parlia ment can be achieved only by the Speaker carefully exercis ing his discretion after taking into account the impropriety of such a debate. Although the powers of State has been distributed by the Constitution amongst the three limbs, that is the Legis lature, the Executive and the Judiciary, the doctrine of Separation of Powers has not been strictly adhered to and there is some overlapping of powers in the gray areas. A few illustrations will show that the courts ' jurisdiction to examine matters involving adjudication of disputes is sub ject to several exceptions. Let us consider a case in which an individual citizen approaches the Court alleging serious violation of his fundamental rights resulting in grave and irreparable injury, arising as a consequence of certain acts, and the decision of his claim is dependent on the adjudication of a dispute covered by Article 262 or Article 363. He does not have a legal remedy before the courts. Similarly a Member of Parliament or of a State Legislature who 81 may have a just grievance in matters covered by Article 122(2) or 212(2) cannot knock the doors of the courts. Let us take another example where a group of citizens residing near the border of the country are in imminent danger of a devastating attack from an enemy country in which they are sure to lose large number of lives besides theft property. This can be averted only by accepting the terms offered by the enemy country, which are in their opinion reasonable and will be highly in the interest of the nation as a whole. The concerned authorities of the State, however, hold a differ ent view and consider starting a war immediately as an unavoidable strategy, even in the face of imminent danger to the border area. On an application by the aggrieved citi zens, the Court cannot embark upon an inquiry as to the merits and demerits of the proposed action of the State nor can it direct that the residents of the threatened area must be shifted to some safe place before starting of the war. The examples can be multiplied. Generally, questions involv ing adjudication of disputes are amenable to the jurisdic tion of the courts, but there are exceptions, not only those covered by specific provisions of the Constitution in ex press terms, but others enjoying the immunity by necessary implication arising from established jurisprudential princi ples involved in the Constitutional scheme. It was observed by this Court in Smt. Indira Gandhi vs Raj Narain, at page 415, that rigid Separation of Powers as under the American Constitution or under the Australian Constitution does not apply to our country and many powers which are strictly judicial have been excluded from the purview of the courts under our Constitution. Judicial power of the State in the comprehensive sense of the expression as embracing all its wings is dif ferent from the judicial power vested or intended to be vested in the courts by a written Constitution. The issue which arises in the present case is whether under the Con stitutional scheme a matter relating to the removal of a Judge of the superior courts (Supreme Court or High Courts) is within the jurisdiction of the courts or in any event of this Court. On a close examination of the Constitution it appears to me that a special pattern has been adopted with respect to the removal of the members of the three organs of the State The Executive, the Legislature and the Judici ary at the highest level, and this plan having been con sciously included in the Constitution, has to be kept in mind in construing its provisions. The approach appears to be that when a question of removal of a member of any of the three wings at the highest level i.e. the President; the Members of the Parliament and the State Legislatures; and the Judges of the Supreme Court and the High Courts arises, it is left to an organ other than where the problem has arisen, to be decided. 82 11. The President has to be elected by the members of an electoral college as prescribed by Article 54, in the manner indicated in Article 55. Since he has to exercise his func tions in accordance with the advice tendered by the Council of Ministers, the matter relating to his impeachment has been entrusted by Article 61 to the Parliament. In the constitution of the two Houses of the Parliament and the Legislatures of the States, the people of the country are involved more directly, through process of election and any dispute arising therefrom is finally settled judicially. When it comes to a disqualification of a sitting member, the matter is dealt with by Article 103 or 192 as the case may be and what is significant for the purpose of the present case is that instead of entrusting the matter to the rele vant House itself, the Constitution has provided for a different machinery, not within the control of the Legisla ture. The decision on such a dispute is left to the Presi dent, and he is not to act on the advice of the Council of Ministers, but in accordance with the opinion of the Elec tion Commission which has been held by this Court to be a Tribunal falling squarely within the ambit of Article 136 of the Constitution in All Party Hill Leaders Conference vs M. A. Sangma; , at 411. Thus, the power to decide a dispute is not to be exercised by the Legislature, but lies substantially with the courts. Consistent with this pattern clause (4) of Article 124 in emphatic terms declares that a Judge of the Supreme Court or the High Court shall not be removed from his office except on a special majority of the Members of each House of Parliament. Both the Execu tive and the Judiciary are thus excluded in this process. The provisions of the Constitution and the Act and relevant materials which ,viII be discussed later all unmistakably indicate this Constitutional plan. The scheme, as mentioned above, which according to my reading of the Constitution has been adopted, cannot be construed as lack of trust in the three organs of the State. There are other relevant considerations to be taken into account while framing and adopting a written constitution, which include the assurance to the people that the possibil ity of a subjective approach clouding the decision on an issue as sensitive as the one under consideration, has been as far eliminated as found practicable in the situation. And where this is not possible at all, it cannot be helped, and has to be reconciled by application of the doctrine of necessity, which is not attracted here. Hamilton, in "The Federalist", while discussing the position in the United States, observed that when questions arise as to whether a person holding very high office either in the Judiciary or the Legislature or the President himself has rendered him self unfit to hold the office, they are of a nature which relates chiefly to the injuries done immediately to the society itself. Any proceeding for their removal will, 83 for this reason seldom fail to agitate the passions of the whole community and divide it into parties more or less friendly or inimical to the person concerned. The delicacy and the magnitude of a trust which so deeply concerns the reputation and existence of every man engaged in the admin istration of public affairs speak for themselves. Mr. Sibal has further relied on Hamilton stating that "the awful discretion which a court of impeachment must necessarily have to doom to honour or to infamy the most confidential and the most distinguished characters of the community, forbids the commitment of the trust, to a small number of persons. " The counsel added that presumably that is the reason that the question of removal of a Judge of the superior court has been exclusively entrusted to the parlia ment and further in that spirit the Act requires a large number of Members of the parliament to even give the Notice of Motion. Quoting from 'Harvard Law Review ' (1912 1913 vol.), counsel argued that judicial office is essentially a public trust, and the right of the public to revoke this trust is fundamental. In a true republic no man can be born with a right to public office, Under such a system of gov ernment, office, whether elective or appointive, is in a sense a political privilege. The grant of this privilege flows from the political power of 'the people, and so, ulti mately must it be taken away by the exercise of the politi cal power resident in the people. After referring to the view of many Jurists of international repute Mr. Sibal again came back to "The Federalist", considering the inappropri ateness of the Supreme Court of United States of America to be entrusted with the power of impeachment in the following words: "It is much to be doubted whether the members of that Tribunal at all times be endowed with so eminent a portion of fortitude, as would be called for in the execu tion of so difficult a task, and it is still more to be doubted whether they would possess the degree of credit and authority, which might, on certain occasions be indispens able towards reconciling the people to their decision". I am not sure whether these are the.precise considerations which appealed to the framers of our Constitution to adopt the Scheme as indicated earlier, but there is no doubt that the subject dealing with the removal of the very high function aries in three vital limbs of the State, received special treatment by the Constitution. My conclusion is further supported by the materials discussed below. Learned counsel for the parties referred to the historical background of the relevant provisions of the Constitution and the Act, as also to the constitutional provisions of several other countries, as aid to the inter pretation of the legal position in relation to removal of Judges of the superior courts. Mr. Sibal laid great emphasis on the evidence of Mr. 84 Setalvad and several other persons before the Joint Commit tee on the Judges (inquiry) Bill, 1964. His argument is that the Bill was dropped as a result of the opinion expressed before the Joint Committee, and consequently another Bill was drafted which was ultimately adopted by the Parliament as the 1968./Act. The provisions of the earlier Bill, objec tions raised thereto, and the fact that the Act of 1968 was passed on a subsequent Bill, reconstructed immediately after the decision to drop the original Bill, are all permissible aids to the interpretation of the legal position which has to be ascertained in the present cases before us. Although the learned counsel for the petitioners challenge their admissiblity, portions of the documents referred to by Mr. Sibal were attempted to be construed on behalf of the peti tioners as supporting their stand. In my view, it is permis sible to take into consideration the entire background as aid to interpretation. The rule of construction of statutes dealing with this aspect was stated as far back as in 1584 in Heydon 's case: 76 E.R. 637, and has been followed by our Court in a large number of decisions. While interpreting Article 286 of our Constitution, reliance was placed by this Court in the Bengal Immunity Company vs The State of Bihar, at 632 & 633, on Lord Coke 's dictum in Heydon s case and the observations. of the Earl of Halsbury in Eastman Photographic Material Company vs Comptroller General of Patents L R., at p. 576 reaffirm ing the rule in the following words: "My Lords, it appears to me that to construe the statute in question, it is not only legit imate but highly convenient to refer both to the former Act and to the ascertained evils to which the former Act had given rise, and to the later Act which provided the remedy. These three being compared I cannot doubt the con clusion". In B. Prabhakar Rao vs State of Andhra Pradesh, [1985] Suppl. 2 SCR 573, the observa tions at p. 591, quoted below, are illuminat ing: "Where internal aids are not forthcoming, we can always have recourse to external aids to discover the object of the legislation. Exter nal aids are not ruled out. This is now a well settled principle of modern statutory con struction. Thus 'Enacting History ' is rele vant: "The enacting history of an Act is the surrounding corpus of public knowledge rela tive to its introduction into Parliament as a Bill, and subsequent progress through, and ultimate passing by, Parliament. In particular it is the extrinsic material assumed to be within the contemplation of Parliament when it passed the Act." Again "In the period im 85 mediately following its enactment, the history of how an enactment is understood forms part of the contemporanea expositio, and may be held to throw light on the legislative inten tion. The later history may, under the doc trine that an Act is always speaking, indicate how the enactment is regarded in the light of development from time to time". "Official statements by the government department admin istering an Act, or by any other authority concerned with the Act, may be taken into account as persuasive authority on the meaning of its provisions". Justice may be blind but it is not to be deaf. Judges are not to sit in sound proof rooms. Committee reports, Parliamentary debates, Policy statements and public utterances of official spokesmen are of relevance in statu tory interpretation. But 'the comity, the courtsey and respect that ought to prevail between the two prime organs of the State, the legislature and the judiciary ', require the courts to make skilled evaluation of the extra textual material placed before it and exclude the essentially unreliable. "Nevertheless the court, as master of its own procedure, retains a residuary right to admit them where, in rare cases, the need to carry out the legisla tor 's intention appears to the court so to require". With a view to correctly interpret the Act which was the subject matter of that case, the history and the succession of events including the initial lowering the age of superan nuation, the agitation consequent upon it, and the agreement that followed the agitation were all taken into considera tion. I, accordingly, propose to briefly state the relevant background of both the Constitutional provisions and of the Act. At the time of framing of the Constitution of India, the Constitutions of several other countries, which appeared to be helpful were examined, and a Draft was initially prepared. On the amendment moved by Sir Alladi Krishnaswamy Iyyar the relevant provision was included in the Draft in terms similar to section 72(ii) of the Commonwealth of Australia COnstitution Act (1900) except the last sentence in the following terms: "Further provision may be made by the Federal Law for the procedure to be adopted in this behalf. " When the matter was finally taken up by the Constituent Assembly the Debates indicate that there was a categorical rejection of the suggestion to entrust the matter to the Supreme Court or a Committee of a 86 number of sitting Judges of the Supreme Court; and while doing so, the law of the other Commonwealth countries were taken into consideration. So far the last sentence of the draft was concerned, Sir Alladi explained the position by stating "that such a provision does not occur in other Constitutions, but there is a tendency to overelaborate the provisions on our side and that is the only justification for my putting in that clause. Before further considering the Debates and the other steps in flaming of the Constitution, it may be useful to appreciate the relevance and importance of the point which has an impact on the controversial issue before us. Accord ing to the petitioners, the question relating to the removal of a Judge comes to the Parliament only on receipt of a report by the Committee under the Act. The Parliament or any of its Houses, not being in the picture earlier, does not have any control over the Committee, which is to function purely as a statutory body, and, therefore, amenable to the jurisdiction of this Court. If this stand is correct, what was the position before 1968, when there was no Act? The question is whether the Parliament did not have any power to take any action even if an inquiry in the alleged misbeha viour or incapacity of a Judge was imminently called for. In other words whether the exercise of the power under clause (4) of Article 124 by the Parliament was dependent on the enactment of a law under clause (5) and until this condition was satisfied no step under clause (4) could be taken. If on the other hand the Parliament 's power was not subject to the enactment of a law, was it divested of this jurisdiction when it passed an Act? On what principle could the initial jurisdiction of the Parliament disappear in 1968? Since this aspect has a bearing, it was the subject matter of some discussion during the arguments of the learned advocates. Mr. Sibal was emphatic in claiming that clause (5) was enabling in nature, and clause (4) could not be inter preted as dependent on clause (5). He relied on Mr. Setal vad 's evidence before the Joint Committee of Bill No. 5 of 1964. The stand of Mr. Shanti Bhushan, instructed by Mr. Prashant Bhushan, the Advocate on record on behalf of the petitioner in the leading case Writ Petition (C) No. 491 of 1991, has been that clause (5) was merely enabling, but not in the sense as stated by Mr. Setalvad in his evidence. In the view of the latter, it is open to the Parliament either to follow the procedure laid down by an Act made under clause (5) or to ignore the same in any case and adopt any other procedure. In other words, even after the passing of the 1968 Act, the Parliament can choose either to proceed according to the said Act or to act independently ignoring the same. Mr. Shanti Bhushan said that this is not permissi ble. Once the 1968 Act was enacted, the Parliament is bound to follow it, but earlier 87 it was free to proceed as it liked. He, however, was quite clear in his submission that the exercise of power under clause (4) could not be said to be conditional on the enact ment of a law under clause (5), and that to interpret the provisions otherwise would lead to the extraordinary result that the Parliament was in a helpless condition for about 18 years till 1968, if a Judge was rendered unfit to continue. I agree with the learned counsel. The other learned advocates appearing for the peti tioners did not advert to this aspect pointedly. The stand of Mr. Garg is that whether or not the third respondent is removed, or whether the inquiry proceeds before the Commit tee or not, he must cease to function as a Judge, as his image being under a cloud, must be cleared so that the people may have trust in the judiciary. Mr. Ram Jethmalani, the other learned counsel who appeared on behalf of the petitioner in Writ petition (C).No. 491 of 1991, was ini tially of the view as Mr. Shanti Bhushan on the co relation of clause (4) and (5), but after some discussion, he recon sidered the position and took a positive stand that the exercise of power under clause (4) was dependent on a law being enacted under clause (5), and that the Parliament was bound to proceed in accordance with the provisions of the Act. Now coming back to the Debates, Mr. Santhanam sug gested an amendment for including more details to which the answer of Sir Alladi was as follows: "We need not be more meticulous and more elaborate than people who have tried a similar case in other jurisdictions. I challenge my friend to say whether there is any detailed provision for the removal of Judges more than that in any other Constitution in the world". He requested the House to accept the general principle, namely, that the President in consultation with the Supreme Legislature of this country shall have that right, and assured that, "That does not mean that the Supreme Legisla ture will abuse that power". He rejected the idea of making further additions to the provision relating to the framing of the law by saying, "To make a detailed provision for all these would be a noble procedure to be adopted in any Con stitution. You will not find it in any Constitution, not even in the German Constitution which is particularly de tailed, not in the Dominion Constitution and not even in the Act of Settlement and the later Acts of British Parliament which refer to the" removal of Judges". Some members strong ly suggested that the Supreme Court of India or a number of sitting Judges of the Court should be 88 involved in the proceeding, to which Sir Alladi had strong objection. He called upon the members, "not to provide a machinery consisting of five or four Judges to sit in judg ment over a Chief Justice of the Supreme Court. Are you really serious about enhancing the dignity of the Chief Justice of India ? You are. I have no doubt about it". The clause was ultimately drafted as mentioned above vesting the power in the "Supreme Parliament" as "there must be some power of removal vested somewhere". He pointed out that the matter was not being left in the discretion of the either House to remove a Judge, but ultimate soverign power will be vested in the two Houses of the Parliament and, "that is the import of my amendment". In this background, the Article was finally included in the Draft. Although as was clear from the statements of Sir Alladi as also the language used, the intention of the Sub commit tee preparing the Draft was not to make clause (4) dependent on clause (5), still presumably with a view to allaying any misapprehension which could have arisen by including the entire provisions in one single clause, they were divided and put in two separate clauses and while so doing, the language was slightly changed to emphasise the limited scope of the law. Clause (4) does not state that the misbehaviour or incapacity of the Judge will have to be proved only in accordance with a law to be passed by the Parliament under clause (5). Clause (4) would continue to serve the purpose as it does now, without any amendment if clause (5) were to be removed from the Constitution today. There is no indica tion of any limitation on the power of the Parliament to decide the manner in which it will obtain a finding on misbehaviour or incapacity for further action to be taken by it. Clause (5) merely enables the Parliament to enact a law for this purpose, if it so chooses. The word 'may ' has been sometimes understood in the imperative sense as 'shall ', but ordinarily it indicates a choice of action and not a com mand. In the present context, there does not appear to be any reason to assume that it has been used in its extraordi nary meaning. It is significant to note that while fixing the tenure of a Judge in clause (2) of Article 124, proviso Co) permits the premature removal in the manner provided in clause (4) without mentioning clause (5) at all. The signif icance of the omission of clause (5) can be appreciated by referring to the language of clause 2(A) of Article 124 directing that the "age of a Judge of the Supreme Court shall be determined by such authority and in such manner as Parliament may by law provide". On an examination of all the relevant materials, I am of the view that the exercise of power under clause (4) was not made conditional on the enactment of a law under clause (5), and the reason for inserting 89 clause (5) in Article 124 was, as indicated by Sir Alladi, merely for elaborating the provisions. The other provisions with reference to which the matter needs further examination are Article 121 of the Constitution and the Act of 1968. The object of Article 121 is to prevent any discussion in Parliament with respect to the conduct of a Judge of the Superior Courts, except when it cannot be avoided. The Article, accordingly, prohibits such a discussion except upon a motion for presenting an 'address ' to the President for removal of a Judge. The point is that if the entire proceeding in regard to the removal of a Judge from the very initial stage is assumed to be in the House, does the bar under Article 121 get lifted at that very stage, thus frustrating the very purpose of the Arti cle. There is a complete unanimity before us, and rightly so, that the object of Article 121 to prevent a public discussion of the conduct of a Judge is in public interest and its importance cannot be diluted. Mr. Shanti Bhushan elaborated this aspect by saying that any such discussion in the House is bound to be reported through the media and will thus reach the general public and which by itself, irrespec tive of the final outcome of the discussion, will damage the reputation of the Judge concerned and thereby the image of the entire judiciary; and must not, therefore, be permitted until a report against the Judge after a proper inquiry is available. Mr. Sibal also agreed on the significance of Article 121 and relied on the views of several eminent international jurists, but we need not detain ourselves on this point, as there is no discordant note expressed by anyone before us. The question, however, is as to whether the object of Article 121 will be defeated, if clause (4) of Article 124 is construed as complete in itself and independ ent of clause (5), and clause (5) be understood as merely giving an option to the Parliament to enact a law, if it so chooses; and further whether the inquiry before the Commit tee is within the control of the House of the Parliament so as to exclude an outside interference by any other authori ty, including the courts. It is true that the provisions of an Act control or determine the constitutional provisions, but where the meaning of an Article is not clear it is permissible to take the aid of other relevant materials. Besides, in the present context, where it is necessary to assess the effect of the construction of the other provisions of the Constitution and of the Act on Article 121, the Act provides useful assist ance; and its importance has been greatly enhanced in view of the points urged in the arguments of the learned counsel for the parties before us. All the learned advocates for the petitioners as also the Attorney General are positive that the Act is a perfectly valid piece of legislation and no part of it is illegal or ultra vires. It is on 90 this premise that the writ petitions of the petitioners have been filed and the reliefs are prayed for. Mr. Sibal repre senting the respondents has halfheartedly challenged the Act, making it clear at the same time that if his interpre tation of the provisions is accepted no fault can be found with the Act. Besides, the foundation of the reliefs, asked for in the writ petitions, is the Act and the inquiry there under and if the Act itself goes, the reference to the Committee of Inquiry itself will have to be held as nonex istent in the eye of Law and the writ petitions will have to be rejected on that ground alone. We must, therefore, assume for the purpose of the present cases, that the Act is good and on that basis if the petitioners be found to be entitled to any relief, it may be granted. I am emphasising this aspect as the Act gives a complete answer to the main ques tion as to whether the Committee is subject to the control of the Lok Sabha, and whether this construction of the provisions defeats the purpose of Article 121. The is a short enactment containing only seven sections. Section 1 gives the title and the date of commencement, Section 2 contains definitions and Section 7 deals with power to make rules. The expression "motion" which has not been defined in the Act is signifi cant in the scheme and naturally, therefore, has been sub ject of considerable discussion during the hearing of these cases. The Lok Sabha Rules flamed under Article 118 of the Constitution deal with "motions" in Chapter XIV. There are separate rules of procedures for conduct of business adopted by the Rajya Sabha. In view of the facts of this case, I propose to refer only to the Lok Sabha Rules. Section 3(1) of the states that if a notice of"motion" is given for presenting an address to the Presi dent for the removal of a Judge, signed, in the case of a notice given in the Lok Sabha, by not less than 100 members, and in the case of a notice given in the Rajya Sabha, by not less than 50 members of the House, the Speaker or the Chair man, as the case may be, after consulting such persons as he deems fit, as also such relevant materials which may be available to him, either admit the "motion" or refuse to admit the same. The manner in which this section refers to "motion" in the Act for the first time without a definition or introduction clearly indicates that it is referring to that "motion" which is ordinarily understood in the context of the two Houses of Parliament attracting their respective rules. Section 3 does not specify as to how and to whom this notice of "motion" is to be addressed or handed over and it is not quite clear how the Speaker suddenly comes in the picture unless the Lok Sabha Rules are taken into account. Rule 185 states that notice of "motion" shall be given in writing addressed to the Secretary General and its ' admissi bility should satisfy the conditions detailed in Rule 186. Rule 187 directs the 91 Speaker to examine and decide the admissibility of a "mo tion" or a part thereof. Rule 189 says that if the Speaker admits notice of a "motion" and no date is fixed for discus sion of such "motion", it shall be notified in the BUlletin with the heading "No,Day Yet Named Motions". It is at this stage that 1968 Act by Section 3(1) takes over the matter and asks the Speaker to take a decision for admitting this "motion" or refusing it after consulting such persons and materials as he deems fit. The conclusion is irresistible that the provisions of the Act have to be read along with some of the Lok Sabha Rules. Rules 185, 186 and 187 should be treated to be supplementary to the Act. Then comes sub section (2) of Section 3 which is of vital importance in the present context. It says that if the "motions" referred to in sub section (1) is admitted, the Speaker "shall keep the motion pending" and constitute a Committee for investigation into the allegations consisting of three members of whom one shall be chosen among Chief Justice and other Judges of the Supreme Court and another from among the Chief Justices of the High Court. The situs where the "motion" is pending is almost conclusive on the issue whether the House is seised of it or not. Unless the "motion" which has to remain pending, as directed by Section 3(2) is outside the House and the Speak er while admitting it acts as a statutory authority and not qua Speaker of the Lok Sabha, as is the case of the peti tioners before us, the petitioners will not have any base to build their case on. If the Speaker has admitted the "mo tion" in the capacity as the Speaker and consequently, therefore, representing the House, and has constituted a Committee, it will be entirely for him and through him the House, to pass any further order if necessary about the future conduct of the Committee, and not for this Court, for, the Committee cannot be subjected to a dual control. So the question to ask is where is the "motion" pending, which is promptly answered by the provisions in the Act, by de claring that it remains pending in the House. Section 6 deals with the matter from the stage when the report of the Committee is ready and sub section (1) says that if the report records a finding in favour of the Judge, "the motion pending in the House" shall not be proceeded with. If the report goes against the Judge, then "the motion referred to in sub section (1) of Section 2 shall, together with a report of the Committee, be taken for consideration by the House or the Houses of Parliament in which it is pending". The Act, therefore, does not leave any room for doubt that the "motion" remains pending in the House and not outside it. This is again corroborated by the language used in Proviso to Section 3 (2) which deals with cases where no tices of"motion" under Section 3(1) are given on the same date in both Houses of Parliament. It says that in such a situation, no Committee shall be constituted unless the "motion" has been "admitted in 92 both Houses" and where such "motion"has been admitted "in both Houses", the Committe shall be constituted jointly by the Speaker and the Chairman. The rule making power dealt with in Section 7 is in the usual terms enumerating some of the subject matters without prejudice to the generality of the power, and permits the Joint Committee of both Houses of Parliament to frame the rules, and accordingly, the Judges (Inquiry) Rules, 1969 were made. Rule 2(e) of these Rules describes "motion" as motion admitted under Section 3(1) of the Act. Supplementing the provisions of Section 6(2), Rule 16(2) provides that "a copy of the motion admitted under sub section (1) of section 3 shall be reproduced as an Annexure to such an address". Sub rule (4) states that "the address prepared under subrule (1) and the motion shall be put to vote together in each House of Parliament". It is clear that it is not an inadvertent reference in the Act of the "motion" being pending in the House; the provisions unmistakably indicate that the Act and the Rules envisage and deal with a "motion" which is admitted in the House and remains pending there to be taken up again when the date is fixed by the Speaker on receipt of the report from the Committee. The language throughout the Act has been consist ently used on this premise and is not capable of being ingored or explained away. Nowhere in the Act or the Rules, there is any provision which can lend any support to the stand of the petitioners before us. The scope of the Act and the Rules is limited to the investigation in pursuance of a "Motion" admitted by the Speaker. At the Conclusion of the investigation the Commit tee has to send the report to the Speaker (or the Chairman as the case may be) along with a copy of the original Mo tion. If the finding goes against the Judge, section 6(2) of the Act directs that the Motion, the same original Motion, shall together with the report be taken up for consideration by the House where the Motion is pending. The relevant part of section 6(2) mentions: "the Motion referred to in sub section (1) of section 3 shall together with the report of the Committee, be taken up for consideration by the House. in which it is pending". Rule 16(4) states that the address and the Motion shall be put to vote together in each House of Parliament. What the Act and the Rules contemplate is the original Motion to be taken up for consideration by the House, and if this Motion is held to have exhausted itself on admission by the Speaker, as has been urged on behalf of the petitioners, nothing remains on which the Act would operate. The concept of the original Motion being pending in the House, to be taken up for debate and vote on the receipt of the report of the Committee, is the life and soul of the Act, and if that Motion disappears nothing remains behind to attract the Act. This 93 idea runs through the entire Act and the Rules, and cannot be allowed to be replaced by a substitute. The existence of a Motion pending in the House is a necessary condition for the application of the Act. Bereft of the same, the Act does not survive. It is, therefore, not permissible to read the Act consistent with the stand of the petitioners that the House is not seised of the Motion and does not have anything to do with the inquiry pending before the Committee, until the report is received. If clauses (4) and (5) of Article 124 are construed as suggested on behalf of the petitioners, the Act will have to be struck down as ultra vires, or in any event inoperative and infructuous and on this ground alone the Writ Petitions are liable to be dismissed. It has been contended that if the Motion is held to be pending in the House on its admission, the object of Article 121 shall be defeated. The apprehension appears to be misconceived. The mandate of the Constitution against discussion on the conduct of a Judge in the House is for everybody to respect, and it is the bounden duty of the Speaker to enforce it. He has to ensure that Article 121 is obeyed in terms and spirit, and as a matter of fact there is no complaint of any misuse during the last more than 41 years. The question, however, is whether it will not be feasible for the Speaker to maintain the discipline, if the Motion on admission becomes pending in the House. Before 1968 Act was passed, the motion, like any other motion, was governed by the Lok Sabha Rules, and Rule 189 enabled the Speaker to notify it as a No Day Yet Named Motion without fixing a date, and to permit the matter to be discussed only at the appropriate stage. After the Act, what was left within the discretion of the Speaker, has been replaced by mandatory statutory provision, directing that the motion shall remain pending in the House, to be taken up only on receipt of a finding of the Committee against the Judge. The pendency of the motion in the House, therefore, cannot be a ground to violate Article 121. Mr Sibal, however, claimed that the members of the House are entitled to express their opinion on the proposed endictment from the very initial stage and as a part of his argument relied upon the statement of Mr. Setalvad before the Joint Committee. Mr. Shanti Bhushan challenged the views of Mr. Setalvad on the ground that they would foul with Article 121. I am afraid, the statements of Mr. Setalvad, referred to above, have not been properly appeciated by either side. The modified Bill, on the basis of which the 1968 Act was passed, had not been drafted by then and Mr. Setalvad was expressing his opinion on the earlier Bill, which substantially vested the power of removal of a Judge in the Executive, and kept the Parliament out of the picture until the receipt of a report on the 94 alleged misbehaviour or incapacity. If that Bill had been passed, the effect would have been that the entire proceed ing beginning with the initiation of the inquiry and con cluding with the report would have remained completely outside the House, an interpretation which is being attempt ed by the present petitioners before us, on the present Act too. The objection to the entrustment of the power to the Executive was mainly on the ground that the intention of the Article 124 to leave the removal of a Judge in the hands of the Parliament would be frustrated. In answer to a query of the Chairman of the Committee, Mr. Setalvad said that as a result of the provisions of the Bill (then under considera tion) the Parliament would be completely kept out until a finding of another body was received by the House and this would militate against the constitutional scheme. In this background when his attention was drawn to the bar of Arti cle 121 he replied that it was possible to prevent a prema ture discussion in the Parliament, by the Speaker exercising his authority with discretion. He referred to the Lok Sabha Rules in this context and furher recommended for the Speaker to be vested with larger powers. He was emphatic that the President should not be entrusted with the matter, even at the initial stage, and that it should be left in the hands of the Speaker to take appropriate steps. The suggested substitution of the Speaker (and the Chairman) in place of the President was in accordance with the view that the matter is within the exclusive domain of the two Houses of the Parliament which could exercise its powers through the respective representatives Speaker and the Chairman. About Mr. Setalvad 's evidence I would like to clarify the position that I am not treating his opinion as an authority, and I have taken into account the same as one step in the history of the present legislation starting from the original Bill of 1964. The report of the JointCommittee (presented on 17th May, 1966) sets out the observations of the Committee with regard to the principal changes proposed in the Bill. Para graph 17 of the Report dealing with clause (2) states that the expression "Special Tribunal" has been substituted by "Committee" and "Speaker" and "Chairman" have been brought in "with a view to ensuring that the Committee may not be subject to writ jurisdiction of the Supreme Court & the High Courts". With respect to clause (3), the following observa tions of the Committee are relevant: "The Committee are of the view that to ensure and maintain the independence of the judici ary, the Executive should be excluded from every stage of the procedure for investigation of the alleged misbehaviour or incapacity of a Judge and that the initiation of any proceed ing against a Judge should be made in Parlia ment by a notice of a motion. The Committee 95 also feel that no motion for presenting an address to the President praying for the removal of a Judge should be admitted unless the notice of such motion is signed in the case of a motion in the Lok Sabha, by not less than one hundred members of that House and in the case of a motion in Rajya Sabha, by not less than fifty members of that House. Fur ther, the Committee are of the opinion that the Speaker or the Chairman or both, as the case may be, may after consulting such persons as they think fit and after considering such materials, as may be available, either admit or reject the motion and that if they admit the motion, then they should keep the motion pending and constitute a Committee consisting of three members, one each to be chosen from amongst the Chief Justice and other Judges of the Supreme Court, Chief Justice of the High Courts and distinguished Jurists, respective ly". Paragraph 20 of the Report deals with clause (6) and the proposed changes, that were more consistent with the motion being pending in the House or Houses. Ultimately, another Bill on the lines suggested by the aforesaid Joint Committee was drafted and adopted. Mr. Setalvad 's opinion is relevant as an important step in this history of legislation and can be referred to as such. The wider proposition put forward by Mr. Sibal that the House was seised of the matter so effectively as to entitle every member to demand a discussion in the House at any stage is, however, not fit to be accepted. This will not only violate Article 121, but also offend the provisions of the 1968 Act. It is not correct to assume that if the right of the individual member to insist on immediate discussion is denied, the consequence will be to deprive the Parliament of the control of the motion. When the Speaker exercises authority either under the Lok Sabha Rules or under the.1968 Act, he acts on behalf of the House. As soon as he ceases to be the Speaker, he is divested of all these powers. When he acts the House acts. It is another matter that he may con sult other persons before admitting the motion, and while so doing, he may consult the members of the House also, but without permitting a discussion in the House. The consulta tion, which the Act permits, is private in nature, not amounting to a public discussion while the object of Article 121 is to prevent a public debate. It may also be open to the Speaker to consult the House on a legal issue which can be answered without reference to the conduct of Judge in question, as for example, the issue (involved in the present case) whether on account of dissolution of the old House the Motion has lapsed and the Committee of Inquiry is defunct. What is prohibited is not every matter 96 relating to the removal of a Judge; the bar is confined to a discussion with respect to the conduct of a Judge in the discharge of his duties. 28: Mr. Shanti Bhushan strenuously contended that such portion of the 1968 Act which direct or declare the initial motion admitted by the Speaker to remain pending in the House, should be interpreted as creating a legal fiction limited for the purpose of ensuring that the bar under Article 121 is not lifted prematurely. I do not see any justification for placing this construction on the Act. This issue could not arise with reference to the original Bill which was ultimately dropped, as under its scheme the matter could not have reached the Parliament before the report the Special Tribunal was laid before the Houses under the Presi dent 's direction. The petitioners are trying to put an interpretation on the present Act that may lead to the same conclusion, that is, that the Parliament does not come in the picture until the receipt of the report from the Commit tee. This is wholly inconsistent with the original Bill not Finding favour with the Parliament. But apart from this consideration, let us assume that the petitioners are right, and the matter does not reach the Parliament at all before it is ready for consideration on the basis of the Inquiry Report. It cannot be suggested that even at that stage a discussion on the conduct of a Judge is banned; and before this stage is reached there is no occasion for relying upon Article 121 to prevent a discussion. The situation, there fore, does not require the aid of any legal fiction. The consequence of accepting the argument of Mr. Shanti Bhushan will be to render the aforesaid provisions of the statute wholly superfluous. Also, had it been a case of a legal fiction as suggested, it would attract the observations of Lord Asquith in East End Dwellings Co. Ltd And Finsbury Borough Council: , (followed in 'this country in numerous cases) to the effect that if you are bidden to treat an imaginary state of affairs as real, you must also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevita bly have flowed from or accompanied it; and if the statute says that you must imagine a certain state of affairs, it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. The alternative sug gestion of Mr. Shanti Bhushan that the motion, on its admis sion, having served its purpose, is completely exhausted, and a new motion is to be moved again by a member on the receipt of the Report from the Committee, has also no merit, for if the motion completely exhausts itself and there. fore does not remain in existence any further, no problem about the lifting of the bar under Article 121 arises for being solved with the help of a legal fiction. An attempt was made by mr. Shanti Bhushan to derive some support 97 from that part of clause (4) of Article 124 which requires the voting in the two Houses to take place in the same session. The provision appears to me to be absolutely irrel evant. The clause does not require that the entire proceed ing with respect to the removal of a Judge commencing with the notice of motion has to be within the same session. It refers only to the voting part. A close reading of the entire Act indicates that the language therein, which com pletely demolishes the petitioners ' case, was consciously chosen to make the House seised of the matter, and conse quently it became necessary to include the provisions di recting the motion to remain pending for the purpose of preventing a premature discussion. The Act has, thus, very successfully respected both Articles 124 and 121 in their true spirit, by neatly harmonising them. Let us consider another argument of the petitioners that by reason of the expression "on the ground of proved misbehaviour or incapacity" occurring in clause (4) of Article 124 it should be held that until an adverse verdict of misbehaviour or incapacity by some other body is received by the House, the matter does not come within its purview. The body in contemplation of clause (4) may be an authority, completely unassociated with either House of the Parliament or the Speaker or the Chairman, and the Parliament may not have any control over the same. Such authority would be purely statutory, not amenable to the discipline of the Parliament, but subject to the Court 's jurisdiction. Merely for the reason that a statute under clause (5) prescribes the procedure in this regard by entrusting the Speaker to take a decision at the initial stage, he could not cease to be a statutory authority. In other words, he acts in his individual capacity under the power vested by the law and not in a representative capacity. 1 do not find this con struction of clauses (4) and (5) acceptable. This would, in substance, deny the Parliament the power to remove a Judge exclusively vested in it by Constitution. Let us ignore the present Act and consider another statute with provisions in express terms on the lines suggested by the petitioners, that is, entitling the statutory authority to act independ ently of the Parliament, the Speaker and the Chairman. If that could be permissible it would lead to the Parliament being reduced to a helpless spectator, dependent on the statutory authority, to act on or to ignore a complaint. This would be in complete violation of the intention of the Constitution to vest the power to remove a Judge exclusively in the Parliament. It must, therefore, be held that the Parliament is in control of the matter from the very begin ning till the end, and it acted correctly in accepting the objections of the Joint Committee to the original Bill, aforementioned, and in passing the Act of 1968, iii the form we find it. By the introduction of the Speaker and the requirement of a large number of members of either House to initiate the matter, the 98 House is brought in control of the proceeding through its representative the Speaker or the Chairman. It has to be noted that "the ground of proved misbehaviour or incapacity" is necessary only for putting the matter to vote in the House under clause (4), and is not a condition precedent for initiating a proceeding and taking further steps in this regard. Mr Sibal projected another extreme point of view by contending that a finding of the Committee in favour of the Judge cannot be held to be binding on the Parliament on account of the limited scope of a statute passed under clause (5). There is no merit in this argument either. Clause (4) authorises the Parliament to act on the ground of proved misbehaviour or incapacity and clause (5) permits it to pass a law to lay down the manner in which it may become possible to do so. It is true that the Parliament can exer cise its power without formally framing a law. The House in question could in the absence of a law, decide on the proce dure to be followed in a given case but it was perfectly open to it to pass an Act laying down a general code to be followed until the Act is repealed or amended. It is a well established practice for a large body to entrust investiga tions to a smaller body for obvious practical reasons, and such an exercise cannot be characterised as indulging in abnegation of authority. It could have asked a Parliamentary Committee to enquire into the allegations or employed any other machinery for the purpose. The ratio in State of Uttar Pradesh vs Batuk Deo Pati Tripathi and Anr., , is attracted here. In that case the Administrative Committee of the High Court, constituted under the Rules of the Court resolved that the District Judge should be retired compulsorily from the service, and the Registrar of the High Court communicated the decision to the State Government and thereafter circulated to all the Judges of the High Court for their information. The State Government passed orders retiring the District Judge, whereupon he filed a writ petition in the High Court. The matter was heard by a Full Bench and the majority of the Judges held that the writ petitioner could not have been compulsorily retired on the opinion recorded by the Administrative Committee, as the Full Court was not consulted. The application was allowed and a writ was accordingly issued. On appeal by the State Government this Court reversed the decision holding that Article 235 of the Constitution authorised the High Court to frame the rules for prescribing the manner in which the power vested in the High Court had to be exercised, and observed that though the control over the subordinate courts is vested constitutionally in the High Court by the Article, it did not follow that the High Court has no power to pre scribe the manner in which that control may, in practice, be exercised; and in fact, the very circumstance that the power of control, which comprehends matters of a wide ranging authority, vests in the entire body of Judges 99 makes it imperative that the rules are flamed so that the exercise of the control becomes feasible, convenient and effective. The parliament is a far larger body than the High Court and the observations apply to it with greater force. So long as the statute enables the House to maintain its control either directly or through the Speaker, the entrust ment of the investigation does not amount to abdication of power. It is a case where the Parliament has taken a deci sion to respect the verdict of the Committee in favour of the Judge, consistently with clause (4) and no fault can be .found. It has been stated on behalf of the respondents that the question whether the Motion against the respondent No. 3 has lapsed as a result of the dissolution of the old House is agitating the minds of the members of the Lok Sabha and the issue is under consideration of the new Speaker. In support, he produced a copy of the proceeding of the House. If the present Speaker holds that the Motion has lapsed, and the Committee does not have any duty to perform, the pro ceeding cannot be proceeded with any further. In reply the learned counsel for the petitioners claimed that after the matter is entrusted to the Committee, neither he nor the Parliament at this stage can undo the admission of the Motion by the earlier Speaker, or withdraw the investiga tion. If the petitioners are right, then what happens if a member of the Committee becomes unavailable by any reason whatsoever or another member renders himself unfit to be on the Committee, say by reason of his apparent and gross bias, against or in favour of the Judge concerned, coming to light after the formation of the Committee ? The answer is that the House which is in control of the proceeding is entitled to take all necessary and relevant steps in the matter, except discussing the conduct of the Judge until the stage is reached and the bar under Article 121 is lifted. If on the other hand it is held that the Committee is an independ ent statutory body not subject to the control of the House directly or through the Speaker, as the petitioners suggest, the Act may be rendered unworkable. Besides, this would impute to the Parliament to have done exactly what the Constituent Assembly refused to do by accepting Sir Alla di 's impassioned appeal, referred to above in para graph 19, not to lower the dignity of the Chief Justice of India by providing a machinery consisting of 5 or 4 Judges to sit in appeal over him. It may be noted here that the Constitution has considered it fit to entrust the inquiry in the alleged misbehaviour of a member of a Public Service Commission, a constitutional functionary but lower in rank than the Supreme Court, to the Supreme Court without associ ating a Chief Justice of the High Court or any other person lower in rank. If the Committee is held to be functioning under the supervision and control of the parliament, with a view to aid it for the purpose of a proceeding pending in the House, it will be the parliament which will be in con trol of the proceeding and not the Committee. 100 32. Mr Jethmalani was fervent in his exhortation to construe the Constitution and the Act in a manner which will protect the independence of the judiciary from the politi cians, and this, according to him, is possible only if this Court comes to an affirmative conclusion on the question of justiciability. There cannot be two opinions on the necessi ty of an independent and fearless judiciary in a democratic country like ours, but it does not lead to the further conclusion that the independence of judiciary will be under a threat, unless the matter of removal of Judges, even at the highest level, is not subjected to the ultimate control of Courts. The available materials unmistakably show that great care was taken by the framers the Constitution to this aspect and the matter was examined from every possible angle, before adopting the scheme as indicated earlier. So far as the district courts and subordinate courts are concerned, the control has been vested in the High Court, but when it came to the High Court and Supreme Court Judges, it was considered adequate for the maintenance of their independence to adopt and enact the Constitution as we find it. I do got see any reason to doubt the wisdom of the Constituent Assembly in entrusting the matter exclusively in the hands of the Parliament and I do not have any ground for suspicion that the Members of Par liament or their representatives, the Speaker and the Chair man, shall not be acting in the rue spirit of the Constitu tional provisions. Similarly, the task of enacting a law under clause (5) was taken up seriously by consid ering every relevant aspect, and the process took several years before the Act was passed. do not propose to deal with this point any further beyond saying that the mandate of the Constitution is binding on all of us, and I would close by quoting the following words from Hamilton: "If mankind were to resolve to agree in no institution of government, until every part of it had been adjusted to the most exact stand ard of perfection, society would soon become a general scene of anarchy, and the world a desert. Where is the standard of perfection to be found ? Who will undertake to unite the discordant opinions of a whole community, in the same judgment of it; and to prevail upon one conceited projector to renounce his infal lible criterion for the fallible criterion of his more conceited neighbour? To answer the purpose of the adversaries of the Constitu tion, they ought to prove, not merely that particular provisions in it are not the best which might have been imagined, but that the plan upon the whole is bad and pernicious". It has not been suggested on behalf of the petition ers or by anybody else that it is open to the Court to examine the legality of a final decision taken by the Par liament under clause (4). Even after a verdict against the Judge is returned by the Committee, the Parlia ment or for that matter any of the two Houses can refuse to vote in favour of the Motion for removal of a Judge, and the Court shall not have any jurisdiction to interfere in the matter. Is it conceivable, in the circumstances, that at the intermediate stage of investigation the Court has got the power to intervene ? The answer is in the negative for more than one reason. If the control of the House continues on the proceeding throughout, which can he exercised through the Speaker, it cannot be presumed that the Court has a parallel jurisdiction, which may result in issuance of contradictory directions. Besides, the Court cannot he expected to pass orders in the nature of step in aid, where the final result is beyond its jurisdiction. Any order passed or direction issued by this Court may result in merely an exercise in futility, and may cause a situation, embarassing both for the highest judicial and legislative authorities of the country. The Constitution cannot he attributed with such an intention. I, therefore, hold that the courts including the Supreme Court do not have any jurisdiction to pass any order in relation to a proceeding for removal of a Judge of the superior courts. Reference was made by the learned counsel for the parties to the Constitutions of several other countries, but I do not consider it necessary to discuss them excepting the Australian Constitution as they do not appear to be helpful at all. As has been mentioned earlier the language of Arti cle 124 (4) is similar to section 72(ii) of the Common wealth of Australia Constitution Act (1900), except with this difference that the Australian Constitution Act.does not specifically provide for any law to he made for regulat ing the procedure and investigation. However, the constitu tional and the legal position in Austraila is not helpful to resolve the present dispute before us, as the Commonwealth of Australia Constitution Act (1900) has adopted rigid Separation of Powers between the Executive, Legislature and Judiciary (as has been observed by this Court on many occa sions including at page 415 in Smt. Indira Gandhi vs Raj Narain, , relented to above in paragraph 9. Reference has been made by P.H. Lane in his commentary on the Australian Constitution to the proceedings which were initiated for removal of Mr. Justice Murphy under section 72 (ii) of the Constitution Act. On account of sharp difference amongst the members of the Select Committee of the Senate appointed to inquire into the matter and a further failure to resolve the situation by establishing a second Committee and in view of certain other facts an adhoc legislation was passed under the name of Parliamentary Commission of Inquiry Act, 1986. Under this Act further steps were being taken when Mr. Justice Murphy moved the High Court of Austraila for an order of injunction challenging the validity of the Act and alleging that one of the members of the Commission constituted under the Act (a 102 retired Judge) was disqualified on account of bias. The application was dismissed on merits without adverting to the question of justiciability. This decision, to my mind, is of no help to the petitioners before us, mainly on account of the difference in the Constitutional scheme of the two countries with respect to the Separation of Powers. The judicial powers there have been exclusively vested in the courts by section 71 of the Constitution Act of 1900. Lane has at page 372 of his book opined that sec tion 72 (ii) may be non justiciable, since it seems to place the exercise under the section in Parliament itself. He, however, further proceeds to say that the Parliament could seek the High Court 's help, for example, in the peripheral matter of the meaning of misbehaviour or incapacity in section 72(ii). He has also referred to certain other provi sions of the Constitution Act, and analysed the roles of Parliament and Court with his comments. I do not consider it necessary to proceed further beyond saying that Mr. Justice Murphy 's case does not provide any aid in deciding the issue in the cases before us. Although our Constitution was made after examining the Constitutions of many other countries, it has adopted a pattern of its own. The learned counsel also placed a large number of decisions; both Indian and foreign and since I have not found them relevant, I have refrained from discussing them. None of the cases in which this Court has either interfered with the decision of the House or has refused to do so, related to a proceeding for removal of a Judge, and are clearly distinguishable in view of my opinion expressed above. I am also not dealing with the other points urged by Mr. Sibal, as I agree with him on the main issue of justiciability. I am avoiding to express any opinion on the controversy whether the Motion lapsed or not on the dissolution of the earlier House, as the issue is for the Lok Sabha to decide. In view of the above findings this Court cannot pass any order whether permanent or temporary on the prayer that the respondent No. 3 should not be allowed to exercise his judicial powers. In the result all the F writ petitions are dismissed. The prayer for transfer of Writ Petition No. 1061 of 1991 in Transfer Petition No. 278 of 1991 is allowed and that Writ Petition is also dismissed. There will be no order as to costs. N.P.V. Petitions dis posed of.
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Some members of the Lok Sabha (the Indian Parliament) wanted to suggest that the President remove a Supreme Court judge. They said the judge had acted wrongly when he was the Chief Justice of a High Court. The Speaker of the Lok Sabha agreed to consider this suggestion. The Speaker created a committee to look into the matter. The committee included a current Supreme Court judge, a High Court Chief Justice, and a legal expert. Later, the Lok Sabha was dissolved, meaning its term ended. The government believed that the suggestion to remove the judge, and the Speaker's decision to form a committee, were no longer valid because the Lok Sabha had ended. So, the government didn't take steps to help the committee do its work. A group called the Sub Committee on Judicial Accountability, which was formed by a convention on judicial accountability, wanted to continue the process of investigating the judge. Also, the Supreme Court Bar Association, a group of lawyers, wanted to pursue the matter because they felt it was important for the public and for people involved in legal cases. These two groups filed petitions (legal requests) in the Supreme Court. Both petitions asked the court to order the government to help the investigation committee do its job. They also asked that the judge be stopped from performing judicial duties while the committee was investigating. Those who filed the petitions argued that while most pending matters end when a parliament session ends, motions to remove a judge are different. They argued that whether a motion ends with the session is a matter for the Parliament alone to decide. They also said that courts should not get involved in how Parliament conducts its business. They said it was not right for the Speaker to send a notice to a judge and ask him to appear before a committee. They claimed these actions were not like punishing the judge. They said the Speaker was only deciding if the matter should be investigated. They also argued that the constitutional process for removing a judge was a political solution for judicial misbehavior. They felt it did not prevent people from using the courts to ensure judges were honest. They said that the right to go to the Supreme Court to protect basic rights included the right to an unbiased court with honest judges. Without that, the right to go to court would be meaningless. They believed the court had the power and duty to make sure its members were honest and unbiased, and to stop any member who wasn't. A separate petition was filed by someone who opposed stopping the judge from performing his duties while the investigation was ongoing. This person argued that the judge should not be stopped from working until the investigation committee found him guilty. If the committee did find him guilty, then the President could ask the judge to step aside until Parliament decided whether to remove him. This decision should not take more than 180 days. Another petition was filed by a lawyer who argued that the law regarding the removal of judges was unconstitutional. He claimed it violated certain articles of the Indian Constitution. He also asked the court to cancel the Speaker's decision to consider the motion to remove the judge. He argued that the judge should have been given a chance to speak before the Speaker made his decision and formed the committee. A request was made to move a similar case from the Delhi High Court to the Supreme Court, so that the Supreme Court could hear all the related cases together. The Supreme Court agreed to hear the case from the Delhi High Court along with the other petitions. The people who filed the petitions argued that the Speaker should have given the judge a chance to be heard before deciding to admit the motion and form a committee. They said this was a basic requirement of fairness. They felt that such a decision had huge consequences for both the judge and the judicial system. They argued that any politically motivated attempt to harm a judge would affect not only the judge but the entire justice system. Therefore, it would be better if the judge was given a chance to be heard. They also argued that the Speaker's actions were against constitutional practices and appeared to be unfair. They said that because the Speaker didn't defend himself against these accusations, he should be considered to have admitted them. They also claimed that the court should not get involved in this matter because any decision it made might be useless. They said that the committee's investigation was only the first step in a process that ultimately depended on Parliament's decision to remove the judge, which was something the courts had no control over. The government argued that the Constitution states that when the Lok Sabha is dissolved, all pending bills (proposed laws) end, with a few exceptions. They said that the same rule should apply to motions. They said that each new Lok Sabha is a separate entity, and any business from the previous Lok Sabha must be continued by law or rules. They also argued that whether a motion ends with the session is a matter to be decided based on the law, and the courts have the power to interpret the law. The court made the following decisions: The majority of the judges (Justices Ray, Venkatachaliah, Verma, and Agrawal) said: 1. 1 When a country has a written Constitution that is the highest law, the powers of the government are limited. The courts have the power to review laws and actions to make sure they follow the Constitution. The courts interpret the Constitution and decide the limits of the powers of different parts of the government. In a country with a federal system, the courts protect the Constitution. Interpreting the Constitution is the job of the courts. It is the duty of the courts to say what the law is. 2. 2 When interpreting the parts of the Constitution that deal with the courts and their independence, the court should choose an interpretation that strengthens the basic ideas and structure of the Constitution. The rule of law is a basic part of the Constitution. The independence of the courts is essential to the rule of law. 3. 3 When interpreting the Constitution, the laws and procedures for removing judges in other countries can provide helpful background information. However, the solution must be found within our own Constitution. Looking at other systems can help us understand and interpret our own Constitution. 4. 1 It is not correct to say that whether a motion has ended or not is a matter only for the Parliament to decide, and that the courts cannot get involved. 5. 2 Whether the motion has ended must be decided based on the Constitution and the relevant rules. 6. 3 The courts have the power to declare that a motion to remove a judge does not end when the Lok Sabha is dissolved. 7. 1 The process for removing a judge, up to the point where the committee makes its findings, is not strictly part of the proceedings of Parliament. The Speaker is acting under the authority of a law. Up to that point, the matter is within the court's jurisdiction. 8. 2 The process for removing a judge has two parts. The first part, from the beginning of the process to the investigation and proof of wrongdoing or inability to perform the job, is covered by a law passed by Parliament. Parliament's role in this part is only to make the law. The second part is in Parliament, and it begins only after wrongdoing or inability to perform the job has been proven according to the law. So, the first part is based on law, while the second part is the parliamentary process. 9. 3 The part of the Constitution that allows Parliament to make a law for the removal of judges is different from the parts that deal with the normal procedures of Parliament. 10. 4 The law made by Parliament for the removal of judges, and the investigation conducted according to that law, are subject to review by the courts. The parliamentary process only begins after a finding is made that the judge is guilty of wrongdoing or unable to perform the job. Therefore, the argument that Parliament has exclusive control over the process and that the courts cannot get involved at this stage does not apply. 11. 1 The Constitution states that discussions about a judge's conduct in Parliament are not allowed, except "upon a motion for presenting an address to the President praying for the removal of the Judge as hereinafter provided." The words "motion" and "as hereinafter provided" refer to the motion for removing the judge, which requires "proved" wrongdoing or inability to perform the job. What allows the discussion is the "proved" wrongdoing or inability. The Constitution also allows Parliament to make a law for investigating and proving wrongdoing or inability before the motion for removal is made. 12. 2 An accusation of wrongdoing or inability of a judge must be made, investigated, and proven according to the law made by Parliament. Parliament is not involved in this process until that stage. Once the wrongdoing or inability is proven, a motion to remove the judge can be made in each House of Parliament. Once the motion is made, the restriction on discussing the judge's conduct is lifted, and the consequences depend on the outcome of the motion in Parliament. If the investigation finds that the accusation is not proven, the matter ends, and there is no motion to remove the judge. 13. 3 Therefore, proof of wrongdoing according to the law is required before the restriction on discussing the judge's conduct in Parliament is lifted. The part of the Constitution that deals with the removal of judges is only meaningful if there is a law that allows for the investigation and proof of wrongdoing. 14. 4 The restriction in the Constitution applies to discussions in Parliament, but the investigation and proof of wrongdoing must take place outside of Parliament. The policy is that the entire process up to the proof of wrongdoing is governed by the law made by Parliament. Parliament does not have any role to play until wrongdoing is proven, and it does not have any control over the process provided in the law. Parliament only gets involved when the investigation finds that the wrongdoing has been proven. 15. 5 The law does not take away from Parliament's power. Instead, the Constitution itself states that the stage of removing a judge only begins when wrongdoing is proven according to the law. Only then is it necessary to discuss the judge's conduct in Parliament, and the restriction on discussion is lifted. 16. 1 If the motion to remove a judge is based on "proved misbehavior or incapacity," it means that the misbehavior or incapacity has already been proven. The words "investigation and proof" in the Constitution indicate that the investigation and proof of misbehavior or incapacity are not part of the motion for removal, but are separate. Also, the fact that the Constitution mentions "same session" in relation to the motion for removal, but not in relation to the investigation and proof, indicates that the session of Parliament is not important for the investigation and proof, which are governed by the law. 17. 2 The importance of the word "proved" before "misbehavior or incapacity" is also clear when comparing the provision for removing judges to the provision for removing a member of the Public Service Commission. The Constitution uses the phrase "the ground of misbehavior" for the Public Service Commission member, but "the ground of proved misbehavior or incapacity" for judges. 18. 3 The word "may" in the Constitution indicates that the law for the "procedure for presentation of address" is optional. If there is no law, the general procedure or the procedure decided by the House may apply. However, the "investigation and proof" must be governed by the law. The word "may" does not mean that Parliament can choose whether or not to make a law for the investigation and proof of misbehavior or incapacity. 19. 4 The use of the word "motion" to refer to the process of investigation and proof in the law does not make it a "motion in the House." The law states that if the investigation finds the judge not guilty, no further action is to be taken. This means that the Speaker does not need to start the process of removing the judge if the accusation is not proven. The Speaker is acting under the authority of the law, and the power to make the complaint is given to Members of Parliament. 20. 1 The part of the Constitution that allows Parliament to make rules of procedure does not apply to the removal of judges. 21. 2 The Constitution gives each House of Parliament the power to make its own rules of procedure. These rules are not binding and can be changed at any time. A violation of the rules is not subject to review by the courts. 22. 3 The part of the Constitution that allows Parliament to make a law for the removal of judges is a special provision intended to regulate the procedure for removing a judge. This is not part of the normal business of the House, but is a special matter. It covers the entire field of removing a judge. Rules made under the general power to make rules of procedure do not apply in this area. 23. 4 The part of the Constitution that allows Parliament to make a law for the removal of judges is different from the part that deals with the normal business of the House. Therefore, it was necessary to specifically state that the law made under that part would take precedence over the rules of procedure. Since the part of the Constitution that allows Parliament to make a law for the removal of judges and the part that deals with the normal business of the House are different, such a provision was not necessary. Even without such a provision, a law made for the removal of judges will override the rules of procedure and will be binding on both Houses of Parliament. A violation of such a law would be illegal and could be reviewed by the courts. 24. 1 The rule that the end of a parliamentary session clears the slate, and the specific rules made by Parliament, do not determine what happens to a motion for the removal of a judge when the Lok Sabha is dissolved. The part of the Constitution that allows Parliament to make a law for the removal of judges excludes the operation of the general rules in this area. 25. 2 The law for the removal of judges is a parliamentary law, which is of higher importance than the rules made by the House for itself. Such a law can prevent the motion from ending with the session. 26. 3 In the area of removing a judge, the law made by Parliament must be considered to go further and exclude the operation of the rules. 27. 1 The law reflects the constitutional idea of both the judicial and political parts of the removal process. The ultimate authority remains with Parliament, meaning that even if the investigation committee finds the judge guilty, Parliament can still decide not to remove him. However, if the committee finds the judge not guilty, then the political part of the process has no further option. The law is a good piece of legislation that balances the idea that judges should be accountable with the value of judicial independence. The law does not conflict with the constitutional scheme. 28. 2 The Speaker, when considering a motion and forming a committee to investigate the accusations against a judge, does not act as part of the House. The House does not get involved at this stage. The law is constitutional and does not take away from the powers of the House. 29. 1 The law is a law made by Parliament that prevents the motion from ending with the session. 30. 2 The law states that the motion should be kept pending until the committee submits its report. If the committee finds the judge guilty, the motion will be considered. Only one motion is allowed, and it will remain pending. There is no limit on how long the motion can remain pending. 31. 3 The law applies to both Houses of Parliament. The words "shall keep the motion pending" cannot have two different meanings in the two different contexts. It can only mean that the consideration of the motion will be delayed until the report of the committee. Therefore, such a motion does not end with the dissolution of the Lok Sabha. 32. At the stage when the Speaker considers the motion, a judge is not automatically entitled to a notice. The law excludes such a right. However, the Speaker can still choose to hear from the judge if the facts and circumstances suggest that it would be appropriate. But a decision to consider the motion and form a committee without giving the judge a chance to be heard does not, by itself, invalidate the decision. 33. 1 It is true that society expects the highest standards of conduct from judges, and any conduct that damages public confidence in the courts is not allowed. However, the idea that the courts themselves have the power to investigate the honesty of one of their members and stop the judge from performing judicial functions is risky. The court would then be acting as a tribunal for removing a judge, which would create more problems than it solves. 34. 2 The request to stop the judge from performing judicial functions cannot be granted. The entire constitutional scheme, including the provisions for removing a judge, must be considered. Since the Constitution states that the judge's conduct cannot be discussed even in Parliament until the alleged misconduct is "proved" according to the law, it is difficult to accept that any such discussion or evaluation is allowed elsewhere, except during the investigation before the committee. Therefore, it is difficult to accept that anyone has the right to act in a way that conflicts with the constitutional scheme for removing a judge. No authority can do what the Constitution forbids. 35. 3 The question of what is proper is different from the question of what is legal. Whether the judge should continue to work during the investigation is a matter for the judge's own sense of propriety and the views of the Chief Justice of India. It is expected that the judge would be guided by the advice of the Chief Justice of India, unless he decides to step aside as a matter of propriety. It is assumed that the framers of the Constitution expected that judges would follow a desirable practice in this situation, which would not require suspending the judge. It is also assumed that the Chief Justice of India is expected to find a solution that avoids embarrassment to the judge and to the court, in a way that promotes the independence of the judiciary. If the Chief Justice of India believes that it is best for the judge to step aside from judicial work until the final outcome, he would advise the judge accordingly, and the judge would usually follow that advice. All of this is a matter of what is proper, and not a matter of legal authority for any court to issue any legal order to the Chief Justice of India for this purpose. 36. Even based on the accusations made in the petition, there is no strong evidence of wrongdoing. A case of wrongdoing cannot be made simply because of the Speaker's political affiliation. That may not be enough in this situation. In any event, as the only authority to deal with the matter, the doctrine of necessity might be used. 37. The law regarding who has the right to sue in public interest cases has changed a lot over the years, and the standards for determining who can sue are now more lenient. This matter is of such importance, and the constitutional issues are so important, that it cannot be said that the members of the Bar, and especially the Supreme Court Bar Association, have no right to sue in this case. It is not necessary to review all the principles and precedents again. It is enough to say that the petitioners meet the legal requirements for the right to sue. Some of the arguments made in the request to stop the judge from working until the proceedings were over were not proper or respectful to the judge. While the lawyers may claim to be acting in the public interest, they also have a duty to be respectful and careful so that if the charges are found to be baseless, the judge does not suffer permanent damage. The approach should not be such that it exposes an able and courteous judge to public shame even before the accusations have been examined by the proper authority. The level of the debate both in and outside the court should be more decorous and dignified. It is proper that the judge should not be embarrassed even before the charges are proven. The constitutional protection given to judges is not for their personal benefit, but is one way of protecting the judiciary and its independence, which is in the public interest. Constitutional methods must be followed if the system is to survive. 1. 1 The court's interpretation of the law, that a motion under the law for investigating judges does not end when the Lok Sabha is dissolved, is a binding declaration. If the law is that the motion does not end, there is no need for the House to say so at any time. It is wrong to assume that the Houses of Parliament would violate the law, since the courts have the exclusive power to interpret the law. 2. 2 If the House does not need to consider this question because the parliamentary process can only begin after a finding of guilt, then the question of a useless order from the court does not arise. The fact that the House can decide not to vote for removal of the judge even after a finding of guilt is not relevant, since that is allowed by the Constitution, regardless of whether the part of the Constitution that allows Parliament to make a law for the removal of judges is optional or a constitutional limit on the power to remove a judge. 3. 3 The government has tried to interpret the law to guide its own response to the situation and to regulate its actions on the Speaker's decision. That understanding of the law is incorrect. 4. 4 No specific order needs to be issued to any authority. Given the nature of the subject matter and the purpose it is intended to serve, all that is necessary is to declare the correct legal and constitutional position and leave the different parts of the government to consider matters within their own powers. 5. 5 In these circumstances, the question of the court refusing to exercise its power because the order it issues would be useless does not arise. Justice Sharma disagreed, saying: 1. 1 A close look at the Constitution shows that it has a special plan for removing members of the three parts of the government: the Executive, the Legislature, and the Judiciary at the highest level. This plan was deliberately included in the Constitution and must be kept in mind when interpreting its provisions. The idea is that when there is a question of removing a member of any of the three parts at the highest level (the President, Members of Parliament and State Legislatures, and judges of the Supreme Court and High Courts), it is left to a part other than the one where the problem has arisen to decide. In line with this plan, the Constitution states that a judge of the Supreme Court or High Court can only be removed by a special majority of the Members of each House of Parliament. Both the Executive and the Judiciary are excluded from this process. This scheme does not mean that there is a lack of trust in the three parts of the government. There are other things to consider when writing a Constitution, including assuring the people that the possibility of a subjective decision on a sensitive issue has been eliminated as much as possible. Where this is not possible, it has to be accepted and reconciled by using the doctrine of necessity, which does not apply in this case. 2. 2 Everyone agrees that an independent and fearless judiciary is necessary in a democratic country like ours. But this does not mean that the independence of the judiciary is threatened unless the courts have the ultimate control over the removal of judges, even at the highest level. The framers of the Constitution took great care with this issue and examined it from every possible angle before adopting the current scheme. As for the district courts and subordinate courts, the control has been given to the High Court. But when it came to the High Court and Supreme Court judges, it was considered enough to protect their independence to adopt the Constitution as it is now. There is no reason to doubt the wisdom of the Constituent Assembly in giving this matter exclusively to Parliament. There is no reason to suspect that the Members of Parliament or their representatives, the Speaker and the Chairman, will not act in the true spirit of the Constitution. The Constitution is binding on everyone. 3. 1 The power to remove a judge was not made dependent on the passage of a law. The reason for including the part of the Constitution that allows Parliament to make a law for the removal of judges was simply to provide more details. The Constitution does not say that wrongdoing or inability of the judge must be proven only according to a law passed by Parliament. The Constitution would still work as it does now, without any changes, even if that part were removed. There is no indication of any limit on the power of Parliament to decide how it will find out about wrongdoing or inability before taking further action. Parliament can pass a law for this purpose if it chooses. 4. 2 The word "may" can sometimes mean "shall," but it usually indicates a choice of action, not a command. In this case, there is no reason to assume that it has been used in its unusual meaning. 5. The purpose of the part of the Constitution that prevents discussion in Parliament about the conduct of a judge is to prevent such discussion unless it cannot be avoided. The Constitution prohibits such a discussion except upon a motion for presenting an address to the President for the removal of a judge. 6. 1 The word "motion" is not defined in the law. The Lok Sabha Rules, made under the Constitution, deal with "motions." The Rajya Sabha has separate rules of procedure. The law states that if a notice of "motion" is given for presenting an address to the President for the removal of a judge, the Speaker or the Chairman, after consulting with people and looking at relevant materials, can either admit the "motion" or refuse to admit it. The way this section refers to "motion" without defining it shows that it is referring to the "motion" that is usually understood in the context of the two Houses of Parliament, which follows their respective rules. The law does not say how or to whom the notice of "motion" is to be addressed or handed over. It is not clear how the Speaker gets involved unless the Lok Sabha Rules are taken into account. Therefore, the law must be read along with some of the Lok Sabha Rules. The rules that are relevant should be treated as additions to the law. 7. 2 The part of the law that is very important in this case says that if the "motion" is admitted, the Speaker "shall keep the motion pending" and form a committee to investigate the allegations. 8. 3 Where the "motion" is pending is almost conclusive on the issue of whether the House is dealing with it or not. The law makes it clear that the "motion" remains pending in the House, not outside it. This is supported by the language used in the part of the law that deals with cases where notices of "motion" are given on the same date in both Houses of Parliament. It says that no committee will be formed unless the "motion" has been "admitted in both Houses." If the "motion" has been admitted "in both Houses," the committee will be formed jointly by the Speaker and the Chairman. The law consistently refers to the "motion" being pending in the House. 9. 4 The law and the rules are limited to the investigation following a "motion" admitted by the Speaker. After the investigation, the committee must send the report to the Speaker (or the Chairman) along with a copy of the original motion. If the finding is against the judge, the motion, the same original motion, along with the report, will be considered by the House where the motion is pending. The address and the motion will be voted on together in each House of Parliament. The law and the rules require the original motion to be considered by the House. If this motion is considered to have ended when it was admitted by the Speaker, there is nothing left for the law to operate on. 10. 5 Therefore, the idea that the original motion remains pending in the House, to be debated and voted on after the committee's report is received, is essential to the law. If that motion disappears, nothing remains to attract the law. This idea runs through the entire law and the rules and cannot be ignored. The existence of a motion pending in the House is necessary for the law to apply. Without it, the law does not survive. It is not allowed to interpret the law to mean that the House is not dealing with the motion and that it has nothing to do with the inquiry pending before the committee until the report is received. If the parts of the Constitution that deal with the removal of judges are interpreted otherwise, the law will have to be struck down as invalid. For this reason alone, the petitions should be dismissed. 11. 1 The Constitution prohibits discussion about the conduct of a judge in the House, and everyone must respect this. The Speaker has a duty to enforce this. The fact that the motion is pending in the House cannot be a reason to violate the Constitution. The concern that if the motion is held to be pending in the House, the purpose of the Constitution would be defeated is incorrect. 12. 2 The broader idea that the House is dealing with the matter so much that every member can demand a discussion in the House at any stage would violate the Constitution and the law. It is not correct to assume that if the right of the individual member to insist on immediate discussion is denied, the result will be to deprive Parliament of control of the motion. The Speaker can consult with other people before admitting the motion, including members of the House, but without allowing a discussion in the House. The consultation allowed by the law is private, not a public discussion. The purpose of the Constitution is to prevent a public debate. The Speaker can also consult the House on a legal issue that can be answered without referring to the conduct of the judge, such as whether the motion has ended because the old House was dissolved and the committee is no longer valid. What is prohibited is not every matter relating to the removal of a judge. The restriction is limited to a discussion about the conduct of a judge in the performance of his duties. 13. 3 There is no reason to interpret the part of the law that says the initial motion admitted by the Speaker remains pending in the House as creating a legal fiction to ensure that the restriction on discussion is not lifted too early. 14. 4 A close reading of the entire law shows that the language was deliberately chosen to make the House deal with the matter. Therefore, it was necessary to include the provision directing the motion to remain pending to prevent a premature discussion. The law has successfully respected both the Constitution and the restriction on discussion by harmonizing them. 15. 5 Parliament is in control of the matter from the beginning to the end. By involving the Speaker and requiring a large number of members to start the process, the House is brought into control of the proceeding through its representative, the Speaker or the Chairman. The ground of proved misbehavior or incapacity is necessary only for putting the matter to a vote in the House, and is not a requirement for starting a proceeding. 16. 6 It is a common practice for a larger body to entrust investigations to a smaller body for practical reasons. This cannot be described as giving up authority. 17. 7 As long as the law allows the House to maintain its control either directly or through the Speaker, entrusting the investigation does not amount to giving up power. This is a case where Parliament has decided to respect the verdict of the committee in favor of the judge, in line with the Constitution. 18. 8 The House, which is in control of the proceeding, can take all necessary and relevant steps in the matter, except discussing the conduct of the judge until the stage is reached and the restriction on discussion is lifted. If the committee is held to be an independent body not subject to the control of the House, the law may be impossible to implement. Besides, this would lower the dignity of the Chief Justice of India by providing a system where a committee of judges could overrule him. If the committee is held to be functioning under the supervision and control of Parliament, it will be Parliament that is in control of the proceeding, not the committee. 19. 1 Even if the committee finds against the judge, Parliament can refuse to vote in favor of the motion for removal, and the Court would have no power to interfere. It is not conceivable that the Court has the power to intervene at the investigation stage. This is because if the House continues to control the proceeding, which can be exercised through the Speaker, it cannot be assumed that the Court has a parallel power, which may result in contradictory orders. Besides, the Court cannot be expected to pass orders to help, where the final result is beyond its power. Any order passed by this Court may be useless and may create a situation that is embarrassing for both the highest judicial and legislative authorities of the country. The Constitution cannot have intended this. 20. 2 In these circumstances, the courts, including this Court, do not have any power to pass any order relating to a proceeding for the removal of a judge of the superior courts. 21. No opinion is given on whether the motion ended with the dissolution of the earlier House, as that is for the Lok Sabha to decide. 22. This Court cannot pass any order on the request that the judge should not be allowed to exercise his judicial powers. 23. 1 Although the powers of the government have been divided among the three parts (the Legislature, the Executive, and the Judiciary), the doctrine of Separation of Powers has not been strictly followed, and there is some overlap of powers in the gray areas. 24. 2 Generally, questions involving disputes are subject to the jurisdiction of the courts, but there are exceptions. These include those covered by specific provisions of the Constitution and others that are protected by established legal principles involved in the Constitutional scheme. 25. It is allowed to consider the entire history of the provisions of the Constitution and the law as an aid to interpretation.
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Constitutional issues of some importance, therefore, arise as to the constitutional and the legal position and status of a Motion for the removal of a Judge under a law made pursuant to Article 124(5) of the Constitution and as to whether the Doctrine of Lapse would apply to such a Motion upon the dissolution of the Lok Sabha and whether, in view of the contention that such motions for removal, im peachment etc. The contentions urged at the hearing in support of the petitions which seek enforcement of Speaker 's decision as well as those urged in support of the petitions which say that the Motion has lapsed can be summaried thus: 29 Contention A: The motion for removal of the Judge moved by 108 Members of Parliament as well as the purported decision of the Speaker to admit that motion and to constitute a committee to investigate into the grounds on which removal is sought have lapsed upon the dissolution of the 9th Lok Sabha. The conduct of the Speaker in regulating the procedure and business of the House shall not be subject to the jurisdiction of any Court. Contention F. ' The process of removal by means of a motion for address to the President is a political remedy. 31 Contention L ' At all events, even if the Speaker is held to be a statutory authority acting under the Statute and not as part of the proceedings or business of the Lok Sabha and is amenable to the jurisdiction of the Court, any judgment rendered and writ issued by this Court have the prospect of being infructuous in view of the undisputed constitutional position that, in the ultimate analysis, the decision to adopt or turn down the motion is exclusively within the power of the House and the Court would have no jurisdiction over that area. Article 121 provides that no discussion shall take place in Parliament with respect to the conduct of any Judge of the Supreme Court or of a High Court in the dis charge of his duties except upon a motion for presenting an address to the President praying for the removal of the Judge as hereinafter provided. England is the only exception where the entire process is in Parliament but there also views are being expressed that it should be replaced by a judicial process of investigation by a judicial tribunal before the matter is taken up by the Houses of Parliament. In Clause (b) of the proviso to sub Section 2 of Section 200 of the said Act which related to judges of the Federal Court, it was pre scribed that "a judge may be removed from his office by order of the Governor General on the ground of misbehaviour or of infirmity of body or mind, if the Judicial Committee of the Privy Council, on reference being made to them, report that the judge ought on any such ground to be re moved". It was provided that "a judge of the Supreme Court of India shall not be removed from his office except by the President on an address from both the Houses of Parliament of the Union in the same session for such removal on the ground of proved misbehaviour or incapacity. The other alternative clause suggested by Shri M.Anantha sayanam Ayyangar was that "a judge of the Supreme Court may be removed from office by the President on the ground of misbehaviour or of infirmity of mind or body, if on refer ence being made to it (Supreme Court) by the President, a special 45 tribunal appointed by him for the purpose from amongst judges or exjudges of the High Courts or the Supreme Court, report that the" 'judge ought on any such grounds to be removed. " There is no doubt that in the amend ments which were suggested by Shri M.Ananthasayanam Ayyan gar, it was provided that there should be investigation into the allegations of misbehaviour or infirmity by a committee consisting of Chief Justices of the High Courts or the special tribunal consisting of judges or ex judges of the High Court or the Supreme Court, but the rejection of the said amendments moved by Shri Ayyangar does not mean that the Constituent Assembly was not in favour of determination about the correctness of such allegations by judicial body because Shri Alladi Krishnaswami Ayyar, while moving Clause 18 had emphasised the word 'proved misbehaviour ' and had stated: "While the ultimate power may rest with the two Houses, the Clause provides that the charges must be proved. Shri Tajamul Hnsain moved an amendment in Clause (4) of Article 103 which related to the removal of a judge of Supreme Court and suggested an amendment in the said clause so as to provide that "a judge of the Supreme 46 Court shall not be removed from his office except by an order of the President passed, after a Committee consisting of all the judges of the Supreme Court had investigated the charge and reported on it to the President and etc. " Having regard to the views expressed by Shri Alladi Krishnaswami Ayyar, who was a member of the Drafting Committee, while opposing the amend ments proposed by Shri M.Ananthasayanam Ayyangar, it is possible to infer that the intention of the Constituent Assembly was that the provision with regard to the machinery for such investigation and proof was a matter which need not be contained in the Constitution and it is a matter for which provision could be made by Parliament by law. It is. (5) and cannot be said to lapse on the dissolution of the Assembly." Section 3 of the Act provides: "3(1) If notice is given of a motion for presenting an address to the President praying for the removal of a Judge signed, (a) in the case of a notice given in the House of the People, by not less than one hundred members of that House; 50 (b) in the case of a notice given in the Council of States, by not less than fifty members of that Council; then, the Speaker or, as the case may be, the Chairman may, after consulting such persons, if any, as he thinks fit and after considering such materials, if any, as may be available to him, either admit the motion or refuse to admit the same. Second: Since a motion for presenting an address to the President referred to in Arti cles 121 and 124 (4) has to be on ground of "proved" misbehaviour and incapacity, no such motion can be made until the allegations relating to misbehaviour or incapacity have first been found to be proved in some forum outside either Houses of Parliament Law under Article 124(5) is mandatory and until the Parliament enacts a law and makes provision for an investigation into the alleged misbeha viour or incapacity and regulates the proce dure therefor, no motion for removal of a Judge would be permissible under Article 124(4) and the House of Parliament would not be brought into the picture till some authori ty outside the two Houses of Parliament has recorded a finding of misbehaviour or incapac ity. Third: That Article 124(5) is only an enabling provision and in the absence of any enactment by the Parliament under that provi sion it would be open to either House to entertain a motion for the removal of a Judge. As soon as a law has been enacted all its provisions would be binding on both Houses of Parliament and would even override any Rules flamed by the two Houses under Article 118 of the Constitution. The question as to when and in what circumstances motion would be allowed to be moved in either House of Parliament to lift the ban against the discussion of conduct of a Judge under Article 121 would be accord ing to such Act of Parliament. (2) Every Judge of the Supreme Court shall be appointed by the President by warrant under his hand and seal after consultation with such of the Judges of the Supreme Court and of the High Courts in the States as the President may deem necessary for the purpose and shall hold office until he attains the age of sixty five years: Provided that in the case of appointment of a Judge other than the Chief Justice of India shall always be consulted: Provided further that (a) a Judge may, by writing under his hand addressed to the President, resign his office; (b) a Judge may be removed from his office in the manner provided in clause (4). (4) A Judge of the Supreme Court shall not be removed from his office except by an order of the President passed after an address by each House of Parliament supported by a majority of not less than two thirds of the members of that House present and voting has been pre sented to the President in the same session for such removal on the ground of proved misbehaviour or incapacity. The motion which lifts the bar contained in Article 121 is really a motion for such removal under clause (4) of Article 124 moved in the House after the alleged misbehavior or incapacity has been proved in accordance with the law enact ed by the Parliament under clause (5) of Article 124. The position would be that an allegation of misbeha viour or incapacity of a Judge has to be made, investigated and found proved in accordance with the law enacted by the Parliament under Article 124(5) without the Parliament being involved upto that stage; on the misbehaviour or incapacity of a Judge being found proved in the manner provided by that law, a motion for presenting an address to the President for removal of the Judge on that ground would be moved in each House under Article 124(4); on the motion being so moved after the proof of misbehaviour or incapacity and it being for presenting an address to the President praying for removal of the Judge, the bar. The other view is that clause (4) of Article 124 gives power to the Parliament to act for removal of the Judge on the ground of proved misbehaviour or incapacity in the manner prescribed if the matter is brought before it at this stage; and for reaching that stage the Parliament is required to enact a law under clause (5) regulating the procedure for that purpose. This means that making of the allegation, initiation of the proceedings, investigation and proof of the misbehaviour or incapacity of a Judge are governed entirely by the law enacted by the Parliament under clause (5) and when that stage is reached, the Parliament comes into the picture and the motion for removal of the Judge on the ground of proved misbehaviour or incapacity is moved for presentation of the address to the President in the manner prescribed. The argument that the House can decide even after a finding of guilt that it would not proceed to vote for removal of the Judge is not germane to the issue since that is permissible in the Constitutional Scheme itself under Article 124(4) irrespective of the fact whether Article 124(5) is a mere enabling provision or a constitutional limitation on the exercise of power under Article 124(4). This indicates that this area is not left uncovered which too is a pointer that the stage at which the bar in Article 121 is lifted, is the starting point of the parliamentary process i.e. when the misbehaviour or incapacity is proved; the stage from the initiation of the process by ' making the allegation, its mode, investigation and proof are covered by the law enacted under clause (5); in case the allegation is not proved, the condition precedent to invoke the Parlia ment 's jurisdiction under clause (4), does not exist, which is the reason for section 6 of 1968 Act saying so; and in case it is proved, the 61 process under clause (4) commences, culminating in the result provided in it. In the case of a Judge, the procedure for investigation and proof is to be in accordance with the law enacted by the Parliament under clause (5) of Article 124. If the first view is correct the law under Article 124(5) would apply at the stage of investigation and proof of misbehaviour or incapacity and at the final stage of presentation of address after the motion is adopted by both the Houses. The position is that at the stage of the provisions when the Speaker admits the motion under section 3 of the , a Judge is not, as a matter of right, entitled to such notice. The Constitu tional Scheme appears to be that unless the alleged misbeha viour or incapacity is 'proved ' in accordance with the provisions of the law enacted under Article 124(5) and a motion for presenting an address for removal of the Judge on the ground of proved misbehaviour or incapacity is made, because of the restriction contained in Article 121, there cannot be a discussion about the Judge 's conduct even in the Parliament which has the substantive power of removal under Article 124(4). If the Constitutional Scheme therefore is that the Judge 's conduct cannot be discussed even in the Parliament which is given the substantive power of removal, till the alleged misconduct or incapacity is 'proved ' in accordance with the law enacted for this purpose, then it is difficult to accept that any such discussion of the conduct of the Judge or any evaluation or inferences as to its merit is permissible according to law elsewhere except during investigation before the Inquiry Committee constituted under the statute for this purpose. The Committee for the investigation into the alleged misbehaviour of the third respondent was constituted on 12.3.1991 under the provi 78 sions of the (hereinafter re ferred to as the Act) by Shri Rabi Ray, the then Speaker of the Lok Sabha, not a party in W.P. It is appropriate that the point relating to the jurisdiction of this Court, and for that matter of any court in India, is considered first. In support of his argument, Mr. Sibal has relied upon the provisions of Article 122(2) of the Constitution read with Article 93, and has urged that the present matter relates to the conduct of the business of the Lok Sabha and is included within the functions of regulating its procedure, and as such the Speaker who is a Member and officer of the Parlia ment cannot be subjected to the jurisdiction of any Court in respect of the exercise of those powers. It has been contended that the Speaker was not free to take a decision by himself to refer the matter to the Committee for inquiry and that too without hearing the Judge concerned; and in any event his order is subject to any decision 80 to the contrary of the House arrived at, at any stage. The issue which arises in the present case is whether under the Con stitutional scheme a matter relating to the removal of a Judge of the superior courts (Supreme Court or High Courts) is within the jurisdiction of the courts or in any event of this Court. Clause (4) does not state that the misbehaviour or incapacity of the Judge will have to be proved only in accordance with a law to be passed by the Parliament under clause (5). The question, however, is as to whether the object of Article 121 will be defeated, if clause (4) of Article 124 is construed as complete in itself and independ ent of clause (5), and clause (5) be understood as merely giving an option to the Parliament to enact a law, if it so chooses; and further whether the inquiry before the Commit tee is within the control of the House of the Parliament so as to exclude an outside interference by any other authori ty, including the courts. Section 3(1) of the states that if a notice of"motion" is given for presenting an address to the Presi dent for the removal of a Judge, signed, in the case of a notice given in the Lok Sabha, by not less than 100 members, and in the case of a notice given in the Rajya Sabha, by not less than 50 members of the House, the Speaker or the Chair man, as the case may be, after consulting such persons as he deems fit, as also such relevant materials which may be available to him, either admit the "motion" or refuse to admit the same. If the report goes against the Judge, then "the motion referred to in sub section (1) of Section 2 shall, together with a report of the Committee, be taken for consideration by the House or the Houses of Parliament in which it is pending". It is clear that it is not an inadvertent reference in the Act of the "motion" being pending in the House; the provisions unmistakably indicate that the Act and the Rules envisage and deal with a "motion" which is admitted in the House and remains pending there to be taken up again when the date is fixed by the Speaker on receipt of the report from the Committee. What the Act and the Rules contemplate is the original Motion to be taken up for consideration by the House, and if this Motion is held to have exhausted itself on admission by the Speaker, as has been urged on behalf of the petitioners, nothing remains on which the Act would operate. Para graph 17 of the Report dealing with clause (2) states that the expression "Special Tribunal" has been substituted by "Committee" and "Speaker" and "Chairman" have been brought in "with a view to ensuring that the Committee may not be subject to writ jurisdiction of the Supreme Court & the High Courts". With respect to clause (3), the following observa tions of the Committee are relevant: "The Committee are of the view that to ensure and maintain the independence of the judici ary, the Executive should be excluded from every stage of the procedure for investigation of the alleged misbehaviour or incapacity of a Judge and that the initiation of any proceed ing against a Judge should be made in Parlia ment by a notice of a motion. The Committee 95 also feel that no motion for presenting an address to the President praying for the removal of a Judge should be admitted unless the notice of such motion is signed in the case of a motion in the Lok Sabha, by not less than one hundred members of that House and in the case of a motion in Rajya Sabha, by not less than fifty members of that House. On appeal by the State Government this Court reversed the decision holding that Article 235 of the Constitution authorised the High Court to frame the rules for prescribing the manner in which the power vested in the High Court had to be exercised, and observed that though the control over the subordinate courts is vested constitutionally in the High Court by the Article, it did not follow that the High Court has no power to pre scribe the manner in which that control may, in practice, be exercised; and in fact, the very circumstance that the power of control, which comprehends matters of a wide ranging authority, vests in the entire body of Judges 99 makes it imperative that the rules are flamed so that the exercise of the control becomes feasible, convenient and effective. Even after a verdict against the Judge is returned by the Committee, the Parlia ment or for that matter any of the two Houses can refuse to vote in favour of the Motion for removal of a Judge, and the Court shall not have any jurisdiction to interfere in the matter.
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They also argued that the constitutional process for removing a judge was a political solution for judicial misbehavior. They also claimed that the court should not get involved in this matter because any decision it made might be useless. They also argued that whether a motion ends with the session is a matter to be decided based on the law, and the courts have the power to interpret the law. 1 It is not correct to say that whether a motion has ended or not is a matter only for the Parliament to decide, and that the courts cannot get involved. 3 The courts have the power to declare that a motion to remove a judge does not end when the Lok Sabha is dissolved. 3 The part of the Constitution that allows Parliament to make a law for the removal of judges is different from the parts that deal with the normal procedures of Parliament. 4 The law made by Parliament for the removal of judges, and the investigation conducted according to that law, are subject to review by the courts. The part of the Constitution that deals with the removal of judges is only meaningful if there is a law that allows for the investigation and proof of wrongdoing. The word "may" does not mean that Parliament can choose whether or not to make a law for the investigation and proof of misbehavior or incapacity. 4 The use of the word "motion" to refer to the process of investigation and proof in the law does not make it a "motion in the House." 1 The part of the Constitution that allows Parliament to make rules of procedure does not apply to the removal of judges. 3 The part of the Constitution that allows Parliament to make a law for the removal of judges is a special provision intended to regulate the procedure for removing a judge. 4 The part of the Constitution that allows Parliament to make a law for the removal of judges is different from the part that deals with the normal business of the House. Since the part of the Constitution that allows Parliament to make a law for the removal of judges and the part that deals with the normal business of the House are different, such a provision was not necessary. Even without such a provision, a law made for the removal of judges will override the rules of procedure and will be binding on both Houses of Parliament. 1 The rule that the end of a parliamentary session clears the slate, and the specific rules made by Parliament, do not determine what happens to a motion for the removal of a judge when the Lok Sabha is dissolved. All of this is a matter of what is proper, and not a matter of legal authority for any court to issue any legal order to the Chief Justice of India for this purpose. 1 The court's interpretation of the law, that a motion under the law for investigating judges does not end when the Lok Sabha is dissolved, is a binding declaration. If the law is that the motion does not end, there is no need for the House to say so at any time. The fact that the House can decide not to vote for removal of the judge even after a finding of guilt is not relevant, since that is allowed by the Constitution, regardless of whether the part of the Constitution that allows Parliament to make a law for the removal of judges is optional or a constitutional limit on the power to remove a judge. The idea is that when there is a question of removing a member of any of the three parts at the highest level (the President, Members of Parliament and State Legislatures, and judges of the Supreme Court and High Courts), it is left to a part other than the one where the problem has arisen to decide. In line with this plan, the Constitution states that a judge of the Supreme Court or High Court can only be removed by a special majority of the Members of each House of Parliament. The Constitution does not say that wrongdoing or inability of the judge must be proven only according to a law passed by Parliament. The purpose of the part of the Constitution that prevents discussion in Parliament about the conduct of a judge is to prevent such discussion unless it cannot be avoided. If the finding is against the judge, the motion, the same original motion, along with the report, will be considered by the House where the motion is pending. It is not allowed to interpret the law to mean that the House is not dealing with the motion and that it has nothing to do with the inquiry pending before the committee until the report is received. The concern that if the motion is held to be pending in the House, the purpose of the Constitution would be defeated is incorrect. 2 In these circumstances, the courts, including this Court, do not have any power to pass any order relating to a proceeding for the removal of a judge of the superior courts. This Court cannot pass any order on the request that the judge should not be allowed to exercise his judicial powers.
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l Appeal No. 2434 35 of 1984 Appeals by Special leave from the Judgment and Order dated the 19th to 21st day of October, 1983 of the Bombay High Court in Appeal Nos. 404 & 405 of 1983. F.S. Nariman, S.S. Ray, I.M.Chagla, P.L. Dubey, A.P.Chinoy, E.B. Desai, N.P. Bharucha, N.R. Khaitan, Anil Kumar Sharma & Praveen Kumar for the appellants. N.A. Palkhivala, K.S. Cooper, S.F. Dastur & Dr. Y.S. Chitale, S.S. Shroff, S.A. Shroff & Mrs. P.S. Shroff for Respondents in CA. No. 1488 of 1984. K.S. Cooper, J.J. Bhatt, Amit Desai, S.A. Shroff and Mrs. P.S. Shroff for the Respondent in CA. No. 1489 of 1984. The Judgment of the Court was delivered by TULZAPURKAR, J. These two appeals raise the following two questions for our determination: 1. Whether under sec. 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961, having regard 452 to its scope, a suit in the nature of a petition under sec. 33 of the could be stayed ? If, so whether the Ist Respondents have made out a case for staying the Appellants ' suit No. 832 of 1982 ? 2. Whether the three claims referred by the Ist Respondents to the Court of Arbitration of the 2nd Respondents are beyond the scope of the Arbitration Clause being Article XVII contained in the Contract dated August 24, 1964 or they are "arising out of or related to" the said Contract ? The facts giving rise to the aforesaid two questions may be stated. The Appellants, Renusagar Power Company Limited (for short 'Renusagar ') are a company incorporated under the having their Registered Office at Renukoot, District Mirzapur in Uttar Pradesh. The Ist Respondents, General Electric Company (for short 'G.E.C. ') are a company incorporated under the laws of the State of New York and carry on their business inter alia at 570, Lexington Avenue, New York, U.S.A. The 2nd Respondents are the International, Chamber of Commerce (Court of Arbitration) (for short 'I.C.C. ') having their registered office in Paris, France. By a Contract in writing dated August 24, 1964 (bearing Ref. 9584) G.E.C. agreed ' to sell to Renusagar equipment for a thermal electric generating plant to be erected at Renukoot on the terms and conditions set out therein. The work to be performed under the contract included the supply of equipment, spare parts and services in accordance with the 'Proposed Specification 's dated November 12, 1963 and contained in G.E.C. 's letter dated October 14, 1963 together with the attached Minutes of the Meeting of October 10, 1963. The total purchase price ' called the 'contract Base Price, for all the work was $ 13,195,000 payable by Renusagar in lawful currency of the U.S.A. in the manner stipulated in the Contract. It appears that the parties intended that delivery of the equipment and spare parts etc. would be completed within 15 months of the Contract Effective Date (which was December 31, 1964), i.e. up to March 30, 1966 and that the erection of the plant would be completed within 16th to 30th Month (i.e. from April 1, 1966 to June 30, 1967) and that the plant would 453 be fully operational by the end of 30th Month from the Contract Effective Date. The parties therefore, agreed that substantial payment of the purchase price by Renusagar should commence when the plant became operational, i.e. by June 30, 1967; it was also agreed that no interest would be payable by Renusagar during the delivery period, that interest shall be paid during the erection period (i.e. 16th to 30th Month) and thereafter till payment but the interest during the erection period would be capitalised and added on to the principal. Accordingly, article III of the Contract stipulated that initially 10% of the total Contract Base price (the amount coming to U.S. $ 1,319,500) should be paid either in cash or by means of a Letter of Credit within 30 days of the Contract Effective Date and that the balance of 90% of the purchase price plus interest at 6 1/2% per annum from 16th to 30th Month aggregating to U.S. $ 12,776,058,75 ($ 11,875,500. for principal plus $ 900,558,75 being the capitalised interest at the aforesaid rate for the aforesaid period) should be paid in accordance with the schedule of payments set out therein. The schedule for the payment of the said balance of 90% of the purchase price provided for payment to be made in sixteen six monthly instalments of U.S. $ 798,503.68 each, the first of such instalments being payable on 30 6 1967, the second on 31 12 1967, the third on 30 6 1968, the fourth on 31 12 1968 and so on with the last instalment falling due on 31 12 1974. The obligation to make such payment was to be evidenced by 4 series (A B C D) of 16 unconditional negotiable promissory notes to be executed by Renusagar. It was further agreed that in case G.E.C. received an exemption from the Government of India from payment of Income Tax on interest receivable by it from Renusagar then the interest for that portion of the period shall be computed at 6% instead of 6.5% per annum and that the concerned promissory notes would be replaced or substituted by fresh promissory notes for amounts reflecting the adjustment in payment of interest necessitated by the grant of tax exemption. The Contract further provided under article XIV B that should G.E.C. 's application for exemption be denied Renusagar may withhold the Indian Income tax applicable to any payments of interest but shall furnish G.E.C with tax receipts on all with held amounts paid to the Government of India. Such provision was obviously made with a view to enable G.E.C. to obtain corresponding credit for the sum in their U.S. Tax Assessment. The Contract also required Renusagar to furnish guarantee of the United Commercial Bank for payment of the full amount of pro 454 missory notes: the form of the promissory notes and the Deed of Guarantee were annexed to the Contract. Under article XIX A it was provided that the rights and obligations of the parties would be governed in all respects by the laws of the State of New York, U.S.A. The Contract contained an Arbitration Clause in article XVII the relevant portion whereof runs thus: "Any disagreement arising out or of related to this contract which the parties are unable to resolve by sincere negotiation shall be finally settled in accordance with the Arbitration Rules of the International Chamber of Commerce. As provided in the said Rules, each party shall appoint one Arbitrator. and the Court of Arbitration of the International Chamber of Commerce shall appoint the third Arbitrator. . Arbitration proceedings shall be conducted at such time and place as the Court of Arbitration shall decide. Judgment upon an award may be entered in any court of competent jurisdiction. " Pursuant of the said Contract Renusagar made the initial payment 10% of the Contract Base price and also issued in all 64 promissory notes (16 in each of the four series) all dated 31 12 1964 but with due dates of payment synchronizing with the dates indicated in the Schedule of payments and forwarded the same to the Escrow Agent under the Escrow Arrangement mentioned in article III B whereunder the Notes were to be released to G.E.C. in numerical sequence and in amounts determined by the Escrow Agents by applying certain (rather complicated) formulae specified in sub clauses (a) to (e) of Clause B. Renusagar also furnished a guarantee executed by the UCO Bank irrevocably guaranteeing to G.E.C. and to any subsequent holder in due course of the Notes the full and prompt payment of the principal and interest on the Notes. Subsequently by an agreement recorded in G.E.C. 's letter dt. June 11, 1965 and as approved by the Central Government the said 1964 Contract (IGE 9584) was extended to include the supply of unfabricated structural steel to Renusagar for approximately U.S. $ 300,000 on the same conditions in regard to payment as contained in the original 1964 Contract. It was agreed that Renusagar would issue a fifth series (E series) of 16 promissory notes bearing interest at 6.5% per annum evidencing 90% of the price of the structural steel; the instalments under the 5th series were payable on the same dates as the corres 455 ponding promissory notes of the earlier four series. It was expressly clarified in the letter of June 11. 1965 that except for the modifications made by it all other terms and conditions of the Contract IGE 9584 shall apply; in other words the Arbitration Clause of the 1964 Contract became applicable to the said supply of structural steel. During the implementation of the Contract two events occurred giving rise to G.E.C. 's three claims against Renusagar that are sought to be referred to arbitration of I.C.C namely. (1) grant of tax exemption by the Government of India to G.E.C. in respect of interest on purchase price receivable by it from Renusagar and the revocation thereof and (2) re scheduling of dates of payment of purchase price agreed to by the parties but not approved by the Reserve Bank and the Government of India. As regards the former, it appears that by two orders dated September 3, 1965 and June 7, 1967 passed under section 10(15) (iv) (c) of the Indian Income Tax Act 1961 the Government of India granted exemption to G.E.C. from payment of Indian income tax on the interest receivable by it from Renusagar with the result that G.E.C. became entitled to receive the interest on the unpaid purchase price at the rate of 6% tax free instead at 6.5% subject to tax. However, by its subsequent order dated September 11, 1969, the Government of India purported to retrospectively cancel or revoke the said tax exemption, whereupon in or about May 1970 Renusagar filed a writ petition (Civil writ No. 179 of 1970) in the Delhi High Court challenging the said cancellation or revocation of tax exemption and further sought an injunction restraining the Government of India from implementing the said cancellation or revocation. On May 18, 1970 Renusagar obtained an order from the Delhi High Court that on its furnishing security for Rs. four lakhs the cancellation or revocation of exemption shall be stayed and the Government of India and its officers were restrained by an interim injunction from enforcing or implementing the impugned order dated September 11, 1969; in other words on furnishing security of Rs. four lakhs (which Renusagar did) the tax exemption continued with the result that there was no necessity to deduct any amount from interest payable to G.E.C. nor to deposit the same as tax with the Indian Government. Even so, Renusagar by its letter dated June 30, 1970 informed G.E.C. that it would continue to calculate interest at 6.5% and make payment to G.E.C. after withholding and keeping in reserve the tax liability out of the amount due to it. The amount so withheld came 456 to 73% of interest payable to G.E.C. on the instalments of purchase price after 1970 and Renusagar only made payment of interest to the tune of 7% to G.E.C. Surprisingly, the interest at 73% which represented the tax deducted at source was not even made over by Renusagar to the Indian Government which resulted in depriving G.E.C. of the benefit of getting the corresponding credit in their U. section Tax Assessments. Ultimately the Delhi High Court by its judgment and order dated November 17, 1980 allowed Renusagar 's writ petition and quashed the impugned order dt. Sept. 11, 1969 revoking the tax exemption. In the correspondence that ensued Renusagar not merely acknowledged that the amount so withheld and credited to reserve was U.S. $ 24,12, 680.20 (calculated on the basis of 6.5% subject to tax) (vide letter dt. 25.3.76 together with Statement attached) but also sought from the Commissioner of Income Tax a no objection certificate and from the Reserve Bank its approval (vide Two Letters both dt. 3 6 1981) for making the remittance to G.E.C. of U.S. $ 21,30,785.52 (calculated on 6% tax free basis to which G.E.C. became entitled as a result of Delhi High Court 's decision). It is this sum of 2.1 Million Dollars (U.S) being the Unpaid Regular Interest, wrongly deducted and wrongly withheld and kept with themselves by Renusagar from 1970 onwards which is the first claim referred by G.E.C. to the arbitration of I.C.C. As regards the latter it may be stated that on account of the alleged delays in the shipment and erection schedule Renusagar requested G.E.C to grant deferment in the payment schedule and as a result of the negotiations that ensued, Renusagar and G.E.C., inter alia, purported to amend the dates of payment of the purchase price evidenced by the promissory notes and certain decisions in that be half were recorded in a Memorandum dated December 30, 1966 and letters dated January 5, 1967, October 4, 1967 and October 9, 1967; this purported re scheduling of the dates of payment of the purchase price as arrived at by the aforesaid documents was sought to be reflected by the parties in the said Contract I.G.E. 9584 by executing a formal Amendment dated October 1, 1968 thereto. This Amendment expressly provided that all other terms and conditions of the original contract shall remain in full force and effect. Renusagar executed fresh promissory notes as per the Amendment dt. Oct. 1, 1968 as also having regard to tax exemption granted as above and sent them to the Escrow Agents. The October 1968 Amendment was, however, subject to the approval of the Reserve Bank and the Central Government. It appears that in December 1968 the parties once 457 again attempted to re schedule the payment of instalments of purchase price. In July 1969 Renusagar sought the Central Government 's approval to the re scheduling of the dates of payment as embodied in October 1968 Amendment as also in the Memorandum of the Meeting held in December 1968 but by letters dated August 1, 1969 and August 4, 1969 the Central Government declined to approve the re scheduling of the dates of payment on the ground that it would result in larger out flow of foreign exchange and advised Renusagar to effect payments as per the original schedule including instalments which had since fallen due. The result was that the original schedule of payment remained operative and there was delay on the part of the Renusagar to make payment of certain instalments on due dates. Such delays occurred in respect of four instalments, namely, instalments No.1 evidenced by promissory note No.1 was payable on 30.6.1967 but was paid (in instalments) by July 1970; instalment No.2 evidenced by promissory note No.2 was payable on 31.12.1967 but the same was paid (in instalments) by December 1972; instalment No.4 evidenced by promissory note No.4 was payable on 31.12.68 but was paid (in instalments) by December 1973; and instalment No. 5 represented by promissory note No. 5 was payable on 30.6.1969 but was, in fact, paid (in instalment) by February 1976. On account of the delays in the payment of instalments of purchase price together with interest Renusagar became liable to pay delinquent interest to G.E.C. In the correspondence on the subject Renusagar accepted the liability to pay such delinquent interest and made annual acknowledgements thereof. In its telex message dated March 25, 1976 Renusagar in terms acknowledged its liability to pay such delinquent interest amounting to U.S. $ 8,48,010 52 (calculated on the basis of 6.5% subject to tax) to G.E.C., which liability if calculated on 6% tax free basis, to which G.E.C. became entitled as a result of the Delhi High Court 's decision, comes to US. $ 7,84,151.84. This liability for Delinquent Interest is the second claim referred by G.E.C to the arbitration of I.C.C. The third claim for Compensatory Damages which G.E.C. has made against Renusagar and which is sought to be referred to arbitration arises out of non payment of the aforesaid two claims of Unpaid Regular Interest and Delinquent Interest for over 12 years, the quantum being calculated by way of interest on those two amounts at the market rate of 18% per annum amounting to U.S. $ 4,160,534.88 up to 31 3.1982 (to be extended till date of actual payment). According to G.E.C. for a long period of 12 years Renu 458 sagar has illegally and wrongfully retained these two funds with itself and has enjoyed the use thereof for its own private advantage has correspondingly totally deprived G.E.C. of their use for which Renusagar must compensate. G.E.C. has also asserted that such compensatory damages are due to it from Renusagar because Renu sagar must be regarded as stake holder or constructive trustee of those funds from the various dates on which they became due and payable but Renusagar has managed to retain them with itself on one pretext or the other and under the common law jurisprudence shared equally by Indian and American law, restitution is payable by a stake holder to the party ultimately determined to be rightful beneficiary and owner of the funds. It may be stated that though in the correspondence indicated above Renusagar accepted its liability to pay the Unpaid Regular Interest (2.1 million U.S. Dollars) and the Delinquent Interest (U.S. $ 784, 151.84), by its letter dated September 21, 1981 Renusagar put forward certain counter claims and in a statement attached to that letter enlisted about 6 or 7 matters giving rise to such counter claims against G.E.C. By a notice of intention to arbitrate dated March 1, 1982, G.E.C. called upon Renusagar to remit the aforesaid three claims, failing which steps to refer the disputes to the Court of arbitration of I.C.C. in pursuance of article XVII of the Contract were threatened and this was followed by a letter dated March 2, 1982 addressed to the Secretariat, Court of Arbitration of I.C.C. containing a Request for Arbitration being undertaken by it seeking reliefs as set out in the notice to Renusagar. After I.C.C. took cognizance of the Request for Arbitration by G.E.C. it called upon Renusagar to nominate its Arbitrator, file its reply and remit certain sums towards the administrative expenses and arbitration fees. On June 11, 1982, Renusagar filed suit No. 832/1982 in the Bombay High Court on its Original Side against G.E.C. and I.C.C. seeking a declaration that the claims referred to the arbitration of I.C.C. by G.E.C. were beyond the scope purview of the arbitration agreement contained in article XVII of Contract I.G.E. 9584 dated August 24, 1964 and that G.E.C. was not entitled to refer the same to the arbitration; a consequential prayer for injunction restraining G.E.C. and I.C.C. from proceeding further with the reference was also made and an injuction was also sought against I.C.C. restraining it from requiring Renusagar to make any deposit towards administrative expenses and arbitration fees. On the some day on a notice 459 of Motion an ex parte ad interim relief in the aforesaid terms was obtained by Renusagar. On August 11, 1982 G.E.C. filed Arbitration Petition No. 96 of 1982 under section 3 of the Foreign Awards (Recognitation and Enforcement) Act, 1961 seeking stay of suit No. 832 of 1982 and all proceedings therein and a prayer for vacating the ad interim reliefs obtained by Renusagar was also made. Both the matters, G.E.C 'section stay petition under section 3 and Renusagar, Notice of Motion for confirmation of ad interim reliefs were heard together and disposed of by Mr. Justice Pendse by a common judgment and order dated April 19 20, 1983. On a consideration of the rival contentions that were urged before him the learned Judge negatived Renusagar 's contention that the Arbitration Clause in the original 1964 Contract could not be availed of by G.E.C. as a fresh agreement creating new rights and liabilities had come into existence by reason of Oct. 1968 Amendment which did not provide for arbitration on two grounds namely that the Oct. 1968 Amendment had kept alive all other terms and conditions of the 1964 Contract including Arbitration Clause and in any case the Oct. 1968 Amendment had fallen through for lack of Government 's approval; he also took the view that though the first two claims sought to be referred to arbitration by G.E.C. were based on the promissory notes executed by Renusagar the issuance of the promissory notes towards the purchase price was provided under the Contract itself and these were not by way of any independent or separate contracts in discharge of the obligation to pay the purchase price under the contract and since the Arbitration Clause covered all disputes arising out of the Contract those claims fell within the Arbitration Clause; and as regards the third claim for compensatory damages he took the view that the liability to pay the same arose due to failure to carry out the terms and conditions of the Contract in regard to payment of purchase price and that even assuming that the said claim was one in tort it was directly and inextricably connected with the terms and conditions of the Contract and certainly " arose out of" the Contract or was " in relation to" the Contract and therefore could be entertained by the Arbitrators. As regards the prayer for stay of suit the learned Judge held that since all the ingredients of section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 had been satisfied it was obligatory upon the Court to stay the suit and G.E.C. was entitled to that relief. He therefore, allowed the Arbitration Petition 96/1982, granted the stay of suit and all the proceedings therein and 460 vacated all the interim reliefs which were granted earlier by the ad interim order. Renusagar preferred two appeals being Civil Appeal Nos. 404 405 of 1983. At the hearing of the appeals Counsel for Renusagar raised four contention: firsts, according to him an Arbitrator had no jurisdiction to decide the limits of his own jurisdiction and since in the case of international arbitration the jurisdiction of the Arbitrator had to be decided according to the law of the Forum where the question is raised in the instant case being the Indian Law) the jurisdiction of the Arbitrator, according to that law, had to be decided by the Court and not by the Arbitral Tribunal; secondly, the dispute sought to be referred related substantially to the claim for interest and that claim had to be (and was so stated in the Notice of intention to arbitrate) founded on the promissory notes which were independent contracts by themselves and therefore, the claim did not arise out of the suit Contract and hence could not be the subject of arbitration; thirdly the claim for compensatory interest was really a claim for damages arising out of tort and such a claim was in any case not covered by the suit Contract and fell outside the scope of the Arbitration Clause; and fourthly, in any event, Renusagar had made out a prima facie case by raising serious triable issues in the suit which should enable it to claim an injuction restraining the arbitration proceedings. Though G.E.C. had raised a contention that the question of the Arbitrator 's jurisdiction had to be decided according to American Law counsel for G.E.C. made a concession that for the purposes of the appeals the Court should proceed on the basis that question was to be decided according to Indian Law. Proceeding on that basis the court of Appeal negatived all the contentions and ultimately confirmed the trial Judge 's order whereby Renusagar 's suit was stayed and the ad interim reliefs were vacated. In support of these appeals preferred against the judgment and order of the Court of appeal dated October 19 20 21, 1983 Counsel for Renusagar have basically raised two contentions: (1) that under s.3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 (for short 'the Foreign Awards Act), having regard to its scope, a suit in the nature of a petition under s.33 of the . cannot be stayed and that no case has been made out by G.E.C. for staying Renusagar 's suit No. 832/1982 which is of that nature and (2) that on merits the three claims referred by G.E C. to the Court of Arbitration of I.C.C. are beyond the scope/purview of the Arbitra 461 tion Clause being article XVII contained in the Contract I.G.E. 9584 as these do not "arise out of" nor "relate to" the said Contract. By way of elaborating the first contention Counsel pointed out that suit No. 832/1982 filed by Renusagar is merely for a declaration that the three claims sought to be referred to arbitration are beyond the scope and purview of the Arbitration Clause and no other relief on the merits of those claims is sought, that such a suit is really in the nature of a petition under s.33 of the , inasmuch as it seeks to have the effect (scope) of the arbitration agreement determined, that such a suit can never be stayed under s.3 of the Foreign Awards Act and that, therefore, the petition under s.3 (which is really in the nature of s.34 application under the ) is totally misconceived and liable to be dismissed; Counsel further submitted that the suit filed by Renusagar is not "in respect of any matter agreed to be referred to arbitration" as required by s.3 and, therefore, the stay sought for by G.E.C. should be refused; Counsel further urged that the Court acting under s.3 (like the Court acting under s.34 of the ) being a Court of limited jurisdiction cannot determine the question of the existence, validity or effect of the arbitration agreement (which is the only issue to be tried in Ranusagar 's suit) and it is for the Court trying the suit to decide the question raised in the suit and, therefore, a stay, if granted under s.3, would finally determine the suit or render it almost dead for all practical purposes and, therefore, no relief on the stay petition can be granted which will have such effect; Counsel finally submitted that the question raised in the suit relating to the effect (scope) of the arbitration agreement, which is the same as the question relating to the existence thereof, is such as is incapable of being finally determined by the Arbitrators and hence such a suit cannot be stayed under s.3 of the Foreign Awards Act. According to Counsel the aforesaid submissions are founded on the well settled position in law English and Indian that questions or issues which pertain to the existence, validity or effect (scope) of an arbitration agreement contained in the underlying commercial Contract are matters which relate to the jurisdiction of the Arbitrator and are not within the competence of the Arbitrator however widely worded the Arbitration agreement may be but these have to be decided by the Court in an application under s.33 or in a suit which is of that nature as is the case here. On the other hand Counsel for G.E.C. contended that the schemes of the Foreign Awards Act and the Indian are 462 not identical, that there are various material differences which have a bearing on the issue whether a suit seeking determination of the effect (scope) of an arbitration agreement can or cannot be stayed in a petition under s.3 of the Foreign Awards Act and that the answer to the said question will depend upon proper construction to be placed on s.3 in the light of the scheme of that Act; Counsel urged that since all the ingredients of s.3 have been satisfied the stay of Renusagar 's suit will be obligatory. Alternatively, Counsel contended that the legal position both under English and Indian Law is not as has been submitted by Counsel for Renusagar; Counsel urged both under English law and Indian law it is well settled that it is open to the parties to have an arbitration agreement incorporating words of the widest amplitude so as to embrace even the questions of its existence, validity or effect (scope) but according to him an enquiry into the scope and effect of an arbitration agreement and a challenge to the existence or validity thereof are not the same but fundamentally different inasmuch as the first pre supposes that the arbitration agreement exists in fact and in law and the enquiry then is limited to the scope and effect thereof; counsel further contended that whenever it is said that an arbitrator cannot decide the question of his own jurisdiction all that is intended is that he cannot determine that too finally, the question of the existence (factual) or validity (i.e. legal existence) of the arbitration agreement if contained in the underlying commercial Contract and this must be so, for, if the existence or validity of the underlying commercial Contract is successfully challenged the arbitration clause which is the part and parcel thereof must perish with it and therefore the Arbitrator will have no jurisdiction to decide the issue of the existence or validity of the agreement; but even here it is well settled that if the arbitration agreement so widely worded is separate and independent from the commercial Contract the arbitrator will have jurisdiction to decide the questions about the existence or validity of the commercial contract; but Counsel urged that these principles have no application whatsoever to a case where the issue relates to the scope and effect of the arbitration agreement contained in the underlying commercial contract and the arbitration agreement is wide enough to include such an issue, for, in such a case the Arbitrator will have jurisdiction to decide that issue. This being the well settled legal position Counsel urged that since in the instant case the Arbitration Clause contained in the underlying commercial Contract IGE 9584 is of the widest amplitude it is the Court of Arbitration of I.C.C. which will have jurisdiction to 463 adjudicate not merely three claims of G.E.C. on merits but also the issue whether those claims fall within the Arbitration Clause or not. However, Counsel further contended that the issue pertaining to the scope and effect of the arbitration agreement, if raised in an application under sec. 34 of the the Court has to decide it and the Court 's decision thereof will naturally be binding on the Arbitrators even though the issue was within the competence of the Arbitrators because of the wide wording of the Arbitration Clause and that is why the Court of Appeal has rightly expressed the view that since it has decided the issue whether the three claims "arise out of" or are "related to" the contract affirmatively it will be binding on the Court of Arbitration of I.C.C. and it will be futile for that court of Arbitration to go into that question again. By way of elaborating the second contention Counsel submitted that the under lying commercial Contract (I.G.E. 9584) for supply and sale of goods and services contains no obligation to pay any interest after June 30, 1967 (i.e. after the 30th month from the Contract Effective Date) whether at 6 1/2% or 6% but that such obligation to pay interest after June 30, 1967 is only to be found in the promissory notes and G.E.C. 's first claim of 2.1 million U.S. Dollars is essentially (approx. 80%) for unpaid regular interest due after June 30, 1967 and the second claim for U.S. $ 78,151.84 is entirely for delinquent interest due after June 30, 1967 and, therefore, substantially these two claims preferred before the Arbitrators do not "arise out of" the Contract nor are they "in relation" thereto but arise under the promissory notes and hence fall outside the scope of arbitration agreement; according to counsel further the promissory notes executed by Ranusagar were in complete discharge of the obligation to pay price and interest thereon under the Contract and these notes constitute independent and separate contracts by themselves and, therefore, the liability arising thereunder cannot be regarded as any arising out of the contract or in relation thereto and what is more these claims have been described by G.E.C. in their Notice of intention to arbitrate as arising under the promissory notes; as regards the claim for compensatory damages, it being a liability arising in tort for wrongful retention of the first two funds and since it was being enforced on the basis of Renusagar 's status as a stakeholder or constructive trustee the same is clearly outside the scope of the arbitration agreement. Such being the precise nature of the three claims that have been referred by G.E.C. to arbitration, counsel urged that since the issue of arbitrability of these claims is being raised 464 in Renusagar 's suit it is but proper that till the issue raised in the suit is finally decided by the Court the arbitration proceedings should be injuncted. On the other hand Counsel for G.E.C. vehemently disputed that the Commercial Contract (IGE 9584) contains no obligation to pay any interest on unpaid purchase after June 30, 1967 or that such obligation to pay interest after that date is only to be found in the promissory notes; he pointed out that such obligation is to be found in the Contract itself and could be readily inferred from article III(A)3(c) read with article XIV B and as such the first two claims for Unpaid Regular Interest and Delinquent Interest due after June 30, 1967, preferred before the arbitrators not merely "arise out of" but really arise "under" the Contract; further the third claim for Compensatory Damages which flows by way of corollary from wrongful detention of the first two funds which ought to have been paid under the Contract is so closely connected with the contract that it is clearly "in relation to it"; all the three claims thus fall within the scope of the Arbitration Clause. Counsel seriously disputed that the promissory notes executed by Renusagar were or are in discharge of the obligation to pay the price and interest thereon under the Contract or that these notes constitute independent and separate contracts by themselves but contended that these are a part of the Contract and the two are so in severable and inextricably bound together that the obligation under the Contract can never be deemed nor intended to have been completely discharged by the mere execution of the notes and in support of this contention several aspects of and circumstances emerging from the Contract were relied upon by him. Counsel urged that real nature of the claims preferred before the Arbitrators and not the nomenclature or description thereof by any party would be relevant and decisive and in this behalf was quick to point out that Renusagar, though it now contends that such interest arises "under the promissory notes" has described it as payable "under the contract" in para 4 of its writ petition No. 179 of 1970 filed in Delhi High Court. Alternatively, Counsel contended that even assuming (a) that the promissory notes are not an in severable and inextricable part of the Contract, (b) that the obligation arising under the notes is totally different from the one arising under the Contract and (c) that the notes are in discharge of the obligation to make payment under the Contract (all of which are strongly denied), the three claims would still be covered by the Arbitration Clause which is of the widest amplitude, for according to him it would be erroneous to determine whether a claim arises out of or in relation to the Contract by looking at the 465 cause of action on which the claim is based. That being the position Counsel submitted that the Court of Appeal was justified in coming to the conclusion that no prima facie case for injunction restraining arbitration proceedings had been made out by Renusagar and it had therefore rightly vacated the ad interim injunction and stay ed Renusagar 's suit. It will be convenient to deal with the second question raised by counsel for the appellants in these appeals first, namely, whether on merits the three claims referred by G.E.C. to the Court of Arbitration of I.C.C. are beyond the scope/purview of the arbitration clause being Article XVII contained in the Commercial Contract IGE 9584 ? The answer to this question must depend upon (a) what disputes are covered by the arbitration agreement and (b) what is the real nature of these claims under the reference. Aspect (a) Obviously depends upon the language used in the arbitration agreement whose construction would be relevant for deciding both the questions (i) whether it embraces even questions of its existence, validity and effect (scope) (particularly the last which bears on the arbitrability of the three claims) and (ii) whether the three claims fall within its scope or purview; in other words, is the language of the arbitration agreement wide enough to cover either of the questions or both. The arbitration clause in the Commercial Contract has already been set out in extenso in the earlier part of the judgment and the relevant words thereof are : "any disagreement arising out of or related to this contract" shall be finally settled in accordance with the Arbitration Rules of the International Chamber of Commerce. It may be stated that though the relevant rules of I.C.C. (particularly Rules 8.3 and 8.4) in terms confer jurisdiction upon the arbitrations to decide questions as to the existence or validity of the arbitration agreement contained in the commercial contract, Counsel for G.E.C. principally relied upon the language used in the aforesaid arbitration clause contained in the Contract itself for contending that it was of widest amplitude and would cover both the questions (i) and (ii). According to him, the English Courts as well as this Court have held that the words "under the contract" are wide but the words 'arising out of" the contract are still wider and the words "relating to" or "in relation to" "in respect of" or "in connection with" or "concerning" the contract have the widest possible content. In view of the authorities to which we were referred, we find considerable force in this contention of Counsel for G.E.C. 466 In Govt. of Gibralter vs Kenney & Anr(1), the arbitration clause covered: ". any dispute or difference which shall arise or occur between the parties hereto in relation to any thing or matter arising out of or under this agreement. " and Sellers, J. has observed at page 26 of the Report that "the distinction between matters "arising out of" and "under" the agreement is referred to in most of the speeches in Heyman vs Darwins Ltd. and it is quite clear that "arising out of" is very much wider that "under" the agreement. In Heyman vs Darwins Ltd.(2) a contract for sole selling agency contained an arbitration clause in the following terms: "If any dispute shall arise between the parties hereto in respect of this agreement or any of the provisions herein contained or anything arising hereout the same shall be referred for arbitration in accordance with the provisions of the Arbitration Act, 1889. " Though the main point decided by the House of Lords in the case was that where the parties were one in asserting that they had entered into a binding contract a subsequent repudiation thereof by one of them did not have the effect of annulling the arbitration clause contained in the contract, each one of the law Lords dealt with the aspect of the wide language that had been used in the arbitration clause (words being "in respect of") and the distinction between matters "arising out of" and "under the agreement" has been put in the clearest terms by Lord Porter at page 399 of the Report thus : "In such a case (case of repudiation) the question of damage has still to be determined and the question whether there has been repudiation may be still in issue. Are these disputes under the contract I use the word "under" advisedly since expressions such as "arising out of" or "concerning" have a wider meaning ? I think they are. " Incidentally, while laying down the ratio in the case as indicated 467 above, Viscount Simon L.C. also stated the law as to the circumstances under which an arbitration clause in a commercial contract would become unenforceable thus : "If the dispute is whether the contract which contains the clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission. Similarly, if one party to the alleged contract is contending that it is void ab initio (because for example the making of such a contract is illegal), the arbitration clause cannot operate, for on this view the clause itself also is void. " In Dhanrajmal Gobindram vs Shamji Kalidas & Co.(1) this Court has clearly taken the view that all questions which could be decided in an application filed under section 20 of the (and such questions involve dealing with objections to the existence, validity or effect (i.e. scope) of the agreement itself) would be encompassed by a clause which contains the words "arising out of" or "in relation to" the contract. The relevant observations at pp. 1040 41 of the Report run thus : "We may dispose of here a supplementary argument that the dispute till now is about the legal existence of the agreement including the arbitration clause, and that this is not a dispute arising out of, or in relation to a cotton transaction. Reference was made to certain observations in Heyman vs Darwins Ltd. In our opinion, the words of the Bye law "arising out of or in relation to contracts" are sufficiently wide to comprehend matters, which can legitimately arise under section 20. The argument is that, when a party questions the very existence of a contract, no dispute can be said to arise out of it. We think that this not correct, and even if it were, the further words "in relation to" are sufficiently wide to comprehend even such a case." In Khardah Company Ltd. vs Raymon & Co. (India) Private Ltd.(2) this Court, though ultimately it held that a dispute as to the validity of the underlying commercial contract containing an arbitration 468 clause was not one which the arbitrators were competent to decide and that when the contract was invalid every part of it including the arbitration clause was also invalid, on question of construction of the expressions used in the arbitration clause did hold that the expressions used were wide enough to cover a dispute as to the validity of the contract. Act page 188 of the report Justice Venkatarama Aiyer has observed thus: "It cannot be disputed that the expressions "arising out of" or "concerning" or "in connection with" or 'in consequence of" in "relating to this contract" occurring in clause 14 are of sufficient amplitude to take in a dispute as to the validity of the agreement dated September 7, 1955". As observed by Lord Porter in Heyman vs Darwins Ltd. (supra) although as a rule the arbitrator cannot clothe himself with jurisdiction the question of his jurisdiction must ultimately depend on the wording of the Arbitration Clause. At page 392 of the Report the learned law Lord has observed thus: "I think it essential to remember that the question whether a given dispute comes within the provisions of an arbitration clause or not primarily depends on the terms of the clause itself. If two parties purport to enter into a contract and a dispute arises whether they have done so or not, or whether the alleged contract is binding on them, I see no reason why they should not submit that dispute to arbitration. Equally I see no reason why, if at the time when they purport to make the contract they foresee the possibility of such a dispute arising, they should not provide in the contract itself for the submission to arbitration of a dispute whether the contract ever bound them or continues to do so. They might, for instance, stipulate that, if a dispute should arise whether there had been such fraud, misrepresentation or concealment in the negotiations between them as to make an apparent contract voidable, that dispute should be submitted to arbitration. It may require very clear language to effect this result, and it may be true to say that such a contract is really collateral to the agreement supposed to have been made, but I do not see why it should not be done. " 469 As an instance of a clause held to be wide enough to include a determination of the ambit of the arbitrator 's authority the learned law Lord cited the decision in Willesford vs Watson(1). In that case a mining lease contained an agreement to refer the disputes between the lessors and lessees to arbitrators or their umpire and the arbitration clause was very widely worded so as to include inter alia any dispute "touching these presents or any clause or matter or the thing herein contained or the construction hereof", in other words a dispute between the parties as to whether the instrument, according to its true construction did or did not warrant a particular thing to be done thereunder, was referable to and within the scope and authority of the arbitrators and at page 477 of the Report Lord Selborne, L.C. observed (which observations have been quoted with the approval by Lord Porter in Heyman vs Darwins Ltd.) thus: "It struck me throughout that the endeavour of the Appellants has been to require this Court to do the very thing which the arbitrators ought to do that is to say, to look into the whole matter, to construe the instrument, and to decide whether the thing which is complained of its inside or outside of the agreement. " Finally, the Court of Appeal held that the Court would not decide but would leave it to the arbitrators to decide whether the matter in dispute between the parties was within the agreement to refer and stayed the suit. In Jawahar Lal Burman vs Union of India(1) while dealing with the scheme of sections 31, 32 and 33 and as also the scope of the section 33 of the this Court has noted and recognised the distinction between the existence or validity of the arbitration agreement on the one hand and its effect (scope on the other, though in ss.31(2), 32 and 33 all the three clubbed or spoken of together. At page 777 of the Report the Court has specifically said that the effect of an arbitration agreement is treated as distinct from the existence of the agreement" and has further observed that "an application to have the effect of an arbitration agreement (determined) can be made provided the existence of the agreement is not in dispute. " It is true that this distinction been has noted for purposes of procedural aspects arising under the three sections but the several 470 authorities discussed above. Particularly Heyman vs Darwins Ltd. and Willesford vs Watson (which has been digested and annotated at two places in Russel on Arbitration at pp.91 and 171) have made the distinction substantively. In Balabux Agarwalla vs Sree Luchminarain Mfg. Co.(1) Das, J. has clearly envisaged the possibility of disputes as to the existence, validity or effect of an arbitration agreement being properly referred to the arbitration of an arbitrator by means of a collateral or subsequent agreement between the parties and the learned Judge has pointed out that there was nothing in the scheme of ss.31 or 33 of the to indicate that such disputes can never form the subject matter of an arbitration agreement or must always be decided by the Court as opposed to an arbitrator. In Waverly Jute Mills Co. vs Raymon & Co.(2) at p.224 of the Report the following statement of law appears: "A dispute as to the validity of a contract could be the subject matter of an agreement of arbitration in the same manner as a dispute relating to a claim made under the contract. But such an agreement would be effective and operative only when it is separate from and independent of the contract which is impugned as illegal. Where, however, it is a term of the very contract whose validity is in question, it has, as held by us in Kharda Co. Ltd. case, no existence apart from the impugned contract and must perish with it." Four propositions emerge very clearly from the authorities discussed above: 1. Whether a given dispute inclusive of the arbitrator 's jurisdiction comes within the scope or purview of an arbitration clause or not primarily depends upon the terms of the clause itself; it is a question of what the parties intend to provide and what language they employ, 471 2. Expressions such as 'arising out of" or "in respect of" or "in connection with" or "in relation to" or "in consequence of" or "concerning" or "relating to" the contract are of the widest amplitude and content and include even questions as to the existence, validity and effect (scope) of the arbitration agreement. Ordinarily as a rule an arbitrator cannot clothe himself with power to decide the questions of his own jurisdiction (and it will be for the Court to decide those questions) but there is nothing to prevent the parties from investing him with power to decide those questions, as for instance, by a collateral or separate agreement which will be effective and operative. If, however, the arbitration clause, so widely worded as to include within its scope questions of its existence validity and effect (scope), is contained in the underlying commercial contract then decided cases have made a distinction between question as to the existence and or validity of the agreement on the one hand and its effect (scope) on the other and have held that in the case of former those questions cannot be decided by the arbitrator, as by sheer logic the arbitration clause must fall along with underlying commercial contract which is either non existent or illegal while in the case of the latter it will ordinarily be for the arbitrator to decide the effect or scope of the arbitration agreement i.e. to decide the issue of arbitrability of the claims preferred before him. At this stage, however, we are concerned with only the first three propositions mentioned above about which no serious dispute was raised by Counsel for Renusagar. We are conscious that Counsel for Renusagar have strongly disputed the correctness of proposition No. 4 above, but we propose to deal with their caveat against it together with the authorities relied upon by them in support thereof later. At this stage it will suffice to observe that since the parties to the underlying Commercial Contract here have used the expressions "arising out of" or "related to this contract" in the arbitration clause contained in the Contract, there can be no doubt that the parties clearly intended to refer the issue pertaining 472 to the effect (scope) of the arbitration agreement to the Court of Arbitration of I.C.C. in other words, the issue about arbitrability of the three claims under reference has been referred. Turning to aspect (b) which is really the crux of the matter on merits, we shall have to ascertain the precise nature of the three claims in order to determine whether they fall within the arbitration clause which uses expressions of the widest possible amplitude and content. While narrating the chronological events in the earlier part of our judgment we have indicated what these three claims are and how they have arisen. The three claims are: (a) 2.1 million U.S. dollars being the Unpaid Regular Interest, (b) U.S. $ 7,84,151.84 being the Delinquent Interest and (c) 4.1 million U.S. dollars being the Compensatory Damages. As explained earlier the first claim represents the quantum of 73% of the regular interest which was wrongly deducted and wrongly withheld and retained by Renusagar from 1970 onwards allegedly for payment of income tax notwithstanding the Delhi High Court 's judgment in effect retrospectively restoring the tax exemption granted in favour of G.E.C.; the second claim represents interest claimed by G.E.C. on account of the delay that occurred in the payment of four instalments of purchase price together with interest on their due dates as per the original Schedule of Payment, while the third claim is by way of compensation for illegally and wrongfully retaining and enjoying the use of the first two funds by Renusagar and depriving G.E.C. the use thereof for 12 long years. Whereas Renusagar has contended that none of these claims falls within the purview of the arbitration clause G.E.C. has claimed that all of them do within the wide language of that clause. As regards the first two claims Counsel for Renusagar have pointed out that admittedly the first claim substantially (approx. 80%) and the second claim entirely are for interest due after June 30, 1967 (i.e. after 30th month from the Contract Effective Date) and according to Counsel since the underlying Commercial Contract (IGE 9584) for supply and sale of goods and services contains no obligation to pay any interest after June 30 1967 and since only the promissory notes provide for payment of such interest after June 30, 1967, these two claims do not "arise out of" the contract, nor are they "in relation thereto" but arise under the promissory notes and hence fall outside the scope of arbitration clause. Counsel further urged that the promissory notes executed by Renusagar were in complete discharge of obligation to pay price and interest 473 thereon under the Contract and since these notes constitute independent and separate contracts by themselves the liability arising thereunder cannot be regarded as any arising out of the Contract or in relation thereto and in this behalf strong reliance was placed by Counsel on the fact that in its Notice of intention to arbitrate G.E.C. has described these claims as arising "under the promissory notes". Counsel pointed out that Article III of the Contract provides for payment of the total purchase price in three modes, the third mode being by executing promissory notes and urged that since the requisite promissory notes were executed by Renusagar these notes must be regarded as having been executed in the complete discharge and satisfaction of the obligation under the Contract and that the sole obligation which survives since after the execution of the notes is the one which arises under the notes. In support of this contention counsel relied upon two decisions of this Court, namely, (1) M/s. Ogale Glass Works Ltd. case where the posting of cheques by a purchaser by way of remitting the bills payable to the seller was held to amount to payment (that is, in discharge of the obligation to pay the price for goods purchased) and (2) H.P. Gupta vs Hira Lal where the posting of a dividend warrant (cheque) by a company at Delhi for despatching it to a shareholder at his registered address (which was Meerut) as per article 132 of the Articles of Association was deemed as payment to the shareholder in discharge of the company 's obligation and a criminal complaint for the alleged failure to discharge the obligation against the company properly lay in the Court of Delhi Magistrate. Counsel also relied on two important factors (a) unconditional nature and (b) negotiability of the promissory notes both requirements of article III (3) (a) of the Contract, as destroying the arbitrability of the claims thereunder, the contention being that if parties agreed that the balance price of 90% should be paid by executing "unconditional negotiable promissory notes" the parties could never intend to make the claims arising thereunder arbitrable. In support of this contention Counsel strongly relied on certain observations of Lord Wilberforce in NOVA (Jersey) Knit Ltd. vs Kammgarn Spinnerei to the effect that if bills of exchange were to contain an arbitration clause they would not be valid bills, as also on Byles on Bills of Exchange: 25th Edn. at p. 10 where the above observation in that case has been digested. Reference was also made to Albert Jan Van Den Berg 's treatise New York Convention of 474 1958 Towards a Uniform Judicial Interpretation ' wherein at pp. 147 148 the learned author has made a reference to this Nova (Jersey) case with his own comments on how the Court of Appeal and the House of Lords have differed on the question whether there can be said to be an arbitrable dispute in regard to a bill of exchange, the former holding that there was in the case a dispute as to the liability on the bills of exchange, the dispute being whether or not the bills should be paid having regard to the cross claim to be decided in arbitration and the latter holding that there was none as English law clearly did not allow reliance on unliquidated cross claims to set off a claim on a bill of exchange and on that basis the House of Lords by majority held that the action on the bills of exchange should not be stayed. Reliance was also placed on three decisions of Asian High Courts in Bihari Diwan Singh vs Jaffe & Sons Dhiraj Lal vs Sir Jacob Behrans & Sons and M/s Vasanji Navj vs K.P.C. Spinners in all of which more of less the same view has been taken that when a suit on a negotiable instrument issued in payment of price of goods sold under a contract and accepted by the seller is brought the action should not be stayed because of the arbitration clause contained in the original commercial contract; in the last case the Madras High Court has observed that even if the suit was traced to the original contract and the plaint referred to antecedent facts which gave arise to the issue of the cheques by the defendant in favour of the plaintiff the arbitration clause could not come into play as the suit was on dishonored cheques and there was no dispute as regards the quality of the goods or quantum of the sale consideration. It is obvious that this last part of Counsel 's submission may hold good only if these two claims are held to arise solely under the promissory notes and that the notes are held to be in complete discharge of the obligation under the Commercial Contract and constitute independent and separate contracts by themselves but not otherwise. As regards the third claim Counsel urged a two fold contention. First, that the claim obviously arises in tort out of wrongful retention of monies under the first two claims for long 12 years and Renusagar is being saddled with this liability in its capacity as a tort feaser, stake holder or constructive trustee and hence is not 475 covered by the arbitration clause; and secondly that if the first two claims are not covered by the arbitration clause this claim would also fall outside its purview. It was pointed out that it cannot be said to be any incidental claim for interest because compensation is claimed at the market rate of 18 per cent. In support of this contention Counsel relied upon two decisions, namely; (1) Monro vs Bognor Urban District Council where the Court of Appeal took the view that where the action brought was for damages for fraudulent mis representation and referred to matters wholly outside the powers of the arbitrator with which he could not possibly deal, the defendants could not get the action stayed because it could not be said that the dispute was upon or in relation to or in connection with the contract and (2) Ghewarchand vs Shiva Jute Bailing Ltd. where the Calcutta High Court has held that where the suit was wholly based on tort, then that action was not to be considered to be in relation to or in connection with a contract merely because it was shown that had there been ever no contract there would not have been any cause of action and what the Court had to look into was what the substance of the plaint was and not how the claim was framed. For the reasons which we shall presently indicate we are unable to accept any of the above submissions urged by Counsel for Renusagar. As regards the first two claims, in the first place it is not possible to hold that the Commercial Contract does not contain any obligation to pay interest on the unpaid purchase price after June 30, 1967 or that the obligation to pay such interest after that date is to be found only in the promissory notes. Admittedly, interest on the purchase price at the agreed rate up to June 30, 1967 was capitalized and included in the principal amount of each of the instalments represented by the concerned promissory note as mentioned in the Schedule of Payments given in article III A 3 (b) of the Contract and the question is whether the obligation to pay further interest after that date till payment is provided for only in the promissory notes or also in the contract. Undoubtedly the form of the promissory note attached as Exhibit 'B ' to the Contract as also the promissory notes that were actually executed clearly contain a recital that Renusagar "Promises to pay to G.E.C. interest thereon (i.e. on the capitalized principal) from June 30, 1967 semi annually at the rate of 6 1/2 % per annum on the last day of June and 476 December in each year until paid". But Counsel for G.E.C. has in our opinion rightly relied upon two provisions in the Contract which clearly show that the obligation to pay such interest after June 30, 1967 till payment has been provided for by the Contract. Article III A 3 (c) (relevant portion) runs thus: "The notes shall be prepared substantially in the form shown in the attached 'Exhibit B ' entitled 'Promissory Note ' and shall bear interest, at the rate of 6 1/2% per annum on the outstanding principal balance, commencing thirty(30 months after Contract Effective Date. . ." It is no doubt true that the promissory notes executed by Renusagar recited the obligation to pay future interest after June 30, 1967 till payment but obviously the promissory notes incorporated such obligation therein because of the aforesaid provision in article III A 3 (c). The aforesaid sub clause in the Contract itself says that the notes shall bear interest at the rate specified on the outstanding principal balance after June 30, 1967; in other words it is the Contract which provides for interest being payable on the outstanding principal balance after June 30, 1967. Counsel for Renusagar, however, argued that the contract and aforesaid clause merely provide for the execution of promissory notes which, it is provided shall bear interest after June 30, 1967 and the argument proceeded further to say that if Renusagar had failed to executive promissory notes as required (i.e. bearing interest after June 30, 1967) G.E.C. would not have become entitled to receive or claim interest after June 30, 1967 but would have had only a right to call upon Renusagar to execute such pro notes and or two claim damage for failure to fulfil contractual obligations. It is impossible to accept this argument. The question is not what rights G.E.C. would have had on Renusagar 's failure to execute the promissory notes as required but the question is what the contract provides for. It cannot be disputed that the aforesaid sub clause in the Contract provides for not merely the execution of promissory notes but that the promissory notes would also bear interest after June 30, 1967. Further the very fact that the failure of Renusagar to execute promissory notes as required,. of course as required by the Contract, would have conferred a right on G.E.C. to call upon Renusagar to execute such notes also shows that the obligation to pay interest after June 30, 1967 till payment has been provided for by the contract. 477 Article XIV B, (which deals with the topic of taxes and proposed exemption from income tax to be obtained by G.E.C.) (relevant portion) runs thus: "Seller intends to apply to the Central Government of India for exemption from income tax on the interest income (including capitalized interest and interest thereon) received by seller on the principal amounts of the promissory notes. Purchaser will assist Seller in expediting Seller 's application for exemption and will furnish such information in support thereof as may be required by Seller or the Central Government of India. ." The above provision clearly shows that the parties to the contract were contemplating to obtain from the Government of India income tax exemption on the interest income which G.E.C. was going to receive from Renusagar under the Contract and the clause indicates the things each party was required to do in that connection but the important aspect of the provision is that the interest income ', on which tax exemption was being sought, is said to include capitalized interest and interest thereon that is to say interest on the amounts of the promissory notes (which included capitalized interest), which obviously means further interest on outstanding principal balance under the notes from June 30, 1967 onwards till payment. In our view these provisions which are to be found in the contract clearly show that the promissory notes are not sole and exclusive repository of GEC 's right to claim and receive future interest on unpaid price after June 30, 1967 but that the contract itself provides for the obligation to pay such interest after that date till payment. Reference was made to the fact that the Bank Guarantee endorsed on each promissory note is restricted only to the payment of principal and interest on the note as per its terms and does not extend to or cover any residuary payment obligation contained in the Contract, de hours the promissory note. But this is as it normally should be. Since the bank guarantee is in connection with and endorsed on the promissory note it would ordinarily refer to the obligations arising thereunder and not to any obligation arising under any other document and the question whether the Contract contains such obligation to pay future interest must depend upon its contents and not upon what is not to be found in the bank guarantee. Similarly, counsel for Renusagar also referred to the fact that G.E.C. 478 has filed a suit (Suit No. 786/1982) against the UCO Bank in the Calcutta High Court to recover 2.1 million U.S. Dollars for the interest as being due under the promissory notes read with the guarantee. But here again that fact is neither here nor there, because the suit against the UCO Bank has to be on the promotes read with the guarantee, the Contract not being a document to which UCO Bank is a party. But things will have to be seen in different perspective when claims are made by G.E.C. against Renusagar and in that behalf it is the substance of G.E.C. 's pleading (Notice of Intention to Arbitrate that will have to be looked into and not how the claims described therein. True, at one place in the Notice of Intention to Arbitrate the two claims are (in fact, only the first claim of 2.1 million U.S. Dollars is) said to be "on the promissory notes" but much cannot be made of that fact because at the commencement of that Notice the subject matter thereof is stated as: "Re: Interest payable under the Contract No. IGE 9584 between GEC and Renusagar" and the substance of the entire pleading, on careful scrutiny, shows how the first two claims have arisen under the Contract and how under the terms thereof and in the correspondence their amounts got adjusted and quantified at certain figures and it is also clear that the reference to the Contract is not way of any antecedent or historical fact. It is, therefore, clear that the Contract contains the obligation to pay future interest from June 30, 1967 onwards till payment and that these two claims have been preferred by G.E.C. before the Court of Arbitration of I.C.C. as arising not merely "out of" but under the Contract. Secondly, the promissory notes, on the terms of the Contract, cannot be regarded as amounting to payment in discharge of the obligation arising under the Contract. It was submitted that since it is one of the modes of payment indicated in the Contract the execution of the notes should be held to be payments by way of discharging the obligation under the Contract. The snap answer to this submission is that since the Contract also indicates the opening of a Letter of Credit as yet another mode of payment, the mere fact of the Letter of Credit having been opened by Renusagar in a Bank in New York City valid for 18 months will have to be regarded as actual payment which is hardly arguable. But the real answer to the submission is that it is always a question of intention of the parties whether a negotiable instrument taken on account of a debt operates as an absolute discharge of the debt or not. In Bhashyam & Adiga 's treatise on the Negotiable Instruments Act (14th Edn.) the law on 479 this aspect has, in our view, been correctly summarised at page 774 thus: "It is always a question of intention of parties whether a bill or a promissory note or a cheque taken on account of a debt, operates as an absolute discharge of the debt, or only as a conditional payment of it. Generally speaking, a bill or note can never go in discharge of a debt unless it is a part of the contract that it shall be so: for, a mere promise to pay cannot be regarded as an effective payment. . This rule may also be based on the general principle of law that one simple executory contract does not ordinarily extinguish another, the presumption in such cases is that the bill or promissory note is taken only as a conditional payment. " In Commissioner of Income Tax vs Kameshwar Singh of Darbhanga the Privy Council has enunciated the legal principle very clearly at page 115 of the Report thus: "A debtor who gives his creditor a promissory note for the sum he owes can in no sense be said to pay his creditor; he merely gives him a document or voucher of debt possessing certain legal attributes. So far then as this item of Rs. 17,34,596 (represented by a promissory note given to the assessee by his debtor) is concerned the assessee did not receive payment of any taxable income from his debtor or indeed any payment at all. " The aforesaid statement of law enunciated by privy Council has been quoted with approval by the Bombay High Court in Keshav Mills Co. Ltd. vs Commissioner of Income Tax. It was a case where cheques and hundis were issued in payment of price for goods sold and delivered and the question was whether such cheques and hundis amounted to payments resulting in unconditional discharge of the liability to pay the price, and the Division Bench speaking through Chagla, C.J. observed thus: "Now, I should have thought that ordinarily the payment of debt by a cheque never results in the discharge of the 480 debt. The cheque merely represents an order by the drawer of the cheque to his banker to pay the amount to the person named in the cheque, and till that payment is made the debt is not discharged. Therefore, the sending of the cheque, as I said before, ordinarily is not an unconditional discharge of the liability. The same would be the position with regard to the hundis. But I can well imagine a case where there may be an arrangement between a creditor and a debtor that the receipt of a cheque or a hundi by a creditor may result in an unconditional discharge of the debt, and in the event of the cheque or hundi not being honoured the creditor would have no right to sue on the original cause of action but only on the cheque or the hundi. That would be a pure question of fact. The Privy Council has taken the same view of the law as is to be found in Commissioner of Income Tax v Kameshwar Singh." (supra) It may be stated here that even in the two decisions of this Court on which Counsel for Renusagar have placed reliance the aforesaid principle of law has been accepted but all that has happened is that each case turned on its own facts and special circumstances on the basis of which this Court held that the parties had intended to and agreed to accept and treat the posting of the instruments (cheques in one case and dividend warrant in the other) as actual payment in discharge of the original obligation. For instance in Ogale Glass Works Ltd. case (supra) the question that arose for determination on this aspect of the matter was whether the assessee (seller) could be said to have received income (sale proceeds) in British Indian within the meaning of sec.4(1)(a) of the Indian Income Tax Act, 1922 when the Government of India (the purchaser of goods) had sent the sale proceeds by means of cheques drawn and posted in Delhi but received by the assessee in Aundhan Indian State ? The answer to the question depended upon whether the posting of cheques in Delhi amounted to payment to the assessee and the Court held that it did by relying upon four or five special circumstances that obtained in the case. Apart from the fact that clause 15 of the Contract itself provided for payment of the sale proceeds by cheques, the Court noticed (a) that in the bills submitted by him to the Government the assessee has expressly asked for payment by cheques, (b) that as per the normal course of business usage parties intended that remittances should be by post, (c) that 481 the assessee had by making a request in that behalf constituted the post office his agent, (d) that accordingly the Govt. had sent cheques in payment of the bills by post, (e) that the assessee had sent formal stamped receipts only after the receipt of the cheques and not in advance along with the bills submitted by him and (f) very importantly the drawer of the cheques was the Government of India and the drawer was the Reserve Bank of India for whose solvency there could be no apprehension at all in the mind of the assessee. It was in these circumstances that the Court came to the conclusion that the parties had intended to treat the posting of cheques as payment. In H.P. Gupta vs Hiralal (supra) the question was whether the posting of a dividend warrant cheque by the Company at Delhi (where its Registered Office was situated) for dispatching it to the shareholder at his registered address (which was Meerut) amounted to payment to the shareholder in discharge of the Company 's obligation to pay the declared dividend and this Court held that it did in view of sec. 205 (5) of the Indian and article 132 of the Articles of Association of the Company as both the said provisions entitled the Company to pay the dividend either in cash or by posting a cheque or warrant at the registered address of a shareholder. The Court pointed out that Art.132, which constituted an agreement between the Company and its shareholder had the effect that if the warrant (cheque) was sent by post at the latter 's registered address that will be equivalent to payment. Bearing the aforesaid general principle in mind that a bill or a promissory note can never go in the discharge of a debt unless it is a part of a contract that it shall be so, it will have to be seen whether the promissory notes executed by Renusagar in this case were intended to operate as payments by way of absolute discharge of the obligation under the Contract or only as conditional payments. In our view the terms of the Contract, far from showing that these were payments in discharge of the original obligation, clearly indicate that the parties had intended that these were to operate as conditional payments. If article III of the Contract, which deals with the topic of Payment of price for the sale of goods and services, is carefully analysed the following factors emerge very clearly: (a) that the pro notes are not expressed to be payments: in fact, it is in terms stated that the "total contract base price shall be paid by purchaser in lawful money of the USA" (article III A) and surely promissory notes are not "lawful money" of USA: 482 (b) that because the Contract so provides even the pro notes also recite that the principal and interest thereunder are "payable in lawful money of the USA"; (c) that article III A (3) which deals with pro notes provides for payment of the remaining 90% of the price "in accordance with the following Schedule of Payments" and expressly states that "the obligation to make such payments is to be evidenced by four series of purchaser 's unconditional negotiable promissory notes", which clearly shows that the pro notes are not payments but are intended merely to be the evidence of the obligation to pay the price; (d) that though stated to be "unconditional and negotiable" (perhaps so between the drawer and subsequent assignees in case of negotiation), as between the seller and the purchaser these have been made subject to several conditions such as (1) the amounts thereof were payable only on the assumption that deliveries of items of equipment were completed within 15 months of Contract Effective Date and interest at the rate of 6 1/2% was to become 6% on receipt of income tax exemption (article III A(3) (b), (ii) these were to lie in Escrow Arrangement to be released to the seller synchronizing with the stated progress of supply of goods according to certain formulae (article III D). (iii) these were to be replaced by fresh Notes depending on receipt of income tax exemption (article III A(3)(f) or price modification (article III D) : (iv) each one contains a default clause saying "upon default in the prompt and full payment the principal or of the interest on this Note when due, all of the notes in each and every series, together with interest to the date of payment, shall immediately become due and be payable and the option and demand of the holder thereof." Having regard to the aforesaid factors that emerge from the various terms specified above it is very clear that the execution of the promissory notes was not intended to nor did it amount to payment by way of discharging the obligation under the contract but the notes were clearly intended to operate as conditional payments. Thirdly the very factors and circumstances enumerated above 483 in connection with the promissory notes and particulary, the fact that these notes were as between the seller and the purchaser subject to several conditions leading to variation and adjustment and replacement and the default clause contained in each, clearly indicate that these were not intended to constitute or separate contracts by themselves but that they were a part and parcel of one integrated transaction embodied in the contract; in fact the aspects mentioned in (d) above clearly show that the promissory notes were and are meant to be governed at all times by various other terms of the Contract and could be modified and substituted under given conditions as set out in the Contract. Hence it is impossible to accede to the proposition that a dispute of nonpayment of interest on the instalments whether regular or delinquent is not a dispute "relating to the Contract. " In fact, as stated earlier, both the claims 2.1 million U.S. dollars and U.S. $7,84,151.84 arise "under the Contract" and have been preferred by G.E.C. before the Court of Arbitration of I.C.C. expressly on that basis and not under the promissory notes. In view of this conclusion of ours it is unnecessary to deal with the further submission of Counsel for Renusagar based on the so called factors of unconditional nature and negotiability of the promissory notes as destroying the arbitrability of the claims thereunder as also the case law relied upon in support thereof. Similarly this conclusion of ours also makes it unnecessary for us to deal with the alternative submission made by counsel for G.E.C. that these claims would still fall within the wide expressions occurring in the Contract even on the assumption that the promissory notes are severable from the Contract, that the obligation arising thereunder is different from the one under the Contract and that these notes are in payment of the obligation to pay the price under the Contract. As regards the third claim of compensatory damages it is true that Renusagar is being saddled with this liability as tort feaser, a stake holder and/or a constructive trustee, but, in our view, that aspect by itself will not justify a conclusion that the same is not covered by the arbitration clause because the question is not whether the claim lies in tort but the question is whether even though it has lain in tort it "arises out of" or is "related to" the Contract, that is to say, whether it arises out of the terms of the Contract or is consequential upon any breach thereof. As explained earlier, this claim is based on and is consequential upon and by way of corollary to the non payment of the two detained amounts by Renusagar to G.E.C. in breach of the terms of the Contract. In other words, it is 484 clear that before adjudicating upon this claim the adjudicating authority will have first necessarily to adjudicate upon first two claims preferred by G.E.C. and only if it is found that G.E.C. is entitled to receive that first two amounts which ought to have been paid by Renusagar under the terms of the Contract but which Renusagar had failed to pay that this third claim could, if at all, be allowed to G.E.C. In the real sense, therefore, this claim is directly, closely and inextricably connected with the terms and conditions of the Contract, the payments to be made thereunder and the breaches thereof and as such will have to be regarded as a claim :`arising out of" or "related to" the Contract. As we shall point out presently Court in one of its decisions has laid down the test for determining the question in such cases and the test is whether recourse to the contract, by which both the parties are bound, would be necessary for the purpose of determining whether the claim in question was justified or otherwise and this test, as indicated above, is clearly satisfied with regard to the third claim in the instant case. We may, at this stage, refer to a passage in Russel on Arbitration and a few decided cases which fortify our aforesaid conclusion. In Russel on Arbitration (20th Edn.) the following statement of law occurs at page 90: "Claims in tort may be so intimately connected with a contract that a clause of appropriate width designed primarily to make contractual disputes arbitrable will nevertheless render such claims in tort arbitrable as well. " In Woolf vs Collis Removal Service (1) the defendants had contracted to remove plaintiff 's furniture and effects from London to their store in Marlow and there safely to keep and take care of them, but, according to the plaintiff, the defendants had, in breach of the Contract, removed the goods to a different destination where some were lost and others damaged. Alternatively the plaintiff claimed that the goods were lost and damaged owing to the negligence of the defendants in using an unsuitable place in which to store them and guarding them inefficiently. The clause providing for arbitration ran: "If the customer makes any claims upon or counterclaim to any claim made by the contractors" the same shall be referred to the decision of the two arbitrators. The question was whether the claim for damages was covered by this clause. The Court 485 of Appeal held that even if the claim in negligence was a claim in tort and not under the contract yet there was a sufficient close connection between that claim and the transaction to bring the claim within the arbitration clause. This authority clearly shows that even though a claim may not directly arise under the contract which contains an arbitration clause, if there was sufficient close connection between that claim and the transaction under the contract it will be covered by the arbitration clause. In Astro Vencedor Compania Naviera SA of Panama vs Mabanaft G m b H(1) the arbitration clause contained in a Contract of charter party ran: "any dispute arising during the execution of this charterparty" shall be settled by two arbitrators, one to be appointed by the Owners and the other by the charterers. The relevant charterers ordered the vessel to a Dutch port not named in the bill of lading whereby satisfactory bills of lading were not available in time and disputes arose as to unloading. By action of the relevant charterers the vessel was arrested and released on a bank guarantee. Later, under a charter quite unconnected with the relevant charterers the vessel happened to be again in a Dutch port and was arrested again as a result of disputes as to the satisfactory nature of the original bank guarantee. The owners arbitrated a claim for damages in respect of each of the two arrests of the vessel. The charterers argued that these were claims in tort and outside the arbitrator 's jurisdiction. The Court held that arbitrator had jurisdiction (1) over the first arrest as it was closely connected with the dispute under the contract, and was indeed a direct consequence of a claim for damage under the contract, and (2) over the second arrest as it was part and parcel of the original arrest. The decision of Sellers, J. in Government of Gibralter vs Kenney and Another (supra) has already been referred by us in the earlier part of our judgment in the context of the distinction made between matters "arising out of" and "under the agreement" and the learned Judge 's view that the former expression is wider than the latter but that decision is relevant to the question which is now under consideration. In that case disputes arose concerning the first defendant 's remuneration receivable from the plaintiff under a contract for services and one of the claims put forward by the first defendant was for a sum of money on a quantum merit basis for services rendered, it being alleged that the agreement had ceased to have any application to those services. The disputes were 486 referred to the arbitration of second defendant under a clause which was very wide and covered " any dispute or difference which shall arise or occur between the parties hereto in relation to anything or matter arising out of or under this agreement". A question arose as to whether a claim based on quantum merit would fall within the arbitration clause and Sellers, J. held that it did observating as under : "It is true that a quantum merit is a quasi contract and arises, in a sense, on an implied contract and not on any express agreement, but, in my view, in the circumstances of this case (although it may not be in all cases) the quantum merit is an incident which arises out of the contract. It is not a remedy for breach or arising on frustration, but it is an incident, in my view, which does arise as a consequence of the contract or `arising out of ' it. One has only to look at the pleadings, at the points of claim, and to visualise what is involved in the arbitration to see the close association between the written contract and the claim advanced in this way on a quantum merit. " In Alliance Jute Mills Co. Ltd. vs Lal Chand Dharanchand and Another(1) disputes between the parties to a commercial contract were arbitrable under the bye laws of the East India Jute & Hessian Exchange Association and the relevant bye law ran thus : "All matters, questions, disputes, difference and/or claims arising out of and/or concerning and/or in connection with and/or in consequence of or relating to this contract shall be referred to arbitration. . . . " Under the commercial Contract Respondent No. 1 had sold, through a broker, certain quantities of fibre to the appellant mill and after effecting delivery of the goods Respondent No. 1 had submitted bills to the appellant mill again through the broker ; the appellant mill, however, claimed reduction in price on account of shortage in weight and submitted claims in that respect. Since the price was not paid, Respondent No. 1 referred the claim to the arbitration of Bengal Chamber of Commerce and Industry. The appellant mill informed the Chamber of Commerce and Industry that it had filed a suit upon the whole of the subject matter of the reference and served a Notice under section 35 of the . In suit so filed against Respondent No. 1 and the broker apart from 487 the declaration sought that the broker had no claims against the appellant mill in respect of the Contract or in respect of the bills submitted by the broker for the price of goods sold and delivered the appellant mill had also claimed a decree for Rs. 50,000 as damages for the alleged libel published by respondent No. 1 and the broker. In an application for stay of the suit under section 34 of the , one of the questions raised was whether the arbitration clause was wide enough to include the claim for damages for the alleged libel. The High Court held that the claim in damages for defamation arose "out of" and "in connection with" the non payment of the bills of respondent No. 1 and in going into the question of tort the Court would necessarily have to go into the terms and conditions of the Contract relating to payment and that the claim in tort was directly and inextricably connected with the terms and conditions of the Contract and as such came within the scope of the arbitration clause which was wide enough to cover the same. In this view of the matter Court stayed the suit under s.34 of the . Lastly, we would refer to the decision of this Court in Union of India vs Salween Timber Construction (India) Ors.(1) where the Court has laid down the test for determining the question whether the arbitrators would have jurisdiction to adjudicate upon a claim made by one of the parties to a Contract, though not strictly arising "under" it. In that case a dispute arose between the appellant (Union of India) and the respondent regarding the supply of timber made by the respondent under a contract between the parties. One of the items in dispute was a claim by the respondent that there was an excess supply of timber to cover up possible rejection, which should have been returned by the appellant with compensation for deterioration, or that payment should be made for it as the market rate. The appellant contended that the terms of contract did not require the respondent to tender for inspection any quantity in excess of the contracted quantity, that the claim was in detinue relating to an involuntary bailment and not in relation to anything done in the performance, implementation or execution of the contract and, therefore, it was not a dispute arising out of the contractor in connection with the contract. Arbitration Clause in the contract covered any question or dispute arising under the contract or `in connection with the Contract '. On the question whether the arbitrators had jurisdiction to adjudicate upon that claim this Court, 488 relying upon its earlier decision in Ruby General Insurance Co. Ltd. vs Peary Lal Kumar(1) held, that the test for determining the question is whether recourse to the contract by which both the parties are bound, was necessary for the purpose of determining whether the claim of the respondent was justified or otherwise and since it was necessary in the case to have recourse to the terms of the contract for the purpose of deciding the matter in dispute the matter was within the scope of the arbitration clause and the arbitrators had jurisdiction to decide it. As stated earlier since this third claim for compensatory damages is directly, closely and inextricably connected with the terms and conditions of the Contract, the payments to be made thereunder and the breaches thereof and since for adjudication thereof recourse to the Contract would be necessary it will have to be held that it is a claim "arising out of" and in any event "related to" the Contract. As regards the two decisions, Monro vs Bognor Urban District Council (supra) and Ghewarchand Rampuria vs Shiva Jute Bailing Ltd. (supra) relied upon by Counsel for Renusagar we would like to point out that both are distinguishable and each turned on its own facts. In the former case the contractor had filed a suit to recover damages for the fraudulent misrepresentation as also to have the contract declared void on the ground that his consent thereto had been obtained by fraudulent misrepresentation and in effect the Court of Appeal held that the alleged fraudulent misrepresentation was not a dispute "upon or in relation to or in connection with the Contract and, therefore, the suit was not liable to stayed nor was the dispute liable to be referred to arbitration. In the latter case the suit was based wholly on tort and tort alone and the action complained of was totally unconnected with the Contract; the High Court actually recorded a finding that the cause of action in the suit had no connection direct or indirect with the Contract itself and the reference to the Contract was only a link in the story to show how the goods came to be in the possession of the defendants and the claim was not based in any way on or related to the contract itself. In the final analysis the question as to whether a claim based on tort is a claim de hors the contract which contains the arbitration clause or is directly or inextricably connected with the contract has to be decided on the facts of each case and the language used in the arbitration clause 489 Having regard to the aforesaid discussion we are clearly of the view that all the three claims referred by G.E.C. to the Court of Arbitration of I.C.C. do "arise out of" and are "related to" the Commercial Contract (in fact the first two claims arise "under the Contract") and squarely fall within the widely worded arbitration clause being article XVII contained in the Commercial Contract. It is also clear that the arbitration clause embraces even the question of its effect (scope), that is to say, it embraces the issue of the arbitrability of the three claims. Questions whether in law, namely, the law of the Forum, the arbitrators will have jurisdiction and power to decide the arbitrability of the claims or not and whether Renusagar 's suit is liable to be stayed or not will be considered by us next but at this stage we are categorically negativing the contentions of Counsel for Renusagar that on merits the three claims are beyond the scope or purview of the arbitration clause or that the arbitration clause on its own language does not embrace the issue of arbitrability of the three claims. We shall now deal with the principal legal contention raised in support of these appeals by Counsel for Renusagar that under section 3 of the Foreign Awards Act, 1961, having regard to its scope, a suit in the nature of a petition under section 33 of the can never be stayed, that G.E.C. 's Arbitration Petition (No. 96 of 1982) in that behalf is totally mis conceived and that no case has been made out for staying Renusagar 's suit which is in the nature of a petition under section 33 of the . In this behalf submissions of Counsel may be analysed thus : (a) That two decisions one of the Calcutta High Court in Balabux Agarwalla 's case (supra) and the other of this Court in Gaya Electric Supply Co 's case(1), have settled the legal position under that a Court acting under section 34 is a Court of limited jurisdiction performing a limited function and that a petition under section 33 (which raises issues regarding the existence, validity or effect of an arbitration agreement) cannot be stayed by invoking section 34 of that Act, unless, there be a fresh arbitration agreement to refer those very issues in regard to the previous arbitration agreement and, therefore, it should similarly be held that section 3 of the Foreign Awards Act, (which is similar to section 34 of the ) cannot be 490 invoked to stay a suit which is in the nature of as. 33 petition and Counsel pointed out that Renusagar 's suit is precisely a suit of that nature, wherein the effect (scope) of the arbitration clause contained in the commercial contract only has been put in issue and no relief on the merits of these claims is sought. (b) That Renusagar 's suit is not a suit "in respect of any matter agreed to be referred to arbitration" as required by section 3 of the Foreign Awards Act and, therefore, the stay sought by G.E.C. should be refused; in other words, Counsel urged that the phrase "in respect of my matter agreed to be referred arbitration" occurring in section 3 should be construed to cover only disputes or claims on merits referred to the arbitrators and not issues as to the existence, validity or effect of the arbitration agreed, (particularly its scope that is the arbitrability of the claims) and for placing such narrow construction on the relevant phrase occurring in section 3 Counsel mainly relied on a decision of this Court in Shiva Jute Baling Ltd. vs Hindley Co.(1) where this Court, while construing section 35 in the context of section 33 and section 34 of the , has on the facts in the case held that there could be no identity of the subject matter under reference to the arbitrator and the subject matter of a section 33 petition, that is to say, the issues and prayers that from the basis of an application under section 33 could not be subject matter of the reference to the arbitrators ; Counsel also relied upon three more decisions of this Court in Khardah Company 's case (supra), Waverly Jute Mills ' case (supra) and M/s. R.N. Ganekar & Co 's(2) case where, according to Counsel, observations supporting the above view have been made. (c) That even of the assumption that arbitrability of the three claims is factually covered by the wide language of the arbitration clause in question here and that the suit is `in respect of a matter agreed to be referred to the arbitration ', in law, that is to say, under the law of the Forum (being the Indian Law in the instant case) the issue of arbitrability of the claims raised in the suit cannot be finally determined by the arbitrators but must rest with the 491 Court and, therefore, Renusagar 's suit cannot be stayed under section 3 ; in this behalf Counsel urged that both English Law as well as Indian Law is the same (the latter being the law of Forum here) and does not allow questions of arbitrators ' own jurisdiction to rest finally with the arbitrators and in support reliance was placed on a number of decisions English, American and Indian (particularly decision in Attorney General for Manitoba vs Kally & Ors.(1), Dalmia Dairy(2) case, Backer Auto Radio(3) case, Municipal Board vs Eastern U.P. Electric Supply Co. Ltd & Ors(4), M/s. Jagan Nath Phool Chand vs Union of India & Ors.,(5) R. Prince & Co. vs Governor General in Council(6), Vallabh Pitti vs Narsingdas(7) as well as certain passages in Russell on Arbitration 20th Edn. at pages 91 92 and 111 112 and Albert Jan Van Dan Berg 's Treatise on New York Convention at pages 311 312. (d) That a stay, if granted as sought by G.E.C., would render Renusagar 's suit dead for all practical purposes, and, therefore, no such relief should be granted which will have the effect of finally determining the suit merely on a prima facie view or a pro tanto finding on the issue of arbitrability of the claims and in support reliance was placed on Strauss & Co 's.(8) case. We shall examine each one of these submissions put forward to strengthen the main legal contention urged in the support of these appeals presently. At the out set we would like to observe that the answer to the question whether Renusagar 's suit which is in the nature of a petition under section 33 of the could be stayed under section 3 of the Foreign Awards Act must necessarily depend upon a correct construction of the said section 3 and it is obvious that the provisions of 492 that section will have to be construed by keeping in mind the objective sought to be achieved by that Act and its scheme and not on the basis of similar or analogous provisions that are to be found in the or the manner in which such similar or analogous provisions have been construed by our Courts. The Statement of Objects and Reasons shows that the Act seeks to achieve speedy settlement of disputes arising from international trade through arbitration. The Act is a successor to the Arbitration (Protocol & Convention) Act, 1937. The earlier Act was intended to effectuate the purposes of Geneva Convention of 1927 ; it was, however, felt that the Geneva Convention hampered the speedy settlement of disputes through arbitration and hence no longer met the requirements of the international trade due to certain defects and, therefore, in order to remedy, inter alia, those defects, a craft Convention was prepared by the International Chamber of Commerce, which was considered by the United Nations Economic and Social Council in consultation with the Governments of the various countries and nongovernmental organisations and finally a new International Convention on the Recognition and Enforcement of Arbitral Awards was adopted at New York on 10th June, 1958. The Convention was duly ratified by the Government of India and was deposited with the Secretary General of the United Nations on 13th July, 1960. The present Act was enacted, as its long title indicates, to give effect to the said New York International Convention on the Recognition and Enforcement of Foreign Arbitral Awards to which India is a party. Article II of the Convention provides for recognition by Contracting States of agreements, including arbitral clauses in writing, by which the parties to the agreement undertake to submit to arbitration and or any differences which have arisen or which may arise between them in respect of defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration and section 2 of the Act defines the expression "foreign award" accordingly, i.e. closely following the language of Article II of the Convention. It is obvious that since the Act is calculated and designed to subserve the cause of facilitating international trade and promotion thereof by providing for speedy settlement of disputes arising in such trade through arbitration, any expression or phrase occurring therein should receive, consisting with its literal and grammatical sense, a liberal construction. Moreover, an examination of the relevant provisions of this Act and the will show that the schemes of the two Acts are not identical and as will be pointed out at the appropriate stage there are various differences which have a material bearing on the question under consideration and as such 493 decisions on similar or analogous provisions contained in the may not help in deciding the issue arising under the Foreign Awards Act because just as the is a consolidating enactment governing all domestic awards the Foreign Awards Act constitutes a complete code by itself providing for all possible contingencies in relation to Foreign awards made pursuant to agreements to which Article II of the Convention applies. With these preliminary observations we now turn to the question of proper construction of section 3 of the Foreign Awards Act. Section 3 of the Foreign Awards Act, 1961 as amended by Act 47 of 1973, (omitting unnecessary words) reads as under : "3. Stay of proceedings in respect of matters to be referred to arbitration. Notwithstanding anything contained in the , or in the Code of Civil Procedure, 1908, if any party to an agreement to which Article II of the Convention set forth in the Schedule applies, commences any legal proceedings in any court against any other party to the agreement, in respect of any matter agreed to be referred to arbitration in such agreement, any party to such legal proceedings may, at any time after appearance and before filing a written statement or taking any other step in the proceedings, apply to the Court to stay the proceedings and the Court, unless satisfied that the agreement is null and void, inoperative or incapable of being performed or that there is not, in fact, any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings". It may be stated that prior to its amendment by Act 47 of 1973 the words in the old section 3 were : "If any party to a submission made in pursuance of an agreement" which were construed by this Court in V/O Tractoroexport, case as prescribing a requirement that there must be an actual reference made to the arbitrators before any party to the arbitration agreement could invoke the section and Parliament immediately stepped in and amended the section by substituting in their place the words : "if any party to an agreement" thereby facilitating the stay of legal proceedings even before any actual reference is made and compelling speedy settlement of disputes through agreed arbitration. On a plain reading of the section as it now stands 494 two things become very clear. In the first place the section opens a non obstante clause giving overriding effect to the provision contained therein and making it prevail over anything to the contrary contained in the or the Code of Civil Procedure, 1908. Secondly, unlike s 34 of the which confers a discretion upon the Court, the section uses the mandatory expression "shall" and makes it obligatory upon the Court to pass the order staying the legal proceedings commenced by a party to the agreement if the conditions specified therein are fulfilled. The conditions required to be fulfilled for invoking sec. 3 are : (i) there must be an agreement to which Article II of the Convention set forth in the Schedule applies. (It is not disputed that this is so in the instant case) ; (ii) a party to that agreement must commence legal proceedings against another party thereto. (It is again not disputed that Renusagar and G.E.C. are the two parties to the arbitration agreement and that Renusagar has commenced legal proceedings against G.E.C. by filing suit No. 832 of 1982 ; (iii) the legal proceedings must be "in respect of any matter agreed to be referred to arbitration" in such agreement. (The question whether this condition is fulfilled here needs to be decided) ; (iv) the application for stay must be made before filing the written statement or taking any other step in the legal proceedings. (Admittedly this condition is fulfilled) ; (v) the Court has to be satisfied that the agreement is valid, operative and capable of being performed ; this relates to the satisfaction about the `existence and validity ' of the arbitration agreement. (In the instant case these questions do not arise) ; (vi) the Court has to be satisfied that there are disputes between the parties with regard to the matters agreed to be referred; this relates to effect (scope) of the arbitration agreement touching the issue of arbitrability of the claims. (It will have to be dealt with while considering the satisfaction of condition (iii) above). 495 As stated above Counsel for Renusagar have urged that conditions (iii) and (vi) and not satisfied and hence stay of Renusagar 's suit ought to be refused while according to Counsel for G.E.C. all the conditions including these two have been fulfilled and it is obligatory upon the Court to stay the suit. Before dealing with the question whether conditions (iii) and (vi) are satisfied in this case or not we would briefly indicate how the schemes of the two Acts (Foreign Awards Act and ) materially differ on several aspects having a bearing on the points at issue. An examination of sections 3, 4 and 7 of the Foreign Awards Act in juxtaposition with sections 32, 33 and 34 of the Arbitration Acts brings out these differences. Under section 32 of the Arbitration Acts suits to challenge the existence or validity of an arbitration agreement or award as also suits to have the effect (scope) of an arbitration agreement determined are barred and such questions can be raised only by an application under section 33 of the Act whereas under the Foreign Awards Act there is no provision similar or akin to sections 32 and 33 (and that is why a suit of the nature filed by Renusagar qua the arbitration agreement covered by the Convention is maintainable) but by virtue of sections 3 and 7 the same purpose is served though by different procedure. Sections 3 and 7 read together disclose a scheme that so far as questions of existence, validity and effect (scope) of the arbitration agreement are concerned, the determination thereof by the arbitrators is also subject to the decision of the Court and this decision of the Court can be had either before the arbitration proceedings commence or during their pendency, if the matter is decided by the Court in a section 3 petition, as in the present case, or can be had under section 7 after the award is filed in the Court and is sought to be enforced under section 6. True, section 4(2) declares that a foreign award shall be treated as binding `for all purposes ' on persons as between whom it is made but that is subject to section 7 whereunder enforcibility thereof is made dependent upon satisfaction of certain conditions specified therein : for example, under section 7(1)(a)(iii) one of such conditions for enforcibility is that the award should not deal with questions not referred nor should it contain decisions on matters beyond the scope of the agreement. In effect, section 3 of the Foreign Awards Act so to say combines in its own ambit both sections 33 and 34 of the ; in other words, questions regarding the existence, validity or effect (scope) of the arbitration agreement which can be decided under section 33 of the are required to be decided under section 3 of the Foreign Awards Acts before a stay of egal proceedings contemplated therein could be granted and the 496 right to have legal proceedings stayed contained in section 34 of the is also to be found in the same section 3. Further the Foreign Awards Act has also taken cognizance of the possibility that there may not be section 3 petition at all the matter being directly proceeded before the arbitrators and the possibility of the arbitrators giving a decision on an issue not within their competence or jurisdiction and such cases section 7 contains a safe guard which prevents any such award from being made enforceable. Such being the scheme under the Foreign Awards Act we would reiterate our view that decisions of our Courts on similar or analogous provisions contained in the would not be of any help to decide questions arising under the Foreign Awards Act. For instance, the view taken by the Calcutta High Court in Balabux Agrawalla 's case (supra) and by this Court in Gaya Electric Supply Co.s case (supra) that a Court acting under section 34 of the is a Court of limited jurisdiction performing a limited function and that a petition under section 33 cannot be stayed by invoking section 34 of that Act will be of no avail whatever in face of the express provisions contained under section 3 of the Foreign Awards Act which section, as indicated earlier, combines within its own ambit both sections 33 and 34 of the and those questions have to be decided by the Court before granting stay. Similarly, the broad principle that an arbitrator has no power to determine questions of his own jurisdiction (which include questions regarding the existence, validity and effect i.e. scope of the arbitration agreement) and that neither English Law nor Indian Law allows these questions to rest with the arbitrator (for which Counsel for Renusagar have been contending and we shall deal with it later) would be hardly applicable to any foreign award made under the Act. if the scheme of the Act emerging from a combined reading of sections 3 and 7 clearly shows that so far as the questions of existence, validity and effect (scope) of the arbitration agreement are concerned, the determination thereof by the arbitrators is subject to the decision of the Court and that this decision of the Court can be had under section 7 even after the award is made and filed in the Court but before it is made enforceable ; section (7)(a)(i) and (iii) show that the award can be challenged on these grounds which implies that the arbitrators have decided those questions while making their award. Turning now to the question whether in this case conditions (iii) and (vi) indicated above are satisfied or not we would like to observe that the two conditions are inter related and in substance bear upon the same aspects and, therefore, could be dealt with together. The main question is whether Renusagar 's suit can be said to be "respect 497 of any matter agreed to be referred to arbitration" ? On this, Counsel for Renusagar put forward a two pronged submission. Initially it was urged that the arbitration clause in the Contract does not include within its scope the issue of arbitrability of the three claims and so the suit is not liable to be stayed but we have already negatived this part of the submission by holding that the language of the arbitration clause is wide enough to embrace the issue of the arbitrability of the claims. Now the submission is that the phrase "in respect of any matter agreed to be referred to the arbitration" occurring in section 3 should be construed as covering only the disputes or claims on merits which have been referred to the arbitrators and since Renusagar 's suit merely raises the issue of arbitrability of those claims the suit cannot be said to be in respect of any matter agreed to be referred to arbitration; in other words, the submission is that the relevant phrase in section 3 should be given a narrow construction. In the first place there is nothing in the section which warrants the placing of such narrow construction on the relevant phrase. What matters are agreed to be referred to arbitration will depend upon what language is employed by the parties to the arbitration agreement and as we have indicated earlier there is nothing in law or equity which prevents the parties from referring even the questions of existence, validity or effects (scope) of the arbitration agreement itself to the arbitrators (in fact. Lord Porter 's observations quoted earlier from Heymen vs Darwins Ltd. and Das J 's view in Balabux Agarwala 's case show that the parties can do it.) Secondly, the scheme of sections 3 and 7 of the Foreign Awards Act, as discussed earlier, clearly suggests that the relevant phrase would include even questions of existence, validity and effect (scope) of the arbitration agreement. It is, therefore, not possible to place a narrow construction on that phrase in section 3 as suggested by Counsel for Renusagar. The decision of this Court in Shiva Jute Bailing Ltd. case (supra) and the supporting observations in three other decisions of this Court, namely, Kharda Co 's case, Waverly Jute Mills case and M/s. R.N. Ganekar & Co 's case (all supra) on which reliance was placed by Counsel for Renusagar are of no avail for two reasons (i) they deal with a position arising under sections 33, 34 and 35 of the and the manner in which certain phrases occurring therein are construed would offer no guidance in construing the relevant phrase occurring in section 3 of the Foreign Awards Act which will have to be construed on its own language and in the light of the scheme of the Foreign Awards Act and (ii) though the ratio in Shiva Jute Bailing Ltd. case has been expressed rather broadly it cannot be forgotten that in each one of the four cases the question pertained to either the existence or the validity of the arbitration 498 agreement and not the effect (scope) thereof, (i.e. not the issue of the arbitrability of the claims) and, therefore, the ratio in that case as also the supporting observations made in the other three cases will have to be understood as being applicable to the actual issue that arose on the facts of each on of them. We therefore, conclude that both the conditions (iii) and (vi) are satisfied in the instant case. The next contention and this has been, if one may so, the crux of the entire submission of Counsel for Renusagar in the case is that arbitrability of the three claims falls within the wide ambit of the arbitration clause and that therefore Renusagar 's suit is in respect of a matter agreed to be referred to the arbitration within the meaning of sec. 3, in law, that is to say under the law of the Forum (being the Indian law in the instant case) the issue of arbitrability of claims cannot be finally determined by the arbitrators but must rest with the Court and therefore Renusagar 's suit cannot be stayed under that section. According to Counsel both English law as well as Indian law is the same which does not allow questions of arbitrator 's own jurisdiction to rest finally with the Arbitrators and in support of this proposition Counsel relied upon the following authorities: (a) Attorney General for Manitoba vs Kelly and Ors, (supra) where the Privy Council at page 276 of the Report has observed thus : "Whenever there is a difference of between the parties as to the authority conferred on an umpire under an agreed submission, the decision rests ultimately with the Court and not with umpire : Produce Brokers Co. vs Olympia Oil and Cake Co. It would be impossible to allow an umpire to arrogate to himself jurisdiction over a question which, on the true construction of the submission, was not referred to him. An umpire cannot widen the area of his jurisdiction by holding, contrary to the fact, that the matter which he affects to decide is within the submission of the parties." (b) Dalmia Dairy Industries Ltd. vs National Bank of Pakistan (supra) where the enforcibility of the award made by a sole arbitrator pursuant to an arbitration clause contained in the document of guarantee executed by the National Bank of Pakistan in favour of Dalmia Dairy Industries Ltd. was resisted by the Bank inter alia on the ground that the arbitrator was not entitled to decide the question of his own jurisdiction when the validity of the contract of guarantee 499 itself was disputed, and the Court of Appeal at pages 292 293 of the Report observed thus : "Whilst we recognise that in answering issue I(B) differently from the learned Judge we are rejecting this preference on this issue Mr. Sikri 's evidence rather than that of Mr. Lall, we reach our conclusion for the reason that we find nothing in the learned Judge 's judgment or in Mr. Sikri 's evidence or in the Indian authorities, which seems to us justify departure from the logical conclusion that there is no difference in principal between a contract containing an arbitration clause admittedly concluded but void for initial illegality and a contract containing such a clause admittedly concluded but where it is alleged that either the contract or the arbitration clause or both have become void because of subsequent illegality. It seem to us to follow that even where the arbitration clause is framed as widely as in the present claim and bears the construction which we have upheld in our answer to issue 1(A), Indian law will not allow effect to be given to it so as to allow an arbitrator appointed thereunder finally to determine his own jurisdiction." (e) Becker Auto Radio case (supra) where the United States Court of Appeals (3rd Circuit) has expressed the view that the question of arbitrability of a dispute is for the Court to decide (para 7 at page 44 of the Report read with footnote 10). (d) R. Prince and Co. vs Governor General in Council (supra) where following the aforesaid Privy Council decision the Punjab High Court at page 242 of the Report has observed thus : "It is well established that an arbitrator or umpire must not go beyond the submission and although there is a presumption in favour of the validity of the award and the onus of proving that the arbitrator has exceeded his jurisdiction rests on the person alleging it, if an award extends to matters not within the scope of the submission it must be held to be void to the extent that it is in excess of the submission. An Arbitrator cannot give himself jurisdiction by a wrong decision as to the facts upon which the limit of his jurisdiction depends and where there is a difference between the parties as to the authority of the arbitrator under an agreed submission the decision rests 500 with the Court and not with the arbitrator. " Observations in similar strain made by the Allahabad High Court in Municipal Board vs Eastern U.P. Electricity Supply Co. Ltd. and Ors. (supra), by the Delhi High Court in M/s. Jagan Nath Phool Chand vs Union of India & Ors. (supra) and by the Bombay High Court in Vallabh Pitti vs Narsingdas (supra) were also relied upon. (e) Russell on Arbitration (20th Edition) : At pages 91 92 the following statement of law occurs : "It can hardly be with in the arbitrator 's jurisdiction to decide whether or not a condition precedent to his jurisdiction has been fulfilled. It has indeed several times been said bluntly that an arbitrator has no power to decide his own jurisdiction and in one case where rules of an institution prepared to conduct arbitrations gave the arbitrator such power, the court will ignore this when asked to enforce the award, and decide the question itself" : Dalmia Dairy Industry 's case. Again at page 112 the learned author has digested Dalmia Dairy Industry 's case thus : "Again some of the rules give the arbitrator power to decide whether he has jurisdiction in a particular dispute. But English court will never give effect to such rules and accordingly, if it is sought to enforce in England an award given after such a decision by the arbitrator, the court will not accept it but will have to determine the question of jurisdiction for itself. " In our view the aforesaid authorities relied on by Counsel for Renusagar do not touch the real question which we have to decide in the case. The question is whether in view of the wide arbitration clause which embraces questions of existence, validity or effect (scope) of the agreement itself Renusagar 's suit (which is in respect of a matter agreed to be referred) should be stayed so as to enable the arbitrators to proceed with the reference and make their award and that question is required to be considered in regard to foreign awards to be made under the Foreign Awards Act and as such must be considered in light of the scheme of that Act and will necessarily be governed by the provisions thereof. As explained earlier the scheme that emerges on a combined reading of sections 3 and 7 of the Foreign Awards Act clearly contemplates that questions of existence, validity or effect (scope) of the arbitration agreement itself, in cases where such agreement is wide enough to include within its ambit such questions, may be decided by the arbitrators initially but their deter 501 mination is subject to the decision of the Court and such decision of the Court can be had either before the arbitration proceedings commence or during their pendency, if the matter is decided in a section 3 petition or can be had under sec. 7 after the award is mane and filed in the Court and is sought to be enforce by a party thereto. In the face of such schemes envisaged by the Foreign Awards Act which governs this case it will be difficult to accept the contention that the arbitrators will have no jurisdiction to decide questions regarding the existence, validity or effect (scope) of the arbitration agreement. In fact the scheme makes for avoidance of dilatory tactics on the part of any party to such agreement by merely raising a plea of lack of arbitrator 's competence and a frivolous plea at that and enables the arbitrator to determine the plea one way or the other and if negatived to proceed to make his award with the further safeguard that the Court would be in a position to entertain and decide the same plea finally when the award is sough to be enforced. All that condition (iii) of sec. 3 requires is that the legal proceedings must be in respect of a matter "agreed to be referred to the arbitration" and there is no warrant to add further words namely, "agreed to be referred to the arbitration for final determination". Obviously if the occasion to decide the question of arbitrator 's jurisdiction arises at an earlier stage namely in a section 3 petition the Court has to decide it before granting stay of the legal proceedings and such decision of the Court on that question will be conclusive and binding on the arbitrator and the question before him will then become academic. It is thus clear that under the scheme questions of existence, validity of effect (scope) of the arbitration agreement itself, in cases where the arbitration clause embraces within its scope such questions, (unless decided by the Court in a section 3 petition) could be initially determined by the arbitrators, which would be subject to the final decision of the Court. This position under the New York Convention (to give effect to which the Foreign Awards Act was passed) has been clarified by Albert Jan Van Den Berg in his treatise of New York Convention at page 312 a passage on which Counsel for Renusagar relied. This is what learned author has stated: "The Convention does not imply that the arbitrator may give a final decision on his competence. Under almost all arbitration laws the arbitrator has no power to give such final decision; as arbitration excludes the competence of the courts, which is considered as a far reaching effect, the courts retain the last word in this matter. Many laws, however, allow the arbitrator to give a provisional ruling on his competence in order not to 502 delay the arbitration and to alleviate dilatory tactics by obstructive respondents. This principle that the court has the last word on the arbitrator 's competence is not different for the New York Convention. If it were otherwise, the Convention would have contained express provisions to that effect in order to make clear that in deviates from the prevailing principles of the national arbitration laws. " Secondly, even the aforesaid authorities on which reliance has been placed by Counsel for Renusagar (excepting perhaps the American decision in Becker Auto Radio case merely lay down that the decision on questions of arbitrator 's jurisdiction (assuming no distinction is made between questions regarding the existence or validity of the agreement on the one hand and effect (scope) thereof on the other) rests finally or ultimately with the Court and not with the Arbitrator or Umpire. [As regards the American decision in Becker Auto Radio case it may be stated, as pointed out by Counsel for G.E.C. that the point was not decided but the statement or observation was made on concession of the parties; and as regards statement of law at pages 91 92 in Russell on Arbitration it must be pointed out that the passage pressed into service by Counsel is merely a half portion of the statement of law but the fuller statement of law, as we shall indicate later, gives a different picture.] These authorities do not suggest that the arbitrator or umpire may not decide these questions even provisionally or tentatively, In other words, there is nothing in the general law of arbitration either English or Indian which prevents the arbitrators or an umpire from deciding questions of their own jurisdiction provisionally or tentatively and to proceed to make their awards on that basis, though it is clear that their provisional or tentative decision on questions of their own jurisdiction would be subject to the final determination by the Court and if the Court takes a contrary view their award will not be given effect to and in our view this is exactly the scheme of the Foreign Awards Act. It may not be out of place to mention here that the statement of Albert Jan van den Berg that many national arbitration laws allow the arbitrator to give a provisional ruling on his competence in order not to delay the arbitration and to alleviate dilatory tactics by obstructing respondents is borne out in regard to the general law of arbitration both English and Indian by several decisions. The position under English law has been summarised in Russel on Arbitration at pages 91 92 where a fuller statement of law (to which we had adverted earlier) appears thus: 503 "It can hardly be within the arbitrator 's jurisdiction to decide whether or not a condition precedent to his jurisdiction has been fulfilled. It has indeed several times been said bluntly that an arbitrator has no power to decide his own jurisdiction and in one case where rules of an institution prepared to conduct arbitrations gave the arbitrator such power, the Court will ignore this when asked to enforce the award, and decide the question itself. However, an arbitrator is always entitled to enquire whether or not he has jurisdiction. An umpire faced with a dispute whether or not there was a contract from which alone his jurisdiction, if any, can arise can adopt one of a number of courses. He can refuse to deal with the matter at all and leave the parties to go to court, or he can consider the matter and if he forms the view that the contract upon which the claimant is relying and from which, if established, alone his jurisdiction can arise is in truth the contract, he can proceed accordingly." (The first part of the statement is based on Dalmia Dairy Industry 's(1) case (supra) while the latter part is based on Brown vs Oesterrei chischer Waldbesitzer R. Gmbh and Per Roskill J. in Luanda Exportadora and Ors. vs Tamari & Sons & Others,(2) So far as Indian Law is concerned the position is clarified in Vallabh Pitti vs Narsingdas (supra). a decision on which Counsel for Renusagar relied where the Bombay High Court has held that the jurisdiction of the arbitrators to decide the question of existence of the contract which contains an arbitration clause is not wholly taken away by mere denial of its existence; that the arbitrator may consider the question of jurisdiction, not to give final and binding judgment on that question but in order to determine what course they should adopt; that they may in a case hold that they have no jurisdiction and direct the party who affirms the jurisdiction to obtain a decision of the Court under the but on the other hand if they are satisfied that they have got jurisdiction they may proceed with the arbitration and make their award; but a decree in terms of such award may not be made by the Court if at the time when one is sought the Court decides question of jurisdiction otherwise. The High Court pointed out that a similar view was taken by Bachawat, J. in Pannallal Sagoremull vs Fatey Chand Muralidhar(3) and that after deciding the 504 question in issue he affirmed the award and passed a decree in terms thereof. Similarly, it may be pointed out that there is no difference between English law and Indian law on the point that an arbitration agreement which empowers an arbitrator to decide the question of its existence, validity or effect (scope) is neither invalid nor void. In Heyman vs Darwins Ltd. Lord Wright 's observations at p. 385 of the Report clearly suggest that there can be a valid agreement to refer any dispute to arbitration including a dispute as to whether the contract in which the arbitration clause is contained was ever entered into at all, or whether if there was, it had been avoided or ended. As regards Indian law in Fertilizer Corporation of India vs Chemical Construction Corporation(1) the Bombay High Court has clarified this position while dealing with Rules 3 and 4 of Article 13 of the Rules of Conciliation and Arbitration framed by the International Chamber of Commerce under which the arbitrators were clothed with a power to decide, inter alia, a question as to the existence and validity of the Contract. Not only has the High Court held that the conferral of such power on the arbitrators does not render the Rules void but has further gone on to hold that if such a plea is raised by way of a defence in an application for stay of suit under section 34 of the it will be for the Court to consider the validity of the arbitration agreement itself and if in the opinion of the Court the contract which contains the arbitration clause is valid no question is likely to arise before the arbitrators on that point and even if such question were to arise the arbitrators will be concluded by the decision of the Court. We may point out that following this decision in Fertilizer Corporation 's case (supra) the Court of Appeal in Dalmia Dairy Industries ' case (supra) has held that the Rules of I.C.C enabling the Arbitral Tribunal to decide its own jurisdiction were not void (vide page 290 of the Report) and it has further noted without disapproval the further observations of the Bombay High Court that if the court once itself decides the question that the arbitrators had jurisdiction then that point would hardly be raised before the arbitrators and if it were the arbitrators would be bound by the decision of the Court on the point. In view of the position which arises from the aforesaid discussion it is really unnecessary for us to go into and decide the question whether, in cases where the arbitration clause contained in the underlying Commercial Contract is so widely worded as to include 505 within its scope the questions of its existence, validity or effect (scope), the decided cases have made a distinction between questions as to the existence or validity of the agreement on the one hand and its effect (scope) on the other and have held that in the case of the former those questions cannot be decided by the arbitrators, as by sheer logic the arbitration clause must fall along with the underlying Commercial Contract which is either non existent or illegal, while in the case of the latter it will ordinarily be for the arbitrators to decide the effect (scope) of the arbitration agreement as is contended for by Counsel for G.E.C., because both under the scheme of the Foreign Awards Act as well as under the general law of arbitration obtaining in England and in India, the decision of the arbitrator on the question of his own jurisdiction will have to be regarded as provisional or tentative, subject to final determination of that question by the Court. However, on a consideration of the rival authorities that have been cited at the Bar bay Counsel on either side we are inclined to accept the contention of Counsel for G.E.C. for the following reasons: (a) that conceptually a challenge to the existence or validity of the arbitration agreement contained in an underlying Commercial Contract is fundamentally different from an inquiry into the scope and effect of such agreement in as much as the former goes to the root of the arbitration agreement whereas the latter pre supposes that the arbitration agreement exists in fact and in law and the inquiry is then undertaken as to its true scope and effect; (b) that indisputably, decided cases have made this distinction between the two concepts, e.g. in Jawahar Lal Barman 's case (supra) this Court has noted this distinction for the purposes of procedural aspects arising under sections 31(2), 32 and 33 of the , but the English cases particularly Heyman vs Darwins Ltd. (supra) and Willesford vs Watson (supra) have made that distinction substantively; (c) that certain observations made by this Court in para 6 of its judgment in Water Supply Service India (P) Ltd. vs The Union of India and Others(1) on which Counsel for Renusagar have relied in support of their contention that existence of an arbitration agreement is the same as the effect (scope) thereof, do not, in our view, have the effect of equating the question of the scope of the arbitration agreement with the question of its existence; in that case the application made under section 5 of the to revoke the arbitration was obviously mis conceived inasmuch as the ground on which the revocation was sought was that the disputes sought to be referred to arbitration were not within the purview of the arbitration clause and 506 it was in that context that the observations were made in para 6 of the judgment to say that such a dispute was as regards the existence of the arbitration agreement; in fact, the ratio of the decision was that the controversy raised in the case fell within the scope of section 33 of the and not section 5; in any case, in our view, the incidental observation in para 6 of the judgment in that case on which Counsel for Renusagar have relied cannot outweigh the distinction which has been noticed by this Court in its well considered judgment in Jawahar Lal Barman 's case (supra); (d) that an analysis of several decisions cited at the Bar, we venture to suggest, shows that almost all the decision which articulate the principle broadly by saying that an arbitrator has no power to decide questions of his own jurisdiction are cases in which the question of either the existence or the validity of the arbitration agreement was involved, whereas whenever the question of arbitrator 's jurisdiction depended upon the scope or effect of the arbitration agreement Courts appear to have readily directed the parties to go before the arbitrators; and (e) in any event the decision of the Court of Appeal in Chancery in Willesford vs Watson (supra) which decision has been annotated and digested in Russell on Arbitration (20th Edn.) is a clear authority for the proposition that where the arbitration clause was very widely worded so as to include within its scope any dispute "touching the construction of" the contract which contained the arbitration clause, the Court would not decide but would leave it to the arbitrator to decide the question whether the matter in dispute between the parties fell within the arbitration agreement. In fact, the Court of Appeal in that case repelled every endeavour on the part of the appellants to require the Court to do the very thing which lay within the competence of the arbitrators that is to say, to look into the whole matter, to construe the instrument and to decide whether the thing complained of was inside or outside the agreement, and directed the parties to go to arbitration by staying the suit. It would be debatable whether in such a case where the Court has expressly declined to decide the dispute involved between the parties and has directed the parties to go to arbitration, the arbitrator 's decision on the question of his jurisdiction would again be subject to Court 's decision. Would it not be a case similar to the case falling within the principle of a specific question of law being expressly referred to an arbitrator whose decision thereon finally binds the parties: But as stated at the out set, the aforesaid question on which we have expressed our view, does not arise for decision in this case. It was next contended by Counsel for Renusagar that a stay, if 507 granted as sought by G.E.C. in a petition under section 3, it would render Renusagar 's suit dead for all practical purpose and there will be nothing left to be decided in the suit either because the suit is stayed indefinitely or alternatively because the decision on the issue would operate as red judicata in the suit, and, therefore, no relief of stay should be granted which will have such effect merely on a prima facie view or a pro tanto finding on the issue of arbitrability of the claims, in support Counsel relied upon a decision of the Allahabad High Court in Strauss Company 's case (supra) a case arising under the earlier Indian Arbitration Act 1899 where that High Court has expressed the view that, "a stay order under section 19 of the , when the arbitration has in fact taken place, is sufficient finally to dispose of the suit". In other words, the contention was that a section 3 petition could not be a proper stage to decide the issue of arbitrability of the claims but the same should be decided in the suit when it will be finally tried. If regard be had to the provisions of section 3 as well as the legal position arising under decided cases the contention will be found to be devoid of any substance. It may be that a stay of the suit either under section 3 of the Foreign Awards Act or under section 34 of the may have the effect of finally disposing of the suit for all practical proposes as pointed out by the Allahabad High Court. But that is no reason why the relief of stay should be refused by the Court if the concerned legal provision requires the Court to do so. Here we are concerned with section 3 which makes it obligatory upon the Court to stay the legal proceedings if the conditions of the section are satisfied and what is more the section itself requires that before any stay is granted the Court should be satisfied that the arbitration agreement is valid, operative and capable of being performed and that there are disputes between the parties with regard to the matters agreed to be referred to arbitration (condition (v) and (vi) mentioned earlier). In other words, the section itself indicates that the proper stage at which the Court has to be fully satisfied about these conditions is before granting the relief of stay in a section 3 petition and there is no question of the Court getting satisfied about these conditions on any prima facie view or a pro tanto finding thereon. Parties have to put their entire material before the Court on these issues (whichever may be raised) and the Court has to record its finding thereon after considering such material. It may be stated that though s.34 of the confers a discretion upon the Court in the matter of granting stay of legal proceedings where there is an arbitration agreement, it cannot be disputed that before granting the stay the Court has to satisfy itself 508 that arbitration agreement exists factually and legally and that the disputes between the parties are in regard to the matters agreed to be referred to arbitration (these aspects fall within the phrase 'if satisfied that there is no reason by the matter should not be referred ' occurring therein) and decided cases have taken the view that the Court must satisfy itself about these matters before the stay order is issued. In other words, Court under s.34 must finally decide these issues before granting stay. In Phagwandas vs Atmasing on a consideration Act the Bombay of the scheme underlying sections 32,33 and 34 of the Arbitration High Court has taken the view that is a defendant who applies for stay section 34 has to say that there is an arbitration agreement that if the plaintiff says that there is no agreement then the issues arises between the parties and there nothing in section 34 to prevent the Court from deciding that issue to enable it to pass an order under that Section. The same position under section 4(1) of the English Arbitration Act, 1950 has been affirmed in a judgment of the Court of Appeal in England in Modern Building Wale Ltd. vs Limmer and Trinidad Co. Ltd.(2) The Court of Appeal held that where a party claimed that proceedings should be stayed because there was an arbitration agreement in force the Court was under a duty to construe the terms of the contract in order to decide whether there was a valid arbitration clause and that question had to be determined at an interlocutory stage because it had to be done before the defendant took any step in the action. In Anderson Wright Ltd. vs Meran & Co.(3) the respondent (Moran & Co.) sold certain goods to the appellant under a number of similar contracts, which contained a wide arbitration clause. Respondent, however, described himself as broker when signing the contracts. The appellants wanted to claim damages from the respondent for non delivery of the goods under the contract notes and desired to refer the same to the arbitration. To prevent this arbitration the respondent filed a suit for a declaration that he was not a party to the said contracts, he having signed the same as broker and that he had incurred no liability thereunder and he further prayed for the consequential relief of an injunction restraining the appellant from claiming damages in respect of the said contracts. The appellant applied for the stay of the suit under section 34 of the Arbitration Act. Learned trial Judge granted stay of the suit. The Appellate Bench of the High Court took the view that the only matter in dispute between parties was whether the respondent was a party to the contract or not and that this dispute was outside the 509 scope of the arbitration agreement but no opinion was expressed on the question whether there was a binding arbitration agreement between the parties (which was the only issue in the suit, the relief on merits being consequential) since that would, in the opinion of the Appellate Court, create a bar of res judicata against one of the party. This Court, however, held that it was incumbent upon a Court, when invited to stay a suit under section 34 of the Arbitration Act, to decide first of all whether there is a binding arbitration agreement between the parties or not. At page 870 of the Report the Court has observed thus: "In this case it is certainly not admitted that the respondent was a party to the contract. In fact, that is the subject matter of controversy in the suit itself. But, as has been said already, the question having been raised in this application under section 34 of the Arbitration Act, the Court has undoubted jurisdiction to decide it for the purpose of finding as to whether or not there is a binding arbitration agreement between the parties to the suit. " The Court actually sent the case back for a decision of that question with a direction that if the Court came to the conclusion that the respondent was, in fact, a party to the contracts, the suit shall be stayed and the appellant would be allowed to proceed by way of arbitration but, if, on the other hand, the finding was adverse to the appellant the application for stay will be dismissed. Counsel for Renusagar pointed out that the suit did not merely raise the issue that the respondent was not a party to the contract notes and that therefore, there was no arbitration agreement between the parties but also claimed relief on merits, namely, an injunction restraining the appellant from claiming damages in respect of the said contracts and, therefore, the direction to stay the suit in case the finding on the main issue went a against the respondent, had some meaning but in the instant case before us no relief on merits has been claimed by Renusagar in its suit which merely raises the issue of arbitrability of the claims. In our view, this distinction is neither valid nor relevant to the question under consideration. Not valid because the only issue which the suit (filed by Moran & Co.) raised was whether there was binding arbitration agreement between the parties or not and an adverse decision thereon in a sec. 34 application would have had the effect of disposing of the suit for all practical purposes, the consequential relief automatically falling to the ground along with such adverse decision. Not relevant because the question of issue is whether a sec. 34 application is proper stage for deciding such issue though it may have the effect of the issue becoming res judicata in 510 the suit. What is of significance is that the decision of this Court does show that notwithstanding the fact that a finding on the issue that the respondent was a party to the contracts would have operated as res judicata in the respondents ' suit, the Court directed that issue to be decided in a section 34 petition for stay. In deciding the question under section 34 in this manner the Court expressed its entire agreement with the view enunciated by Mr. Justice S.R. Das in Khushiram vs Hantumal that where on an application made under sec. 34 of the Arbitration Act for stay of a suit, an issue is raised as to the formation, existence or validity of the contract containing the arbitration clause, the Court is not bound to refuse a stay but may in its discretion, on the application for stay, decide the issue as to the existence or validity of the arbitration agreement even though it may involve incidentally a decision as to the validity or existence of the parent contract. If this is the position under section 34 of the Arbitration Act which confers discretionary power upon the Court a fortiori the Court acting under section 3 of the Foreign Awards Act must decide such issues at that stage when the grant of stay is obligatory. In the instant case the issue pertained to the arbitrability of the three claims under the Arbitration clause in the contract and depended upon the proper construction thereof in light of the conduct of the parties and surrounding circumstances and no prejudice was caused to any of the parties as both Renusagar 's application for injunction and G.E.C. 's stay petition under sec. 3 were heard together and parties did put before the Court Trial Court, the Appeal Court and even before us the entire material such as each wanted to rely upon and sought a decision on the concerned issue and we are satisfied that the finding recorded by both the lower courts on the issue is correct; and in that view of the matter the prayer for injunction restraining arbitration sought by Renusagar could not be granted and was rightly refused. The triable issue raised in the suit having been found upon against Renusagar no question of balance of convenience survives. We would reiterate that the Court 's decision on the issue of arbitrability of three claims will have to be regarded as final, conclusive and binding and that issue would not arise before the Court of arbitration of I.C.C. and even if it is raised it would be purely academic. In the result both the appeals filed by Renusagar against G.E.C. are dismissed with costs. S.R. Appeals dismissed.
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The first company involved, General Electric Company, which was started under New York State laws, made a deal in writing on August 24, 1964. They agreed to sell equipment to Renusagar Power Company Ltd. for a power plant to be built in Renukoot, following the agreed terms. The contract included providing equipment, spare parts, and services. The total cost for this was $13,195,000, known as the "Contract Base Price." Renusagar had to pay this amount in U.S. dollars as stated in the contract. The goal of the contract was to finish: (a) delivering the equipment and spare parts within 15 months from December 31, 1964 (the "Contract Effective Date"), meaning by March 30, 1966; (b) building the plant from April 1, 1966, to June 30, 1967 (months 16 to 30); and (c) having the plant fully working by July 1, 1977, which was the end of the 30th month from the Contract Effective Date. So, the companies agreed that: (a) Renusagar would start paying a lot of the price when the plant was working, by June 30, 1967; (b) no interest would be charged while the equipment was being delivered; (c) interest would be charged while the plant was being built and until the full payment, but the interest during building would be added to the original price; (d) Renusagar would pay 10% of the Contract Base Price ($1,319,500) in cash or with a Letter of Credit within 30 days of the Contract Effective Date. The remaining 90% of the price, plus interest at 6 1/2% per year from month 16 to 30, totaling $12,776,058.75 ($11,875,500 for the price plus $900,558.75 for the interest), would be paid according to the contract's payment plan. The payment plan for the remaining 90% involved sixteen payments every six months, each for $798,503.68. The first payment was due on June 30, 1967, and the last on December 31, 1974. Renusagar had to issue four sets (A, B, C, D) of 16 "promissory notes." These were like promises to pay that could be transferred to someone else (Article III). Also, (e) if the Indian government excused General Electric from paying income tax on the interest they received from Renusagar, the interest for that time would be calculated at 6% instead of 61/2%. The promissory notes would be changed to show this new interest rate. (f) If General Electric's request for a tax break was denied, Renusagar could hold back the Indian income tax from the interest payments. However, Renusagar had to give General Electric tax receipts showing they paid the money to the Indian government. This would let General Electric get credit for that amount on their U.S. tax return (Article XIV B). (g) Renusagar had to get a guarantee from the United Commercial Bank to cover the full amount of the promissory notes. (h) The laws of New York State would govern the rights and responsibilities of both companies (Article XIX A). (j) Any disagreements about the contract that couldn't be solved through talks would be settled using the Arbitration Rules of the International Chamber of Commerce. According to these rules, each company would pick one arbitrator, and the International Chamber of Commerce's Court of Arbitration would pick a third arbitrator. The arbitration would happen at a time and place chosen by the Court of Arbitration. The result of the arbitration could be enforced in any court that has the power to do so (Article XVII, Arbitration Clause). Following the contract, Renusagar met all the first steps, including getting a guarantee from UCO Bank. This guarantee promised that the bank would pay the full amount of the promissory notes, including principal and interest, to General Electric or anyone who later held the notes. Later, in a letter from General Electric dated June 11, 1965, which was approved by the government, the 1964 contract (IGE 9584) was changed. It now included General Electric supplying steel to Renusagar for about $300,000, using the same conditions as the original contract, including the Arbitration Clause. Renusagar agreed and issued a fifth set (E series) of sixteen promissory notes with 61/2% interest. The payment dates for these notes were the same as the original four sets. During the contract, two things happened that led General Electric to make three claims against Renusagar. These claims were going to be settled through arbitration by the International Chamber of Commerce. These events were: (i) the Indian government gave General Electric a tax break on the interest from Renusagar, but then took it away. Renusagar filed a case (No. 179 of 1970) in the Delhi High Court and got the government's decision reversed. (ii) The payment dates for the purchase price were changed, but the Reserve Bank of India and the government didn't approve the changes. General Electric's three claims were: (i) Renusagar wrongly held back about $2.1 million in regular interest from 1970 onward. This kept General Electric from getting the tax credit in the U.S. The amount was the difference between $2,412,680.20 (73% of the interest at 61/2% before tax) and $2,130,785.52 (calculated at 6% tax-free). (ii) Renusagar owed $784,151.84 in "delinquent interest" because they were late in paying four payments of the purchase price and interest. This was because the Reserve Bank and the government didn't approve the changed payment dates (calculated at 6% tax-free). (iii) General Electric wanted "compensatory damages" because Renusagar hadn't paid the unpaid regular interest and delinquent interest for over twelve years. They calculated this by adding interest at the market rate of 18% per year, totaling $41,610,534.88 up to March 31, 1982 (and continuing until the actual payment date). General Electric claimed that Renusagar had illegally kept these two amounts for 12 years, using the money for their own benefit. General Electric said Renusagar should pay them back for this use of their money, acting as if Renusagar were holding the money for them and should return it to the rightful owner. In a notice dated March 1, 1982, General Electric demanded that Renusagar pay these amounts. They also sent a letter on March 2, 1982, to the International Chamber of Commerce's Court of Arbitration, asking them to start arbitration to get the money from Renusagar. After the International Chamber of Commerce agreed to the arbitration, they asked Renusagar to choose their arbitrator, respond to the claims, and pay some money for administrative and arbitration costs. Renusagar then filed lawsuit No. 832/82 in the Bombay High Court on June 11, 1982, against General Electric and the International Chamber of Commerce. They asked the court to declare that General Electric's claims were not covered by the arbitration agreement in Article XVII of contract IGE 9584 dated August 24, 1964. They also asked the court to stop General Electric and the International Chamber of Commerce from continuing with the arbitration and to stop the International Chamber of Commerce from asking Renusagar to pay any costs. The court temporarily granted Renusagar's request. On August 11, 1982, General Electric filed Arbitration Petition No. 96 of 1982. They asked the court to stop lawsuit No. 832 of 1982 and to cancel the temporary relief that Renusagar had been granted. The court heard both cases together and, on April 19 and 20, 1983, the judge allowed General Electric's petition, stopped Renusagar's lawsuit, and canceled the earlier temporary relief. The judge said that General Electric had met all the requirements for stopping the lawsuit. The judge decided that: (a) General Electric could use the Arbitration Clause in the original 1964 Contract because the October 1968 Amendment had kept all other terms of the 1964 Contract, including the Arbitration Clause, even though the amendment didn't get government approval. (b) Although the first two claims were based on the promissory notes, the judge said the notes were part of the original Contracts and not separate agreements. Since the Arbitration Clause covered all disputes from the contract, these claims were covered. (c) The judge said that the claim for "compensatory damages" came from failing to follow the contract's payment terms. Even if this claim was a "tort" (a civil wrong), it was closely tied to the contract and therefore could be decided by the Arbitrators. Renusagar appealed, arguing that: (a) An Arbitrator can't decide the limits of their own power. In international arbitration, the court where the issue is raised (in this case, India) must decide the Arbitrator's power, not the Arbitrator. (b) The dispute was mainly about interest, and the claim was based on the promissory notes, which were separate contracts. Therefore, the claim didn't come from the contract and couldn't be arbitrated. (c) The claim for "compensatory interest" was really a claim for damages from a tort and wasn't covered by the contract's Arbitration Clause. (d) Renusagar had a good argument that the lawsuit raised serious issues that should allow them to stop the arbitration. The Court of Appeal disagreed with Renusagar and confirmed the trial judge's order. The Court stayed Renusagar's lawsuit and canceled the earlier relief. Renusagar then appealed. Renusagar argued that: (1) General Electric's request to stop the lawsuit was wrong because Renusagar's lawsuit only asked for a declaration that the claims were outside the scope of the arbitration clause. Renusagar said the lawsuit was like asking the court to determine the effect of the arbitration agreement, which can't be stopped. (2) Renusagar's lawsuit wasn't "in respect of any matter agreed to be referred to arbitration," so General Electric's request should be denied. (3) The court couldn't decide the existence, validity, or effect of the arbitration agreement because it had limited power. The court trying the lawsuit should decide the issue. Stopping the lawsuit would end it completely, so the court shouldn't grant that relief. (4) The question of the arbitration agreement's effect couldn't be decided by the Arbitrators, so the lawsuit couldn't be stopped. (5) The contract didn't require Renusagar to pay interest after June 30, 1967. That requirement only came from the promissory notes. General Electric's claims for unpaid interest after June 30, 1967, didn't "arise out of" or "relate to" the contract but came from the promissory notes and were outside the arbitration agreement. (6) The promissory notes were a complete payment for the purchase price and interest. They were separate contracts, so the claims couldn't be seen as "arising out of" or "relating to" the contract. General Electric even described the claims as "arising under the promissory notes." (7) The claim for "compensatory damages" was for a tort and was based on Renusagar's role as a stakeholder, so it was outside the arbitration agreement. (8) Since the issue of whether the claims could be arbitrated was raised in the lawsuit, the arbitration should be stopped until the court decided the issue. General Electric argued that: (1) The laws about foreign arbitration and Indian arbitration are different, so the decision of whether to stop a lawsuit depends on the specific law about foreign arbitration. (2) Since all the requirements were met, Renusagar's lawsuit must be stopped. (3) Even under English and Indian law, parties can have an arbitration agreement that covers even questions about its own existence, validity, or effect. But looking into the scope of an agreement is different from challenging its existence. The first assumes the agreement exists, while the second challenges whether it exists at all. (4) When it's said that an arbitrator can't decide their own power, it means they can't make a final decision about whether the arbitration agreement exists. If the main contract is challenged, the arbitration clause within it also fails, and the Arbitrator has no power to decide. But if the arbitration agreement is separate from the contract, the Arbitrator can decide questions about the contract's existence. These rules don't apply if the issue is about the scope of the arbitration agreement and the agreement is broad enough to include that issue. In that case, the Arbitrator can decide. Since the Arbitration Clause in the contract was broad, the International Chamber of Commerce's Court of Arbitration had the power to decide not only General Electric's claims but also whether those claims were covered by the Arbitration Clause. (5) If the issue of the arbitration agreement's scope is raised in a case, the Court has to decide it, and the Arbitrators must follow the Court's decision, even if the Arbitrators could have decided the issue themselves. Here, the Court decided that the claims "arise out of" or are "related to" the contract, so the Court of Arbitration must follow that decision. (6) The contract required Renusagar to pay interest after June 30, 1967, not just the promissory notes. So, the claims for unpaid interest after June 30, 1967, "arise under" the contract. (7) The claim for "Compensatory Damages" is closely connected to the contract because it comes from wrongly holding the money that should have been paid under the contract. (8) The promissory notes were not a complete payment for the price and interest under the contract. They were part of the contract, and the obligation under the contract was not completely fulfilled by simply signing the notes. The real nature of the claims, not how they are described, is important. Even if the promissory notes were not part of the contract, the claims would still be covered by the broad Arbitration Clause. It's wrong to decide whether a claim arises out of or relates to the contract by looking at the reason for the claim. (9) The Court of Appeal was right to say that Renusagar didn't have a strong case for stopping the arbitration and was right to cancel the earlier relief and stop Renusagar's lawsuit. The Court HELD: 1.1 Whether a lawsuit can be stopped depends on the specific law about foreign arbitration, not on similar laws about Indian arbitration. 1.2 The purpose of the law about foreign arbitration is to settle international trade disputes quickly through arbitration. The law follows an international agreement that says countries should recognize agreements to arbitrate disputes. 1.3 Because the law helps international trade by providing quick arbitration, any words in the law should be understood broadly. The laws about foreign and Indian arbitration are different, so decisions about Indian arbitration don't help decide issues about foreign arbitration. The law about foreign arbitration is a complete set of rules for foreign arbitration agreements. 1.4 The law about foreign arbitration clearly says that: (i) it overrules anything to the contrary in other laws; and (ii) the Court "shall" stop a lawsuit if the requirements are met, unlike the law about Indian arbitration, which gives the Court a choice. The requirements for stopping a lawsuit are: (1) There must be an agreement covered by the international agreement. (This is true in this case.) (2) A party to the agreement must start a lawsuit against another party. (This is also true.) (3) The lawsuit must be "in respect of any matter agreed to be referred to arbitration." (This needs to be decided.) (4) The request to stop the lawsuit must be made before filing a response or taking other action. (This is true.) (5) The Court must be sure that the agreement is valid and can be performed. (These questions don't arise in this case.) (6) The Court must be sure that there are disputes about the matters agreed to be referred. (This relates to the scope of the arbitration agreement and will be dealt with when considering requirement (3).) The key question is whether requirements (3) and (6) are met. If they are, the Court must stop Renusagar's lawsuit. 1.5 The laws about foreign and Indian arbitration are different in ways that affect the issues. The law about Indian arbitration says that lawsuits challenging the existence or validity of an arbitration agreement are not allowed. However, the law about foreign arbitration has no such rule, so Renusagar's lawsuit is allowed. The law about foreign arbitration says that the arbitrators' decision about the existence, validity, and effect of the agreement is subject to the Court's decision. The Court can decide before or during the arbitration, or after the award is filed. The law says that a foreign award is binding, but it can't be enforced if it deals with issues not referred to the arbitrators or goes beyond the scope of the agreement. The law about foreign arbitration combines the rules for deciding the existence, validity, and effect of the agreement. It also recognizes that there may not be a lawsuit, and the arbitrators may decide an issue outside their power. In such cases, the law prevents the award from being enforced. Because of these differences, decisions about Indian arbitration don't help decide questions about foreign arbitration. 1.6 Requirements (3) and (6) are related and both are satisfied. First, the language of the Arbitration Clause is broad enough to cover the issue of whether the claims can be arbitrated. Second, the phrase "in respect of any matter agreed to be referred to the arbitration" should be understood broadly because: (a) there's nothing in the law that says it should be narrow; and (b) the law suggests that the phrase includes questions about the existence, validity, and effect of the arbitration agreement. 2.1 The rules of the International Chamber of Commerce give the Arbitrations the power to decide questions about the existence or validity of the Arbitration agreement. Also, the parties used the expressions "arising out of" or "related to this contract" in the Arbitration Clause, showing they intended to refer the issue of the Arbitration Agreement's effect to the Court of Arbitration. 2.2 Indian Court decisions show that: (a) Whether a dispute comes within the scope of an arbitration clause depends on the terms of the clause; it's about what the parties intended. (b) Expressions like "arising out of," "in respect of," or "relating to" the contract are very broad and include questions about the agreement's existence, validity, and effect. (c) An arbitrator can't usually give themself the power to decide their own power, but the parties can give them that power through a separate agreement. (d) If the arbitration clause is broad enough to include questions about its own existence, validity, and effect, then the courts have distinguished between questions about the existence and validity of the agreement and its effect. The courts have said that the Arbitrator can't decide the former because the arbitration clause fails along with the contract. But the Arbitrator can usually decide the latter, meaning they can decide whether the claim can be arbitrated. 2.3 All three claims "arise out of" and are "related to" the contract and fall within the broad arbitration clause. The third claim is directly connected to the contract and its breaches, so it's a claim "arising out of" and "related to the contract." The Arbitration Clause covers even the question of its own effect, meaning it covers the issue of whether the three issues can be arbitrated. 2.4 The contract requires Renusagar to pay interest on the unpaid purchase price after June 30, 1967, and General Electric correctly made the claims for unpaid interest based on the contract. The contract shows that the promissory notes are not the only way General Electric can claim interest after June 30, 1967. The contract itself requires such interest to be paid. Interest up to June 30, 1967, was added to the principal amount of each payment. The promissory notes say that Renusagar "promises to pay to General Electric interest" from June 30, 1967, at 6.5% per year. The contract also shows that the parties planned to get a tax break on the interest income. This "interest income" includes interest on the amounts of the promissory notes, meaning interest on the outstanding balance from June 30, 1967, until payment. 2.5 The argument that General Electric wouldn't have been able to claim interest after June 30, 1967, if Renusagar hadn't issued the promissory notes is rejected. The question is what the contract says. The contract requires not just the issuing of promissory notes but also that the notes bear interest after June 30, 1967. The fact that Renusagar's failure to issue the notes would have given General Electric the right to demand them also shows that the contract requires interest to be paid after June 30, 1967. 2.6 The fact that the bank guarantee only covers the payment of principal and interest on the note and doesn't cover any other payment in the contract doesn't mean that the cause of action only came from the notes. The bank guarantee is connected to the notes and refers to the obligation arising from them. Whether the contract requires future interest payments depends on its contents, not on what's in the bank guarantee. Also, the lawsuit against UCO Bank is based on the notes and the guarantee, not on the contract, since UCO Bank isn't a party to the contract. It's the substance of General Electric's claim, not the description of the claims, that matters. Although the notice says the claims are "on the promissory notes," it also says the subject is "Interest under the contract." The claims arose under the contract, and their amounts were adjusted and quantified under the contract. 2.7 Whether a negotiable instrument operates as a complete payment of a debt depends on the parties' intention. Here, the promissory notes can't be seen as complete payment because the contract says that the price "shall be paid in lawful money of the USA," and promissory notes aren't that. The contract also says that the notes are "payable in lawful money of the USA." The contract provides for payment of the remaining 90% of the price "in accordance with the following Schedule of Payments" and says that "the obligation to make such payments is to be evidenced by four series of purchaser's unconditional negotiable promissory notes," showing that the notes aren't payments but evidence of the obligation to pay. 2.8 The terms of the contract show that the notes were intended as conditional payments, not complete payments. If Article III of the contract is examined, the following factors are clear: (a) the notes are not expressed to be payments; (b) the notes say that the principal and interest are "payable in lawful money of the USA"; (c) Article III A (3) provides for payment of the remaining 90% "in accordance with the following Schedule of Payments" and says that "the obligation to make such payments is to be evidenced by four series of purchaser's unconditional negotiable promissory notes," showing that the notes are not payments but evidence of the obligation to pay the price; (d) the notes are "unconditional and negotiable" but are subject to conditions such as (i) the amounts were payable only if deliveries were completed within 15 months and the interest rate depended on getting a tax break, (ii) the notes were to be released according to a formula, (iii) the notes were to be replaced depending on getting a tax break or changing the price, (iv) each note contains a default clause saying that if payment is missed, all notes become due. These factors show that the notes were not intended to be separate contracts but were part of one integrated transaction. The notes were meant to be governed by the contract and could be changed under the contract. Therefore, a dispute about unpaid interest is a dispute "relating to the Contract." The claims were made on that basis, not under the notes. 2.9 Regarding the third claim for "compensatory damages," the fact that Renusagar is being held liable as a tort feaser (wrongdoer) doesn't mean the claim isn't covered by the arbitration clause. The question is whether the claim "arises out of" or is "related to" the Contract. The third claim is based on and results from the non-payment of the two amounts by Renusagar in breach of the contract. So, before deciding this claim, the authority must decide whether General Electric is entitled to receive the first two amounts. This third claim is directly connected to the terms of the Contract and the breaches, so it's a claim "arising out of" or "related to" the contract. The question of whether a claim based on tort is separate from the contract or connected to it depends on the facts of each case and the language in the arbitration clause. 3.1 The argument that the Indian court should decide whether the claims can be arbitrated, even if the arbitration clause is broad, is rejected. The law on foreign arbitration has its own scheme. 3.2 The law shows that questions about the existence, validity, or effect of the arbitration agreement can be decided by the arbitrators first. But their decision is subject to the court's decision. All that's required is that the lawsuit be in respect of a matter "agreed to be referred to the arbitration." There's no requirement that it be "agreed to be referred for final determination." 3.3 There's nothing in arbitration law that prevents arbitrators from deciding their own power temporarily and making awards on that basis. Their power is subject to the court's final decision. 3.6 Stopping the lawsuit may end it for all practical purposes. But that's not a reason to refuse to stop it if the law requires it. The law says that the Court must be fully satisfied about the requirements before stopping the lawsuit. The Court must finally decide these issues before granting a stay. If an issue is raised about the validity of the contract, the Court may decide that issue even if it involves deciding the validity of the contract. In this case, the issue was whether the claims could be arbitrated. The Court heard both sides and had all the information. Therefore, the request to stop the arbitration was rightly refused. The Court decided that the decision about whether the claims could be arbitrated was final and binding.
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were based on the promissory notes executed by Renusagar the issuance of the promissory notes towards the purchase price was provided under the Contract itself and these were not by way of any independent or separate contracts in discharge of the obligation to pay the purchase price under the contract and since the Arbitration Clause covered all disputes arising out of the Contract those claims fell within the Arbitration Clause; and as regards the third claim for compensatory damages he took the view that the liability to pay the same arose due to failure to carry out the terms and conditions of the Contract in regard to payment of purchase price and that even assuming that the said claim was one in tort it was directly and inextricably connected with the terms and conditions of the Contract and certainly " arose out of" the Contract or was " in relation to" the Contract and therefore could be entertained by the Arbitrators. At the hearing of the appeals Counsel for Renusagar raised four contention: firsts, according to him an Arbitrator had no jurisdiction to decide the limits of his own jurisdiction and since in the case of international arbitration the jurisdiction of the Arbitrator had to be decided according to the law of the Forum where the question is raised in the instant case being the Indian Law) the jurisdiction of the Arbitrator, according to that law, had to be decided by the Court and not by the Arbitral Tribunal; secondly, the dispute sought to be referred related substantially to the claim for interest and that claim had to be (and was so stated in the Notice of intention to arbitrate) founded on the promissory notes which were independent contracts by themselves and therefore, the claim did not arise out of the suit Contract and hence could not be the subject of arbitration; thirdly the claim for compensatory interest was really a claim for damages arising out of tort and such a claim was in any case not covered by the suit Contract and fell outside the scope of the Arbitration Clause; and fourthly, in any event, Renusagar had made out a prima facie case by raising serious triable issues in the suit which should enable it to claim an injuction restraining the arbitration proceedings. 832/1982 filed by Renusagar is merely for a declaration that the three claims sought to be referred to arbitration are beyond the scope and purview of the Arbitration Clause and no other relief on the merits of those claims is sought, that such a suit is really in the nature of a petition under s.33 of the , inasmuch as it seeks to have the effect (scope) of the arbitration agreement determined, that such a suit can never be stayed under s.3 of the Foreign Awards Act and that, therefore, the petition under s.3 (which is really in the nature of s.34 application under the ) is totally misconceived and liable to be dismissed; Counsel further submitted that the suit filed by Renusagar is not "in respect of any matter agreed to be referred to arbitration" as required by s.3 and, therefore, the stay sought for by G.E.C. should be refused; Counsel further urged that the Court acting under s.3 (like the Court acting under s.34 of the ) being a Court of limited jurisdiction cannot determine the question of the existence, validity or effect of the arbitration agreement (which is the only issue to be tried in Ranusagar 's suit) and it is for the Court trying the suit to decide the question raised in the suit and, therefore, a stay, if granted under s.3, would finally determine the suit or render it almost dead for all practical purposes and, therefore, no relief on the stay petition can be granted which will have such effect; Counsel finally submitted that the question raised in the suit relating to the effect (scope) of the arbitration agreement, which is the same as the question relating to the existence thereof, is such as is incapable of being finally determined by the Arbitrators and hence such a suit cannot be stayed under s.3 of the Foreign Awards Act. According to Counsel the aforesaid submissions are founded on the well settled position in law English and Indian that questions or issues which pertain to the existence, validity or effect (scope) of an arbitration agreement contained in the underlying commercial Contract are matters which relate to the jurisdiction of the Arbitrator and are not within the competence of the Arbitrator however widely worded the Arbitration agreement may be but these have to be decided by the Court in an application under s.33 or in a suit which is of that nature as is the case here. Alternatively, Counsel contended that the legal position both under English and Indian Law is not as has been submitted by Counsel for Renusagar; Counsel urged both under English law and Indian law it is well settled that it is open to the parties to have an arbitration agreement incorporating words of the widest amplitude so as to embrace even the questions of its existence, validity or effect (scope) but according to him an enquiry into the scope and effect of an arbitration agreement and a challenge to the existence or validity thereof are not the same but fundamentally different inasmuch as the first pre supposes that the arbitration agreement exists in fact and in law and the enquiry then is limited to the scope and effect thereof; counsel further contended that whenever it is said that an arbitrator cannot decide the question of his own jurisdiction all that is intended is that he cannot determine that too finally, the question of the existence (factual) or validity (i.e. legal existence) of the arbitration agreement if contained in the underlying commercial Contract and this must be so, for, if the existence or validity of the underlying commercial Contract is successfully challenged the arbitration clause which is the part and parcel thereof must perish with it and therefore the Arbitrator will have no jurisdiction to decide the issue of the existence or validity of the agreement; but even here it is well settled that if the arbitration agreement so widely worded is separate and independent from the commercial Contract the arbitrator will have jurisdiction to decide the questions about the existence or validity of the commercial contract; but Counsel urged that these principles have no application whatsoever to a case where the issue relates to the scope and effect of the arbitration agreement contained in the underlying commercial contract and the arbitration agreement is wide enough to include such an issue, for, in such a case the Arbitrator will have jurisdiction to decide that issue. 80%) for unpaid regular interest due after June 30, 1967 and the second claim for U.S. $ 78,151.84 is entirely for delinquent interest due after June 30, 1967 and, therefore, substantially these two claims preferred before the Arbitrators do not "arise out of" the Contract nor are they "in relation" thereto but arise under the promissory notes and hence fall outside the scope of arbitration agreement; according to counsel further the promissory notes executed by Ranusagar were in complete discharge of the obligation to pay price and interest thereon under the Contract and these notes constitute independent and separate contracts by themselves and, therefore, the liability arising thereunder cannot be regarded as any arising out of the contract or in relation thereto and what is more these claims have been described by G.E.C. vehemently disputed that the Commercial Contract (IGE 9584) contains no obligation to pay any interest on unpaid purchase after June 30, 1967 or that such obligation to pay interest after that date is only to be found in the promissory notes; he pointed out that such obligation is to be found in the Contract itself and could be readily inferred from article III(A)3(c) read with article XIV B and as such the first two claims for Unpaid Regular Interest and Delinquent Interest due after June 30, 1967, preferred before the arbitrators not merely "arise out of" but really arise "under" the Contract; further the third claim for Compensatory Damages which flows by way of corollary from wrongful detention of the first two funds which ought to have been paid under the Contract is so closely connected with the contract that it is clearly "in relation to it"; all the three claims thus fall within the scope of the Arbitration Clause. Alternatively, Counsel contended that even assuming (a) that the promissory notes are not an in severable and inextricable part of the Contract, (b) that the obligation arising under the notes is totally different from the one arising under the Contract and (c) that the notes are in discharge of the obligation to make payment under the Contract (all of which are strongly denied), the three claims would still be covered by the Arbitration Clause which is of the widest amplitude, for according to him it would be erroneous to determine whether a claim arises out of or in relation to the Contract by looking at the 465 cause of action on which the claim is based. (supra) It may be stated here that even in the two decisions of this Court on which Counsel for Renusagar have placed reliance the aforesaid principle of law has been accepted but all that has happened is that each case turned on its own facts and special circumstances on the basis of which this Court held that the parties had intended to and agreed to accept and treat the posting of the instruments (cheques in one case and dividend warrant in the other) as actual payment in discharge of the original obligation. If article III of the Contract, which deals with the topic of Payment of price for the sale of goods and services, is carefully analysed the following factors emerge very clearly: (a) that the pro notes are not expressed to be payments: in fact, it is in terms stated that the "total contract base price shall be paid by purchaser in lawful money of the USA" (article III A) and surely promissory notes are not "lawful money" of USA: 482 (b) that because the Contract so provides even the pro notes also recite that the principal and interest thereunder are "payable in lawful money of the USA"; (c) that article III A (3) which deals with pro notes provides for payment of the remaining 90% of the price "in accordance with the following Schedule of Payments" and expressly states that "the obligation to make such payments is to be evidenced by four series of purchaser 's unconditional negotiable promissory notes", which clearly shows that the pro notes are not payments but are intended merely to be the evidence of the obligation to pay the price; (d) that though stated to be "unconditional and negotiable" (perhaps so between the drawer and subsequent assignees in case of negotiation), as between the seller and the purchaser these have been made subject to several conditions such as (1) the amounts thereof were payable only on the assumption that deliveries of items of equipment were completed within 15 months of Contract Effective Date and interest at the rate of 6 1/2% was to become 6% on receipt of income tax exemption (article III A(3) (b), (ii) these were to lie in Escrow Arrangement to be released to the seller synchronizing with the stated progress of supply of goods according to certain formulae (article III D). In this behalf submissions of Counsel may be analysed thus : (a) That two decisions one of the Calcutta High Court in Balabux Agarwalla 's case (supra) and the other of this Court in Gaya Electric Supply Co 's case(1), have settled the legal position under that a Court acting under section 34 is a Court of limited jurisdiction performing a limited function and that a petition under section 33 (which raises issues regarding the existence, validity or effect of an arbitration agreement) cannot be stayed by invoking section 34 of that Act, unless, there be a fresh arbitration agreement to refer those very issues in regard to the previous arbitration agreement and, therefore, it should similarly be held that section 3 of the Foreign Awards Act, (which is similar to section 34 of the ) cannot be 490 invoked to stay a suit which is in the nature of as. Sections 3 and 7 read together disclose a scheme that so far as questions of existence, validity and effect (scope) of the arbitration agreement are concerned, the determination thereof by the arbitrators is also subject to the decision of the Court and this decision of the Court can be had either before the arbitration proceedings commence or during their pendency, if the matter is decided by the Court in a section 3 petition, as in the present case, or can be had under section 7 after the award is filed in the Court and is sought to be enforced under section 6. The question is whether in view of the wide arbitration clause which embraces questions of existence, validity or effect (scope) of the agreement itself Renusagar 's suit (which is in respect of a matter agreed to be referred) should be stayed so as to enable the arbitrators to proceed with the reference and make their award and that question is required to be considered in regard to foreign awards to be made under the Foreign Awards Act and as such must be considered in light of the scheme of that Act and will necessarily be governed by the provisions thereof. a decision on which Counsel for Renusagar relied where the Bombay High Court has held that the jurisdiction of the arbitrators to decide the question of existence of the contract which contains an arbitration clause is not wholly taken away by mere denial of its existence; that the arbitrator may consider the question of jurisdiction, not to give final and binding judgment on that question but in order to determine what course they should adopt; that they may in a case hold that they have no jurisdiction and direct the party who affirms the jurisdiction to obtain a decision of the Court under the but on the other hand if they are satisfied that they have got jurisdiction they may proceed with the arbitration and make their award; but a decree in terms of such award may not be made by the Court if at the time when one is sought the Court decides question of jurisdiction otherwise. In view of the position which arises from the aforesaid discussion it is really unnecessary for us to go into and decide the question whether, in cases where the arbitration clause contained in the underlying Commercial Contract is so widely worded as to include 505 within its scope the questions of its existence, validity or effect (scope), the decided cases have made a distinction between questions as to the existence or validity of the agreement on the one hand and its effect (scope) on the other and have held that in the case of the former those questions cannot be decided by the arbitrators, as by sheer logic the arbitration clause must fall along with the underlying Commercial Contract which is either non existent or illegal, while in the case of the latter it will ordinarily be for the arbitrators to decide the effect (scope) of the arbitration agreement as is contended for by Counsel for G.E.C., because both under the scheme of the Foreign Awards Act as well as under the general law of arbitration obtaining in England and in India, the decision of the arbitrator on the question of his own jurisdiction will have to be regarded as provisional or tentative, subject to final determination of that question by the Court. for the following reasons: (a) that conceptually a challenge to the existence or validity of the arbitration agreement contained in an underlying Commercial Contract is fundamentally different from an inquiry into the scope and effect of such agreement in as much as the former goes to the root of the arbitration agreement whereas the latter pre supposes that the arbitration agreement exists in fact and in law and the inquiry is then undertaken as to its true scope and effect; (b) that indisputably, decided cases have made this distinction between the two concepts, e.g. in Jawahar Lal Barman 's case (supra) this Court has noted this distinction for the purposes of procedural aspects arising under sections 31(2), 32 and 33 of the , but the English cases particularly Heyman vs Darwins Ltd. (supra) and Willesford vs Watson (supra) have made that distinction substantively; (c) that certain observations made by this Court in para 6 of its judgment in Water Supply Service India (P) Ltd. vs The Union of India and Others(1) on which Counsel for Renusagar have relied in support of their contention that existence of an arbitration agreement is the same as the effect (scope) thereof, do not, in our view, have the effect of equating the question of the scope of the arbitration agreement with the question of its existence; in that case the application made under section 5 of the to revoke the arbitration was obviously mis conceived inasmuch as the ground on which the revocation was sought was that the disputes sought to be referred to arbitration were not within the purview of the arbitration clause and 506 it was in that context that the observations were made in para 6 of the judgment to say that such a dispute was as regards the existence of the arbitration agreement; in fact, the ratio of the decision was that the controversy raised in the case fell within the scope of section 33 of the and not section 5; in any case, in our view, the incidental observation in para 6 of the judgment in that case on which Counsel for Renusagar have relied cannot outweigh the distinction which has been noticed by this Court in its well considered judgment in Jawahar Lal Barman 's case (supra); (d) that an analysis of several decisions cited at the Bar, we venture to suggest, shows that almost all the decision which articulate the principle broadly by saying that an arbitrator has no power to decide questions of his own jurisdiction are cases in which the question of either the existence or the validity of the arbitration agreement was involved, whereas whenever the question of arbitrator 's jurisdiction depended upon the scope or effect of the arbitration agreement Courts appear to have readily directed the parties to go before the arbitrators; and (e) in any event the decision of the Court of Appeal in Chancery in Willesford vs Watson (supra) which decision has been annotated and digested in Russell on Arbitration (20th Edn.) in a petition under section 3, it would render Renusagar 's suit dead for all practical purpose and there will be nothing left to be decided in the suit either because the suit is stayed indefinitely or alternatively because the decision on the issue would operate as red judicata in the suit, and, therefore, no relief of stay should be granted which will have such effect merely on a prima facie view or a pro tanto finding on the issue of arbitrability of the claims, in support Counsel relied upon a decision of the Allahabad High Court in Strauss Company 's case (supra) a case arising under the earlier Indian Arbitration Act 1899 where that High Court has expressed the view that, "a stay order under section 19 of the , when the arbitration has in fact taken place, is sufficient finally to dispose of the suit".
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So, the companies agreed that: (a) Renusagar would start paying a lot of the price when the plant was working, by June 30, 1967; (b) no interest would be charged while the equipment was being delivered; (c) interest would be charged while the plant was being built and until the full payment, but the interest during building would be added to the original price; (d) Renusagar would pay 10% of the Contract Base Price ($1,319,500) in cash or with a Letter of Credit within 30 days of the Contract Effective Date. The judge said that General Electric had met all the requirements for stopping the lawsuit. In international arbitration, the court where the issue is raised (in this case, India) must decide the Arbitrator's power, not the Arbitrator. Renusagar argued that: (1) General Electric's request to stop the lawsuit was wrong because Renusagar's lawsuit only asked for a declaration that the claims were outside the scope of the arbitration clause. General Electric's claims for unpaid interest after June 30, 1967, didn't "arise out of" or "relate to" the contract but came from the promissory notes and were outside the arbitration agreement. Since the Arbitration Clause in the contract was broad, the International Chamber of Commerce's Court of Arbitration had the power to decide not only General Electric's claims but also whether those claims were covered by the Arbitration Clause. (5) If the issue of the arbitration agreement's scope is raised in a case, the Court has to decide it, and the Arbitrators must follow the Court's decision, even if the Arbitrators could have decided the issue themselves. (8) The promissory notes were not a complete payment for the price and interest under the contract. Even if the promissory notes were not part of the contract, the claims would still be covered by the broad Arbitration Clause. (9) The Court of Appeal was right to say that Renusagar didn't have a strong case for stopping the arbitration and was right to cancel the earlier relief and stop Renusagar's lawsuit. The requirements for stopping a lawsuit are: (1) There must be an agreement covered by the international agreement. If they are, the Court must stop Renusagar's lawsuit. The law about foreign arbitration says that the arbitrators' decision about the existence, validity, and effect of the agreement is subject to the Court's decision. The law says that a foreign award is binding, but it can't be enforced if it deals with issues not referred to the arbitrators or goes beyond the scope of the agreement. Also, the parties used the expressions "arising out of" or "related to this contract" in the Arbitration Clause, showing they intended to refer the issue of the Arbitration Agreement's effect to the Court of Arbitration. 2.4 The contract requires Renusagar to pay interest on the unpaid purchase price after June 30, 1967, and General Electric correctly made the claims for unpaid interest based on the contract. Here, the promissory notes can't be seen as complete payment because the contract says that the price "shall be paid in lawful money of the USA," and promissory notes aren't that. If Article III of the contract is examined, the following factors are clear: (a) the notes are not expressed to be payments; (b) the notes say that the principal and interest are "payable in lawful money of the USA"; (c) Article III A (3) provides for payment of the remaining 90% "in accordance with the following Schedule of Payments" and says that "the obligation to make such payments is to be evidenced by four series of purchaser's unconditional negotiable promissory notes," showing that the notes are not payments but evidence of the obligation to pay the price; (d) the notes are "unconditional and negotiable" but are subject to conditions such as (i) the amounts were payable only if deliveries were completed within 15 months and the interest rate depended on getting a tax break, (ii) the notes were to be released according to a formula, (iii) the notes were to be replaced depending on getting a tax break or changing the price, (iv) each note contains a default clause saying that if payment is missed, all notes become due. The question of whether a claim based on tort is separate from the contract or connected to it depends on the facts of each case and the language in the arbitration clause.
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Civil Appeal No. 3072 of 1980 etc. From the Judgment and order dated 5. 10.1979 of the Allahabad High Court in Civil Misc. Writ No. 3587 of 1974. S.N. Kacker, C.P. Lal, M.N. Krishnamani, Dalip Tandon, E.C. Agganvala, Vijay Pandit, Atul Sharma and Ms. Purnima Bhat for the Appellants. Govind Das, Anil Dev, K.K. Singhvi, P.P. Rao, Kapil Sibbal, V.A. Bobde, G.L Sanghi, A. Subba Rao, C.V.S. Rao, C. Ramesh, Miss A. Subhashini, Mrs. section Dikshit, A.S. Bhasme, A.M. Khanwilkar, R.K. Mehta, V.J. Francis, N.M. Popli, J.R. Dass, S.P. Kalra, Mrs. Rani Chhabra, V.B. Joshi, L.K. Pandey, D.D. Gupta and K.K. Khurana for the Respondents. P.N. Mishra for the Intervener. The Judgment of the Court was delivered by 292 INTRODUCTION RANGANATHAN, J. 1. The controversies arising in this batch of cases are by way of sequel to three earlier decisions of this court in regard to the constitution of the Indian Forest Service viz. Kraipak vs Union of India, AIR 1970 S.C. 150; Parvez Qadir vs Union of India, ; and Union of India vs Chothia, [1978] 3 S.C.R. 652. A little historical background is, therefore, necessary to appreciate the problems before us. THE ALL INDIA SERVICES ACT 2. A few months before India gained Independence, a decision was taken that one of the primary needs of the federal constitution envisaged for India would be the setting up of All India Services common to the Centre and to the States. The members were to be recruited from the intelligent youth of the country by competitive examinations of high standard. They were to be free from political control, contended and having a sense of security. The idea was to build up a bureaucracy consisting of efficient officers of integrity and impartiality who could man important administrative posts and make possible the continued governance of the country unaffected by periodical changes in the political set ups in the Centre and various States consequent on quinquennial elections to the various legislatures in the country. The recruitment to these services and their ultimate disciplinary control was to be with the Union Government but the officers would serve, under the immediate control of the State Governments, on various State cadres. Initially, the All India Services viz. the Indian Administrative Service and the Indian Police Service were created to replace the former Indian Civil Service and Indian Police respectively. p The statutory basis for the implementation of the above policy was provided by Chapter I of Part XIV of the Constitution (articles 308 to 314) supplemented by the All India Services Act, 1951 (hereinafter referred to as "the Act") passed by Parliament as envisaged in article 312 of the Constitution. The Act, initially applicable to the two Services above mentioned, was extended by Amendment Act 27 of 1963 to cover the constitution of three new All India Services one of which was the Indian Forest Service (I.F.S. for short). section 3 of the Act empowers the Government of India to make, after consultation with the State Governments, rules for the regulation of recruitment, and the conditions of service of persons appointed, to an All India Service. Such rules are to be laid, as soon as possible after they are made and for not less than fourteen days, before Parliament. 293 THE RULES 3. Pursuant to the amendment of 1963, mutual consultations were held between the Union Government and the various State Governments and the broad pattern I already in existence for the Indian Administrative Service and the Indian Police Service was decided to be adopted for the Indian Forest Service also. Once this decision was taken, the statutory rules followed. There were five sets of rules framed between 1966 and 1968: (i) The IFS (Cadre) Rules, 1966 (ii) The IFS (Recruitment) Rules, 1966 (iii) The IFS (Probation) Rules, 1968 (iv) The IFS (Pay) Rules, 1968 (v) The IFS (Regulation of Seniority) Rules, 1968 Some of the rules relevant for our present purposes may now be set out. 4(a) Cadre Rules: The Cadre Rules came into force on 1st July, 1966. Rule 3 provides that there shall be constituted for each State or group of States an Indian Forest Service Cadre. The cadre constituted for a State is called a 'State Cadre ' and a cadre constituted for a group of states, a 'Joint Cadre '. Rule 4 is important and can be extracted: "4. Strength of Cadres: (1) The strength and composition of each of the cadres constituted under rule 3 shall be as determined by regulations made by the Central Government in consultation with the State Government in this behalf. (2) The Central Government shall, at the interval of every three years, re examine the strength and composition of each such cadre in consultation with the State Government concerned and may make such alterations therein as it deems fit; Provided that nothing in this sub rule shall be deemed to affect the power of the Central Government to 294 alter the strength and composition of any cadre at any time: Provided further that the State Government concerned may add for a period not exceeding one year, and with the approval of the Central Government for a further period not exceeding two years, to a State or Joint Cadre one of. more posts carrying duties or responsibilities of a like nature to cadre posts. " Rule 7 empowers the State Government to make the appointments to the State cadre and one of the 'concerned ' State Governments to a Joint cadre. Under rule 8, every cadre post has to be filled by a cadre officer. Rule 9 envisages temporary appointments of non cadre officers to cadre posts. Under rule 10, cadre posts are not be kept vacant or held in abeyance for a period exceeding six months without approval of the Central Government. Under rule 11, temporary arrangements or leave arrangements could be made enabling a single cadre officer to look after two cadre posts but such arrangements cannot extend beyond 12 months. (b) Recruitment Rules: The Recruitment Rules were also framed simultaneously and came into force on 1st of July, 1966. They contemplate the initial recruitment of the officers of certain Services already in existence (hereinafter referred to as the State Forest Service or S.F.S. in short). Rule 3 and rule 4 are relevant for our present purposes . The relevant portions of these rules reads as follows: "3. Constitution of the Service: The Service shall consist of the following Persons, namely: (a) Members of the State Forest Service recruited to the service at its initial constitution in accordance with the provisions of sub rule (1) of rule 4; and (b) Persons recruited to the service in accordance with the provisions of sub rules (2) to (4) of rule 4. Method of recruitment to the Service (1) As soon as may be after the commencement of 295 these rules, the Central Government may Recruit to the Service any person from amongst the members of the State Forest Service adjudged suitable in accordance with such regulations as the Central Government may make in consultation with the State Governments and the Union Public Service Commission (U.P.S.C.): (2) After the recruitment under sub rule (1), subsequent recruitment to the Service, shall be by the following methods, namely: (a) by a competitive examination (aa) by selection of persons from amongst the Emergency Commissioned officers and Short Service Commissioned officers of the Armed Forces of the Union who were commissioned after the Ist November, 1961, and who are released in the manner specified in sub rule (I) of rule 7A; (b) by promotion of substantive members of the State Forest Service. Rule 6 makes it clear that all appointments to the service are to be made by the Central Government. No appointment can be made except after recruitment by one of the methods specified in rule 4. The appointments of persons recruited to the service under rule 4(2)(a) (i.e. by competitive examination) can only be made to the junior time scale of pay and the appointments of persons recruited to the service under rule 4(2)(b) (i.e., by promotion of substantive members of the State Forest Service) shall be in the senior time scale of pay. "However, under rule 6A, "an officer in the junior time scale of pay shall be appointed by the State Government concerned to a post in the senior time scale of pay if, having regard to his length of service, experience and performance in the junior time scale of pay, the State Government is satisfied that he is suitable for appointment to a post in the senior time scale of Pay. " Rule 7 deals with the recruitment by competitive Examination, rule 296 7A deals with recruitment by selection of persons from among officers released from the Armed Forces and rule 8 with recruitments by promotion. Rule 9 provides that the recruitment of persons under rule 8 is not to exceed 331/3 per cent of the number of senior duty posts borne on the cadre of that State. (c) Pay Rules: The Pay Rules provide for time scales of pay for the members of the service. There are two scales prescribed, one a Junior scale, the top of which is reached after 18 years of service and the other a senior scale which runs over a period of about 22 years. Under rule 4, the initial pay of a member of the service appointed under rule 4(1) of the Recruitment Rules has to be fixed in the junior time scale of the service at he stage he would have got if he had been appointed in that scale on the deemed date of appointment in the year of allotment. Sub rule (b) of rule 4(1) contemplates appointment of such an officer simultaneously to a post in the senior time scale and prescribes the mode of fixation of his salary in the senior time scale. (d) Seniority Rules: So far as seniority rules are concerned, two rules are relevant for our present purposes. One is the definition of 'senior post ' contained in rule 2(g), which reads thus: "2(g) 'Senior post ' means a post included and specified under item (1) of the Cadre of each State in the Schedule to the Indian Forest Service (Fixation of Cadre Strength) Regulations. and includes: a post included in the number of posts specified in item 2 and 5 of the said cadre, when held on senior scale of pay, by an officer recruited to the Service in accordance with sub rule ( 1) of rule 4 or rule 7 of the Recruitment Rules. " Rule 3 describes the mode of appointment and the allotment of a year of allotment to every officer appointed to the service. The seniority of officers is determined primarily by the year of allotment and, inter se officers having the same year of allotment, by the principles set out in rule 4. THE REGULATIONS 5. It may be mentioned that the rules contemplate regulations 297 being made by the Central Government in consultation with the State Government on various matters. Some of these regulations are also relevant: 6(a) Cadre Strength Regulations: The Fixation of Cadre Strength Regulations were framed in exercise of the powers conferred by rule 4(1) of the Cadre Rules. These regulations were first issued by a notification of the Government of India dated 31.10.1966 and were deemed to have come into force with effect from Ist October, 1966. There is only one substantive clause in this regulation, which reads thus: "2. Strength and Composition of Cadres The posts borne on, and the strength and composition of the cadre of, the Indian Forest Service in each of the States, shall be as specified in the Schedule to these regulations. " The schedule proceeds to set out the strength and composition of the cadres of various States. In these matters before us we are concerned with the position in regard to three States,: Uttar Pradesh, Maharashtra and Orissa. The provisions of the Schedule in so far as these States are concerned are as follows: Maharashtra U.P. Orissa 1. Senior posts under the State Government Chief Conservator of 1 1 1 Forests Deputy Chief Conservator of Forests 2 Addl. Chief Conservator of Forests 1 Conservator of Forests 7 9 4 Conservator of Forests (Development Circle) 1 Conservator of Forests, Working Plan Circle 1 1 298 Conservator of Forests, Headquarters 1 Special officer, Revenue & Forest Department 1 Deputy Conservators of Forests 35 48 24 Deputy Conservators of Forests, Integrated Unit 3 Deputy Conservator of Forests, Working Plans 8 Deputy Conservators of Forests, Foresters ' Training Division 2 Deputy Conservator of Forests, Forest Resources Survey Division 1 Forest Utilisation officer 1 1 Working Plan officer 7 4 Forest Extension officer 1 Chief Wild Life Warden 1 Timber Supply officer 1 Silviculturist 1 2 1 Working Plan officers Officer on Special Duty for Forest Labourers Cooperative Society 1 Officer on Special Duty for Forest Labourers Cooperative Society 1 Assistant to Chief Conservator of Forests 1 P.A. to the Chief Conservator of Forests 1 __ __ __ Total: 62 76 37 __ __ __ 2. Senior posts under the Central Government 5 6 3 __ __ __ 67 82 40 __ __ __ 299 3. Posts to be filled by promotion in accordance with rule 8 of the Indian Forest Service (Recruitment) Rules 1966 22 27 13 4. Posts to be filled by direct recruitment 45 55 27 __ __ __ 67 82 40 __ __ __ 5. Deputation Reserve 15% of 4 above 7 8 4 6. Leave Reserve 11% of 4 above 5 6 3 7. Junior posts 20% of 4 above 9 11 5 8. Training Reserve 5% of 4 above 2 3 1 __ ___ __ 90 110 53 __ ___ __ Direct Recruitment posts 68 83 40 Promotion posts 22 27 13 __ ___ __ Total Authorised Strength 90 110 53 __ ___ __ (b) Initial Recruitment Regulations: The second set of regulations is the Initial Recruitment Regulations framed in pursuance of rule 4(1) of the Recruitment Rules. These regulations are somewhat important for our present purposes and they have to be referred to in some detail. These also came into force with effect from Ist July, 1966. Regulation 3 provides for the constitution of a Special Selection Board (S.S.B.) for the purpose of making selections to the service. The S.S.B. consists of a number of officers, one of whom is the Chief Conservator of Forests (C.C.F.) of the State Government, concerned. Regulations 4. 5 and 6 have to be set out in full: "4. Conditions of eligibility (1) Every officer of the State Forest Service who, on the date of constitution of the Service (a) is holding a cadre post substantively or holds a lien on such post, or (b) (i) holds substantively a post in the State Forest Service, 300 (ii) who has completed not less than eight years of continuous service (whether officiating or substantive) in that Service, and (iii)who has completed not less than three years continuous service in an officiating capacity in a cadre post or in any other post declared equivalent thereto by the State Government concerned, shall be eligible for selection to the Service in the senior scale. (2) Every officer of the State Forest Service who has completed four years of continuous service on the date of constitution of the Service shall be eligible for selection to the Service in the junior scale. Explanation: In computing the period of continuous service for the purpose of sub regulation (1)(b) or sub regulation (2) there shall be included any period during which an officer has undertaken: (a) training in a diploma course in the Forest Research Institute and Colleges, DehraDun; or (b) such other training as may be approved by the Central Government in consultation with the Commission in any other institution. Preparation of list of suitable officers: (1) The Board shall prepare, in the order of preference, a list of such officers of State Forest Service who satisfy the conditions specified in regulation 4 and who are adjudged by the Board suitable for appointment to posts in the senior and junior scales of the Service. (2) The list prepared in accordance with sub regulation (1) shall then be referred to the Commission for advice, by the Central Government along with: 301 (a) the records of all officers of State Forest Service included in the list; (b) the records of all other eligible officers of the State Forest Service who are not adjudged suitable for inclusion in the list, together with the reasons as recorded by the Board for their non inclusion in the list; and (c) the observations, if any, of the Ministry of Home Affairs on the recommendations of the Board. (3) on receipt of the list, along with the other documents received from the Central Government, the Commission shall forward its recommendations to that Government. Appointment to the Service The officers recommended by the Commissioner under sub regulation (3) of regulations shall be appointed to the Service by the Central Government, subject to availability of vacancies in the State Cadre concern. (c) The Appointment by Competitive Examination Regulations: We may next refer to the appointment by Competitive Examination Regulations, 1968. All that is necessary for our present purposes is that, under these regulations, a candidate, to compete at the examination, must, inter alia have attained the age of 20 and not attained the age of 24 on the Ist day of July of the year in which the examination is held. There is a provision for relaxation of the upper age limit in respect of persons who are directly recruited to the gazetted cadre of the State Forest Service and put in less than 4 years ' service (including 2 years ' training for Diploma course in the Foreign Research Institute and Colleges, Dehradun on the Ist July, 1966. But persons who have put in more than 4 years ' service in the State Forest Service would not be eligible to appear in these examinations firstly because they would have crossed the maximum age limit and secondly because the provision for relaxation does not enuse in their favour. (d) Appointment by Promotion Regulations: Recruitment by promotion under rule 9(1) of the Recruitment Rules is governed by the Appointment by Promotions Regulations, 1966, which came into force with effect from 1.7.1966. A selection committee is constituted under regulation 3 to select candidates whose conditions of eligibility for 302 promotion are defined in regulation 4. Briefly speaking, the selection committee is to consider the cases of all substantive members of the State Forest Service, who on the first day of January of that year, have completed not less than eight years of continuous service (whether officiating or substantive) in a post not lower in rank than that of Assistant Conservator of Forests. This Committee would then prepare a list of eligible members which, after approval by the U.P.S.C., would be forwarded to the State Government for making appointment to the cadre posts. INITIAL RECRUITMENT 7. Kraipack case: Sometime after these rules and regulations were framed the initial recruitment to the service was taken on hand. S.S.Bs., including the C.C.F., made selections of officers to the various cadres. The process brought to light a serious defect in the constitution of the S.S.Bs. It has been mentioned earlier that, under the Initial Recruitment Regulations, a S.S.B. had been constituted for selection L) of officers at the time of the initial constitution of the service and that the Chief Conservator of Forests (C.C.F.) was one of the officers on the Selection Board. A perusal of the Schedule to the Cadre Strength Regulations would show that the C.C.F. was also one of the cadre posts mentioned in the Schedule. At the time of the initial recruitment, therefore, it was necessary also to recruit an officer who might eventually fill this post. Thus, the C.C.F. was not only on the S.S.B. but was also a prospective candidate for consideration in the initial recruitment. This somewhat anamolous position was considered by the Supreme Court in the case of A.K. Kraipak vs Union of India, AIR 1970 S.C. 150 in its judgment dated 29th April, 1969. The Supreme Court held that the initial recruitment to the State Cadre of Jammu & Kashmir was vitiated by the above circumstance and quashed the same. Though the question arose only with regard to one of the States, namely, Jammu & Kashmir, the position was identical in respect of several States in the Indian Union. Hence all the initial recruitments made to the various State cadres had to be quashed either suo moto by the Government or got quashed by proceedings in a court of law. It may be mentioned here that, in the States with which we are concerned here, the position was as follows. In Orissa, a select list of 41 officers was issued in January 1967, which had to be set aside as a result of the decision in Kraipak. In Uttar Pradesh, 85 persons were initially recruited to the service and this initial recruitment was held to be bad, on 11.12.1979, in Jagat Narain vs Union, CMWP 58 of 1968 following the decision in Kraipak. In Maharashtra, a selection was 303 made on 2.6.1967 of 57 persons but this selection was set aside by the High Court following Kraipak. LEGISLATIVE INTERVENTION 8.(a) Rule 4(3A) The decision in Kraipak having rendered the initial appointment in all the States invalid, the defect had to be cured and fresh selections had to be made by way of initial recruitment. Perhaps a second selection could have been made even under general law by way of implementation of the decision but Government wanted to make sure and, therefore, it introduced rule 4(3A) in the Recruitment Rules. This provision reads as follows: "4(3A) Notwithstanding anything contained in this rule where appointments to the Service in pursuance of the recruitment under sub rule (1) have become invalid by reason of any judgment or order of any court, the Central Government may make fresh recruitment under that subrule and may give effect to the appointments to the service in pursuance of such fresh recruitment from the same date on which the appointments which have become invalid as aforesaid had been given effect to. " This rule was introduced with effect from 1.3.1971. section 3(1A) It appears that certain doubts had arisen in the meanwhile regarding the power of the Government to make rules with retrospective effect. Since such retrospective effect was necessary for various reasons and particularly for implementing the decision of the Third Central Pay Commission, it was considered necessary to make a specific statutory provision clarifying the power of the Central Government to make rules, if necessary, with retrospective effect. Parliament, therefore, enacted the All India Service (Amendment) Act, 1975. The statement of objects of the Amendment Act shows that section 3 of the Act was amended "so as to empower the Central Government to make rules with retrospective effect subject to the safeguard that no rules shall be made retrospectively so as to prejudicially affect the interests of any person, who may be governed by such rules. " The Amendment Act also proposed to validate rules which had been made in the past with retrospective effect. It may the convenient here to set out the new sub section ( lA) introduced in section 3 of the Act the 1975 Amendment Act. This sub section reads as follows: 304 " 1A The power to make rules conferred by this section shall include the power to give retrospective effect from a date not earlier than the date of commencement of this Act, to the rules or any of them but no retrospective effect shall be given to any rule so as to prejudicially affect the interests of any person to whom such rule may be applicable. " It is also necessary to refer to section 3 of the Amendment Act, which was in the following terms. "3. Validation No rule made, or purporting to have been made, with retrospective effect, under section 3 of the Principal Act before the commencement of this Act shall be deemed to be invalid or ever to have been invalid merely on the ground that such rule was made with retrospective effect and accordingly every such rule and any action taken or thing done thereunder shall be as valid and effective as if the provisions of section 3 of he Principal Act, as amended by this Act, were in force at all material times when such rule was made or action or thing was taken or done. Purvez Qadir 's Case Exercising the powers conferred by the amendment of the Act and the rules, the Central Government constituted fresh S.S.Bs. to consider the initial recruitment to the various State cadres in place of the one that was quashed in Kraipak. This raised the question of the validity of rule 4(3A), introduced with substantial retrospective effect. The seniority of persons recruited to the service as affected by the provision that recruitments to be made pursuant to the new sub rule would be deemed to have taken effect from Ist October, 1966. The validity of the rule was, therefore, challenged by various concerned officers but this challenge was repelled by the Supreme Court in the case of Parvez Qadir vs Union of India & Ors., ; 11. Chothia Case Another challenge was also posed to the initial recruitment made in certain States under rule 4(1). It appears that the S.S.Bs. had considered not all the officers who were eligible under the initial recruitment rules but only such number of them as was considered necessary to fill up the vacancies that were then available in the State cadre. Thus, for example, in the State of Maharashtra, although there were 116 officers eligible for consideration, the State is 305 said to have considered only about 95 of them. The others were not, it is alleged, considered by the S.S.B. This procedure was challenged by a number of officers. A contention was raised that rule 4(1) and the regulation thereunder envisaged a consideration by the S . Of (broadly speaking) all the officers belonging to the State Forest Service who had put in 8 years of service or 4 years of service (as the case may be) for recruitment to the service and that the S.S.B. had to arrange the names of all the officers found to be eligible and adjudged suitable for appointment in the order of preference. Thereafter, subject to the availability of vacancies, these officers had to be recruited to the service. It was also urged that in respect of each one of the officers not placed in the select list, the SSB had to record and forward to the U.P.S.C. specific reasons for their non inclusion in the list. It was not sufficient for the S.S.B. generally to say that it had considered the other officers and found them unsuitable as initial recruits. This contention was accepted by the Supreme Court in Union of India vs Chothia., [1978] 3 S.C.R. 652. 12. Present Cases In the present matters, we have to consider certain questions arising out of the second (in the case of U.P., the second and third) set of selections made by the SSBs in place of the first selection set aside by Kraipak. To avoid confusion, we may clarify here that what we are concerned with in all the cases is the INITIAL RECRUITMENT under section 4(1) of the Recruitment Rules but made for the second or third time, the first selection having been set aside by Kraipak. The problem arises this way. It has been mentioned that the first selections by way of initial recruitments to the State cadres were made sometime in 1966 and 1967. The Kraipak decision came in 1969. In the meanwhile in many of the States the first selection had been followed up by subsequent recruitments largely made on the basis of competitive examination under rule 4(2)(a) of the Recruitment Rules and a few also by promotion under rule 4(2)(b). As a result of the second (and third) selections made by the SSBs, a number of officers in the respective S.F.S. have been given appointment in the I.F.S. with effect from 1. 10.1966 under rule 4(3A) and have thus been placed in a position of higher seniority vis a vis the recruits under rule 4(2) (all of whom are, for convenience, hereinafter referred to as 'direct recruits '). The direct recruits are dissatisfied with this for obvious reasons. The present batches of cases relate to three State cadres, Maharashtra, Orissa and Uttar Pradesh. Before dealing with the contentions, it may perhaps be convenient to give a brief resume of the position in each of these States. 306 14. Uttar Pradesh The nine petitioners in the High Court (of whom 8 are appellants before this court) are direct recruits of 1968 and 1969 confirmed between 1969 and 1972 after probation. In this State, the initial recruitment was made in 1966 67 of 85 officers, 58 to posts in the senior time scale and 27 to posts in the junior time scale. Subsequently, six persons were promoted under rule 4(2)(b) and nine persons were recruited under rule 4(2)(a) of the Recruitment Rules. The initial recruitment having been declared bad, a fresh SSB was appointed and, on its recommendations 104 persons were appointed to the Service, 60 to senior time scale posts and 44 to junior time scale posts. Again in 1976, six more persons were added and thus 110 persons have been taken in as and by way of initial recruitment as against 85 persons taken in the first selection. The direct recruits are aggrieved by these selections. They contend: (a) Under the Maharashtra Schedule to the Cadre Regulations, there can be initial recruitment only to 28 junior posts. This has been exceeded by the second and third selections; (b) As on 23.12.1974, the total strength of the cadre rose to 104 plus 15, appointed earlier under rule 4(2), thus making a total of 119 as against an authorised strength of 110 only; (c) The second and third selections can only be made to validate the initial recruitment of 85 which had been invalidated and cannot be made use of to increase the number of initial recruits; (d) The third selection of six officers is, in any event, bad as the power under rule 4(3A) could have been exercised only once; and (e) It appears that in the subsequent selections certain officers not adjudged suitable at the first selection have been included. This could have been done only if their confidential report (CRs) subsequent to, or other than, those considered at the time of the first selection had been considered. This is not. justified as a recruitment under rule 4(3A) has to be made as if it was being made at the time of the initial recruitment i.e. 1. 10.1966 and subsequent records cannot be taken into account. Their contentions having been rejected by the High Court, they are in appeal. 307 15. Maharashtra Turning to Maharashtra, the position is as follows: The first selection was made on 2.2.1967 of 57 officers, 36 for the senior time scale posts and 21 for the junior time scale posts. This was set aside. On 13.7.1971, at the second selection, 116 officers were found to be eligible but only 66 officers were considered suitable for appointment. 39 out of 51 eligible officers were found suitable for senior scale out of whom 35 were appointed immediately and four later. 27 were found suitable for junior scale out of whom 23 were appointed initially and four later. All these 66 appointments were made w.e.f. 1. 10. 1966. The writ petitioners before the High Court (in. CA No. 2443/74) were persons who had joined the SFS in 1962 and had put in 4 years.of service as on 1. 10. 1986 and were thus eligible for consideration to junior scale posts. Their grievance was that the Government had not considered the case of all the officers who were eligible for consideration for junior posts (viz. those in section Nos. 52 to 116 on the eligibility list) because the Government, which had found 23 officers suitable when they reached section No. 96 stopped there and did not consider the names of the others at all as they should have done under Chothia. Initially, the writ petition was dismissed on 2.6.1979 for the failure to implead all persons affected as parties but this Court by its order dated 24.10.1980 (in CA 2359/80) restored the matter for fresh disposal after adding the affected persons as parties. The High Court eventually allowed the writ petition on 7.8.1981 holding that all the 116 officers should be considered and that the omnibus reason given for rejecting some is not sufficient compliance with regulation 5(2)(b) of the Initial Recruitment Regulations. It directed that now the 116 persons should be considered for the 90 posts available in the State cadre in strict compliance with regulation 5. Some of the respondents, comprising persons who had been directly recruited under rule 4(2) between 1968 and 1970, have preferred the appeals to this Court. While they have in principle no objection to a fresh selection, their contention is (a) that the recruitments to the senior time scale posts should not be redone as there is no controversy regarding the selection of 39 out of 5 1 eligible officers; (b) that the number of selections to junior time scale posts from out of the candidates section Nos. 52 to 116 should not exceed 23; and (c) that the selections should be made on the basis of CRs upto 1. 10. 1966 without reference to subsequently changes made therein or the CRs for subsequent periods. On behalf of the writ petitioners before the High Court (respondents here), a preliminary objection has been taken. They point out that the appellants had not raised any protest of this type either at the stage of hearing of the original writ petitions or at the stage of their rehearing (when they had been added as parties). Neither was any counter affidavit filed nor was 308 there any appearance on their beahlf. In view of this, it is contended that their appeal is not maintainable. It is also submitted that the selections now being made are for an initial recruitment as on 1.1().1966, a date at which the appellants had not been "born" into the service, and so they do not have any locus standi to complain against any recruitments as on the said date. Without prejudice to the above preliminary objections, they also support the judgment of the High Court on merits. Orissa In the case of Orissa, writ petitions have been directly filed in this court. There are eight petitioners who had joined the Orissa State Forest Service as on 1.4.1962. After two years ' training, they were appointed as Assistant Conservators of Forests on 1.4.1964. By 1.4.1966 they had completed 4 years ' continuous service in the State Cadre. They were, therefore, eligible for selection to junior scale posts in the IFS. Two selections were made by way of initial recruitment, once in January 1967 when 4 1 officers were selected and, then in 1972 when 42 out of 82 eligible officers were selected. The petitioners were not adjudged suitable at either of these selections but they were eventually taken into the IFS under Rule 4(2)(b) between 1975 and 1977. The petitioners ' contention is that their names were not considered at all either at the first selection or at the second selection under an impression that the number of posts in the junior time scale were limited. It is said that the selections were made by considering eligible officers in the order of seniority only to an extent necessary to recruit 41 or 42 persons and the Government did not consider all the 82 eligible officers and select 42 out of them arranged in the order of preference. This, it is argued vitiates the selection as held in Chothia. In the counter affidavit, these allegations are vehemently denied. It is claimed that the petitioners were all considered at the time of drawing up the earlier select lists. The respondents, are (a) the persons selected and appointed in 1972 who are still in service and (b) persons who have come in between 1966 and 1975 by way of recruitment under rule 4(2)(a). They plead that the writ petition should be dismissed on grounds of laches as the petitioners raised no such protest or objection at any earlier stage and have come to court after a lapse of twelve years. They also deny the allegations in the writ petitions and contend that the petitioners had all been duly considered at the earlier selections but had not been adjudged suitable for recruitment to the service. These, in brief, are the problems raised in these cases and we may now proceed to deal with them one after the other. 309 CAN NUMBER EXCEED INITIAL SELECTIONS? 18. The first contention urged on behalf of the direct recruits is that rule 4(3A) authorises the Government to fill in only the number of posts the appointment to which had been declared void by the Court and no more. Thus, in U.P., the initial recruitment which had to be quashed because of Kraipak was of 85 persons. Taking advantage of this situation, the Government purported to recruit 104 persons on 23.12.1974 and six more in 1976, thus completing the total strength of 110 as against 85 first filled up. Likewise, in Maharashtra the first selection was of 57 persons which was expanded to 66 in 1971. ln Orissa, the first selection was of 41 persons but the second selection resulted in the recruitment of 42 persons. T his addition to the number of officers first recruited in the subsequent selections is challenged by the direct recruits principally because the subsequent selections, which are deemed to be a remaking of the initial recruitment, have been given retrospective effect from 1. 10.1966 and thus these persons rank higher in seniority to the direct recruits who have come in from 1967 onwards. We are unable to accept this contention. The initial recruitment regulations clearly envisage that the S.S.B. should consider the cases of all the officers in the S.F.S. who fulfill the conditions of eligibility and judge their suitability for appointment to posts in the service and prepare a list of such officers in the order of preference. This selection was initially done by a Board, the constitution of which was found to be vitiated. The logical consequence of this would be that the process has to be redone by a competent and validly appointed S.S.B. from out of the eligible officers. It is not anybody 's case that, in the second or third selections, the Board has considered persons other than those in the SFS who were eligible as on 1.10.1966. In other words, the range of selection was the same as was considered or should have been considered by the initial S.S.B. It is also not anybody 's case that the Board has considered the records of any of these officers subsequent to 1.10.1966. It, however, appears that there had been some changes, subsequent to 1. 10.1966, in the CRs of some of the officers pertaining to the period upto 1. 10.1966, consequent on representations made for expunction or modification of adverse remarks. Sri Kackar suggested that such revised CRs should not have been taken with account but we are unable to agree. We do not think that anyone can validly object to this course since the case of an officer who has succeeded in having an adverse remark against him struck off or modified is exactly on the same footing as if such adverse remarks had 310 not been there at all or had been there in the modified form right from the beginning. What has happened therefore is only that, from the same set of officers as had been considered by the initial S.S.B., the subsequent Boards have adjudged more officers as suitable for recruitment, partly due to inherent differences of approach between one Board and another in the process of adjudication and partly due to the fact that the records of some of the officers for the relevant period had undergone changes which had to be taken into account. One further reason for the increase in the number of officers adjudged suitable (which we shall discuss in some detail later) is that the initial S.S.B. considered only some out of all the eligible officers and did not extend their scrutiny to all the eligible officers as they should have done as per the decision in Chotia to sum up, the decision in Kraipak necessitated a complete review of the first selection. On no logical basis can the subsequent Selection Boards be compelled to restrict their adjudication of suitability to the same list number of persons as the first Board had selected, so long as the same list of eligible officers and their records as on 1. 10.1966 were considered. We see, therefore, no t) merit in the first contention urged on behalf of the direct recruits. STRENGTH & COMPOSITION OF THE CADRE 20. The second contention urged on behalf of the direct recruits is more substantial and is perhaps the vital contention on which their case rests. It is pointed out that the Cadre Strength Regulations not merely prescribe the strength of the various cadres but also their composition. One of the principal features of the composition as per the schedules is that the authorised strength prescribed is to consist of a certain number of senior posts and a certain number of junior posts. According to the direct recruits, the schedules prescribe the minimum number of senior posts and the maximum number of junior posts. It is pointed out: (a) that all the posts enumerated against items nos. 1 and 2 in each of the schedules are specifically described as senior posts; (b) that items nos. 3 and 4 set out in each of the schedules pertain to recruitments (subsequent to the initial recruitment) under rule 4(2) of the Recruitment Rules and that these items have to be left out of account in considering the initial recruitment under rule 4(1);(c) that all the posts enumerated against item No. 7 are described as junior posts; and (d) that the posts mentioned against items nos. S, 6, and 8 depend upon item No. 4 and so partake of the same character. Even assuming that all the posts against item nos. 5 to 8 are only junior posts, the total number of junior posts cannot exceed 13, 28 and 23 respectively in the case of Orissa, Uttar Pradesh and Maharashtra. On 311 this premise, it is contended that the appointments purportedly made by way of initial recruitment in the subsequent selections have exceeded the quotas prescribed by the schedules in regard to senior and junior posts. Thus in U.P., while the first recruitment of 58 officers to the senior scale and 27 to the junior scale was in order, the second recruitment of 44 persons to junior scale posts was not warranted. Likewise, in Maharashtra while the Government restricted itself in the first selection to the appointment of 23 persons to the junior scale, the High Court has now directed the filling up of all the 90 posts in the cadre by considering the 116 eligible officers, overlooking that the maximum number of officers found eligible for consideration to senior scale posts is only 51 and that out of the balance of 65 persons only 23 can be appointed to junior scale posts. The petitioners submit that, while they do not wish to attack the validity of the appointment of officers in excess of the respective quotas, it is necessary at least to ensure that the officers so appointed do not steal a march over those who have been rightly recruited in terms of rule 4(2) after the first recruitment in terms of rule 4(1) had been completed. The Government and the initial recruits seek to meet the above contention in two ways. They contend, firstly, that the assumption of the direct recruits that the prescription of strength of the service in the schedule will apply to the initial recruitment is wrong and that, even if this were correct, the further assumption that the schedule separately prescribes limitations on the number of junior and senior posts is wrong. Secondly, they submit that, even if both the above assumptions are granted, the argument overlooks that the rules confer power on the Central Government to alter the strength and composition of the cadres at any time and that, therefore, any appointments, even if made in excees, should be treated as an automatic expansion of the cadre strength and would not be irregular or invalid. We may take up the second argument first. If it were correct. it would be a complete answer to the contentions of the direct recruits. The argument is that it is for the Central Government to fix the strength and composition of the cadres and that this power can be exercised by it at any time. The first proviso to rule 4(2) of the cadre rules, it is said, places this beyond all doubt. As against this, it is contended by the direct recruits that the proviso relied upon is only a proviso to rule 4(2) and does not extend to rule 4(1). it is urged that it has application only to the power of the Central Government to make alterations to the cadre strength in between the three year review contemplated by rule 4(2). Shri Kackar, in this context, referred us to 312 the following observations in Royappa vs State of Tamil Nadu, [19741 2 SCR 348 at p. 379: "We now turn to the first ground of challenged which alleges contravention of the second proviso to r. 4(2) of the Indian Administrative Service (Cadre) Rules, 1954 and r. 9, sub s.(1) of the Indian Administrative Service (Pay) Rules, 1954. So far as the second proviso to r. 4(2) of the Indian Administrative Service (Cadre) Rules, 1954 is concerned, we do not think it has any application. That proviso merely confers limited authority on the State Government to make temporary addition to the cadre for a period not exceeding the limit therein specified. The strength and composition of the cadre can be determined only by the Central Government under r. 4( l) and the Central Government alone can review it trienially or at any other intermediate time under r. 4(2). We do not think that such a narrow interpretation of the proviso is warranted. As we see it, the proviso only outlines the general principle that, whoever has the power to do a particular thing has also the power to exercise it from time to time, if need be: (vide, section 14 of the ). It had to be specifically put in because of the language of the main part of sub rule (2) providing for a triennial review lest it should be construed as a restriction on the general power otherwise available. We, therefore, agree with the contention of the initial recruits that the Central Government has the power to alter the strength and composition of the cadres at any time. We are, however, still of the view that the contention urged on behalf of the initial recruits cannot be accepted for a different reason. If the terms of the relevant rules are scrutinised, it will be seen that the strength and composition of the cadre has to be determined by regulations and that these regulations have to be made by the Central Government in consultation with the State Government. It is a well settled principle that, if a statutory power has to be exercised in a particular manner, any exercise of that power has to comply with that procedure. [t follows, therefore, that if the initial composition can be only drawn up in consultation with the State Government and by regulations, it will not be permissible for the Central Government to modify or alter the same save in the same manner. In fact also, it has been brought to our notice, there have been subsequent increases in the authorised strength of almost all State Cadres and this has been effected by an appropriate amendment to the Regulations. It is not the 313 case of the Government that before the second and third selections were made, either the State Government was consulted or the regulations were amended for increasing the strength. Nor is it even their case that there was any specific order by the Central Government changing the strength and composition of any cadre. We are, therefore, of opinion that it is not possible to accpet the contention of the initial recruits that the mere appointment of an excess number of officers should be treated as an automatic expansion of the cadre strength and composition in exercise of the power available under rule 4( 1). On behalf of the Government and the initial recruits, it was contended that the Regulations, in this respect, cannot be considered to be mandatory, particularly as they do not outline the consequences that will follow on a violation of their requirements. Reference was made, in this context, to the decision of this court in Lila Gupta vs Lakshmi Narain; , at p. 932; Atlas Cycle Industries Ltd. vs State of Haryana, ; at p. 1076 and 1084 5 and G.S. Lamba vs Union of India, at p. 1032. We do not think the observations cited are in point. The nature and context of the provisions considered in the cited decisions were totally different. In Lila Gupta, the court was concerned with the question whether a marriage contracted in violation of the proviso to section 15 of the Hindu Marriage Act should be considered void; and the Atlas case, the question was whether the non lying of a notification before the Legislature rendered it null and ineffective; and in the Lamba case the court, in the context of certain facts, came to the conclusion that the exercise of a power of relaxation should not be treated as vitiated merely because reasons were not recorded. Here we are concerned with a set of Regulations whose whole purpose is to fix the cadre strength. It is also a provision in regard to an All India Services in regard to the constitution of which both the Central Government and State Governments have a say. It is difficult to accept, in this context, the submission that the cadre strength could be varied without amending the Regulations and schedule of without consulting the State Government concerned. The former course would leave the strength of the cadre easily alterable, fluctuating and indeterminable and thus nullify the entire purpose of the Cadre Strength Regulation. So far as the latter is concerned, this Court held, in Kapur vs Union of India, that it is not open to a State Government to overutilise the deputation reserve in all All India Service without consulting the Central Government. Equally, we think, it is not open to the Central Government to alter the strength and composition of the Cadre without con 314 sulting the State Government concerned. The second argument of the initial recruits is, therefore, rejected. We may now turn to the first argument which, again consists of two parts. The first is that the restriction on number of officers in the schedule does not apply to the initial recruitment at all. It is argued that the idea and intention of the Initial Recruitment regulations is that all officers of the SFS found eligible for appointment either in the senior time scale or in the junior time scale and adjudged suitable for such appointment to the service by the S.S.B. and U.P.S.C. will automatically stand recruited to the service irrespective of the number of such of . Thus, it is argued that even if, in any particular State, the number of such officers exceeds the total authorised strength of that State Cadre as per the Schedule to the Cadre Regulations, there can be no bar to their initial recruitment to the service. In support of this contention, it is pointed out that items nos. 3 and 4 mentioned in the schedule, viz., posts to be filled by direct recruitment, are references to recruitments under rule 4(2) of the Recruitment Rules. It is then said that item No. S and 8 which are expressed as a percentage of item No. 4 can also be considered only as a reference to such subsequent recruitment. It follows, it is argued, that the total authorised strength which is the aggregate of item nos. 3 to 8 can pertain only to the strength of recruitments under rule 4(2) and not to the initial recruitment. Plausible as this argument appears, we are unable to accept this contention. The Cadre Regulations read with the Cadre Rules leave no doubt that the strength and composition referred to, or prescribed, therein is of the entire cadre of the service in the State concerned and is not restricted to the recruitments made after the initial recruitment. The total authorised strength referred to is the total number of officers who, at any point of time, can man the posts in the cadre. It could not have been the intention that the cadre should consist of an indefinite number of persons recruited by the SSB from the SFS supplemented by the number of officers referred to as the total authorised strength. This conclusion is reinforced by three important considerations. The first, as rightly pointed out by Sri Kackar, is that if the intention were that the Schedule was to operate only in respect of recruitments under rule 4(2), it would have been specifically so mentioned. Not only has this not been done; the regulations have been made retrospective with effect from the date of commencement of the Service which would be totally without purpose on the argument addressed by the initial recruits. Such a situation cannot be accepted. The second is that the number of officers referred to against item nos. 3 and 4 is the same as the numbers indicated against 1 and 2 which represents posts already in 315 the State cadre and in Central Government and which have to be filled in by way of initial recruitment. Thus, for example, if in Maharashtra, 67 officers in the SFS are found eligible and are recruited to the service against the various cadre posts and if subsequently 67 officers are recruited against item nos. 3 & 4, the total authorised strength will rise to 134. The fact that the total of items 1 and 2 is the same as the total of items 3 and 4 indicates beyond doubt that, apart from officers recruited against items 5 to 8, the cadre, at any point, can only consist of the number prescribed as the authorised strength and not virtually twice that number. The more harmonious way of reading the entries in the schedule in that the maximum strength of the cadre at any point can only be the total authorised strength which will comprise of the senior posts mentioned against items nos. 1 and 2 and the adjuncts specified against items nos. 5 to 8. Items 3 and 4 are indicated in the schedule only to show that after the initial recruitments are over and recruitments are to be made to senior posts in the cadre under rule 4(2), the number of promotes should not exceed 331/3% of the senior posts in the cadre, which is the requirement of rule 9 of the Recruitment Rules. The break up and composition of the cadre, referred to against items nos. 3 and 4, will only be relevant at the stage when, all the initial recruits having retired or ceased to be in service, the cadre comprises exclusively of persons recruited under rule 4(2). The third consideration which reinforces our conclusion is the significant mandate that the initial recruitment under rule 4(1) shall be "subject to the availability of vacancies in the State Cadre concerned". If the number of initial recruits can be indefinite and limitless as urged, this expression would be meaningless. The apprehension that the interpretation placed by us would create difficulties where the number of eligible officers of the SFS adjudged suitable exceeds the total strength is really without foundation. In the first place, a good deal of discussion preceded the framing of the rules and regulations and one can reasonably assume that the cadre strength has been fixed for each State with a fair idea about the number of SFS officers who may be eligible and are likely to come into the cadrs at the time of initial recruitment. The actual experience in the three States before us also shows that the contingency of such officers exceeding the total authorised strength is quite remote. Secondly, even if in any case there should be an excess of such officers, no insurmountable problems will be created. The Central Government, in consultation with the State Government (which would only be too anxious to place its eligible officers in the All India Service) can increase the authorised total strength to accommodate them. Even otherwise, the surplus officers will be kept in the waiting list and will get into the service as and when vacancies available due to retirement 316 or other vacation of office by the initial recruits arise or as and when the cadre strength is augmented. All that is necessary is that they should all be accommodated before recruitment under rule 4(2) is undertaken. There is, therefore, no difficulty in holding that the total authorised strength of the cadre is to be counted by including the initial recruits and that all eligible officers adjudged suitable cannot be recruited to the Service in excess of the total authorised strength. The truly critical, and really difficult, question that needs consideration in these appeals is not that appointments by way of initial recruitment were made in excess of the total authorised strength but that the Government has failed to keep in mind the restrictions placed on the number of senior and junior posts in each cadre while making appointments. The point made is that, in each State cadre, the posts indicated against items nos. I and 2 are senior posts. These, say the petitioners, can be filled up subject to the availability by officers found eligible under regulation 4(1). Items nos. 3 and 4 do not at all figure at the time of initial recruitment. So far as items 5 to 8 are concerned, it is submitted, items 7 and 8 are clearly junior posts and, though there is no indication whether items nos. 5 and 6 are to be junior or senior posts, the total number of junior posts in the cadre cannot exceed the total number mentioned against items nos. 5 to 8. The grievance of the petitioners is that more recruitments have been made against junior posts than is permissible under the respective schedule. The above contention arises in the following way. In U.P. as has been pointed out earlier, the first recruitment of 58 and 27 fell within the prescribed strength. But, in the second selection, 44 junior posts and again six more officers in a third selection were taken in. This it is said, was not justified as the maximum number of junior posts in the cadre was only 28. While it is suggested that, strictly speaking, the appointment of surplus officers is invalid, the petitioners say that they do not want those appointments declared invalid but only pray that they should not be treated as initial recruits and hence should be placed in seniority below the direct recruits. In Maharashtra, the setting aside of the initial recruitment is not, and cannot be, complained against in view of the earlier decision of this Court. The only grievance here is that the High Court, while ordering a redo of the initial recruitment, by a second selection, has directed that, the 116 eligible persons should be considered for 90 posts, without specifying that officers eligible for senior scale will have to be considered for 67 senior posts and a maximum of only 23 officers could be taken for junior posts. In 317 Orissa, 41 officers were recruited in 1967 and 42 in 1972 by way of initial recruitment. It is not known whether the number of officers appointed to junior posts has been restricted to 13 (the total of items nos. 5 to 8 in the Schedule) or not but there is no allegation that this number has been exceeded and so this question does not arise. The answer of the initial recruits to this contention is that it proceeds on a complete misapprehension of the nature of the all India Service and the composition of the cadre. They say that the rules contemplate two stages. The first is a recruitment of an officer to the All India Service, whether under rule 4(1) or 4(2), in accordance with the regulations and subject to the total strength authorised thereunder. This is done by the Central Government and it is with this that we are concerned here. The second is the appointment of a person recruited to the Service to a particular post in the cadre. This has to be done by the State concerned under rule 7 of the Cadre Rules. At the first stage, the post which the person may eventually accept in the service is totally irrelevant. Once a person is recruited, whatever may be the post to which he may be assigned, he will be an I.F.S. Officer belonging to the cadre. To give an easily understood analogy, a person who succeeds in the written and viva voce tests held for recruitment to the Indian Administrative Service becomes a member of the Service once he is recruited having been selected and having come within the scope of the available posts in the service. Thereafter, whether he is to be appointed as a Collector or as an officer in the Secretariat or is to occupy one of the innumerable cadre posts allotted to the service and whether he should be given a junior post or senior post will be a concern of the State concerned and will have no bearing on the validity of his initial recruitment to the service. The initial recruits also object to the attempt of the direct recruits to equate senior and junior posts with senior time scale and junior time scale posts mentioned in the Initial Recruitment Regulations. They say that a senior officer can occupy a junior scale post if exigencies of the service so require. This will not cause any prejudice to the officer because he will be carrying his own time scale of pay on any post. So also, a very junior officer can be appointed to a senior post, for the Pay Rules envisage an officer just recruited to the service being appointed simultaneously to a post on the senior time scale. Attention is also invited to the definition in the Seniority Rules which defines certain posts as senior in the light of the status of the officer occupying the same. It is urged, therefore, that though the Cadre Regulations describe some posts as senior and some as junior, this is 318 only a description of the nature of the posts on the cadre and has no bearing on the nature of the initial recruitment. Hence, it is said, a reference to the junior and senior posts should not be confounded with the right of an appointee to be placed on a junior or senior time scale post, as the case may. We have given careful thought to the various aspects of the issue and it seems to us that the initial recruits are right in contending that the Cadre Regulations do not lay down any water tight classification of junior and senior posts in the manner contended for by the direct recruits. It is true that the Cadre Regulations make a reference to senior and junior posts but this is not intended to be an essential element in the composition of the cadre. For one thing, the Cadre Regulations do not indicate, in respect of a number of posts, whether they are to be considered as junior or senior. This would not have been the position if this classification was intended to be a vital feature of the composition. Secondly, the Cadre Regulations contain no definition of the words 'senior ' and 'junior ' posts. There is a definition only in the seniority rules but even that definition declares a post indicated in item No. 2 of the schedule as a senior post to be a senior post only when the current incumbent therein at any point of time is an officer on the senior time scale of pay. Nor can we conclude that the posts are divided into senior time scale and junior time scale posts, the former of which can be describe as senior, and the latter as junior posts. This is because the Pay Rules show that if regard be had to pay scales, some of the posts are on scale of pay higher than either of the scales indicated in rule 3 thereof. Again the rules envisage that (a) officers recruited under rule 4(1) should be placed on either of the scales depending, broadly speaking, on the length of their service; (b) direct recruits through competitive examination should be taken on the junior scale; and (c) that recruits through promotion should be placed on the senior scale. In other words, it cannot be postulated that entrants to the service will first enter on a junior scale post and work his way upward. Though rule 6A of the Recruitment Rules permits an appointment of an officer on a junior time scale post to a post on the senior time scale only if "having regard to his length of service, experience and performance in the junior scale of pay, the State Government is satisfied that he is suitable for appointment to a post in the senior time scale of pay", rule 4 of the Pay Rules envisages an officer recruited under rule 4(1) of the Recruitment Rules being simultaneously appointed to a post on the senior time scale. This rule indeed takes away the basis of the arguments on behalf of the direct recruits for it will be open to the State Government to appoint even officers recruited on junior time 319 scale to posts on the senior time scale. Equally, there appears to be no specific bar to an officer recruited to the senior time scale being appointed to a post described as a junior post in the Schedule to the Cadre Regulations as such an officer will carry his time scale with him, although, normally, such an appointment is not likely to be made. All these rules therefore show that an officer being in the junior or senior time scale or a on a junior post or senior post depend upon various eventualities and it is not possible to pin down any posts as senior or junior or any officer as on one of the two time scales. We are, therefore, inclined to agree with the initial recruits that the reference to junior and senior posts in the cadre should not be considered to be so a rigid or integral part of the cadre composition as to affect the validity of appointments made in excess of a particular number. However, we would like to say that, in the view we take of the regulations as discussed below, it is unnecessary to express any concluded opinion on the above issue. One thing that is plain on the terms of the regulations is this: that, once a person is found to be eligible and is adjudged suitable for recruitment under the Initial Recruitment Regulations, he has to be taken into the service as part of the initial recruitment either immediately on 1. 10. 1966 or as and when vacancies arise in the cadre. When the number of officers found eligible for each category is less than the number of available posts in the corresponding category, there is no difficulty. But where the number of suitable candidates to either category or in both categories exceeds the number of posts, difficulties arise on the stand taken by the direct recruits. In this context, we can conceive of four types of situations. To illustrate with reference to a concrete example, we may consider a State where, on the basis urged by the direct recruits, there are 45 senior and 20 junior posts in the cadre. Let us suppose that the SSB 's selections reveal one of the following alternative states of affairs: (i) that 25 persons in the SFS are suitable for senior posts and 15 persons for junior posts; (ii) that 25 persons in the SFS are suitable for senior posts and 40 persons for junior posts; G (iii)that 50 persons in the SFS are suitable for senior posts and 15 for junior posts; and (iv) that 75 persons in the SFS are found suitable for senior post and 40 for junior posts. 320 Situation (i) will create no difficulty. The initial recruitment will be inadequate to fill up the cadre and the remaining posts will have to be filled in by recruits under rule 4(2). In situation (iii) also, there will be no difficulty if it can be agreed that persons found eligible for senior posts can be given junior posts for the time being. But if this is not conceded, five of the officers found suitable for senior posts will be left out even though five of the junior posts are vacant and will have to wait until enough senior posts fall vacant and then compete for them alongwith others who may have become eligible therefor by then. In situation (ii) above, though there are 40 persons found suitable for junior posts, twenty of them will have to be left out even though there are 20 senior posts remaining vacant. And, in situation (iv) above, 30 . Officers adjudged suitable for senior posts and 20 for junior posts will he left out. The situations thus result (a) either in vacancies being unfilled though there are available officers adjudged suitable (b) or in officers adjudged suitable being left out altogether. The first of these positions is contrary to the spirit of the Recruitment. Rules that no cadre posts should remain vacant for long spells particularly when cadre officers are available to occupy them. It is necessary to remember in this context that if the vacancies are in senior posts they can be filed up only by SFS officers with X years ' continuous service and, ex hypothesi, such officers will not be available for at least four more years, and if the vacancies are of junior posts, they can be filled in only after a competitive examination is held and this will take time. The second of the positions will leave the officers selected for the service and having more than 4 years of experience in the SFS in a very uneviable position. They cannot be appointed according to the petitioners, because there are no vacancies of posts for which there have been found suitable. They cannot seek recruitment under rule 4(2)(a), as regulation 4(3) of the Appointment by Competitive Examination Regulations prescribes an upper age limit of 24 years which they would have crossed already and permits relaxation of that age limit only to persons directly recruited to the SFS officers who had put in less than four years ' service including their training period. They cannot also hope for recruitment under rule 4(2)(b) until they put in eight years ' of service. The result will be that these persons will be in the dilemma of looking on and seeing younger people and people with shorter service being recruited under rule 4(2). Surely that could not, have been the intention of these rules and regulations. Such an interpretation also amounts to an arbitrary and discriminatory treatment of a group of officers incompatible with the spirit of article 14 of the competition. We cannot, therefore, accept the contention that officers of the SFS who have been adjudged suitable by the SSB should 321 not be taken into the service merely because their number exceeds the number of posts available. True, they cannot be appointed immediately but the consequence cannot be that they should be ignored and persons recruited under rule 4(2) given preference over them. The correct solution, in our opinion, on a proper construction of the rules, is this. Even accepting the position, for the sake of argument, that the number specified for each category of posts in the Cadre Regulations limits, as contended for by the petitioners, the number of persons who could have been taken into the service in those posts in the first instance, the others are also entitled to be absorbed into the service as and when vacancies occur, by reason of Rule 6 of the initial Recruitment Regulations. The filing up of such vacancies will also be part of the initial recruitment contemplated under rule 4(1) and no recruitment under rule 4(2) can start before the above process is complete. It is only rational to interpret the rules as laying down that all those officers of the SFS with 8 or 4 years ' experience, as the case may be, who are adjudged suitable for the service should be recruited to the service before any recruitment can at all start under rule 4(2). Whether all such persons are entitled to the back dating of their appointment to 1. 10. 1966 or not, they are certainly entitled to contend that their appointment should be given precedence over the appointments of recruits under rule 4(2) of the Recruitment Rules. That being so, if there are vacancies against which recruitments could have been made under rule 4(2) they should have first gone to these left overs among the eligibles. In this view of the matter the plea of the petitioners that they will get precedence over these surplus officers among the eligible cannot at all be accepted. CAN THERE BE RECRUITMENT MORE THAN ONCE? 33. The next contention urged by Shri Kackar was that a fresh selection by way of initial recruitment can take place only once and cannot be repeated twice as has been done in the State of Maharashtra. He cited, in this connection, a decision of the Punjab & Haryana High Court in Union of India vs Harnek Singh, L.P.A. 406/83 decided on 20.9.83 affirming the decision of the Single Judge in W.P 545 75. We think that this argument proceeds on a misapprehension. To recapitulate the facts relating to this cadre, there were 116 officers who were eligible for consideration by the Selection Board. The first selection was of 57 persons (36 to senior scale posts and 21 for Junior scale posts). This was set aside because of Kraipak. This necessitated a reconsideration of the cases of the 116 eligible officers by a different 322 SSB of suffering from the defect that vitiated the earlier one. This S.S.B. appears to have committed the mistake of considering only 97 persons out of 116. This was not correct, as it was the duty of the Selection Board, under Chotia, to consider all the 116 officers, arrange those adjudged suitable in their order of preference and give reasons for not including in the list the names of those not adjudged suitable. This has, therefore, necessitated the second selection which the High Court has directed. Apart from the fact that such a fresh selection has to follow as a necessary consequence of the setting aside of the earlier selection by the court, it is also specifically warranted by the terms of rule 4(3A) which authorises such fresh recruitment under sub rule ( 1) '.where appointments to the service in pursuance of sub rule (1) have become invalid by reason of any judgment or order of any court. " It is not limited to a fresh recruitment becoming necessary on account of Kraipak. The position in this regard in U.P. is slightly different. Here 5 persons were recruited initially but this became bad due to Kraipak. Subsequently, 104 persons were recruited. We have already held that this recruitment cannot be challenged either because it is of a number larger than the initial 85 or because it selects 44 officers eligible only for the junior time scales. Sri Kackar, however, contends that there was no justification to recruit six more persons in 1976. Here again, though ostensibly there have been two selections, there has been in substance only one selection in place of the one set aside by reason of Kraipak. It is not in dispute that the Selection Board has considered only such of the officers as were eligible on 1. 10. It is also common ground that the selection has been made only on the basis of the C. Rs. pertaining to that period. We have already pointed out that it is only right that persons should be adjudged on the basis of the correct C.Rs. pertaining to them. Any expunction or modification in the CR of a period naturally relate back to that period and no legitimate objection can be taken if the correct CRs are taken into account. In our view, therefore, there was nothing wrong in the selections made by the Selection Board. Though made in two stages, the Board was only considering and selecting suitable officers out of those eligible for consideration on 1 10 1966 on the strength of their CRs uptil then and this has to be taken only as the initial recruitment, done in two stages but really one. RETROSPECTlVE EFFECT OF RULE 4(3A) 35. Sri Kackar took considerable pains to urge that the persons 323 selected in 1972 and later cannot claim seniority over the petitioners recruited earlier under rule 4(2). The argument was that, even if this be treated as authorised by rule 4(3A), the retrospective effect to this rule has to be limited by reference to section 3(lA) of the Act. He contends, relying on the decision in Inderjit Singh vs Union of India, that the Act has been framed in exercise of the powers conferred by Article 312 of the Constitution and that, unlike rules framed under Article 309 of the Constitution, the rules framed under the Act cannot have greater retrospective effect than is authorised by the Act itself. He therefore urges that rule 4(3A) should not be as interpreted as to "prejudicially affect the interests" of the petitioners who, by reason of their earlier appointments under rule 4(2) have earned a higher seniority than the respondents who are subsequent recruits under rule 4(1). We do not think it is necessary to go into all these questions. Granting all the premises of Sri Kackar, we think that rule 4(3A) does not offend any of them. The rule only places the fresh recruits in the same position as if they had been recruited in the first instance i.e. On 1.10.1966 as indeed they should have been and thus involves no retrospective effect beyond the date of commencement of the Act. It is also not correct to suggest that it prejudicially affects the direct recruits in any way. The fresh selectees of 1974 were all in the SFS on 1. 10.1966, at a time when the petitioners were nowhere in the picture. As we have pointed out earlier the petitioners acquire under the rules no right to be in the service until after the initial recruitment is over. The mere fact that, due to certain fortuitous circumstances, that initial recruitment has had to be set aside and time has been consumed in the process of remaking that selection validly and properly, cannot, in our view, confer a right on the recruits under section 4(2) so as to justify their complaint that some benefits given to them have been taken away. Under the rules, they can rank only after the candidates who get in by way of initial recruitment. In that position there is no change and the petitioners cannot be aggrieved that those in service in the SFS are found suitable for recruitment to the service and taken into the service w.e.f. 1. 10.1966. As we have observed earlier, those persons, even if not entitled to appointment as on 1.10.1966, are entitled to be appointed as and when vacancies arise and must always be given a position of precedence over the recruits under rule 4(2). In this view of the matter the direct recruits can hardly claim that they are prejudicially affected by the remaking of the initial recruitment. We, therefore, do not see any force in Sri Kakker 's contention. THE POSITION IN ORISSA 36. So far as orissa is concerned, the position is very simple. It 324 clearly emerges from our discussion above that all the 82 eligible officers had to be considered for initial recruitment. Though it has been alleged in the counter affidavit that they had been so considered, the Government note referred to by counsel dated 2.6.1967 (at p. 47 of the paper book) indicates to the contrary. The S.S.B. merely selected 42 officers and made an omnibus observation that the others were found unsuitable. This, as explained in Chothia, is not proper compliance with the rules and so the selection has to be aside with a direction that it should be redone properly. It has been vehmently contended for the respondents that the writ petition should be dismissed on the ground of laches. It is true that the petitioners have come to court somewhat belatedly. Counsel urged that they had been under a bona fide impression that they had been considered and found ineligible. But this does not appear to be correct. T here is on record (at p. 44 of the paper book) a representation made by one of them on 20.4.67 from which it seems that he was even then aware that his name had not been considered at all because of an interpretation that the junior posts were limited to 19 only. Nevertheless, they did not take any steps. The Gujarat, Karnataka and Maharashtra judgments on which the petitioners rely had been rendered in 1978, Jan. 1981 and August 1981 respectively but even after that the petitioners allowed time to lapse. There has therefore been delay on the part of the petitioners in coming to Court. Nevertheless, having regard to the complicated nature of the issues involved, we do not think that the petitioners should be put out of court on the ground of laches. The position as it has now emerged is that all 82 eligible officers as on 1. 10. 1966 should be considered and not merely some of them. Their suitability should be adjudged. If they are not found suitable, reasons should be given which the U.P.S.C. should be able to consider. If they are found suitable a list of such officers should be drawn up with ranking given to them in the order of preference for the consideration of the U.P.S.C. Since this has not been done the recruitments have to be set aside and the matter remanded with directions that it should be finalised as per the Recruitment Rules and in the light of the above discussion. OTHER CONDITlONS 38. Before concluding, we may touch upon certain other contentions which were urged before us: (i) Shri Kackar, for instance, made a reference to rules 3 and 4 325 of the All India Services (Conditions of Service Residuary Matters) Rules, 1960, the Government of India 's decisions thereunder and the decisions of this Court in Shri Amrik Singh and others vs Union of India and others, [1980] 2 S .L . R. 1 10 and R. R. Verma and Ors. The Union of India & Ors., interpreting the same. These rules confer powers on the Central Government to relax or dispense with the requirements of any rule in case they cause undue hardship in any particular case and also to decide questions arising as to the application or interpretation of certain rules applicable to All India Services. Apart from the fact that no relaxation, dispensation or interpretation has been made by the Government, we see no occasion at all to involve these provisions and we need not go with the question of their interpretation. (ii) Shri Kackar also made a reference to rule 3(3) of the Pay Rules inserted in 1980 to highlight the fact that since promotions in the service are under this rule, based on "merit with due regard to seniority", the interests of the direct recruits is vitally affected by the fall in their seniority resulting from the induction of initial recruits by a second or third or even further selection. We have already pointed out that this argument proceeds on a misconception. The direct recruits cannot have any grievance against the remaking of the initial selection because they cannot deny to the eligible officers on the S.F.S. their legitimate dues. No doubt, they can complain against the fall in their seniority if these subsequent selections are invalid but, if, as we have explained above, they are the logical consequence of Kraipak and have been validly made, they can have no grievance. In the latter event, it is actually the persons who ought to have been included in the first selection but were not, due to no fault of theirs, who have room for legitimate complaint that recruits under section 4(2) have been allowed to forestall them. (iii) Sri Kakkar submitted that the view we have taken that recruitment under rule 4(2) cannot be restored to until initial the recruitment under rule 4(1) is complete runs contrary to the following Observations of this Court in Parvez Qadir; , at p. 443. "If the interpretation urged by the petitioner 's learned Advocate to be accepted, then the initial recruitment not having taken place till after the Kraipak 's case was decided any subsequent recruitment to the Service under sub rule (2) of rule 4 cannot take place. Such cannot, in our view, be 326 the purpose of the rules and regulations, nor was it so in tended . " We do not agree The above observations were made in the context of answering an argument that. the officers for initial recruitment have to be considered not as on 1. 10.1966 but as on the date of the (second, third or subsequent) selection that may have to be made consequent on Kraipak. The court pointed out that, to uphold such a contention would virtually render the rules and regulations meaningless as, then, one unsuccessful aspirant after another could hold up the selections by way of initial recruitment indefinitely and thus deprive others of benefits they could have otherwise obtained. This Court did not, and did not intend to, observe, inspite of the language of rule 4(2), that recruitment under that rule could be made even before recruitment under rule 4(1) are complete. (iv) Shri Singhvi in supporting his plea that the appeal in the Maharashtra cases is not maintainable relied on the following observations of the Court in HarjeetSingh vs Union, ; "On the other hand we think that the Fixation of Cadre Strength Regulations made under Rule 4 of the Cadre Rules do not over ride the Recruitment Rule, the remaining Cadre Rules and the Seniority Rules so as to render invalid any service rendered by a non cadre officer in a Cadre post on the mere ground of breach of the Fixation of Cadre Strength Regulations, when there has been strict compliance with Rule 9 of the Cadre Rules. We think that fixation of Cadre Strength is the exclusive concern of the Central and the State Governments and the Regulations are made for their convenience and better relationship. Excessive utilisation of 'Deputation or Central Reserve ' is a matter for adjustment and controversy between the Central and the State Governments and is of no concern to any member of the Service. For example no can cadre officer who is asked to fill a deputation post can refuse to join the post on the ground that the 'Deputation Reserve ' has already been exceeded. The Regulations are not intended to and do not confer any right on any member of the Service, unlike some other Rules which do confer or create rights in the members of the Services. Among other Rules, for instance Rule 9(2) of the Recruitment Rules stipulates that the total number of persons recruited by promotion shall not at 327 any time exceed 25% of the posts shown against item Nos. 1 and 2 of the cadre in the schedule to the fixation of Cadre Strength Regulations. Now, if at a point of time this limit is exceeded, direct recruits may have a just cause for complaint and it may perhaps be held that to the extent of the excess the appointments by promotion are invalid and confer no rights of seniority over direct recruits. But, as we said, the Fixation of Strength Regulations confer no rights on members of the Service and a mere breach of the Regulations furnishes no cause of action to any member of the service on the ground that his seniority is affected in some round about way. We may add that there is no suggestion that Rule 9(2) of the Recruitment Rules was contravened. " He urged, on the strength of these observations, that the Cadre Strength Regulations only provide for internal adjustments at the discretion of the Government that no one can claim a right on the strength of those Regulations. In our opinion the argument places the case of the initial recruits on too high a pedestal to be accepted and we do not think that the cited observations help him sustain such a tall argument. The exception, given by way of illustration in the above passage, indicates that there can be circumstances in which rights can be created in certain recruits under the Cadre Strength Regulations. If we had agreed with the direct recruits that there had been some invalidity or infirmity attached to the subsequent selections by way of initial recruitment, we would not have rejected the appeal on the ground that the Regulations cannot give rise to a cause of action. It is only because we have come to the conclusion, on a proper interpretation of the Cadre Strength Regulations and the Recruitment Rules, that there is no error in the procedure followed by the Government that we are rejecting the appellants ' contention. We would like to make one more thing clear before we conclude. It is not our intention, nor can it be the result of our discussion, that the appointment of any of the officers recruited under rule 4(1) or 4(2) should be considered invalid. All the officers selected will have to be adjusted, if necessary, by amending the Cadre Regulations. The only result of our findings will be the readjustment of their seniority with necessary and consequential effect on their promotions in the Service. CONCLUSlON 40. In the result, we see no merits in the appeals from U.P. and 328 Maharashtra which, consequently, stand dismissed subject to what we have observed above. So far as the Orissa writs are concerned, they are allowed and the S.S.B. is directed to redo the selections in the light of the principles set out in this judgment. We make no order as to costs.
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These cases are about disagreements over who has more seniority (higher rank) among officers in the Indian Forest Service (I.F.S.). These disagreements came up because of three earlier court decisions about how the I.F.S. is set up. These decisions are *Kraipak vs Union of India, Parvez Qadir vs Union of India,* and *Union of India vs Chothia.* In these cases, the Court had to look at selections made by Special Selection Boards (S.S.Bs). These boards were used to replace selections that were canceled by the *Kraipak* case. The Court was looking at the first group of people recruited under section 4(1) of the I.F.S. (Recruitment) Rules, 1966. The first selections for state jobs were made in 1966 and 1967. The *Kraipak* decision was made in 1969. In the meantime, many states had made their first selections, followed by more recruitments. Most of these later recruitments were based on competitive exams under rule 4(2)(a) of the Recruitment Rules. Some were also promoted under rule 4(2)(b). Because of the second (and third) selections made by the S.S.B., some officers in the State Forest Service (S.F.S.) were given jobs in the IFS starting October 1, 1966, under rule 4(3A). They were placed in a higher rank than people directly recruited under rule 4(2). The direct recruits were not happy about this. In Uttar Pradesh, nine people asked the High Court for help. Eight of them were direct recruits from 1968 and 1969 who were confirmed in their positions between 1969 and 1972. They brought their case to this Court. In Uttar Pradesh, the first recruitment in 1966 and 1967 involved 85 officers. 58 were given senior positions, and 27 were given junior positions. Later, six people were promoted under rule 4(2)(b), and 286 nine people were recruited under rule 4(2)(a) of the Recruitment Rules. Since the first recruitment was declared invalid, a new S.S.B. was appointed. Based on its recommendations, 104 people were appointed to the service. 60 were given senior positions, and 44 were given junior positions. In 1976, six more people were added. So, 110 people were taken in through initial recruitment, compared to the 85 in the first selection. The direct recruits were upset by these selections. The High Court rejected their case. In Maharashtra, the first selection was made on February 2, 1967, for 57 officers. 36 were for senior positions, and 21 were for junior positions. This selection was canceled. On July 13, 1971, in the second selection, 116 officers were found eligible, but only 66 were considered suitable for appointment. 39 out of 51 eligible officers were found suitable for the senior scale (pay grade). 35 were appointed right away, and four were appointed later. For the junior scale, 27 were found suitable. 23 were appointed right away, and four were appointed later. All 66 of these appointments were made effective from October 1, 1966. Some people who had joined the State Forest Service in 1962 and had worked for 4 years as of October 1, 1966, were eligible for junior positions. They filed a writ petition (a request for court action) in the High Court. Their complaint was that the government had not considered all the officers who were eligible for the junior positions, as required by the *Chothia* case. The High Court agreed with the writ petitions. Some of the respondents (those being sued), who had been directly recruited under rule 4(2) between 1968 and 1970, appealed to this Court against the High Court's decision. In Orissa, eight people filed Writ Petitions in this Court. They had joined the Orissa State Forest Service on April 1, 1962. After two years of training, they had been appointed Assistant Conservators of Forests on April 1, 1964. By April 1, 1966, they had four years of continuous service in the State Cadre (group of officers). They had become eligible for selection to junior positions in the I.F.S. Two selections were made for initial recruitment. One was in January 1967, when 41 officers were selected. The other was in 1972, when 42 out of 82 eligible officers were selected. The petitioners (those filing the petitions) were taken into the I.F.S. under rule 4(2)(b) between 1975 and 1977. The petitioners argued that their names were not considered at all in either the first or second selection. The selections were made by considering eligible officers in order of seniority only to recruit 41 or 42 people. The government did not consider all 82 eligible officers and select 34 of them in order of preference. This made the selection invalid, as was decided in the *Chothia* case. The Court dismissed the appeals from U.P. and Maharashtra, but made some observations (comments). It allowed the Orissa writ petitions. It ordered the Special Selection Board to redo the selections based on the principles described. The Court HELD: The initial recruitment rules clearly say that the Special Selection Board should consider all officers in the State Forest Service who meet the requirements. They should judge if they are suitable for appointment and make a list of them in order of preference. This selection was done by a Board whose setup was found to be flawed. The logical result is that the selection process had to be redone by a properly appointed S.S.B. The group of people to be considered was the same as the first S.S.B. should have considered. That is, those officers in the S.F.S. who were eligible as of October 1, 1966. However, there had been some changes after October 1, 1966, in the Confidential Reports (C.R.S.) of some officers. This was due to requests to remove or change negative comments. No one could object to these people also being considered. If a negative comment is removed or changed, it's as if it never existed, or existed in the changed form, from the beginning. The *Kraipak* decision required a complete review of the first selection. The later selection boards could not be forced to limit their judgments about suitability to the same number of people as the first Board had selected. They just had to consider the same list of eligible officers and their records as of October 1, 1966. The first part of rule 4(2) of the cadre Rules (rules about the structure of the service) only states the general idea that whoever has the power to do something also has the power to do it again if needed. The Central Government has the power to change the number and makeup of the cadres at any time. However, if you look closely at the rules, you'll see that the number and makeup of the cadres must be decided by regulations. These regulations must be made by the Central Government after talking to the State Government. If the first setup can only be created after talking to the State Government and by Regulations, the Central Government cannot change it except in the same way. It is not possible to agree with the argument of 288 the initial recruits that simply appointing too many officers should be seen as automatically expanding the cadre in exercise of the power under rule 4(1). These cases are about a set of Regulations whose whole purpose is to set the number of people in the cadre. It is also a rule about an All India Service. Both the Central Government and the State Governments have a say in how it is set up. The number of people in the cadre could not be changed without changing the Regulations and schedule or without talking to the State Government. The Cadre Regulations, along with the Cadre Rules, make it clear that the number and makeup mentioned are for the entire cadre of the service in the State. They are not just for recruitments made after the initial recruitment. The total authorized strength refers to the total number of officers who can fill the positions in the cadre at any time. It could not have been intended that the cadre should consist of an unlimited number of people recruited by the S.S.B. from the S.F.S., plus the number of officers referred to as the total authorized strength. There is no problem in saying that the total strength of the cadre is counted by including the initial recruits. All the eligible officers judged suitable cannot be recruited to the service if it would exceed the total authorized strength. The most important and difficult question in these appeals is not that too many appointments were made during the initial recruitment. It is that the government did not keep in mind the limits on the number of senior and junior positions in each cadre when making appointments. The appellants (those appealing) are complaining that more recruitments have been made against the junior positions than is allowed under the schedule. The initial recruits are right in saying that the Cadre Regulations do not strictly define junior and senior positions in the way the direct recruits argue. It is true that the Cadre Regulations mention senior and junior positions, but this is not meant to be a key part of the makeup of the cadre. The Cadre Rules do not say whether some positions are junior or senior. They also don't define the words "senior" and "junior" positions. It cannot be assumed that people entering the service will start in a junior position and work their way up. All the rules show that whether an officer is in the junior or senior pay grade, or in a junior or senior position, depends on different situations. It is not possible to label any positions as always senior or junior, or any officer as always in one of the two pay grades. The Court agreed with the initial recruits that the reference to junior and senior positions in the cadre should not be considered so strict or essential that it affects the validity of appointments made above a certain number. One thing clear in the Regulations is that once a person is found eligible and suitable for recruitment under the Initial Recruitment Regulations, they must be taken into service as part of the initial recruitment. This should happen either immediately on October 1, 1966, or when vacancies come up in the cadre. It is important to remember that if the vacancies are in senior positions, they can only be filled by S.F.S. Officers with eight years of continuous service. These officers will not be available for at least four more years. If the vacancies are in junior positions, they can only be filled after a competitive exam is held, which takes time. The Court cannot accept the argument that officers of the S.F.S. who have been judged suitable by the S.S.B. should not be taken into the service simply because their number is more than the number of positions available. It is true that they cannot be appointed right away. But they should not be ignored, and people recruited under rule 4(2) should not be given preference over them. It is only logical to interpret the rules as saying that all those officers of the S.F.S. with eight or four years of experience, who are judged suitable for the service, should be recruited before any recruitment starts under rule 4(2). Whether all such people are entitled to have their appointment backdated to October 1, 1966, they are certainly entitled to argue that their appointment should be given priority over the appointments of recruits under rule 4(2) of the Recruitment Rules. Because of this, the argument of the petitioners (the direct recruits) that they will get priority over the extra eligible officers cannot be accepted. It is only right that people should be judged based on the correct Confidential Reports (C.R.S.). Any removal or change in the C.R.S. of a period naturally relates back to that period. No legitimate objection can be made if the correct C.R.S. are taken into account. There was nothing wrong in the selections made by the Selection Board. Rule 4(3A) only puts the new recruits in the same position as if they had been recruited in the first place, on October 1, 1966. This does not have any effect before the Act started. It is also not correct to say that it unfairly affects the direct recruits in any way. The appellants (the direct recruits) do not gain any right to be in service under the Rules until after the initial recruitment is over. Under the Rules, they can only rank after the candidates who get in through initial recruitment. The appellants cannot complain that those in service in the S.F.S. are found suitable for recruitment and taken into service from October 1, 1966. Those people, even if not entitled to appointment on October 1, 1966, are entitled to be appointed when vacancies come up. They must always be given priority over the recruits under Rule 4(2). The direct recruits can hardly claim that they are unfairly affected by the redoing of the initial recruitment. As for Orissa, all 82 eligible officers had to be considered for initial recruitment. But the S.S.B. only selected 42 officers and said that the others were found unsuitable. This, as explained in the *Chothia* case, is not a proper way to follow the Rules. The selection has to be canceled and redone properly. There has been a delay on the part of the petitioners in coming to this Court. But because the issues are complicated, the petitioners should not be turned away because of this delay. All 82 eligible officers as of October 1, 1966, should be considered, not just some of them. Their suitability should be judged. If they are not found suitable, reasons should be given that the U.P.S.C. (Union Public Service Commission) can consider. If they are found suitable, a list of such officers should be made, with rankings in order of preference for the U.P.S.C. to consider. Since this has not been done, the recruitments have to be canceled. The matter is sent back with the order that it should be finalized according to the Recruitment Rules and this judgment. If the Court had agreed with the direct recruits that there was something invalid about the later selections for initial recruitment, the Court would not have rejected the appeals because the Regulations cannot give rise to a cause of action (a reason to sue). There is no error in the procedure followed by the Government. It is not the intention of the Court, nor can it be the result of this discussion, that the appointments of any officers recruited under rule 4(1) or 4(2) should be considered invalid. All the officers selected will have to be adjusted, if necessary, by changing the Cadre Regulations. The only result of the Court's findings will be the readjustment of seniority. This will have necessary effects on promotions in the service. There is no merit in the appeals from U.P. and Maharashtra. The Orissa writ petitions are allowed. The S.S.B. is ordered to redo the selections based on the principles in the judgment. *Kraipak vs Union of India, Parvez Qadir vs Union of India, Union of India vs Chothia, Jagat Narain vs Union, Lila Gupta vs Lakshmi Narain, Atlas Cycle Industries Ltd. vs State of Haryana, G.S. Lamba vs Union of India, Kapur vs Union of India, Union of India vs Harnek Singh, Inderjit Singh vs Union of India, Amrik Singh and Ors. vs Union of India & Ors.*, and *R.R. Verma and Ors. vs The Union of India & Ors.*, were referred to.
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section 3 of the Act empowers the Government of India to make, after consultation with the State Governments, rules for the regulation of recruitment, and the conditions of service of persons appointed, to an All India Service. (2) The Central Government shall, at the interval of every three years, re examine the strength and composition of each such cadre in consultation with the State Government concerned and may make such alterations therein as it deems fit; Provided that nothing in this sub rule shall be deemed to affect the power of the Central Government to 294 alter the strength and composition of any cadre at any time: Provided further that the State Government concerned may add for a period not exceeding one year, and with the approval of the Central Government for a further period not exceeding two years, to a State or Joint Cadre one of. Constitution of the Service: The Service shall consist of the following Persons, namely: (a) Members of the State Forest Service recruited to the service at its initial constitution in accordance with the provisions of sub rule (1) of rule 4; and (b) Persons recruited to the service in accordance with the provisions of sub rules (2) to (4) of rule 4. Method of recruitment to the Service (1) As soon as may be after the commencement of 295 these rules, the Central Government may Recruit to the Service any person from amongst the members of the State Forest Service adjudged suitable in accordance with such regulations as the Central Government may make in consultation with the State Governments and the Union Public Service Commission (U.P.S.C. The appointments of persons recruited to the service under rule 4(2)(a) (i.e. by competitive examination) can only be made to the junior time scale of pay and the appointments of persons recruited to the service under rule 4(2)(b) (i.e., by promotion of substantive members of the State Forest Service) shall be in the senior time scale of pay. Under rule 4, the initial pay of a member of the service appointed under rule 4(1) of the Recruitment Rules has to be fixed in the junior time scale of the service at he stage he would have got if he had been appointed in that scale on the deemed date of appointment in the year of allotment. and includes: a post included in the number of posts specified in item 2 and 5 of the said cadre, when held on senior scale of pay, by an officer recruited to the Service in accordance with sub rule ( 1) of rule 4 or rule 7 of the Recruitment Rules. " Some of these regulations are also relevant: 6(a) Cadre Strength Regulations: The Fixation of Cadre Strength Regulations were framed in exercise of the powers conferred by rule 4(1) of the Cadre Rules. Strength and Composition of Cadres The posts borne on, and the strength and composition of the cadre of, the Indian Forest Service in each of the States, shall be as specified in the Schedule to these regulations. " Training Reserve 5% of 4 above 2 3 1 __ ___ __ 90 110 53 __ ___ __ Direct Recruitment posts 68 83 40 Promotion posts 22 27 13 __ ___ __ Total Authorised Strength 90 110 53 __ ___ __ (b) Initial Recruitment Regulations: The second set of regulations is the Initial Recruitment Regulations framed in pursuance of rule 4(1) of the Recruitment Rules. (2) Every officer of the State Forest Service who has completed four years of continuous service on the date of constitution of the Service shall be eligible for selection to the Service in the junior scale. Preparation of list of suitable officers: (1) The Board shall prepare, in the order of preference, a list of such officers of State Forest Service who satisfy the conditions specified in regulation 4 and who are adjudged by the Board suitable for appointment to posts in the senior and junior scales of the Service. It has been mentioned earlier that, under the Initial Recruitment Regulations, a S.S.B. In Maharashtra, a selection was 303 made on 2.6.1967 of 57 persons but this selection was set aside by the High Court following Kraipak. Validation No rule made, or purporting to have been made, with retrospective effect, under section 3 of the Principal Act before the commencement of this Act shall be deemed to be invalid or ever to have been invalid merely on the ground that such rule was made with retrospective effect and accordingly every such rule and any action taken or thing done thereunder shall be as valid and effective as if the provisions of section 3 of he Principal Act, as amended by this Act, were in force at all material times when such rule was made or action or thing was taken or done. had considered not all the officers who were eligible under the initial recruitment rules but only such number of them as was considered necessary to fill up the vacancies that were then available in the State cadre. To avoid confusion, we may clarify here that what we are concerned with in all the cases is the INITIAL RECRUITMENT under section 4(1) of the Recruitment Rules but made for the second or third time, the first selection having been set aside by Kraipak. It has been mentioned that the first selections by way of initial recruitments to the State cadres were made sometime in 1966 and 1967. In this State, the initial recruitment was made in 1966 67 of 85 officers, 58 to posts in the senior time scale and 27 to posts in the junior time scale. Again in 1976, six more persons were added and thus 110 persons have been taken in as and by way of initial recruitment as against 85 persons taken in the first selection. They contend: (a) Under the Maharashtra Schedule to the Cadre Regulations, there can be initial recruitment only to 28 junior posts. This has been exceeded by the second and third selections; (b) As on 23.12.1974, the total strength of the cadre rose to 104 plus 15, appointed earlier under rule 4(2), thus making a total of 119 as against an authorised strength of 110 only; (c) The second and third selections can only be made to validate the initial recruitment of 85 which had been invalidated and cannot be made use of to increase the number of initial recruits; (d) The third selection of six officers is, in any event, bad as the power under rule 4(3A) could have been exercised only once; and (e) It appears that in the subsequent selections certain officers not adjudged suitable at the first selection have been included. This is not. justified as a recruitment under rule 4(3A) has to be made as if it was being made at the time of the initial recruitment i.e. 1. On 13.7.1971, at the second selection, 116 officers were found to be eligible but only 66 officers were considered suitable for appointment. Their grievance was that the Government had not considered the case of all the officers who were eligible for consideration for junior posts (viz. While they have in principle no objection to a fresh selection, their contention is (a) that the recruitments to the senior time scale posts should not be redone as there is no controversy regarding the selection of 39 out of 5 1 eligible officers; (b) that the number of selections to junior time scale posts from out of the candidates section Nos. The petitioners ' contention is that their names were not considered at all either at the first selection or at the second selection under an impression that the number of posts in the junior time scale were limited. It is said that the selections were made by considering eligible officers in the order of seniority only to an extent necessary to recruit 41 or 42 persons and the Government did not consider all the 82 eligible officers and select 42 out of them arranged in the order of preference. The respondents, are (a) the persons selected and appointed in 1972 who are still in service and (b) persons who have come in between 1966 and 1975 by way of recruitment under rule 4(2)(a). They also deny the allegations in the writ petitions and contend that the petitioners had all been duly considered at the earlier selections but had not been adjudged suitable for recruitment to the service. The first contention urged on behalf of the direct recruits is that rule 4(3A) authorises the Government to fill in only the number of posts the appointment to which had been declared void by the Court and no more. 3 and 4 set out in each of the schedules pertain to recruitments (subsequent to the initial recruitment) under rule 4(2) of the Recruitment Rules and that these items have to be left out of account in considering the initial recruitment under rule 4(1);(c) that all the posts enumerated against item No. Thus in U.P., while the first recruitment of 58 officers to the senior scale and 27 to the junior scale was in order, the second recruitment of 44 persons to junior scale posts was not warranted. Likewise, in Maharashtra while the Government restricted itself in the first selection to the appointment of 23 persons to the junior scale, the High Court has now directed the filling up of all the 90 posts in the cadre by considering the 116 eligible officers, overlooking that the maximum number of officers found eligible for consideration to senior scale posts is only 51 and that out of the balance of 65 persons only 23 can be appointed to junior scale posts. The argument is that it is for the Central Government to fix the strength and composition of the cadres and that this power can be exercised by it at any time. We, therefore, agree with the contention of the initial recruits that the Central Government has the power to alter the strength and composition of the cadres at any time. If the terms of the relevant rules are scrutinised, it will be seen that the strength and composition of the cadre has to be determined by regulations and that these regulations have to be made by the Central Government in consultation with the State Government. It is argued that the idea and intention of the Initial Recruitment regulations is that all officers of the SFS found eligible for appointment either in the senior time scale or in the junior time scale and adjudged suitable for such appointment to the service by the S.S.B. and U.P.S.C. Thus, it is argued that even if, in any particular State, the number of such officers exceeds the total authorised strength of that State Cadre as per the Schedule to the Cadre Regulations, there can be no bar to their initial recruitment to the service. The Cadre Regulations read with the Cadre Rules leave no doubt that the strength and composition referred to, or prescribed, therein is of the entire cadre of the service in the State concerned and is not restricted to the recruitments made after the initial recruitment. Not only has this not been done; the regulations have been made retrospective with effect from the date of commencement of the Service which would be totally without purpose on the argument addressed by the initial recruits. 3 and 4 is the same as the numbers indicated against 1 and 2 which represents posts already in 315 the State cadre and in Central Government and which have to be filled in by way of initial recruitment. Thus, for example, if in Maharashtra, 67 officers in the SFS are found eligible and are recruited to the service against the various cadre posts and if subsequently 67 officers are recruited against item nos. Items 3 and 4 are indicated in the schedule only to show that after the initial recruitments are over and recruitments are to be made to senior posts in the cadre under rule 4(2), the number of promotes should not exceed 331/3% of the senior posts in the cadre, which is the requirement of rule 9 of the Recruitment Rules. There is, therefore, no difficulty in holding that the total authorised strength of the cadre is to be counted by including the initial recruits and that all eligible officers adjudged suitable cannot be recruited to the Service in excess of the total authorised strength. The only grievance here is that the High Court, while ordering a redo of the initial recruitment, by a second selection, has directed that, the 116 eligible persons should be considered for 90 posts, without specifying that officers eligible for senior scale will have to be considered for 67 senior posts and a maximum of only 23 officers could be taken for junior posts. In 317 Orissa, 41 officers were recruited in 1967 and 42 in 1972 by way of initial recruitment. The answer of the initial recruits to this contention is that it proceeds on a complete misapprehension of the nature of the all India Service and the composition of the cadre. The first is a recruitment of an officer to the All India Service, whether under rule 4(1) or 4(2), in accordance with the regulations and subject to the total strength authorised thereunder. This is done by the Central Government and it is with this that we are concerned here. This has to be done by the State concerned under rule 7 of the Cadre Rules. Thereafter, whether he is to be appointed as a Collector or as an officer in the Secretariat or is to occupy one of the innumerable cadre posts allotted to the service and whether he should be given a junior post or senior post will be a concern of the State concerned and will have no bearing on the validity of his initial recruitment to the service. The initial recruits also object to the attempt of the direct recruits to equate senior and junior posts with senior time scale and junior time scale posts mentioned in the Initial Recruitment Regulations. It is urged, therefore, that though the Cadre Regulations describe some posts as senior and some as junior, this is 318 only a description of the nature of the posts on the cadre and has no bearing on the nature of the initial recruitment. For one thing, the Cadre Regulations do not indicate, in respect of a number of posts, whether they are to be considered as junior or senior. All these rules therefore show that an officer being in the junior or senior time scale or a on a junior post or senior post depend upon various eventualities and it is not possible to pin down any posts as senior or junior or any officer as on one of the two time scales. We are, therefore, inclined to agree with the initial recruits that the reference to junior and senior posts in the cadre should not be considered to be so a rigid or integral part of the cadre composition as to affect the validity of appointments made in excess of a particular number. One thing that is plain on the terms of the regulations is this: that, once a person is found to be eligible and is adjudged suitable for recruitment under the Initial Recruitment Regulations, he has to be taken into the service as part of the initial recruitment either immediately on 1. Let us suppose that the SSB 's selections reveal one of the following alternative states of affairs: (i) that 25 persons in the SFS are suitable for senior posts and 15 persons for junior posts; (ii) that 25 persons in the SFS are suitable for senior posts and 40 persons for junior posts; G (iii)that 50 persons in the SFS are suitable for senior posts and 15 for junior posts; and (iv) that 75 persons in the SFS are found suitable for senior post and 40 for junior posts. In situation (iii) also, there will be no difficulty if it can be agreed that persons found eligible for senior posts can be given junior posts for the time being. It is necessary to remember in this context that if the vacancies are in senior posts they can be filed up only by SFS officers with X years ' continuous service and, ex hypothesi, such officers will not be available for at least four more years, and if the vacancies are of junior posts, they can be filled in only after a competitive examination is held and this will take time. They cannot be appointed according to the petitioners, because there are no vacancies of posts for which there have been found suitable. We cannot, therefore, accept the contention that officers of the SFS who have been adjudged suitable by the SSB should 321 not be taken into the service merely because their number exceeds the number of posts available. Even accepting the position, for the sake of argument, that the number specified for each category of posts in the Cadre Regulations limits, as contended for by the petitioners, the number of persons who could have been taken into the service in those posts in the first instance, the others are also entitled to be absorbed into the service as and when vacancies occur, by reason of Rule 6 of the initial Recruitment Regulations. It is only rational to interpret the rules as laying down that all those officers of the SFS with 8 or 4 years ' experience, as the case may be, who are adjudged suitable for the service should be recruited to the service before any recruitment can at all start under rule 4(2). This S.S.B. Apart from the fact that such a fresh selection has to follow as a necessary consequence of the setting aside of the earlier selection by the court, it is also specifically warranted by the terms of rule 4(3A) which authorises such fresh recruitment under sub rule ( 1) '.where appointments to the service in pursuance of sub rule (1) have become invalid by reason of any judgment or order of any court. " The argument was that, even if this be treated as authorised by rule 4(3A), the retrospective effect to this rule has to be limited by reference to section 3(lA) of the Act. The rule only places the fresh recruits in the same position as if they had been recruited in the first instance i.e. On 1.10.1966 as indeed they should have been and thus involves no retrospective effect beyond the date of commencement of the Act. In that position there is no change and the petitioners cannot be aggrieved that those in service in the SFS are found suitable for recruitment to the service and taken into the service w.e.f. the officers for initial recruitment have to be considered not as on 1. (iv) Shri Singhvi in supporting his plea that the appeal in the Maharashtra cases is not maintainable relied on the following observations of the Court in HarjeetSingh vs Union, ; "On the other hand we think that the Fixation of Cadre Strength Regulations made under Rule 4 of the Cadre Rules do not over ride the Recruitment Rule, the remaining Cadre Rules and the Seniority Rules so as to render invalid any service rendered by a non cadre officer in a Cadre post on the mere ground of breach of the Fixation of Cadre Strength Regulations, when there has been strict compliance with Rule 9 of the Cadre Rules. If we had agreed with the direct recruits that there had been some invalidity or infirmity attached to the subsequent selections by way of initial recruitment, we would not have rejected the appeal on the ground that the Regulations cannot give rise to a cause of action. It is only because we have come to the conclusion, on a proper interpretation of the Cadre Strength Regulations and the Recruitment Rules, that there is no error in the procedure followed by the Government that we are rejecting the appellants ' contention.
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The first selections for state jobs were made in 1966 and 1967. Most of these later recruitments were based on competitive exams under rule 4(2)(a) of the Recruitment Rules. Eight of them were direct recruits from 1968 and 1969 who were confirmed in their positions between 1969 and 1972. Later, six people were promoted under rule 4(2)(b), and 286 nine people were recruited under rule 4(2)(a) of the Recruitment Rules. So, 110 people were taken in through initial recruitment, compared to the 85 in the first selection. In Maharashtra, the first selection was made on February 2, 1967, for 57 officers. 36 were for senior positions, and 21 were for junior positions. On July 13, 1971, in the second selection, 116 officers were found eligible, but only 66 were considered suitable for appointment. Some people who had joined the State Forest Service in 1962 and had worked for 4 years as of October 1, 1966, were eligible for junior positions. Their complaint was that the government had not considered all the officers who were eligible for the junior positions, as required by the *Chothia* case. Some of the respondents (those being sued), who had been directly recruited under rule 4(2) between 1968 and 1970, appealed to this Court against the High Court's decision. They had become eligible for selection to junior positions in the I.F.S. Two selections were made for initial recruitment. The Court HELD: The initial recruitment rules clearly say that the Special Selection Board should consider all officers in the State Forest Service who meet the requirements. The group of people to be considered was the same as the first S.S.B. That is, those officers in the S.F.S. who were eligible as of October 1, 1966. They just had to consider the same list of eligible officers and their records as of October 1, 1966. If the first setup can only be created after talking to the State Government and by Regulations, the Central Government cannot change it except in the same way. It is also a rule about an All India Service. The Cadre Regulations, along with the Cadre Rules, make it clear that the number and makeup mentioned are for the entire cadre of the service in the State. The initial recruits are right in saying that the Cadre Regulations do not strictly define junior and senior positions in the way the direct recruits argue. It is true that the Cadre Regulations mention senior and junior positions, but this is not meant to be a key part of the makeup of the cadre. The Court agreed with the initial recruits that the reference to junior and senior positions in the cadre should not be considered so strict or essential that it affects the validity of appointments made above a certain number. One thing clear in the Regulations is that once a person is found eligible and suitable for recruitment under the Initial Recruitment Regulations, they must be taken into service as part of the initial recruitment. It is important to remember that if the vacancies are in senior positions, they can only be filled by S.F.S. should not be taken into the service simply because their number is more than the number of positions available. But they should not be ignored, and people recruited under rule 4(2) should not be given preference over them. It is only logical to interpret the rules as saying that all those officers of the S.F.S. with eight or four years of experience, who are judged suitable for the service, should be recruited before any recruitment starts under rule 4(2). Because of this, the argument of the petitioners (the direct recruits) that they will get priority over the extra eligible officers cannot be accepted. It is also not correct to say that it unfairly affects the direct recruits in any way. The appellants (the direct recruits) do not gain any right to be in service under the Rules until after the initial recruitment is over. are found suitable for recruitment and taken into service from October 1, 1966. As for Orissa, all 82 eligible officers had to be considered for initial recruitment. All 82 eligible officers as of October 1, 1966, should be considered, not just some of them. If they are not found suitable, reasons should be given that the U.P.S.C. If the Court had agreed with the direct recruits that there was something invalid about the later selections for initial recruitment, the Court would not have rejected the appeals because the Regulations cannot give rise to a cause of action (a reason to sue). It is not the intention of the Court, nor can it be the result of this discussion, that the appointments of any officers recruited under rule 4(1) or 4(2) should be considered invalid. *, and *R.R.
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Civil Appeal Nos. 12 and 865 1978. From the Judgment and order dated 19 12 77 of the Kerala High Court in Eloction Petition No. 16 of 1977. F. section Nariman, section Narayanan Poti, J. B. Dadachanji and K. J. John for the Appellant, (In CA 12 and Respondent in C.A. 865/ 78) . Y. section Chitale and N. Sudhakaran for the Respondent (In C.A. 12 and Appellant in C.A. 865/78). The Judgment of the Court was delivered by FAZAL ALI, J. This election appeal is directed against the order of the High Court of Kerala dated 19th December, 1977 by which the election of the appellant Haji C. H. Mohammad Koya has been set aside and he has been disqualified from taking part in the elections for a period of six years under the provisions of the Representation of the People Act, 1951 (hereinafter called the Act). For the purpose of brevity we shall refer to the respondent petitioner as the Petitioner and Haji C. H. Mohammad Koya as the appellant. 668 In the general election held to the Legislative Assembly of Kerala on 20th March, 1977 the petitioner and the appellant were the contesting candidates from No. 34 Malappuram Constituency. The counting of votes took place on the 20th March, 1977 and The appellant was declared elected on the same date. The total votes polled were 56,276. The appellant secured 39,362 votes and thus defeated the petitioner by a margin of 20,000 votes. Aggrieved by the election results, the petitioner filed an election petition in the High Court alleging that the appellant had committed various corrupt practice falling within the ambit of sections 123(3), (3A) and (4) of the Act. It was mainly alleged that before the elections, the appellant was the Chief Editor of a Malayalam daily paper called Chandrika which was the official organ of the Muslim League. It is further alleged by the petitioner that the appellant held shares worth Rs 3 lakhs in the Printing and Publishing Company which published Chandrika. This paper, according to the petitioner, contains several articles, extracts of speeches and cartoons which tended to ask the Muslims to vote for the appellant on religious and communal grounds and also promoted ill will and hatred between two classes of citizens, namely, the Janasangh and the Muslim League. It appears, however, that at the hearing the petitioner confined is case only to the corrupt practices alleged by him under section 123(3A) of the Act In this connection, the learned Judge of the High Court observed as follows: "Though in the petition sub sections 3. 3A and 4 of section 123 of the Act are specifically referred to, from the evidence tendered in the case it would appear that applicability of sub section 3A of section l 23 alone falls for the decision". The petition was contested by the appellant who filed a counter affidavit denying the assertions and averments made by the petitioner and took the stand that he made no speech which offended section 123 (3A) of the Act nor was he aware of any of the offending articles or cartoons published in Chandrika prior to the elections. The also denied that he was an Editor of Chandrika, but admitted that he was the Chief Editor and that too only in name. Being an important and an influential person he was able to collect lot of more for Chandrika from the Gulf States and that is why he was assigned an important role in Chandrika as Chief Editor for the purpose of deciding the larger policies of the paper. The appellant further denied that he had anything to do with the editorial work of Chandrika or the publication of the speeches or articles etc. It may be pertinent to note here that even the petitioner in his petition has not at all 669 alleged or described the nature of the duties which the appellant performed as Chief Editor nor has he stated that as Chief Editor he was controlling the materials published in the paper so as to ascribe constructive knowledge to him of the articles published in Chandrika. ALL that the petitioner pleaded in his petition on this subject may be extracted thus: "The respondent is the Chief Editor of Chandrika, a daily newspaper published from Calicut. It is published by the Muslim Printing and Publishing Company Limited. The major shares of this company is owned by the Muslim league Party and the respondent holds share worth of Rs. 3 lakhs in the above company. The daily Chandrika is the official organ of the Muslim League Party. It is submitted that in the daily Chandrika of which the respondent is the Chief Editor, is published reports and articles appealing to the members of the Muslim community not to vote for the candidates of the Muslim League (opposition) in the name of religion and community". As regards the speech while the petitioner admitted that he did make a speech as would appear from the extract exhibit P.1(a) but denied that he made any communal allegations against the Janasangh but stated that some of the words used by him in the speech were used purely in a figurative sense. When the appeal was heard before us counsel for the parties agreed that the only items of evidence which could be relied upon against the appellant were (1) his speech exhibit P.1(a), (2) Cartoon exhibit P.5 and (3) other offending speeches and articles which were published in the paper of which he was the Chief Editor. It was conceded by Dr. Chitale, counsel for the petitioner that if he was not able to prove that the appellant was really the Editor of the paper then the presumption under section 7 of the Press and Registration of Books Act 1867 (hereinafter called the Press Act) would not apply and the case of the petitioner would stand or fall on Ex.P.1(a) and Exhibit P.5. It is also not disputed that although the High Court has relied on a number of articles and extract of speeches published in the various issues of Chandrika yet none of these have been proved according to law by examining the writer or the reporter or producing the original script or the paper. If, therefore. the petitioner fails to establish that the appellant was virtually the Editor of Chandrika or at any rate performed the duties of the editor then no constructive knowledge of these articles can be attributed to him. The High Court framed the following issues: 1. Whether the petition is maintainable ? 670 2. Whether the election is vitiated by all or any of the corrupt practices alleged in the petition? 3. Regarding reliefs and costs. As regards issue No. 1 the High Court held that the petition was maintainable and decided this issue against the appellant. This finding has not been challenged by the appellant before us and we there fore affirm the same. The main issue in the case was issue No. 2 and we should have expected the High Court to have framed a more detailed issue giving the nature and character of the corrupt practices alleged by the petitioner against the appellant in order to give a clear picture to the parties regarding the matters which were to be decided by the court. However, as both the parties understood what the allegations were and proceeded to trial on that basis the vagueness of the issues framed by the High Court has not caused any prejudice to any of the parties. The main corrupt practice pleaded against the appellant by the petitioner and which has been vehemently argued before us is to be found in paragraph 5 of the petition which is regarding the inflammatory speech Exhibit P.1(a) said to have been made by the appellant and which according to the petitioner fell within the mischief of section 123 (3A) of the Act. Another important averment made in the petition was in paragraph 11 of the petition which refers to the cartoon and may be extracted thus: "In Chandrika dated 12 3 1977 on the front page a cartoon is published. It depicting Jansangh as a Pig and Shri E. M. Sankaran Namboodiripad, the Marxist Leader, cutting to the flesh of the pig and serving it to the Muslim. This is an attempt to promote feelings of enmity and hatred between different classes of citizens of India on grounds of religion. It is well known to eat pork is pardial ansthma (haram) for true muslims. The publication of this cartoon in Chandrika is with the consent and knowledge of the respondent, which promoted hatred of the Muslims against the United Front of Marxist Party and Janata Party and Muslim League (opposition) of which the petitioner is a candidate from the concerned constituency". It is clearly pleaded that the cartoon was published in Chandrika with the consent and knowledge of the appellant. Thus, in other cases, consent and knowledge were not expressly pleaded by the petitioner, who sought to rely only on the presumptions to be drawn under section 7 of the Press Act. 671 We shall first take up, therefore, the question whether The petitioner can avail of the presumption to be drawn under section 7 of the Press Act. The High Court has found that in the circumstances of the case, section 7 of the press Act fully applies to the facts of the present case. We are however for the reasons that we shall give hereafter unable to agree with the view taken by the High Court. Before dealing with the various provisions of the Press Act, it may be necessary to divide this question into two parts: (t) the legal aspect and (2) the factual aspect. The legal aspect concerns the effect of the various provisions of the Press Act and the extent of their applicability to the appellant. The actual aspect would take within its fold the duties and responsibilities performed by the appellant as the Chief Editor. We will first take up the legal aspect. The Preamble to the Press Act runs thus: "Whereas it is expedient to provide for the regulation of printing presses and of newspapers, for the preservation of copies of every book and newspaper printed in India and for the registration of such books and newspaper, it is hereby enacted as follows": It would thus appear that the object of the Press Act was to regulate printing presses and newspapers in order to preserve copies of newspapers and books. Moreover, in order to avoid multiplicity of suits and uncertainties of liabilities, it was considered necessary to choose one of the persons from the staff and make him liable for all the articles or matters published in the paper so that any person aggrieved may sue only the person so named under the provisions of the Press Act and is relieved from the necessity of making a fishing or roving enquiry about persons who may have been individually responsible for the offending matters published in the paper. Our opinion in this regard is however re informed be the statement, object and reasons accompanying the Press Act which mark be extracted thus: "Whereas it is expedient to repeal the Indian Press Act, 1910 and the newspapers (Incitements to offences) Act, 1908, and to make further provision in the Press and Registration of Books Act, 1867, for the liability of editors of newspapers in civil and criminal proceedings and to make certain amendments in that Act in order to facilitate the registration of printers and publishers; and to provide in the , the Code of Criminal Procedure, 1898, and the Indian Post office Act, 1898 for the seizure and disposal of certain documents; it is hereby 9 549 S Cl/78 672 encted as follows :" It was with this avowed object that the Press Act clearly defines 'Editor` who has a clear legal status under the Press Act. Section 1 (1) of the Press Act defines 'Editor ' thus: "Editor" means the person who controls the selection of the matter that is published in a newspaper". Section 5 of the Press Act provides that no newspaper shall be published except in conformity with the rules hereinafter laid down. Section 5(1) runs thus: "Without prejudice to the provisions of section 3, every copy of every such newspaper shall contain the names of the owner and editor thereof printed clearly on such copy and also the date of its publication". It would thus be clear that under section 5(1) of the Press Act the legal requirement is that every newspaper shall contain the name of the owner. and the editor printed clearly, so that there is no con fusion in the minds of the people on this account. Sub section (2) of section 5 of the Press Act makes it incumbent on the printer and the publisher to appear before the authorities mentioned in that section and make a declaration. Sub rule (2) of rule 8 of the Rules made under the Press Act runs thus: "Every copy of every newspaper shall have printed legibly on it the names of the printer, publisher, owner . and editor and the place of its printing and publication in the following form: Printed by . and published by . on behalf of . (name of owner) . . and printed at . (place of printing) . and published at . (place of publication. Editor . . " "This rule enjoins that the name of the printer, publisher, owner and editor must be clearly indicated. The note to this rule is extracted thus: "Note: This form may be modified to suit the circumstances of each paper, for example, where The printer, publisher and owner are the same the imprint line can be Printed, published and owned by . The editor 's name, however, should be given separately in every case". This requires that the editor 's name however, should be given separately in every case. Rule 6 requires every publisher to submit an annual statement to the Press Registrar. It is not disputed in the 673 present case that this statement was not made by the appellant but by P.W. 2 Aboobaker who was the editor, publisher and printer of Chandrika. The annual statement which has to be filed in form 2 contains one of the columns where the editor 's name has to be shown. Section 7 of the Press Act runs thus: "In any legal proceeding whatever, as well civil as criminal, the production of a copy of such declaration as is aforesaid, attested by the seal of some Court empowered by this Act to have the custody of such declarations, or, in the case of the editor, a copy of the newspaper containing his name printed on it as that of the editor shall be held (unless the contrary be proved) to be sufficient evidence, as against the person whose name shall he subscribed to such declaration, or printed on such newspaper as the case may be, that the said person was printer or publisher, or printer and publisher (according as the words of the said declaration may be) of every portion of every newspaper whereof the title shall correspond with the title of the newspaper mentioned in the declaration or the editor of every portion of that issue of the newspaper of which a copy is produced. Section 8(A) of the Press Act provides that where any person 's name has appeared as an editor in a paper although he was not an editor he shall within two weeks of his becoming aware that his name has been so published" appear before the District? Presidency or Sub Divisional Magistrate and make a declaration that his name has been incorrectly published and get a certificate from the Magistrate that the provisions of section 7 shall not apply to him. It may be interesting to note the following facts here: 1 That the issues of Chandrika shown to US clearly and unmistakably mention the name of Aboobaker as the printer, publisher and editor of Chandrika and does not mention the appellant as the Editor of Chandrika. The appellant is merely shown as the Chief Editor but this is an officer which is not at all contemplated by the Press Act. That if the appellant was really the editor of the paper then P.W. 2 Aboobaker ought to have resorted to section 8(A) to correct the mistake in the paper where his name was shown as the editor but no such thing has been done. One the other hand, P.W. 2 Aboobaker tacitly and clearly admits that he is the editor of the paper. 674 3. That the petitioner has not at all pleaded in his petition the nature of the duties performed or responsibilities shouldered by the appellant as Chief Editor. There is no averment at all in the petition that the appellant controls the selection of matter that is published in the newspaper which alone would make him an editor as defined in section 1 (1) of the Press Act. The word 'Chief Editor ' is clearly absent from the Press Act and in fact foreign to it because the Press Act has selected only one person who has a special status and that is the editor who can be sued, if necessary, or can sue and against whom alone a presumption under section 7 of the Press Act can be drawn. While holding that the presumption under section 7 of the Press Act is available to the petitioner, the High Court has completely over looked the aforesaid aspects mentioned by us. The law on the subject is absolutely clear and there are a number of decisions of this Court which have interpreted the relevant sections of the Press Act. In the case of State of Maharashtra vs Dr. R. B. Chowdhary & Ors. (1) this Court observed as follows: "The term 'editor ' is defined in the Act to mean person who controls the selection of the matter that is published in a newspaper. Where there is mentioned an editor as a person who is responsible for selection of the material section 7 raises presumption in respect OF such a person. The name of that person has to be printed on the copy of the newspaper and in the present case the name of Madane admittedly as printed as the editor of the Maharashtra in the copy of the Maharashtra which contained the defamatory article. The declaration in Form I which has been produced before us shows the name of Madane not only as the printer and publisher but also as the editor. In our opinion the presumption will attach to Madane as having selected the material for publication in the newspaper . In the circumstances not only the presumption cannot be drawn against the others who had not declared themselves as editors of the newspaper but it is also fair to leave them cut because they had no concern with the publishing of the article in question". (1) ; 675 This case, therefore, clearly holds that where a person is not shown A in the paper to be its editor no such presumption under section 7 of the Press Act can be drawn but it must be held that he has no concern with the publishing of the article. To the same effect is another decision of this Court in the case of D. P. Misra Kamal Naran Sharma & Ors.(1). In this case which was also an election matter a newspaper called Mahakoshal was published from Raipur and one Shukla was registered as the printer, publisher and editor with the Press Registrar. The defence of Shukla was that he had appointed one Tarangi as the editor of Mahakoshal in June 1962 and was not present at the relevant time. This Court pointed out that the proceedings for naming a person who is found responsible for publication of an offending matter and for constituting a corrupt practice are in the nature of quasi criminal proceedings. It follows therefore that being a corrupt practice it has to be proved beyond reasonable doubt and not by the measure of preponderance of probabilities. The Court observed in this connection as follows: "Section 7 raises a presumption that a person whose name is printed in a copy of a newspaper is the editor of every portion of that issue. The presumption must be re butted by evidence . The presumption under section 7 of the Press and Registration of Books Act undoubtedly arises, but in a charge under section 123(4) of the Representation of the People Act the presumption under section 7 of the Press and Registration of Books Act, 1867 would come with greater or less force, according to the circumstances to the aid of a person claiming that the editor was responsible for the publication and that the publication was to the knowledge of editor". "Granting that there was close association between Mishra and Shukla and even granting that Mahakoshal was exclusively carrying on propaganda on behalf of Mishra, unless there is evidence to prove that Shukla had either authorised the publication of the offending matter, or had undertaken to be responsible for all the publications made in the Mahakoshal, no inference that the offending publications were made to the knowledge and with the, consent of Shukla may be raised". "The statement filed by Shukla is not inconsistent with the case set up by him in this proceeding. Responsibility for publication was accepted by him but he had clearly stated (1) [1971] 3 section C. R. 257 676 that the publication of news items from the correspondents were attended to by the Sub editors and That he generally laid down the policy of the newspaper and gave general directions. He admitted his responsibility because he personally had with knowledge published the article which constituted contempt of Court". We may mention here that in this case Shukla in his statement has clearly stated that the publication of the news items in the paper were attended to by Sub editors and he generally laid down the policy of the newspaper and gave general directions. No such allegation or evidence is forthcoming in the instant case because it has neither been alleged nor proved that the appellant was in any way controlling selection of the matters published in the paper. In the case of Narasingh Charan Mohanty vs Surendra Mohanty(1) this Court pointed out that consent or agency could not be inferred but had to be proved affirmatively like any other fact. In this connection the Court observed as follows :. "Consent or agency cannot be inferred from remote causes. Consent cannot be inferred from more close friend ship or other relationship or political affiliation. As pointed out in D. P. Mishra 's case (supra) however close the relationship unless there is evidence to prove that the person publishing or writing the editorial was authorised by the returned candidate or he had undertaken to be responsible for all the publications, no consent can be inferred". It was further held in this case that the presumption under section 7 of the Press Act is a rebuttable presumption and the so called editor can rebut the presumption by showing that he had nothing to do with t he publication of the editorial or the news report. In our opinion, even if any presumption is sufficiently rebutted by him not only from the evidence adduced by the appellant but also by the evidence adduced by the petitioner. We shall presently deal with this facet of the matter, namely the factual aspect of this question. The court further observed as follows: "When once it is established that neither the editorial (ext. 1) nor the news report (Ext. 2) were published by the respondent or by some one else with his consent or that the speech alleged to be made by Biju Patnaik even if it amounts to corrupt practice, was made without the consent of the respondent, and that Biju Patnaik was not his agent. It is unnecessary to consider the question whether the (1) 119741 2 section C. R. 39. 677 editorial and the news report as well as the speech of Biju Patnaik did in fact constitute corrupt practice under sub section (3) of section 123 of the Act". As against this Dr. Chitale, counsel appearing for the petitioner submitted two points before us. In the first place, he argued that the provisions of rule 8 thereof have not at all been complied with, and, therefore, the appellant cannot escape his liability even though he was the Chief Editor. It was argued that the note to rule 8 as also the form mentioned in rule 8 sub rule (2) clearly provide that the editor 's name must be separately shown in every paper and in the instant case the issue of the paper Chandrika shows in a composite form that the editor, printer and publisher of the paper was P.W. 2 Aboobaker. It was thus contended that the provisions of rule 8(2) have not been complied with because the name of the editor has not been separately shown. In these circumstances, it was argued that as the name of the Chief Editor was separately shown he must be taken lo be the editor of the paper under the provisions of the Press Act and the rules made thereunder. We are however unable to accept this argument. In the first place, the paper clearly shows the name of the editor as Aboobaker. As the printer, publisher and the editor was one and the same person it cannot be said that merely because the name of the editor was not shown at a separate place he was absolved of his responsibilities as the editor. The intention of the rule is merely to clarify who the editor of the paper is and once this is shown then there is a substantial though not a literal compliance of the rule. Secondly, the Press Act does not recognise any other legal entity except the editor insofar as the responsibilities of that office are concerned. Therefore, mere mention of the name of the Chief Editor is neither here nor there, nor does it in any way attract the provisions of the Press Act particularly section 7. Thirdly, it is not even pleaded in the petition, much less proved, that the appellant being the Chief Editor, it was part of his duty to edit the paper and control the selection of the matter that was published in the newspaper which in fact has been demonstrably disproved by ' the appellant. Thus? we are unable to accept the finding of the High Court that any presumption under section 7 of the Press Act can be drawn against the appellant. This brings us to the factual aspect of the matter. In this connection, the definite case of the appellant is that although he has been shown as the Chief Editor of Chandrika he was not at all connected with any editorial function but his name was lent to the paper because of his past services to Chandrika and because he used to get lot of 678 money for this paper being an influential man. This has been proved not only by the evidence led by the appellant but also by the evidence adduced by the petitioner. Before taking the evidence on this point we might mention a few admitted facts which loom large in our minds (1) that the petitioner proceeds on the footing in his petition that the appellant was the Chief Editor and no where he has been mentioned as the editor of Chandrika, (2) there is no pleading by the petitioner that the appellant was an editor within the meaning of section 1(1) of the Press Act particularly when the paper Chandrika was the pivot and the sheet anchor of his case and which clearly showed that the appellant was not the editor but P.W. 2 Aboobaker was officially and factually the editor of the paper and yet there is no positive denial of this fact in the petition; (3) no particulars of the functions, duties and powers of the appellant as Chief Editor have been pleaded. On the other hand, it has been pleaded that the appellant held shares worth Rs. 3 lakhs in the company but that will not attract the provisions of the Press Act at all; and (4) as Aboobaker was admittedly the editor of the paper Chandrika as clearly admitted by the petitioner himself in his evidence, the onus was clearly on the petitioners to allege and prove that the duties of the editor were actually performed not by P.W. 2 Aboobaker but by the appellant. In this background we would now discuss the evidence of the parties on this point. P.W. 1 Thangal (Petitioner) categorically states thus: "V. C. Aboobaker is the editor and printer of Chandrika". He further admits that Aboobaker 's responsibility is to submit the reports and the speeches supplied by the appellant. He also admitted that Aboobaker does the editing. The witness no doubt says that he had seen the appellant in the Chandrika office twice but that by itself would not show that the appellant was the editor of the paper. Strong reliance was placed by counsel for the petitioner on the statement of P.W. 1 to the effect that the appellant was doing the day to day. editorial work of Chandrika. In the first place, this statement does not appear to, be true and is clearly contradicted by the petitioners own witnesses, namely, P.Ws. 2 and 5 who have categorically stated that Aboobaker was the editor and the appellant was not a member of the editorial group and was extremely busy with the elections to be able to devote any time to do the work of the editor. The evidence of this witness shall be discussed hereafter. 679 Another important aspect of the matter is that as the petitioner was not connected with Chandrika he is not competent to depose to show who did the editing work of Chandrika. The only competent witnesses on this point are P.Ws. 2 and 5 and the appellant and they have said that the appellant had nothing to do with the editorial work of the paper. Moreover, it would appear from the evidence of P.W '. 5 that there is a special attendance register for the editorial staff and that the appellant had not signed the said register which clearly shows that the appellant had no concern at all with the editorial group. Finally, the allegation that the appellant was doing day to day editing work of Chandrika is not merely a piece of evidence but a material fact which ought to have been pleaded in the petition if the petitioner wanted to rely on the presumption under section 7 of the Press Act. If this fact was within the knowledge of the petitioner there was no reason why he did not mention it in his petition. In these circumstances, therefore, the statement of P.W. 1 on the point cannot be accepted. P.W. 2 Aboobaker who has been examined as the petitioner 's own witness categorically states that he is the printer, publisher and editor of Chandrika and his statement on this point is extracted thus: "I am the Printer, Editor and Publisher of the Malayalam Daily Chandrika. This is published by Chandrika Printing and Publishing Company". He further states that in this institution (Chandrika) the post of Chief Editor is an ornamental post. Thus, the witness fully supports the appellant 's case that he was the Chief Editor only in name and his post was purely ornamental. The witness further admits that all responsibilities are with the editor and Chandrika has no regular Board called the Editorial Board. He further admits that as an editor he knows what his responsibilities are. The witness further admits in clearest possible terms that the authority to change the policies from time to time is vested in him. His statement may be extracted thus: "The authority to change policy from time to time is vested in him. " He further states that the reports or the news are published only after `he is satisfied about the truthfulness of the report concerned. This shows clearly that P.W. 2 was both de jure and de facto an editor inasmuch as the control of the policy was vested in him. He was performing the duties and shouldering the responsibilities of the editor and the reports were published under his authority. 680 Reliance was however placed by counsel for the petitioner on the statement of the witness P.W. 2 which runs thus: "In the Chandrika Office, Chief Editor has got a special room . He is interested in the maintenance of the standards of Chandrika as a newspaper . He knows the policy of the paper. If anything appears against the declared policy of the paper he has got the authority to give necessary direction to me about that". To show that the appellant was controlling the general policy of the paper. We are unable to infer from this statement that the appellant was controlling the selection of the matter published in the paper so as to fall within the definition of the word 'editor ' as defined in section 1(1) of the Press Act. The appellant was no doubt connected with the paper for a long time and there is nothing wrong in his giving directions to the editor if he found that some event took place against the declared policy of the paper. The witness at a later stage of his evidence has clearly stated that he had not discussed with the appellant the news item which appeared in the paper nor did the appellant give any direction to the witness about the printing and editing of the paper. This statement may be extracted thus: "I have not discussed with the respondent about the news items which appeared in the paper. He did not give any direction about the printing and publishing of the paper". The witness further clarifies that the Chief Editor has no such special ' responsibility. He further states thus: "In the editorial staff of Chandrika there are 20 persons including me. This 20 include trainees also. Under them there are two news editors. There are two Chief Sub Editors. 5 or 6 Sub Editors. I have got supervision of their work . I have only responsibility of editing and printing of the paper". This clearly shows that the witness was not only entirely responsible. for the printing and editing of the paper but was also supervising the work of the Sub editors under him. He also admits that the declaration under the Press Act was filed by him. To an express question whether the appellant has been selecting or editing any of the day to day matters appearing in the paper the witness categorically denied the same. The statement may be extracted thus. "The declaration under the Registration of Press and Books Act was filed by me. Has the respondent been selecting or editing any of the day to day matter appearing 681 in the paper? (Q) No. (Ans.) . At the time of election because of his responsibility as the Secretary of the Muslim League and as a leader of the United Front, during the months of February and March, the respondent was mostly on tour. on all days when I was present, I sign the register". It is, therefore, clear that even the witness examined by the petitioner has knocked the bottom out of the case of the petitioner that the appellant had anything to do with the duties and functions of an editor, and the question put to the witness which is denied by him clearly shows that the appellant has demonstrably disproved that he could be an editor of the paper as defined in section 1 of the Press Act. Further this witness has also admitted that at the time of election because of the appellant 's being the Secretary of the Muslim League and leader of the United Front he was mostly on tour. This admission goes to show that the appellant was too busy to be ascribed knowledge of the articles or speeches published in Chandrika. P.W. 3 C. K. Hassan who is a worker of the petitioner merely says that the appellant Haji C. H. Mohd. Koya was the Chief Editor and it was mentioned in the Chandrika paper that the Chief Editor would give speeches. The witness further says that since it was printed in the Chandrika paper it was understood that the appellant was the Chief Editor. This takes us nowhere because the witness does not throw any light on the duties performed by the Chief Editor and also does not say who was the editor of Chandrika. In these circumstance, the evidence of this witness is absolutely valueless on the point in issue. P.W. 4 Mohammed Ali Shihab Thangal is an important witness being the President of the Muslim League and Managing Director of the Muslim Printing and Publishing Press which published the paper Chandrika. The witness was fully conversant with the working of the editorial department of the paper. The witness clearly states that the appellant was the Chief Editor and the editor was under him. The witness further categorically asserts that the policy of Chandrika is decided by the editorial staff which as has already been seen does not include the Chief Editor. This fact was admitted by P.W. 2 as reported above. Even this witness does not say that the appellant as the Chief Editor was a member of the editorial staff. On a specific question asked to him whether the appellant as the Chief Editor had powers to take decision about the paper, the witness has denied knowledge of the same. The witness further proves that the appellant as 682 the Chief Editor was drawing a salary of Rs. 700 per month, but the witness admits that the entire management is done by Seethi Sahib as Director in Charge. Thus, according to this witness, Seethi Sahib who has been examined as P.W. 5 is the most competent witness to prove as to what was the exact nature of the duties of the Chief Editor. P.W. 5 Seethi Haji is the Director in charge of the Muslim Printing and Publishing Press and admits that he attended to the administrative functions of the Press. He clearly admits that Aboobaker (P.W. 2) was the editor of Chandrika paper and, his responsibilities are the same as they were in 1974 75. While explaining the reason why the post of Managing Editor and Chief Editor existed in the establishment, he says that this was because it was thought that the names of big personalities would be prestigious. In other words, the witness fully corroborates the version given by P.W. 2 that the appellant 's name as Chief Editor was merely ornamental. The witness also says that although the appellant had a lot of experience in journalism yet that was not the only reason why he was made the Chief Editor but another consideration that swayed with the authorities concerned was that the appellant was a leader of the community. The witness further asserts thus: "To write 'Chief Editor` has a value of its own that was why the name was inserted. (Ans.) He is also a leader of the community as well as a journalist. He is an M.P. So his name was inserted". The witness stoutly denied the suggestion put to him that there was an impression among the public that Chandrika and everything about it constitutes the responsibility of the appellant. The witness says that from 1967 to 1974 the appellant was in Chandrika but there is no such impression in the public. The appellant is a shale holder having invested Rs. 400 whereas Rs. 3 lakhs has been invested in the name of the Muslim League. Another important suggestion which is denied by the witness was an answer to the following question: "Will you work out the policy of the paper on your own accord without the knowledge of C.H. ?" the witness answer is as follows: "I do things now, after consulting P.W. 2. Till now I have not asked C.H." It is, therefore, clear that even in matters of policy the witness who was in charge of the administration of the paper would not consult the appellant but only P.W. 2 who was admittedly the editor of the 683 paper. In other words, it is clear that the appellant had nothing to do with the policy of the paper much less the editing part of it. To a question that except Chief Editor the appellant has got any other official position in this company the witness answered 'nothing '. The witness further stated that the Chief Editor had not raised any objection to him about any news item published in Chandrika or the policy matter of the paper from which he inferred that the Chief Editor had approved the policy for if he had no objection he would have told him. Again, the witness makes a very significant statement which runs thus. "I am present in the office on almost all days. I was in charge of going through the publications appearing everyday in the paper and checking up as to whether they are in conformity with the declared policies and interests of the paper. It was my responsibility to place objections, if any, if they were against the declared policies". The witness further stated that the Manager had nothing, to do with the editing and printing of the Paper but categorically asserted that P. W. 2 is selecting and editing everyday 's matters in the Chandrika. Thus, on the admission of this witness who was fully conversant with the working of the paper P.W. 2 alone fulfils the requirements of the definition of an editor as given in section 1 of the Press Act and totally excludes the appellant from the scope and ambit of an editor as defined in the aforesaid, section. The witness further admits that there is a special attendance register for the editorial staff and when the register is shown to him he admits that this is the same register since January 1977. This register is marked Exhibit R 7. The witness further admits that the register is for the entire editorial staff including P.W. 2. The witness further asserts that the appellant who was the Chief Editor had not signed in this register. This therefore clearly and conclusively proves and unmistakably shows that the appellant was not a part of the editorial staff at all and had no concern with that department. This is all the evidence led by the petitioner and from this evidence it has not at all been proved that the appellant as the Chief Editor performed any functions of the Editor or was an editor within the meaning of section ] of the Press Act. Before concluding this part of the case was might refer to the evidence of the appellant himself. But before we do that it would he necessary to analyze the pleading of the appellant. 684 In para 4 of the counter affidavit which is really a substitute tor the written statement the appellant avers as follows: "The actual functions of the editor are being looked after by Sri V. C. Aboobaker who is the editor, printer and publisher of the Chandrika. This respondent has very little time to perform the functions of the Chief Editor as he is pre occupied with other important activities on account of his membership of Parliament and his being the Secretary of the Indian Muslim League, both all India and State The actual editing and publishing were entirely looked after by Sri V. C. Aboobaker". In the evidence given by the appellant as his own witness what he has stated in his counter affidavit is fully proved and further supported by the evidence of P.s. 1 to 5 as discussed above. At any rate the appellant himself has made the entire position clear in his evidence which is fully corroborated by the witnesses of the petitioner examined by him. On a specific question put to him as to whether he worked as Chief Editor during those days, the witness has categorically denied the same. The witness further stated that he became the Chief Editor in 1971 and continued to be so till 1977. He has further clarified that when he became the Chief Editor he was not doing the editing work which he was doing before. According to the witness, he joined the paper as far back as 1944 as Sub Editor. It is, therefore, natural that in the early stages of his career he was a part of the editorial staff and must be performing editorial duties when he became the editor. But what we have to see is what was the position in 1977 after he became the Chief Editor. On this point, the witness has categorically stated that as Chief Editor he was not doing any editing work. The witness has further explained that when he became the Chief Editor he was also an M.P. and so he did not get any time for doing the editorial work. The witness then goes on to state that from 1974 to 1977 till the Lok Sabha was dissolved he was in Delhi as an M.P. and even during that time his name used to be printed in the paper as Chief Editor but he was not doing any editing work. He further states that as leader of the United Front and of the Muslim League he had much work to do during the election time and he was very busy with the election speeches. Explaining the responsibilities and duties of an editor the witness stated thus: "The responsibility of editing Chandrika is of P.W. " Aboobaker. There is a large staff of Chief Sub Editors and Sub Editors to assist him. There are two Chief Sub Editors, 685 including Sub Editors there are about 10, 20 persons. The A work of these persons is supervised and co ordinated by PSHAW. 2". The witness further states that the Chief Editor has No. room in the editorial section. He further corroborates PSHAW. 2 by stating that PSHAW. 2 has given the declaration under the Press Act. Regarding the nature of the functions which he actualy performed the witness asserted thus. "You had no difference of opinion with the reports and articles which appeared in Ext. P. 1 to 11 . Having read I did not think that any of those would constitute corrupt practices. If I had thought so I would have tried to rectify them". He further stated that he did not belong to the regular staff. He further admitted that he collected funds from the Gulf countries to finance the paper Chandrika and the Muslim League holds the shales in the name of the witness. Learned counsel for the petitioner laid very great stress on exhibit P. 2 a letter signed by the appellant to show that he was doing the editorial work. This letter was sent to one of the correspondents of the paper Chandrika and the appellant has explained in his statement that in the absence of the editor P.W. 2 the Manager requested the appellant to sign the letter and so he signed it This was just an act of official accommodation which was totally unconnected with the duties performed by the appellant. After all the appellant was a high officer in the said organisation and if the letter had to be sent to one of the correspondents and was a little urgent instead of waiting for the editor to come there could be no harm if the Manager asked the appellant as Chief Editor to sign it. Such a casual act on the part of the appellant done, not voluntarily, but at the request of the Manager cannot clothe him with the legal status of an editor. Thus, this fact alone would not show that he was performing any editorial functions. The witness further states that the Chandrika has no editorial Board but there is an editorial group consisting of Editor, Sub Editor and others. This is the relevant part of the evidence of the appellant on this question. Thus, on a close and careful consideration of the evidence discussed above. the following inescapable conclusions emerge: 1. P.W. 2 Aboobaker was admittedly the editor of Chandrika, fulfilled all the conditions of section 1(1) of the 686 Press Act and his name was printed as editor in the of Chandrika. 2. P.W. 2 as the editor of the paper supervised the editorial staff, controlled the selection of materials to be published in the paper, approved the policies to be followed in publication and was wholly in charge of the editorial group. The appellant was never shown or referred to as the editor anywhere. Even the register which is meant to be signed by the editor and the other staff on the editorial rial group was not signed by the appellant as he had nothing to do with the editorial work. The appellant had been appointed as Chief Editor because he was a Member of Parliament and an influential man who could get finance for the paper from the Gulf States but he had no hand at all in any of the functions and duties performed by the editor. The appellant was no doubt shown as Chief Editor in the issues of the Chandrika but the Press Act as held by us does not recognise any such legal entity and the only person who is recognised by the Press Act is the editor who in this case was P.W. 2 and who had admittedly filed the declaration under section 5(2) of the Press Act. Although section 8A was the specific provision under which a person could apply for a certificate that he 1. ' ceased to be the editor no such action was taken by P.W. 2 to get his name struck off from the roll of editor. This clearly shows that P.W. 2 alone was the editor and the appellant was merely a name lender and his post was purely ornamental. The petitioner himself has not at all anywhere pleaded in his petition that the appellant was the editor nor has he mentioned the duties or responsibilities which were performed by the appellant as Chief Editor so as to bring him within the fold of section 1 of the Press Act. From the facts established above, it is manifest that the petitioner has miserably failed to prove either that the appellant was the editor of the paper or that he was performing the functions. duties or 687 shouldering the responsibilities of the editor. It is obvious that a presumption under section 7 of the Press Act could be drawn only if the person concerned was an editor within the meaning of section l of the Press Act. Where however a person does not fulfil the conditions of section 1 of the Press Act an(l does not perform the functions of an editor whatever may be his description or designation the provisions of the Press Act would have no application. In these circumstances, therefore, the High Court had no legal justification to draw a presumption against the appellant under section 7 of the Press Act in holding that he was proved to be the editor of Chandrika and! therefore, must be deemed to be aware of the articles published in the said paper. Even if, for the sake of argument, it is assumed that the appellant was the editor it has been pointed out by this Court that the presumption to be drawn under section 7 of the Press Act is rebuttable and the evidence and the circumstances of this case discussed above show that this presumption has been sufficiently rebutted. The next question that arises for consideration is that if the finding of the High Court on this point is rejected as it must be then can the petitioner be liable for the materials or speeches published in the paper Chandrika. The publication of the materials promoting hatred between two classes of citizens is undoubtedly a corrupt practice and` it is well settled by long course of decisions of this Court that such practices must be clearly alleged with all the necessary particulars and proved not by the standard of preponderance of probabilities but beyond reasonable doubt. We are fortified in our view by the decision of this Court in the case of Mohan Singh vs Bhanwar Lal & Ors.(1) where this Court observed as follows: "The onus of establishing a corrupt practice is undoubtedly on the person who sets it up, and the onus is not discharged on proof of mere preponderance of probability, as in the trial of a civil suit, the corrupt practice must be established beyond reasonable doubt by evidence which is clear and unambiguous. " To the same effect is a decision of this Court in the case of Magraj Patodia vs R. K. Birla & Ors.(2) where this Court observed as follows: "But the fact remains that burden of proving the com mission of the corrupt practice pleaded is on the petitioner (1) A. 1. R. (2) ; 10 549 SCI/78 688 and he has to discharge that burden satisfactorily. In doing so he cannot depend on preponderance of probabilities. Courts do not set at naught the verdict of the electorate except on good grounds". ln the case of D. Venkata Reddy vs R. Sultan & Ors.(1) this Court after reviewing most of the previous decisions of this Court observed as follows: "In a democracy such as ours, the purity and sanctity of elections, the sacrosanct and sacred nature of the electoral process must be preserved and maintained. The valuable verdict of the people at the polls must be given due respect and candour and should not be disregarded or set at naught on vague, indefinite, frivolous or fanciful allegations or on evidence which is of a shaky or prevaricating character. lt is well settled that the onus lies heavily on the election petitioner to make out a strong case for setting aside an election. In our country election is a fairly costly and expensive venture and the Representation of the People Act has provided sufficient safeguards to make the elections fair and free. In these circumstances, therefore, election results t cannot be lightly brushed aside in election disputes. . Another principle that is equally well settled is that the election petitioner in order to succeed must plead all material particulars and prove them by clear and cogent evidence. The allegations of corrupt practice being in the nature of a quasi criminal charge the same must be proved beyond any shadow of doubt". In the case of Ramanbhai Nagjibhai Patel vs Jaswantsingh Udesingh Dabhi & ors.(2) this Court observed as follows: "We may state that the charge of bribery is in the nature of a criminal charge and has got to be proved beyond doubt. The standard of proof required is that of proving a criminal or a quasi criminal charge. A clear cut evidence, wholly ! credible and reliable is required to prove the charge beyond doubt. Evidence merely probabilising and endeavouring to prove the fact on the basis of preponderance of probability is not sufficient to establish such a charge". In the light of these decisions we shall now proceed to decide the next question. In view of our finding that the appellant has not been (I ) 11976] 3 section C. R. 445. (2) A. 1. R. 689 proved to be the editor of the paper Chandrika Ext. P. 2 to P. 11 excepting Ext. P. 5 will have to be totally excluded from consideration because those are speeches and articles of various persons published in Chandrika and the constructive knowledge of this has been ascribed to the appellant by virtue of the allegation that he was the editor of the paper. As however this has not been proved it was incumbent on the petitioner to prove knowledge of these articles or speeches like any other fact. The admitted position appears to be that neither the writer of the article nor the speaker who delivered the speech nor the reporter nor even the manuscripts of the speeches have been produced before the Court. In these circumstances, therefore, all these articles and speeches are inconsequential until they are shown to have been made with the knowledge and consent of the appellant. Even in the pleading the petitioner has not averred that the appellant had any independent knowledge of these things or that these speeches or articles were written with his express or implied consent. The petitioner has based his case entirely on the footing that as the appellant was the editor he must be deemed to be aware of these articles and speeches and if the speeches contained offending matters and promoted hatred and ill will between two classes of citizens the appellant must be deemed to have committed the corrupt practice under section l 23 (3A) of the Act. As the entire edifice built by the petitioner for the admissibility of exhibit P. 2 to P. ll except P. 5 collapses, the allegation of the petitioner on this score is clearly disproved. Moreover, we are fortified in our view by the decision of this Court in the case of Samant N. Balakrishna etc. vs George Fernandez Ors. etc.(1) where this Court observed as follows: "The best proof would have been his own speech or some propaganda material such as leaflets or pamphlets etc but none was produced . A news item without any further proof of what had actually happened through witnesses is of no value. It is at best a second hand secondary evidence. It is well known that reporters collect information and pass it on to the editor who edits the news item and then publishes it. In this process the truth might get perverted or garbled. Such news items cannot be said to prove them selves although they may be taken into account with other evidence if the other evidence is forcible". We might also mention here that the High Court rejected EXT. P. 12 rand P. 13 by finding that these documents did not fall within the mischief of section 123(3A) of the Act. Some reliance was however (1) [ ; 690 placed on exhibit P. l(d) which is said to have been written by the appellant. This document cannot be taken into consideration for two reasons. In the first place, this was undoubtedly a material particular if it was an article actually written by the appellant and contained offending matter, and, therefore, it was necessary that it should find place in the petition before being considered by the Court. Secondly, it has not been proved to have been written by the appellant at all. This document is in the nature of an editorial written on 1 3 1977. The appellant has already denied that he had anything to do with the editorial work and was too busy with the election work as an M.P. and had no time to devote to these things. The learned Judge of the High Court has wrongly mentioned in his judgment at page 28 of the paper book Vol. l that the petitioner had made out a case that Ext. P. 1 (d) was written by the appellant. There is no such averment in the petition at all and the High Court has committed a clear error of record. Thirdly, the appellant stated that he could not say after such length of time that the editorial was written by him. But on reexamination the appellant categorically asserted that the editorial written could not be in his language and thus denied having written the editorial. Although P.W. 2 the editor of the paper was examined by the petitioner and being the editor he was the best person to know whether or not this editorial was written by the appellant yet this document was not put to him. In these circumstances, this document has not been proved according to law, and, therefore, must be excluded from consideration. Counsel for the petitioner also did not press us to consider these documents Ext. P. 2 to 1 '. ll except P. S if we find that the appellant was nor the editor of the paper Chandrika or that the presumption is not available to the petitioner. Reliance was however placed by counsel for the petitioner as also by the High Court on two documents, namely, exhibit P. l(a) which was an extract of a speech delivered by the appellant at one of the election meetings where he is said to have made certain observations which tended to promote hatred or ill will between the Janasangh and the Muslim League. Reliance was further placed on exhibit P. S which was a cartoon printed in the paper Chandrika and it was alleged by the petitioner that it was done with the knowledge and consent of the appellant. The cartoon, according to the High Court, did contain offending matter inasmuch as it tried to promote feelings of hatred between two classes of citizens. So far as exhibit P. l(a) the speech of the appellant is concerned the petitioner made the following averments in the petition which may be extracted thus: 691 "The respondent is the Chief Editor of Chandrika, a daily newspaper published from Calicut. It is published by the Muslim Printing and Publishing Company Limited. The major shares of this company is owned by the Muslim League Party and the respondent holds share worth of Rs. 3 lakhs in the above company. The daily Chandrika is the official organ of the Muslim League Party. It is submitted that in the daily Chandrika of which the respondent is the Chief Editor, is published reports and articles appealing to the members of the Muslim community not to vote for the candidates of the Muslim League (opposition) in the name of religion and community". The analysis of the averment clearly discloses the following facts: 1. The petitioner has not mentioned the name of a single person who had actually heard the speech and made a report. According to the evidence of P.W. 1 he was present at the place where the speech was delivered by the appellant and yet this fact, though a very material particular, does not find mention in the averment in the petition referred to above. It is not indicated in the petition as to how and in what manner the speech tended to promote feelings of enmity or hatred between two classes of citizens. Even the classes of citizens against whom hatred was preached by the speaker has not been mentioned. From the infirmities mentioned above, it is clear that so far as the speech is concerned the allegations made in the petition are vague. Assuming however that para S may amount to an allegation as contemplated by section 123(3A) of the Act, we shall proceed now to determine how far the petitioner has been able to prove his case within the four corners of the aforesaid section. No evidence was produced by the petitioner to prove whether the extract of the speech was correct and was a reproduction of the very words used by the appellant. Although the witnesses for the petitioner admitted that his speeches were reported to the paper by the reporters neither the script of the speech nor the reporter concerned was examined as a witness to prove that the contents were the transcript of the speech delivered by the appellant. The entire case of the petitioner on this point rests on an admission made by 692 the appellant in his statement in court that the extract printed in the paper was more or less the correct reproduction of his speech. Thus, it is clear that the petitioner relies on this part of the case solely on the admission of the appellant. It is well settled that an admission unless it is separable has to be taken as a whole or not at all. In the case of Hanumant vs The State of Madhya Pradesh(l) this Court observed as follows: "It is settled law that an admission made by a person whether amounting to a confession or not cannot be split up and part of it used against him. An admission must be used either as a whole or not at all". To the same effect is the decision of this Court in the case of Palvinder Kaur vs The State of Punjab(i ') where Mahajan, J. speaking. for the Court observed as follows: "The court thus accepted the inculpatory part of that statement and rejected the exculpatory part. In doing so it contravened the well accepted rule regarding the use of confession and admission that these must either be accepted as a whole or rejected as a whole and that the court is not competent to accept only the inculpatory part while rejecting the exculpatory part as inherently incredible". The same view was taken in a recent decision of this Court in the case of Dadarao vs The State of Maharashtra(3) where this Court observed as follows: "It may not, however, be overlooked that the admission made by the appellant must be read as a whole, for what he has stated is that he had made his signature in the. account books of the branch office after an audit objection was raised that he ought to have signed the books at the end of every day in his managerial capacity. The statement of the appellant on this aspect is not capable of dissection because the particular part thereof on which the High Court relies is inextricably connected with the other part which the High Court has not taken into consideration". In view of the settled law on the question, it is manifest that the petitioner would fail or succeed on the admission of the appellant and the admission will have to be read in the light of what the (1) [1952] S.C.R. 1091. (2) (3) 693 appellant has himself stated in his statement unless there are other A satisfactory reasons for taking a contrary view. To begin with the offending words of the extract may be quoted thus: "C.H. declared emphatically that the assassins who dissected the community are now canvassing votes for the United Front of Janasangh and R.S.S. who were thirsting for Muslim blood. He loudly declared that the community should rest only after completely flooring this front in the ring of the elections. C.H. exhorted the gathering to cut down the fascist scarecros to the extent that they cannot rise again". Out of the entire speech this is the only portion against which offence has been taken as falling within the mischief of section 123 (3A) of the Act. It was suggested by counsel for the petitioner that the words used by the speaker clearly indicate that the party of the United Front of Jana Sangh and R.S.S. was after Muslim blood and the Muslim community should not rest unless this party is obliterated from the election. Strong exception has been taken by counsel for the petitioner to the use of the words 'assassins ' for describing the Muslim who had gone over to the side of the United Front. This passage was put to the appellant who stated thus: "In Ext. P. 1(a) second paragraph it is said 'Murderers who split the community ' which community was split (Q). I was referring to the split in the Muslim League (Ans.). . The speech was at 2 o 'clock in the night. I do not know whether the words which I exactly used have come in the paper. The general idea is the same. I say that you used these very words; can you deny (Q.). I am not sure (Ans.). When a speech is made different versions will come in the paper. I do not usually prepare my speeches. I speak extempore". "I cannot say that I used the very same words. But I have strongly urged that the opposition Front be defeated. (Ans.) Have you said "RSS Jana Sangh which was thirsting for the Muslim blood". (Q) The speech was made a year ago. I do not remember the actual words used. exhibit P. 1(a) report was written by Chandrika reporters. The ideas were mine. The phrase 'thirsting for blood ' was used in figurative language (Ans.). " It is clear that the appellant does not admit that the extract contains the very words which were used by him in his speech particularly when the appellant had delivered an extempore speech. As the 694 speech was delivered a year before by the appellant, it is quite natural that he would not have been able to remember the actual words used by him. The appellant however makes it clear that the phrase 'thirsting for Muslim blood ' was used in a figurative sense and not literally. That must obviously have been so. He has further stated that he used the words 'thirsting for blood ' in a figurative sense and not in the sense of drinking blood. What he meant was to give the Muslim community a warning that it would guard itself against such undesirable candidates by defeating them in the election. It was, therefore, a speech in a political matter. Further while explaining the words 'Getting into the battle field ' the witness has stated that he used the same in the sense of getting ready for a political contest. This is how the appellant has explained his speech and the explanation given by him can not be rejected because no other evidence has been produced by the petitioner excepting the statement of the appellant regarding the interpretation of the speech. Furthermore, the extract of the speech quoted above also shows that there does not appear to be any intention on the part of the speaker to preach hatred or enmity between two classes of citizens, namely, Janasangh, RSS and the Muslim League. We might mention that a good deal of argument was advanced before us by counsel for the appellant as to the nature, character and significance of the term 'citizen ' and it was contended that political parties having a particular ideology could not be treated as a class of citizens as contemplated by section 123(3A) of the Act. In the view which we have taken it is not necessary for us to examine this question. We shall assume for the sake of argument that Janasangh, R.S.S. and the Muslim League were different classes of citizens, but even then that does not advance the case of the petitioner any farther. We feel ourselves in complete agreement with the interpretation given by the appellant regarding the speech made by him. In the first place, being the speaker the appellant was the best person to say what he meant by the speech he delivered. Secondly, the petitioner has not produced either the reporter who was present at the meeting when the appellant spoke nor has he called for the script of the speech the extract of which was given in the newspaper. It is very difficult to interpret a part of the speech completely torn from its context. Furthermore, the words 'thrist for Muslim blood ' have been used for a particular purpose as explained by the appellant, because the words following, namely, 'he loudly declared that the community should rest only after completely flooring this front in the ring of the elections ' clearly show that what the speaker meant 695 was that as Jana Sangh and R.S.S. were against the Muslims they A should muster all efforts to get them defeated and teach a lesson to the dissident Muslims who had joined the Janasangh party. There does not appear to be any element of hatred or enmity in the extract of the speech of the appellant reported above. There is no exhortation by the speaker to the Muslims to attack the Janasangh or the R.S.S. Or to do any kind of harm or violence. 'the entire speech is made against a political background and for a political purpose. Another intrinsic circumstance which takes the speech out of the ambit of section 123(3A) of the Act is the conduct of the petitioner. The petitioner admits in his evidence that he heard the speech of the appellant but did not take down the same. He further clearly admits that the speech excited religious sentiments which is an election offence and yet he did not complain to any one about the speech of the appellant. In this connection, the petitioner stated thus: "It is a speech which excites the religious sentiments. That is an election offence. I had not complained to any authority about the speech of the respondent". the petitioner has not examined any independent member of the public belonging to the place where the speech was delivered and who had heard the same to prove that the speech tended to promote hatred or enmity between different communities, nor is there any such evidence consisting of the members of the people to show what impact the speech made on them. On the other hand, it was rightly pointed out by Mr. Nariman, counsel for the appellant that there is reliable evidence to show that the speech was not treated to be an offending one or one that fell within the mischief of section 123(3A) of the Act. P.W. 1 admits in his statement that a paper called 'Mathrubhumi ' dated 1 3 1977 which was shown to him contains the correct reproduction of the speech of the appellant. In this connection, the witness state as follows: "I read the Mathrubhumi also. `Mathrubhumi ' dated 1 3 1977 shown to witness. Is not the news item under the heading the United Front will return to power on 696 page 3 in this about the same news P. l(a) meeting (Q). A copy of paper shown to witness. The witness reads the passage. The report about the meeting may be correct. Does it give an exact report of the speech of the respondent on that day (Q) Yes (A). " This extract in the Mathrubhumi is exhibit R l and runs thus: "C.H. Mohammed Koya expressed the opinion that the fate of those who condemned and denigrated the leaders of the community and those who stabbed the organisation from behind the back will be known by the next election". A perusal of this extract would clearly show that the appellant never preached any hatred or enmity between two classes of citizens, but had merely condemned the dissident leaders of the community who had stabbed the organisation, namely, the Muslim League in the back and who were seriously condemned for their defection. Had the speech been understood by the public and the intellectuals as promoting hatred or enmity between two parties, some comment on this aspect must have been found in the paper Mathrubhumi which be longed neither to the Jana Sangh nor to the Muslim League. Furthermore, there is another paper 'League Time ' which is exhibit R 14 and which clearly mentions that in the last election communalism has not played any part at all. The relevant extract may h ' be quoted thus: "Communalism has not played any part in the election. Mr. Rajagopal pointed out this is a hopeful situation". Thus, both these papers found no communal tinge nor any sermon! preaching hatred or enmity between Janasangh and Muslim League in any of the speeches delivered by the appellant at the various meetings in the course of the elections. In view of the circumstances, therefore, the only evidence from which the court can find that the appellant had committed a corrupt practice as contemplated by section 123(3A) of the Act is the evid 697 ence of the appellant containing the explanation and the ramifications of his speech which being an admission has, in the facts and circumstances of this case, to be taken as a whole or not at all. Moreover, as the offending, extract of the speech is an integral part of the speech of the appellant it cannot be dissected. In other words. a corrupt practice must be proved beyond reasonable doubt and applying this standard we must hold that the petitioner has failed to prove that the speech given by the appellant promoted or attempted to promote hatred or enmity between two classes of citizens. In these circumstances. stances, the allegation in para S of the petition against the appellant has not been proved. None of the aspects discussed by us have been adverted to by the High Court which seems to have proceeded on presumptions and assumptions. Lastly we come to the next item on which reliance is placed which is exhibit P. 5, the cartoon. The allegation regarding the cartoon is made by the petitioner in para 11 of the petition which may be extracted thus: "In Chandrika dated 12 3 1977 on the front page a cartoon is published. It is depicting Jana Sangh as a Pig and Shri E. M. Sankaran Namboodiripad, the Marxist leader, cutting the flesh of the pig and serving it to the Muslim. This is an attempt to promote feelings of enmity and hatred between different classes of citizens of India on grounds of religion. It is well known to eat pork is pardial ansthma (haram) for true Muslims The publication of this cartoon in Chandrika is with the consent and knowledge of the respondent which promoted hatred of the Muslims against the United Front of Marxist Party and Janata Party and Muslim League (opposition) of which the petitioner is a candidate from the concerned constituency". It may be pertinent to note that in this averment the petitioner has pleaded that the cartoon was published with the consent and knowledge of the petitioner a fact which the petitioner has miserabIy failed to prove. There is absolutely no evidence on record to show that the cartoon was shown to the appellant and his approval was obtained before it was published, nor is there any evidence to show that the appellant had any knowledge direct or indirect about the cartoon before its publication in Chandrika. We might indicate 698 here that the term 'consent ' is a much stronger word than knowledge because it implies conscious assent and there is nothing to show that the appellant at any time gave his consent to the publication of the cartoon. The actual cartoon seems to depict Janasangh as a pig and Shri E. M. section Namboodiripad the Marxist Leader cutting the flesh of the pig and serving it to Muslims It is well known that pork is strictly prohibited by Islam and the very act of offering pig to a Muslim is extremely abhorrent to the Muslim so the cartoon no doubt attempts to promote feeling of hatred between the Hindus and the Muslims and the High Court was right in coming to this finding. But this does not conclude the matter because it must be affirmatively provide by the petitioner that this cartoon was shown to the appellant or was within his knowledge or had his consent before its publication. on this there is no evidence at all. Indeed if there is any evidence it is to negative this fact. The petitioner has mainly relied on the statement of P.W. 2 the editor which is to the effect that the copy of Chandrika used to be sent to the appellant. That by itself would not show that the appellant must have read all the issues of Chandrika including the one which contained the cartoon. In fact, as indicated above, P.W. 2 has himself admitted that at the time of election because of his responsibilities as the Secretary of the Muslim League and as a leader of the United Front during the months of February and March the appellant was mostly on tour. The appellant has also admitted that during the relevant time he never got time to read the paper completely. He has also stated categorically as indicated by us while dealing with his evidence that he was extremely busy and has stated l thus: "As a leader of the United Front and the leader of the Muslim League I got much work to be done during election time. During this time were you very busy with your election speeches ? (Q) Yes (Ans.) I was very busy". He has further admitted that although a copy of Chandrika was sent to him yet he did not get time to read fully. The statement runs thus: "As Chief Editor one issue of Chandrika used to be sent to me. Did you have time to read Chandrika and other newspapers during election time ? (Q) l do not get time to read fully (Ans.)" This is all the evidence that has been produced in the court to show that the cartoon was printed with the knowledge and consent of the appellant. Putting however the case of the petitioner at the 699 highest all that has been shown is that the appellant may have seen A or received the paper and at the same time it is equally possible that in view of his pre occupation the appellant may not have read or seen the paper at all. In such a situation, the onus of proof being on the petitioner to prove that the appellant had knowledge of the publication of the cartoon, and applying the standard of proof by the doctrine B of benefit of doubt, the allegation of the petitioner that the appellant was aware of the cartoon or gave his consent to its publication stands disproved for the appellant will get the benefit of doubt if two clear possibilities are available. Thus, it is impossible for us to jump to the conclusion that the appellant had any knowledge of the publication of the cartoon before its publication, or that he gave his consent C to its publication merely from the fact that the appellant was the Chief Editor and received a copy of Chandrika every day particularly hen the appellant has explained that he was too busy and did not find time to read the paper fully. As the allegation regarding the cartoon is also a corrupt practice it has to be proved by clear and cogent evidence which is wholly wanting in this case. It is true that the appellant was shown the cartoon while he was deposing in court and was asked to give his impression but whatever he might have said in court is totally irrelevant because that would not show that he had any knowledge of the cartoon prior to its publication. He gives his impression only when the cartoon is shown to him. On a careful consideration of the evidence we are clearly of the opinion that the petitioner has not been able to prove the corrupt practice alleged against the appellant. There is no legal or satisfactory evidence to prove that the speech Ext. P.L(a) made by the appellant promoted or attempted to promote feeling of enmity and hatred between two classes of citizens, namely, the Janasangh and R.S.S. On the one side and the Muslim League on the other. Similarly, there is no reliable evidence to show that the appellant had any knowledge or had given prior consent to the publication of the cartoon exhibit P. section Thus, the petitioner has miserably failed to prove the allegation made by him in paragraphs S and 11 of the petition which alone have been pressed before us. We have also come to the conclusion that the presumption under section 7 of the Press Act is not available to the appellant and the learned Judge was wrong in relying on the same. The result is that the appeal is allowed with costs. The judgment of the High Court setting aside the election of the appellant and unseating him is quashed as also the order of the High Court disquali 700 fying the appellant from contesting the election for a period of sixyears. The election petition filed by the petitioner before the High Court is dismissed. Civil Appeal No. 865 of 1978 FAZAL ALI, J. In view of our decision in the case of Haji C. H. Mohammed Koya vs T. K. section M. A. Muthukoya (Civil Appeal No. 12 of 1978), the appeal is dismissed but without any order as to costs. P.H P. C. A. No. 12/78 allowed. C.A. No. 865/78 dismissed.
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In the election for Kerala's law-making group in March 1977, the two people running from the Malappuram area were the person making the complaint and the person being accused. The person being accused won the election with 56,276 votes, beating the person making the complaint who got 39,362 votes. The person making the complaint said in a legal document that the person being accused did dishonest things during the election. These actions broke rules in the Representation of People Act from 1951, specifically section 123(3), (3A), and (4). The main issue was that the person being accused was the top editor of a Malayalam newspaper called 'Chandrika.' This paper was the official voice of the Muslim League political party. The person making the complaint said that the paper had articles, speech excerpts, and cartoons that tried to get Muslims to vote for the person being accused based on religion and community. It also supposedly created bad feelings and hate between two groups of people: the Janasangh party and the Muslim League party. During the court hearing, the person making the complaint only focused on the dishonest actions that broke rule 123(3A). The person being accused fought back against these claims. He argued that he didn't make any speeches that broke rule 123(3A). He also said he didn't know about any of the articles or cartoons in Chandrika that were causing problems before the election. He said he wasn't an editor of Chandrika, but admitted he was the Chief Editor, but only in name. He said he didn't have anything to do with the writing or publishing of the paper or the speeches. The High Court said that the complaint was valid. The High Court believed that the person being accused was really the editor of the paper. They thought that a rule called section 7 of the Press and Registration of Books Act from 1867 should apply. This rule makes certain assumptions about who is responsible for what's printed. But when the case was appealed, the Court said: The point of the Press Act is to control printing businesses and newspapers to keep copies of what's printed. To avoid many lawsuits and confusion about who is responsible, they decided to pick one person from the staff and make them responsible for everything published in the paper. This way, if someone is upset by something, they can sue that one person named under the Press Act. This saves people from having to investigate too much. According to section 1(1), an Editor is the person who decides what goes into the newspaper. Section 5(1) says that every copy of a newspaper must clearly show the names of the owner and editor, along with the date it was published. Section 8A says that if someone's name is wrongly listed as an editor in a newspaper, they have two weeks to tell a judge that their name was published incorrectly. In this case, the following things are true: 1. The copies of Chandrika that were shown clearly say that Aboobaker is the printer, publisher, and editor of Chandrika. The person being accused is only listed as the Chief Editor, which isn't a position mentioned in the Press Act. 2. If the person being accused was really the editor, then Aboobaker should have used section 8(A) to correct the mistake in the paper where his name was shown as the editor. But that didn't happen. Instead, Aboobaker quietly admits that he is the editor of the paper. 3. The person making the complaint didn't explain what duties or responsibilities the person being accused had as Chief Editor. The complaint doesn't say that the person being accused controls what gets published in the newspaper, which is what would make him an editor according to section 1(1) of the Press Act. The term 'Chief Editor' isn't in the Press Act because the Press Act only focuses on one person: the editor. This is the person who can be sued or can sue, and against whom certain assumptions can be made under section 7 of the Press Act. The High Court made a mistake by assuming that section 7 applied without considering these things. [671 D E, 672 A C673 E H, 674 A C] The Court cited other cases to support their reasoning, including State of Maharashtra vs Dr. R. B. Chowdhury and ors., D. P. Mishra vs Kamal Narain Sharma and ors., and Narasingh Charan Mohanty vs Surendra Mohanty. In this case, the newspaper clearly lists Aboobaker as the editor. There's enough evidence from both sides to show that Aboobaker was in charge of the paper and acted as the editor. The Court came to this conclusion after carefully looking at the evidence from both sides. [685 H, 686 A The person making the complaint didn't prove that the person being accused was an editor of the paper or that he was doing the duties of an editor. The assumption under section 7 of the Press Act can only be made about the person who is actually the editor. The High Court wasn't right to make an assumption against the person being accused under section 7 of the Act. [686 H, 687 A B] Even if we assume that the person being accused was the editor, the assumption under section 7 can be disproven. The evidence in this case shows that it has been disproven. [687 B C] Publishing material that promotes hate between different groups of people is definitely a dishonest practice in an election. The Court has said many times that these practices must be clearly described and proven beyond a reasonable doubt. The Court cited other cases to support their reasoning, including Mohan Singh vs Bhanwar Lal and ors., Magrai Patodia vs R. K. Birla and Ors., Dr Venkata Reddy vs R. Sultan & ors, and Ramanbhai Nagibhai Patel vs Jaswant Singh Udesingh Dabhi and ors. Neither the person who wrote the article, the speaker who gave the speech, the reporter, nor the original copy of the speeches were brought to the Court. These articles and speeches don't matter unless it's shown that they were made with the knowledge and agreement of the person being accused. [689 B C] The following facts are important: 1. The person making the complaint didn't name a single person who actually heard the speech and reported it. 2. According to the evidence, the person making the complaint was at the place where the speech was given by the person being accused. But this important detail isn't mentioned in the complaint. 3. The complaint doesn't explain how the speech created feelings of hate between two groups of citizens or who was being hated. [691 C E]` The claims in the complaint are too general. The person making the complaint didn't provide evidence to show if the excerpt of the speech was correct and used the exact words spoken by the person being accused. It's a rule that admissions must be taken as a whole or not at all, unless they can be separated. [691 F, G, 692 A] The Court cited other cases to support their reasoning, including Hanumant vs The State of Madhya Pradesh, Palvinder Kaur vs The State of Punjab, and Dadarao vs The State of Maharashtra. Even from the excerpt of the speech, it's clear that the speech wasn't meant to promote hate or bad feelings between two groups of citizens. The person making the complaint didn't bring in the reporter who was there when the person being accused spoke, nor did he ask for the written copy of the speech. Only an excerpt of the speech was given in the newspaper. It's hard to understand a part of a speech when it's taken out of context. The entire speech was made in a political situation and for a political reason. The person making the complaint didn't ask any regular people from the place where the speech was given to say that the speech created hate between different communities. [694 C, D, F G H, 969 D] The person making the complaint also mentioned a cartoon in the complaint, saying: "In Chandrika dated March 12, 1977, there's a cartoon on the front page. It shows Janasangh as a pig, and Mr. E. M. Sankaran Namboodiripad, the Marxist Leader, is cutting the pig and serving it to a Muslim. This is an attempt to create feelings of hate between different groups of citizens in India based on religion. It's well known that eating pork is forbidden for true Muslims. Publishing this cartoon in Chandrika is done with the agreement and knowledge of the person being accused, which created hate from Muslims against the United Front of Marxist Party and Janta party and Muslim League (opposition), of which the person making the complaint is a candidate from the area." The person making the complaint didn't prove that the cartoon was published with the agreement and knowledge of the person being accused. The word "agreement" is stronger than "knowledge" because it means giving approval. There's nothing to show that the person being accused ever agreed to the publication of the cartoon. There's no evidence of either agreement or knowledge. Instead, there's evidence that says the opposite. [697 F, H, 698 A C] The Court decided that the person making the complaint couldn't prove the dishonest practices he accused the person being accused of. There's no legal or convincing evidence to prove that the speech made by the person being accused promoted or created feelings of hate between two groups of citizens. There's no evidence to prove that the person being accused knew about or agreed to the publication of the cartoon. [699 B C, E G]
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12 and 865 1978. 12 and Appellant in C.A. The also denied that he was an Editor of Chandrika, but admitted that he was the Chief Editor and that too only in name. The appellant further denied that he had anything to do with the editorial work of Chandrika or the publication of the speeches or articles etc. It may be pertinent to note here that even the petitioner in his petition has not at all 669 alleged or described the nature of the duties which the appellant performed as Chief Editor nor has he stated that as Chief Editor he was controlling the materials published in the paper so as to ascribe constructive knowledge to him of the articles published in Chandrika. It is submitted that in the daily Chandrika of which the respondent is the Chief Editor, is published reports and articles appealing to the members of the Muslim community not to vote for the candidates of the Muslim League (opposition) in the name of religion and community". As regards the speech while the petitioner admitted that he did make a speech as would appear from the extract exhibit P.1(a) but denied that he made any communal allegations against the Janasangh but stated that some of the words used by him in the speech were used purely in a figurative sense. When the appeal was heard before us counsel for the parties agreed that the only items of evidence which could be relied upon against the appellant were (1) his speech exhibit P.1(a), (2) Cartoon exhibit P.5 and (3) other offending speeches and articles which were published in the paper of which he was the Chief Editor. It was conceded by Dr. Chitale, counsel for the petitioner that if he was not able to prove that the appellant was really the Editor of the paper then the presumption under section 7 of the Press and Registration of Books Act 1867 (hereinafter called the Press Act) would not apply and the case of the petitioner would stand or fall on Ex.P.1(a) and Exhibit P.5. The main corrupt practice pleaded against the appellant by the petitioner and which has been vehemently argued before us is to be found in paragraph 5 of the petition which is regarding the inflammatory speech Exhibit P.1(a) said to have been made by the appellant and which according to the petitioner fell within the mischief of section 123 (3A) of the Act. The publication of this cartoon in Chandrika is with the consent and knowledge of the respondent, which promoted hatred of the Muslims against the United Front of Marxist Party and Janata Party and Muslim League (opposition) of which the petitioner is a candidate from the concerned constituency". It is clearly pleaded that the cartoon was published in Chandrika with the consent and knowledge of the appellant. The High Court has found that in the circumstances of the case, section 7 of the press Act fully applies to the facts of the present case. It is not disputed in the 673 present case that this statement was not made by the appellant but by P.W. Section 7 of the Press Act runs thus: "In any legal proceeding whatever, as well civil as criminal, the production of a copy of such declaration as is aforesaid, attested by the seal of some Court empowered by this Act to have the custody of such declarations, or, in the case of the editor, a copy of the newspaper containing his name printed on it as that of the editor shall be held (unless the contrary be proved) to be sufficient evidence, as against the person whose name shall he subscribed to such declaration, or printed on such newspaper as the case may be, that the said person was printer or publisher, or printer and publisher (according as the words of the said declaration may be) of every portion of every newspaper whereof the title shall correspond with the title of the newspaper mentioned in the declaration or the editor of every portion of that issue of the newspaper of which a copy is produced. Section 8(A) of the Press Act provides that where any person 's name has appeared as an editor in a paper although he was not an editor he shall within two weeks of his becoming aware that his name has been so published" appear before the District? The appellant is merely shown as the Chief Editor but this is an officer which is not at all contemplated by the Press Act. There is no averment at all in the petition that the appellant controls the selection of matter that is published in the newspaper which alone would make him an editor as defined in section 1 (1) of the Press Act. The word 'Chief Editor ' is clearly absent from the Press Act and in fact foreign to it because the Press Act has selected only one person who has a special status and that is the editor who can be sued, if necessary, or can sue and against whom alone a presumption under section 7 of the Press Act can be drawn. (1) ; 675 This case, therefore, clearly holds that where a person is not shown A in the paper to be its editor no such presumption under section 7 of the Press Act can be drawn but it must be held that he has no concern with the publishing of the article. The Court observed in this connection as follows: "Section 7 raises a presumption that a person whose name is printed in a copy of a newspaper is the editor of every portion of that issue. The presumption under section 7 of the Press and Registration of Books Act undoubtedly arises, but in a charge under section 123(4) of the Representation of the People Act the presumption under section 7 of the Press and Registration of Books Act, 1867 would come with greater or less force, according to the circumstances to the aid of a person claiming that the editor was responsible for the publication and that the publication was to the knowledge of editor". It was further held in this case that the presumption under section 7 of the Press Act is a rebuttable presumption and the so called editor can rebut the presumption by showing that he had nothing to do with t he publication of the editorial or the news report. 677 editorial and the news report as well as the speech of Biju Patnaik did in fact constitute corrupt practice under sub section (3) of section 123 of the Act". In these circumstances, it was argued that as the name of the Chief Editor was separately shown he must be taken lo be the editor of the paper under the provisions of the Press Act and the rules made thereunder. As the printer, publisher and the editor was one and the same person it cannot be said that merely because the name of the editor was not shown at a separate place he was absolved of his responsibilities as the editor. In this connection, the definite case of the appellant is that although he has been shown as the Chief Editor of Chandrika he was not at all connected with any editorial function but his name was lent to the paper because of his past services to Chandrika and because he used to get lot of 678 money for this paper being an influential man. This has been proved not only by the evidence led by the appellant but also by the evidence adduced by the petitioner. Before taking the evidence on this point we might mention a few admitted facts which loom large in our minds (1) that the petitioner proceeds on the footing in his petition that the appellant was the Chief Editor and no where he has been mentioned as the editor of Chandrika, (2) there is no pleading by the petitioner that the appellant was an editor within the meaning of section 1(1) of the Press Act particularly when the paper Chandrika was the pivot and the sheet anchor of his case and which clearly showed that the appellant was not the editor but P.W. 3 lakhs in the company but that will not attract the provisions of the Press Act at all; and (4) as Aboobaker was admittedly the editor of the paper Chandrika as clearly admitted by the petitioner himself in his evidence, the onus was clearly on the petitioners to allege and prove that the duties of the editor were actually performed not by P.W. 2 and 5 who have categorically stated that Aboobaker was the editor and the appellant was not a member of the editorial group and was extremely busy with the elections to be able to devote any time to do the work of the editor. 2 and 5 and the appellant and they have said that the appellant had nothing to do with the editorial work of the paper. Finally, the allegation that the appellant was doing day to day editing work of Chandrika is not merely a piece of evidence but a material fact which ought to have been pleaded in the petition if the petitioner wanted to rely on the presumption under section 7 of the Press Act. 2 Aboobaker who has been examined as the petitioner 's own witness categorically states that he is the printer, publisher and editor of Chandrika and his statement on this point is extracted thus: "I am the Printer, Editor and Publisher of the Malayalam Daily Chandrika. The witness at a later stage of his evidence has clearly stated that he had not discussed with the appellant the news item which appeared in the paper nor did the appellant give any direction to the witness about the printing and editing of the paper. It is, therefore, clear that even the witness examined by the petitioner has knocked the bottom out of the case of the petitioner that the appellant had anything to do with the duties and functions of an editor, and the question put to the witness which is denied by him clearly shows that the appellant has demonstrably disproved that he could be an editor of the paper as defined in section 1 of the Press Act. Koya was the Chief Editor and it was mentioned in the Chandrika paper that the Chief Editor would give speeches. The witness further says that since it was printed in the Chandrika paper it was understood that the appellant was the Chief Editor. The witness clearly states that the appellant was the Chief Editor and the editor was under him. 2) was the editor of Chandrika paper and, his responsibilities are the same as they were in 1974 75. He is an M.P. The witness further stated that the Chief Editor had not raised any objection to him about any news item published in Chandrika or the policy matter of the paper from which he inferred that the Chief Editor had approved the policy for if he had no objection he would have told him. This is all the evidence led by the petitioner and from this evidence it has not at all been proved that the appellant as the Chief Editor performed any functions of the Editor or was an editor within the meaning of section ] of the Press Act. On this point, the witness has categorically stated that as Chief Editor he was not doing any editing work. The witness has further explained that when he became the Chief Editor he was also an M.P. and even during that time his name used to be printed in the paper as Chief Editor but he was not doing any editing work. He further states that as leader of the United Front and of the Muslim League he had much work to do during the election time and he was very busy with the election speeches. The witness further states that the Chief Editor has No. This is the relevant part of the evidence of the appellant on this question. 2 Aboobaker was admittedly the editor of Chandrika, fulfilled all the conditions of section 1(1) of the 686 Press Act and his name was printed as editor in the of Chandrika. The appellant had been appointed as Chief Editor because he was a Member of Parliament and an influential man who could get finance for the paper from the Gulf States but he had no hand at all in any of the functions and duties performed by the editor. The appellant was no doubt shown as Chief Editor in the issues of the Chandrika but the Press Act as held by us does not recognise any such legal entity and the only person who is recognised by the Press Act is the editor who in this case was P.W. The petitioner himself has not at all anywhere pleaded in his petition that the appellant was the editor nor has he mentioned the duties or responsibilities which were performed by the appellant as Chief Editor so as to bring him within the fold of section 1 of the Press Act. In these circumstances, therefore, the High Court had no legal justification to draw a presumption against the appellant under section 7 of the Press Act in holding that he was proved to be the editor of Chandrika and! Even if, for the sake of argument, it is assumed that the appellant was the editor it has been pointed out by this Court that the presumption to be drawn under section 7 of the Press Act is rebuttable and the evidence and the circumstances of this case discussed above show that this presumption has been sufficiently rebutted. The next question that arises for consideration is that if the finding of the High Court on this point is rejected as it must be then can the petitioner be liable for the materials or speeches published in the paper Chandrika. In view of our finding that the appellant has not been (I ) 11976] 3 section C. R. 445. (2) A. As however this has not been proved it was incumbent on the petitioner to prove knowledge of these articles or speeches like any other fact. The petitioner has based his case entirely on the footing that as the appellant was the editor he must be deemed to be aware of these articles and speeches and if the speeches contained offending matters and promoted hatred and ill will between two classes of citizens the appellant must be deemed to have committed the corrupt practice under section l 23 (3A) of the Act. 2 the editor of the paper was examined by the petitioner and being the editor he was the best person to know whether or not this editorial was written by the appellant yet this document was not put to him. Reliance was however placed by counsel for the petitioner as also by the High Court on two documents, namely, exhibit P. l(a) which was an extract of a speech delivered by the appellant at one of the election meetings where he is said to have made certain observations which tended to promote hatred or ill will between the Janasangh and the Muslim League. Reliance was further placed on exhibit P. S which was a cartoon printed in the paper Chandrika and it was alleged by the petitioner that it was done with the knowledge and consent of the appellant. So far as exhibit P. l(a) the speech of the appellant is concerned the petitioner made the following averments in the petition which may be extracted thus: 691 "The respondent is the Chief Editor of Chandrika, a daily newspaper published from Calicut. It is submitted that in the daily Chandrika of which the respondent is the Chief Editor, is published reports and articles appealing to the members of the Muslim community not to vote for the candidates of the Muslim League (opposition) in the name of religion and community". No evidence was produced by the petitioner to prove whether the extract of the speech was correct and was a reproduction of the very words used by the appellant. The entire case of the petitioner on this point rests on an admission made by 692 the appellant in his statement in court that the extract printed in the paper was more or less the correct reproduction of his speech. The same view was taken in a recent decision of this Court in the case of Dadarao vs The State of Maharashtra(3) where this Court observed as follows: "It may not, however, be overlooked that the admission made by the appellant must be read as a whole, for what he has stated is that he had made his signature in the. This is how the appellant has explained his speech and the explanation given by him can not be rejected because no other evidence has been produced by the petitioner excepting the statement of the appellant regarding the interpretation of the speech. the petitioner has not examined any independent member of the public belonging to the place where the speech was delivered and who had heard the same to prove that the speech tended to promote hatred or enmity between different communities, nor is there any such evidence consisting of the members of the people to show what impact the speech made on them. On the other hand, it was rightly pointed out by Mr. Nariman, counsel for the appellant that there is reliable evidence to show that the speech was not treated to be an offending one or one that fell within the mischief of section 123(3A) of the Act. In view of the circumstances, therefore, the only evidence from which the court can find that the appellant had committed a corrupt practice as contemplated by section 123(3A) of the Act is the evid 697 ence of the appellant containing the explanation and the ramifications of his speech which being an admission has, in the facts and circumstances of this case, to be taken as a whole or not at all. There is absolutely no evidence on record to show that the cartoon was shown to the appellant and his approval was obtained before it was published, nor is there any evidence to show that the appellant had any knowledge direct or indirect about the cartoon before its publication in Chandrika. But this does not conclude the matter because it must be affirmatively provide by the petitioner that this cartoon was shown to the appellant or was within his knowledge or had his consent before its publication. on this there is no evidence at all. He has also stated categorically as indicated by us while dealing with his evidence that he was extremely busy and has stated l thus: "As a leader of the United Front and the leader of the Muslim League I got much work to be done during election time. He has further admitted that although a copy of Chandrika was sent to him yet he did not get time to read fully. (Q) l do not get time to read fully (Ans.)" This is all the evidence that has been produced in the court to show that the cartoon was printed with the knowledge and consent of the appellant. Thus, it is impossible for us to jump to the conclusion that the appellant had any knowledge of the publication of the cartoon before its publication, or that he gave his consent C to its publication merely from the fact that the appellant was the Chief Editor and received a copy of Chandrika every day particularly hen the appellant has explained that he was too busy and did not find time to read the paper fully. Similarly, there is no reliable evidence to show that the appellant had any knowledge or had given prior consent to the publication of the cartoon exhibit P. section Thus, the petitioner has miserably failed to prove the allegation made by him in paragraphs S and 11 of the petition which alone have been pressed before us. In view of our decision in the case of Haji C. H. Mohammed Koya vs T. K. section M. A. Muthukoya (Civil Appeal No. P.H P. C. A.
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The person making the complaint said in a legal document that the person being accused did dishonest things during the election. The person making the complaint said that the paper had articles, speech excerpts, and cartoons that tried to get Muslims to vote for the person being accused based on religion and community. He said he wasn't an editor of Chandrika, but admitted he was the Chief Editor, but only in name. Section 5(1) says that every copy of a newspaper must clearly show the names of the owner and editor, along with the date it was published. In this case, the following things are true: 1. The person being accused is only listed as the Chief Editor, which isn't a position mentioned in the Press Act. If the person being accused was really the editor, then Aboobaker should have used section 8(A) to correct the mistake in the paper where his name was shown as the editor. The person making the complaint didn't explain what duties or responsibilities the person being accused had as Chief Editor. The complaint doesn't say that the person being accused controls what gets published in the newspaper, which is what would make him an editor according to section 1(1) of the Press Act. The term 'Chief Editor' isn't in the Press Act because the Press Act only focuses on one person: the editor. [671 D E, 672 A C673 E H, 674 A C] The Court cited other cases to support their reasoning, including State of Maharashtra vs Dr. R. B. Chowdhury and ors., D. P. Mishra vs Kamal Narain Sharma and ors., and Narasingh Charan Mohanty vs Surendra Mohanty. In this case, the newspaper clearly lists Aboobaker as the editor. There's enough evidence from both sides to show that Aboobaker was in charge of the paper and acted as the editor. [685 H, 686 A The person making the complaint didn't prove that the person being accused was an editor of the paper or that he was doing the duties of an editor. The assumption under section 7 of the Press Act can only be made about the person who is actually the editor. The High Court wasn't right to make an assumption against the person being accused under section 7 of the Act. [686 H, 687 A B] Even if we assume that the person being accused was the editor, the assumption under section 7 can be disproven. [687 B C] Publishing material that promotes hate between different groups of people is definitely a dishonest practice in an election. These articles and speeches don't matter unless it's shown that they were made with the knowledge and agreement of the person being accused. The person making the complaint didn't name a single person who actually heard the speech and reported it. According to the evidence, the person making the complaint was at the place where the speech was given by the person being accused. [691 C E]` The claims in the complaint are too general. The person making the complaint didn't provide evidence to show if the excerpt of the speech was correct and used the exact words spoken by the person being accused. The person making the complaint didn't bring in the reporter who was there when the person being accused spoke, nor did he ask for the written copy of the speech. Only an excerpt of the speech was given in the newspaper. The person making the complaint didn't ask any regular people from the place where the speech was given to say that the speech created hate between different communities. [694 C, D, F G H, 969 D] The person making the complaint also mentioned a cartoon in the complaint, saying: "In Chandrika dated March 12, 1977, there's a cartoon on the front page. Publishing this cartoon in Chandrika is done with the agreement and knowledge of the person being accused, which created hate from Muslims against the United Front of Marxist Party and Janta party and Muslim League (opposition), of which the person making the complaint is a candidate from the area." The person making the complaint didn't prove that the cartoon was published with the agreement and knowledge of the person being accused. [697 F, H, 698 A C] The Court decided that the person making the complaint couldn't prove the dishonest practices he accused the person being accused of. There's no legal or convincing evidence to prove that the speech made by the person being accused promoted or created feelings of hate between two groups of citizens.
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Appeal No. 37 of 1955. Appeal from the judgment and order dated December 7, 1954, of the Jammu and Kashmir High Court in Criminal Misc. No. 76 of 2011. Vir Sen Sawhney, for the appellant. C. K. Daphtary, Solicitor General of India, B. R. L. Iyengar, R. H. Dhebar and T. M. Sen, for the respondents. Sardar Bahadur, for the intervener. December 5. The Judgment of Sinha, C. J., Kapur, Gajendragadkar, Wanchoo and Shah, JJ., was delivered by Sinha, C. J. Subba Rao, J. and Das Gupta, J. delivered separate judgments. SINHA, C. J. This appeal on a certificate of fitness granted by the High Court of Judicature, Jammu and Kashmir, is directed against the judgment and order dated December 7, 1954, in an application under article 32(2A) of the Constitution for issue of. a writ, directions or. order against the Union of India, through the Secretary, Ministry of Defence,, New Delhi, a,% the first respondent and the State of Jammu and Kashmir through the Chief Secretary,, Jammu and Kashmir State, as the second respondent. The petition is based on the following allegations. The petitioner will be referred to as the appellant in the course of this judgment. He was aged 45 years 832 262 days on August 12, 1954. He was holding a regular commission in the Jammu and Kashmir State Forces, which were amalgamated with the Defence Forces of the Union with effect from September 1, 1949. The appellant holding the substantive rank of Lieut. Col. in the amalgamated forces had the right to continue in service until he attained the age of 53 years, which event will happen on November 20, 1961. The Government of India issued a letter dated July 31, 1954, retiring the appellant from the service with effect from August 12, 1954, This decision of the Government of India is not based on any allegations or charge of inefficiency, indiscipline or any other irregularity on the part of the appellant. The aforesaid decision of the Government of India prematurely retiring the appellant is impugned as illegal, unwarranted and discriminatory and as having been made in contravention of article 16(1) of the Constitution. The petition was opposed on behalf of the respondents aforesaid on a number of preliminary grounds of which it is only necessary to mention the first, namely, that the authority against whom the writ is sought, that is to say, respondent No. 1, being outside the territorial limits of the jurisdiction of the Jammu and Kashmir High Court, the same was not maintainable. This preliminary objection was heard by a Division Bench, (Janki Nath Wazir, C. J. and M. A. Shahmiri, J.) Jammu and Kashmir High Court. By its judgment. dated December 7, 1954, the High Court upheld the preliminary objection. The High Court, relying upon the decisions of this Court in Election Commission, India vs Saka Venkata Subba Rao (1) and K. section Rashid and Son vs The Income tax Investigation Commission etc. (2), held that it had no jurisdiction to issue a writ against the first respondent and, therefore, dismissed the petition, but the High Court granted the necessary certificate under article 132 of the Constitution; hence this appeal. The matter was first heard by a Bench of five judges. in the course of hearing it became clear to us that the appellant not only sought to distinguish (1) ; (2) ; 833 the two decisions aforesaid of this Court, but questioned the correctness of those decisions. Hence this larger Bench was constituted in order to examine the correctness of the decisions aforesaid of this Court on the strength of which the High Court had refused to entertain the appellant 's petition, on merits. It has been argued on behalf of the appellant, in the first instance, that the previous decisions of this Court were distinguishable on the ground that they did not, in terms, consider the question whether the Government of India wag amenable to the jurisdiction of the High Court under article 226 or of the Jammu and ' Kashmir High Court under article 32(2A) of the Constitution. that those provisions, on a true construction, would not stand in the way of the appellant, inasmuch as the Government of India has no location and its authority is present throughout the Union territory; that the correct test is whether or not the cause of action arose within the territorial limits of the High Court 's jurisdiction; that the High Court was in error in holding that the term "authority" included a Government. In answer to these contentions on behalf of the appellant, the learned Solicitor General contended that, on a proper construction of the relevant provisions of the Constitution, it is clear that Sastri C. J. 's observations relating to "authority" in the case of Election Commission, India vs Saka Venkata Subba Rao (1) applied with equal force to Government, inincluding the Union Government. The Government of India functions through its officers and, therefore, the location contemplated means the place at which the orders impugned are ordinarily passed. The considerations in a suit with reference to the cause of action for the suit do not stand on the same footing in a writ matter, because the writ has to reach the particular officers of the Government concerned. The expression "in appropriate cases" means that there may be cases where though the Union Government as such is not located within the territorial limits of a High Court yet a writ may be issued against it by the High (1) ; 834 Courts because an officer of the Union Government is functioning within such limits and it is his order which is the subject matter of the controversy. Therefore, it is not in every case that a High Court can issue a writ against the Union. A writ of mandamus, for example, is directed against a particular named person or authority. Similarly, a writ of certiorari is directed against a particular record. Therefore, the writ must issue to someone within the territorial limits of the High Court 's jurisdiction. The question that we have to determine in this case is of far reaching importance and is not a matter of first impression. The question was first raised in this Court in 1952 and was determined by a Constitution Bench in the case of Election Commission, India vs Saka Venkata Subba Rao (1). In that case a writ was applied for in the Madras High Court for restraining the Election Commission from, enquiring into the alleged disqualification of the respondent. A single Judge of the High Court of Judicature of Madras issued a writ of prohibition restraining the Election Commission, a statutory authority constituted by the President of India, with its office permanently located at New Delhi, when the matter was heard by the learned single Judge of the High Court. In the High Court the Election Commission demurred to the jurisdiction of the Court to issue any writ against it on the ground that the Commission was not within the territory in relation to which the High Court exercised jurisdiction, apart from other objections. The learned Judge of the High Court overruled the preliminary objection and decided the case on merits, and issued a writ prohibiting the Commission from ' proceeding with the enquiry. The learned Judge granted the certificate under article 132 that the case involved a substantial question of law as to the interpretation of the Constitution. The Election Commission accordingly came up in appeal to this Court and challenged the jurisdiction of the Madras High Court to issue the writ it had purported to do. This Court overruled the contention on behalf of the respondent which was (1) ; 835 based on the decision of the Privy Council in the Parlakimedi case (1) that the jurisdiction of the High Court to issue a writ is analogous to the jurisdiction of a court to grant a decree or order against persons outside the limits of its local jurisdiction, provided that the cause of action arose within those limits. This Court overruled that contention in these words: "The rule that cause of action attracts jurisdiction in suits is based on statutory enactment and cannot apply to writs issuable under article 226 which makes no reference to any cause of action or where it arises but insists on the presence of the person or authority 'within the territories ' in relation to which the High Court exercises jurisdiction". The Constitution Bench in that case considered that the language of article 226 of the Constitution was "reasoriably plain" and that the exercise of the power conferred by that Article was subject to a two fold limitation, namely, (1) that the power is to be exercised "throughout the territories in relation to which it exercises jurisdiction" and (2) that the person or authority to whom the High Court is empowered to issue the writs must be "within those territories". In other words, the writ of the Court could not run beyond the territories subject to its jurisdiction and that the person or authority affected by the writ must be amenable to the Court 's jurisdiction, either by residence or location within those territories. The second case of this Court, which dealt with this question is K. section Rashid and Son vs The Income Tax Investigation Commission (2). That was a case on appeal from the judgment and order dated August 10, 1950, of the High Court of Judicature, Punjab, at Simla, in a number of miscellaneous matters, in which the High Court had been moved under articles 226 and 227 of the Constitution praying for quashing proceedings started against the appellants under the Taxation on Income (Investigation Commission.) Act (XXX of 1947). It was prayed in the High Court that a writ of prohibition might issue against the Income Tax (1) (1943) L.R. 70 I.A. 129. (2) ; 836 Investigation Commission directing it not to proceed with the investigation of cases referred to it under the provisions of the Act. The writ petitions in the High Court were opposed on behalf of the Commission on a number of grounds, one of them being that the Pun. jab High Court had no jurisdiction to issue the writs prayed for under article 226 of the Constitution, simply because the Commission was located in Delhi. Reliance was placed on behalf of the Commission on the decision of the Privy Council in the Parliament case (1) that the substance of the matter was that the assessees against whom the investigation had been started belonged to U. P. and all the assessment pro ceedings, including reference to the High Court, would lie in Uttar Pradesh. The High Court gave effect to this contention and dismissed the application primarily on the ground that the High Court had no jurisdiction to issue the writ to the Commission. The assessees came up in appeal to this Court, and this Court substantially adopted the reasons given by it in its previous judgment in the case of Election Commission, India vs Saka Venkata Subba Rao (2). It is to be noted that when the High Court of Punjab decided the case, the decision of this Court referred to above had not been given. Relying upon its previous decision, this Court held that the Punjab High Court was in error in holding that it had no jurisdiction to deal with the matter under article 226 of the Constitution. The appeal was dismissed by this Court on other grounds, not material to this case. Learned counsel for the appellant has contended that the two decisions of this Court referred to above are distinguishable from the facts of the present case, inasmuch as in those cases the Election Commission and the Income tax Investigation 'Commission were statutory bodies, which had their location in Delhi, and, therefore, this Court held that the Punjab High Court was the High Court within whose jurisdiction those bodies functioned and had their location and were, therefore, amenable to its jurisdiction. He further contended that the Union Government functioned throughout the territory of India and could (1) (1943) L.R. 70 I.A. 129. (2) ; 837 not be said to be located only in Delhi simply because the capital for the time being was in Delhi. In this connection, strong reliance was placed on the decision of the Full Bench of the Allahabad High Court in Maqbulunnissa vs Union of India (1). That case does lend a great deal of support to this contention on behalf of the appellant. It was held by the High Court in that case that the words "any Government" in article 226(1) of the Constitution clearly indi cated that the Allahabad High Court had jurisdiction to entertain the petition under article 226, not only against the State of Uttar Pradesh, but also against the Union Government for the issue of a writ in the nature of mandamus, directing the Government to forbear from giving effect to the order asking the petitioner to leave India. The ratio of the decision was that, even though the capital of the Government of India is in Delhi, its executive power extends throughout the territory of India and that the real test to determine the jurisdiction would be the residence of the petitioners and the effect of the impugned order upon them. After holding that the High Court had the jurisdiction to entertain the petition, the Court dismissed it on other grounds, not material to this case. The Allahabad High Court distinguished the decision of a Division Bench of the Calcutta High Court dated January 17, 1951, in the case of The Lloyds Bank Limited vs The Lloyds Bank Indian Staff Association (Calcutta Branches) (2) which was unreported till then. In that case, Harries, C. J., speaking for the Court, had held that though article 226 of the Constitution had gone beyond the English practice by providing that writs in the nature of prerogative writs could issue even against a Government, that Government most be located within the territorial limits of the Court which was moved to exercise its power under that Article. He further observed that the Government of India could not be said to be located in the State of West Bengal and, therefore, writs under article 226 could not issue against that Government by the High Court of Calcutta. That (1) I.L. R. (1953) 2 All. 289. (2) I.L.R. 838 decision of the Calcutta High Court was distinguished by the Allahabad High Court on the ground that "the effects of the orders of the Union Government were not operative within the jurisdiction of the Court". It may be added that that decision came up in appeal to this Court in Civil Appeal No. 42 of 1952 but the appeal was dismissed by this Court by its judgment dated April 20, 1952, on other grounds. It will be noticed that when the Allahabad decision, so strongly relied upon by the appellant, was given, the two decisions referred to above of this Court were not there. The Allahabad High Court may not have given that judgment if the two decisions of this Court had then been in existence. The two main questions which arise, therefore, are: (i) whether the Government of India as such can be said to have a location in a particular place, viz., New Delhi, irrespective of the fact that its authority extends over all the States and its officers function throughout India, and (ii) whether there is any scope for introducing the concept of cause of action as the basis of exercise of jurisdiction under article 226. Before, however, we deal with these two main questions, we would like to clear the ground with respect to two subsidiary matters which have been urged on behalf of the appellant. The first argument is that the word "authority" used in article 226 cannot and does not include Government. We are not impressed by this argument. In interpreting the word "authority" we must have regard to the clause immediately following it. article 226 provides for "the issue to any person or authority including in appropriate cases any Government" within those territories. It is clear that the clause "including in appropriate cases any Government" goes with the preceding word "authority", and on a plain and reasonable construction it means that the word " authority" in the context may include any Government in an appropriate case. The suggestion that the said clause is intended to confer discretion on the High Courts in the matter of issuing a writ or direction on any Government seems to us clearly unsustainable. 839 To connect this clause with the issuance of a writ or order and to suggest that in dealing with cases against Government the High Court has to decide whether the case is appropriate for the issue of the order is plainly not justified by the rules of grammar. We have no hesitation in holding that the said clause goes with the word "authority" and that its effect is that the authority against whom jurisdiction is conferred on the High Court to issue a writ or appropriate order may in certain cases include a Government. Appro priate cases in the context means cases in which orders passed by a Government or their subordinates are challenged, and the clause therefore means that where such orders are challenged the High Court may issue a writ against the Government. The position, therefore, is that under article 226 power is conferred on the High Court to issue to any person or authority or in a. given case to any Government, writs or orders there specified for enforcement of any of the rights conferred by Part III and for any other purpose. Having thus dealt with the two subsidiary points raised before us, we may now proceed to consider the two main contentions which arise for our decision in the present appeal. This brings us to the first question, namely, whether the Government of India as such can be said to be located at one place, namely, New Delhi. The main argument in this connection is that the Government of India is all pervasive and is functioning throughout the territory of India 'and therefore every High Court has power to issue a writ against it, as it must be presumed to be located within the territorial jurisdiction of all State High Courts. This argument in our opinion confuses the concept of location of 'a Government with the concept of its functioning ' A Government may be functioning all over a State or all over India; but it certainly is not located all over the State or all over India. It is true that the Constitution has not provided that the seat of the Government, of India will be at New Delhi. That, however, does not mean ' that the Government of India as such has no seat where it is located. It is common knowledge that the seat of the 840 Government of India is in New Delhi 'and the Government as such is located in New Delhi. The absence of a provision in the Constitution can make no difference to this fact. What we have to see, therefore, is whether the words of article 226 mean that the person or authority to whom a writ is to be issued has to be resident in or located within the territories of the High Court issuing the writ? The relevant words of article 226 are these "Every High Court shall have power to issue to any person or authority within those territories. ". So far as a natural person is concerned, there can be no doubt that he can be within those territories only if he resides therein either permanently or temporarily. So far as an authority is concerned, there can be no doubt that if its office is located therein it must be within the territory. But do these words mean with respect to an authority that even though its office is not located within those territories it will be within those territories because its order may affect persons living in those territories? Now it is clear that the jurisdiction conferred on the High Court by article 226 does not depend upon the residence or location of the person applying to it for relief; it depends only on the person or authority against whom a writ is sought being within those territories. It seems to us therefore that it is not permissible to read in article 226 the residence or location of the person affected by the order passed in order to determine the jurisdiction of the High Court. That jurisdiction depends on the person or authority passing the order being within those territories and the residence: or location of the person affected can have no relevance on the question of the High Court 's jurisdiction. Thus if a person residing or located in Bombay, for example, is aggrieved by an order passed by an authority located, say, in Calcutta, the forum in which he has to seek relief is not the Bombay High Court though the order may affect him in Bombay but the Calcutta High Court where the authority passing the order is located. It would, therefore, in our opinion be wrong to introduce in article 226 the concept of the place where the order 841 passed has effect in order to determine the jurisdiction of the High Court which can give relief under article 226. The introduction of such a concept may give a rise to confusion and conflict of jurisdictions. Take , for example, the case of an order passed by an authority in Calcutta, which affects six brothers living, say , in Bombay, Madras, Allahabad, Jabalpur, Jodhpur and Chandigarh. The order passed by the authority in Calcutta has thus affected persons in six States. Can it be said that article 226 contemplates that all the six High Courts have jurisdiction in the matter of giving relief under it? The answer must obviously be 'No ', if one is to avoid confusion and conflict of jurisdiction. As we read the relevant words of article 226 (quoted above) there can be no doubt that the jurisdiction conferred by that Article on a High Court is with respect to the location or residence of the person or authority passing the order and there can be no question of introducing the concept of the place where the order is to have effect in order to determine which High Court can give relief under it. It is true that this Court will give such meaning to the words used in the Constitution as would help towards its working smoothly. If we were to introduce in article 226 the concept of the place where the order is to have effect we would not be advancing the purposes for which article 226 has been enacted. On the other hand, we would be producing conflict of jurisdiction between various High Courts as already shown by the illustration given above. Therefore, the effect of an order by whomsoever it is passed can have no relevance in determining the jurisdiction of the High Court which can take action under article 226. Now, functioning of a Government is really nothing other than giving effect to the orders passed by it. Therefore it would not be right to introduce in article 226 the concept of the functioning of Government when determining the meaning of the words "any person or authority within those territories". By introducting the concept of functioning in these words we shall be creating the same conflict which would arise if the concept of the place where the order is to have effect is introduced in 842 article 226. There can, therefore, be no escape from the conclusion that these words in article 226 refer not to the place where the Government may be functioning but only to the place where the person or authority is either resident or is located. So far therefore as a natural person is concerned, he is within those territories if he resides there permanently or temporarily. So far. as an authority (other than a Government) is concerned, it is within the territories if its office is located there. So far as a Government is concerned it is within the territories only if its seat is within those territories. The seat of a Government is sometimes mentioned in the Constitutions of various countries but many a time the seat is not so mentioned. But whether the seat of a Government is mentioned in the Constitution or not, there is undoubtedly a seat from which the Government as 'such functions as a fact. What article 226 requires is residence or location as a fact and if therefore there is a seat from which the Government functions as a fact even though that seat is not mentioned in the Constitution the High Court within whose territories that seat is located will be the High Court having jurisdiction under AA. 226 so far as the orders of the Government as such are concerned. Therefore, the view taken in Election Commission, India vs Saka Venkata Subba Rao (1) and K.S. Rashid and Son vs The Income tax Investigation Commission (2) that there is two fold limitation on the power of the High Court to issue writs etc. under article 226, namely, (i) the power is to be exercised 'throughout the territories in relation to which it exercises jurisdiction ', that is to say, the writs issued by the Court cannot run beyond the territories subject to its jurisdiction, and (ii) the person or authority to whom the High Court is empowered to issue such writs must be "within those territories" which clearly implies that they must be amenable to its jurisdiction either by residence or location within those territories, is the correct one. This brings us to the second point, namely, whether (1) ; (2) ; 843 it is possible to introduce the concept of cause of action in article 226 so that the High Court in whose jurisdiction the cause of action arose would be the proper one to pass an order thereunder. Reliance in this connection has been placed on the judgment of the Privy Council in Ryots of Garabandho vs Zamindar of Parlakimedi (1). In that case the Privy Council held that even though the impugned order was passed by the Board of Revenue which was located in Madras, the High Court would have no jurisdiction to issue a writ quashing that order, as it had no jurisdiction to issue a writ beyond the limits of the city of Madras except in certain cases, and that particular matter was not within the exceptions. This decision of the Privy Council does appa rently introduce an element of the place where the cause of action arose in considering the jurisdiction of the High Court, to issue a writ. The basis of the at decision, however, was the peculiar history of the issue of writs by the three Presidency High Courts as successors of the Supreme Courts, though on the literal construction of cl. 8 of the Charter of 1800 conferring jurisdiction on, the Supreme Court of Madras, there could be little doubt that the Supreme Court would have the same jurisdiction as the Justices of the Court of King 's Bench Division in England for the territories which then were or thereafter might be subject to or depend upon the Government of Madras. It will therefore not be correct to put too much stress on the decision in that case. The question whether the concept of cause of action could be introduced in article 226 was also considered in Saka Venkata Subba Rao 's case ( 2 ) and was repelled in these words: "The rule that cause of action attracts jurisdiction in suits is based on statutory enactment and cannot apply to writs issuable under article 226 which makes no reference to any cause of action or where it arises but insists on the presence of the person or authority within the territories ' in relation to which the High Court exercises jurisdiction. " Article 226 as it stands does not refer anywhere to (1) (1943) L.R. 70 I.A. 129. (2) ; 844 the accrual of cause of action and to the jurisdiction of the High Court depending on the place where the cause of action accrues being within its territorial jurisdiction. Proceedings under article 226 are not suits; they provide for extraordinary remedies by a special procedure and give powers of correction to the High Court over persons and authorities and these special powers have to be exercised within the limits set for them. These two limitations have already been indicated by us above and one of them is that the person or authority concerned must be within the territories over which the High Court exercises juris diction. Is it possible then to overlook this constitu tional limitation and say that the High Court can issue a writ against a person or authority even though it may not be within its territories simply because the cause of action has arisen within those territories? It seems to us that it would be going in the face of the express provision in article 226 and doing away with an express limitation contained therein if the concept of cause of action were to be introduced in it. Nor do we think that it is right to say that because article 300 specifically provides for suits by and against the Government of India, the proceedings under article 226 are also covered by article 300. It seems to us that article 300 which is on the same line as section L76 of the Government of India Act, 1935, dealt with suits as such and proceedings analogous to or consequent upon suits and has no reference to the extraordinary remedies provided by article 226 of the Constitution. The concept of cause of action cannot in our opinion be introduced in article 226, for by doing so we shall be doing away with the express provision contained therein which requires that the person or authority to whom the writ is to be issued should be resident in or located within the territories over which the High Court has jurisdiction. It is true that this may result in some inconvenience to persons residing far away from Now Delhi who are aggrieved by some order of the Government of India as such, and that may be a reason for making a suit. able constitutional amendment in article 226. But the argument of inconvenience, in our opinion,. cannot 845 affect the plain language of article 226, nor can the concept of the place of cause of action be introduced into it for that would do away with the two limitations on the powers of the High Court contained in it. We have given our earnest consideration to the language of article 226 and the two decisions of this Court referred to above. We are of opinion that unless there are clear and compelling reasons, which cannot be denied, we should not depart from the interpretation given in these two cases and indeed from any interpretation given in an earlier judgment of this Court, unless there is a fair amount of unanimity that the earlier decisions are manifestly wrong. This Court should not, except when it is demonstrated beyond all reasonable doubt that its previous ruling, given after due deliberation and full hearing, was erroneous, go back upon its previous ruling, particularly on a constitutional issue. In this case our reconsideration of the matter has confirmed the view that there is no place for the introduction of the concept of the place where the impugned order has effect or of the concept of functioning of a Government, apart from the location of its office concerned with the case, or even of the concept of the place where the cause of action arises in article 226 and that the language of that Article is plain enough to lead to the conclusion at which the two cases of this Court referred to above arrived. 'If any inconvenience is felt on account of this interpretation of article 226 the remedy seems to be a constitutional amendment. There is no scope for avoiding the inconvenience by an interpretation which we cannot reasonably, on the language of the Article, adopt and which the language of the Article does not bear. In this view of the matter the appeal fails and is hereby dismissed with costs. SUBBARAO, J. I have had the advantage of perusing the judgment prepared by my Lord the Chief Justice. I regret my inability to agree. I would not have ventured to differ from his weighty opinion but for the fact that the acceptance of the contention of 107 846 the respondents would practically deprive the majority of citizens of our country of the benefit of cheap, expeditious and effective remedy given to them under article 226 of the Constitution against illegal acts of the Union Government. If the relevant provisions are clear and unambiguous, the said contention must prevail however deleterious the effect may be to public interest. But if the words of the Article are capable of two or more interpretations, one that will carry out the intention of the Constituent Assembly and the other that would defeat it, the former interpretation must necessarily be accepted. We must also bear in mind that the provisions of the Constitution are not " mathematical formulae which have their essence in mere form". It being an organic statute, its provisions must be construed broadly and not in a pedantic way, but without doing violence to the language used. The facts have been fully stated in the judgment of my Lord the Chief Justice and it would be redundant to restate them. It would be enough if I formulate the point of law raised and express my opinion thereon. The question is whether the appellant, who is a citizen of India and is residing in the State of Kashmir, can enforce his fundamental right under Art 32(2A) of the Constitution by filing an appropriate writ petition in the High Court of Jammu & Kashmir, if his right is infringed by an order of the Union Government. The Constitution of India has been made applicable to the State of Jammu & Kashmir by the Constitution (Application to Jammu & Kashmir) Order, 1954 (Order No. 48 dated May 14, 1954) with certain exceptions and modifications. By the said Order, cl. (3) of article 32 of the Constitution was deleted, and a new clause (2A) was inserted after cl. The question falls to be decided on a true construction of the said el. (2A) which reads: "Without prejudice to the powers conferred by clauses (1) and (2), the High Court shall have power throughout the territories in rotation to which it exercises jurisdiction to issue to any person or authority, including in appropriate cases any Government within these territories, directions or orders or writs, 847 including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by this Part. " The operative part of this clause is in pari materia with article 226 of the Constitution with the difference that the words "for any other purpose" found in the latter Article are omitted in the former. Though the power of the High Court of Jammu & Kashmir is limited to that extent, in other respects it is as extensive as that of the other High Courts under article 226. The object of the amendment is self evident; it was enacted to enable the said High Court to protect the fundamental rights of the citizens of India in that part of the country. The learned Solicitor General broadly contends that this Court has construed the analogous provisons of article 226 of the Constitution and held that the writs under that Article do not run beyond the territories in relation to which a High Court exercises jurisdiction and that a High Court cannot issue a writ thereunder unless the person or authority against whom the writ is sought is physically resident or located within the territorial jurisdiction of that High Court; and that, therefore, on the same parity of reasoning, the High Court of Jammu & Kashmir cannot issue a writ to run beyond the territories of that State against the Union Government functioning through its officers in New Delhi. Learned counsel for the appellant contends, on the other hand, that neither article 32(2A) nor article 226 bears any such limited construction and that on a liberal and true construction of the said constitutional provisions it must be held that 'the High Court can issue a writ against any Government, including the Union Government, exercising the functions within the territories of a State, if it infringes the right of a person in that State. Before I attempt to construe the provisions of el. (2A) of article 32, I think it would be convenient to trace briefly the history of article 226, for it throws a flood of light on the legislative intention expressed in 848 article 32(2A). In pre independence India the High Courts, other than the High Courts in the presidency towns of Bombay, Calcutta and Madras, had no power to issue prerogative writs; even in the case of the said presidency High Courts the power to issue writs was very much circumscribed; their jurisdiction to issue the said writs was confined only to the limits of their original jurisdiction and the Governments were excluded from its scope. But the framers of our Constitution with the background of centuries of servility, with the awareness of the important role played by the High Court of England in protecting the rights of its citizens when they were infringed by executive action, with the knowledge of the effective and impartial part played by the High Courts in pre independence India within the narrow limits of their jurisdiction to protect the rights of the citizens of our country, with a vision to prevent autocracy raising its ugly head in the future, declared the fundamental rights in Part III of the Constitution, conferred powers on the High Courts to issue to any person or authority, including in appropriate cases any Government, directions, orders or writs for the enforcement of the fundamental rights or for any other purpose. In short, any person of India can approach an appropriate High Court to protect his rights against any person, authority or any Government if his fundamental right or any other right is infringed by the said person, authority or Government. If the contention of the respondents be accepted, whenever the Union Government infringes the right of a person in any remote part of the country. , he must come all the way to New Delhi to enforce his right by filing a writ petition in the Circuit Bench of the Punjab High Court. If a common man residing in Kanyakumari, the southern most part of India, his illegally detained in prison, or deprived of his property otherwise than by law, by an order of the Union Government, it would be a travesty of fundamental rights to expect him to come to New Delhi to seek the protection of the High Court of Punjab. This construction of the provisions of article 226 would attribute to the framers 849 of the Constitution an intention to confer the right on a person and to withhold from him for all practical purposes the remedy to enforce his right against the Union Government. Obviously it could not have been the intention of the Constituent Assembly to bring about such an anomalous result in respect of what they conceived to be a cherished right conferred upon the citizens of this country. In that event, the right conferred turns out to be an empty one and the object of the framers of the Constitution is literally defeated. The scope of article 226 vis a vis the reach of the High Courts ' power has been considered in two decisions of this Court, namely, Election Commission, India vs Saka Venkata Rao (1) and K. section Rashid and Son vs The Income tax Investigation Commission (2). As this Bench of seven Judges is constituted to enable this Court to approach the problem with a fresh mind unhampered by precedents, I propose to scrutinize the provisions of article 32(2A) free from the curbs imposed by the earlier decisions. The core of the Article is discernible in the following clause and phrases: "throughout the territories in relation to which it exercises its jurisdiction", "any Government", "within those territories", "directions or orders or writs, including writs in the nature of habeas corpus, etc. " The wore "throughout the territories, etc." delimit the territorial jurisdiction of the High Courts in the matter of issuing directions or writs. A High Court exercises jurisdiction throughout the State in which it is located. Its writs run only through. out the State and not beyond its territorial limits. The main object of the powers to keep the authorities or tribunals within their bounds and to prevent them from infringing the fundamental or other rights of citizens. At the instance of an aggrieved person it can issue one or other of the writs or orders or directions against the offending authority in respect of an act done or omitted tot be done by it. It is implicit in the, limitation that the impugned act must affect a person or property amenable to its territorial jurisdiction. (1) ; (2) ; 850 This question, in a different context, has been considered by the Judicial Committee of the Privy Council in Ryots of Garabandho vs Zemindar of Parlaki medi (1). There the Board of Revenue situated in the State of Madras under section 172 of the Madras Estates Land Act, 1908, enhanced the rents payable by the ryots in three villages, including Parlakimedi village, in the district of Ganjam in the Northern Circars. The question was whether the Madras High Court had power to issue a writ to quash the order of the Board. of Revenue, as the parties to that litigation were not subject to the original jurisdiction of the Madras High Court. The Judicial Committee held that the Madras High Court had no jurisdiction to issue a writ of certiorari to run beyond the territorial limits of that High Court. When it was contended that, as the Revenue Board was in Madras, the High Court had jurisdiction to quash its order, the Judicial Committee repelled that contention with the follow ing remarks at p. 164: "The Board of Revenue has always had its offices in the Presidency Town, and in the present case the Collective Board, which made the order complained of, issued this order in the town. On the other hand, the parties are not subject to the original jurisdiction of the High Court, and the estate of Parlakimedi ties in the north of the province. . . Their Lordships think that the question of jurisdiction must be regarded as one of substance, and that it would not have been within the competence of the Supreme Court to claim jurisdiction over such a matter as the present by issuing certiorari to the Board of Revenue on the strength of its location in the town. Such a view would give jurisdiction to the Supreme Court, in the matter of settlement of rents for ryoti holdings in Ganjam between parties not otherwise subject to its jurisdiction, which it would not have had over the Revenue Officer who dealt with the matter at first instance." This decision in clear terms lays emphasis on the substance of the matter and holds that mere physical (1) (1943) L.R. 70 I.A. 129. 851 presence of an authority within the jurisdiction of a High Court does not enable that Court to issue writs against the said authority in respect of an order made in a dispute between persons residing outside the territorial jurisdiction of the said High Court. Therefore, a High Court 's jurisdiction to issue an appropriate writ depends on the co existence of two conditions, namely, (i) the cause of action has accrued within the territories in relation to which it has jurisdiction, and (ii) the said authority is "within" the said territories. This interpretation may give rise to a criticism; it may be asked, which High Court could give the relief if the cause of action accrues within the territorial jurisdiction of one High Court and the authority concerned is located within that of another High Court? There may. be statutory authorities with all India jurisdiction, but for convenience located in a particular State. In exercise of the powers conferred under statutes, they may make orders affecting the rights of parties residing in different States. I am prima facie of the view that the said authorities, in so far as their orders operate in a particular territory, will be "within" those territories and the High Court, which exercises its jurisdiction throughout that territory, can issue a suitable writ against the said authorities. This interpretation avoids the anomaly of one High Court issuing a writ against an authority located "within" its territorial jurisdiction in respect of a cause of action accruing in another State or territory over which it has no jurisdiction. But this question does not arise in this case, for we re mainly concerned with the Union Government. Article 226 of the Constitution is expressed in wide and most comprehensive terms. There is no difficulty about. the words "person or authority", but the phrase "including any Government" gives rise to a conflict of opinion. If the framers of the Constitution intended to extend simply the power of the High Court to issue writs only against the Government of the State, they could have stated "or the Government of the State", instead they designedly used the words "any Government" which at first sight appear rather involved but on a deeper scrutiny reveal that the words 852 "any Government" cannot mean only the Government of the State. The word "any" clearly presupposes the existence of more than one Government functioning in a State. Under the Constitution two Governments function in each State. Under article 1, India shall be a Union of States and the territory of India shall comprise, inter alia, the territories of the States. Part 11 provides for one class of citizens, that is, citizens of India. In whatever State a person with the requisite qualifications of a citizen may reside, he is a citizen of India and not of that particular State. All the three departments of the Union as well as the State function in the State; both Parliament and the Legislature of the State make laws which govern the State in respect of matters allotted to them respectively. Both the Union and the State executive powers extend to the. State, and the former is exercised in regard to matters with respect to which Parliament has power to make laws and the latter in regard to matters with respect to which the Legislature of the State has power to make laws: see articles 73 and 162. The Judiciary consists of an hierarchy of courts and all the courts from the lowest to the Supreme Court exercise jurisdiction in respect of a cause of action arising in that State. The demarcation between the Union Government and the State Government is, therefore, not territorial but only : subjectwise and both the Governments function within the State. With this background it is easy to perceive that "any Government" must include the Union Government, for two State Governments cannot administer the same State, though for convenience or as a temporary arrangement, the offices of one State may be located in another State. Then it is asked why the Article confers power to issue writs against any Government only in appropriate cases. There are two answers to this question. Till the Constitution was framed there was no power in a High Court to issue a writ even against the Provincial Government. The Constitution conferred for the first time a power on the High Court to issue a writ not only against the State Government but also the Union Government. As the 853 Union Government has sway over not only the State in question but beyond it, it became necessary to administer a caution that a writ can only be issued in appropriate cases. The High Court 's jurisdiction is limited in the matter of issuing writs against the Union Government, for it cannot issue writs against it in respect of a cause of action beyond its territorial jurisdiction. There may also be a case where the secretariat of one of the State Governments is located in another State temporarily. In such a case also the High Court of the latter State cannot issue writs against that State Government as it is not appropriate to issue such writs, for the cause of action accrues ' within the former State. I have, therefore, no doubt that the words "any Government" must necessarily take in the Union Government. Much of the argument turns upon the words "within those territories". It is said that the Union Government is not within the territories of the State, for its headquarters are in Delhi. The Article does not use the word "headquarters", "resident" or "location". The dictionary meaning of the word "within" is "inside of, not out of or beyond". The connotation of the words takes colour from the context in which they are used. A person may be said to be within a territory if he resides therein. He may also be within a territory if he temporarily enters the said territory or is in the course of passing through the territory. Any authority may be in a territory if its office is located therein. It may also be said to be within a territory if it exercises its powers therein and if it can make orders to bind persons for properties therein. So too a Government may be within a State if it has a legal situs in that State. It may also be said to be within a State if it administers the State, though for convenience some of its executive authorities are residing outside the territory. We must give such meaning to these words as would help the working of the Constitution rather than retard it. To put it differently, can it be said that the Union Government 108 854 is within a particular State? Union Government in the present context means the executive branch of the Government. Where is it located? To answer this question it is necessary to consider what is "Union Government". The Constitution in Part V under the heading. "The Union" deals with separate subjects, namely, the executive, the Parliament and the Union judiciary. Under article 53, the executive power of the Union shall be vested in the President and shall be exercised by him either directly or through officers subordinate to him in accordance with the Constitution. Article 74 provides for a council of Ministers with the Prime Minister at the head to aid and advise the President in the exercise of his functions. By article 77, all executive action of the Government of India shall be expressed to be taken in the name of the President; and el. (3) thereof authorizes the President to make rules for the more convenient transaction of the business of the Government of India, and for the allocation among Ministers of the said business. Article 73 says that subject to the provisions of the Constitution, the executive power of the Union shall extend to the matters with respect to which Parliament has power to make laws and to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any; treaty or agreement. The Constitution nowhere fixes the seat of the Union Government or even that of the President. Shortly stated, the Union Government is the President acting on the advise of the Ministers directly or through officers subordinate to him in accordance with the Constitution and the jurisdiction of the said Government extends, so far as is relevant to the present purpose, to matters in respect of which Parliament has power to make laws. The question that immediately arises is, what is the situs of such a Government? There is no statutory situs. For convenience of administration, the officers of such Government may stay at one place,, or they may be distributed in different places; the President may. reside in one place, the Prime Minister in another, the 855 Ministers in a third place and the officers through whom the President exercises his powers in a place different from the rest. What happens when the Secretariat remains in New Delhi and the President resides for some months in a year in, say,, Hyderabad? Contrary wise, what would be the position if the President stays in New Delhi and the entire or part of the Secretariat or some of the Ministers stay in Hyderabad? It is, therefore, not possible to apply 'the test of residence or location in the absence of any statutory situs. The Union Government has no fixed legal abode; it is present throughout the territories over which it exercises jurisdiction and in respect whereof it can make effective and binding orders in the field allotted to it by the Constitution. The constitutional situs of the Union Government is the entire territories of the Union and it is "within" the territories of India and,, therefore, within the territories of every State. Let us look at the problem from another standpoint. Under article 300 of the Constitution, the Government of India may sue or be sued by the name of the Union of India. The word "sued" is used in a general sense and cannot be narrowly construed in the Constitution as to comprehend only action by way of filing a suit in a civil court. According to Webster, it means to seek justice or right by legal process. Generally speaking, it includes any action taken in a court. The practice followed in the various High Courts and the Supreme Court is also consistent with the wide meaning attributed to it, for writs are filed against the Government of India only in the name of the Union of India. Union of India is a juristic person and it is impossible to predicate its residence in a particular place in the Union. Its presence Synchronizes with the limits of the Union territories. That is the reason why that Order XXVII, rule 3, Code of Civil Procedure, says that in suits by or against the Government instead of inserting in the plaint the name and description and place of residence of the plaintiff or defendant, it shall be sufficient to insert the appropriate name as provided in section 79 Section 79 of the 856 Civil Procedure Code is in terms analogous to article 300 of the Constitution, and under that section, "In a suit by or against the Government, the authority to be named as plaintiff or defendant, as the case may be, shall be (a). in the case of a suit by or against the Central Government, the Union of India, and (b). in the case of a suit by or against a State Government, the State." As the Union of India has no statutory situs, Order XXVII, rule 3, Code of Civil Procedure, exempts its place of residence being given in the plaint or the written statement, as the case may be. The suit by or against the Union Government shall be filed in a court which has jurisdiction to entertain such a suit, having regard to the provisions of sections 15 to 20 of the said Code. On the same analogy, it may be held that the Union of India has no legal situs in a particular place and a writ petition can be filed against it in a place within the jurisdiction of the High Court wherein the cause of action accrues. It is said that the limits of the power to issue a writ are implicit in the nature of a particular writ. What is the nature of the principal writs, namely, habeas corpus, mandamus, prohibition, quo warranto and certiorari? The writ of habeas corpus "is a prerogative process for securing the liberty of the subject by affording an effective means of immediate release from unlawful or unjustifiable detention whether in prison or in private custody". The writ of mandamus "is, in form, a command directed to any person, corporation or inferior tribunal, requiring him or them to do some particular thing therein specified which appertains to his or their office and is in the nature of a public duty." An order of prohibition is an order directed to an inferior tribunal forbidding it to; continue with the proceedings pending therein. An information in the nature of a quo warranto lies against a person who claimed or usurped an office, franchise, or liberty, to inquire by what authority he supported his claim. A certiorari is directed to an authority "requiring the record of the proceedings in some cause or matter to 857 be transmitted into the High Court to be dealt with there. " (See Halsbury 's Laws of England, Vol. II, 3rd edition). It was asked how could the liberty of a subject be secured, the command be issued, the proceedings of an inquiry be prohibited, the credentials of a person to hold office be questioned, the records of a proceeding be directed to be transmitted to the High Court, if the authority concerned wag located, or the person directed resided, outside. the territorial jurisdiction of the High Court? It was also asked how, if the said authority, or person, disobeyed the order of the High Court, it could be enforced against the said authority or person. On the parity of the same reasoning the argument proceeded that, as the officers acting for the Government of India reside in Delhi, a writ which would become brutum fulmen could not be issued by the High Court. The questions so posed are based on a misapprehension of the relevant provisions of the Constitution. They also mix up the nature of the writs with the procedure in dealing with the writs or enforcing the orders made therein. As I have already indicated, the Article confers a power on the High Court to issue writs against the Union Government. If the said Government is "within the State", is it an answer to it that an officer of the Government dealing with a particular paper or papers is residing outside the territorial jurisdiction of the High Court? If the Union Government is bound by the order of the High Court, the question of service of notice on a particular officer acting for the Government or to enforce an order against him is a matter pertaining to the realm of procedure and appropriate rules calf be framed by the High Court or the requisite law made by the Parliament. If the Union Government disobeys the order it would certainly be liable for contempt of court under the . Even if the con temner happens to be an officer of the said Government residing outside the territorial limits of the High Court, the High Court has ample power to reach him under section 5 of the said Act. 858 The analogy drawn from English law is rather misleading. England is comparatively a small country and it has only one Government functioning throughout the State. The problem that has arisen now could not have arisen in England, for the jurisdiction of the Queen 's Bench Division of the High Court extends throughout England. In England the manner of the exercise of the jurisdiction was also regulated by a procedure brimming with technicalities, but later on simplified by statute. The framers of our Constitution therefore designedly used the words "in the nature of" indicating that they were not incorporating in the Constitution the entire procedure followed in England, for the procedure will have to be evolved having regard to the federal structure of our Government. How can the procedural law of England in the matter of writs be bodily lifted and implanted in India? This Court shall have to put a reasonable construction on the words without being unduly weighed down by the historical background of these writs and construe the Article in such a way, if legally permissible, to carry out the intention of the Constitution makers. That apart, Article 226 of the Constitution is not confined to the prerogative writs in vogue in England. The Article enables the appropriate High Court to issue also directions or orders, and there is no reason why the High Court could not, in an appropriate case, give a suitable direction to, or make a proper order on, the Union Government. Such directions or orders are certainly free from the procedural technicalities of the said writs. I shall now notice briefly the decisions cited at the Bar. The first is the decision of this Court in Election Commission, India vs Saka Venkata Rao(1). There the Governor of Madras referred to the Election Commission, which had its offices permanently located in New Delhi, the question whether the respondent was disqualified and could be allowed to sit and vote in the Assembly. The respondent thereupon applied to the High Court of Madras under article 226 of the Constitution for a writ restraining the Election Commission (1) [1953] S.C.R. lI44. 859 from enquiring into his alleged disqualification for membership of the Assembly. This Court held that the power of the High Court to issue writs under article 226 of the Constitution was subject to the two fold limitation: (i) that such writs cannot run beyond the territories subject to its jurisdiction; and (ii) that the person or authority to whom the High, Court is empowered to issue writs must be amenable to the jurisdiction of the High Court either by residence or location within the territories subject to its jurisdiction. On that basis the writ petition was dismissed. At the outset it may be noticed that there is one obvious difference between that case and the present one. In that case the respondent was not the Union of India but an authority which could have and had its location in a place outside the Madras State. The present case satisfies both the conditions: the writ does not run beyond the territorial jurisdiction of the High Court, as the Union Government must be deemed to be "within" the said territories; the second condition is also satisfied, as the Union Government, being within the State, is also amenable to its jurisdiction. The next case relied upon by the learned Solicitor General is a converse one. It is the decision of this Court in K. section Rashid & Son vs The Income tax Investigation Commission (1). In that case the Income tax Investigation Commission located in Delhi was investigating the case of the petitioners under section 5 of the Taxation on Income (Investigation Commission) Act 1947, although the petitioners were assessees belonging to Uttar Pradesh and their original assessments were made by the Income tax authorities of that State. It was contended that the Punjab High Court had no jurisdiction to issue a writ under article 226 of the Constitution to the said Commission. This Court, after restating the two limitations on the power of the High Court to issue a writ, held that the Commission was amenable to the jurisdiction of the Punjab High Court and, therefore, the Punjab High Court had jurisdiction to issue the writ. This decision also (1) ; 860 deals with a case of statutory authority located in Delhi and it has no application to the case of the Union Government. The question whether the principles that apply to the Government of India would equally apply to statutory authorities situate in one State but exercising jurisdiction in another, does not arise for consideration in this case; though, as I have already expressed, I am prima facie of the view that there is no reason why they should not. Now coming to the decision of the High Courts, there is a clear enunciation of the relevant principles in Maqbul Un Nissa vs Union of India(1). The Full Bench of the Allahabad High Court directly decided the point now raised before us. The importance of the decision lies in the fact that the learned Judges approached the problem without being oppressed by the decision of this Court in Saka Venkata Rao 's case (2), which was decided only subsequent to that decision. After considering the relevant Articles of the Constitution ' Sapru, J., speaking for the Full Bench, observed at pp. 293 294 thus: "The analogy between a government and a corporation or a joint stock company which has its domicile in the place where its head office is situate is misleading. To hold that the jurisdiction of this Court does not extend to the Union Government as it has its capital at Delhi and must be deemed to have its domicile at Delhi would be to place the Union Government not only in respect of the rights conceded in Part III but for any other purpose also beyond the jurisdiction of all State High Courts except the Punjab High Court. " The learned Judge proceeded to state at p. 294 "In our opinion, the jurisdiction of this Court to intervene under Article 226 depends not upon where the Headquarters or the Capital of, the Government is situate but upon the fact of the effect of the act done by Government, whether Union or State being within the territorial limits of this Court., Adverting to the words "any Government" in article 226, the learned Judge observed at p. 292 thus: (1) I.L.R. (2) ; 861 "They indicate that the founding fathers knew that more than one government would function within the same territory.)) I entirely agree with the observations of the learned Judge, for they not only correctly construe the provisions of article 226 but also give effect to the intention of the Constitution makers. After the decision of this Court in Saka Yenkata Rao 's case (1) the High Court of Madhya Pradesh considered the question in Surajmal vs State of M. P. (2). There, the Central Government rejected an application for a mining lease and the order rejecting the application was communicated to the applicant who was residing in the State of Madhya Pradesh. It was held by the High Court that the writ asked for could not be issued so as to bind the Central Government because, "(a) the Central Government could not be deemed to be permanently located or normally carrying on its business within the jurisdiction of the High Court; (b) the record of the case which the Central Government decided was not before the High Court and could not be made available from any legal custody within the State; (c) the order of the State Government must be deemed to have merged in that of the Central Government; (d) the order of the State Government could not be touched unless the order of the Central Government could be brought before the High Court and quashed. " We are concerned here with the first and second grounds. The learned Chief Justice, who delivered the judgment on behalf of the Full Bench, applied the principle of the decision of this Court in Saka Venkata Rao 's(1) to the Union Government; and for the reasons already mentioned I am of opinion that the decision Is not applicable to the case of the Union Government. The second reason in effect places the procedure 'on a higher pedestal than the substantive law. It is true that in a writ of certiorari the records would be called for; but, if once it is held that the Union Government is within the State within the meaning of article 226 of the Constitution, I do not think why the High Court in exercise (1) ; (2) A.I.R. 1958 M.P. 103, 862 of its constitutional power cannot direct the Union Government to bring the records wherever its officers might have kept them. This second ground is really corollary to the first, viz., that the Union Government is not within the territorial jurisdiction of the High Court concerned. The Bombay High Court in Radheshyam Makhanlal vs The Union of India (1) also held that a writ cannot issue against the Union Government whose office is located outside the territorial jurisdiction of the High Court. Shah, J., applying the principle of the decision in Saka Venkata Rao 's case (2 ) to the Union Government hold that as the office of the Union Government was not located within the State of Bombay, the Bombay High Court could not issue a writ to the Union Government. But section T. Desai, J.,, was not willing to go so far, and he based his conclusion on a narrower ground, namely, that even if the writ was issued it could not be enforced. I have already pointed out that both the grounds are not tenable. The Union Government is within the State of Bombay in so far as it exercises its powers in that State and the High Court has got a constitutional power to issue writes to the Union Government and, therefore, their enforceability does not depend upon its officers residing in a particular place. The foregoing discussion may be summed up in the following propositions: (1) The power of the High Court under article 226 of the Constitution is of the widest amplitude and it is not confined only to issuing of writs in the nature of habeas corpus, etc., for it can also issue directions or orders against any person or authority, including in appropriate cases any Government. (2) The intention of the framers of the Constitution is clear, and they used in the Article words "any Government" which in their ordinary significance must include the Union Government. (3) The High Court can issue a writ to run throughout the territories in relation to which it exercises jurisdiction. and to the person or authority or Government within the said territories. (4) The Union Government has (1) A.I.R. 1960 Bom. (2) ; 863 no constitutional situs in a particular place, but it exercises its executive powers in respect of matters to which Parliament has power to make laws and the power in this regard is exercisable throughout India; the Union Government must, therefore, be deemed in law to have functional existence throughout India. (5) When by exercise of its powers the Union Government makes an order infringing the legal right or interest of a person residing within the territories in relation to which a particular High Court exercises jurisdiction, that High Court can issue a writ to the Union Government, for in law it must be deemed to be "within" that State also. (6) The High Court by issuing a writ against the Union Government is not travelling beyond its territorial jurisdiction, as the order is issued against the said Government "within" the State. (7) The fact that for the sake of convenience a particular officer of the said Government issuing an order stays outside the territorial limits of the High Court is not of any relevance, for it is the Union Government that will have to produce the record or carry out the order, as the case may be. (8) The orders issued by the High Court can certainly be enforced against the Union Government, as it is amenable to its jurisdiction, and if they are disobeyed it will be liable to contempt. (9) Even if the Officers physically reside outside its territorial jurisdiction, the High Court can always reach them under the , if they choose to disobey the orders validly passed against the Union Government which cannot easily by visualized or ordinarily be expected. (10) The difficulties in communicating the orders pertain to the rules of procedure and adequate and appropriate rules can be male for communicating the same to the Central Government or its officers. For the aforesaid reasons, I hold that article 32(2A) of the Constitution enables the High Court of Jammu & Kashmir to issue the writ to ' the Union Government in respect of the act done by it infringing the fundamental rights of the parties in that State. In the result,, I allow the appeal, set aside the order of the High Court and direct ' it to dispose of the 864 matter in accordance with law. The appellant will have his costs. DAS GUPTA, J. I have had the advantage of reading the judgments prepared by my Lord the Chief Justice and Mr. Justice Subba Rao. I agree with the conclusions reached by the Chief Justice 'that the appeal should be dismissed. As, however, I have reached that conclusion by a slightly different process of reasoning I propose to indicate those reasons briefly. The facts have been fully stated in the judgment of My Lord the Chief Justice and it is not necessary to repeat them. It is sufficient to state that the appellant filed an application to the High Court of Jam mu & Kashmir under Article 32(2A) of the Constitution for the issue of an appropriate writ, order or directions restraining the Union of India and the State of Jammu & Kashmir from enforcing an order conveyed in the Government of India 's letter dated July 31, 1954, whereby the Government of India ordered the premature compulsory retirement of the appellant with effect from August 12, 1954. A preliminary objection was raised on behalf of the respondents that Government of India is not a Government within the territorial limits of the jurisdiction of the Jammu and Kashmir High Court and so the application was not maintainable. The High Court accepted this objection as valid and dismissed the application. The sole question in controversy in appeal is whether the High Court had jurisdiction, on the 'facts and circumstances of this case, to issue a writ to the Government of India under article 32(2A) of the Constitution. Article 32(2A) of the Constitution under which the appellant asked the High Court for relief is in the following words: "Without prejudice to the powers conferred by clauses (1) and (2), the High Court shall have power throughout the territories in relation to which it exercises jurisdiction to issue to any person or authority, including in appropriate cases, any Government within the territories, directions or orders or writs, 865 including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by this Part. " Except for the fact that "the High Court" in this Article means only the High Court of the State of Jammu & Kashmir, while article 226 of the Constitution refers to all other High Courts and the further fact that power granted by this Article is for the enforcement only of the rights conferred by Part III of the Constitution while article 226 gives power to the High Courts in the Union for the enforcement not only of the rights conferred by Part III but for any other purpose, the provisions of the two articles are exactly the same. Power is given to the High Court to give relief in certain matters by issuing appropriate writs and orders to (1) any person; (2) any authority other than the Government and (3) any Government. The exercise of this power is subject to the existence of the condition precedent that the person or the Government or the authority other than the Government must be "within the territories in relation to which the High Court exercises jurisdiction". A special limitation in respect of the issue of writs or orders to a Government is introduced by the words "in appropriate cases" before the words "any Government". Leaving for later consideration the effect of the words "in appropriate cases" we have first to examine the question: when is a Government within the territories under the jurisdiction of a particular High Court ? On behalf of the first respondent, the Union of India, it is urged that to be within the terri tories under the jurisdiction of a High Court the Government must be located within those territories. It is pointed out that "any person" ' to be within any specified territories has to be present within those territories; an authority other then Government has also, before it can be said to be within any particular territories, a physical existence within those territories by having its office therein. The same requirement of location within the particular territories, it is argued, should apply to the case of Governments. The 866 argument is no doubt attractive and at first sight even plausible. On closer examination however it becomes evident that this argument oversimplifies the problem by slurring over the fallacious assumption that a, Government has a location in the same way as any person or any authority other than Government. Has the Government any location in a similar sense in the same way as a person has a location at any point of time by being present at a particular place or an authority other than the Government can be said to be located at the place where its office is situated ? There is no doubt that when we think of a Government, whether of the States or of the Union we are thinking of the executive organ of the State. The executive power of the Union is under article 53 vested in the President and is to be exercised by him. The executive power of the States is vested in the Governors of the States and has to be exercised by them. Does it follow however that the Government of India is located at the place where the President resides and similarly the Government of each State is located at the place where the Governor resides ? It has to be noticed that while the Constitution contains specific provisions in article 130 as to where the Supreme Court shall sit, no such provision is made as to where the President of India shall reside or exercise his executive power vested in him. article 231 of the Constitution speaks of a principal seat for the High Court of each State. We search in vain however for any mention of any principal seat "for the President of India or the Governors of the States". The fact that the President of India has a special place of residence, the Rashtrapati Bhawan in Delhi and the Governors of States have also special places of residence at some places in the State known as Rai Bhavan is apt to make us forget that the Constitution does not provide for any place 'of residence for the President or Governors. There is nothing to prevent the President of India from having more than one permanent place of residence within the Union. If this happens and places of residence are provided for the President of India in, say, Bombay, Calcutta and 867 Madras in addition to the residence at Delhi, can it be said that the Government of India is located in Delhi when the President of India resides in Delhi, it goes to Calcutta when he resides in Calcutta, it goes to Bombay when the President resides in Bombay and to Madras when the President goes and resides in Madras? This may seem at first sight a fantastic illustration; but when we remember that in fact in the days of British rule, the Viceroy had a permanent place of residence at Simla for part of the year and another permanent place of residence at Calcutta for part of the year before 1911 and after 1911 one permanent place of residence in Delhi and another in Simla, it is easy to see that what has been said above by way of illustration is by no means improbable. If therefore a Government is to be held to be located at the place where the head of the State the President of India in the case of the Government of India and the Governor in the case of each State resides, it may well become impossible to speak of any particular place as the place where the Government is located throughout the year. This may not affect the question of any State Government being within the territories of the High Court of the State. For whatever place the Governor may have for his residence is bound to be within the territories of the State. The position will however become wholly uncertain and difficult as regards the Government of India being within the territorial jurisdiction of any particular High Court. For part of the year it may be, if the residence of the President be the criterion for ascertaining the location of the Government, that the Government of India will be within the territories of one High Court and for other parts of the year in another High Court. It will be wholly unreasonable therefore to accept the test of residence of the President of India for deciding where the Government of India is located. Finding the test of the President 's residence illusory, one may try to say that the Government of India or of a State is situated at the place *here the offices of the Ministry are situated. Under article 77, the President allocated the business of the. Government of India 868 among the Ministers while under article 166 the Governor of a State allocates the business of the Government of a State except business with respect to which the Governor is required to act in his discretion among the Ministers of the State. If therefore it was correct to say that all the Ministers of the Government of India had to perform their functions in respect of the business allocated to them at one particular place, it might be reasonable to say that the Government of India is located at that place. Similarly if all the Ministers of a State had to perform their functions in respect of the business allocated to them at one particular place the Government of the State might well be said to be located at that place. The Constitution however contains no provision that all the Ministers of a State shall perform their functions at one particular place in the State nor that the Ministers of the Union will perform their functions at one particular place in the State. Situations may arise not only in an emergency, but even in normal times, when some Ministers of the Government may find it necessary and desirable to dispose of the business allocated to them at places different from where the rest of the Ministers are doing so. The rehabilitation of refugees from Pakistan is part of the business of the Government of India and for the proper performance of this business there is a Ministry of Rehabilitation for Refugees. It is well known that the Minister in this Ministry has to perform a great portion of his business at Calcutta 'in West Bengal and stays there for a considerable part of the year. Many of the offices of this Ministry are situated in Calcutta. What is true of this Ministry, may happen as regards other Ministries also. Special circumstances may require that some portion of the business of the Minis. try of Commerce be performed at places like Bombay, Calcutta or Madras in preference to Delhi, and if this happens the Minister to whom the business of Government of India in respect of commerce has been allocated will be transacting his business at these places instead of at Delhi. If public interest requires that the greater portion of the business of the Ministry of 869 Defence should for reasons of security or other reasons be carried on at some place away from Delhi the Defence Minister will have to transact its business at that place. It is clear therefore that while at any particular point of time it may be possible to speak of any Ministry of the Government of India being located at a particular place, the Government of India as a whole may not necessarily be located at that place. In my opinion, it is therefore neither correct nor appropriate to speak of location of any Government. Nor is it possible to find any other satisfactory test for ascertaining the location of the Government of India. In Election Commission vs Saka Venkata Subba Rao (1) this Court held that before a writ under article 226 could issue to an authority, the authority must be located within the territories under the jurisdiction of the High Court. There however the Court was not concerned with the case of any Government, and had no occasion to consider whether a Government could be said to have a location. The decision in that case and in the later case of K. section Rashid and Son vs The Income tax Investigation Commission, etc., (2) does not therefore bind us to hold that a Government has a location in the same way as an authority like an Election Commission or an Income tax Investigation Commission. It appear,% reasonable therefore to hold that all that is required to satisfy the condition of a Government being within the territories under the jurisdiction of a High Court is that the Government must be functioning within those territories. The Government of India functions throughout the territory of India. The conclusion cannot therefore be resisted that the Government of India is within the territories under the jurisdiction of every High Court including the High Court of Jammu and Kashmir. The use of the words "any Government" appears to me to be an additional reason for thinking that the Government of India is within the territories under the jurisdiction of the Jammu & Kashmir High Court. "Any Government" in the context cannot but mean (1)[1953] S.C.R. 1144. (2) ; 870 every Government. If the location test were to be applied the only Government within the territories of the State of Jammu and Kashmir would be the Government of Jammu and Kashmir. It would be meaningless then to give the High Court the power to give relief against "any Government" within its territories. These words "any Government" were used because the Constitution makers intended that the High Court shall have power to give relief against the Government of India also. But, contends the respondent, that will produce an intolerable position which the Constitution makers could not have contemplated. The result of the Government of India being within the territories of every High Court in India will, it is said, be that the Government of India would be subjected to writs and orders of every High Court in India. A person seeking relief against the Government of India will naturally choose the High Court which is most convenient to him and so the Government of India may have to face applications for relief as against the same order affecting a number of persons in all the different High Courts in India. If a position of such inconvenience to the Government of India ' though of great convenience to the persons seeking relief, did in fact result from the words used by the Constitution makers, I for one, would refuse to shrink from the proper interpretation of the words merely to help the Government. I do not however think that that result follows. For, on a proper reading of the words "in appropriate cases", it seems to me that there will be, for every act or omission in respect of which relief can be claimed, only one High Court that can exercise jurisdiction. It has first to be noticed that the limitation introduced by the use of these words "in appropriate cases ' has not been placed in respect of issue of writs to persons and to authorities other than government. It has been suggested that the effect of these words is that in issuing writs against any Government the High Court has not got the same freedom as it has when issuing writs against any person or authority other than 871 Government and that when relief is asked against a Government the High Court has to take special care to see that writs are not issued indiscriminately but only in proper cases. I have no hesitation in rejecting this suggestion. It cannot be seriously contemplated for a moment that the Constitution makers intended to lay down different standards for the courts when the relief is asked for against the Government from when the relief is asked for against other authorities. In every case where relief under article 226 is sought the High Court has the duty to exercise its discretion whether relief should be given or not. It is equally clear that in exercising such discretion the High Court will give relief only in proper cases and not in cases where the relief should not be granted. Why then were these words "in appropriate cases" used at all? It seems to me that the Constitution makers being conscious of the difficulties that would arise if all the High Courts in the country were given jurisdiction to issue writs against the Central Government on the ground that the Central Government was functioning within its territories wanted to give such jurisdiction only to that High Court where the act or omission in respect of which relief was sought had taken ' place. In every case where relief is sought under article 226 it would be possible to ascertain the place where the act complained of was performed or when the relief is sought against an omission, the place where the act ought to have been performed. Once this place is ascertained the High Court which exercises jurisdiction over that place is the only High Court which has jurisdiction to give relief under article 226. That, in my view, is the necessary result of the words "in appropriate cases". On behalf of the appellant it Was contended on the authority of the decision of the Privy Council in Ryots of Garabandho vs Zemindar of Parlakimedi (1) that all that is necessary to give, jurisdiction to a High Court to act under article 226 is that a part of the cause of action has arisen within the ';territories in relation to which it exercises jurisdiction. The question whether the cause of action attracts jurisdiction for relief (1) (1943) L.R. 70 I.A. 129. 872 under article 226 of the Constitution as in the case of suits was considered by this Court in Saka Venkata Subba Rao 's Case (1) and the answer given was in the negative. Referring to the decision of the Privy Council in Parlakimedi 's Case (2) this Court pointed out that the decision did not turn on the construction of a statutory provision similar in scope, purpose or wording to article 226 of the Constitution, and is not of much assistance in the construction of that article. Delivering the judgment of the Court Patanjali Sastri C. J. also observed: "The rule that cause of action attracts jurisdiction in suits is based on statutory enactment and cannot apply to writs issuable under article 226 which makes no reference to any cause of action or where it arises but insists on the presence of the person or authority 'within the territories ' in relation to which the High Court exercises jurisdiction. " This decision is binding on us, and I may respectfully add that I find no reason to doubt its correctness. It is true that in that case the Court had to consider the question of jurisdiction in respect of an authority other than Government. It is difficult to see however why if cause of action could not attract jurisdiction against persons and authorities other than Government it would attract jurisdiction as against a Government. It seems to me clear that the principle of basing jurisdiction on cause of action has not been introduced in the Constitution under article 226 or article 32(2A) of the Constitution. It may seem at first sight that to hold that the High Court within whose jurisdiction the action or omission, complained of took place will have jurisdiction, is in effect to accept the accrual of cause of action as the basis of jurisdiction. This however is not correct. The High Court within. the jurisdiction of which the act or omission takes place, has jurisdiction, not because a part of the: cause of action arose there, but in consequence of the use of the words "in appropriate cases". (1) ; (1) (1943) L.R. 70 I.A. 129. 873 The several cases in the High Court in which the question now before us has been considered have been referred to in the majority judgment and also in the judgment of Mr. Justice Subba Rao and no useful purpose would be served in discussing them over again. For the reasons discussed above I have reached the conclusion that while the Government of India is within the territories of every High Court in India the only High Court which has jurisdiction to issue a writ or order or directions under article 226 or article 32 (2A) against it is the one within the territories under which the act or omission against which relief was sought took place. In the present case the act against which the relief has been sought was clearly performed at Delhi which is within the territories under the jurisdiction of the Punjab High Court and the Jammu and Kashmir High Court cannot therefore exercise its jurisdiction under article 226. In the result, I agree with my Lord the Chief Justice that the appeal should be dismissed with costs. BY COURT. In accordance with the opinion of the majority of the Court, this appeal is dismissed with costs. Appeal dismissed.
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The High Court of Jammu and Kashmir used previous court decisions, like *Election Commission, India vs Saka Venkata Subba Rao*, and *K. section Rashid and Son vs The Income Tax Investigation Commission*, to reject a request from the appellant (the person making the appeal). The appellant wanted the court to issue a writ (a court order) against the Union of India (the Indian government) and another party. This request was made under article 32(2A), which deals with enforcing fundamental rights (basic rights guaranteed to all citizens). Article 226 of the Constitution is similar. The court said it couldn't hear the case because the Union of India was outside of its area of authority, or jurisdiction. The appellant argued that he held the rank of Lieutenant Colonel in Jammu and Kashmir. He believed he had the right to continue working until he turned 53 on November 20, 1961. However, he was forced to retire early by a letter from the Indian government on July 31, 1954. He claimed this was done without any accusations or charges and violated article 16(1) of the Constitution. The court decided that the High Court was correct in its decision and the appeal must be denied. The High Court's power under article 226 of the Constitution depends on where the person or group making the order is located, not where the person affected by the order lives. Where the order takes effect doesn't determine the court's power. A government functions by putting its orders into action. This doesn't define the meaning of "any person or authority within these territories" in the article. A person is within those territories if they live there permanently or temporarily. An organization that is not the government is within those territories if its office is located there. A government is within those territories if its main office is there. It's not correct to say that the word "authority" in article 226 cannot include a government. That word must be read with the phrase "including in appropriate cases any Government" that follows it. This means the word "authority" can include any government in a suitable case. The phrase doesn't give the High Courts the power to choose when to issue a writ to a government. It only means that if the authority the High Court has the power to issue a writ to happens to be a government, the High Court can issue a writ against that government. The court approved the previous decisions in *Election Commission, India vs Saka Venkata Subba Rao*, and *K. section Rashid and Son vs The Income tax Investigation Commission*. *Maqbulunnissa vs Union of India*, was overruled (disagreed with). *The Lloyds Bank Limited vs The Lloyds Bank Indian Staff Association (Calcutta Branches)*, was mentioned. Proceedings under article 226 are not lawsuits covered by article 300 of the Constitution. These proceedings offer special solutions through a special process. There's no room for considering the "cause of action" (the reason for the lawsuit) because the article clearly states that the person or authority involved must be within the High Court's jurisdiction. *Ryots of Garabandho vs Zamindar of Parlakimedi*, was held not applicable. The fact that this interpretation of article 226 may cause problems for people who live far from New Delhi, where the Indian government is located, and are affected by an order from the government, may be a reason to change the article. However, it doesn't change the article's clear meaning. The Court should not change a previous ruling unless it's very clear that the ruling was wrong, especially when it involves a constitutional issue. Justice Subba Rao said that the goal of the Constitution's writers was to protect fundamental rights and empower the High Courts to enforce them. This goal would be difficult to achieve if someone in a remote part of the country had to travel to New Delhi to seek protection from the Punjab High Court whenever the Union Government violated their basic rights. The High Courts have broad power under article 226 of the Constitution. They can issue not only writs, but also directions and orders. The words "any Government" in the Article include the Union Government, which doesn't have a specific location and exercises its powers throughout India. Therefore, it must be considered to have a functional presence throughout India and within the territories of every state. As a result, when the Union Government violates the legal rights of someone living within a High Court's jurisdiction, the High Court has the power to issue a writ to that government. If that government or any of its officers disobeys the court's orders, even if they are physically outside the court's territory, the court can take action against them for contempt of court under the Contempt of Courts Act, 1952. *Election Commission, India vs Saka Venkata Subba Rao*, was held not applicable. *K. section Rashid and Son vs Income Tax Investigation Commission*, and *Ryots of Garabandho vs Zamindar of Parlakimedi*, were considered. *Maqbul Unnissa vs Union of India*, was approved. *Surajmal vs State of M.P.*, and *Radheshyam Makhanlal vs Union.of India*, were held not applicable. Therefore, in this case, the High Court had the power to issue the writ to the Union Government under article 32(2A) of the Constitution. Justice Das Gupta said that it's not correct or appropriate to talk about the "location" of a government. There's no good way to determine the location of the Indian government. Because the government functions throughout India, it must be considered to be within the territories under the jurisdiction of every High Court. The words "any Government" in article 226 clearly show that the High Court was intended to provide relief against that government as well. Even though the Indian government is within the territories of every High Court, it won't have to deal with requests for relief against the same order in all the High Courts in India. The words "in appropriate cases" in that Article mean that only one High Court can have jurisdiction under the Article for each action or failure to act that someone is seeking relief for. It's always possible to determine where the act or failure to act took place. Only the High Court that has jurisdiction over that place can grant relief under the Article. It's not correct to say that the "cause of action" determines jurisdiction under article 226. Neither that Article nor article 32(2A) of the Constitution is based on that principle. *Election Commission, India vs Saka Venkata Subba Rao*, was approved.
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It has been argued on behalf of the appellant, in the first instance, that the previous decisions of this Court were distinguishable on the ground that they did not, in terms, consider the question whether the Government of India wag amenable to the jurisdiction of the High Court under article 226 or of the Jammu and ' Kashmir High Court under article 32(2A) of the Constitution. that those provisions, on a true construction, would not stand in the way of the appellant, inasmuch as the Government of India has no location and its authority is present throughout the Union territory; that the correct test is whether or not the cause of action arose within the territorial limits of the High Court 's jurisdiction; that the High Court was in error in holding that the term "authority" included a Government. The expression "in appropriate cases" means that there may be cases where though the Union Government as such is not located within the territorial limits of a High Court yet a writ may be issued against it by the High (1) ; 834 Courts because an officer of the Union Government is functioning within such limits and it is his order which is the subject matter of the controversy. Therefore, it is not in every case that a High Court can issue a writ against the Union. The question was first raised in this Court in 1952 and was determined by a Constitution Bench in the case of Election Commission, India vs Saka Venkata Subba Rao (1). In the High Court the Election Commission demurred to the jurisdiction of the Court to issue any writ against it on the ground that the Commission was not within the territory in relation to which the High Court exercised jurisdiction, apart from other objections. This Court overruled the contention on behalf of the respondent which was (1) ; 835 based on the decision of the Privy Council in the Parlakimedi case (1) that the jurisdiction of the High Court to issue a writ is analogous to the jurisdiction of a court to grant a decree or order against persons outside the limits of its local jurisdiction, provided that the cause of action arose within those limits. The Constitution Bench in that case considered that the language of article 226 of the Constitution was "reasoriably plain" and that the exercise of the power conferred by that Article was subject to a two fold limitation, namely, (1) that the power is to be exercised "throughout the territories in relation to which it exercises jurisdiction" and (2) that the person or authority to whom the High Court is empowered to issue the writs must be "within those territories". In other words, the writ of the Court could not run beyond the territories subject to its jurisdiction and that the person or authority affected by the writ must be amenable to the Court 's jurisdiction, either by residence or location within those territories. It was held by the High Court in that case that the words "any Government" in article 226(1) of the Constitution clearly indi cated that the Allahabad High Court had jurisdiction to entertain the petition under article 226, not only against the State of Uttar Pradesh, but also against the Union Government for the issue of a writ in the nature of mandamus, directing the Government to forbear from giving effect to the order asking the petitioner to leave India. The two main questions which arise, therefore, are: (i) whether the Government of India as such can be said to have a location in a particular place, viz., New Delhi, irrespective of the fact that its authority extends over all the States and its officers function throughout India, and (ii) whether there is any scope for introducing the concept of cause of action as the basis of exercise of jurisdiction under article 226. We have no hesitation in holding that the said clause goes with the word "authority" and that its effect is that the authority against whom jurisdiction is conferred on the High Court to issue a writ or appropriate order may in certain cases include a Government. The position, therefore, is that under article 226 power is conferred on the High Court to issue to any person or authority or in a. given case to any Government, writs or orders there specified for enforcement of any of the rights conferred by Part III and for any other purpose. The main argument in this connection is that the Government of India is all pervasive and is functioning throughout the territory of India 'and therefore every High Court has power to issue a writ against it, as it must be presumed to be located within the territorial jurisdiction of all State High Courts. It is true that the Constitution has not provided that the seat of the Government, of India will be at New Delhi. That, however, does not mean ' that the Government of India as such has no seat where it is located. What we have to see, therefore, is whether the words of article 226 mean that the person or authority to whom a writ is to be issued has to be resident in or located within the territories of the High Court issuing the writ? The relevant words of article 226 are these "Every High Court shall have power to issue to any person or authority within those territories. So far as an authority is concerned, there can be no doubt that if its office is located therein it must be within the territory. Now it is clear that the jurisdiction conferred on the High Court by article 226 does not depend upon the residence or location of the person applying to it for relief; it depends only on the person or authority against whom a writ is sought being within those territories. It would, therefore, in our opinion be wrong to introduce in article 226 the concept of the place where the order 841 passed has effect in order to determine the jurisdiction of the High Court which can give relief under article 226. As we read the relevant words of article 226 (quoted above) there can be no doubt that the jurisdiction conferred by that Article on a High Court is with respect to the location or residence of the person or authority passing the order and there can be no question of introducing the concept of the place where the order is to have effect in order to determine which High Court can give relief under it. There can, therefore, be no escape from the conclusion that these words in article 226 refer not to the place where the Government may be functioning but only to the place where the person or authority is either resident or is located. as an authority (other than a Government) is concerned, it is within the territories if its office is located there. under article 226, namely, (i) the power is to be exercised 'throughout the territories in relation to which it exercises jurisdiction ', that is to say, the writs issued by the Court cannot run beyond the territories subject to its jurisdiction, and (ii) the person or authority to whom the High Court is empowered to issue such writs must be "within those territories" which clearly implies that they must be amenable to its jurisdiction either by residence or location within those territories, is the correct one. In that case the Privy Council held that even though the impugned order was passed by the Board of Revenue which was located in Madras, the High Court would have no jurisdiction to issue a writ quashing that order, as it had no jurisdiction to issue a writ beyond the limits of the city of Madras except in certain cases, and that particular matter was not within the exceptions. The question whether the concept of cause of action could be introduced in article 226 was also considered in Saka Venkata Subba Rao 's case ( 2 ) and was repelled in these words: "The rule that cause of action attracts jurisdiction in suits is based on statutory enactment and cannot apply to writs issuable under article 226 which makes no reference to any cause of action or where it arises but insists on the presence of the person or authority within the territories ' in relation to which the High Court exercises jurisdiction. " The concept of cause of action cannot in our opinion be introduced in article 226, for by doing so we shall be doing away with the express provision contained therein which requires that the person or authority to whom the writ is to be issued should be resident in or located within the territories over which the High Court has jurisdiction. In this case our reconsideration of the matter has confirmed the view that there is no place for the introduction of the concept of the place where the impugned order has effect or of the concept of functioning of a Government, apart from the location of its office concerned with the case, or even of the concept of the place where the cause of action arises in article 226 and that the language of that Article is plain enough to lead to the conclusion at which the two cases of this Court referred to above arrived. The learned Solicitor General broadly contends that this Court has construed the analogous provisons of article 226 of the Constitution and held that the writs under that Article do not run beyond the territories in relation to which a High Court exercises jurisdiction and that a High Court cannot issue a writ thereunder unless the person or authority against whom the writ is sought is physically resident or located within the territorial jurisdiction of that High Court; and that, therefore, on the same parity of reasoning, the High Court of Jammu & Kashmir cannot issue a writ to run beyond the territories of that State against the Union Government functioning through its officers in New Delhi. Learned counsel for the appellant contends, on the other hand, that neither article 32(2A) nor article 226 bears any such limited construction and that on a liberal and true construction of the said constitutional provisions it must be held that 'the High Court can issue a writ against any Government, including the Union Government, exercising the functions within the territories of a State, if it infringes the right of a person in that State. 851 presence of an authority within the jurisdiction of a High Court does not enable that Court to issue writs against the said authority in respect of an order made in a dispute between persons residing outside the territorial jurisdiction of the said High Court. The Constitution conferred for the first time a power on the High Court to issue a writ not only against the State Government but also the Union Government. The High Court 's jurisdiction is limited in the matter of issuing writs against the Union Government, for it cannot issue writs against it in respect of a cause of action beyond its territorial jurisdiction. In such a case also the High Court of the latter State cannot issue writs against that State Government as it is not appropriate to issue such writs, for the cause of action accrues ' within the former State. It is said that the Union Government is not within the territories of the State, for its headquarters are in Delhi. The constitutional situs of the Union Government is the entire territories of the Union and it is "within" the territories of India and,, therefore, within the territories of every State. On the same analogy, it may be held that the Union of India has no legal situs in a particular place and a writ petition can be filed against it in a place within the jurisdiction of the High Court wherein the cause of action accrues. This Court held that the power of the High Court to issue writs under article 226 of the Constitution was subject to the two fold limitation: (i) that such writs cannot run beyond the territories subject to its jurisdiction; and (ii) that the person or authority to whom the High, Court is empowered to issue writs must be amenable to the jurisdiction of the High Court either by residence or location within the territories subject to its jurisdiction. In that case the respondent was not the Union of India but an authority which could have and had its location in a place outside the Madras State. It was contended that the Punjab High Court had no jurisdiction to issue a writ under article 226 of the Constitution to the said Commission. This decision also (1) ; 860 deals with a case of statutory authority located in Delhi and it has no application to the case of the Union Government. To hold that the jurisdiction of this Court does not extend to the Union Government as it has its capital at Delhi and must be deemed to have its domicile at Delhi would be to place the Union Government not only in respect of the rights conceded in Part III but for any other purpose also beyond the jurisdiction of all State High Courts except the Punjab High Court. " The learned Chief Justice, who delivered the judgment on behalf of the Full Bench, applied the principle of the decision of this Court in Saka Venkata Rao 's(1) to the Union Government; and for the reasons already mentioned I am of opinion that the decision Is not applicable to the case of the Union Government. It is true that in a writ of certiorari the records would be called for; but, if once it is held that the Union Government is within the State within the meaning of article 226 of the Constitution, I do not think why the High Court in exercise (1) ; (2) A.I.R. The Union Government is within the State of Bombay in so far as it exercises its powers in that State and the High Court has got a constitutional power to issue writes to the Union Government and, therefore, their enforceability does not depend upon its officers residing in a particular place. and to the person or authority or Government within the said territories. (5) When by exercise of its powers the Union Government makes an order infringing the legal right or interest of a person residing within the territories in relation to which a particular High Court exercises jurisdiction, that High Court can issue a writ to the Union Government, for in law it must be deemed to be "within" that State also. (6) The High Court by issuing a writ against the Union Government is not travelling beyond its territorial jurisdiction, as the order is issued against the said Government "within" the State. (7) The fact that for the sake of convenience a particular officer of the said Government issuing an order stays outside the territorial limits of the High Court is not of any relevance, for it is the Union Government that will have to produce the record or carry out the order, as the case may be. A preliminary objection was raised on behalf of the respondents that Government of India is not a Government within the territorial limits of the jurisdiction of the Jammu and Kashmir High Court and so the application was not maintainable. The sole question in controversy in appeal is whether the High Court had jurisdiction, on the 'facts and circumstances of this case, to issue a writ to the Government of India under article 32(2A) of the Constitution. Article 32(2A) of the Constitution under which the appellant asked the High Court for relief is in the following words: "Without prejudice to the powers conferred by clauses (1) and (2), the High Court shall have power throughout the territories in relation to which it exercises jurisdiction to issue to any person or authority, including in appropriate cases, any Government within the territories, directions or orders or writs, 865 including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by this Part. " Except for the fact that "the High Court" in this Article means only the High Court of the State of Jammu & Kashmir, while article 226 of the Constitution refers to all other High Courts and the further fact that power granted by this Article is for the enforcement only of the rights conferred by Part III of the Constitution while article 226 gives power to the High Courts in the Union for the enforcement not only of the rights conferred by Part III but for any other purpose, the provisions of the two articles are exactly the same. Has the Government any location in a similar sense in the same way as a person has a location at any point of time by being present at a particular place or an authority other than the Government can be said to be located at the place where its office is situated ? If therefore a Government is to be held to be located at the place where the head of the State the President of India in the case of the Government of India and the Governor in the case of each State resides, it may well become impossible to speak of any particular place as the place where the Government is located throughout the year. This may not affect the question of any State Government being within the territories of the High Court of the State. For part of the year it may be, if the residence of the President be the criterion for ascertaining the location of the Government, that the Government of India will be within the territories of one High Court and for other parts of the year in another High Court. In Election Commission vs Saka Venkata Subba Rao (1) this Court held that before a writ under article 226 could issue to an authority, the authority must be located within the territories under the jurisdiction of the High Court. There however the Court was not concerned with the case of any Government, and had no occasion to consider whether a Government could be said to have a location. The result of the Government of India being within the territories of every High Court in India will, it is said, be that the Government of India would be subjected to writs and orders of every High Court in India. For, on a proper reading of the words "in appropriate cases", it seems to me that there will be, for every act or omission in respect of which relief can be claimed, only one High Court that can exercise jurisdiction. It has been suggested that the effect of these words is that in issuing writs against any Government the High Court has not got the same freedom as it has when issuing writs against any person or authority other than 871 Government and that when relief is asked against a Government the High Court has to take special care to see that writs are not issued indiscriminately but only in proper cases. It seems to me that the Constitution makers being conscious of the difficulties that would arise if all the High Courts in the country were given jurisdiction to issue writs against the Central Government on the ground that the Central Government was functioning within its territories wanted to give such jurisdiction only to that High Court where the act or omission in respect of which relief was sought had taken ' place. On behalf of the appellant it Was contended on the authority of the decision of the Privy Council in Ryots of Garabandho vs Zemindar of Parlakimedi (1) that all that is necessary to give, jurisdiction to a High Court to act under article 226 is that a part of the cause of action has arisen within the ';territories in relation to which it exercises jurisdiction. It is true that in that case the Court had to consider the question of jurisdiction in respect of an authority other than Government. For the reasons discussed above I have reached the conclusion that while the Government of India is within the territories of every High Court in India the only High Court which has jurisdiction to issue a writ or order or directions under article 226 or article 32 (2A) against it is the one within the territories under which the act or omission against which relief was sought took place. In the present case the act against which the relief has been sought was clearly performed at Delhi which is within the territories under the jurisdiction of the Punjab High Court and the Jammu and Kashmir High Court cannot therefore exercise its jurisdiction under article 226.
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The High Court of Jammu and Kashmir used previous court decisions, like *Election Commission, India vs Saka Venkata Subba Rao*, and *K. section Rashid and Son vs The Income Tax Investigation Commission*, to reject a request from the appellant (the person making the appeal). The appellant wanted the court to issue a writ (a court order) against the Union of India (the Indian government) and another party. Article 226 of the Constitution is similar. The court said it couldn't hear the case because the Union of India was outside of its area of authority, or jurisdiction. He believed he had the right to continue working until he turned 53 on November 20, 1961. The High Court's power under article 226 of the Constitution depends on where the person or group making the order is located, not where the person affected by the order lives. Where the order takes effect doesn't determine the court's power. This doesn't define the meaning of "any person or authority within these territories" in the article. A government is within those territories if its main office is there. It's not correct to say that the word "authority" in article 226 cannot include a government. That word must be read with the phrase "including in appropriate cases any Government" that follows it. The phrase doesn't give the High Courts the power to choose when to issue a writ to a government. It only means that if the authority the High Court has the power to issue a writ to happens to be a government, the High Court can issue a writ against that government. The court approved the previous decisions in *Election Commission, India vs Saka Venkata Subba Rao*, and *K. section Rashid and Son vs The Income tax Investigation Commission*. *The Lloyds Bank Limited vs The Lloyds Bank Indian Staff Association (Calcutta Branches)*, was mentioned. Proceedings under article 226 are not lawsuits covered by article 300 of the Constitution. There's no room for considering the "cause of action" (the reason for the lawsuit) because the article clearly states that the person or authority involved must be within the High Court's jurisdiction. The fact that this interpretation of article 226 may cause problems for people who live far from New Delhi, where the Indian government is located, and are affected by an order from the government, may be a reason to change the article. However, it doesn't change the article's clear meaning. Justice Subba Rao said that the goal of the Constitution's writers was to protect fundamental rights and empower the High Courts to enforce them. The High Courts have broad power under article 226 of the Constitution. The words "any Government" in the Article include the Union Government, which doesn't have a specific location and exercises its powers throughout India. Therefore, it must be considered to have a functional presence throughout India and within the territories of every state. As a result, when the Union Government violates the legal rights of someone living within a High Court's jurisdiction, the High Court has the power to issue a writ to that government. If that government or any of its officers disobeys the court's orders, even if they are physically outside the court's territory, the court can take action against them for contempt of court under the Contempt of Courts Act, 1952. *Election Commission, India vs Saka Venkata Subba Rao*, was held not applicable. *K. section Rashid and Son vs Income Tax Investigation Commission*, and *Ryots of Garabandho vs Zamindar of Parlakimedi*, were considered. *Maqbul Unnissa vs Union of India*, was approved. *, and *Radheshyam Makhanlal vs Union.of India*, were held not applicable. Therefore, in this case, the High Court had the power to issue the writ to the Union Government under article 32(2A) of the Constitution. Because the government functions throughout India, it must be considered to be within the territories under the jurisdiction of every High Court. Even though the Indian government is within the territories of every High Court, it won't have to deal with requests for relief against the same order in all the High Courts in India. The words "in appropriate cases" in that Article mean that only one High Court can have jurisdiction under the Article for each action or failure to act that someone is seeking relief for. Only the High Court that has jurisdiction over that place can grant relief under the Article. It's not correct to say that the "cause of action" determines jurisdiction under article 226. *Election Commission, India vs Saka Venkata Subba Rao*, was approved.
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uld be open to all the parties to place their claims, or further claims, as the case may be, in regard to the areas applied for by them on or before 30.4.1987, hacked by supporting reasons, before the State Government in the form of representations within four weeks from the date of this order; that the State Government would dispose of these applications within the statutory period failing which the parties will have their remedy under the statute by way of revision to the Central Government; that in arriving at its decisions, it will be open to the State Government to take into account the dis cussions and findings of the Rao Report in the light of this judgment; that the State Government should also keep in mind that no leases to any of the parties (other than OMC and IDCOL) could be granted unless either the areas so proposed to be leased out are deserved and thrown open to appellants from the public or unless the Central Government, after considering the recommendations of the State Government, for reasons to be recorded in writing considers a relaxation in favour of any of the parties necessary and justified. [96B E] & CIVIL APPELLATE JURISDICTION: Civil Miscellaneous Peti tion Nos. 16435 37 of 1987. IN Writ Petition No. 14116 of 1984. (Under Article 32 of the Constitution of India). WITH Special Leave Petition (C) Nos. 5163/88 with 8574 of 1989 read with I.A. No. 1/89. K. Parsaran, Dr. L.M. Singhvi, G. Ramaswamy, V.C. Maha jan, Harish N. Salve, Rajan Mahapatra, Ms. Lira Goswami, section Sukumaran, C. Mukhopadhyay, A. Subba Rao, A.D.N. Rao, P.K. Mehta, Ms. Mona Mehta, Girish Chandra, S.C. Patel, T. Sriku mar, p. 36 Parmeshwaran, Bishamber Lal Khanna and M.C. Bhandare for the appearing parties. S.C. Roy, Advocate General and A.K. Panda for the State of Orissa. The Judgment of the Court was delivered by RANGANATHAN, J. THE "DRAMATIS PERSONAE" All these matters are in the nature of off shoots of a basic controversy raised in W.P. No. 14116/84 which was "disposed of" by the orders of this Court dated 30.4.87 and 6.10.87. The parties are now seeking certain clarifications and directions in relation to the orders passed by this Court in the above writ petition. There have been several subsequent developments having an impact on the issue origi nally brought to this Court in the Writ Petition (W.P.) and, at present, the matter has become very complicated and involves the interests of a large number of parties. To give a cogent narration of the necessary facts, it is best to start with an enumeration of the various parties with whom we are concerned in the matters which are being disposed of by this judgment. The writ petition as well as the connected matters arise out of applications for grant of rights for the mining of chrome ore or Chromite in the State of Orissa. Chrome ore is one of the minerals specified in the First and Second Sched ules to, and not a "minor mineral" within the meaning of section 3(f) of, the Mines and Minerals (Development and Regulation) Act, 1957. The right to grant mining rights in respect of this mineral is vested in the State Government, subject, as we shall see later, on control by the Union of India. The State of Orissa (S.G.) and the Union of India (C.G.) are, therefore, the primary respondents in this litigation. On the other side are ranged a number o[ applicants for the mining rights we have referred to above. These are: (1) Indian Metals and Ferro Alloys Limited (IMFA); (2) Ferro Alloys Corporation Limited (FACOR); (3) Orissa Cements Limited (OCL); (4) Orissa Industries Limited (ORIND); 37 (5) Orissa Mining Corporation (OMC); (6) Industrial Development Corporation of Orissa Ltd. (IDCOL); and (7) Shri Mantosh Aikath. Of the above, the first four are companies in the private sector, the next two are public sector corporations owned substantially by the State of Orissa and the last, a private individual. THE PRESENT CONTROVERSY The principal question for decision before us is as to whether all or any of the various parties referred to above are entitled to obtain leases for the mining of chrome ore (hereinafter referred to as MLs) and, if so, to what extent. In particular, we are concerned with an area consisting of five blocks referred to in para 8 of the W.P. to which reference will be made later. The controversy primarily turns round applications made in respect of these blocks by IMFA, FACOR, AIKAT and OCL. ORIND also lays claim to mining rights in respect of a portion of these blocks. It has filed a special leave petition which is separately numbered as S.L.P. No. 8574 of 1989 and is directed against an order dated 7.4.89 passed by the Orissa Government rejecting an application made by the company on 5th July, 1971. FACOR has also preferred S.L.P. No. 5163 of 1988 from an order of the High Court of Orissa dated 11.11.1987 dismissing a writ petition filed against an order of rejection by the S.G. of an application made by it on 18.7.1977 for grant of a ML which was confirmed by the C.G. As already mentioned, this Court 'disposed ' of W.P. No. 14116/ 1984 by its order of 30.4.87. We shall have to con sider this and several other orders passed by this Court in the course of the hearing more closely but a brief reference may be made here to the resultant effect thereof. When this Court found that there were a large number of applications for MLs over varying extents of land in the areas in ques tion, this Court decided that the respective merits of the applications ' could not be gone into by this Court but that they should be considered by a responsible officer of the C.G. Accordingly, by the orders above referred to, this Court referred the entire controversy to the Secretary to the Government of India in the Ministry of Mines (Shri B.K. Rao, "Rao", for short) for a detailed consideration of the claims of the various parties. When the matter went to Rao, OMC and IDCOL also 38 put forward claims that the public sector units in the State of Orissa were entitled to the grant of mining rights in the State to the exclusion of all private parties inasmuch as there was a reservation in their favour by an appropriate notification issued by the State Government. The other parties objected to the intervention of the OMC and IDCOL at, what they alleged was, a belated stage of the proceed ings. However, on applications made by OMC and IDCOL, this Court directed that the claims of these two public sector undertakings would also be examined by Rao. Eventually Rao, after considering the claims of all parties, reduced his conclusions in the form of a report dated 1st February, 1988. in his report, Rao accepted the claim of reservation made on behalf of the OMC and the IDCOL. Nevertheless it appears that, bearing in mind certain interim orders passed by this Court in the various applications made to it during the pendency of the writ petitions, Rao came to the conclu sion that only three of the parties other than the two public sector undertakings should be granted leases to the extent mentioned by him. Broadly speaking, Rao accepted partially the claims of IMFA, FACOR and AIKATH. He rejected the claims made by ORIND and OCL. He accepted the claim of the public sector undertakings but he recommended for them leases in respect of only the balance of the lands left, after fulfilling the claims of the others which he had accepted. Applications have now been filed before us which, inter alia, seek directions on Rao 's report. There has been a good deal of contest before us as to the precise legal character of the report submitted by Rao. One suggestion is that Rao was nothing more than a commissioner appointed by the Court to examine the claims of the various parties and to submit a detailed report thereon. It is submitted that this report having been received we should pass such orders thereon as we may consider appropriate. A second approach suggested is that the Rao report should be taken to be the decision of the Central Government, which it is now for the State Gov ernment to implement, leaving it open to any aggrieved party to take such appropriate proceedings as may be available to them in law for successfully challenging the findings reached by Rao. A third line of argument which has been addressed before us, particularly by the State of Orissa, the OMC and the IDCOL, is that Dr. Rao 's report suffers from a fundamental defect in that he has completely ignored the reservation made by the State Government in favour of the public sector. According to them, Rao was not right in suggesting the grant of leases to any of the other parties and should have simply left it to the State to exploit the mines in public sector, including inter alia, the OMC and IDCOL. A fourth 39 stance taken up by the State Government may also be men tioned here, The learned Advocate General for the State made a statement before us that, without prejudice to a conten tion that the Rao report suffered from the fundamental defect referred to above, the State Government was prepared to abide by the findings of Rao provided this Court decides to accept the same in toto without any modifications. He clarified that this is not because they think the Rao report is ' correct. On the other hand they have got several objec tions to the validity and correctness of Dr. Rao 's report. However, having regard to the interim orders passed by this Court and having regard to the fact that what Rao has done is virtually to implement various orders passed by this Court during the pendency of the writ petition, the State Government, without prejudice to its contentions in relation to the Rao report, is prepared to abide by it. However, the learned Advocate General said, the State Government wish to make it clear that if, for some reason, this Court does not accept the Rao Report in toto, then the State Government would like to put forward their contentions against the report of Dr. Rao. In that event the State Government should be given the liberty to attack Dr. Rao 's report and urge all contentions that are open to it in respect of the grant of mining leases relating to chrome ore in the State of Orissa. The above stance understandably, is not acceptable to OCL and ORIND or, indeed, even to OMC and IDCOL who have got nothing at the hands of Rao. IMFA and FACOR are substantial ly satisfied with the report given by Dr. Rao (except for certain minor contentions which they are prepared to give up for the present, with liberty to make representations to the State Government) but they also wish to make it clear that, in case the Rao report is not to be accepted by this Court, they would also like to put forward all their contentions so that their case may not go by default. In that event, in particular, they would like to attack the reservation plea urged by the S.G., OMC and IDCOL both as belated as well as on merits. AIKATH 's submission is that he is a small opera tor who discovered the mines and that Rao 's recommendation for the grant of a ML in his favour in respect of a small extent of land should not be disturbed by us. We have only broadly set out here the attitudes of the various parties to the Rao report and shall discuss their contentions later in detail. In the light of these various contentions, we have to determine the legal character of the Rao report and decide whether the findings of Rao are to be given effect to in toro or are to be modified and, if so, in what respects. Before dealing with these questions and even setting out the details of the claims of the various parties and the material they placed 40 before Rao to substantiate their claims, it will be useful to survey the relevant statutory provisions relating to the grant of mineral concessions of the nature we are concerned with here. This we shall at once proceed to do. THE RELEVANT STATUTORY PROVISIONS (a) Constitution: Article 297 of the Constitution of India unequivocally declares that 'all lands, minerals and other things of value underlying the ocean . . shall vest in the Union and be held for the purposes of the Union '. Arti cle 298 defines the extent of the executive power of the Union and of each State thus: "298. Power to carry on trade, etc. The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose: Provided that (a) the said executive power of the Union shall, in so far as such trade or business or such purpose is not one with respect to which Parliament may make laws, be subject in each State to legislation by the State; and (b) the said executive power of each State shall, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws, be subject to legislation by Parliament." The Union and the States have both been vested with powers to legislate in respect of mining rights under the Seventh Schedule to the Constitution. The respective rights of the Union and the States in this regard are contained in the following entries in the said Schedule: List 1, Entry 54 Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in public interest. 41 List H, Entry 23 Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and develop ment under the control of the Union. (b) Act: In exercise of the above powers, the Union legisla ture has enacted the Mines and Minerals (Development & Regulation) Act, 1957 (hereinafter referred to as 'the Act '). The Act has been substantially amended and several drastic changes introduced in 1986 with a view, inter alia, to prevent unscientific mining, remove bottle necks and promote speedy development of mineral based industries. We are concerned only with the provisions relating to the grant of mining leases and we may proceed to consider the same. section 2 of the Act contains the declaration referred to in Entry 54 referred to above. It reads: "2. Declaration as to expediency of Union control It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided. " With this declaration, the Act proceeds to circumscribe the extent to which the regulation of mining rights in the States should be subject to the control of the Union. We may now proceed to refer to the relevant provisions of the Act in relation to minerals like "chrome ore", which may be described, for convenience, as "major minerals". section 4 of the Act provides as follows: "No person shall undertake any prospecting or mining opera tion in any area except under and in accordance with the terms and conditions of a prospecting licence or as the case may be, a mining lease granted under this Act and the rules made thereunder. (2) No prospecting licence or mining lease shall be granted otherwise than in accordance with the provisions of this Act and the rules made thereunder. " Sections 10 and 11 outline the procedure for obtaining a prospecting 42 licence (PL) or a mining lease (ML). They read thus: "10. Application for prospecting licences or mining leases: (1) An application for a prospecting licence or a mining lease in respect of any land in which the minerals vest in the Government shall be made to the State Government con cerned in the prescribed form and shall be accompanied by the prescribed fee. (2) Where an application is received under sub section 1 there shall be sent to applicant an acknowledgement of its form. (3) On receipt of an application under this section, the State Government may, having regard to the provisions of this Act and any rules made thereunder, grant or refuse to grant the licence or lease. Preferential right of certain person: (1)Where a pros pecting licence has been granted in respect of any land, the licensee shall have a preferential right for obtaining the mining lease in respect of the said land over any other per son: XXX XXX XXX (2) Subject to the provisions of sub section (1), where two or more persons have applied for a prospecting licence or a mining lease in respect of the same land, the applicant whose application was received earlier shall have a prefer ential right for the grant of the licence or lease as the case may be over an applicant whose application was received later: Provided that where any such applications are received on the same day, the State Government, after taking into consideration the matters specified in subsection (3), may grant the prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit. (3) The matters referred to in sub section (2) are the following: 43 (a) any special knowledge of, on experience in, prospecting operations or mining operations as the case may be possessed by the applicant; (b) the financial resources of the applicant; (c) the nature and quality of the technical staff employed or to be employed by the applicant; (d) such other matters as may be prescribed. (4) Notwithstanding anything contained in sub section (2) but subject to the provisions of sub section (1), the State Government may for any special reasons to be recorded and with the previous approval of the Central Government. grant a prospecting licence or a mining lease to an applicant whose application was received later in preference to an applicant whose application was received earlier. " We may next to refer to section 17A which has been inserted in the Act by the 1986 amendment. It reads thus: section 17 A: Reservation of area for purposes of conservation (1) The Central Government, with a view to conserving any mineral and after consultation with the State Government may reserve any area not already held under any prospecting licence or mining lease and, where it proposes to do so, it shall, by notification in the Official Gazette. specify the boundaries of such area and the mineral or minerals in respect of which such area will be reserved. (2) The State Government may, with the approval of the Central Government, reserve any area not already held under any prospecting licence or mining lease, for undertaking prospecting or mining operations through a Government compa ny or corporation owned or controlled by it or by the Cen tral Government and where it proposes to do so, it shall by notification in the Official Gazette, specify the boundaries of such area and the mineral or minerals in respect of which such areas will be reserved. (3) Where in exercise of the powers conferred by subsection (2) the State Government undertakes prospecting 44 or mining operations in any area in which the minerals vest in a private person, it shall be liable to pay prospecting fee, royalty, surface rent or dead rent, as the case may be, from time to time at the same rate at which it would have been payable under this Act if such prospecting or mining operations had been undertaken by a private person under prospecting licence or mining lease. section 19 of the Act declares that any prospecting licence or mining lease granted, renewed or acquired in contravention of the provisions of this Act or any rules or orders made thereunder shall be void and of no effect. section 30 confers revisional powers on the C.G. It reads: "The Central Government may, of its own motion or on appli cation made within the prescribed time by an aggrieved party, revise any order made by the State Government or other authority in exercise of the powers conferred on it by or under this Act. " These are the provisions of the Act relevant for our pur poses. (c) Rules: Turning now to the rules framed under the Act which also have a material bearing on the present issues, they are contained in Chapter IV of the Mineral Concessions Rules, 1960 which deals with the grant of mining leases in respect of land the minerals in which vest the Government. Rule 22 outlines the procedure in respect of applications for MLs. It requires the application to be made in a pre scribed form and accompanied by a fee of Rs.500 and certain documents and particulars. Rules 24 and 26 ' prescribe the procedure for disposal of such applications. Sub rules (1) and (3) of rule 24 are relevant for our present purposes and are extracted below: "24. Disposal of application for mining lease: (1) An appli cation for the grant of a mining lease shall be disposed within twelve months from the date of its receipt. XXX XXX XXX (3) If any application is not disposed of within the period specified in sub rule (1), it shall be deemed to have been refused. XXX XXX XXX 45 Under rule 26, the S.G. may, after giving an opportunity of being heard and for reasons to be recorded in writing and communicated to the applicant, refuse to grant or renew a mining lease over the whole or part of the area applied for. Rule 31 prescribes that where an order for grant of a lease is made, a lease deed has to be executed within a period of six months of the order or such further period as the S.G. may allow in this behalf. Failure to do this, if attributable to any default on the part of the appellant, could entail the revocation of the lease. The lease shall commence from the date of the lease deed. We next turn to rule 54 which deals with applications for revision to the C.G. It reads, in so far as is relevant for our purposes: "54. Application for revision: (1) Any person aggrieved by any order made by the State Government or other authority in exercise of the powers conferred on it by the Act or these rules may, within three months of the date of communication of the order to him, apply to the Central Government in triplicate in Form N, for revision of the order. The appli cation should be accompanied by a treasury receipt showing that a fee or ' Rs.500 has been paid into a Government treas ury or in any branch of the State Bank of India doing the treasury business to the credit of Central Government under the head of account '128 Mines and Minerals Mines Depart ment Minerals Concession Fees and Royalty ': Provided that any such application may be entertained after the said period of three months, if the applicant satisfies the Central Government that he had sufficient cause for not making the application within time. xxx xxx xxx (4) On receipt of the application and the copies thereof, the Central Government shall send a copy of the application to each of the parties impleaded under sub rule (2), speci fying a date on or before ' which he may make his representa tions, if any, against the revision application. Explanation: For the purposes of this rule, where a State 46 Government has failed to dispose of an application for the grant of renewal of a prospecting licence or a mining lease within the period specified in respect thereof in these rules, the State Government shall be deemed to have made an order refusing the grant or renewal of such licence or lease on the date on which such period expires. Rule 55 provides that the C.G., after getting the comments of the S.G. and other parties on the application and after giving each of them an opportunity to put forward their comments on the stand taken by the others, "may confirm, modify or set aside the order (of the S.G.) or pass such other order in relation thereto" as it "may deem just and proper". Three more rules need to be set out which deal with the topic of reservation. Rules 58, 59 and 60, before 1980, were in the following terms: "58. Availability of areas for regrant to be notified (1) No area which was previously held or which is being held under prospecting licence or a mining lease so the case may be or in respect of which the order granting licence or lease has been revoked under sub rule (1) of the rule 15 or sub rule (1) of rule 31, shall be available for grant un less (a) an entry to the effect is made in the register referred to in sub rule (2) of rule 21 or sub rule (2) of rule 40, as the case may be, in ink; and (b) the date from which the area shall be available for grant is notified in the Official Gazette at least thirty days in advance. (2) The Central Government may, for reasons to be recorded in writing, relax the provision of sub rule (1) in any special case. Availability of certain areas for grant to be notified In the case of any land which is otherwise avail able for the grant of a prospecting licencor a mining lease but in respect of which the State Government has refused to grant a prospecting licence or a mining lease on the ground that the land should be reserved for any purpose, the State Government, shall, as soon as such land becomes again avail able for the grant of prospecting licence or mining lease, grant the licence or lease after following the procedure laid down in rule 58. 47 60. Premature applications Applications for the grant of a prospecting licence or a mining lease in respect of the areas in which (a) no notification has been issued under rule58 or rule59; or (b) if any such notification has been issued the period specified in the notification has not expired. Shall be deemed to be premature and shall not be entertained and the fee, if any, paid in respect of any such application shall be refunded." G.S.R. 146 dated 16th January, 1980 substantially amended these rules. After this amendment, Rule 58 reads: "58. Reservation of areas for exploitation in the public sector, etc. : The State Government may, by notification in the Official Gazette, reserve any area for exploitation by the Government, a Corporation established by any Central, State or Provincial Act or a Government company within the meaning of Section 6 17 of the ( 1 of 1956)". Rule 59 is relevant only in part. It reads: "59. Availability of area for regrant to be notified: (1) No area XXX XXX XXX (e) which has been [reserved by the State Government] Sub stituted for the words "reserved by the Government" by G.S.R. 86(E) w.e.f. 10.2.87 under Rule 58, [or u/s 17A) These words were inserted by G.S.R. 146(E) dated 16.1.80 w.e.f. 2.2.80 shall be available for grant unless (i) an entry to the effect that the area is available for grant is made in the register referred to in sub rule (2) of Rule 21 or sub rule (2) of Rule 40 as the case may be, in ink; and (ii) the availability of the area for grant is notified in the Official Gazette and specifying a date (being a date not 48 earlier than thirty days from the date of the publication of such notification in the Official Gazette) from which such area shall be available for grant: XXX XXX XXX (2) The Central Government may, for reasons to be recorded in writing relax the provisions of sub rule (1) in any special case. Rule 60 deals with "premature applications". It reads: 60. Premature applications: Applications for the grant of a prospecting licence or mining lease in respect of areas whose availability for grant is required to be notified under Rule 59 shall if, (a) no notification has been issued under that rule: or (b) where any such notification has been issued, the period specified in the notification has not expired, shall be deemed to be premature and shall not be entertained, and the application fee thereon, if any paid, shall be refunded. The above are the relevant rules governing application for, and grant of, leases, revision petitions and reservation of areas in the light of which the issues in the present case have to be considered. We shall now proceed to give the details of the various applications for MLs preferred by the parties before us. ML APPLICATIONS OF THE PARTIES Though it was the IMFA which came to this Court with a writ petition, there were a number of other applications for grant of MLs pending before the State Government. The broad details of these applications are set out below: 1. IMFA (a) Previous Histor),: IMFA made five applications for grant of mining lease in respect of five blocks of land as per the following details (which are hereinafter referred to as items 1 to 5 respectively): 49 Area Date of Area Village & District No. Applica applied for tion 1. 1.7.1981 634.359 Ghotarangia and other villages 8.7.1981 hects. (Dhankanal Distt. ) 2. 23.6.1981 142.000 Ostapal Village, SukhindaTehsil hects. (Cuttack Distt. ) 3. 6.7.1981 108.860 Kamarada and padar villages hects. (Cuttack Distt. ) 4. 9.9.1981 37.008 Ostapal and Gurjang villages, Sukhinda 10.9.1981 hects. Tehsil (Cuttack Distt.) 5. 24.11. 1981 147.693 Ostapal and Gurjang villages, Sukhinda hects. Tehsil (Cuttack Distt. ) The S.G. did not dispose of these applications within the prescribed period of twelve months. They were, there fore, deemed to have been rejected under rule 24(3). IMFA applied to the C.G. for the revision of these deemed rejec tion orders of the S.G. The C.G. set aside the deemed rejec tion orders and directed the S.G. to dispose of the matter on merits within a period of 200 days. However, the S.G. did not take any action on the applications of the IMFA within the period of 200 days. IMFA made a representation to the Central Government but the Central Government gave no relief on the ground that it had become functus officio and had no jurisdiction to issue further directions to the State Gov ernment. Thereupon IMFA filed Writ Petition No.14116 of 1984 in this Court. IMFA alleged, that while its applications were kept pending, the S.G. had granted leases in favour of FACOR and thus discriminated against IMFA. It prayed for the issue of a writ of mandamus to the S.G. to grant leases to IMFA also. (b) Subsequent developments: This Court, on 27.9.84 passed an order (extracted later) directing the S.G. to consider IMFA 's applications by 23.10.84 and restraining it from granting MLS to any one else in the meanwhile. FACOR moved for a recall of this order. The Court passed an inter im order on 18.10.84 holding over the implementation of the earlier order in regard to grant of lease to IMFA and call ing for the records. However, it appears, on 21.11.84, the S.G. had agreed to grant a ML in favour of AIKATH in respect of 140 acres out of 147.69 hectares covered by item No. 5 above. On 26.12.84, the S.G. filed a counter affidavit pointing out: (a) that there was a reservation of the 50 areas for the public sector and (b) that except item 1, the areas covered by the other applications overlapped areas covered by earlier applications of OMC IDCOL and others. Nevertheless, it was stated, on due consideration in the light of the observations of this Court, the S.G. had tenta tively decided to grant a ML to IMFA in respect of 634.359 hectares in item 1. On 27.11.84, IMFA stated that it was not interested in item 1 which, according to it contained only low grade ore and was not commercially viable unless IMFA was given, at the same time, areas bearing high quality ore which could be blended with the low grade ore. It stated that it was willing to accept M.L. in respect of items 2, 3 and either item 4 or half of item 5. On 2.1.85. the S.G. passed formal orders rejecting IMFA 's application in respect of items 2 to 5 of the list. This was on the ground, so far as item 2 was concerned, that the area fell within the reserved areas, that there were prior applications of OMC & FACOR in respect of the areas and that the S.G. had already agreed to lease out item 1 to IMFA. On 15.2.85, the S.G. informed IMFA that, on reconsideration it had recommended grant of MLs to it in respect of 139.37 hectares (out of 142 hectares of item 2) and the entire area of item 3. On 18.2.85, the S.G. submitted in court that it had already agreed to grant 140 acres in item 5 to AIKATH and the rest to FACOR as per compromises in the writ proceedings pending in the Orissa High Court. The compromise with AIKATH had been placed before. and accepted by the Orissa High Court on 4.12.84 but the final terms and conditions were proposed on 18.2.85 and, accepted on 19.2.85. In respect of FACOR also, the compromise agreeing to lease to it 596 acres (out of which 180 acres were covered by item 5 of IMFA 's applica tion) had been filed in the Orissa High Court only on 18.2.85. The validity of these allotments was challenged by IMFA before this Court. Without going into the merits or ' this controversy, this Court on 28.2.85. passed an order directing the S.G. to grant a lease to IMFA in respect of item 3 in full and 26.62 hectares in item 4. (This order was objected to by FACOR and on 8.5.85 the Court passed an order directing the grant of a lease to FACOR over 180 acres in item 5). IMFA says that it has not been given physical possession of the areas granted to it except to an extent of a small area of 2 hectares. The net result is that out of the five items applied for by IMFA: (i) item 1 has been given but surrendered, (ii) the S.G. is agreeable to give 139.37 acres out of 142 acres of item 2; (iii) this Court has directed the grant to IMFA of item 3; (iv) in item 4, this Court has directed the grant to IMFA of 26.62 out of 37.008 hectares of item 4: and (v) In item 5, the S.G. has agreed to lease our 140 acres to AIKATH and 180 acres to FACOR. FACOR (a)Earlier History: FACOR 'S applications for mining leases for chrome ore were made on various dates between 1974 and 1978. Relevant particulars in respect of the said applications are set out in the following table: Sl. Village Extent Date of Date of final Particulars No. appli final order of of the pro cation disposal of ceedings in revision app High Court 1. Ostapal 142,000 8.7.74 29/76 12.3.76 OJC 67 of 79 Distt. hects. 315/78 3.7.78 12.1.79 Cuttack or 359 acres 2. Chingudi 749.32 8.7.74 21/76 21.4.76 OJC 66 of 79 pal Distt. hects. 278/78 30.5.78 12.1.79 3. Samole 248.447 6.8.74 182/77 29.8.77 OJC 72 of 79 Distt. hects. 15.1.79 Dhankanal (618 acres) 4. Bangur 40.47 22.6.77 432/78 17.8.78 OJC 1309 of Distt. hects. 80 21.1.80 Keonjhar (100 acres) 5. Ostapal & 312.42 7.6.78 528/79 21.9.79 OJC 2036 of Gurjang hects. 579/80 26.9.80 31.8.81 Distt. Cuttack 6. Kamarda 108 6.10.78 17/80 1.1.80 OJC 1028 of Distt. hects. 513/82 29.10.82 11.5.83 All the six applications made by FACOR were rejected by the S.G. Against the revision orders of the C.G. affirming the orders of the S.G. FACOR filed writ petitions in the High Court of Orissa and these writ petitions are pending dispos al there [except the one re: item 4 which was dismissed by the High Court on 11.11.87 and is the subject matter of S.L.P. (C) 5163 of 1988 before us. In this sense, the appli cations of FACOR were alive and awaiting disposal when IMFA filed W. P. 14 116 of 1984 in this Court. 52 (b) Subsequent developments: As we shall mention later. FACOR had obtained leases over 486 acres at Barua in Keonjhar district and 280 acres at Kathpal over Dhankanal district in 1971 72. The above applications were rejected and the writ petitions filed against the rejections were pending in the Orissa High Court when the writ petition was filed. It has been stated that the S.G. had entered into a compromise with FACOR on 18.2.85 agreeing to grant a mining lease in its favour in respect of 596 acres out of 772 acres applied under item No. 5 above on condition that FACOR gave up its claim in respect of the balance of the area of 702 acres as well as the claim made in the other five applica tions. It may be added that on 18.5.85 this Court passed an interim order directing that FACOR be given a lease in respect of 180 acres out of the 596 acres covered by the compromise dated 18.2.85. A lease was accordingly executed by the S.G. in favour of FACOR on 16.8.85 after obtaining the approval of the C.G. to the lease under section 5(2) of the Act (before its amendment in 1986) as well as to the relaxa tion under rule 59(1) of the Rules. The net result, there fore. is that, though FACOR made six applications, it had agreed to give up all of them in lieu of a ML for 596 acres out of item 5 out of which a lease in respect of 180 acres has already been obtained and is being exploited by FACOR. MANTOSH AIKATH (a) Previous History: This gentleman had obtained a lease from the Raja Sri Pitamber Bhupati Harichandan Mohapa tra, the proprietor of Sukhinda Estate on 17.10.52 (regis tered on 28.10.52) for a period of 20 years in respect of 640 acres situated in village Gurjang in Cuttack District. On 12.1.53 the State Government (in whom the estate of the former Zamindar had come to vest w.e.f. 27.11.52 under the Orissa Estates Abolition Act) issued a notice terminating the lease. Mr. AIKATH made representations against the termination. It is said that, ultimately, a compromise was reached between him and the S.G. whereunder it was agreed that a lease in respect of half of the area covered by the original lease deed on the southern side could be retained by him. Thereupon, it is said, he filed a formal application on 25.5.54 for a mining lease in respect of 320 acres. But this was rejected on the ground that the S.G. preferred to exploit the area in public sector. A revision petition to the C.G. was rejected on 9.2.72. Mr. AIKATH filed a writ petition in the High Court of Orissa impleading the C.G. and the S.G. as parties. The Orissa High Court on 18.4.1984 set aside the order of the C.G. and directed the C.G. to dispose of Mr. 53 AIKATH 'S application afresh. The C.G., in turn, set aside the order of the S.G. on 3.8.78 and directed the S.G. to decide the application of the party afresh, after taking into account the plea of the party that the area could not be reserved for exploitation in the public sector. However, no orders were passed by the S.G. The petitioner, therefore. again filed a revision application before the C.G. which passed orders on 12.12.79 directing the State Government to pass a speaking order and dispose of the application on merits. The S.G. by an order dated 17.1.80, rejected the application. Mr. AIKATH filed a writ petition in the High Court and this was pending when W.P. 14116/84 was filed here by IMFA. (b) Subsequent Development: On 21.11.84, AIKATH and 'the S.G. entered into a compromise under which the former was to be granted a lease in respect of 140 acres situated on the eastern side of the 320 acres referred to earlier. This compromise was accepted by the High Court of Orissa on 4.12.84. Thereafter the S.G. offered a lease of 140 acres on certain terms and conditions and these were accepted by AIKATH on 19.2.85. This was reported by the S.G. to this Court but no orders were passed by this Court, and no ML has been executed, in favour of AIKATH. It may be mentioned that one of the areas applied for by IMFA on 24.11.81 covered the area which. according to AIKATH, had been in his possession all along. ORISSA INDUSTRIES LIMITED (ORIND) (a) Previous History. ' ORIND made an application for mining lease on 5.7.71. It applied for mining leases over an area of 1129.25 hectares in the villages of Telangi, Patna. Ostapal, and Gurjang in District Cuttack. This application was rejected by the S.G. on 23.10.73 on the ground that the area was reserved for exploitation in the public sector. It is stated that subsequently on a representation made by ORIND on 15.12.73, the S.G. recommended to the C.G. that a lease in favour of ORIND may be granted in respect of 749.82 out of 1129.25 hectares applied for. However. this recommen dation was withdrawn (as will be discussed later). The C.G., by an order dated 23.2.77, directed the S.G. to pass a speaking order on the application but the S.G. did not comply with this direction. The company, therefore, filed writ petition. O.J.C. 1585/198 1 in the High Court of Oris sa. This writ petition was pending when W.P. 14116/84 was filed here. It may be here mentioned that one of the contentions of ORIND 54 before us is that it had also applied on 5.7.71 lot a lease of mining rights in respect of 446.38 hectares in village Sukrangi in Distt. Cuttack. That had been rejected but a revision petition had been filed before the C.G. against the said rejection. The S.G. it is said. while Lending its comments on 26.2.74 to the C.G. on the ORIND 's revision petition. had reiterated that their revision petition may be rejected as S.G. had already decided to grant ORIND a lease of 749.82 out of the area of 1129.25 hectares applied for by it. (b) Subsequent developments: It is stated that the S.G. has subsequently withdrawn its recommendations for the area of hectares. The S.G. rejected ORIND 's application for 1129.25 hectares by an order dated 7.4.89. The contents of the order are discussed later It concludes: In view of the above facts and pendency of Writ Petition No. 14116 of 1984 before the Hon 'ble Supreme Court of India. it is not possible for the S.G. at this stage to pass any order on the mining lease application dated 5.7. 1971 of ORIND and. accordingly the said application is disposed of. ORIND has preferred S.L.P. No. 8574/89 from this order of the S.G. So far as the other application of ORIND is con cerned. no information has been given to us as to what orders. if any. the C.G. has passed on ORIND 'S revision or as to what steps the applicant has taken subsequently. ORISSA CEMENT LIMITED (OCL) (a) Previous History: The company 's grievance is that it has been filing applications for mining rights in respect of chrome ore right from the year 1961 but none of the applications have been considered by the State Government on the plea that the areas applied for had been reserved for exploitation in the public sector. Further applications were made by OCL in respect of following areas: 55 SI. Date Area Date of Orders Orders Remarks No. of and Revis passed passed Appeal Village sion of by the by the appli State Central cation, Govt. , if any. if any. 1. 2. 3. 11.5.70 354,505 3.5.71 5.2.71 3.6.72 This area Hectare, The area was free, Gurjang is reser previously & Telan ved by held by gi, P.S. the State Aikath for Sukinda Govt. for 320 Acrs. Distt. exploita The State Cuttack tion in Govt. has public now gran sector. ted i.e. in the year 1985 as per compromise petition filed be fore High Court Ori ssa. M/s. Aikath 140 Acs. Factor 180 Acs. Same application filed again 2. 8.5.74 354,505 Deemed 23,277 Rejected Although Hectares Rejec M/s. Facor 's Gurjang tion application & on 7.6.78 Ostapal was much Distt. after our Cuttack application they were granted M/L by S.G.vide No.6844 dated 24.5.85 In fairness S/G should have given us this area. As per deci sion taken by them earlier, 50% of the area should be released to us keep 56 ing in view the principles of natural justice, as recommended by State Govt. vide in their letter No17410 dated 26.2.74, to centre for 142 Acrs. to Orissa Cement. 15.5.70 226.22 1.5.72 10.2.71 1.6.72 Although Ferro Hecta on the Alloys Corpo res same ration have no Boula plea, unit in Orissa & Soso reser but have a Distt. ved manufacturing Keonjher for state unitin Andhra exploita the Central tion Govt. passed orders as un der in 1971 72 over an area of 187.03 hects. against strong opposi tion by State Govt. : "Whereas the Central Govt. in exercise of the powers conferred by Rule 58(2) of the N.C. Rules 1960 relaxed the provision of rule 58(1) as a special case for the reason that the appli cants having establis 57 hed a big fac tory for manu facturing Fer ro Chrome ore, provision has to be made for procurement of raw materials for the proper running of the factory". Based on the said decision a fresh revi sion petition was filed on 6.4.73 but the C.G. it rejec ted on30.11.74 although the S.G.recommen ded: vide letter No.17410 NG dated26.2.1974 for approval for grant of 142 Acrs. to O.C.L. Same application filed again 4. 10.4.74 226.22 No 6.6.75 29.8.75 The Please see re Hectares Orders Central marks in Sl(3) Boula were Govt. set 142 Ac. could Keonjhar passed aside the have been gra as re the deemed nted. This quired rejection application by sta and reman was filed pur tute. ded the suant to the matter back Notification to the S.G. issued by the for consi S.G. throwing deration. open for re grant 58 The State vide No.38/73 Govt. on dated 5.3.74. 25.9.1975 The State Govt rejected latter changed the appln. their decision on the plea for working in that the public sector, area over contrary to laps other the decision lease area. pronounced by Our earlier Supreme Court appln. as referred to 15.3.70 in AIR. 1976 was rejec Delhi. ted but was granted to Keeping in some other view principle party i.e. of justice, FerroAlloys 50% of this Corporation area should be for a redu released to ced area. Orissa Cement. 11.5.70 388.498 22.10.70 23.10.70 7.4.72 C.G. rejected Hectares as above the applica Shrhranqi tion on the & plea they did Tailangi, not like to P.S. interfere with Sukinda. the decision District taken by the Cuttack. S.G. for keep ing the area reserved for exploitation in public sector. Same application filed again 6. 8.5.74 388.498 Deemed 23.2.77 3.6.77 The M/s Sirajudin Hectares rej delay was was holding Sukrangi ection explained the area of & but rejec 100 Ac. under Tailangi ted becau M.L. for 20 Distt. se of delay years from cuttack. 8.8.85 which expired in 1975. 59 Renewal has been refused, Sirajudin being a trader (However M/s Sirajudin & Co., has gone in writ to Orissa High Court, which is still pen ding) OMC has been granted lease over 382.709 Hects. 8.5.74 7 Sq. Deemed 6.6.75 8.6.76 The This could miles rejec Central Govt.have been Kala tion set aside granted to us ran the deemed but M/s. OMS is gista rejection working which & Ka and reman can be taken liapani ded to S.G. out from them Distt. The S.G. to grant the Cuttack. rejected our property to us appln. but OMC was just granted a permitted to free area work on ad hoc of 3 sq.km. basis. to OMC, who are holding a lease from more than 70 sq Kms. approx. and hardly working 15/20 sq. in different ML areas granted to M/s. OMC. 23.10.82 20.072 Dee 14.11.83 The C.G. set hec med aside the tares re order of area jec tion 60 Bangura deemed rejec etc. tion on Distt. 23.12.83. No Keonjhar final order has been passed by the S.G. 9. 23.10.82 549,1098 Dee 14.11.83 29.12.83 as This has Hectares med above been gran Kalia rej ted to M/s. pani & ec OMC. Gurjang tion etc. 23.10.82 365.467 Dee 14.11.82 19.12.83 This area Hecta med as above pertains res re to Sl.1&2 Ostopal jec therefore & Gur tion the jang, remarks etc. stated Distt. therein Cuttack. stand. 23.10.82 16.087 Dee 14.11.83 19.12.83 As The S.G. Hecta med above. rejected res rej it on Bangu ec 27 6 1985 ra, tion. on the P.S. ground Soso that the Distt. area over Keonjhar laps in full with the area previously held by Sirajudin & Co. Re newal was refused by StateGovt. 21.1.83 29.477 Deemed 28.3.84 Against Hectares rejec The C.G. this rejec of 72.64 tion remanded tion we Acs. the mat filed re Sajana ter back vision on garh P.S. to 2.9.85 before C.G 61 Nilgiri S.G. Therefore it Distt. is free. It Balascre. No should be orders granted to us have On similar been grounds the passed. S.G. has granted. 28.6.85 558.74 No orders acres or passed by 226.14 S.G. des hectares pite C.G. 's Asurbandha orders on Distt. revision kanal 14. 27.1.86 356.70 No orders hectares passed by in Namla S.G. Revi bhanga sion peti in Karma tion filed khya nagar before C.G. Distt. on 18.3.87 Dhankanal The previous history as well as the latter developments are indicated in the above columns. It will be seen, there from that the first seven and the eleventh applications of OCL were duly disposed of before the present litigation started and the party 's grievance is that, in respect of some of them, leases have been granted to others like IMFA, FACOR, AIKATH & OMC. The others are pending before the S.G. after a remand by the C.G. or, in revision, before the C.G. The thirteenth and fourteenth applications are pending before the S.G. and C.G. respectively. ORISSA MINING CORPORATION LIMITED (OMC) OMC is a State Government undertaking. It submitted an application for an area of 725.21 hectares in village Chin gripal on 30.6.82. 62 Though this area was within the area of 1460 sq. re served for exploitation of chromium ore in public sector as per the State Government notification dated 3.8.77, its application remained un disposed of and was deemed to be rejected on the expiry of the statutory period of one year. The C.G., by an order dated 10.10.83, on a revision filed by OMC, directed the S.G. to dispose of the application within 200 days. The S.G., however, did not grant OMC any lease but, instead, granted ML to IMFA on 14.3.85 in respect of 26.62 hectares which was well within the area applied for by OMC. OMC has also made an application for mining rights regarding 108.86 hectares in Kamrarda Balipada villages and 220.15 hectares in Gurjang village which has not been grant ed. In the result, the OMC has not been granted by mining lease despite its claim that the area in question has been reserved for exploitation in public sector though IMFA has been given ML in respect of 26.62 acres out of the area covered by these applications. However. from the details given earlier pertaining to OCL, it will be seen that OMC has been permitted to exploit about 382.709 Hectares in one area on an ad hoc basis and has leases over about 70 sq. and 3 sq. in other areas. INDUSTRIAL DEVELOPMENT CORPORATION OF ORISSA LIMITED (IDCOL) This company submitted two applications on 11.1.83 before the S.G. for grant of mining leases for chromium ore over an area of 740.67 hectares in village Patna Chingiripal and 171.73 hectares in village Gurjang. The applications were not disposed of by the S.G. within the specified time. The C.G. set aside the deemed refusal and directed the application to be disposed of but no decision has been taken by the S.G., apparently on the ground that the entire dis pute regarding grant of mining rights for chromium ore is pending in this Court in W.P. 14116/84. ORDERS PASSED BY THIS COURT It is now necessary to refer to the various interim orders passed by this Court in this matter because some of the parties have made a grievance that, though their claims for leases were pending at various levels, IMFA and FACOR have been able to obtain from this Court orders directing the grant of leases to them and that this procedure was wholly unjustified. To start with, it must be mentioned, the C.G., the S.G. and certain officers of the C.G. and S.G. were impleaded as respondents 1 to 6 in the Writ Petition with FACOR as the 7th respon 63 dent. In the writ petition IMFA referred to its applications in respect of five blocks of land detailed in para 8 of the writ petition and alleged that, while the petitioner 's application for a lease in respect of the five blocks re ferred to earlier remained pending for more than a year for consideration in pursuance of the C.G. 's directions for its disposal, the S.G. had granted mining leases for chrome ore in favour of FACOR which, according to the petitioner, was similarly placed. In view of this allegation, this Court passed a detailed and stiff interim order on 27.9.84 in the following words after hearing the counsel for the petition ers and the standing counsel to the S.G.: "Mr. R.K. Mehta, learned counsel appears on behalf of Respondents Nos. 4 to 6 pursuant to the notice served upon him as Standing Counsel for those respondents, and he asks for time in order to enable him to obtain instructions from those respondents and to file a counter affidavit for these respondents. We would, therefore, adjourn the Writ Petition to 30.10.84. But in the meanwhile we would direct respondents Nos. 4 to 6 not to grant to anyone else other than the petitioners mining lease for chromite ore in re spect of the areas applied for by the petitioners and form ing the subject matter of applications made by them as set out in paragraph 8 of the Writ Petition. Since the project which is being set up by the petitioners is a very important export oriented project for which the necessary permission has already been granted by the Govt. of India and the Consortium of Foreign Banks has already agreed to finance the Project and it is a project which will earn considerable foreign exchange for the country and provide employment to a large number of workmen, we would direct the 4th respondent to consider and decide the application of the petitioners set out in paragraph 8 of the Writ Petition on or before 23. 10.84 after giving an opportunity to the petitioners of being heard in the matter. We have no doubt that the 4th respondent will keep in view the nature and importance of the project and its foreign exchange earning capacity, as also its potential for providing job employment to a large number of workmen in the State of Orissa while considering and deciding the applications of the petitioners. The 4th respondent will also take into account the fact that similar mining leases have been given to the 7th respondent and prima facie there does not appear to be any reason for denying the same facility to the petitioners, for 64 otherwise the action of the 4th respondent may be liable to be condemned as discriminatory and arbitrary and moreover the 4th respondent cannot over look the fact that if mining lease as applied for are not granted, the petitioners will have to import chromite and that will be a drain on the foreign exchange resources of the country. There are matters where national interest alone must count. It is indeed surprising that though the Central Govt. directed the 4th respondent to dispose of the application of the petitioners more than a year ago, the 4th respondent has not yet chosen to dispose of the applications. We would direct the 4th respondent to carry out the direction given by us and dis pose of the applications of I.the. ,petitioners in the light of the observations contained in this order on or before 23.10.84. The decision taken by the State Govt. on the application shall contain the reasons and will be communi cated to the petitioners and also placed before this Court along with the Counter affidavit. The previous order made by us in regard to the production of files will stand and the files shall be produced at the next hearing of the Writ Petition. The Writ Petition stands adjourned to 30/10/84. On coming to know of this order, FACOR had the matter men tioned and, after hearing the arguments of its counsel, the Court passed an order on 18.10.84, the material portion of which reads as under: "On the application of Mr. Kapil Sibbal, learned counsel appearing on behalf of the 7th respondent, we direct that no decision shall be taken on the applications of the petitioner until 30.10.84 unless a decision has already been taken. In the event the decision has already been taken it shall not be implemented until then. The files relating to the applications of the petitioner and the 7th respondent for mining leases in respect of chromite ore shall be sent to the Registry of this Court forthwith in a sealed cover along with a responsible officer of the State Government so as to reach the Registry of this Court by 2 p.m. on Satur day, 20th October, 1984. " A little later, Mr. Aikath was impleaded as respondent No. 8 and, pending the filing of a counter affidavit by him, the Court passed the following order on 28.2. 1985: 65 " . . We would direct the State Government to give to the petitioners within 15 days from today the leases in respect of the areas of item No. 3 and 26.62 hectares area out of item No. 4 set out in para 8 of the writ petition . so far as the remaining controversy is concerned, we shall dispose it of on 2.4.85 after hearing the parties. " The State Government will make an application to the Union of India within 5 days from today for the approval of the leases and the Union of India shall grant approval to them within 10 days". By the next date of hearing viz. 8/5/85, ORIND entered into the fray and was ordered to be made respondent No. 9 in the writ petition. Pending further affidavits by the parties, the Court gave another direction in the following terms: " . . the State Government will give to respondent No. 7 within 3 weeks from today lease in respect of 180 acres in item No. 5set out in paragraph 8 of the writ peti tion excluding the area which the State Government propose to give to respondent No. 8. This order. is without preju dice to the rights and contentions of the parties . . The State will make an application to the Union of India within a week from today for the approval of the lease and the Union of India will grant its approval within a period of 2 weeks from that date". Then comes the order dated 30.4.87 by which the writ peti tion was disposed of. It needs to be set out in full: "After hearing counsel appearing for the parties we consider that the proper order to be passed is to direct the parties who have applied for grant of mining leases to file representations before the Secretary Ministry of Mines and Steel, Department of Mines, Government of India within ten days from today setting out their claims in respect of the areas covered by their respective applications. We direct that the Secretary; Department of Mines shall consider the claims of the various parties in respect of the areas cov ered by their application in the light of the observations contained in the orders already passed by the Court; namely; the Order dated 27th September, 1984 and 66 8th May 1985 after duly taking into consideration the re quirements of the manufacturing industries concerned and decide about the question of grant of mining leases after giving an opportunity of being heard to the parties con cerned. Final orders in the matters should be passed by the Secretary within a period of six weeks from today. It is made clear that the memoranda of compromise said to have been filed in the High. Court of Orissa will be treated as not binding either on the parties or on the State Government and the whole question will be treated as being fully open for fresh consideration and determination by the Secretary Department of Mines, Government of India. The status quo as obtaining at present with regard to the carting out of the mining operations over the areas will continue until the representations are disposed of by the Secretary pursuant to this order within six weeks from today. As already indicated the entire matter will be fully open for consideration by the Secretary and the orders passed by this Court should not be treated as final in regard to the allocation of the areas to the different claimants. The fact that certain writ petitions are pending before the High Court of Orissa will not in any way hamper the effective carrying out of this order. It is needless to add that the disposal of the matter by the Secretary should be by a reasoned order. The writ petition is disposed of on the above terms. " Sometime later, IMFA moved an application for clarification of the Court 's order dated 30.4.87. On this the following order was passed on 6.10. 1987: "There are several claimants for the grant of mining leases in different parts of Orissa. This question has come up from time to time before this Court. The first relevant order was the one dated the 28th February, 1985. Therein a bench consisting of P.N. Bhagwati, J. (as he then was) and V. Balakrishna Eradi, J. directed the State Govern ment to give to the petitioners M/S Indian Metal & Ferro Alloys Ltd. within 15 days from today the leases in respect of the full areas of Item No. 3 and 26.62 hectares area out or ' Item No. 4 as set out in paragraph 8 of the Writ Peti tion. This Court further directed so far as the remaining controversy was concerned that the same shall be disposed of later on 67 by giving certain other consequential directions as the petitioners might seek which it is not necessary to refer ' here. It was directed that the State Government was to make an application to the Union of India within 5 days from the date of the order for the approval of the leases by the Union of India and which should grant approval within ten days therefrom. Thereafter it appears that on 8.5.85 another order was passed by the same bench of this Court wherein it was di rected that the Orissa Industries Ltd. should be joined as respondent No. 9 in the Writ Petition and respondent No. 9 would file counter affidavit and directions were also given for filing rejoinder, if any. It was directed that "pending hearing and final disposal of the writ petition the State Government would give to the respondent No. 7 within three weeks from today, lease in respect of 180 acres in Item No. 5, set out in paragraph 8 of the writ petition the State excluding the area which the State Government proposed to give to respondent No. 8. " It was stated that this order was made without prejudice to the rights and contentions of the parties directions were given for hearing of the writ peti tions. Finally the order with which we are directly concerned with is the order dated the 30th April, 1987 which was passed by a bench consisting of Hon 'ble V. Balakrishna Eradi, J. and one of us G.L. Oza, J. The said order is set out in paragraph 2 of the C.M.P. Nos. 16435 37/87. It is not necessary to set out in detail the order. It may be noted that the Court directed that the proper order to be passed was to direct the parties who had applied for grant of mining |eases to file representations before the Secretary, Ministry of Mines and Steel, Department of Mines; Government of India within ten days from that date setting out their claims in respect of the areas covered by their respective applications. This Court directed the Secretary Department of Mines to consider the claim of the various parties in respect of the areas covered by their applications in the light of the observations contained in the orders already passed by this Court, namely, the orders dated the 22nd September, 1984 and the 8th May, 1985 after duly taking into consideration the requirements of the manufacturing Indus tries concer 68 ned and decide about the question of grant of Mining Leases after giving an opportunity of being heard to the parties concerned. Thereafter, the present applications have been made by different claimants seeking for directions for being added for consideration by the Secretary subject to their existing rights under the existing leases and grant of future leases. Mr. Kapil Sibbal, counsel appearing for the respondent No. 7 and Dr. Gauri Shankar counsel appearing for the applicant submitted that there are existing leases in their favour which cannot be entertained (sic) by any order passed by the Secretary and they are entitled to work out their full rights. On the other hand the Orissa Mining Corporation as well as Industrial Development Corporation Orissa are also claiming for grant of Mining leases includ ing respondent No. 8 who is alleged to have found out the mines. In our opinion the proper order would be to pass order in terms of the order passed by this Court on 30.4.87. The claims of the.different claimants including Mr. Sibal 's clients as well as Dr. Gauri Shankar 's should be considered in accordance with law by the Secretary in making his con siderations. The Secretary should bear in mind the previous orders made in their favour and the previous leases and the rights, if any, granted therefrom and their consequences. Similarly the public benefit and public interest involved and proper exploitation of the mines should be borne in mind. Bearing these facts it is directed that the Secretary should arrive at a just, equitable and objective decision and send a report to this Court within three months on receipt of the copy of the order within a fortnight from today. The Secretary should only consider the applications of those who had existing leases applications at the time when the order of 30.4.87 was made and not of those who had no existing leases applications on 30.4.87. The copy of the report to be made shall be supplied to the parties. " It is in pursuance of this order Rao has heard the parties and submitted the report which has now been placed before us for further directions. OTHER PENDING APPLICATIONS It is necessary, to clear the ground, to refer to a number of applications made by the various parties subse quent to the order of this Court dated 30.5.87: 69 (i) By C.M.P. No. 13347/87, FACOR pointed out that a lease in respect of 180 acres (being part of item 5) had been granted to it by the S.G. on 13.8.85 in pursuance of this Court 's order dated 8/5/85. It claimed that it had made substantial investments, engaged a huge labour force and started mining in this area. It was disturbed by the fact that OMC and IDCOL had suddenly entered into the picture and claimed before Rao that they were entitled to leases on the basis of reservations. According to the applicant, only the parties to the writ petition could be heard by Rao and OMC and IDCOL should not be permitted to join the proceedings before Rao and allowed to disturb the leases directed to the given to it and IMFA by the orders dated 28.2.85 and 8.5.85. A second point taken in the application was this: "13. That it is submitted that the order dated 30.4.87 does not make it clear as to under what statutory authority the Secretary to the,Government of India shall dispose of the representations made by the various parties to the writ petition. This matter requires to be clarified by this Hon 'ble Court". This application was opposed by the OMC and the IDCOL. The Court, by its order dated 6.10.87, rejected the first re quest and allowed OMC and IDCOL to participate in the pro ceedings before Rao; it was directed that the claims of all parties whose applications for lease were subsisting on 30.4.87 should be heard by Rao. It was, however, clarified that in arriving at his conclusions, the Secretary should bear in mind the previous orders made in favour of IMFA and FACOR, the previous leases and rights granted to them and their consequences. The second aspect to which the applica tion referred was, however, not clarified. (ii) A second application of FACOR (C.M.P. 22588/77) was directed primarily at the IMFA. It was submitted here that the order dated 28/2/85 needed to be recalled and FACOR allowed to put forward claims in respect of the areas di rected to be leased out to IMFA as IMFA had not at all been operating its export oriented unit (EOU) since 1984 and was attempting to divert the ore to its domestic units whereas FACOR was the one that was operating an EOU and needed all the ore it could get. No notice was issued on this applica tion apparently as all the claims had already been referred to Rao. (iii) In August 1987, IMFA moved C.M.P. 21578/1987. This was in the nature of a counter to C.M.P. 13347/87 moved by FACOR. This 70 application also prayed that the consideration before the Rao Committee should be confined to the parties to the writ petition. IMFA also took this occasion to request that the area of 180 hectares leased out to FACOR by the order dated 3/5/85 should be treated as provisional and taken into account in the allotment to be decided on by Rao. FACOR tiled a reply. No orders have, however, been passed on the petition. again. apparently since all the claims were before Rao. (iv)C.MP. 9284/88 was filed by OCL to quash the "order" of 1.2.88 passed by Rao which has totally rejected the claims of OCL. No orders on this petition have been passed so far but this will now have to be disposed of in the light of the conclusions we may reach in regard to OCL 's claims on the merits and no separate orders need to be passed thereon. (v) I.A. 1/89 was filed by ORIND challenging the cor rectness of Rao 's findings and praying that, pending dispos al of W.P. 14116/84 which according to it stands undisposed of despite the orders dated 30/4/87 and 6/10/87 the S.G., OMC, Tisco. Sirajuddin & Co. and Mysore Minerals (the re spondents to the application) should be directed to supply to ORIND 3000 M/T of chrome ore per month. No orders have been passed on this application so far but, since the writ petition itself is now being disposed of, no interim orders as prayed for in this application are at all called for. STATUTORY INADEQUACIES 1) Delay and Ineffectiveness: Now the first thing that strikes one on perusing the course of the proceedings in the case is the extremely unsatisfactory and impractical proce dure followed under the Act in regard to the grant of mining leases for important minerals like chrome ore. The statute envisages that the application should be made to the S.G. and disposed of by it within a prescribed period. But the course of events in the case and other reported cases show that this time limit is observed more in breach than in observance. Anticipating this possibility, the rules provide that, if an application is not disposed of within the statu tory period, it shall be deemed to have been refused. So far so good, as at least, the applicant can, on the expiry of the period, have recourse to a higher authority. The remedy provided to the aggrieved applicant is to file a revision application before the C.G. under section 30 of the Act for revision of the order within three months thereafter. Rule 55 enables the C.G., after hearing all necessary parties, to "confirm, modify or set aside the order or pass such other order in relation to 71 thereto as the Central Government may deem just and proper". A note under rule 55 also says that "during the pendency of a revision application the State Government should not take any action in respect of the area, which is the subject matter of the revision petition as the matter becomes sub judice". Having regard to the wide powers thus conferred. one would except the C.G. to dispose of the application on merits, either granting the lease in whole or in part or rejecting it. But, curiously, in most of the cases which come up before Courts as also in this case, the C.G. seems reluctant to pass any order except to set aside the "deemed refusal" and direct the S.G. to dispose of the application afresh within a specified period. That was the order passed, for example, in IMFA 's case the time given being 200 days. But the S.G. does not seem to pay any heed to this direction and no order is passed within a reasonable period. Well, one would think a second approach to the C.G. may be helpful. IMFA tried it but got back a reply to say that the C.G. was helpless in the matter. The original order in revision has stated: "should the State Government fail to pass order on the petitioner 's application he may seek redress in an appropriate Court of Law, if so advised" and the subsequent application was rejected by the C.G. on the ground that the C.G. becomes functus officio when it passes the order in revision and has no jurisdiction to revise it. So all that the applicant can do is to wait for some time and then file a writ petition. Even if the writ petition were to be heard quickly all that the Court can do is to direct the S.G. to dispose of the application expeditiously. This is an ex tremely cumbrous and ineffective procedure in which several years pass but the application stands still. Thus, for e.g., ORIND made an application in 1971 and is yet to know what the fate of its application would be. It puzzles 'us why the C.S., even in the first instance, could not dispose of the application on merits in the light of the report received from the S.G. and after hearing concerned parties. (2) Proliferation of applications: Another problem created by the passage of time is the entry of new parties in the fray. We shall later point out that, though section 11 tries to enunciate a simple general principle of "first come; first served" in practice, priority of an application in point of time does not conclude the issue. In this case itself. for instance: during the period ORIND 's application of 1971 has been under consideration before various authorities and in the writ petition filed in Orissa High Court, several other competitors have come into the picture. The statutory provi sion is not clear as to which of the applications in respect of any particular area, are to be considered together. If ORIND 's application of 1971 for example: were to be 72 considered only on the basis of the persons who had made applications at that time or a short time before or after, one result would follow; if, on the other hand: if all the applications pending for disposal at the time ORIND 's appli cation is to be granted or rejected are to be considered. the result would be totally different. Since the interests of the nation require that no lease for mining rights should be granted without all applications therefore at any point of time being considered and the best among them chosen or the areas distributed among such of them as are most effi cient and capable; the latter is the only reasonable and practical procedure. That is why this Court, in its order dated 30.4.87: laid down we think rightly that all appli cations pending for consideration as on 30.4.87 should be considered by Rao. (3) Procedure for consideration of applications: A further confusion created in this case is due to the fact that leases of different areas in different villages and dis tricts have been applied for. No attempt has been made to locate, with reference to any compact block of land; who exactly are the competitors and whether there are areas in respect of which there is no competition at all. It will be seen later how this has caused difficulty in the present case. But what we wish to point out here is that the statute must lay down clearer guidelines and procedure. Having regard to the new avenues for vast industrial development in the country, the more workable procedure would be for the S.G. to call for applications in respect of specified blocks by a particular date and deal with them together: other later entrants not being permitted in the field. Otherwise only confusion will result, as here. There was a time when the S.G. looked to private enterprises for mineral develop ment in its territory. Even now, it has been stated that 87% of the State territory containing chromite is under lease to one industrial house. Of late, however, competition has crept in. The S.G. has its own public sector corporations and various entrepreneurs are interested in having mining leases for their purposes. It is, therefore: vital that there should be a better and detailed analysis, district wise and area wise and that a schedule for consideration of applications in respect of definite areas should be drawn up with a strict time frame so that the State is no longer constrained to deal with sporadic applications or make a routine grant of leases in order of priority of applica tions. These are aspects which call for careful considera tion and appropriate statutory amendments. IS section 11(2) CONCLUSIVE? Now, to turn to the contentions urged before us: Dr. Singhvi, who 73 appeared for ORIND, vehemently contended that the rejection of the application of ORIND for a mining lease was contrary to the statutory mandate in section 11 (2); that, subject only to the provision contained in section 11(1) which had no application here, the earliest applicant was entitled to have a prefer ential right for the grant of a lease; and that a considera tion of the comparative merits of other applicants can arise only in a case where applications have been received on the same day. It is no doubt true that section 11(2) of the Act read in isolation gives such an impression which, in reality, is a misleading one. We think that the sooner such an impres sion is corrected by a statutory amendment the better it would be for all concerned. On a reading of section 11 as a whole one will realise that the provisions of sub section(4) completely override those of sub section (2). This sub section preserves to the S.G. a right to grant a lease to an applicant out of turn subject to two conditions: (a) record ing of special reasons and (b) previous approval of the C.G. It is manifest, therefore, that the S.G. is not bound to dispose of applications only on a "first come, first served" basis. It will be easily appreciated that this should indeed be so for the interests of national mineral development clearly require in the case of major minerals. that the mining lease should be given to that applicant who can exploit it most efficiently. A grant of ML in order of time will not achieve this result. In the context of his submission pleading for priority on the basis of the time sequence Dr. Singhvi referred to certain observations in the decisions reported as Ferro Alloys Corporation of India vs Union, I.L.R. 1977 Delhi 189 at p. 196 and as Mysore Cements Ltd. vs Union, A.I.R. at p. 15 1. we do not think these decisions help him. In the former case; an application by FACOR for a lease was rejected on the ground that an earlier application was being accepted. FACOR contended this was wrong that the S.G. could not have refused to look into its application merely because another applicant had a preferential right under section 11(2) and that its application as well as that of the earlier applicant should have been considered together. It is in the situation that the Court observed that rule 11 primarily embodies the general principle of "fist come first served" and an out ofturn consideration under section 11(4.) was an exception for which a strong case had to be made out. The petitioner could not have a grievance if the general principle was followed. So also, in the latter case an earlier application having been accepted and a lease granted, the consideration of a later application was held to be uncalled for. These decisions cannot be treated as authorities for the proposition that the S.G. is bound to grant an earlier application as soon as it is received 74 and cannot wait for other applications and consider them all together and grant a later one 'if the circumstances set out in rule 11(4) are fulfilled. That apart it has to be remem bered that the S.G. did reject ORIND 's application by an order dated 23.10. This order was set aside in the C.G. on 20.2. 1977 and the S.G. directed to consider it afresh. The S.G. did not comply with this order and so a writ petition was filed by ORIND which was pending when this writ petition was" filed. Subsequently the High Court on 9.2.89 directed the S.G. to consider and ,dispose of ORIND 's application on merits. The S.G. on ' 7.4.89 dismissed ORIND 's application on the ground that the issue is before us and hence the S.L.P. against the order of rejection of the S.G. Even assuming that we accept the S.L.P. filed by ORIND that will only entitle ORIND to have its application reconsidered for grant along with such other applications as may be pending as on the date of such reconsideration. In the context of the scheme of the Act and the importance of a lease being granted to one or more of the better qualified candidates where there are a number of them it would not be correct to say that as the S.G. 's order of 29.10.1973 has been set aside ORIND 's application should be restored for reconsideration on the basis of the situation that prevailed as on 29.10. 1973 and that therefore it has to be straight away granted as there was no other application pending on that date before the S.G. In matters like this subsequent applications cannot be ignored and a rule of thumb applied. We are unable to accept the submission of Dr. Singhvi that the application of ORIND being the earliest in point of time should have been accepted and that we should direct accord ingly. As to how far the requirements of section 11(4) are ful filled in the present case that is an aspect which will be considered later. PROMISSORY ESTOPPEL It will be convenient here also to deal with another argument raised by Dr. Singhvi based on grounds of promisso ry estoppel. Dr. Singhvi points out that when ORIND applied to the C.G. for revision of the order of rejection of its application on 23.10.73 the S.G. on 26.2.74 wrote to the C.G. as follows: M/s Orissa Industries Limited made 'representation to the State Government on ' 15.12. 1973 for reconsidering grant of lease to serve the captive requirements of their refractory plant. They also brought to the notice of the State Government an export order of refractories of sizeable value of about Rs.2 crores received from National 75 Iranian Steel Mills. Teheran Chromite, being essential raw material for manufacture of refractories they pressed for grant of Mining Lease. After careful consideration of the representation, the State Government have revised the policy of reserving the chromite area only for exploitation in public sector and have decided for grant of chromite to serve the captive requirements of industry within the State should be given first priority. Accordingly, it is proposed to grant the mining lease for chromite over the available areas subject to revision of the previous order of the State Government by Government of India u/s 30 of the Mines & Minerals (Regulation & Development) Act, 1957 and u/s 5(2) of the said Act. Steps are being separately taken to exclude this area from the operation of reservation notification for exploitation of chromite in the public sector. In the interest of the local industries. the State Govt. do not intend to throw open the area after releasing from reservation. Approval of Government of India would also be necessary for not throwing open the area in the relaxa tion of the rule 58 of the Mineral Concession Rules 1960. Out of 1129.25 hectares applied for, an area of 379.93 hectares is covered by overlapping of applied leases or applications including an area of 142 hectares which is being separately recommended to Government of India for grant of Mining lease in favour of M/s Orissa Cement Limit ed. As such the net area available for grant of mining lease is therefore. 749.32 hectares. The State Government having rejected the application of the party in Government Proceeding No. 1043 dated 23.10. 1973 are got obtain to revise their own order by granting Mineral Concession as instructed in your department letter No. MV I(445)/61 dated 5.1.72. The case is therefore. recom mended to Government of India for grant of Mining Lease over an area of 749.32 hects. in favour of M/s Orissa Industries Limited revising the above order of the State Government u/s 30 of the . As chromite ore is specified mineral under the first schedule of the Act approval of Government of India is also requested u/s 5(2) of the Act. I would therefore, request you to kindly obtain and communicate orders of Government of India on revision u/s 30 of Mines & Minerals (Regulation & Development) Act, 1957 and approval u/s 5(2) of the said Act and in relaxation of Rule 58 of the Mineral Concession Rules. 1960 for grant of Mining Lease for chromite over an area of 749.32 hectares in Cuttack District in favour of Orissa Industries Limited. " Simultaneously, it is pointed out, the S.G., while sending its comments to the C.G. on the contents of another revision application filed by ORIND against the rejection of its application (also dated 5.7.71) for a lease of 446.38 hec tares in village Sukrangi of Cuttack District, had this to say: "Recently in State Government letter No. 1747MG dated 26.2.74 chromite bearing area to the extent of 749.32 hectares in Cuttack district has been recommended to Govern ment of India for grant in favour of M/s Orissa Industries Ltd. The need of M/s Orissa Industries Ltd. will be met from this. It is the responsibility of the party to obtain raw materials for its factory and the State Government cannot take such responsibility as contended by the petitioner. The party is at liberty to purchase the chrome ore from Orissa Mining Corporation. XXX XXX XXX The State Government have already recommended an area in favour of M/s Orissa Industries Ltd. to the Govt. of India to meet the requirements of their industry. The State Government have already decided to grant the area applied for by M/s Orissa Industries Ltd. in their M.L. application under revision to M/s Orissa Mining Corporation Ltd. who are now working the area as an agent of the State Government. Hence the question of granting this area to M/s Orissa Industries Ltd. does not arise. " Also, on 5.3.74 the S.G. published a notification dereserv ing the said 749.32 hectares (said to have been earlier reserved for exploitation in the public sector by a notifi cation of 3.7. 1962). Dr. Singhvi submitted on the strength of this correspondence and notification that the S.G. having sought to justify its rejection of ORIND 's application for 77 446.38 acres on the ground that the company 's application for 749.32 hectares was being recommended after dereserva tion, it was not open to the S.G. now to take up a different stand and that ORIND 's application for 1229.25 hectares now under consideration should have been granted at least to the extent of 744.32 hectares the dereservation and lease in favour of ORIND, of which had been recommended by the S.G. itself as early as 1974. In support of this contention, learned counsel relied on the observations made in a series of decisions of this Court: Kanai Lal Sur vs Paramnidhi Sadhukhan, ; M/s Motilal Padampat Sugar Mills Co. (P) Ltd. vs State of Uttar Pradesh and Ors. , ; ; Gujarat State Financial Corporation vs M/s Lotus Hotels Pvt. Ltd., ; Surya Narain Yadav & Ors. vs Bihar State Electricity Board & Ors., [1985] Suppl. 1 S.C.R. 605; Union of India & Ors. vs Godfrey Phi lips India Ltd., [1985] Suppl. 3 SCR 123 and Mahabir Auto Stores & Ors. vs Indian Oil Corporation & Ors., [1990] J.T. 1 S.C. 363. This argument is interesting but overlooks certain very important relevant circumstances. As mentioned earlier, ORIND 's revision petition was disposed of by the C.G. on 23.2. This order contains no reference to the S.G. 's letter of 26.2.74; on the contrary, it proceeds on the footing that no comments had been received from the S.G. Possibly this is because the letter of 26.2.74 was not in the form of comments on the ORIND 's revision application but was in the form of the S.G. 's recommendations on ORIND 's representation to it dated 15.12.73, although it does sug gest that the C.G. could set aside the order of 23.10.73 and direct the grant of a lease to ORIND in respect of 749.32 hectares. Be that as it may, the C.G. did not accept the recommendation of the S.G. Indeed, we find on record that, having regard to a letter of the C.G. dated 15.5.74, the S.G. sent a letter dated 17.7.74 withdrawing the earlier recommendation made by it on 26.2.74 for the allotment of 749.32 acres to ORIND. In view of this letter, the C.G. simply set aside the order of 23.10.73 on the ground that it was not a speaking order and directed the S.G. to dispose of ORIND 's application within 100 days in the light of the letter of the C.G. dated 15.5.74. Interestingly, this letter had been written in reply to a proposal from the S.G. that the exploitation of chromite had to be entrusted to the public sector. Accepting this suggestion, the letter pro ceeded to lay down certain broad priorities on the basis of which leases could be granted and certain other directions in respect of research and development. The position, there fore, is that the C.G. did not accept the S.G. 's recommenda tions regarding the grant of a lease to ORIND in respect of 749.32 hectares out of the 1129.25 78 hectares applied for. There was, however, delay in the disposal of the application by the S.G. When the S.G. took up consideration of the matter once again it took note of three circumstances to reject the application of ORIND. These were: (i) One of the directions in the C.G. 's letter of 15.5.74 was that "no lease of lumpy ore for metallurgical and re fractory grade be granted to private sector unless mining undertakings of the State or Central Government are not interested in the exploitation of ore in these leaseholds" and the requirement of ORIND was for lumpy chromite ore; (ii) Two notifications had been issued on 28.4.77 and 3.8.77 reserving certain areas for exploitation by the public sector. The former dealt specifically with the 749.32 hec tares which had been proposed for allocation to ORIND in the letter of the S.G. dated 26.2.74. The latter covered a huge area of 1460 sq. km. in various districts of the State; (iii) The claims of all applicants had been considered by Rao and Rao had come to the conclusion that no mining leases need be given to ORIND. We shall consider later the claim of ORIND on merits. But, for the present, we only wish to point out that no grounds have been made out which could support a plea of promissory estoppel. The grant of a lease to ORIND had to be approved by the C.G. The C.G. never approved of it. The mere fact that the S.G., at one stage, recommended the grant cannot stand in the way of their disposing of the application of ORIND in the light of the C.G. 's directives. Perhaps, the highest that ORIND can claim is that, since this lease of 749.32 acres has not come through, the SG 's order rejecting its application in respect of 446.38 hectares deserves to be considered. But that area is not the subject matter of the present S.L.P. by ORIND. Moreover, ORIND has not placed before us any information as to what happened to the revi sion petition filed by it against the rejection of the application in respect of 446.38 hectares of the further proceedings, if any, in relation thereto. We express no opinion as to ORIND 's entitlement to a lease on that appli cation in case it does not succeed in its claim here in respect of 749.32 hectares. It will be open to ORIND to pursue such remedies in respect thereof as it may be advised and as may be available to it in law. 79 THE RESERVATION POLICY The principal obstacle in the way of ORIND as well as the other private parties getting any leases was put up by the S.G., OMC and IDCOL. They claimed that none of the private applications could at all be considered because the entire area in all the districts under consideration is reserved for exploitation in the public sector by the noti fication dated 3.8.77 earlier referred to. All the private parties have therefore joined hands to fight the case of reservation claimed by the S.G., OMC and IDCOL. We have indicated earlier that the S.G. expressed its preparedness to accept the Rao report and to this extent waive the claim of reservation. Interestingly, the OMC and IDCOL have en tered caveat here and claimed that as public sector corpora tions they could claim, independently of the S.G. 's stand, that the leases should be given only to them and that the Rao report recommending leases to IMFA, FACOR and AIKATH should not be accepted by us. The relevant provisions of the Act and the rules have been extracted by us earlier. Previously, rule 58 did not enable the S.G. to reserve any area in the State for exploi tation in the public sector. The existence and validity of such a power of reservation was upheld in Kotiah Naidu vs State of A.P., A.I.R. 1959 A.P. 185 and Amritlal Nathubhai Shah vs Union, A.I.R. 1973 Guj. 117, the latter of which was approved by this Court in ; pointed out earlier, rule 58 has been amended in 1980 to confer such a power on the S.G.). It is also not in dispute that a notification of reservation was made on 3.8.77. The S.G., OMC and IDCOL are, therefore, right in contending that, ex facie, the areas in question are not available for grant to any person other than the S.G. or a public sector corpora tion [rule 59(1), proviso] unless the availability for grant is renotified in accordance with law [rule 59(1)(e)] or the C.G. decides to relax the provisions of rule 59(1) [rule 59(2) ]. None of those contingencies have occurred since except as is indicated later in this judgment. There is, therefore, no answer to the plea of reservation put forward by the S.G., OMC and IDCOL. The private applicants seek to get over this difficulty in several ways. In the first place, they all vociferously urge that this plea has been taken by the S.G. belatedly, that the OMC and IDCOL have come into the picture very late and that this plea should not be allowed to be raised at this stage. The learned Advocate General for the State of Orissa has pointed out, we think rightly, that there is no substance 80 this grievance. The objection regarding reservation was raised by the S.G. at the very first opportunity it had, in a preliminary counter affidavit filed by it in the writ petition dated 29.10.1984. The counteraffidavit mentioned about the reservation in no uncertain terms and a copy of the relevant page of the Orissa Gazette dated 12.8.77 which contained the reservation notification dated 3.8.77 was also annexed to the counter affidavit. Reference was also made to the statutory provisions and judicial decisions. The claim was reiterated, when ORIND joined the proceedings, in a reply filed by the State to the counter affidavit filed by ORIND on 22.8.85; this reply affidavit refers to the letter of the C.G. dated 15.5.74 and the notification of reserva tion dated 28.4.77 pertaining to the 749.32 acres in respect of which ORIND had made an application. In a further coun ter affidavit dated 24.11.89 filed "in reply to the addi tional submissions dated 17.10.89 filed on behalf of ORIND", the notification of 3.8. 1977 has also been referred to. OMC and IDCOL had submitted their applications for lease but no orders had been passed thereon. When they came to know that the applications of IMFA and FACOR were considered by this Court and certain interim orders passed, they approached Rao to consider their applications as well. This request was opposed by the other parties whereon OMC and IDCOL sought and obtained the directions of this Court that their appli cations should also be considered by Rao. Before Rao, they supported the S.G. plea of reservation. In the circumstances Set out above, it is difficult to accept the contention of the various private applicants that the plea as to reserva tion should not be entertained at all on the ground of delay and 1aches. It is then argued that though the S.G. may have formally notified a reservation, it has not been very serious about this and has always been willing to consider private appli cations for leases. In support of this contention, reliance is placed on the following circumstances: (a) On 26.2.74, the S.G. has clearly expressed its willingness to dereserve the area of 749.32 acres and, indeed, followed it up on 5.3.74 with a notification of dereservation. (b) Though the S.G. claims that reservation is neces sary to meet the S.G. 's requirements because 81% of chromite ore rich lands already stand leased out to a private party (TISCO), the S.G. proceeded to renew the grant in favour of that party. (c) The S.G. has been willing enough to lease out lands to private parties: (i) The S.G. has granted leases to FACOR on 81 9.2.72, 7.10.72 and 12.11.76 in respect of 157.05 hects. 133.31 hects. and 72.84 hects. respectively in Bokhla, Kathpal and Ostapal villages. (ii) it has entered into an agreement with AIKATH to grant a lease in respect of a part of the land applied for by him in item 8; (iii) it has agreed to lease out item 3 and 26.62 hectares out of item 4 in favour of IMFA; (iv) it agreed to lease out 180 acres in item 5 in favour of I FACOR. (d) Even at this final stage of hearing of the writ petition. the Advocate General of the State has conceded that the S.G. is prepared to abide by the Rao report i.e. the S.G. is willing to grant leases to IMFA, FACOR and AIKATH but not to OCC or ORIND. This is patently discrimina tory. We do not, however, think that these circumstances establish that the State is not serious about its plea of reservation. So far as item (a) is concerned. we have al ready pointed out that this was the initial attitude of the Government but this policy was changed in pursuance of the C.G. 's letter dated 15.5.74 and its order on ORIND 's revi sion application. The S.G. itself had, in fact, withdrawn the recommendations made on 26.2.74 by its letter of 17.7.74. The thought of dereservation had therefore been given up by the S.G. in July '74 itself though the notifica tion of dereservation was superseded only in 1977. In regard to items (b) & (c), the position is that the lease of 1976 was after the dereservation of 5.3.74. The leases to FACOR in 1972 (the details of which are not available before us) are stated to have been granted after obtaining C.G. 's order for relaxation. The full circumstances in which the lease in favour of TISCO was renewed are not before us but perhaps such renewal was dictated by the nature of the industry run by TISCO and its importance for the economy of the State and the country. These apart, the Court approved of the grant of leases to IMFA and FACOR. So far as (d) is concerned, the learned Advocate General of Orissa has made it clear that the S.G. does not accept the Rao report in so far as it ignores its claim of reservation. The concession made only is that since the Rao Committee, in recommending grant of leases to IMFA and FACOR is only giving effect to a fait accompli in pursuance of the interim directions of this Court, they are willing to abide by it. It will therefore be clear that, except for two or three instances, where leases have been granted by the S.G. on its own, the S.G. has generally and consistently adhered to its stand that the chromite bearing lands are reserved for exploitation in the public sector. The rules permit the C.G. to relax the rigid requirements of reservation in individual cases after re cording special reasons. We are 82 not here called upon to decide whether the relaxations made in the above eases were in accordance with the rules or not. It is sufficient to say here that these exceptional and isolated instances of lease are not sufficient to sustain the plea of the parties before us that the policy of reser vation is merely being raised as a formal defence and has never been seriously implemented by the S.G. Dr. Singhvi also raised a plea of arbitrariness and mala fide to challenge the reservation policy. He urges on the first count that it was not open to the S.G. to go on shift ing its reservation policy from time to time without ade quate reasons, Such conduct was also vitiated, he said, as amounting to malice in law and referred in this context to the observations of this Court in Venkataraman vs Union, ; We do not think this contention has any substance. Chromite ore is an important major mineral and the importance of its conservation and proper utilisation for our country 's development cannot be gainsaid. The S.G. rightly decided upon a policy of reservation in 1967 and this was kept up till 1974. In February 1974 the S.G. was in favour of freer issue of mining leases but gave up this policy in pursuance of the C.G. 's letter of 15.5.74. Reser vation was, therefore, clamped in 1977 again. Applications could still be considered to see how far a relaxation was permissible having regard to the nature of the applicant 's needs, the purpose for which the lease was asked for, the nature of the ore sought to be exploited, the relative needs of the State, the availability of a public sector undertak ings to carry out the mining more efficiently and other relevant considerations. There is no material on record to substantiate a plea that the S.G. has been acting arbitrari ly or mala fide in its policy formulations in this regard. Our conclusion that the areas in question before us were all duly reserved for public sector exploitation does not, however, mean that private parties cannot be granted any lease at all in respect of these areas for, as pointed out earlier, it is open to the C.G. to relax the reservation for recorded reasons. Nor does this mean, as contended for by OMC and IDCOL, that they should get the leases asked for by them. This is so for two reasons. In the first place, the reservation is of a general nature and does not directly confer any rights on OMC or IDCOL. This reservation is of two types. Under section 17A(1), inserted in 1986, the C.G. may after consulting the S.G. just reserve any area not covered by a PL or a ML with a view to conserving any mineral. Apparently, the idea of such reservation is that the miner als in this area will not be exploited at all, neither by private parties nor in the public sector. It is not neces sary to consider whether any area so 83 reserved can be exploited in the public sector as we are not here concerned with the scope of such reservation, there having been no notification under section 17A(1) after 1986 and after consultation with the S.G. The second type of reserva tion was provided for in rule 58 of the rules which have already been extracted earlier in this judgment. This reser vation could have been made by the S.G. (without any neces sity for approval by the C.G. ) and was intended to reserve areas for exploitation, broadly speaking, in the public sector. The notification itself might specify the Govern ment, Corporation or Company that was to exploit the areas or may be just general, on the lines of the rule itself. Under rule 59(1), once a notification under rule 58 is made, the area so reserved shall not be available for grant unless the two requirements of sub rule (e) are satisfied: viz. an entry in a register and a Gazette notification that the area is available for grant. It is not quite clear whether the notification of 5.3.74 complied with these requirements but it is perhaps unnecessary to go into this question because the reservation of the areas was again notified in 1977. These notifications are general. They only say that the areas are reserved for exploitation in the public sector. Whether such areas are to be leased out to OMC or IDCOL or some other public sector corporation or a Government Company or are to be exploited by the Government itself is for the Government to determine de hors the statute and the rules. There is nothing in either of them which gives a right to OMC or IDCOL to insist that the leases should be given only to them and to no one else in the public sector. If, there fore the claim of reservation in 1977 in favour of the public sector is upheld absolutely, and if we do not agree with the findings of Rao that neither OMC nor IDCOL deserve any grant, all that we can do is to leave it to the S.G. to consider whether any portion of the land thus reserved should be given by it to these two corporations. Here; of course, there are no competitive applications from organisa tions in the public sector controlled either by the S.G. or the C.G., but even if there were, it would be open to the S.G. to decide how far the lands or any portion of them should be exploited by each of such Corporations or by the C.G. or S.G. Both the Corporations are admittedly instrumen talities of the S.G. and the decision of the S.G. is binding on them. We are of the view that, if the S.G. decides not to grant a lease in respect of the reserved area to an instru mentality of the S.G., that instrumentality has no right to insist that a ML should be granted to it. It is open to the S.G. to exercise at any time, a choice of the State or any one of the instrumentalities specified in the rule. It is true that if, eventually, the S.G. decides to grant a lease to one or other of them in respect of such land, the instru mentality whose application is rejected may be aggrieved .by the 84 choice of another for the lease. In particular, where there is competition between an instrumentality of the C.G. and one of the S.G. or between instrumentalities of the C.G. inter se or between the instrumentalities of the S.G. inter se, a question may well arise how far an unsuccessful in strumentality can challenge the choice made by the S.G. But we need not enter into these controversies here. The ques tion we are concerned with here is whether OMC or IDCOL car, object to the grant to any of the private parties on the ground that a reservation has been made in favour of the public sector. We think the answer must be in the negative in view of the statutory provisions. For the S.G. could always denotify the reservation and make the area available for grant to private parties. Or, short of actually dere serving a notified area, persuade the C.G. to relax the restrictions of rule 59(1) in any particular case. It is. therefore. open to the S.G. to grant private leases even in respect of areas covered by a notification of the S.G. and this cannot be challenged by any instrumentality in the public sector. Before leaving this point, we may only refer to the position after 1986. Central Act 37 of 1986 inserted sub section (2) which empowers the State Government to reserve ureas for exploitation in the public sector. This provision differs from that in rule 5, ', in some important respects (i) the reservation requires the approval of the C.G.; (ii) the reservation can only be of areas not actually held under a PL or ML; (iii) the reservation can only be for exploitation by a Government company or a public sector corporation (owned or controlled by the S.G. or C.G. ) but not for exploitation by the Government as such. Obviously, section 17A(2) and rules 58 could not stand together as section 17A empowers the S.G. to reserve only with the approv al of the C.G. while rule 58 contained no such restriction. There was also a slight difference in their wording. Perhaps because of this rule 58 has been omitted by an amendment of 1988 (G.S.R. 449E of 1988) made effective from 13.4.88. Rule 59, however, contemplates a relaxation of the reservation only by the C.G. By an amendment of 1987 effective on 10.2. 1987, (G.S.R. 86 E of 87) the words "reserved by the State Government" were substituted for the words "reserved by the 85 Government" in rule 59(1(e). Later, rule 59(1) has been amended the insertion of the words "or under section 17 A of the Act" after the words "under rule 58" in clause (e) as well as in the second proviso. The result appears to be this ' (i) After 13.4.88, certainly, the S.G. cannot notify any reservations without the approval of the C.G., as rule 58 has been deleted. Presumably, the position is the same even before this date and as soon as Act 37 of 1986 came into force. (ii) However, it is open to the S.G. to denotify a reservation made by it under rule 58 or section 17A. Presumably, dereservation of an area reserved by the S.G. after the 1986 amendment can be done only with the approval of ,the C.G. for it would be anomalous to hold that a reservation by the S.G. needs the C.G. 's approval but not the dereservation. Anyhow, it is clear that relaxation in respect of reserved areas can be permitted only by the C.G. (iii) It is only the C.G. that can make a reservation with a view to conserve minerals generally but this has to be done with the concurrence of the S.G. We are concerned in this case with reservations made by the S.G. under rule 58 before 1986 which, there is no reason to doubt, continue in force even after the introduction of section 17A. These, as pointed out above, can be dereserved by th S.G. but a relaxation can be done by the C.G. only. We shall consider later whether this power of the C.G. can be or has been or should be exercised in this case. It is sufficient to observe here that the reservations notified in 1977 do not necessarily vitiate the grant of leases to private parties. STATUS OF RAO REPORT We now come to the question regarding the status of, and the weight to be attached to, the Rao report. The writ petition and other proceedings before us were directed against the S.G. 's failure to pass favourable orders on the applications of various parties. Normally, in such a case, this Court would either have directed the S.G. to consider the applications afresh and pass appropriate orders or left it to the parties to file revision petitions before the C.G. against the S.G. 's orders. Here, as described earlier, the various parties came up before 86 this Court one after the other and some of them had their writ petitions pending in the Orissa High Court. This Court, therefore, decided that the best course would be to consoli date all the applications that were pending on 30.4.87 for the consideration of the C.G. so that a satisfactory deci sion could be arrived at after an examination of the rela tive merits of the various applicants. This Court did not specify the statutory provision under which this was to be done but it is apparent that it was intended to be an exer cise of the power of the C.G. under section 30, though this aspect was not clarified when FACOR draw attention to it in C.M.P. 13347/87. We have no difficulty in construing the Rao report as a decision on the claims of the various parties before it, though, having regard to the terms of the order of this Court dated 6.10.87, it has been styled as a report. The objections to this conclusion are three fold and they are dealt with below: First, it is pointed out that revisions to the C.G. under section 30 can be validly dealt with only by a "tribunal" and not by a single officer. We find that the procedure indicated is not dictated by the statute or the rules. It is only a forum outlined in an office order more as a matter of internal regulation than as a rigid rule of procedure. We have seen one of these orders dated 10.7. It consti tutes three Single Bench Tribunals each consisting of a designated Joint Secretary in the Department of Mines and three Divisional Bench Tribunals each comprising of a desig nated Joint Secretary in the Department of Mines and a designated Joint Secretary in the Department of Legal Af fairs in the Ministry of Law and Justice. The instructions are: "To the extent possible, cases in which parties have not asked for personal hearing should be disposed of by Single Bench Tribunals unless the member feels that some complicated legal issue is involved requiring advice of the member from the Law Ministry. The cases where personal hearing has been requested by parties, the Single Member Tribunals will decide whether to dispose of the cases after grant of hearing by himself or whether the hearing should be held by Division Bench Tribu nal. " It will thus be seen that even regular revision petitions under section 30 can be validly disposed of solely by a Joint Secretary in the Department of Mines unless he considers it necessary, either because a personal hearing is asked for or because some complicated legal issue is involved, to 87 invoke the aid of a Joint Secretary in the Law Ministry. Here, there is no regular revision petition except perhaps in one case; the disposal is by the Secretary to the Depart ment of Mines; he has been specially authorised to deal with the matter by this Court; and no legal issued at all are involved. We, therefore, see nO irregularity or defect in the procedure forged by this Court for a speedy and effec tive disposal of the claims before the Court. Secondly, it is said that though the order of 30.4.1987 directs the secretary to dispose of the representations by a reasoned final order, the subsequent order of 6.10.87 asks him to sent a report to this Court. We do not think there is any inconsistency between the two orders. Even the order of 6.10.87 requires the Secretary to arrive at a just, equita ble and objective decision. He has been asked to send a report of his decision to the Court, with copies to the parties, only in order that, if any of the parties are aggrieved by his decision, their grievances may be consid ered by this Court in this W.P. itself, instead of driving the parties to a fresh course of litigation. Thirdly, it is submitted that Rao 's hands were more or less tied by the various observations and directions of this Court thus preventing him from coming to independant conclu sions of his own. This criticism is unfounded and also belied by the contents of the report. This Court had made it clear that Rao should not consider himself bound by the memoranda of compromise filed in the High Court of Orissa (with AIKATH and FACOR) or the orders passed by this Court in regard to the allocation of areas (to IMFA and FACOR) though necessarily he had to "bear in mind the previous orders made in their [IMFA and FACOR] favour and the previ ous leases and the rights, if any, granted therefrom and their consequences". He was also asked to bear in mind the public benefit and public interest involved and also the need for the proper exploitation of the mines. In fact also we find that although Rao has approved the grants made in favour of IMFA and FACOR by the S.G. (which, he remarks, were perhaps based on the observations made by this Court). he has clearly reached his conclusions on these independent ly. In fact, he has set out a basis for justifying the grants to IMFA and FACOR. It is also clear that there were no Court orders that could have influenced his decisions on the claims of the other parties. This objection is, there fore, not at all tenable. OMC, IDCOL, OCL and ORIND complain, indeed, that Rao has been completely overwhelmed by the weight of the observa tions and the leases granted by the S.G. pursuant to interim orders of this 88 Court. They have gone to the length of criticising, and, indeed, challenging, the validity of these interim orders which had been passed without notice to any of them. They have invoked, in support, several passages from the decision of this Court in Antulay vs Nayak, ; We think these criticisms are unfounded. This Court had only directed the grant of two leases pending disposal of the writ petition. At the time these directions were made, only IMFA, FACOR and AIKATH were before the Court. IMFA had pointed out that FACOR had been given certain leases al though its earlier applications were pending before the C.G. The S.G. submitted to the Court that a lease in respect of item 1 had been granted to FACOR, that item 5 had already been agreed to be leased in favour of AIKATH and FACOR and that it was willing to grant a ML in respect of item 3 and 26.62 acres out of item 4 to IMFA. It was in view of this that the Court passed the order. Similarly, the ML directed to be granted to FACOR was also in consequence of the S.G. 's acquiescence therein. It is, therefore, incorrect to characterise these orders as erroneous or unjustified. They were fully within the scope of the writ petition and were passed after hearing the parties before the Court. No doubt, OCC, ORIND, OMC and IDCOL were not there then. After they put in their appearance, this Court made it clear that while the earlier orders, the observations therein and the leases granted in pursuance thereof should be kept in mind, Rao would not be bound by them but would be free to arrive at his conclusion. We, therefore, do not see any grounds for the criticisms put forward by these parties in regard to the interim orders passed by the Court. For the above reasons, we are of opinion that, though styled a report, the findings given by Rao are in the nature of a decision of the C.G. on the claims of the various parties. We, therefore, proceed to consider the Rao report on its merits. MERITS OF THE RAO REPORT This takes us then to the merits of the various claims put forward before Rao and his decision thereon. For our present purposes, we think we can consider the Rao report in two parts: (a) his endorsement of the S.G. 's decision to grant ML to IMFA, FACOR and AIKATH: (b) the rejection by him of the claims put forward by the above three parties for leases in respect or areas over the above what 89 has been allotted to them as well as the rejection of the claims of the other parties. So far as the first aspect is concerned, we think that Rao 's decision, that the leases that have been granted already in favour of IMFA, FACOR be confirmed, should be upheld. In our view, these should be treated as leases legitimately granted to them in exercise of the powers of relaxation under rule 59(2). It is true that the orders granting the leases do not elaborately record the reasons but they were passed in the context of this litigation and have to be considered in the light of the affidavits and counter affidavits filed herein. We are also of opinion that the Rao 's decision regarding the grant of a lease to AIKATH (not yet implemented) should also be upheld. In these three cases, we think, the records disclose sufficiently the reasons on the basis of which the leases have been decided upon and are adequate to justify the MLs actually granted. We shall just summarise these reasons which have also been taken note of by Rao. (a) ML to AIKATH, IMFA, FACOR 1. AIKATH is admittedly an individual who discovered chromite ore in the State. He had secured a lease as early as in 1952 though that lease was annulled by the State when it took over. Again, as against a lease of 640 acres which he had once obtained and started operating upon, the S.G. has finally approved of a lease in respect of only 140 acres. AIKATH had been actually working some mines from 1.5.53. His original grant had been approved before the area was reserved on 3.7.62. If the S.G. considers these to be weighty considerations and entered into a compromise with him for a lease of 140 acres and this has also been recorded by the Orissa High Court, there are no grounds to interfere with the decision of the S.G. 2. So far as FACOR is concerned, the requirements for their plant in Andhra Pradesh were met by the ML granted to them in 1971 72 at Kathpal and Boula, thus recognising their claim for a ML to meet part of their requirements of ore. Their present needs were in connection with their plant at Randia in Balasore District which required about 1,20,000 tons per annum of ore. The compromise entered into with FACOR agreeing to grant a ML for an area 72.84 hectares having a potential of about 2.4 million tons would cater to 50% of its needs on a 20 year time frame making allowances for wastage in recovery. IMFA needs 50,000 tons per annum for their plant at Therbauli and 120,000 tons in respect of a plant at Chandwar run by a subsidiary. While the reserve potential of 26.62 hectares allotted to IMFA out of item 4 is roughly 0.8 million tons the reserve potentials of 108.86 acres given out of area 3 and of another 17.02 hectares in Balasor District given for the plant of the subsidiary were yet to be assessed. Nevertheless. it was expected that they would cater to the needs of IMFA more or less to the same extent that the ML in favour of FACOR catered to its needs. It is true that a relaxation under rule 59(2) has to be made by the C.G. The orders of grant do recite the approval of the C.G. in this regard. An objection has been taken that the C.G. granted the approval not after applying its mind to the matter but merely because this Court had directed it to do so. We do not think this contention can be accepted. Apparently, when the S.G. agreed to lease out the areas to IMFA and FACOR it was pointed out that this could not be given effect to without the C.G. 's approval. This Court thereupon directed that the S.G. should seek such approval. The direction to the C.G. is only that its approval should be given within the particular time limit set out therein. It cannot be construed, reasonably, as a direction compel ling the C.G. to grant approval whether it agreed with the S.G . 's decision or not. We would. therefore, reject this contention and treat the grants to IMFA anti FACOR as made in exercise of the power of relaxation u/s 59(2 ). Once again, we would like to observe that, though there is no specific recording of reasons by the S.G. or C.G. inasmuch as these leases came to be granted by way of com promise, it is a fair inference that the compromise propos als were prompted by the, at least partial, acceptance of the claims put forward by these parties. Since the grant of leases to these three parties can be attributed to the relaxation of the reservation rule in particular cases, the finding of Rao that these leases may be confirmed deserves acceptance. We have to add a few words in respect of AIKATH. Though the S.G. and AIKATH had entered into a compromise as early as 4.12. 1984, no lease has yet been granted in his favour perhaps as the C.G. has had no occasion to consider the matter earlier. We do not think that any useful purpose will be served by remitting the matter and asking the S.G. to seek the formal approval of the C.G. therefore. The decision of Rao itself can be taken as containing the approval of the C.G. in this regard. We would, therefore, uphold Rao 's decision 91 and direct the S.G. to execute, at as early as possible,a ML in favour of AIKATH in respect of the 140 acs. agreed to be leased to him under the compromise dated 4.12.84. (b) OTHER CLAIMS It is asserted on behalf of OCL and ORIND that, if there are factors justifying the relaxation of reservation in favour of IMFA and FACOR there are equally valid factors justifying a like relaxation in favour of these two compa nies as well. The operative part of the Rao report in regard to the claims of these two parties reads thus: "For the requirement of the other parties viz. M/s Orissa Industries Ltd., M/s Orissa Cements Ltd., manufactur ing refractories, their requirements of chrome ore are relatively less and that too, consisting mostly of hard lumpy ore. The potential for hard lumpy ore in the areas under consideration is relatively less, since most of it is located in the areas which have already been leased out to TISCO who are also one of the larger producers of hard lumpy ore and are capable of meeting the needs of other industries also. The occurrence of chrome ore is such. that hard lumpy ore, lumpy friable ore and fine ore occur together and in varying proportion. The refractory manufacturers require ments are such that if they want to get hard lumpy ore from the areas under consideration, they will have to necessarily become traders of the other grades which will be in higher proportion. They have been carrying on their business for the past several years without any captive mines. Hence. it is felt that their requirements can be adequately met by the other producers of chrome ore, including hard lumpy ore. Hard lumpy ore will be available from other producers of chrome ore to meet their requirements, including the Orissa Mining Corporation and no captive mining leases need be given to them, in the areas under consideration." XXX XXX XXX The Refractory industries viz. the Orissa Industries Ltd. and M/s Orissa Cements Ltd. for their level of production 92 and their need for hard lumpy ore, captive mines in the areas under consideration do not optimally meet their re quirements and there is enough lumpy ore in the State from other sources. " Rao 's line of reasoning is criticised by OCL and ORIND. Sri Bhandare, on behalf of OCL, urges, inter alia: (a) The company 's refractory plant is in need of at least 35,000 to 40,000 MT of ore per annum (not 15000 MT as worked out by Rao) and for securing a regular uninterrupted supply, it needs a captive mine badly; instead it is thrown at the mercy of traders like TISCO or Sirajuddin & Co. or the OMC who are unable to supply the quantities of ore needed by OCL. (b) The company which has a vital mineral based industry has not been granted even a single ML for which it had been applying from 1961 to 1986 whereas traders like Mohanty and Sirajuddin have been granted leases. (c) Besides supply of refractories for domestic consumption OCL has also a vast export market and has earned huge foreign exchange by exports to countries like Pakistan, Bangladesh, Korea, Kenya, etc. (d) The company has also employed about 3000 workers who are adivasis or who belong to the Scheduled Castes and Scheduled Tribes. (e) The industrial licence granted to OCL by the C.G. envisages that the OCL should secure PL and ML from the S.G. for its needs of ore. (f) The S.G. had made on 25.1.72 a grant of a ML to OCL over an area of 187.02 hectares with the approval of the C.G. The S.G. had indeed recommended the grant of ML to OCL. (g) It is also stated that in certain informal meet ings held recently, the S.G. has expressed itself in favour of granting ML in favour of the OCL. Likewise, on behalf of ORIND, it has been urged that Rao has erred in thinking that the need of the company was of lumpy ore which 93 could be adequately met by procuring the ore from private parties and that it would not be necessary to grant a mining lease for meeting its requirements. It is submitted, in particular, that (i) ORIND 's requirements are not small as suggested by the SG but come to a minimum of 25,000 MT per annum and would indeed go up to 65,000 MT with the setting up of a ferroalloys plant for which steps are being taken; (ii) the reasoning that ORIND has been functioning without a captive source all along and hence could continue to do so is bad logic and also a misleading argument which overlooks that ORIND has been put to great difficulty in obtaining even 8,000 to 10,000 MT (about one half of its needs) in driblets from various sources being at their mercy in regard to quantity, price and other vagaries. Even OMC has been capricious in its supplies of ore in that it has agreed to supply 25,000 MT to OCL against their needs of 15,000 MT only whereas it is willing to supply only 9,000 MT only to ORIND against its present requirements of 20,000 MT. (iii) the assumption that ORIND needs only lumpy ore is not correct. Actually more than 60 to 65% of the ore used by ORIND is friable ore. (iv) ORIND also/deserves grant of ML on other grounds of national and public significance. It supplies basic refrac tories not only to core and strategic domestic industries but also exports them outside India and the exports made by it, being value added and involving proportionately less consumption of ore, earn much more foreign exchange than the exports of IMFA & FACOR. The want of a captive source of supply has gravely prejudiced the commissioning of ORIND 's first benefaction plant for refractories. It also employs a strong labour force and thus provides opportunities for large scale employment. (v) if MLs can be granted to AIKATH, IMFA, FACOR, ORIND also deserves one. OMC has been allotted huge areas which remain idle and unexploited and a predominant portion of its ore is supplied to the metallurgical industry not leaving much for the refractory industry. (vi) atleast the area marked as Area No. 7 in the plan filed 94 by ORIND should be allotted to it. We have briefly summarised the claims of ORIND & OCL. It is unnecessary to discuss these contentions at length as we cannot but help feeling that the claims of OCL and ORIND have been rejected summarily by Rao without an advertence to the various considerations urged by them. In our opinion, this part of Rao 's decision has to be set aside as being too cryptic and unsustainable. Pursuant to this conclusion, it is open to us to direct these claims to be considered afresh by the C.G. We, however, think it more expedient that the claims of the OCL and ORIND should be restored, for detailed consideration in all their several aspects, before the S.G., as the 'S.G. has had no opportunity to consider the various aspects pointed out and as this course will also provide one opportunity to the claimants to approach the C.G. again, if dissatisfied with the S.G. 's decision to consider whether, despite the reservation, some relaxation can be made also in favour of these two companies. The learned Advocate General for Orissa criticised the conclusion of Rao conceding the right of industries set up in the State, even of FACOR and IMFA, to captive mines for meeting their requirements. We are inclined to think he is right in saying that merely because an industry is allowed to be set up in the State by grant of an industrial licence and/or certain other conces sions, it does not follow that it becomes entitled to a captive mine to cater to its needs. We, however, express no concluded opinion on this issue ' which does not arise for our consideration. The SG has to take into account various factors and aspects (some of which have also been referred to in the interim order of this Court dated 27.9.84) before granting a ML to an individual concern carving out an excep tion to its reservation policy. This it has done in respect of IMFA and FACOR for certain special reasons which have been elaborated upon earlier. Whether it would do so also in favour of OCL and ORIND is for the State to consider. We express no opinion on these claims and leave it for the consideration of the SG and C.G. It would have been noticed that the applications of these two companies have not been considered in this light earlier. We, therefore, restore the applications of OCL and ORIND for the consideration of the S.G. The learned Advocate General of Orissa also submitted that Special Leave Petition No. 8574/89 filed by ORIND from the order of the S.G. is not maintainable. He urged that the S.G., in disposing of applications for ML, is not function ing as "tribunal" and he cited the decisions in Shivji vs Union; , and Indo China Steam Navigation Co. vs Jasjit Singh; , in support. We do not 95 consider it necessary to go into this issue. The S.G. has, by the impugned order, rejected ORIND 's application, inter alia, on the ground that, in view of the pendency of W.P. 14116/84 before this Court, it could not at that stage pass any order on the application. It would, therefore, be open to ORIND to ask the S.G. to reconsider the application in the light of our present order. We see no necessity f6r insisting on such a formal request and would, therefore, direct the S.G. to consider ORIND 's application afresh in the light of this judgment. So far as OMC & IDCOL are concerned, Rao has "recommend ed" that the areas of items I & 2, left after the grants to IMFA and FACOR. be given on lease to OMC. We have seen that there are huge areas of mineral bearing lands which have been reserved for the public sector. Its interests do not clash or come into conflict with those of private applicants which can only claim a right to the extent the SG is willing to relax the rule of reservation. We do not think the OMC or IDCOL have any voice in requiring that the SG should keep certain extents of land reserved and should not grant any ML at all in favour of an), private party. The interests of these corporations are safe in the hands 01 ' the S.G. and the allocation of MLs to these organisations is a matter of discretion with the S.G. Strictly speaking,, therefore. no question of any application by them for ML need arise at all. But, when made, their applications arc considered by the S.G. and, on revision by the C.G. as a matter of form. To this extent, they have a statutory remedy but, beyond this. we think they cannot go. We are of opinion that their interests are safe with the S.G. and need no directions from us. Even IMFA and FACOR urge that their claims to further leases deserve consideration. Rao has already adjudicated upon their claims and "recommended" leases to them to the extent indicated. If they apply to the S.G. for more leases. it is open to the S.G. to consider whether they deserve any further leases and if so, to what extent. more reserved areas could be released in their favour. The learned Advocate General for the State emphasised that the State is also interested in its industrial develop ment and the national economy and that, while reserving substantial areas for public sector exploitation, the State has a well formulated policy in respect of grant of private leases which has been placed before Rao. He also submits that, even if grant of a ML in favour of a particular party is not found feasible, the State will do its best to ensure that the ore mined in the 96 State is equitably distributed so as to meet the legitimate needs of all industries operating in the State. We have no doubt that the S.G. will keep. all relevant aspects urged by the parties in reaching their decision on the matters re manded to it by us. In the circumstances, we accept and confirm Rao 's recom mendation for grant of MLs to IMFA, FACOR and AIKATH, to the extent indicated by him. We set aside his rejection of the claims of OCL and ORIND. We leave it open to all the parties to place their claims, or further claims, as the case may be, in regard to the areas applied for by them on or before 30.4.1987, backed by supporting reasons, before the S.G. in the form of representations within four weeks from the date of this order. The S.G., we hope, will dispose of these applications within the statutory period failing which the parties will have their remedy under the statute by way of revision to the C.G. In arriving at its decisions, it will be open to the S.G. to take into account the discussions and findings of the Rao report in the light of this judgment. The S.G. should also keep in mind that no leases to any of the parties (other than OMC & IDCOL) can be granted unless either the areas so proposed to be leased out are dereserved and thrown open to applications from the public or unless the C.G., after considering the recommendations of the S.G., for reasons to be recorded in writing, considers a relaxa tion in favour of any of the parties necessary and justi fied. Before we conclude, we should like to place on record our appreciation of the detailed and excellent report given by Dr. Rao. He has brought together all the relevant data and analysed the various claims put forward before him; a detailed note on chromite deposits in the State of Orissa prepared by the Chief Mining Geologist of the Indian Bureau of Mines has also been made an Annexure to the report. The report and its annexures are bound to be of immense help and value to the S.G. and C.G. in arriving at their decisions not only on the various applications but also in regard to their future policy in the matter of grant of chromite leases and of the supply of chromite to the needy applicants in an equitable manner. W.P. No. 14116/87 and the other applications are dis posed of in the above terms. There will be no order as to costs. G.N. Petitions disposed of.
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In these cases, the people asking for help (called petitioners) are four private companies, two state-owned companies (owned by the government of Orissa), and one private person. They wanted the court to explain and give instructions about orders the court made earlier on April 30, 1987, and October 6, 1987, related to a written request (called a Writ Petition). All these requests came from applications to get the right to mine chrome ore (also called chromite) in the state of Orissa. Chrome ore is a mineral listed in the first and second lists of the Mines and Minerals Act of 1957. It's not a "minor mineral" according to the law. So, the state government has the power to give mining rights for chrome, but the central government can control what the state does. That's why the state and central governments are the ones responding to these requests (called respondents). When dealing with these cases, the court asked the Secretary of Mines in the Indian government, Mr. Rao, to carefully look at all the claims made by everyone involved. Mr. Rao looked at the claims of the two state-owned companies. They said that because they were owned by the government, they should get the mining rights instead of any private companies. They said the state government had made a rule saying the state companies should get first priority. The other parties (private companies) argued that the state companies were bringing up this claim too late in the process. The court told Mr. Rao to also look into the claims of the state companies. In his report on February 1, 1988, Mr. Rao agreed that the two state companies, Orissa Mining Corporation (OMC) and Industrial Development Corporation of Orissa Ltd. (IDCOL), should get priority. He also partly agreed with the claims of three private companies: Indian Metals and Ferro Alloys Limited (IMFA), Ferro Alloys Corporation Limited (FACOR), and Aikath. He rejected the claims of the other two private companies: Orissa Cements Ltd. (OCL) and Orissa Industries Ltd. (ORIND). Even though he agreed with the state companies' claims, he said they should only get leases for the land that was left over after the other companies he approved got their share. The current requests to the court are asking for instructions about Mr. Rao's report. The petitioners argued that Mr. Rao was just someone the court appointed to look into the situation, so the court should make its own decisions based on his report. The petitioners and respondents had different ideas about what Mr. Rao's report meant and how it should be used. Some wanted it followed completely, while others wanted it changed. The private companies challenged the idea that the state companies should get priority. Some of the petitioners also argued that the government had promised them mining rights in the past, and they should be forced to keep that promise (this is called Promissory Estoppel). The Court Decided: 1. The law needs to have clearer rules and steps to follow. Because there are many new chances for industry to grow in the country, the state government should ask for applications for specific areas by a certain date. Then, they should deal with all the applications together, and not let anyone else join in later. Otherwise, things will get confusing. There was a time when the state government depended on private companies to develop its mineral resources. But now, there's competition. The state government has its own state-owned companies, and many private businesses want mining leases. So, it's important to carefully study the situation, area by area. A schedule should be made for considering applications for specific areas, with strict deadlines. This way, the state won't have to deal with random applications or just give out leases based on who applied first. These are things that need careful thought and changes to the Mines and Minerals Act of 1957 and the rules made under it. 2. Chrome ore is a very important mineral, and it's important to protect it and use it properly for the country's growth. The state government made a good decision in 1967 to give state companies priority, and they kept doing this until 1974. In February 1974, the state government wanted to freely give out mining leases, but they changed their mind after the central government sent a letter on May 15, 1974. So, the state went back to giving state companies priority in 1977. Applications could still be considered to see if an exception was allowed, depending on the applicant's needs, what they wanted the lease for, what kind of ore they wanted to mine, the state's needs, if a state company could mine it more efficiently, and other important things. There's no proof that the state government has been unfair or dishonest in making these rules. The court agreed with Mr. Rao's decision to confirm the leases that had already been given to IMFA and FACOR. These should be seen as leases that were correctly given to them by making an exception under rule 59(2). It's true that the orders giving the leases don't explain the reasons in detail, but they were made during this legal case and should be seen in the context of the documents filed in court. The court also agreed with Mr. Rao's decision to give a lease to AIKATH (which hasn't happened yet). In these three cases, the records show enough reasons for giving the leases, and they justify the mining leases that were actually given. 4. Mr. Rao rejected the claims of OCL and ORIND without considering the different arguments they made. This part of Mr. Rao's decision is overturned because it's too short and doesn't have enough support. So, the central government is ordered to consider these claims again. It would be better if the claims of OCL and ORIND were brought back to the state government for a detailed review. The state government hasn't had a chance to consider all the different points made, and this would give the companies a chance to appeal to the central government again if they're not happy with the state government's decision. The state government needs to consider different things before giving a mining lease to a private company, making an exception to its policy of giving state companies priority. It did this for IMFA and FACOR for specific reasons that it wrote down. Whether it will do the same for OCL and ORIND is up to the state government to decide. It should be noted that the applications of these two companies haven't been considered in this way before. The applications of OCL and ORIND are brought back for the state government to consider. 5. The state government rejected ORIND's application because the legal case was ongoing, and they couldn't make any decisions at that time. ORIND can ask the state government to reconsider its application based on this new order. There's no need to require a formal request, so the state government is ordered to consider ORIND's application again based on this judgment. 6. As for OMC and IDCOL, Mr. Rao suggested that they should get leases for the areas that are left over after IMFA and FACOR get their share. There are large areas of land with minerals that have been set aside for state companies. Their interests don't clash with the private companies, which can only claim rights if the state government is willing to make an exception to the rule of giving state companies priority. The court doesn't think OMC or IDCOL can demand that the state government keep certain land set aside and not give any mining leases to private companies at all. The interests of these companies are safe with the state government, and it's up to the state government to decide how to give out mining leases to them. So, the companies don't really need to apply for mining leases at all. But if they do, the state government considers their applications, and the central government reviews them as a formality. To this extent, they have a legal option for appeal. 7. When the state government agreed to lease out areas to IMFA and FACOR, it was pointed out that this couldn't happen without the central government's approval. So, the court ordered the state government to get that approval. The order to the central government was only to give its approval within a certain time. It can't be seen as an order forcing the central government to give approval, whether it agreed with the state government's decision or not. So, the mining leases given to IMFA and FACOR are seen as having been made by making an exception under Rule 59(2). Even though the state government and central government didn't specifically write down their reasons, it's fair to say that the compromise was made because they partly agreed with the claims made by these companies. Since the leases were given to these companies by making an exception to the rule of giving state companies priority, Mr. Rao's finding that these leases should be confirmed is accepted. 8.1 AIKATH is someone who discovered chrome ore in the state. He got a lease back in 1952, but the state canceled it when it took over. He once had a lease for 640 acres and started mining, but the state government has now approved a lease for only 140 acres. AIKATH had been mining since May 1, 1953. His original lease was approved before the area was set aside on July 3, 1962. If the state government thinks these are important reasons and made a compromise with him for a lease of 140 acres, and the High Court has also written this down, then there are no reasons to interfere with the state government's decision. 8.2 Even though the state government and AIKATH made a compromise on December 4, 1984, no lease has been given to him yet, probably because the central government hasn't had a chance to consider the matter. But there's no point in sending the matter back and asking the state government to get the central government's approval. Mr. Rao's decision can be taken as including the central government's approval, so it's upheld. The state government is ordered to give AIKATH a mining lease as soon as possible for the 140 acres that they agreed to lease to him under the compromise on December 4, 1984. 9. Although Mr. Rao approved the grants made to IMFA and FACOR by the state government (which he says were perhaps based on the court's comments), he clearly made his own decisions on these independently. He has given reasons for justifying the grants to IMFA and FACOR. It's also clear that there were no court orders that could have influenced his decisions on the claims of the other parties. 10.1 When deciding who should get a lease when there are many qualified candidates, it wouldn't be right to say that because the state government's order of October 29, 1973, has been overturned, ORIND's application should be brought back and considered as if it were still October 29, 1973. It wouldn't be right to say that they should automatically get the lease because there were no other applications pending at that time. In these cases, later applications can't be ignored, and a simple rule can't be applied. 10.2 Although section 11 tries to follow a simple rule of "first come, first served," in reality, applying first doesn't always decide the issue. In this case, for example, while ORIND's application from 1971 was being considered by different authorities and in the court case, several other companies have entered the picture. The law isn't clear about which applications for a particular area should be considered together. If ORIND's application from 1971 were considered only based on the companies that had applied at that time, one thing would happen. If all the applications that were waiting to be decided when ORIND's application was being considered were considered, the result would be completely different. Since the country's interests require that no lease for mining rights should be given without considering all applicants at any point in time and choosing the best among them or dividing the area among the most efficient and capable, the latter is the only reasonable and practical way to do it. That's why the court, in its order on April 30, 1987, said that all applications waiting to be considered on April 30, 1987, should be considered by Mr. Rao. 11.1 Before, rule 58 didn't allow the state government to set aside any area in the state for state companies to mine. The court has said that the state government does have this power. Rule 58 was changed in 1980 to give the state government this power. It's also agreed that a rule setting aside areas was made on August 3, 1977. So, the state government, OMC, and IDCOL are right in saying that the areas in question are not available to anyone other than the state government or a state company, unless the availability is announced again according to the law (rule 59(1)(e)) or the central government decides to make an exception to rule 59(1). 11.2 In these cases, except for a few times where the state government gave out leases on its own, the state government has generally stuck to its position that the land with chrome is set aside for state companies to mine. The rules allow the central government to make exceptions to the strict rules in individual cases after writing down special reasons. These few exceptions are not enough to prove that the state government is only pretending to follow the policy of setting aside areas and hasn't really been serious about it. 11.3 The conclusion that the areas in question before the court were all properly set aside for state companies to mine doesn't mean that private companies can't get any leases at all for these areas. As pointed out earlier, the central government can make exceptions to the rule for recorded reasons. It also doesn't mean that the state companies should get all the leases they're asking for. There are two reasons for this. First, the rule setting aside areas is general and doesn't directly give any rights to the state companies. There are two types of these rules. Under section 17A(1), added in 1986, the central government can set aside any area not covered by a private lease or a mining lease to protect any mineral, after talking to the state government. The idea of these rules is that the minerals in this area will not be mined at all, either by private companies or by state companies. The second type of rule was provided for in rule 58, and the state government could make this rule (without needing approval from the central government). It was meant to set aside areas for state companies to mine. The rule itself might say which state company should mine the areas or might just be general, like the rule itself. Whether these areas are leased out to OMC or IDCOL or some other state company or are mined by the government itself is up to the government to decide, not the law or the rules. There's nothing in either of them that gives OMC or IDCOL the right to insist that the leases should only be given to them and no one else in the state sector. There are no competing applications from companies in the state sector controlled by either the state government or the central government. But even if there were, the state government could decide how much of the land should be mined by each of the companies or by the central government or state government. Both companies are part of the state government, and the state government's decision is binding on them. If the state government decides not to give a lease for the set-aside area to a company that's part of the state government, that company has no right to insist that a mining lease should be given to it. The state government can choose at any time to give the lease to the state or any one of the companies listed in the rule. It's true that if the state government eventually decides to give a lease to one of them, the company whose application is rejected may be upset by the choice of another company for the lease. Whether OMC or IDCOL can object to the grant to any of the private companies because a rule has been made in favor of the state sector has to be answered negatively because of the laws. The state government could always cancel the rule setting aside the area and make the areas available to private companies. Or, without actually canceling the rule, they could persuade the central government to make an exception to the rules in any particular case. So, the state government can give private leases even for areas covered by a rule of the state government, and this can't be challenged by any company in the state sector. 12. In these cases, no reasons have been given that would support a claim that the government had made a promise that it should now be forced to keep. The central government had to approve the grant of a lease to ORIND. The central government never approved it. The fact that the state government recommended the grant at one point doesn't prevent them from deciding on ORIND's application based on the central government's instructions.
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uld be open to all the parties to place their claims, or further claims, as the case may be, in regard to the areas applied for by them on or before 30.4.1987, hacked by supporting reasons, before the State Government in the form of representations within four weeks from the date of this order; that the State Government would dispose of these applications within the statutory period failing which the parties will have their remedy under the statute by way of revision to the Central Government; that in arriving at its decisions, it will be open to the State Government to take into account the dis cussions and findings of the Rao Report in the light of this judgment; that the State Government should also keep in mind that no leases to any of the parties (other than OMC and IDCOL) could be granted unless either the areas so proposed to be leased out are deserved and thrown open to appellants from the public or unless the Central Government, after considering the recommendations of the State Government, for reasons to be recorded in writing considers a relaxation in favour of any of the parties necessary and justified. 14116/84 which was "disposed of" by the orders of this Court dated 30.4.87 and 6.10.87. The writ petition as well as the connected matters arise out of applications for grant of rights for the mining of chrome ore or Chromite in the State of Orissa. 5163 of 1988 from an order of the High Court of Orissa dated 11.11.1987 dismissing a writ petition filed against an order of rejection by the S.G. of an application made by it on 18.7.1977 for grant of a ML which was confirmed by the C.G. When the matter went to Rao, OMC and IDCOL also 38 put forward claims that the public sector units in the State of Orissa were entitled to the grant of mining rights in the State to the exclusion of all private parties inasmuch as there was a reservation in their favour by an appropriate notification issued by the State Government. However, on applications made by OMC and IDCOL, this Court directed that the claims of these two public sector undertakings would also be examined by Rao. Nevertheless it appears that, bearing in mind certain interim orders passed by this Court in the various applications made to it during the pendency of the writ petitions, Rao came to the conclu sion that only three of the parties other than the two public sector undertakings should be granted leases to the extent mentioned by him. However, having regard to the interim orders passed by this Court and having regard to the fact that what Rao has done is virtually to implement various orders passed by this Court during the pendency of the writ petition, the State Government, without prejudice to its contentions in relation to the Rao report, is prepared to abide by it. IMFA and FACOR are substantial ly satisfied with the report given by Dr. Rao (except for certain minor contentions which they are prepared to give up for the present, with liberty to make representations to the State Government) but they also wish to make it clear that, in case the Rao report is not to be accepted by this Court, they would also like to put forward all their contentions so that their case may not go by default. (3) On receipt of an application under this section, the State Government may, having regard to the provisions of this Act and any rules made thereunder, grant or refuse to grant the licence or lease. Application for revision: (1) Any person aggrieved by any order made by the State Government or other authority in exercise of the powers conferred on it by the Act or these rules may, within three months of the date of communication of the order to him, apply to the Central Government in triplicate in Form N, for revision of the order. Explanation: For the purposes of this rule, where a State 46 Government has failed to dispose of an application for the grant of renewal of a prospecting licence or a mining lease within the period specified in respect thereof in these rules, the State Government shall be deemed to have made an order refusing the grant or renewal of such licence or lease on the date on which such period expires. Availability of areas for regrant to be notified (1) No area which was previously held or which is being held under prospecting licence or a mining lease so the case may be or in respect of which the order granting licence or lease has been revoked under sub rule (1) of the rule 15 or sub rule (1) of rule 31, shall be available for grant un less (a) an entry to the effect is made in the register referred to in sub rule (2) of rule 21 or sub rule (2) of rule 40, as the case may be, in ink; and (b) the date from which the area shall be available for grant is notified in the Official Gazette at least thirty days in advance. Premature applications Applications for the grant of a prospecting licence or a mining lease in respect of the areas in which (a) no notification has been issued under rule58 or rule59; or (b) if any such notification has been issued the period specified in the notification has not expired. 2.2.80 shall be available for grant unless (i) an entry to the effect that the area is available for grant is made in the register referred to in sub rule (2) of Rule 21 or sub rule (2) of Rule 40 as the case may be, in ink; and (ii) the availability of the area for grant is notified in the Official Gazette and specifying a date (being a date not 48 earlier than thirty days from the date of the publication of such notification in the Official Gazette) from which such area shall be available for grant: XXX XXX XXX (2) The Central Government may, for reasons to be recorded in writing relax the provisions of sub rule (1) in any special case. Premature applications: Applications for the grant of a prospecting licence or mining lease in respect of areas whose availability for grant is required to be notified under Rule 59 shall if, (a) no notification has been issued under that rule: or (b) where any such notification has been issued, the period specified in the notification has not expired, shall be deemed to be premature and shall not be entertained, and the application fee thereon, if any paid, shall be refunded. ML APPLICATIONS OF THE PARTIES Though it was the IMFA which came to this Court with a writ petition, there were a number of other applications for grant of MLs pending before the State Government. However, it appears, on 21.11.84, the S.G. had agreed to grant a ML in favour of AIKATH in respect of 140 acres out of 147.69 hectares covered by item No. (This order was objected to by FACOR and on 8.5.85 the Court passed an order directing the grant of a lease to FACOR over 180 acres in item 5). The net result is that out of the five items applied for by IMFA: (i) item 1 has been given but surrendered, (ii) the S.G. is agreeable to give 139.37 acres out of 142 acres of item 2; (iii) this Court has directed the grant to IMFA of item 3; (iv) in item 4, this Court has directed the grant to IMFA of 26.62 out of 37.008 hectares of item 4: and (v) In item 5, the S.G. has agreed to lease our 140 acres to AIKATH and 180 acres to FACOR. It has been stated that the S.G. had entered into a compromise with FACOR on 18.2.85 agreeing to grant a mining lease in its favour in respect of 596 acres out of 772 acres applied under item No. is that, though FACOR made six applications, it had agreed to give up all of them in lieu of a ML for 596 acres out of item 5 out of which a lease in respect of 180 acres has already been obtained and is being exploited by FACOR. Mr. AIKATH filed a writ petition in the High Court and this was pending when W.P. This was reported by the S.G. to this Court but no orders were passed by this Court, and no ML has been executed, in favour of AIKATH. ORIND made an application for mining lease on 5.7.71. This application was rejected by the S.G. on 23.10.73 on the ground that the area was reserved for exploitation in the public sector. that a lease in favour of ORIND may be granted in respect of 749.82 out of 1129.25 hectares applied for. It may be here mentioned that one of the contentions of ORIND 54 before us is that it had also applied on 5.7.71 lot a lease of mining rights in respect of 446.38 hectares in village Sukrangi in Distt. had reiterated that their revision petition may be rejected as S.G. had already decided to grant ORIND a lease of 749.82 out of the area of 1129.25 hectares applied for by it. The S.G. rejected ORIND 's application for 1129.25 hectares by an order dated 7.4.89. ORISSA CEMENT LIMITED (OCL) (a) Previous History: The company 's grievance is that it has been filing applications for mining rights in respect of chrome ore right from the year 1961 but none of the applications have been considered by the State Government on the plea that the areas applied for had been reserved for exploitation in the public sector. on the P.S. The C.G., by an order dated 10.10.83, on a revision filed by OMC, directed the S.G. to dispose of the application within 200 days. The S.G., however, did not grant OMC any lease but, instead, granted ML to IMFA on 14.3.85 in respect of 26.62 hectares which was well within the area applied for by OMC. In the result, the OMC has not been granted by mining lease despite its claim that the area in question has been reserved for exploitation in public sector though IMFA has been given ML in respect of 26.62 acres out of the area covered by these applications. ORDERS PASSED BY THIS COURT It is now necessary to refer to the various interim orders passed by this Court in this matter because some of the parties have made a grievance that, though their claims for leases were pending at various levels, IMFA and FACOR have been able to obtain from this Court orders directing the grant of leases to them and that this procedure was wholly unjustified. It needs to be set out in full: "After hearing counsel appearing for the parties we consider that the proper order to be passed is to direct the parties who have applied for grant of mining leases to file representations before the Secretary Ministry of Mines and Steel, Department of Mines, Government of India within ten days from today setting out their claims in respect of the areas covered by their respective applications. It may be noted that the Court directed that the proper order to be passed was to direct the parties who had applied for grant of mining |eases to file representations before the Secretary, Ministry of Mines and Steel, Department of Mines; Government of India within ten days from that date setting out their claims in respect of the areas covered by their respective applications. 13347/87, FACOR pointed out that a lease in respect of 180 acres (being part of item 5) had been granted to it by the S.G. on 13.8.85 in pursuance of this Court 's order dated 8/5/85. According to the applicant, only the parties to the writ petition could be heard by Rao and OMC and IDCOL should not be permitted to join the proceedings before Rao and allowed to disturb the leases directed to the given to it and IMFA by the orders dated 28.2.85 and 8.5.85. That it is submitted that the order dated 30.4.87 does not make it clear as to under what statutory authority the Secretary to the,Government of India shall dispose of the representations made by the various parties to the writ petition. No orders on this petition have been passed so far but this will now have to be disposed of in the light of the conclusions we may reach in regard to OCL 's claims on the merits and no separate orders need to be passed thereon. No orders have been passed on this application so far but, since the writ petition itself is now being disposed of, no interim orders as prayed for in this application are at all called for. If ORIND 's application of 1971 for example: were to be 72 considered only on the basis of the persons who had made applications at that time or a short time before or after, one result would follow; if, on the other hand: if all the applications pending for disposal at the time ORIND 's appli cation is to be granted or rejected are to be considered. Now, to turn to the contentions urged before us: Dr. Singhvi, who 73 appeared for ORIND, vehemently contended that the rejection of the application of ORIND for a mining lease was contrary to the statutory mandate in section 11 (2); that, subject only to the provision contained in section 11(1) which had no application here, the earliest applicant was entitled to have a prefer ential right for the grant of a lease; and that a considera tion of the comparative merits of other applicants can arise only in a case where applications have been received on the same day. The S.G. did not comply with this order and so a writ petition was filed by ORIND which was pending when this writ petition was" filed. Accordingly, it is proposed to grant the mining lease for chromite over the available areas subject to revision of the previous order of the State Government by Government of India u/s 30 of the Mines & Minerals (Regulation & Development) Act, 1957 and u/s 5(2) of the said Act. 1960 for grant of Mining Lease for chromite over an area of 749.32 hectares in Cuttack District in favour of Orissa Industries Limited. " on the contents of another revision application filed by ORIND against the rejection of its application (also dated 5.7.71) for a lease of 446.38 hec tares in village Sukrangi of Cuttack District, had this to say: "Recently in State Government letter No. Dr. Singhvi submitted on the strength of this correspondence and notification that the S.G. having sought to justify its rejection of ORIND 's application for 77 446.38 acres on the ground that the company 's application for 749.32 hectares was being recommended after dereserva tion, it was not open to the S.G. now to take up a different stand and that ORIND 's application for 1229.25 hectares now under consideration should have been granted at least to the extent of 744.32 hectares the dereservation and lease in favour of ORIND, of which had been recommended by the S.G. itself as early as 1974. could set aside the order of 23.10.73 and direct the grant of a lease to ORIND in respect of 749.32 hectares. Be that as it may, the C.G. simply set aside the order of 23.10.73 on the ground that it was not a speaking order and directed the S.G. to dispose of ORIND 's application within 100 days in the light of the letter of the C.G. (c) The S.G. has been willing enough to lease out lands to private parties: (i) The S.G. has granted leases to FACOR on 81 9.2.72, 7.10.72 and 12.11.76 in respect of 157.05 hects. Our conclusion that the areas in question before us were all duly reserved for public sector exploitation does not, however, mean that private parties cannot be granted any lease at all in respect of these areas for, as pointed out earlier, it is open to the C.G. If, there fore the claim of reservation in 1977 in favour of the public sector is upheld absolutely, and if we do not agree with the findings of Rao that neither OMC nor IDCOL deserve any grant, all that we can do is to leave it to the S.G. to consider whether any portion of the land thus reserved should be given by it to these two corporations. We are of the view that, if the S.G. decides not to grant a lease in respect of the reserved area to an instru mentality of the S.G., that instrumentality has no right to insist that a ML should be granted to it. It is. We have no difficulty in construing the Rao report as a decision on the claims of the various parties before it, though, having regard to the terms of the order of this Court dated 6.10.87, it has been styled as a report. This Court had made it clear that Rao should not consider himself bound by the memoranda of compromise filed in the High Court of Orissa (with AIKATH and FACOR) or the orders passed by this Court in regard to the allocation of areas (to IMFA and FACOR) though necessarily he had to "bear in mind the previous orders made in their [IMFA and FACOR] favour and the previ ous leases and the rights, if any, granted therefrom and their consequences". The S.G. submitted to the Court that a lease in respect of item 1 had been granted to FACOR, that item 5 had already been agreed to be leased in favour of AIKATH and FACOR and that it was willing to grant a ML in respect of item 3 and 26.62 acres out of item 4 to IMFA. It was in view of this that the Court passed the order. For our present purposes, we think we can consider the Rao report in two parts: (a) his endorsement of the S.G. 's decision to grant ML to IMFA, FACOR and AIKATH: (b) the rejection by him of the claims put forward by the above three parties for leases in respect or areas over the above what 89 has been allotted to them as well as the rejection of the claims of the other parties. So far as the first aspect is concerned, we think that Rao 's decision, that the leases that have been granted already in favour of IMFA, FACOR be confirmed, should be upheld. Whether it would do so also in favour of OCL and ORIND is for the State to consider. We leave it open to all the parties to place their claims, or further claims, as the case may be, in regard to the areas applied for by them on or before 30.4.1987, backed by supporting reasons, before the S.G. in the form of representations within four weeks from the date of this order.
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So, the state government has the power to give mining rights for chrome, but the central government can control what the state does. The petitioners argued that Mr. Rao was just someone the court appointed to look into the situation, so the court should make its own decisions based on his report. Applications could still be considered to see if an exception was allowed, depending on the applicant's needs, what they wanted the lease for, what kind of ore they wanted to mine, the state's needs, if a state company could mine it more efficiently, and other important things. The state government hasn't had a chance to consider all the different points made, and this would give the companies a chance to appeal to the central government again if they're not happy with the state government's decision. The state government needs to consider different things before giving a mining lease to a private company, making an exception to its policy of giving state companies priority. It should be noted that the applications of these two companies haven't been considered in this way before. The state government rejected ORIND's application because the legal case was ongoing, and they couldn't make any decisions at that time. There are large areas of land with minerals that have been set aside for state companies. Their interests don't clash with the private companies, which can only claim rights if the state government is willing to make an exception to the rule of giving state companies priority. The court doesn't think OMC or IDCOL can demand that the state government keep certain land set aside and not give any mining leases to private companies at all. The interests of these companies are safe with the state government, and it's up to the state government to decide how to give out mining leases to them. When the state government agreed to lease out areas to IMFA and FACOR, it was pointed out that this couldn't happen without the central government's approval. So, the court ordered the state government to get that approval. It can't be seen as an order forcing the central government to give approval, whether it agreed with the state government's decision or not. If the state government thinks these are important reasons and made a compromise with him for a lease of 140 acres, and the High Court has also written this down, then there are no reasons to interfere with the state government's decision. 10.1 When deciding who should get a lease when there are many qualified candidates, it wouldn't be right to say that because the state government's order of October 29, 1973, has been overturned, ORIND's application should be brought back and considered as if it were still October 29, 1973. It wouldn't be right to say that they should automatically get the lease because there were no other applications pending at that time. 11.1 Before, rule 58 didn't allow the state government to set aside any area in the state for state companies to mine. So, the state government, OMC, and IDCOL are right in saying that the areas in question are not available to anyone other than the state government or a state company, unless the availability is announced again according to the law (rule 59(1)(e)) or the central government decides to make an exception to rule 59(1). 11.3 The conclusion that the areas in question before the court were all properly set aside for state companies to mine doesn't mean that private companies can't get any leases at all for these areas. It also doesn't mean that the state companies should get all the leases they're asking for. Under section 17A(1), added in 1986, the central government can set aside any area not covered by a private lease or a mining lease to protect any mineral, after talking to the state government. The idea of these rules is that the minerals in this area will not be mined at all, either by private companies or by state companies. But even if there were, the state government could decide how much of the land should be mined by each of the companies or by the central government or state government. If the state government decides not to give a lease for the set-aside area to a company that's part of the state government, that company has no right to insist that a mining lease should be given to it. The state government can choose at any time to give the lease to the state or any one of the companies listed in the rule. So, the state government can give private leases even for areas covered by a rule of the state government, and this can't be challenged by any company in the state sector. In these cases, no reasons have been given that would support a claim that the government had made a promise that it should now be forced to keep.
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220, 222, 240 and 380 to 395 of 1955. Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. Dec. 10, 11, 12, 13, 17, 18, 19. Jan. 7, 8, 9. D. Narsa Raju, Advocate General for the State of Andhra Pradesh and T. M. Sen, for the respondent. The petitions are premature and incompetent as the facts of each transaction of sale are yet to be investigated and it is not possible to know the character of each sale, nor can it be determined which sales can be and which cannot be taxed by Andhra Pradesh. [CHIEF JUSTICE. You should be reasonably satisfied that the sales are of such a nature that you can levy tax on them before you issue a notice. BOSE J. You must state the facts on which you think you can tax the sales.] section K. DAS J. Your stand is that all transactions could be taxed by the delivery State.] D. Narsa Raju. My State is taxing under the decision of this Court in the United Motors case ( [1953]S. C. R. 1069). [ Upon the counsel for the petitioners stating that he would confine his arguments to the imposition of tax on Explanation sales only, which some of the transactions indisputably were, the Court indicated that it would hear the petitions. ] K. section Krishnaswami Iyengar, N. Srinivasan and R. Ganapathy Iyer, for the petitioners. The Andhra (Madras) Act does not seek to tax Explanation sales 1427 at all. It talks of " property passing " only and as such Andhra can tax only such sales where property passes in Andhra. See Poppatlal Shah vs State of ' Madras, ( [1953] section C. R. 677). Section 22 does not enlarge the definition of sales; it only restricts the power of the State to tax. The explanation to section 22, like the explanation to article 236(1), is merely for the purpose of defining what is an outside sale and not for determining what is an inside sale. See Bengal Immunity Company case ( at 640). The power of the President under article 372(2) being merely to bring the State laws into conformity with article 286, section 22, which was introduced by the Presidential Adap tation Order under article 372(2), cannot be construed as permitting the imposition of tax on Explanation sales which was prohibited by article 286. If section 22 was construed to permit such imposition it was unconstitutional, illegal and void and must be deemed to be non est. See Bengal Immunity Company case ( at 667). What did not exist could not be validated. The Sales Tax Laws (Validation) Act, 1956, was not valid legislation under article 286(2). Article 286(2) only empowers Parliament to lift the ban on the imposition of tax on inter State ales and after it has lifted the ban the State legislature may impose the tax. Parliament is not competent to impose sales tax; such power is vested only in the State legislatures. Article 286(2) does not give Parliament power to validate or ratify laws of the State legislatures. The power under article 286(2) can be exercised only once and finally and fully, not partially. Parliament can only lift the ban as from the day the power is exercised and riot retrospectively. Punjab Province vs Daulat Singh, (73 I. A. 59); Behram Khurshed Pesikaka vs The State of Bombay ( [ 1955 ] I section C. R. 613, 654 and 655). The case of Dialdas vs Talwalkar (A. 1. R. has been wrongly decided. But even this decision helps the petitioners in so far as it lays down that where tax had neither been collected nor levied the Validation Act did not confer power to assess or levy. The whole 181 1428 policy of the Validation Act was to save the State from disgorging the, tax illegally collected. Both levy and collection must be within the period specified in section 2 of the, Act. Mettur Industries Ltd. vs The State of Madras (A. 1. R. and Mysore Spinning and Manufacturing Co. Ltd. vs Deputy Commercial Tax Officer (A. 1. R. are against the petitioners. R. Ganapathy Iyer followed. Section 22 of the Andhra (Madras) Act did riot enlarge the powers of taxation. Mathew vs Travancore Cochin Board of Reventue (A. 1. R. 1957 T. C. 300). The validation being for a temporary period which expired on September 6, 1.955, no action can be taken after that date under the validated laws. Kesavan Madhava Menon vs The State of Bombay, ( ; , 234, 235), section Krishnan vs The State of Madras, ( [1951]S. C. R. 62 1, and State of Punjab vs Mohar Singh,[1955 ] I section C. R. 893). The tax being a sinole pointtax under the Act, and the petitioners having already paid the tax at the time of the purchase of the yarn from the Mills, no second tax was payable. The Andhra (Madras) Act being a new Act the tax on yarn is hit by the Essential Commodities Act (52 of 1952) read with article 286(3) of the Constitution. Petitioners are not dealers in Andhra Pradesh and cannot be assessed. There are no sales in Andhra; all sales being in Madras. V.L. Narasimhamoorthy, J. B. Dadachanji and Rameshtvar Nath, for the Mysore Spinning & Mfg. Co., Ltd., and Minerva Mills Ltd., (Interveners), supported the petitioners. Section 22 does not authorise the imposition of tax on Explanation sales. It could not have been the intention of the President to allow the State to add a new category of sales the Explanation Sales to be taxed. The language of article 286(2) indicates that the lifting of the ban is a condition precedent to legislation by the States imposing tax on inter State sales. Alternatively, the power to tax inter State sales is with Parliament under Entry 97 of List I of Schedule VII of the Constitution. Section 22 was wiped out and obliterated by the judgment in the 1429 Bengal Immunity Company case. See Behram Khurshed Pesikaka vs The State of Bombay, ([1955] 1 section C. R. 613); Newberry vs United States; , The same interpretation must be given to the explanation to section 22 as has been given to the explanation to article 286(1)(a). The non obstante clause in section 22 has only the effectof subtracting something from the power to tax andriot of adding to it. Ram Narain Sons Ltd. vs Asst. Commissioner of Sales Tax ([1955] 2 S.C. R. 483); Aswini Kumar Ghosh vs Arbinda Bose ([1953] S.C.R. 1, 22, 24); A. V. Fernandez vs The State of Kerala, ([1957] section C. R. 837). N. A. Palkhiwala, J. B. Dadachanji and Rameshwar Nath, for Tata Iron & Steel Co., Ltd., (Intervener). There must be a factual levy before Parliament can validate it. Section 22(ii) removes inter State sales from the purview of the Act. Fernandez 's case supports this contention. On a proper construction of article 286(2), according to the decision in the Bengal Immunity Company case, there was no levy on interState sales and there was nothing for Parliament to lift the ban for. ( [ 1955 ] 2 section C. R. 603, 621, 662, 667). There is a vital difference between retrospective and retroactive operation. There is no power in Parliament to validate ex post facto a violation of article 286(2). Parliament must first lift the ban and then the State legislation may come imposing tax on inter State sales. Parliament is competent to prevent what otherwise would have been a violation of the Constitution, but it is not competent to condone an accomplished violation. Section 2 of the Validating Act will operate only where taxes have already been collected or have been finally assessed. P. N. Bhagwati and .1. N. Shroff, for Pashebbhai Patel & Co., Ltd., (Intervener) supported the petitioners. D. Narsa Raju, Advocate General of Andhra Pradesh and T. M. Sen, for the respondents. Article 372(2) must take regard of the provision of the Constitution to bring the State laws into conformity with which the power of adaptation is to be exercised. That provision 1430 is article 286. Implicit in article 286(1) is the recognition that the delivery State alone may tax. The President would be acting within his power to enable the delivery State to tax Such power is in accordance with the provisions of the Constitution. The power of the legislature to bring the laws in accordance with the Constitution is conferred upon the President. Consequently, the explanation to section 22 can be read along with the definition of sale and it does add to that definition by bringing Explanation sales within it. K. V. Subramania Iyer, D. N. Mukherjee and B. N. Ghosh, for Madura Mills Co., Ltd., (Intervener). The Adaptation Order made by tile President is not 'law of a State ' within the meaning of the Validating Act. 'Law of a State ' in the Validating Act must mean the same thing as in article 286(2). The President exercising power under article 372(2) is not controlled by article 286; he exercises a power which belongs to the President and not a power on behalf of the State. Section 22 of the Andhra (Madras) Act is not law made by the State Legislature and is not validated by the Validating Act. The power of imposition of sales tax on inter State sales was taken away from the States. The bail under article 286(2) is only in respect of existing laws; there is no power in the States to enact laws imposing tax on interstate sales. The power to impose tax on inter State sales is within the exclusive domain of Parliament under Entry 42 of List I of the Seventh Schedule of the Constitution and Entry 54 of List 11 must be construed as not including such power. A reference to article 301 reinforces this interpretation. The freedom under article 301 includes freedom from sales tax. See The Commonwealth vs The State of South Australia, (38 C. L. R. 408). The Validation Act is not legislation within Entry 42. See Bank of N. section W. vs The Commonwealth, (76 C. L. R. 1, 381); Robbins vs Taxing District of Shelby County ((1877) ; ; McLeod vs Dilworth Co. ((1944) 88 L. Ed. 1304). C. K. Daphtary, Solicitor General of India, G. N. 1431 Joshi and T. M. Sen, for the Union of India (Intervener). The Sales Tax Laws Validation Act, 1956, is valid legislation tinder article 286(2). In effect and in substance the Validation Act is a law which removes the ban imposed by article 286(2), and is not really a Validating Act. Article 286(2), in respect of existing laws, merely said that they should not be effective or operative. It did not take away the competency of the legislatures to make laws providing for taxes oil inter State sales. Such a law may be against the provision of the Constitution, but that does not repeal or obliterate it. It is only in abeyance. See Bhikaji Narain Dhakra,s and others vs The State Of Madhya Pradesh and another, ([ ; , 600). Legislative power generally includes the power to legislate retrospectively. There is no limitation in article 286(2) as respects retrospective legislation. Parliament could, therefore, lift the ban retrospectively. Section 22 is a piece of conditional legislation. As soon as the ban under article 286(2) was lifted by Parliament it came into operation. The Validation Act is not a temporary statute. A temporary statute is one which says that it is to be effective for a particular period. The Validating Act operates even now and is effective, though it is in respect of sales of a particular period. It is open to the States to initiate proceedings now for taxing the Explanation sales made during the period mentioned in section 2 even though no such proceedings had been taken during that period. Entry 42 of List I which reads: " Inter State trade and commerce " does not confer any power of taxation on Parliament. In the scheme of our Constitution a general Entry does not include the power of taxation. Taxes, duties, etc., are enumerated in a separate group in Entries 82 92 in List I. V. K. T. Chari, Advocate General for the State of Madras, B. R. Gopalakrishnan and T. M. Sen for the State of Madras (Intervener). In construing section 22 of the Andhra (Madras) Act regard must be had to the law as it stood till September 6, 1955, when judgment was delivered in the Bengal Immunity Company case. In view of the decision in the United Motors 1432 case ([1953] section C. R. 1069, 1085, 1086, 1093, 1094), Explanation sales were regarded as 'inside sales ' in the delivery State, and the delivery State was entitled to tax sales. The law of a State which imposed tax on Explanation sales would remain on the statute book, in spite of the decision in The Bengal Immunity Company case, but could not be enforced. See Bhikaji Narain Dhakras and others vs The State of Madhya Pradesh and another ([1955] 2 S.C.R. 589); Ulster Transport Authority vs James Brown & Sons Ltd. ((1953) Northern Ireland Reports 79). Section 2 of the Validating Act refers to such a law. Mahabir Prasad, Advocate General for the State of Bihar, Rajeshwar Prasad and section P. Varma, for the State of Bihar (Intervener); G. C. Mathur and C. P. Lal, for the State of Uttar Pradesh (Intervener) supported the respondents and the Union of India. R. Ganapathy Iyer, for the petitioners, replied. K. V. Subramania Iyer, for Madura Mills Co., Ltd., (Intervener), also replied with the permission of the Court. March II. The judgment of Das C. J., Venkatarama Aiyar, section K. Das and Vivian Bose, JJ. was delivered by Venkatarama Aiyar J. Sarkar J. delivered a separate judgment. VENKATARAMA AIYAR J. The petitioners are dealers carrying on business in the City of Madras in the sale and purchase of yarn, and they have filed the present applications under article 32 of the Constitution for the issue of a writ of prohibition or other appropriate writ restraining the State of Andhra from taking proceedings for imposing tax on certain sales effected by them in favour of merchants who are residing or carrying on business in what is now the State of Andhra Pradesh, on the ground, inter alia, that the said sales were made in the course of inter State trade, and that no tax could be levied on them by reason of the prohibition contained in article 286(2) of the Constitution. The course of dealings between the parties resulting 1433 in the above sales has been set out in para. 5 in Petition No. 220 of 1955. It is therein stated that the dealers in Andhra would place orders for the purchase of yarn with the petitioners in Madras, that the contracts would be concluded at Madras, that the goods would be delivered ex godown at Madras and would thereafter be despatched to the purchasers either by lorries or by rail as might be directed by them, that when the goods were sent by rail, the railway receipts would be taken either in the name of the consignees, and sent to them by post or in the name of the consignor and endorsed to the purchasers and delivered to them in Madras or sent to them by post endorsed in favour of a bank and the purchasers would take delivery of those receipts after payment to the bank. It is said that in all cases price of the goods was paid in Madras. On the above allegations, it is manifest that the sales mentioned therein are not all of the same kind, and in point of law, the incidents attaching to them might be different. A consideration of the validity of the imposition with reference to the several classes of sales mentioned above would he wholly airy and pointless without a determination of the facts relating to them, which, however, have not been investigated. Counsel for the petitioners, however, concedes that the, dispute in these proceedings is confined to the proposed imposition of tax, in so far as it relates to sales of the character mentioned in the Explanation to article 286(1)(a), that is to say, sales in which the property in the goods sold passed outside the State of Andhra but the goods themselves were actually delivered as a result of the sale for consumption within that State. These sales have been referred to in the arguments before us as "Explanation sales ", and it will be convenient to adopt that expression in referring to them in this judgment. It will be seen that the above sales would all of them have been intrastate, so long as the Andhra State formed part of the composite State of Madras, and questions of the character now agitated before us could not then have arisen. On September 14, 1953, 1434 Parliament enacted the Andhra State Act (30 of 1953), whereby a separate State called the State of Andhra was constituted incorporating therein territories which had previously thereto formed part of the State of Madras, and this Act came into force on October 1, 1953. Under section 53 of the Andhra State Act, the laws in force in the territories in the Andhra State prior to its constitution are to continue to be in force even thereafter, and one of those laws is the Madras General Sales Tax Act (Madras 9 of 1939), hereinafter referred to as the Madras Act. Section 54 of the Andhra State Act conferred on the Government a power to adapt laws for the purpose of facilitating the application of any law previously made, and in exercise of the power conferred by this section, an Adaptation Order was passed on November 12, 1953, whereby the word " Andhra " was substituted for the word "Madras" in the Madras Act. We shall hereafter refer to the Madras Act as continued and applied in the State of Andhra as the Andhra (Madras) Act. It will be convenient at this stage to refer to the relevant provisions of this Act. The preamble to the Act states that " it is expedient to provide for the levy of a general tax on the sale of goods in the State of Madras". "Sale" is defined in section 2(h), omitting what is not material, as meaning " every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration. " Section 2(i) defines " turnover " as " the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration ". Section 3 is the charging section and provides that every dealer shall pay for each year tax on his total turnover for such year. By the Madras General Sales Tax (Amendment) Act No. 25 of 1947, a new Explanation was added to the definition of " sale ", and it is as follows: Explanation 2: " Notwithstanding anything to the contrary in the Indian Sale of (Goods Act, 1930, the sale or purchase of any goods shall be deemed, for 1435 the purposes of this Act, to have taken place in this Province, wherever the contract of sale or purchase might have been made (a) if the goods were actually in this Province at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in this Province at any time after the contract of sale or purchase in respect thereof was made. " This amendment came into force on January 1, 1948. In Poppatlal Shah vs The State of Madras (1), this Court had to consider the scope of the definition of " sale " in section 2(h) and of Explanation 2, and it was therein held that though the power to tax a sale was really a power to tax a transaction of sale and a law imposing such tax would be competent if any of the ingredients of sale had taken place within the State, the Madras Act had, by its definition of " sale " in section 2(h) prior to the enactment of Explanation 2, imposed a tax only when the property in the goods passed within the State, and that in respect of sales which had taken place prior to the amendment, the tax would be unauthorised if the property in the goods passed outside the State of Madras. It was also observed that after the amendment came into force, a tax on a sale which came within Explanation 2 would be valid. That was the position in law under the Madras Act prior to the enactment of the Constitution. It is now necessary to refer to the changes effected in the law by the Constitution. Article 286, which is relevant for the present purpose, is as follows: 286(1). " No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place (a) outside the State; or (b) in the course of the import, of the goods into, or export of the goods out of, the territory of India. (1) ; 182 1436 Explanation. For the purposes of Sub clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. (2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase take,,; place in the course of interstate trade or commerce: Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of sucli tax is contrary to the provisions of this clause, continue to be levied until the, thirty first day of March, 1951. (3) No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent. " Article 372(2) enacts that, " For the purpose of bringing the provisions of any law in force in the territory of India into accord with the provisions of this Constitution, the President may by order make such adaptations and modifications of such law, whether by way of repeal or amendment, as may be necessary or expedient, and provide that the law shall, as from such date as may be specified in the order, have effect subject to the adaptations and modifications so made, and any such adaptation or modification shall not be questioned in any court of law. " In exercise of the power conferred by this provision, 1437 the President made Adaptation Orders with reference to the Sales Tax Laws of all the States, and as regards the Madras Act, he issued on July 2, 1952, the Fourth, Amendment inserting a new section, section 22 in that Act. It runs as follows: " Nothing contained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place (a) (i) outside the State of Madras, or (ii)in the course of import of the goods into the territory of India or of the export of the goods out of such territory, or (b) except in so far as Parliament may by law otherwise provide, after the 31st March, 1951, in the course of inter State trade or commerce, and the provisions of this Act shall be read and construed accordingly. Explanation: For the purposes of cl. (a) (i) a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. " It will be noticed that the Explanation to article 286 (1) (a) is reproduced verbatim in section 22 of the Madras Act. The true meaning and scope of this Explanation came up for consideration before this Court in The State of Bombay and another vs The United Motors India Ltd., and others (1). Therein, it was held by a majority that though the sales falling within the Explanation would, in fact, be in the course of interState trade, they became, by reason of the fiction introduced therein, invested with the character of intra State sales, and would be liable to be taxed by the State within which the goods were delivered for consumption. Acting on this judgment, the Board of Revenue (Commercial Taxes) Andhra State, issued a (1) ; 1438 notification on July 13, 1954, calling upon dealers to submit returns of their turnover of sales in which goods were delivered in the Andhra State for consumption, and a copy thereof was sent to the Madras Yarn Merchants ' Association, of which the petitioners are members. The Association disputed the liability of the Madras dealers to pay any tax in respect of the sales to the Andhra dealers, and after some correspondence, the Andhra State finally issued on June 30, 1955, notices to the petitioners to send their returns of turnover by July 15, 1955, failing which it was stated that assessments would be made on the best judgment basis, and that, further, the dealers would be liable to the penalties prescribed by the law (Vide Annexure H to the petition). Thereupon, the petitionera have filed the present petitions challenging the validity of the demand made by the Andhra State on the ground, inter alia, that the sales proposed to be taxed were inter State sales, and that they were immune from taxation under article 286(2). These petitions were filed on various dates in July and August, 1955. While they were pending, the question of the true scope of the Explanation to article 286 (1) (a) came up again for consideration before this Court in The Bengal Immunity Company Limited vs The State of Bihar and others (1). By its judgment dated September 6, 1955, this Court held, again by a majority, that the sales falling within the Explanation being inter State in character, could not be taxed by reason of article 286(2), unless Parliament lifted the ban, that the Explanation to article 286 (1) (a) controlled only that clause and did not limit the operation of article 286 (2), and that the law had not been correctly laid down in The United Motors case (2). On the decision in The Bengal Immunity Company case(1) it cannot be doubted that the claim of the Andhra State to tax Explanation sales would be unconstitutional, and indeed, that was admitted by the State in a statement filed on October 21, 1955, wherein it was stated that having regard (1) [1955]2 S.C.R. 603. (2) ; 1439 to the decision aforesaid, the petitions might be allowed but without costs. Before final orders were passed on the petitions, however, the Sales Tax Validation Ordinance No. III of 1956, was promulgated on January 30, 1956, and that was later replaced by the Sales Tax Laws Validation Act (7 of 1956) and that came into force on March 21, 1956. Section 2 of this Act runs as follows: " Notwithstanding any judgment, decree or order of any court no law of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter State trade or commerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of interstate trade or commerce; and all such taxes levied or collected or purporting to have been levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law." On February 19, 1957, the Andhra State which had become the State of Andhra Pradesh under section 3 (1) of the States Reorganisation Act (37 of 1956) filed a fresh statement that by reason of the Validation Act the State was entitled to impose a tax on the Explanation sales, which had taken place during the period between the 1st day of April, 1951, and the 6th day of September, 1955 (which will hereinafter be referred to as the specified period), and that the petitions should therefore be dismissed. The petitioners challenge the correctness of this position. They contend that the Andhra (Madras) Act does not, in fact, impose a tax oh the Explanation sales, and that, in consequence, the Validation Act can have no effect on it; that the Validation Act is itself unconstitutional and void; that the Act even if valid, does not validate section 22 of the Andhra (Madras) Act; that it validates only levies and collections of tax already made, and does not authorise the initiation 1440 of fresh proceedings for assessment of tax or for realisa tion of the same; that even if the Act authorised fresh imposition of taxes, that could not be done without further legislation pursuant thereto by the State, and that no action could be taken on the basis of section 22 of the Andhra (Madras) Act, as, being unconstitutional when enacted, it was for all purposes non est ; that tax on the sale of yarn could under the Act be levied only at a single point and the State of Madras having imposed a tax on the sale of goods now proposed to be taxed, the Andhra State could not impose a tax once again on the sale of the self same goods, and that, further, the tax on yarn would, so far as the Andhra State is concerned, be bad as being hit by the Essential Commodities Act (52 of 1952), read with article 286 (3). It must be mentioned that similar to the Adaptation Order which enacted section 22 in the Madras Act, there were Adaptation Orders by the President with reference to the Sales Tax Laws in all the States, and provisions similar to section 22 were enacted therein. As any decision by this Court on the questions raised in the petitions must conclude similar questions under the laws of other States, those States applied for and obtained permission to intervene in these proceedings, and we have heard the Advocates General of Madras, Uttar Pradesh and Bihar on the questions. As the main point for determination is the vires of the Sales Tax Laws Validation Act (which will hereinafter be referred to as the impugned Act), the Union of India has intervened, and the learned Solicitor General has addressed us on the questions relating to the validity of that Act. Certain assessees who are interested in the decision of the above questions also applied for and obtained permission to intervene, and they are the Mysore Spinning and Manufacturing Co., the Minerva Mills, Ltd., the Tata Iron and Steel Co. Ltd., and the Madura Mills Co. Ltd., and counsel appearing for them have, in general, supported the petitioners. Counsel for the Madura Mills Co. Ltd., raised a further contention different from and inconsistent with 1441 the position taken by the petitioners and other inter. veners, and that is that under Entry 42 in List I of the Seventh Schedule to the Constitution, inter State trade and commerce is the exclusive domain of the Union Legislature, that tax on inter State sales is comprised therein, that the States have accordingly no power to tax such sales, and that Parliament is not competent to authorise them to impose such a tax, and that, accordingly, the impugned Act is wholly misconceived and inoperative. On these contentions, the questions that arise for our determination are: (I) Whether the Andhra (Madras) Act, in fact, imposes a tax on the class of sales falling within the Explanation to article 286 (1) (a); (II)Whether the impugned Act is ultra vires the ground that it is not authorised by the terms of article 286(2); (III) (a) Whether section 22 of the Andhra (Madras) Act is within the protection of the impugned Act, and (III)(b) Whether the impugned Act validates only levies and collections made during the specified period, or whether it authorises the imposition and collection of taxes on such sales in future; (IV)Whether section 22 of the Madras Act was null and void on the ground that it was in contravention of article 286 (2), and whether the proceedings sought to be taken thereunder on the strength of the impugned Act are incompetent; (V) Whether tax on inter State sales is within the exclusive competence of Parliament, and whether the impugned Act is, in consequence, bad as authorising the States to levy tax ; (VI)Whether the proposed imposition of tax is illegal on the ground that successive sales of yarn are subject under the law to be taxed at only one point, and as the State of Madras has already taxed the present sales, the State of Andhra cannot again levy a tax on them ; and (VII)Whether the proposed imposition of tax on yarn by the Andhra State is hit by the Essential Commodities Act, read with article 286(3), and is illegal? 1442 (1):The first question that falls to be determined is whether the Andhra (Madras) Act, in fact, imposes a tax on the Explanation sales. Only if it does that, would the further questions as to the vires and the operation of the impugned Act arise for consideration. We have already referred to the relevant provisions of the Madras Act and to the decision of this Court in Poppatlal Shah vs The State of Madras (1), wherein it was held that under the definition of " sale " in section 2(h) of that Act and apart from the Explanations to it which are not material for the present discussion, power had been taken by the Province of Madras to tax only sales in which property in the goods passed inside the State. It must, therefore, be taken that under the Act, as it stood prior to the Constitution, the State of Madras had no power to impose a tax on sales of the kind mentioned in the Explanation to article 286 (1)(a). Now, the question is whether the Adaptation Order of the President (Fourth Amendment) dated July 2, 1952, has, by the insertion of section 22 in the Madras Act, altered the position. The contention of the respondent is that it has, because it has bodily incorporated the Explanation to article 286 (1) (a) in the section itself, and as under that Explanation, all sales falling within its ambit would be sales inside the State of Madras, they became taxable as sales within the definition in section 2 (h) of the Madras Act; and that accordingly under section 22 of the Andhra (Madras) Act the Explanation sales become taxable by the Andra State as sales within that State. The petitioners dispute this position, and contend that that is not the true effect of the Explanation, and that properly construed, it does not authorise the in position of any tax which was not leviable under the provisions of the Act, prior to its enactment. It is argued that the object of article 286 of the Constitution was merely to impose restrictions on the power which the States had under Entry 54 in List 11 to enact laws imposing tax on sales, and that, in that context, the true scope of the Explanation to article 286 (1) (a) was that it merely took away from the State its power to (1) ; 1443 tax a sale in which the property passed inside it if the goods were actually delivered under the sale for consumption in another State and not to confer on the delivery State a power to tax such a sale, and that the Explanation in section 22 which is, word for word, a reproduction of the Explanation to article 286 (1) (a) must be construed as having the same import. Reliance is placed in support of this contention on the following observations of this Court in The Bengal Immunity Company case(1) at p. 640: " In clause (1) (a) the Constitution makers have placed a ban on the taxing power of the States with respect to sales or purchases which take place outside the State. If the matter had been left there the ban would have been imperfect, for the argument would have still remained as to where a particular ,ale or purchase took place. Does a sale or purchase take place at the place where the contract of sale is made, or where the property in the goods passes or where the goods are delivered ? These questions are answered by the Explanation. That Explanation is 'for the purposes of sub clause (a) ', i.e., for the purpose of explaining which sale or purchase is to be regarded as having taken place outside a State. By saying that a Parti cular sale or purchase is to be deemed to take in a particular State the Explanation only indicates that such sale or purchase has taken place outside all other States. The Explanation is neither an Exception nor a Proviso but only explains what is an outside sale referred to in sub clause (a). This it does by creating a fiction. That fiction is only for the purposes of subclause (a) and cannot be extended to any other purpose. It should be limited to its avowed purpose. To say that this Explanation confers legislative power on what for the sake of brevity has been called the delivery State is to use it for a collateral purpose which is not permissible. .Further, it is utterly illogical and untenable to say that article 286 which was introduced in the Constitution to place restrictions on the legislative powers of the States, by a side wind, as it were, (1) 183 1444 gave enlarged legislative powers to the State of delivery by an explanation sandwiched between two restrictions. This construction runs counter to the entire scheme of the article and the explanation and one may see no justification for imputing such indirect and oblique purpose to this article. " Now, the contention of the petitioners is that these observations are decisive of the present controversy, because the same provision expressed in ipsissima verba cannot have one meaning in article 286(1) (a) and quite a different one in section 22 of the Madras Act; and on the construction put by this Court on the Explanation to article 286(1) (a), the Explanation to section 22 of the, Andhra (Madras) Act must be interpreted as prohibiting States other than Andhra from taxing sales under which goods are delivered for consumption outside those States, even though property passed inside them and not as authorising the State of Andhra to tax sales in which goods are delivered therein for consumption , even though property in the goods passed outside that State. It is argued that this conclusion is reinforced by the opening words of section 22, viz., "Nothing contained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods". The effect of this, it is said, is to impose a restriction on the power which the State previously possessed, of taxing sales coming within the definition in section 2 (h) and not to enlarge it. The decision in Government of Andhra vs Nooney Govindarajulu (1) is cited in support of these contentions. The error in this argument lies in this that it focusses attention exclusively on the terms in which the Explanations are couched in article 286(1) (a) and in section 22 and completely overlooks the fundamental difference in the context and setting of these two enactments. The scope and purpose of article 286 have been considered at length in the decisions of this Court in The United Motors case (2) as also in The Bengal Immunity Company case (3), and it is sufficient to briefly recapitulate them. Under Entry 48 in List 11 of the (1) (1957) 8 Sales Tax Cases 297. (2) ; (3) 1445 Seventh Schedule to the Government of India Act, 1935, the Provincial Legislature had the exclusive competence to enact a law imposing a tax on the sale of goods, and under section 99 (1), such a law could be made " for the Province or for any part thereof ". In Wallace Brothers & Co. Ltd. vs Income tax Commissioner (1), the question arose as to the validity of certain provisions of the Indian Income tax Act, which sought to tax non resident foreigners in respect of their foreign income. The Indian Legislature had under Entry 54 in List I of the Government of India Act power to enact laws imposing tax on income other than agricultural income, and under section 99(1) the law could be made " for the whole of :British India or for any part thereof ". It was held by the Privy Council that the requirements of section 99 were satisfied if there was sufficient territorial connection between the State imposing the tax and the person who was sought to be taxed, and the receipt of income by the assessees in British India furnished sufficient nexus to give validity to the legislation imposing tax on their foreign income. If this doctrine of nexus is applicable to laws imposing tax on sales and it was applied by this Court to those laws in the United Motors case (2) at p. 1079 and in Poppatlal Shah 's case (3) at pp. 682 683 then it would be competent to the State to enact a law imposing a tax on sales not merely when the property in the goods passed within the State but even when it (lid not, if there was sufficient connection between the State and the transaction of sale, such as the presence of the goods in the State at the date of the agreement, as was held recently by this Court in Tata Iron & Steel Co. Ltd. vs State of Bihar (4). In fact, acting on the nexus theory the Legislatures of the States enacted Sales Tax Laws adopting one or more of the nexi as the basis of taxation. This resulted in multiple taxation, as a consequence of which the free flow of commerce between the States became obstructed and the larger economic interests of the country suffered. It was to repair this mischief that the Constitution, while (1) (1948) L.R. 75 I.A. 86. (2) ; (3) ; (4) ; 1446 retaining the power in the States to tax sales under Entry 54 in List II sought to impose certain restrictions on that power in article 286. One of those restrictions is contained in article 286(1)(a) which prohibits a State from taxing outside sales. The Explanation now under consideration is attached to this provision, and it is in this context, viz., in its setting in an Article, the object of which was to impose fetters on the legislative powers of the States, that this Court observed that though positive in form, it was in substance negative in character, and that its true purpose was not to confer any fresh power of taxation on the State but to restrict the power which it previously had under Entry 54. These considerations will clearly be in apposite in construing a taxing statute like the Madras Act, the object of which is primarily to confer power on the State to levy and collect tax. When we find in such a statute a provision containing a prohibition followed by an Explanation which is positive in its terms, the true interpretation to be put on it is that while the prohibition is intended to prevent taxation of outside sales on the basis of the nexus doctrine, the Explanation is intended to authorise taxation of sales falling within its purview, subject of course to the other provisions of the Constitution, such as article 286 (2). It should be remembered that unlike the Constitution, the law of a State can speak only within its own territories. It cannot operate either to invest another State with a power which it does not possess, or divest it of a power which it does possess under the Constitution. Its mandates can run only within its own borders. That being the position, what purpose would the Explanation serve in section 22 of the Madras Act, if it merely meant that when goods are delivered under a contract of sale for consumption in the State of Madras, the outside State in which property in the goods passes has no power to tax the sale ? That is not the concern of the State of Madras, and indeed, the Legislature of Madras would be incompetent to enact such a law. In its context and setting, therefore, the Explanation to section 22 must mean that it 1447 authorises the State of Madras to impose a tax on sales falling within its purview. Thus, while in the context of article 286 (1) (a) the Explanation thereto could be construed as purely negative in character though positive in form, it cannot be so construed in its setting in section 22 of the Madras Act, where it must have a positive content. Nor is there much force in the contention that the non obstante clause in section 22 has only the effect of substracting something from the power to tax conferred on the State by the charging section, section 3, read with section 2 (h) and not of adding to it. In Aswini Kumar Ghosh and another vs Arabinda Bose and another (1), It was observed by this Court that " the enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously ". Now, as the Explanation lays down in clear and unambiguous terms that the sales of the character mentioned therein are to be deemed to have taken place inside the State in which goods are delivered for consumption, full effect must be given to it, and its operation cannot be cut down by reference to the non obstante clause. It cannot be put against this construction that it renders the non obstante clause ineffective and useless. According to the definition in section 2 (h), a sale in which property passes inside the State of Madras will be liable to be taxed, even though the goods are delivered for consumption outside that State, but under the Explanation such a sale will be deemed to have taken place in the out side State in which goods are delivered for consumption, and therefore the State of Madras will have nO power to tax it: The purpose which the non obstante clause serves is to render the Explanation effective against the definition in section 2 (h) and not to render it ineffective in its own sphere, as determined on its terms. But it is contended that in order to reach this result it was necessary that the Explanation to section 22 should have been made a part of the definition of " sale " under section 2 (h), because under section 3, which is the charging (1) ; , 24. 1448 section, it is the turnover of sales that is subject to tax, that sale for the purpose of that section is only what is defined as " sale " under section 2 (h), and that the Explanation sales not having been brought within that definition, no charge could be imposed thereon. The Explanation in section 22, it is argued, cannot override section 2 (h), and if its object was to confer on the State a power to tax sales falling within its ambit, that has not, in fact, been achieved. It is pointed out by way of contrast that in the Sales Tax Laws of some other States, such as Bihar and Uttar Pradesh, the Explanation has been added to the definition of sale. Now, a contention that what the Legislature intended to bring about it has failed to do by reason of defective draftsmanship is one which can only be accepted in the last resort, when there is no avenue left for escape from that conclusion. But that clearly is not the position here. Section 22 opens with the words " Nothing contained in this Act ", and that means that that section is to be read as controlling, inter alia, the definition of sale in section 2 (h). Otherwise, sales in which property passes in Madras but delivery is outside that State would be taxable under section 2 (h) and under section 3, even though they are within the prohibition enacted in section 22. If the provisions of section 22 are effective for the purpose of limiting the operation of section 2 (h), we do not see any difficulty in construing the Explanation therein as equally effective for the purpose of enlarging it. Again, it is a rule of construction well establisbed that the several sections forming part of a statute should be read, unless there are compelling reasons contra, as constituting a single scheme and construed in such manner as would give effect to all of them. On this principle, section 2 (h) and section 22 must be read together as defining what are sales, which are taxable under the Act and what are not, and so read, the Explanation really means that in sales in which goods are delivered for consumption in the State of Madras, the property therein shall be deemed to have passed inside that State, notwithstanding that it has, under the Sale of Goods Act, passed outside that State. On this construction, those 1449 sales will fall within the definition in section 2 (h) and will be taxable. The contention of the petitioners highly technical and based oil the non insertion of the Explanation in section 2 (h) must, in our opinion, be rejected as unsound. It is next contended that the power of the President under Art,. 372 (2) is merely to bring the provisions of the State laws into conformity with article 286, and that having regard to the interpretation put on that Article in The Bengal Immunity Company case (1), the Explanation in section 22 would be valid in so far as it prohibits the State of Madras from imposing a tax on sales in which goods are delivered outside Madras, though property therein passed inside that State, but that in so far as it makes taxable sales in which property passes outside the State of Madras but the goods themselves are delivered for consumption in Madras, it is much more than bringing the. ,State law into conformity with article 286, and is, in consequence, unauthorised and bad. It is argued that such a provision could be enacted by the Legislature of Madras, as was in fact, done by the legis latures of many of the States, but the President could not do it in exercise of the special and limited power conferred on him by article 372(2). That power is merely, it is contended, to take the definition of " sale " in section 2(h) of the Madras Act, strike out therefrom whatever is repugnant to article 286, such as sales in which goods are delivered for consumption outside Madras, and leave it there and not to add to it. We are not satisfied that that is a correct view to take of the powers of the President under article 372(2). It is to be observed that article 286(1)(a) and the Explanation thereto form, in their setting in a taxing statute, integral parts of and different facets of the same concept. Sales in which property passes outside the State of Madras but delivery for consumption is inside Madras are at once inside sales for Madras and outside sales for the other States. Now, if in exercise of the power to adapt, the enactment of the Explanation is requisite to give effect to one aspect of that (1) 1450 concept, that is, for prohibiting the State of Madras from taxing sales when goods are delivered outside, we fail to see why it should not operate to give effect to the other aspect of the concept which is so integrally connected with it, viz., taxing of sales in which goods are delivered for consumption in the State of Madras, if its language is comprehensive and wide enough to include such sales. We find it difficult to hold that the self same Explanation is intra vires the powers of the President in so far as it prohibits the State from taxing gales, in which goods are delivered Outside the State but is ultra vires in so far as it authorises that State to tax sales in which goods are delivered inside it. It should be remembered in this connection that the power which the President has under article 372(2) to adapt is the legislative power of the State whose law is adapted, and that includes the power to repeal and amend any provision. Provided that the law as adapted is within the legislative competence of the State and its enactment is in the process of bringing the State law into conformity with article 286, it seems to us that it is within the ambit of the power con ferred by article 372(2). The question, however, is of academic interest, because of the concluding words of article 372(2), which enact that no adaptation order made under that provision shall be liable to be questioned. It was suggested for the petitioners that these words would have no application when the adaptation order went beyond the terms of article 372(2), and that it was open to them to challenge its validity on the ground that it amounted to more than bringing the existing law into conformity with article 286. We are unable to agree. If the adaptation order is within the scope of article 372(2), then it is valid of its own force, and does not require the aid of a clause such as is contained in the concluding portions thereof. It is only when the adaptation amounts to something more than merely bringing the State law into conformity with the Constitutional provisions that there can arise a need for such a clause. In our opinion, the effect of the concluding words of article 372(2) is to 1451 render the question of the validity of the adaptation non justiciable. The Adaptation Order in question must, accordingly, be held to be not open to attack on the ground that it goes beyond the limits contemplated by article 372(2). It is then argued that even though the Adaptation Order of the President might not be open to question even if it had imposed for the first time a tax on sales which had not been previously imposed by the Act, nevertheless in deciding whether it does, in fact, impose such a tax, it would be relevant to take into account that the object of article 372(2) was only to bring the State laws into conformity with the Constitution, and that, in consequence, the Explanation in section 22 must be construed as having the same meaning as the Explanation in article 286(1)(a). This would, no doubt, be a legitimate consideration in interpreting the language of the Explanation, but then, it must be remembered that at the time when the Adaptation Order was made, the true interpretation of the Explanation to article 286(1)(a) had not been the subjectmatter of any decision, and it is therefore difficult to impute to the framers of section 22 the construction put by this Court on the Explanation to article 286(1)(a) in The Bengal Immunity Company case (1) any more than the one put on it in The United Motors case (2). We are therefore thrown back on the language of the Explanation itself to discover its true scope. If, in enacting the Explanation, the Adaptation Order merely intended to prohibit the State of Madras from imposing tax on sales under which goods are delivered for consumption outside that State even though property therein passed inside that State, it would clearly have expressed that intention in words to the following effect: " For the purposes of clause (a)(i), a sale under which goods are delivered for consumption outside the State of Madras shall be deemed to have taken place outside that State, notwithstanding that property in those goods passed inside that State ". But the language of the Explanation is general, and fixes the situs of sales of (1) (2) ; 184 1452 an inter State character in the State in which goods are actually delivered for consumption. Under this Explanation, a sale under which goods are delivered outside the State of Madras will be an outside sale for that State even though property in the goods passed inside that State, and likewise, a sale under which goods are delivered inside the State of Madras will be an inside sale for that State, even though property in the goods passed outside that State. As the language of the Explanation is general and of sufficient amplitude not merely to restrict but also to add to the power of the State to tax Explanation sales, and as the reasons for construing it as purely restrictive in article 286(1)(a) are, as already stated, without force in their application to a taxing statute, we must give full effect to the words of the enactment, and bold that they operate to confer on the State a power to tax Explanation sales. There is one other contention relating to this aspect of the matter, which remains to be considered, and that is that even if the Explanation could be construed as authorising the imposition of a tax on the sales mentioned therein, a reading of the section as a whole makes it clear that, in fact, no such tax was imposed, as it expressly enacts that "Nothing contained in this Act shall be deemed to impose a tax on inter State sales ". The argument is that the Explanation sales being inter State sales and the section having exempted them from taxation, they go out of the statute book altogether, and do not exist for the purpose of the impugned Act. We are unable to agree with this contention. Article 286(2) consists of two parts, one imposing a restriction on the power possessed by the States to tax sales under Entry 54 in so far as such sales are in the course of inter State trade and commerce and another, vesting in Parliament a power to enact a law removing that restriction. If section 22 had merely enacted that portion of article 286(2) which prohibited imposition of taxes on interstate sales, that might have furnished some plausible ground for the contention now urged by the petitioners.:but it enacts both the parts of article 286(2), 1453 the restriction imposed therein and also the condition on which that restriction is to cease, viz., Parliament providing otherwise by law. Taken along with the admitted power of the States to impose tax on sales under Entry 54, the true scope of section 22 is that it does impose a tax on the Explanation sales, but the imposition is to take effect only when Parliament lifts the ban. In other words, it is a piece of legislation imposing tax in praesenti but with a condition annexed that it is to come into force in futuro as and when Parliament so provides. It is not contended that there is in the Constitution any inhibition against conditional legislation. In The Queen vs Burah (1), it was held by the Privy Council that a legislature acting within the ambit of authority conferred on it by the Constitution has the power to enact a law either absolutely or conditionally, and that position has been repeatedly affirmed in this Court. Vide In The , etc. (2) and Sardar Inder Singh vs State of Rajasthan(3). It would clearly be within the competence of the Madras Legislature to enact a law imposing a tax on sales conditional on the ban enacted in article 286(2) being lifted by Parliamentary legislation, and that, in our opinion, is all that has been done in section 22. The Madras Act defines the event on which the tax becomes payable and the person from whom and the rate at which it has to be levied, and forms a complete code on the topic under consideration. It could have no immediate operation by reason of the bar imposed by article 286(2), but when once that is removed by a law of Parliament, there is no impediment to its being enforced. That satisfies all the requirements of a conditional legislation. But it was argued that section 22 of the Madras Act could not be so construed, because it was not open to the President acting in exercise of the power conferred on him under article 372 (2) to impose a conditional levy ; nor would it be competent to the Legislature of Madras to make a levy conditional or otherwise, unless Parliament had authorised it. We see no force in this argument. As (1) (1878) L.R. 5 I.A. 178. (2) ; (3) ; 1454 article 286(2) is itself in two parts, one a restriction on the power of the State and the other, a condition on which such restriction will cease to operate, an adaptation made pursuant thereto must also be similar in its contents. Nor is there in article 286 (2) any prohibition of any legislation by tile State Legislature against enacting laws imposing tax on interstate sales. It merely enacts that such law can have no effect. The words "No law of a State shall impose " mean only that no such law shall be effective to impose a tax. It is also contended that under the Sales Tax Acts, the levy of tax is annual and the rules contemplate submission of quarterly returns and payment of taxes every quarter on the admitted turnover, and that a conditional legislation under which payment of tax will become enforceable in futuro would be inconsistent with the scheme of the Act and the rules. But this argument, when examined, comes to no more than this that the existing rules do not provide a machinery for the levy and the collection of taxes which might become payable in future, when Parliament lifts the ban. Assuming that that is the true position, that does not affect the factum of the imposition, which is the only point with which we are now concerned. That the States will have to frame rules for realizing the tax which becomes now payable is not a ground for holding that there is, in fact, no imposition of tax. It should also be mentioned in this connection that the Madras Act makes a clear distinction between sales which are outside the operation of the Act, and sales which are within its operation but are exempt from taxation. Section 4 provides that the provisions of the Act shall not apply to the sale of electrical energy, motor spirit, manufactured tobacco and certain other articles. In contrast to this is the language of section 22, which expressly enacts that the Act shall not be deemed to impose a tax on inter State sales, except in so far as Parliament may by law otherwise provide. We are of opinion that, on the true construction of section 22 of the Act, there is an imposition of tax on Explanation sales but that it could be enforced only when Parliament so provides. 1455 We have so far considered the question on principle and on the language of the statute. We may now.,. refer to the decisions of the High Courts, wherein this question has been considered. In Mettur Industries Ltd. vs State of Madras (1), the point directly arose for decision as to whether section 22 of the Madras Act did. in fact, levy a tax on the Explanation sales so as to fall within the protection of the Sales Tax Laws Validation Act. It was held that the Explanation to section 22 had ' the effect of rendering the sale one inside the State so as to fall within the definition of that word in section 2 (h), and that it was taxable. Next in point of time is the decision of the Bombay High Court in Dial Das vs P. section Talwalkar (2) in which the question arose with reference to section 46 of the Bombay Sales Tax Act (Bom. III of 1953), corresponding to section 22 of the Madras Act. It was held that it did impose a tax, though it was to operate only if Parliament so provided. Then, there are two decisions of the Travancore Cochin High Court, Mathew vs Travancore Cochin Board of Revenue(3) and Cochin Coal Co., Ltd. vs State Of Travancore Cochin(4), in which it was held that section 26 of the Travancore Cochin General Sales Tax Act corresponding to section 22 of the Madras Act, had not the effect of imposing, of its own force, a tax on the Explanation sales, and the decision in Mettur Industries Ltd. vs Madras State (supra) was not followed. In The Mysore Spinning and Manufacturing Co., Ltd. vs Deputy Commercial Tax Officer, Madras (5) the Madras High Court re affirmed the view which it had taken in Mettur Industries Ltd. vs State of Madras (supra), and held that section 22 had the effect of imposing a tax on the Explanation sales. In The Government of Andhra vs Nooney Govindarajulu (supra), the true effect of section 22 of the Madras Act came up for consideration before the Andhra High Court, and it was held therein, dffering from Mettur Industries Ltd. vs State of Madras (1) and Dial Das vs P. section Talwalkar (2) that in view of the observations of this Court as to the scope of the (1) A.I.R. 1957 Mad. 362. (2) A.I.R. 1957 Bom. (3) A.I.R. 1957 T.C. 300. (4) (1956) 7 Sales Tax Cases 731. (5) A.I.R. 1957 Mad. 1456 Explanation in article 286 (1) (a), the Explanation in section 22 could not be construed as imposing a tax on the sales mentioned therein, and that that conclusion also followed on the opening words of the section that " Nothing contained in this Act shall be deemed to impose, or authorise the impo sition of a tax. . . For the reasons already given, we are unable to agree with the decisions in Mathew vs Travancore Cochin Board of Revenue(1), Cochin Coal Co. Ltd. vs State of Travancore Cochin(2) and The Government of Andhra vs Nooney Govindarajulu (3). We are of opinion that the law has been correctly laid down in Mettur Industries Ltd. vs State of Madras (4) and Dial Das vs P. section Talwalkar (5). We accordingly hold that section 22 operated to impose a tax falling within the Explanation, subject to authorisation by Parliament as provided in article 286 (2). In this view, the contention urged on behalf of the States that the Explanation to article 286 (1) (a), being a provision of the Constitution, operated by its own force to impose a tax on the sales covered by it, and did not require to be supplemented by any State legislation to become effective, does not call for any detailed consideration. Suffice it to say that it cannot be maintained if the true scope of article 286 is to define and limit the powers of State Legislatures with reference to imposition of sales tax and not to itself impose it. (11) That brings us on to the next question which is whether the impugned Act, Sales Tax Laws Validation Act, is ultra vires on the ground that it is not authorised by the terms of article 286 (2). Now, it is a well known rule of interpretation that in order to understand the true nature and scope of an Act it is necessary to ascertain what the evils were which were intended to be redressed by it. The starting point of the trouble which ultimately led to the enactment of the impugned Act is the Explanation to article 286(1)(a), which came into force on January 26, 1950. The terms in which it is worded undoubtedly suggest that sales (1) A.I. R. (2) (1956) 7 Sales Tax Cases 731. (3) (1957) 8 Sales Tax Cases 297. (4) A.I.R. 1957 Mad. (5) A.I.R. 1957 Bom. 1457 of the description mentioned therein are to be treated as sales inside the delivery State for purposes of taxation. That is how it would seem to have been understood in the Adaptation Order under which section 22 was inserted in the Madras Sales Tax Act and in the Adaptation Orders relating to the Sales Tax Laws of other States; for, as already stated, in a taxing statute the language of the Explanation can only mean that a sale failing within its purview is an inside sale enabling the State to tax it. In The United Motors case (1), the construction put by this Court on the Explanation was that though but for it the sales mentioned therein would be in the course of interState trade and commerce, its effect was to convert them into intrastate sales, so as to bring them within the taxing power of the delivery State. It was only later that this Court held finally in The Bengal Immunity Company case (2) that the Explanation sales were not divested of their character as inter State sales as the Explanation to article 286 (1) (a) did not govern article 286 (2), and that in the absence of Parliamentary legislation as contemplated by article 286 (2), taxation of sales falling within its purview would be unconstitutional. This judgment was delivered on September 6, 1955. But acting on the apparent tenor and import of the Explanation and the construction put upon it in The United Motors case (1), the States in India had been levying taxes oil the sales falling within its purview. The position on September 6, 1955, was that the States had imposed and collected large amounts by way of tax on Explanation sales; that there were proceedings pending for assessment of tax on such sales; and that apart from this, the States would have been entitled to take, but for the decision in The Bengal Immunity Company case (2), proceedings for the assessment of tax in respect of those sales. Now, the result of the decision in The Bengal Immunity Company case (2) was that the levy of the tax on the Explanation sales became unauthorised and the States were faced with large claims for restitution of the (1) ; (2) 1458 amounts realised, involving threat to their economic stability. It should also be mentioned that quite a large number of dealers had, acting under provisions of the Sales Tax Acts which empowered them to pass the tax on, collected it from their purchasers for the purpose of payment to the State, and as after the decision in The Bengal Immunity Company case (1) they could no longer be called upon to pay it, they stood to make an unjust gain of it. These were the evils which called for redress, and it was to remedy them that Parliament enacted the Sales Tax Validation Ordinance No. III of 1956, and eventually replaced it by the impugned Act. Section 2 of the Act provides that no law of a State imposing a tax on sales which took place in the course of interState trade or commerce between April 1, 1951, and September 6, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sales were in the course of inter State trade. The section further provides that all taxes levied or collected under such a law during the specified period shall be deemed to have been validly levied or collected. The policy behind the Act is obviously to declare the law as interpreted in The United Motors case (2) as the law governing sales filling within the Explanation up to the date of the judgment in The Bengal Immunity Company case(1) and to give effect to the law as laid down in that decision for the sales effected subsequent thereto. The question is whether this Act is unconstitutional as being ultra vires the powers of Parliament tinder Art ' 286 (2). The petitioners maintain that it is, and put forward several grounds in support of that position. It is firstly contended by them that under Entry 54 in List II, the power to make laws in respect of tax on sales is vested exclusively in the States, that the power which is conferred on Parliament under article 286(2) is only to enact a law directing or permitting the States to impose a tax on inter States sales and not to itself enact a law with reference thereto that the impugned Act being one to validate Sales (1) (2) ; 1459 Tax Laws is substantive in character and is not authorised by the terms of article 286 (2) and is, in consequence, unconstitutional. It is argued that to validate is to confirm or ratify, and that can be only in respect of acts which one could have himself performed, and that if Parliament cannot enact a law relating to sales tax, it cannot validate such a law either, and that such a law is accordingly unauthorised and void. The only basis for this contention in the Act is its description in the Short Title as the " Sales Tax Laws Validation Act " and the marginal note to section 2, which is similarly worded. But the true nature of a law has to be determined not on the label given to it in the statute but on its substance. Section 2 of the impugned Act which is the only substantive enactment therein makes no mention of any validation. It only provides that no law of a State imposing tax on sales shall be deemed to be invalid merely because such sales are in the course of inter State trade or commerce. The effect of this provision is merely to liberate the State laws from the fetter placed on them by article 286 (2) and to enable such laws to operate on their own terms. The true scope of the impugned Act is, to adopt the language of this Court in the decisions in The United Motors case (1) and The Bengal Immunity Company case (2), that it lifts the ban imposed on the States against taxing inter State sales and not that it validates or ratifies any such law. Considering the legislation on its substance, we have .no doubt that it is within the scope of the authority conferred on Parliament by article 286 (2) and is not ultra vires. It is next contended that the impugned Act is wholly retrospective in character in that it operates on sales which took place during the specified period, and that such a legislation is, having regard to the intendment of article 286 (2), outside its terms. It is argued that this Article, to start with, enacts a restriction on the power of the State to impose taxes on inter State sales and then vests in Parliament a power (1) (2) 185 1460 to remove that restriction, and that in logical sequence therefore, there should first be a legislation by Parliament authorising the States to impose a tax on interState sales and then a law of the State made in accordance therewith, and that that order having been reversed in the present case, the impugned Act is unconstitutional. We do not agree with this contention. Article 286 (2) merely provides that no law of a State shall impose tax on inter State sales " except in so far as Parliament may by law otherwise provide ". It places no restrictions on the nature of the law to be passed by Parliament. On the other hand, the words " in so far as " clearly leave it to Parliament to decide oil the form and nature of the law to be enacted by it. What is material to observe is that the power conferred on Parliament under article 286 (2) is a legislative power, and such a power conferred on a Sovereign Legislature carries with it authority to enact a law either prospectively or retrospectively, unless there can be found in the Constitution itself a limitation on that power. Now, there is nothing express in article 286 (2) imposing a restriction on the power of Parliament to enact a law with retrospective operation. But it is argued for the petitioners that such a restriction is to be implied from the scheme of it, which is that there is a prohibition on the power of the State to enact a law imposing tax on inter State sales, unless Parliament lifts the ban, and it is said that a prohibition operates only in futuro and therefore a law removing that prohibition must also operate in futuro. The decision of the Privy Council in Punjab Province vs Daulat Singh (1) is relied on in support of this proposition. There, the question arose with reference to the validity of a mortgage of agricultural lands in the Punjab executed in the year 1933. Section 13 A of the Punjab Alienation of Land Act which came into force in 1939 enacted that transfer of a land by a member of an agricultural tribe in favour of another member of the tribe was void if the transferee was a benamidar for a person who was not a member of that tribe, whether such transfer was (1) (1946) L.R. 73 I.A. 59. 1461 made before or after the Act. The mortgagee instituted a suit, challenging the vires of this section on the ground that it contravened section 298(1) of the Government of India Act, 1935, which provided that no subject of His Majesty domiciled in India shall be prohibited from acquiring, holding or disposing of property on grounds only of religion, place of birth or descent. The mortgagor in reply relied on section 298 (2) which enacted that nothing in that section shall affect the operation of any law which prohibits the sale or mortgage of agricultural land situate in any particular area and owned by a person belonging to the agriculturist class. In rejecting this contention, the Privy Council observed that what was saved by section 298 (2) was a law prohibiting certain kinds of transfers, that the word " prohibition " could properly apply only to acts to be done in futuro, and that the impugned provision, section 13 A, was intra vires the Constitutional provision in so far as it prohibited transfers after the date of its enactment, but to the extent that it avoided transfers which had taken place prior to that date, it was ultra vires. This decision proceeded solely on the connotation of the word " prohibits " in section 298 (2) of the Government of India Act, and can be of no assistance in the construction of article 286 (2), wherein that word does not occur. And even on the substance of it, we see no real analogy between the case in Punjab Province vs Daulat Singh (1) and the present. There, the law which was authorised by section 298 (2) was one prohibiting certain transfers; here the law which Parliament is authorised to make is one not prohibiting the States from imposing tax on inter State sales, but permitting them to do so. While a law prohibiting transfers must be prospective, a law authorising imposition of tax need not be. It can be both prospective and retrospective. A decision more directly in point is the one in The United Provinces vs Atiqa Begum(2). There, the question arose on the construction of section 292 of the Government of India Act, 1935, which enacted that, " Notwithstanding the repeal by this Act of the (1) I. A. 59. (2) 1462 Government of India Act, but subject to the other provisions of this Act, all the law in force in British India immediately before the commencement of Part III of this Act shall continue in force in British India until altered or repealed or amended by a competent Legislature or other competent authority. " The Legislature of the United Provinces had enacted a law modifying the pre existing law relating to the payment of rents by tenants to landlords and giving it retrospective operation. The question was whether the enactment was repugnant to section 292 which had provided that the preexisting law was to continue in force until it was altered. It was held that the power of a legislature to pass a law included a power to pass it retrospectively, and that the words of section 292 did not operate to impose any restriction on that power, and that the legislation was intra vires. In our opinion, the principle of this decision is applicable to the present case, and the impugned Act cannot be held to be bad on the ground that it is retrospective in operation. It is next contended that the impugned Act is ultra vires, inasmuch as it is much more than a mere retrospective law, and that it is really a piece of ex post facto legislation, which is not authorised by article 286(2). The argument in support of this contention may thus be stated : A ' State legislature is competent under Entry 54 in List II to enact a law taxing sale of goods, and when such a law is made to operate retrospectively it may not be open to challenge on constitutional grounds, though its propriety may be open to question on grounds of policy. Parliament has no competence to enact laws in respect of tax on sales filling within Entry 54 in List 11, but article 286(2) confers on it a power to authorise the States to impose a tax on inter State sales. The impugned Act does not do that, but validates ex post facto laws of States imposing such a tax retrospectively for the specified period. Such a general law may be intra vires the States but not Parliament, nor is it one which can be justified by the power granted to it to " provide otherwise. " It is therefore unconstitutional and void, In 1463 our opinion, this argument is only an amalgam of the two contentions already dealt with, and does not require further detailed consideration. The impugned Act, though it is in name a validating Act, is in essence a law lifting the ban under article 286 (2), and if no limitation on the character of that law could be spelt out of the language of that Article, then it must be upheld as within the authority conferred by it. It is also argued that even if the power to make a law conferred on Parliament under article 286 (2) comprehends a power to enact a law with retrospective operation, that power cannot extend to authorising what is unconstitutional, and that as section 22 of the, Madras Act and the corresponding provisions in the statutes of other States were unconstitutional and illegal when made as contravening the prohibition enacted in article 286 (2), the impugned Act must be held to be unauthorised and bad in that it seeks to give effect to those provisions. But this is to beg the very question which we have to decide. If it is competent to the legislatures of the States to enact a law imposing a tax on inter State sales to take effect when Parliament so provides, there is nothing unconstitutional or illegal either in section 22 of the Madras Act or in the corresponding provisions in the Acts of other States. If conditional legislation is valid, as we have held it is, then section 22 is clearly intra vires, and the foundation on which this contention of the petitioners rests, disappears and it must fall to the ground. In the result, we are of opinion that the impugned Act is intra vires, and is not open to challenge on any of the grounds put forward by the petitioners. (111) (a). We have now to consider the contention that even if the impugned Act is valid, that would not give efficacy to section 22 of the Madras Act or the corresponding provisions in the laws of other States which came in by adaptation under article 372 (2). The ground urged in support of this contention is that the expression " law of a State " in article 286 (2) has a technical import, and means a law which is enacted by the legislature of a State in the manner prescribed by the Constitution and open to challenge in courts if 1464 it is unconstitutional, that that expression occurring , in section 2 of the impugned Act must bear the same meaning which it has in article 286 (2) as it was enacted, pursuant to the authority contained therein, and that section 22 of the Madras Act is not a law of that description, as it was made by the President in exercise, of the special power conferred on him by article 372 (2), and is, as provided therein, not open to attack in a court of law. We do not see why we should restrict the connotation of the words " law of a State " in the manner contended above. The law of a State signifies, in its ordinary acceptation, whatever is an expression of the legislative, as distinguished from the executive or judicial power of a State. Its normal mode under the Constitution is no doubt that it is enacted by the legislature of the State constituted in accordance with the procedure prescribed therein. But that is not the only mode in which the legislative power of the State could be exercised. Under article 213, the Governor is authorised, subject to the conditions laid down therein, to issue Ordinances which have the force of law, and these Ordinances are clearly laws of the State and not the less so by reason of their not having been passed by the State legislature. Under article 252, it is open to Parliament acting on resolutions of the legislatures of two or more States, to enact laws on subjects which are within the exclusive competence of the States, a recent instance of such legislation being Act 42 of 1955, the validity of which was the subject of consideration in R. M. D. Charnarbaugwalla vs Union of India(1). Can it, be contended that these are not laws of the States for which they were enacted, because they were not passed by the legislatures of those States ? We entertain no doubt that by the expression " law of a State " in article 286 (2) and section 2 of the impugned Act is meant whatever operates as law in the state, and that section 22 of the Madras Act is a law within those enactments. Nor does it affect this conclusion that that law may not be open to challenge in a court of law. A right to challenge a (1) ; 1465 law must depend on the provisions of the Constitution governing the matter, and if those provisions enact that it is not open to question in a court of law or ' that it is liable to be questioned only on certain specified grounds, that will not have the effect of depriving a statute duly enacted of its character as law. We are also not satisfied that a law as adapted under article 372 (2) is not open to attack on the ground that it contravenes some constitutional provision. We are disposed to think that the concluding words of article 372 (2) preclude an attack on the Adaptation Order only on the ground that it does more than merely bringing the State law into conformity with the Constitution and is, in consequence, ultra vires the powers conferred by that article. In the result, we must hold that section 22 of the Madras Act is within the protection afforded by section 2 of the impugned Act. (111) (b) : The next contention of the petitioners that falls to be considered is whether even on the footing that the impugned Act is intra vires the powers of Parliament under article 286 (2), the proceedings which are proposed to be taken by the State of Andhra against them for assessment of tax are incompetent, because the Act validates only levies or collections made during the specified period but does not authorise the initiation of fresh proceedings for levy or collection of tax. It is contended that though section 2 of the impugned Act consists of two clauses, one giving effect to laws of States imposing tax on inter State sales in so far as they took place during the specified period and the other validating levy or collection of tax made during that period, the first clause has no independent operation, the only purpose which it serves being to lead up to the second which is the only effective clause in the section. It is argued that if the intention of the legislature was not merely to validate the levies or collections already made but also to maintain the laws in force so as to enable the States to take fresh proceedings for assessment and levy of tax, then there was no need whatsoever for the second clause, as effectuation of the Act would automatically validate the levies and collections made thereunder. It is said 1466 that the object of the legislation was only to see that the States had not to refund amounts collected by them, and that for achieving that object it was necessary only to give effect to the second clause. The decision in Dialdas vs P. section Talwalkar (1) already cited, was relied on as supporting the petitioners on this point. In our judgment, the language of the enactment is too clear and unambiguous to admit of this contention. If the purpose of the enactment is what the petitioners contend it to be, then nothing would have been easier for the legislature than to have so framed the section as to confine its operation to levies or collections already made, without giving effect to the law itself. On the contention of the petitioners, the first clause has to be discarded as wholly inoperative, and we should be 10th to adopt a construction which leads to that result. It is true that on the contention of the State that the first clause has independent operation the second clause would be unnecessary, as even without it, the result sought to be achieved by it must follow on the first clause itself. But it is to be noted that the first clause has reference to the exercise of legislative power while the second is concerned with administrative action, and it is possible that the second clause might have been enacted by way of abundant caution. It is nothing strange or unusual for a legislature to insert a provision ex abundanti cautela, so as to disarm possible objection; but it is in conceivable that it should enact a provision which is wholly inoperative. Of two alternative constructions of which one leads to the former and the other involves the latter result, there cannot be any question that it is the former that is to be preferred. Nor is it permissible to cut down the plain meaning of the terms of the statute on considera tions of policy behind the legislation. But even from that point of view, there was the fact that there were dealers who had collected taxes from their purchasers for payment to the State, but were relieved of (1) A.I.R. 1957 Bom. 1467 that obligation by the judgment in The Bengal Immunity Company case (1) and that, further, to validate only levies and collections made would give an advantage to those who evaded the law as then understood, over those who loyally obeyed it. It follows that we are unable to agree with the decision in Dialdas vs P. section Talwalkar (2), in so far as it held that it was not competent to the State to start fresh proceedings for assessment of tax on the strength of the impugned Act. In our opinion, the true construction of section 2 is that the two clauses therein are, as indicated by the conjunction, distinct and independent in their opera. tion, and that the laws of the States are kept in force in respect of sales which had taken place during the specified period, and that proceedings in respect thereof for assessment are within the protection of the Act. It was next argued that the impugned Act is a temporary statute, as its operation is limited to sales which took place during the specified period, and that period having expired, no proceedings could now be taken on the strength of the provisions of that Act, and reliance was placed on the observations of this Court in Keshavan Madhava Menon vs The State of Bombay (3), in support of this position. But the impugned Act is in no sense a temporary Act. Its life is not limited to any specified period. It is a permanent statute operating on all sales which took place during the specified period. The fallacy in this contention of the petitioners lies in mixing up the period, the sales during which are brought within the operation of the Act, with the period of the operation of the Act itself. The former may be said to be temporary, but the latter clearly is not. (IV) It is next contended that even if the impugned Act authorised starting of fresh proceedings for assessment of tax on the Explanation sales which had taken place during the specified period, no action in that behalf could be taken under section 22 of the (1) (2) A.I.R. 1957 Bom. (3) ; , 235. 186 1468 Andhra (Madras) Act, because it was, when it was enacted, repugnant to article 286(2) of the Constitution, and was therefore void. It is argued that a statute which is unconstitutional is a nullity and must be treated as non est and that the impugned Act could not infuse life into it. It may be open, it is said, to the Legislature of the State of Andhra to enact a fresh law giving it even retrospective operation as provided in the impugned Act, but in the absence of such a legislation, the provisions of the Act as they stood prior to the impugned Act are incapable of enforcement. It would be sufficient answer to this contention that section 22 of the Madras Act is only a piece of conditional legislation, imposing tax on interState sales when Parliament should enact a law lifting the ban, and if such legislation is competent as we have held it is, then no question of unconstitutionality of the section when it was enacted could arise. But it would be more satisfactory to decide the point on its own merits, as the question raised has been, of late, the subject of considerable discussion in this Court. Now, in considering the question as to the effect of unconstitutionality of a statute, it is necessary to re member that unconstitutionality might arise either because the law is in respect of a matter not within the competence of the legislature, or because the matter itself being within its competence, its provisions offend some constitutional restrictions. In a Federal Constitution where legislative powers are distributed between different bodies, the competence of the legislature to enact a particular law must depend upon whether the topic of that legislation has been assigned by the Constitution Act to that legislature. Thus, a law of the State on an Entry in List 1, Sch. VII of the Constitution would be wholly incompetent and void. But the law may be on a topic within its competence, as for example, an Entry in List II, but it might infringe restrictions imposed by the Constitution on the character of the law to be passed, as for example, limitations enacted in Part III of the Constitution. Here also, the law to the extent of the repugnancy will be 1469 void. Thus, a legislation on a topic not within the competence of the legislature and a legislation within its competence but violative of constitutional limitations have both the same reckoning in a court of law; they are both of them unenforceable. But does it follow from this that both the laws are of the same quality and character, and stand on the same footing for all purposes ? This question has been the subject of consideration in numerous decisions in the American Courts, and the preponderance of authority is in favour of the view that while a law on a matter not within the competence of the legislature is a nullity, a law on a topic within its competence but repugnant to the constitutional prohibitions is only unenforceable. This distinction has a material bearing on the present discussion. If a law is on a field not within the domain of the legislature, it is absolutely null and void, and a subsequent cession of that field to the legislature will not have the effect of breathing life into what was a still born piece of legislation and a fresh legislation on the subject would be requisite. But if the law is in respect of a matter assigned to the legislature but its provisions disregard constitutional prohibitions, though the law would be unen. forceable by reason of those prohibitions, when once they are removed, the law will become effective without re enactment. Willoughby on the Constitution of the United States, Vol. 1, at p. 11 says : " The validity of a statute is to be tested by the constitutional power of a legislature at the time of its enactment by that legislature, and, if thus tested it is beyond the legislative power, it is not rendered valid, without re enactment, if later, by constitutional amendment, the necessary legislative power is granted. However, it has been held that where an act is within the general legislative power of the enacting body, but is rendered unconstitutional by reason of some adventitious circumstance, as for example, when a State legislature is prevented from regulating a matter by reason of the fact that the Federal 1470 Congress has already legislated upon that matter, or by reason of its silence is to be construed as indicating that there should be no regulation, tile act does not need to be re enacted in order to be enforced, if this cause of its unconstitutionality is removed. " In Cooley on Constitutional Law at p. 201, it is stated that " a finding of unconstitutionality does not destroy the statute but merely involves a refusal to enforce it". In Wilkerson vs Rahrer (1), the State of Kansas had enacted a law in 1889 forbidding the sale of intoxicating liquor. This was bad in so far as it related to sales in the course of interstate trade, as it was in contravention of the Commerce Clause. But in 1890, the Congress passed a law conferring authority on the States to enact prohibition laws. The question was whether a prosecution under the law of 1889 in respect of a breach of that law subsequent to the Congress legislation in 1890 was maintainable. Repelling the contention that the statute of 1889 was a nullity when it was passed and could not be enforced without reenactment, the Court observed: " This is not the case of a law enacted in the unauthorized exercise of a power exclusively confided to Congress, but of a law which it was competent for the State to pass, but which could not operate upon articles occupying a certain situation until the passage of the Act of Congress. That Act in terms removed the obstacle, and we perceive no adequate ground for adjudging that a re enactment of the state law was required before it could have the effect upon imported which it had always had upon domestic property. " It should be noted that in this case the law of 1889 applied to intrastate sales also, and it was admittedly valid to that extent. The impugned legislation was therefore unconstitutional only in part. Rottschafer after referring to the conflict of authorities on 'this question in the States, refers to the decision in Wilkerson vs Rahrer (1) as embodying the better view. Vide American Constitutional Law, 1939 Edn. p. 39. A similar view was taken in Ulster Transport (1) (1891) I40 U.S. 545; ; 1471 Authority vs James Brown & Sons Ltd. (1). There, construing section 5(1) of the Act of 1920 which enacts that " any law made in contravention of the restrictions imposed by this sub section shall so far as it contravenes these restrictions, be void ", Lord MacDermott L. C. J. observed: " I am not aware of any authority for the view that language such as this necessarily means that contravention must produce an actual gap in the statute book in the sense that the measure concerned, or some specific part thereof, simply drops out of the authorized text. As well as this vertical severability, if I may so describe it, I see no reason why, if the circumstances warrant such a course, the terms of section 5(1) should not be sufficiently met by what I may call a horizontal severance, a severance that is which, without excising any of the text, removes from its ambit some particular subject matter, activity or application. This, I think, would give effect to the words ' so far as it contravenes ' without impinging on the meaning or weight to be attached to the word ' void '. " It will be noted that this decision also deals with a statute which was in part unconstitutional. Coming to the authorities of this Court where this question has been considered: In Behram Khurshed Pesikaka vs The State of Bombay (2) the question arose with reference to the Bombay Prohibition Act of 1949 which, subject to certain exceptions provided therein, prohibited the consumption of liquor. In The State of Bombay and another vs F. N. Balsara (3) this Court had held that this provision was obnoxious to article 19(1)(g) of the Constitution in so far as it related to medicinal and toilet preparations containing alcohol. The appellant was prosecuted for the offence of consuming liquor, and his defence was that he had taken medicine containing alcohol. The point in dispute was whether the burden was upon the appellant to prove that he had taken such a medicine or for the prosecution to show that he had not. This (1) (1953) Northern Ireland Reports 79. (2) , 654. (3) ; 1472 Court held that the onus was on the prosecution, and the same not having been discharged, the appellant was entitled to be acquitted. In the course of the judgment, Mahajan C. J. made the following observations, which are relied on by the petitioners: " The constitutional invalidity of a part of section 13(b) of the Bombay Prohibition Act having been declared by this Court, that part of the section ceased to have any legal effect in judging cases of citizens arid had to be regarded as null and void in determining whether a citizen was guilty of an offence. " It must be observed that the question of the constitu tionality of the Act did not arise directly for deter mination and was incidentally discussed as bearing on the incidence of burden of proof. And further, these observations have reference to the enforceability of the provisions of the Bombay Prohibition Act, while the bar under article 19 continued to operate. There was no question of the lifting of ban imposed by article 19, 'and the question as to the effect of lifting of a ban did not arise for decision. In the context in which they occur, the words " null and void " cannot be construed as implying that the impugned law must be regarded as non est so as to be incapable of taking effect, when the bar is removed. They mean nothing more than that the Act is unenforceable by reason of the bar. In A. V. Fernandez vs State of Kerala (1) the question arose with reference to the Travancore Cochin General Sales Tax Act and the Rules made thereunder. Prior to the Constitution, the assessees were liable to pay tax on the total turnover of sales including those inside the State and those outside the State. Where the sales were of cocoanut oil, there was a provision for deduction of the price paid for the purchase of copra from the total turnover. After the coming into force of the Constitution, a new section, section 26, corresponding to section 22 of the Madras Act, was introduced incorporating therein the provisions of article 286, and consequent thereon, the sales which took place outside the State were excluded from the turnover. On this, (1) ; 1473 a question arose as to the quantum of deduction to which the assessee was entitled in respect of his purchase of copra. He claimed that he was entitled to deduct the price paid for copra not only in respect of oil which was sold inside the State but also oil sold outside the State. This contention was rejected by the High Court, which limited the deduction to purchase of copra relating to the sales inside ' the State, and in affirming that decision, this Court observed : " In our opinion, section 26 of the Act, in cases falling within the categories specified under Article 286 of the Constitution has the effect of setting at nought and of obliterating in regard thereto the provisions contained in the Act relating to the imposition of tax on the sale or purchase of such goods and in particular the provisions contained in the charging section and the provisions contained in rule 20(2) and other provisions which are incidental to the process of levying such tax. So far as sales falling within the categories specified in Article 286 of the Constitution and the corresponding section 26 of the Act are concerned, they are, as it were, taken out of the purview of the Act and no effect is to be given to those provisions which would otherwise have been applicable if section 26 had not been added to the Act. " On the strength of the above observations, the petitioners contend that the provisions relating to inter State sales must be treated as non existent, and that, therefore, a fresh enactment of the statute would be necessary to bring them into operation. Here again, the point for decision was only as to the effect of the ban under article 286 on the transactions which came within its purview. That ban had not then been lifted and the effect of the lifting of such a ban on the existing law did not fall to be considered. We are unable to read the observations relied on by the petitioners as implying that section 22 of the Madras Act must be taken to have been blotted out of the statute book. A case directly in point is Bhikaji Narayan Dhakras and others vs The State of Madhya Pradesh and another (1). There, the question arose with reference (1) ; 1474 to the C. P. & Berar Motor Vehicles (Amendment) Act, 1947 (Act 3 of 1948). That Act had amended section 43 of the , by introducing provisions which authorised the Provincial Government " to take up the entire motor transport business in the Province and run it in competition with and even to the exclusion of motor transport operators ". These provisions, though valid at the time when they were enacted, became void on the coming into force of the Constitution as infringing the rights of citizens to carry on business, protected by article 19(1)(g). The Constitution, however, was amended on June 18,1951, and article 19(6) was amended so as to authorise the State to carry on business " to the exclusion, complete or partial, of citizens or otherwise ". Subsequent to this amendment, the Government issued a notification under section 43 of the Amendment Act of 1948, and it was the validity of that notification that was in issue. The contention was that as section 43 of the Act of 1948 had become void at the date of the Constitution, a notification issued by the Government under that section after the date of the amendment of the Consti tution was not valid, as it must be taken to have become non est. It was held by this Court that section 43 of the Act of 1948 could not be held to have been effaced out of the statute book, because it continued to operate on transactions prior to the coming into force of the Constitution, and that even after the Constitution, it would be operative as against non citizens, that the consequence of section 43 being repugnant to article 19(1)(g) was that it could not be enforced so long as the prohibition contained therein was in force, but that when once that prohibition had been removed as it was by the First Amendment, the provisions of that Act which had been dormant all the time became active and enforceable. The result of the authorities may thus be summed up: Where an enactment is unconstitutional in part but valid as to the rest, assuming of course that the two portions are severable, it cannot be held to have been wiped out of the statute book as it admittedly must remain there for the purpose of enforcement of 1475 the valid portion thereof, and being on the statute book, even that portion which is unenforceable on the ground that it is unconstitutional will operate proprio vigore when the Constitutional bar is removed, and there is no need for a fresh legislation to give effect thereto. On this view, the contention of the petitioners with reference to the Explanation in section 22 of the Madras Act must fail. That Explanation operates, as already stated, on two classes of transactions. It renders taxation of sales in which the property in the goods passes in Madras but delivery takes place outside Madras illegal on the ground that they are outside sales falling within article 286(1) (a). It also authorises the imposition of tax on the sales in which the property in the goods passes outside Madras but goods are delivered for consumption within Madras. It is valid in so far as it prohibits tax on outside sales, but invalid in so far as sales in which goods are delivered inside the State are concerned, because such sales are bit by article 286(2). The fact that it is invalid as to a part has not the effect of obliterating it out of the statute book, because it is valid as to a part and has to remain in the statute book for being enforced as to that part. The result of the enactment of the impugned Act is to lift the ban under article 286(2), and the consequence of it is that that portion of the Explanation which relates to sales in which property paws outside Madras but the goods are delivered inside Madras and which was unenforceable before, became valid and enforceable. In this view, we do not feel called upon to express any opinion as to whether it would make any difference in the result if the impugned provision was unconstitutional in its entirety. There is one other aspect of the question to which reference must be made. The decisions in Behram Khurshed Pesikaka vs The State of Bombay (1) and Bhikaji Narain Dhakras and others vs The State of Madhya Pradesh and another (2) both turn on the construction of article 13 of the Constitution, which enacts that laws shall be void to the extent they are (1) 187 (2) ; , 187 1476 repugnant to the provisions of Part III. We are concerned in these petitions not with infringement of any of the provisions of Part III but of article 286(2), and the point for our decision is as to the effect of the infringement of that provision. article 286(2) does not provide that a law which contravenes it is void, and when regard is had to the context of that provision, it is difficult to draw the inference that that is the consequence of contravention of that provision. article 372(1) provides for the continuance in force of all laws existing at the date of the Constitution. The proviso to article 286(2) enacts that the President may by an order continue the operation of the Sales Tax Laws up to March 31, 1951, and article 286(2) itself enacts that no law of a State shall impose a tax. In the context in which they occur, the true meaning to be given to these words is, as already observed, that no law of a State shall be effective to impose a tax; that is to say, the law cannot be enforced in so far as it imposes such a tax. Whether we consider the question on broad principles as to the effect of un constitutionality of a statute or on the language of article 286(2), the conclusion is inescapable that section 22 of the Madras Act and the corresponding provisions in the other statutes cannot be held to be null and void and non est by reason of their being, repugnant to article 286(2) and the bar under that Article having been now removed, there is no legal impediment to effect being given to them. (V) We shall now deal with the contention of the learned counsel for the Madura Mills Ltd., who struck a new path cutting across the lines on which the petitioners and the other interveners proceeded. He contended that the decisive factor in the determination of the question was Entry 42 in List I of the Seventh Schedule, "Inter State trade and commerce", that under that Entry, Parliament had the exclusive power to enact laws in respect of inter State trade and commerce and that included power to impose a tax on inter State sales, that the States had therefore no competence under the Constitution to enact a law imposing tax on such sales, that the laws passed 1477 by the States after the Constitution imposing such a tax were ultra vires and void, that the impugned Act purporting to give effect to such laws was likewise ultra vires and inoperative, and that, in consequence, the proceedings sought to be taken under section 22 of the Madras Act and the corresponding provisions in the sister Acts of other States were unauthorised and illegal. The argument in support of this contention was as follows: Entry 42 in List I is based on the Commerce Clause of the American Constitution, article 1, section 8 that " The Congress shall have power to regulate commerce among the several States ", and that has been interpreted by the Supreme Court of the United States as meaning that the States have no power to enact a law imposing a tax on the carrying on of inter State trade (Vide Robins vs Taxing District of Shelby County (1), or imposing tax on inter State sales (Vide McLeod vs Dilworth Co. (2)). The contents of Entry 42 are the same as those of the Commerce Clause, and it must therefore be construed as of the same effect. It is also a well established rule of construction that the Entries in the Legislative Lists must be interpreted liberally and in a wide sense. The true interpretation therefore to be put upon Entry 42 is that Parliament has, and therefore, in view of the non obstante clause in article 246(1) and of the words "subject to" in article 246(3), the States have not, the power to impose tax on inter State sales. Article 301 which provides that trade and commerce in the territory of India shall be free is also intended to achieve the same result. It reproduces section 92 of the Commonwealth of Australia Constitution Act, and the authorities on that section have held that imposition of a tax on inter State trade would be obnoxious to that provision. That the freedom in article 301 includes freedom from taxation is also implicit in article 304 (a) in which an exception to article 301 is made in respect of the imposition of tax on goods imported from other States. The result is, it is argued, that after the Constitution no law of a State can impose a tax on (1) ; ; (2) (1044) ; ; 1478 inter State sales, and in consequence, section 22 of the Madras Act, which came into force after the Constitution, would, if it is construed as imposing a tax, be bad, and the impugned Act which proceeds on the view that the States have the power to enact laws imposing a tax on inter State sales and seeks to give effect to them would also be unconstitutional and void. This contention suffers, in our opinion, from serious infirmities. It overlooks that our Constitution was not written on a tabula rasa, that a Federal Constitution had been established under the Government of India Act, 1935, and though that has undergone considerable change by way of repeal, modification and addition, it still remains the framework on which the present Constitution is built, and that the provisions of the Constitution must accordingly be read in the light of the provisions of the Government of India Act. It fails to give due weight to the setting of the relevant provisions of the Constitution and the interpretation which is to be put upon them in their context. In the Government of India Act, 1935, there was no Entry corresponding to Entry 42 in List I of the Constitu tion. But there was in List II, Entry 48 which corresponds to Entry 54 in the Constitution. It is not in dispute that under Entry 48 the States had power to pass a law imposing a tax on inter State sales, because the terms of the Entry are wide and would include inter State as well as intrastate sales. It was on this view that the Provinces had enacted laws imposing tax on inter State sales. Then the Constitu tion came into force, and it included for the first time a new Entry 42 in List 1. It also reproduced Entry 48 in Entry 54 in List II in terms, for our purposes, identical. Having regard to the connotation of that Entry in the Government of India Act, 1935, one would have expected that if it was intended by the Constitution makers that the States should be deprived of the power to tax interstate sales which they had under Entry 48 in the Government of India Act, that would have been made clear in the Entry itself. It is material to note that while Entry 48 in the Government 1479 of India Act was "Taxes on the sale of goods and on advertisement ", Entry 54 in List II of the Constitution as originally enacted was " Taxes on the ' sale or purchase of goods other than newspapers". Thus, the Constitution did limit the scope of Entry 48 by excluding from it newspapers, and if it was its intention to exclude inter State sales from its purview, nothing would have been easier for it than to have said so, instead of leaving that result to be inferred on a construction of Entry 42 in List I in the light of the American authorities on the Commerce Clause. This Is strong indication that Entry 42 is not to be read as including tax on inter State sales. This conclusion is further strengthened, when regard is had to the scheme of the Lists in the Seventh Schedule and the principle underlying the enumeration of heads of legislation therein. In List 1, Entries I to 81 mention the several matters over which Parliament has authority to legislate. Entries 82 to 92 enumerate the taxes which could be imposed by a law of Parliament. An examination of these two groups of Entries shows that while the main subject of legislation figures in the first group, a tax in relation thereto is separately mentioned in the second. Thus, Entry 22 in List I is " Railways ", and Entry 89 is " Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freights ". If Entry 22 is to be construed as involving taxes to be imposed, then Entry 89 would be superfluous. Entry 41 mentions "Trade and commerce with foreign countries; import and export across customs frontiers ". If these expressions are to be interpreted as including duties to be levied in respect of that trade and commerce, then Entry 83 which is " Duties of customs including export duties " would be wholly redundant. Entries 43 and 44 relate to incorporation, regulation and winding up of corporations. Entry 85 provides separately for Corporation tax. Turning to List II, Entries I to 44 form one group mentioning the subjects on which the States could legislate. Entries 45 to 63 in that List form another group, and they deal with 1480 taxes. Entry 18, for example, is " Land " and Entry 45 is " Land revenue ". Entry 23 is " Regulation of mines " and Entry 50 is " Taxes on mineral rights ". The above analysis and it is not exhaustive of the Entries in the Lists leads to the inference that taxation is not intended to be comprised in the main subject in which it might on an extended construction be regarded as included, but is treated as a distinct matter for purposes of legislative competence. And this distinction is also manifest in the language of article 248, Cls. (1) and (2), and of Entry 97 in List I of the Constitution. Construing Entry 42 in the light of the above scheme, it is difficult to resist the conclusion that the power of Parliament to legislate on inter State trade and commerce under Entry 42 does not include a power to impose a tax on sales in the course of such trade and commerce. Article 286 has a direct bearing on the point now under discussion. It imposes various restrictions on the power of the State to enact laws imposing taxes on sale of goods and one of those restrictions has reference to taxes on inter State sales, vide article 286(2). It is implicit in this provision that it is the States that have got the power to impose a tax on such sales, as there can be no question of a restriction on what does not exist. That is how article 286(2) has been construed by this Court both in The United Motors case (1) and in The Bengal Immunity Company case (2). It was observed therein that under Entry 54, as under Entry 48 of the Government of India Act, the power to tax sales rested with the States, and that article 286(2) was enacted with the object of avoiding multiple taxation of inter State sales in exercise of the power conferred by that Entry. This again strongly supports the conclusion that Entry 54 must be interpreted as including the power to tax inter State sales and Entry 42 as excluding it. In order to get over this hurdle, learned counsel put forward the contention that article 286(2) had reference only to laws which were in existence at the time when the Constitution came into force, and that the (1) ; (2) 1481 power given to Parliament was one to continue those laws. Reference was made to the proviso to article 286(2) which authorised the President to direct that the taxes which were being levied by the State before the commencement of the Constitution might be continued to be levied until March 31, 1951, and it was said that the power conferred under article 286(2) was of the same character, and that it merely enabled Parliament to continue pre Constitution laws. Now, it cannot be disputed that the language of article 286(2) would, in terms, comprehend future legislation. Language similar to the one used in article 286 (2) is also to be found in article 287, and there, it clearly has reference to laws to be enacted after the Constitution. Indeed, it was conceded that on the wording of article 286(2) both existing and future legislation would be included. But it was contended that its operation should be limited to existing laws, because as Entry 42 in List I includes tax on inter State sales, any law of the State subsequent to the Constitution imposing such a tax would be incompetent. This, however, is petitio principii. The point for decision is whether tax on inter State sales is included within Entry 42. The inference to be drawn from the plain language of article 286(2) is that it is not. It is no answer to this to say that Entry 42 includes it, and that, therefore, the meaning of article 286(2) should be cut down. We cannot accede to such a contention. To sum up: (1) Entry 54 is successor to Entry 48 in the Government of India Act, and it would be legitimate to construe it as including tax on interState sales, unless there is anything repugnant to it in the Constitution, and there is none such. (2) Under the scheme of the Entries in the Lists, taxation is regarded as a distinct matter and is separately set out. (3) Article 286(2) proceeds on the basis that it is the States that have the power to enact laws imposing tax on inter State Sales. it is a fair inference to draw from these considerations that under Entry 54 in List 11 the States are competent to enact laws imposing tax on inter State sales. We must now consider the arguments that have 1482 been put forward as supporting the opposite conclusion. It is firstly contended that the Entries in the Legislative Lists must be construed broadly and not narrowly or in a pedantic manner, and that, in accordance with this principle, Entry 42 should be construed, there being no limitation contained therein, as inclusive of the power to tax sales in inter State trade and commerce. The rule of construction relied on is no doubt well established; but the question is as to the application of that rule in the present case. The question here is not simpliciter whether a particular piece of legislation falls within an Entry or not. The point in dispute before us is whether between two Entries assigned to two different Legislatures the particular subject of legislation falls within the ambit of the one or the other. If Entry 42 in List I is to be construed liberally, so must Entry 54 in List II be, and the point is not settled by reference to article 246, Cls. (1) and (3) and to the principle laid down in Union Colliery Company of British Columbia vs Bryden (1) that where there is a conflict of jurisdiction between a Central and a Provincial Legislature, it is the law of the Centre that must prevail. article 246, Cls. (1) and (3) have to be invoked only if there is a conflict as to the scope of two Entries in the two Lists and not otherwise. What has therefore first to be decided is whether there is any conflict between Entry 42 in List I and Entry 54 in List 11. If there is not, the application of the non obstante clause in article 246(1) or of the words " subject to " in article 246(3) does not arise. There is another rule of construction also wellsettled that the Entries in two Legislative Lists must be construed if possible so as to avoid a conflict. In Province of Madras vs Boddu Paidanna and Sons (2) the question was as to whether the first sales by a manufacturer of goods were liable to be taxed by the Province under Entry 48 in List II, or whether it was really a tax on excise which was within the exclusive competence of the Centre under Entry 45 in List 1. It was held by the Federal Court that the (1) (2) 1483 correct approach to the question was to see whether it was possible to effect a reconciliation between the two Entries so as to avoid a conflict and overlapping, ' and that, in that view, though excise duty might in a extended sense cover the first sales by the manufacturer, in the context of entry 48 in List II it should be held not to include it, and that therefore the Province had the right to tax the first sales. This view was approved by the Privy Council in GovernorGeneral in Council vs Province of Madras (1). If it is possible therefore to construe Entry 42 as not including tax on interstate sales, then on the principle enunciated in Province of Madras vs Boddu Paidanna and Sons (2) and Governor General in Council vs Province of Madras (1) we should so construe it, as that will avoid a conflict between the two Entries. It was also argued in support of the contention that Entry 42 in List I must be held to include the power to tax, that that was the interpretation put by the American authorities on the Commerce Clause, and that there was no reason why a different construction ,should be put on Entry 42 in list I of our Constitution. It is true that our Constitution makers bad before them the Commerce Clause and the authorities thereon, but it is a mistake to suppose that they intended to bodily transplant that clause in Entry 42. We had in the Government of India Act, 1935, a fullfledged Federal Constitution in force in this Country, and what the Constitution makers did was to draw from other Federal Constitutions of the world, adapt and modify the provisions so as to sent our conditions and fit them in our Constitution. In this new context, those provisions do not necessarily mean what they meant in their old setting. The threads were no doubt taken from other Constitutions, but when they were woven into the fabric of our Constitution, their reach and their complexion underwent changes. Therefore, valuable as the American decisions are as showing how the question is dealt with in a sister (1) (1945) L.R. 72 I.A. 91. (2) 188 1484 Federal Constitution, great care should be taken in applying them in the interpretation of our Constitution. We should not forget that it is our Constitution that we are to interpret, and that interpretation must depend on the context and setting of the particular provision which has to be interpreted. Applying these principles and having regard to the features already set out, we must hold that Entry 42 in List I is not to be interpreted as including taxation. The same remarks apply to the argument based upon section 92 of the Commonwealth of Australia Constitution Act and article 301 of 'our Constitution. We should also add that article 304 (a) of the Constitution cannot be interpreted as throwing any light on. the scope of article 301 with reference to the question of taxation, as it merely reproduces section 297 (1) (b) of the Government of India Act, and as there was no provision therein corresponding to article 301, section 297 (1)(b) could not have implied what is now sought to be inferred from article 304 (a). In the result, we are of opinion that if the States had the power under Entry 54 to impose a tax on inter State sales subject only to the restriction enacted in article 286 (2), then by virtue of the impugned Act such law is rendered operative and proceedings taken thereunder are valid. We have reached this conclusion on a construction of the statutory provisions bearing on the question without reference to the Sixth Amendment of the Constitution which, proceeding on the view that the States had the power to tax interState sales under Entry 54, has amended the Constitu tion, and has vested the power to tax interstate sales in the Centre. (VI) Another contention urged by the petitioners is that the levy of tax proposed to be made by the Andhra State on the sale of yarn by them to dealers in the State of Andhra is illegal, because under the Madras Act and the Rules made thereunder, where there are successive sales of yarn the tax can be imposed at only one point, and as the Government of Madras had already imposed a tax on the sale within that State, a second levy on the self same goods by the State of Andhra is unauthorised. and that therefore 1485 the threatened proceedings for assessment are incompetent. This contention is clearly untenable. When the Madras Act provides for a single levy on successive sales of yarn, it can have only application to sales in the State of Madras, as it would be incompetent to the Legislature of Madras to enact a law to operate in another State. But it is argued that section 53 of the Andhra State Act, 1953, on its true interpretation enacts that though for political purposes Andhra is to be regarded as a separate State, for the enforcement of laws as they stood on that date it should be deemed to be a part of the State of Madras. We do not agree with this interpretation. In our opinion, section 53 merely provides that the laws in existence in the territories which were constituted into the State of Andhra should continue to, operate as before. In fact, by an Adaptation Order issued on November 12, 1953, even the name of Andhra was substituted for Madrts in the Madras General Sales Tax Act. There is no substance in this contention. (VII) Lastly, it is argued that the Essential Commodities Act enacted by Parliament in exercise of the power conferred by article 286 (3) has declared that yarn is an essential commodity, and that if the Madras Act is to be construed as a fresh enactment for the Andhra State by reason of sections 53 and 54 of the Andhra State Act and the Adaptation Order dated November 12, 1953, then it would be bad inasmuch as the procedure prescribed in that provision had not been followed. The basis of this contention is that the Madras Act as applied to the Andhra State is a now Act for purposes of article 286 (3), but that is not so. The Madras Act was in force in the territories which now form part of the Andhra State until October 1, 1953, and thereafter that Act continues to be in operation by force of section 53 of the Andhra State Act. Moreover, the Madras Act become operative in the new State of Andhra not under any law passed by the Legislature of the State of Andhra but under section 53 of a law enacted by Parliament and therefore article 286 (3) has no application. We should add that the Essential Commodities Act (LII of 1952) has itself 1486 been repealed and is no longer in operation. This contention of the petitioners also should be rejected. The petitioners sought to raise certain other contentions such as that they are not "dealers" in the Andhra State, and that the Explanation to section 22 had no application to the sales sought to be taxed, as the goods were delivered not in the State of Andhra but in Madras. But these are questions which ought properly to be raised before the assessing authorities, and cannot be gone into in these proceedings. In the result, the petitions fail and are rejected. The petitions have had a chequered career, their fortures fluctuating with changes in the interpretation of the law and in the law itself. In the circumstances, we direct the parties to bear their own costs. SARKAR J. The petitioners who are dealers in cotton yarn carrying on business in the city of Madras had sold goods to various persons in the State of Andhra. This State, the respondent in these petitions, demanded taxes on these sales under the provisions of the Sales Tax Act applying to its territories. The petitioners challenged the respondents right to tax the, sales, and filed these petitions for writs of prohibition or other suitable writs restraining the respondent from levying and collecting the tax. The Act mentioned various kinds of sales which could be taxed under it. The procedures followed by the petitioners in effecting the sales were diverse and have not yet been ascertained, and it is not possible without such ascertainment to decide whether they are or are not taxable under the provisions of the Act read with other relevant laws. To avoid this difficulty it has been agreed between the parties that the only question that will be decided on these petitions is whether the respondent can tax a sale under which the pro perty in the goods sold passed outside the State of Andhra but the goods were delivered in that State for consumption there. Before proceeding to discuss this question it is necessary to refer to certain antecedent events. On January 26, 1950, the Constitution of India was 1487 promulgated. It continued the laws previously in force in the territories of India subject to its provisions. Article 372(2) of the Constitution provides that, "For the purpose of bringing the provisions of any law in force in the territory of India into accord with the provisions of this Constitution, the President may by order make such adaptations and modifications of such law, whether by way of repeal or amendment, as may be necessary or expedient. " Article 286 of the Constitution as it stood prior to its amendment in 1956, that being what this case is concerned with, contained the following provisions : " article 286. (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place (a) outside the State ; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India,. Explanation. For the purposes of sub clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consump tion in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. (2) Except in so far as Parliament my by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase talks place in the course of inter State trade or commerce : " In the year 1939 the legislature of Madras had enacted the Madras General Sales Tax Act and this was continued in force by the Constitution after its promulgation. In order to bring its provisions into accord with the Constitution, the President under his power mentioned earlier, passed on July 2, 1952, the Adaptation of Laws(Fourth Amendment) Order which 1488 added a new section to the Madras Act, being section 22. The terms of this section are important in this case and will be set out later. The effect of the Explanation in article 286(1)(a) came up for consideration by this Court in the case of The State of Bombay vs The United Motors (India) Ltd. (1). This Court held by its judgment pronounced by a majority, on March 30, 1953, that a State 'could tax a sale under which goods were delivered within its territories for consumption there though the property in the goods passed beyond its territories and a provision in a State statute purporting to levy such a tax did not contravene article 286. Andhra is a new State which came into existence on October 1, 1953. It was created by the Andhra State Act, 1953, largely out of territories previously belonging to the State of Madras. Later, the new State came to be designated as the State of Andhra Pradesh but I will refer to it as the State of Andhra or simply Andhra. Section 53 of the Andhra State Act provided that the laws in force prior to the Con stitution of the State of Andhra in the territories included in it, were thereafter to continue in force there. The Madras General Sales Tax Act therefor(, became applicable to the State of Andhra and it became go applicable with the new section 22 previously added to it. Subsequently, the Madras Act as applying in the State of Andhra was, to suit the latter State, adapted by substituting for the name Madras the name Andhra wherever it occurred in that Act. I will hereafter call this Act the Sales Tax Act. Sometime in the year 1954 the respondent, the State of Andhra, issued notices to the petitioners demanding taxes under its Sales Tax Act. As I have earlier stated the petitioners challenged the right of the respondent to levy the tax and certain correspondence followed. As the respondent insisted on collecting the tax, the petitioners instituted the present proceeding, , in July and August, 1955. While these proceedings were pending, the question of the effect of article 286 again came up for consideration (1) ; 1489 by this Court in the case of the Bengal Immunity Company Ltd. vs The State of Bihar(1). This Court by its judgment pronounced, again by a majority, on September 6, 1955, held that until Parliament by law made in the exercise of powers vested in it under article 286(2) otherwise provided, no State could impose any tax on a sale or purchase of goods when such sale or purchase took place in the course of inter State trade or commerce and the majority decision in the State of Bombay vs The United Motors (India) Ltd. (2) in so far as it decided to the contrary could not be accepted andfurther that the explanation in article 286(1)(a)did not confer any right on the State in which the goods were delivered under a sale, to tax it notwithstanding that the property in the goods passed in another State. In view of this decision the respondent was advised that it could not oppose the petitions and on October 21, 1955, it actually filed statements in these proceedings submitting that the petitions might be allowed. Before however the petitions could be heard and disposed of, an Ordinance called the Sales Tax Laws Validation Ordinance, 1956, was promulgated by the President on January 30, 1956. This Ordinance was later, on March 21, 1956, replaced by the Sales Tax Laws Validation Act, 1956. Both these enactments were in identical terms. The operative provision of the Validation Act is set out below. " Notwithstanding any judgment, decree or order of any court no law of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter State trade or commerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of interstate trade or commerce ; and all such taxes levied or collected or purporting to have been levied or collected during the (1) (2) ; 1490 aforesaid period shall be deemed always to have been validly levied or collected in accordance with law. " The respondent was advised that the Validation Act had changed the situation and in view of it the petitions could no longer succeed. Thereupon, the respondent on February 19, 1957, filed fresh statements submitting that the petitions should be dismissed. The petitions have now come up for hearing in these circumstances. The validity of the Validation Act itself has been challenged. But I do not think it necessary to decide that question. I will assume that that Act is perfectly valid. It does not however itself levy any tax. Its only effect, so far as these cases are concerned, is to permit the Sales Tax Act to operate to tax sales which took place in the course of trade between Andhra and any other State between certain dates. I will not refer to these dates hereafter for what Ihave to say applies to sales between them only. As has been agreed between the parties, as mentioned at the commencement of this judgment, the only question that we have to decide is whether a sale under which the goods were delivered in Andhra for consumption there though property in them passed in Madras, can be taxed by the respondent. Such a sale would no doubt be a sale in the course of trade between Andhra and Madras. It is said that such a sale cannot be taxed by the respondent notwithstanding the Validation Act, because the Sales Tax Act does not purport to tax it. Does the Sales Tax Act then contain any provision taxing such a sale ? Now the Act authorises the levy of a tax on sales as defined in it. A sale is defined in section 2(h) of the Act. It is not disputed however that that definition does not include a sale under which goods are delivered in Andhra for consumption there but property in them passes in Madras and no further reference to that section is therefore necessary. It is however said that the effect of the Explanation in section 22 is to make such a sale, a sale within the meaning of the Act and therefore liable to be taxed under it. So I proceed to examine that section. Section 22 as it stood at the relevant time reads thus: 1491 S.22. "Nothing contained in this Act shall be deemed to impose, or authorise the imposition of, a tax on the sale or purchase of any goods, where such ' sale or purchase takes place (a) (i) outside the State of Andhra, or (ii) in the course of the import of the goods into the territory of India or of the export of the goods out of such territory, or (b) except in so far as Parliament may by law otherwise provide, after the 31st day of March 1951 in the course of inter State trade or commerce, and the provisions of this Act shall be read and construed accordingly. Explanation. For the purposes of clause (a)(i), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods, the property in the goods has by reason of such sale or purchase passed in another State. " Does the Explanation in this section then say that when under a sale goods are delivered in Andhra, the sale shall be deemed to have taken place there though the property in the goods may have passed in another State, for example, Madras ? It no doubt says, without specifying any particular State, that a sale shall be deemed to have taken place in the State in which the goods were delivered under it though the property in them has passed in another State. But it seems to me impossible from the language used to say that it contemplated a case in which the goods were delivered in Andhra though property in them passed in another State. For the sake of clarity I have left out in what I have just said the term as to consumption in the State in which the goods were delivered and no question as to such consumption is in dispute in these cases. The Explanation opens with the words " For the purposes of clause (a) (i) ". What then is that clause ? 189 1492 It only contains the words "outside the State of Andhra". It completes the sentence part of which has preceded it. The complete sentence says, Nothing in this Act shall be deemed to impose, or authorise the imposition of, a tax on the sale or purchase of any good,,;, where such sale or purchase takes place (a) (i) outside the State of Andhra. It then savs that no tax shall be levied under the Act on a sale which takes place outside Andhra. It is after this that the Explanation comes and starts with the words " for the purposes of clause (a) (i)". These words must therefore mean, for the purpose of explaining which sale is to be regarded as having taken place outside Andhra. The Explanation then is for this purpose. I will now turn to the remaining and the substantive portion of the Explanation. That must explain when a sale is to be regarded as having taken place outside Andhra. The substantive portion of the Explanation however mentions a sale which is to be deemed to have taken place inside a State. Keeping its purpose in mind, it must be taken by saying that a certain sale is to be deemed inside a State, to say that it is outside the State of Andhra. It follows that the Explanation does not contemplate that the State inside which a sale is to be deemed to have taken place, can be the State of Andhra. That State cannot be the State of Andhra, for then the Explanation would not show when a sale is to be deemed to be outside Andhra and that by its language is the only purpose for which it is enacted. Therefore the Explanation can only be read as contemplating a State other than Andhra as the State inside which a sale shall be deemed to have taken place. This is the inevitable result produced by the opening words of the Explanation understood according to their plain meaning. So the Explanation, omitting portions of it for the sake of clarity, can only be read in the manner shown below: For the purposes of clause (a)(i) a sale or purchase shall be deemed to have taken place in the State being a State other than Andhra, in which the goods have 1493 been actually delivered notwithstanding that the property in the goods has passed in the State of Andhra. I therefore find it impossible to say that the Explanation states that a sale shall be deemed to have taken place inside Andhra if under it the goods have been delivered there though the property in them passed in another State. The Explanation does not hence, in my view, authorise the taxation of a sale under which goods are delivered in Andhra though property in them passed in Madras. The view that I have taken of the purpose of the Explanation in section 22 was taken of the purpose of the Explanation in article 286(1)(a) in the Bengal Immunity Company case (1). It was said at p. 646 of the report, " Here the avowed purpose of the Explanation is to explain what an outside sale referred to in sub clause (a) is ". The language of the Explanations and the setting of each in its respective provision are identical. That language must therefore have the same meaning. It is said that the consideration that prevailed with the Court in the Bengal Immunity Company case (1) in dealing with article 286 cannot apply in dealing with section 22 for the latter is a provision in a taxing statute which the former is not. But I do not see that this comment, even if justified, would lead to a different meaning being put on words used when they occur in a taxing statute from that when they occur in a statute which does not purport to levy a tax. As a matter of language only, words must have the same meaning. The words "for the purpose of clause (a)(i)" must therefore have tile same meaning in the Explanation in article 286(1)(a) as in the Explanation in section 22. 1 am unable to distinguish the present case from the Bengal Immunity Company case (1) for the purpose of determining the meaning of the words used. It is then said that the Explanation in i. 22 has two facets; that when it talks of a sale inside one State, it at the same time necessarily talks of a sale outside all other States. Therefore it is said that when under a (1) 1494 sale goods are delivered in Andhra but property in .them passes outside Andhra, the Explanation at the same time makes such a sale inside Andhra and outside all other States. I do not follow this. Why should the Explanation in this Andhra Act be concerned with saying when a sale shall be deemed to have taken place outside all other States ? Andhra cannot of course legislate for any other State. Nor is there anything in this Act which makes it necessary for the purposes of it to say when a sale shall be deemed to be outside all other States. It follows therefore that a construction cannot be put on the language used in tile Explanation which produces the result of showing a sale to be inside Andhra and so outside all other States. Further, as I have earlier pointed out, the words " For the purposes of clause (a)(i)" with which the Explanation starts, show conclusively that it is necessarily confined to a sale under which goods are delivered in a State other than Andhra and the property in the goods passes in Andhra. It is no objection to this reading of the Explanation to say that the Andhra Act would then be saying when a sale is to be deemed to have taken place inside another State and it has no power to do so as it can legislate only for itself and for no other State. Such an objection would be pointless because Andhra by saying that a sale shall be deemed to have taken place inside another State is only legislating for itself and only saying that such a sale is therefore an outside sale so far as it is concerned and cannot be taxed in view of section 22(a) of its Act. It may be that it is possible in construing the Explanation in article 286(1)(a) to conceive of two facets because that dealt with all States or any two States at a time and for all these the Constitution was fully competent to lay down the law. That however is not possible when construing a law passed by a State legislature. Such law cannot regulate the laws of other States. And in this case the conception is further impossible because the language shows that the Explanation is for explaining when a sale is to be deemed to have taken place outside the State of Andhra. It is not meant to 1495 explain when it is deemed to have taken place outside any State whatsoever that State may be. I am therefore unable to see that the Explanation has any facet showing what would be a sale inside Andhra. The conclusion that I reach is that the Sales Tax Act with which these cases are concerned does not authorise '.he taxing of a sale under which goods are delivered in Andhra but the property in them passes in Madras. In this view of the matter I do not think it necessary to discuss the various other grounds on which the respondent 's right to tax these sales was also challenged. In the result I would allow these petitions. BY COURT: In view of the opinion of the majority, the petitions an dismissed. The parties are to bear their own costs. Petitions dismissed.
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The people filing the case were businesses in Madras that bought and sold yarn (a type of thread). Businesses in Andhra (a different state) would order yarn from these Madras businesses. The deals were made in Madras, and the yarn was given to the buyers in Madras. Then, the buyers would ship the yarn to Andhra and receive it there. This case is about sales where the ownership of the yarn changed hands outside of Andhra. However, the yarn was delivered to Andhra to be used there. After India's Constitution started, the President made changes to the sales tax laws of all the states. He added a new section, section 22, to the Madras General Sales Tax Act of 1939. This section was exactly the same as the explanation in article 286 (i)(a) of the Constitution. On July 13, 1954, the Board of Revenue (Commercial Taxes) in Andhra told Madras businesses to report their sales where goods were delivered in Andhra for use there. They did this because of a court decision in a previous case. So, the Madras businesses filed these petitions (legal requests) under article 32 of the Constitution. They argued that the sales they were being taxed on were sales between states. They said that these sales were protected from taxes under article 286(2) of the Constitution. While these petitions were being considered, the Supreme Court made a ruling on September 6, 1955, in another case. According to this ruling, the Madras businesses should not be taxed. But before the court made a final decision on the petitions, Parliament (the Indian government) passed the Sales Tax Laws Validation Act in 1956. Section 2 of this law said that no state law that taxed sales between states between April 1, 1951, and September 6, 1955, was invalid just because the sales happened during trade between states. This section also said that any taxes collected on these sales during that time were considered valid. Andhra argued that because of this new law, it had the right to tax sales between states during that time. However, the Madras businesses argued that: (1) section 22 of the Madras General Sales Tax Laws Validation Act, 1956, only made laws that imposed a tax valid, but did not allow a tax to be imposed; (2) the Sales Tax Laws Validation Act went against article 286(2); (3) section 22 of the Madras Act was not a "law of a State" under article 286(2) and section 2 of the challenged Act; (4) the challenged Act only made taxes that had already been collected valid, and did not allow new tax proceedings to start; (5) because section 22 was unconstitutional when it was created and therefore void, no proceedings could be taken under it based on the Validation Act, as the effect of unconstitutionality of the law was to get rid of it from the law books; and (6) the tax was bad because it broke the rule that yarn sales could only be taxed once. They also argued that only Parliament had the power to tax sales between states. They said that the Sales Tax Laws Validation Act was bad because it gave states the power to tax these sales. The court held that section 22 of the Madras General Sales Tax Act, 1939, did tax the sales covered by the explanation in article 286(1)(a). However, this tax only applied if the ban in article 286(2) was lifted by a law from Parliament. Because of this, it was made valid by section 2 of the Sales Tax Laws Validation Act, 1956. The court also said that the previous interpretation of the explanation in article 286(1)(a) of the Constitution (that it only stopped other states from taxing these sales and did not give the delivery state the power to tax them) did not apply here. This was because the Madras law was specifically meant to give the state the power to tax these sales. Section 22 and section 2(h) of the Madras General Sales Tax Act must be read together to define which sales are taxable under the Act. The court approved of the decisions in other similar cases. The court disapproved of the decisions in some other similar cases. The court relied on the rulings in some older cases. The court held that the Sales Tax Laws Validation Act, 1956, lifted the ban on taxing sales between states and was within Parliament's power under article 286(2). It also said that Parliament could make such a law that applied to past events. The court distinguished this case from a previous case. The court also held that the President's Adaptation Order was valid and could not be challenged. The court also said that the phrase "law of a State" in article 286(2) and section 2 of the Sales Tax Laws Validation Act meant anything that acted as law in the state. Section 22 of the Madras General Sales Tax Act was a law under these rules. The court further held that section 2 of the Sales Tax Laws Validation Act made not only the taxes already collected valid, but also allowed taxes to be imposed on sales that fell under the explanation during the time specified in section 2. The Act is not temporary, even though it only applies to sales that happened within a certain time. The court disapproved of a previous case to the extent that it said the state could not start new proceedings to assess (calculate) taxes. Even though section 22 of the Madras General Sales Tax Act was unconstitutional when it was created, the unconstitutionality did not erase it from the law books. A law can be unconstitutional because the legislature (law-making body) does not have the power to make it, or because even though it has the power, the law violates some constitutional restriction. A law that the legislature does not have the power to make is invalid. However, a law that is within its power but violates a constitutional restriction is only unenforceable. In the latter case, once the constitutional restriction is removed, the law becomes enforceable without needing to be made again. If part of a law is unconstitutional but the rest is valid, and the two parts can be separated, the law is not erased from the law books. It remains there so that the valid part can be enforced. Also, because the challenged law is conditional legislation, it cannot be considered non-existent. The court distinguished this case from some other previous cases. The court relied on the rulings in another previous case. Under Entry 42 in List 1, Schedule VII of the Constitution, only Parliament can make laws about trade and commerce between states. Under Entry 54, List 11, only the State Legislature can make laws about taxes on the sale of goods. Reading these two entries together, Entry 42 must be interpreted as excluding the power to tax the sale of goods. The way the entries are organized in the Lists is that taxation is seen as a separate matter and is listed separately. Therefore, Entry 42, List 1, must be interpreted as not including the power to tax sales between states. The proposed tax does not violate the rule that yarn sales should only be taxed once. This is because the tax is being imposed by Andhra, and the rule only prohibits multiple taxes within the same state. One judge disagreed. He said that the Sales Tax Act does not allow a sale to be taxed if the goods are delivered in Andhra but the ownership of the goods changes hands outside of Andhra. He said that the explanation in section 22 of the Act only considers a state other than Andhra as the state where a sale is considered to have taken place. The words "for the purposes of clause (a)(i)" have the same meaning in the explanation in article 286(1) as in the explanation in section 22 of the Act. This case cannot be distinguished from a previous decision.
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220, 222, 240 and 380 to 395 of 1955. The Sales Tax Laws (Validation) Act, 1956, was not valid legislation under article 286(2). Under section 53 of the Andhra State Act, the laws in force in the territories in the Andhra State prior to its constitution are to continue to be in force even thereafter, and one of those laws is the Madras General Sales Tax Act (Madras 9 of 1939), hereinafter referred to as the Madras Act. In Poppatlal Shah vs The State of Madras (1), this Court had to consider the scope of the definition of " sale " in section 2(h) and of Explanation 2, and it was therein held that though the power to tax a sale was really a power to tax a transaction of sale and a law imposing such tax would be competent if any of the ingredients of sale had taken place within the State, the Madras Act had, by its definition of " sale " in section 2(h) prior to the enactment of Explanation 2, imposed a tax only when the property in the goods passed within the State, and that in respect of sales which had taken place prior to the amendment, the tax would be unauthorised if the property in the goods passed outside the State of Madras. They contend that the Andhra (Madras) Act does not, in fact, impose a tax oh the Explanation sales, and that, in consequence, the Validation Act can have no effect on it; that the Validation Act is itself unconstitutional and void; that the Act even if valid, does not validate section 22 of the Andhra (Madras) Act; that it validates only levies and collections of tax already made, and does not authorise the initiation 1440 of fresh proceedings for assessment of tax or for realisa tion of the same; that even if the Act authorised fresh imposition of taxes, that could not be done without further legislation pursuant thereto by the State, and that no action could be taken on the basis of section 22 of the Andhra (Madras) Act, as, being unconstitutional when enacted, it was for all purposes non est ; that tax on the sale of yarn could under the Act be levied only at a single point and the State of Madras having imposed a tax on the sale of goods now proposed to be taxed, the Andhra State could not impose a tax once again on the sale of the self same goods, and that, further, the tax on yarn would, so far as the Andhra State is concerned, be bad as being hit by the Essential Commodities Act (52 of 1952), read with article 286 (3). On these contentions, the questions that arise for our determination are: (I) Whether the Andhra (Madras) Act, in fact, imposes a tax on the class of sales falling within the Explanation to article 286 (1) (a); (II)Whether the impugned Act is ultra vires the ground that it is not authorised by the terms of article 286(2); (III) (a) Whether section 22 of the Andhra (Madras) Act is within the protection of the impugned Act, and (III)(b) Whether the impugned Act validates only levies and collections made during the specified period, or whether it authorises the imposition and collection of taxes on such sales in future; (IV)Whether section 22 of the Madras Act was null and void on the ground that it was in contravention of article 286 (2), and whether the proceedings sought to be taken thereunder on the strength of the impugned Act are incompetent; (V) Whether tax on inter State sales is within the exclusive competence of Parliament, and whether the impugned Act is, in consequence, bad as authorising the States to levy tax ; (VI)Whether the proposed imposition of tax is illegal on the ground that successive sales of yarn are subject under the law to be taxed at only one point, and as the State of Madras has already taxed the present sales, the State of Andhra cannot again levy a tax on them ; and (VII)Whether the proposed imposition of tax on yarn by the Andhra State is hit by the Essential Commodities Act, read with article 286(3), and is illegal? We have already referred to the relevant provisions of the Madras Act and to the decision of this Court in Poppatlal Shah vs The State of Madras (1), wherein it was held that under the definition of " sale " in section 2(h) of that Act and apart from the Explanations to it which are not material for the present discussion, power had been taken by the Province of Madras to tax only sales in which property in the goods passed inside the State. It must, therefore, be taken that under the Act, as it stood prior to the Constitution, the State of Madras had no power to impose a tax on sales of the kind mentioned in the Explanation to article 286 (1)(a). The contention of the respondent is that it has, because it has bodily incorporated the Explanation to article 286 (1) (a) in the section itself, and as under that Explanation, all sales falling within its ambit would be sales inside the State of Madras, they became taxable as sales within the definition in section 2 (h) of the Madras Act; and that accordingly under section 22 of the Andhra (Madras) Act the Explanation sales become taxable by the Andra State as sales within that State. It is argued that the object of article 286 of the Constitution was merely to impose restrictions on the power which the States had under Entry 54 in List 11 to enact laws imposing tax on sales, and that, in that context, the true scope of the Explanation to article 286 (1) (a) was that it merely took away from the State its power to (1) ; 1443 tax a sale in which the property passed inside it if the goods were actually delivered under the sale for consumption in another State and not to confer on the delivery State a power to tax such a sale, and that the Explanation in section 22 which is, word for word, a reproduction of the Explanation to article 286 (1) (a) must be construed as having the same import. Now, the contention of the petitioners is that these observations are decisive of the present controversy, because the same provision expressed in ipsissima verba cannot have one meaning in article 286(1) (a) and quite a different one in section 22 of the Madras Act; and on the construction put by this Court on the Explanation to article 286(1) (a), the Explanation to section 22 of the, Andhra (Madras) Act must be interpreted as prohibiting States other than Andhra from taxing sales under which goods are delivered for consumption outside those States, even though property passed inside them and not as authorising the State of Andhra to tax sales in which goods are delivered therein for consumption , even though property in the goods passed outside that State. The Explanation now under consideration is attached to this provision, and it is in this context, viz., in its setting in an Article, the object of which was to impose fetters on the legislative powers of the States, that this Court observed that though positive in form, it was in substance negative in character, and that its true purpose was not to confer any fresh power of taxation on the State but to restrict the power which it previously had under Entry 54. According to the definition in section 2 (h), a sale in which property passes inside the State of Madras will be liable to be taxed, even though the goods are delivered for consumption outside that State, but under the Explanation such a sale will be deemed to have taken place in the out side State in which goods are delivered for consumption, and therefore the State of Madras will have nO power to tax it: The purpose which the non obstante clause serves is to render the Explanation effective against the definition in section 2 (h) and not to render it ineffective in its own sphere, as determined on its terms. 372 (2) is merely to bring the provisions of the State laws into conformity with article 286, and that having regard to the interpretation put on that Article in The Bengal Immunity Company case (1), the Explanation in section 22 would be valid in so far as it prohibits the State of Madras from imposing a tax on sales in which goods are delivered outside Madras, though property therein passed inside that State, but that in so far as it makes taxable sales in which property passes outside the State of Madras but the goods themselves are delivered for consumption in Madras, it is much more than bringing the. It is then argued that even though the Adaptation Order of the President might not be open to question even if it had imposed for the first time a tax on sales which had not been previously imposed by the Act, nevertheless in deciding whether it does, in fact, impose such a tax, it would be relevant to take into account that the object of article 372(2) was only to bring the State laws into conformity with the Constitution, and that, in consequence, the Explanation in section 22 must be construed as having the same meaning as the Explanation in article 286(1)(a). This would, no doubt, be a legitimate consideration in interpreting the language of the Explanation, but then, it must be remembered that at the time when the Adaptation Order was made, the true interpretation of the Explanation to article 286(1)(a) had not been the subjectmatter of any decision, and it is therefore difficult to impute to the framers of section 22 the construction put by this Court on the Explanation to article 286(1)(a) in The Bengal Immunity Company case (1) any more than the one put on it in The United Motors case (2). As the language of the Explanation is general and of sufficient amplitude not merely to restrict but also to add to the power of the State to tax Explanation sales, and as the reasons for construing it as purely restrictive in article 286(1)(a) are, as already stated, without force in their application to a taxing statute, we must give full effect to the words of the enactment, and bold that they operate to confer on the State a power to tax Explanation sales. There is one other contention relating to this aspect of the matter, which remains to be considered, and that is that even if the Explanation could be construed as authorising the imposition of a tax on the sales mentioned therein, a reading of the section as a whole makes it clear that, in fact, no such tax was imposed, as it expressly enacts that "Nothing contained in this Act shall be deemed to impose a tax on inter State sales ". We are of opinion that, on the true construction of section 22 of the Act, there is an imposition of tax on Explanation sales but that it could be enforced only when Parliament so provides. Next in point of time is the decision of the Bombay High Court in Dial Das vs P. section Talwalkar (2) in which the question arose with reference to section 46 of the Bombay Sales Tax Act (Bom. It is firstly contended by them that under Entry 54 in List II, the power to make laws in respect of tax on sales is vested exclusively in the States, that the power which is conferred on Parliament under article 286(2) is only to enact a law directing or permitting the States to impose a tax on inter States sales and not to itself enact a law with reference thereto that the impugned Act being one to validate Sales (1) (2) ; 1459 Tax Laws is substantive in character and is not authorised by the terms of article 286 (2) and is, in consequence, unconstitutional. It is also argued that even if the power to make a law conferred on Parliament under article 286 (2) comprehends a power to enact a law with retrospective operation, that power cannot extend to authorising what is unconstitutional, and that as section 22 of the, Madras Act and the corresponding provisions in the statutes of other States were unconstitutional and illegal when made as contravening the prohibition enacted in article 286 (2), the impugned Act must be held to be unauthorised and bad in that it seeks to give effect to those provisions. The ground urged in support of this contention is that the expression " law of a State " in article 286 (2) has a technical import, and means a law which is enacted by the legislature of a State in the manner prescribed by the Constitution and open to challenge in courts if 1464 it is unconstitutional, that that expression occurring , in section 2 of the impugned Act must bear the same meaning which it has in article 286 (2) as it was enacted, pursuant to the authority contained therein, and that section 22 of the Madras Act is not a law of that description, as it was made by the President in exercise, of the special power conferred on him by article 372 (2), and is, as provided therein, not open to attack in a court of law. It would be sufficient answer to this contention that section 22 of the Madras Act is only a piece of conditional legislation, imposing tax on interState sales when Parliament should enact a law lifting the ban, and if such legislation is competent as we have held it is, then no question of unconstitutionality of the section when it was enacted could arise. It was held by this Court that section 43 of the Act of 1948 could not be held to have been effaced out of the statute book, because it continued to operate on transactions prior to the coming into force of the Constitution, and that even after the Constitution, it would be operative as against non citizens, that the consequence of section 43 being repugnant to article 19(1)(g) was that it could not be enforced so long as the prohibition contained therein was in force, but that when once that prohibition had been removed as it was by the First Amendment, the provisions of that Act which had been dormant all the time became active and enforceable. He contended that the decisive factor in the determination of the question was Entry 42 in List I of the Seventh Schedule, "Inter State trade and commerce", that under that Entry, Parliament had the exclusive power to enact laws in respect of inter State trade and commerce and that included power to impose a tax on inter State sales, that the States had therefore no competence under the Constitution to enact a law imposing tax on such sales, that the laws passed 1477 by the States after the Constitution imposing such a tax were ultra vires and void, that the impugned Act purporting to give effect to such laws was likewise ultra vires and inoperative, and that, in consequence, the proceedings sought to be taken under section 22 of the Madras Act and the corresponding provisions in the sister Acts of other States were unauthorised and illegal. The true interpretation therefore to be put upon Entry 42 is that Parliament has, and therefore, in view of the non obstante clause in article 246(1) and of the words "subject to" in article 246(3), the States have not, the power to impose tax on inter State sales. The result is, it is argued, that after the Constitution no law of a State can impose a tax on (1) ; ; (2) (1044) ; ; 1478 inter State sales, and in consequence, section 22 of the Madras Act, which came into force after the Constitution, would, if it is construed as imposing a tax, be bad, and the impugned Act which proceeds on the view that the States have the power to enact laws imposing a tax on inter State sales and seeks to give effect to them would also be unconstitutional and void. It is implicit in this provision that it is the States that have got the power to impose a tax on such sales, as there can be no question of a restriction on what does not exist. But it was contended that its operation should be limited to existing laws, because as Entry 42 in List I includes tax on inter State sales, any law of the State subsequent to the Constitution imposing such a tax would be incompetent. (VI) Another contention urged by the petitioners is that the levy of tax proposed to be made by the Andhra State on the sale of yarn by them to dealers in the State of Andhra is illegal, because under the Madras Act and the Rules made thereunder, where there are successive sales of yarn the tax can be imposed at only one point, and as the Government of Madras had already imposed a tax on the sale within that State, a second levy on the self same goods by the State of Andhra is unauthorised. But it is argued that section 53 of the Andhra State Act, 1953, on its true interpretation enacts that though for political purposes Andhra is to be regarded as a separate State, for the enforcement of laws as they stood on that date it should be deemed to be a part of the State of Madras. The basis of this contention is that the Madras Act as applied to the Andhra State is a now Act for purposes of article 286 (3), but that is not so. Moreover, the Madras Act become operative in the new State of Andhra not under any law passed by the Legislature of the State of Andhra but under section 53 of a law enacted by Parliament and therefore article 286 (3) has no application. (2) Except in so far as Parliament my by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase talks place in the course of inter State trade or commerce : " In the year 1939 the legislature of Madras had enacted the Madras General Sales Tax Act and this was continued in force by the Constitution after its promulgation. This Court by its judgment pronounced, again by a majority, on September 6, 1955, held that until Parliament by law made in the exercise of powers vested in it under article 286(2) otherwise provided, no State could impose any tax on a sale or purchase of goods when such sale or purchase took place in the course of inter State trade or commerce and the majority decision in the State of Bombay vs The United Motors (India) Ltd. (2) in so far as it decided to the contrary could not be accepted andfurther that the explanation in article 286(1)(a)did not confer any right on the State in which the goods were delivered under a sale, to tax it notwithstanding that the property in the goods passed in another State. That State cannot be the State of Andhra, for then the Explanation would not show when a sale is to be deemed to be outside Andhra and that by its language is the only purpose for which it is enacted. It is no objection to this reading of the Explanation to say that the Andhra Act would then be saying when a sale is to be deemed to have taken place inside another State and it has no power to do so as it can legislate only for itself and for no other State.
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Businesses in Andhra (a different state) would order yarn from these Madras businesses. The deals were made in Madras, and the yarn was given to the buyers in Madras. On July 13, 1954, the Board of Revenue (Commercial Taxes) in Andhra told Madras businesses to report their sales where goods were delivered in Andhra for use there. They did this because of a court decision in a previous case. They said that these sales were protected from taxes under article 286(2) of the Constitution. Section 2 of this law said that no state law that taxed sales between states between April 1, 1951, and September 6, 1955, was invalid just because the sales happened during trade between states. This section also said that any taxes collected on these sales during that time were considered valid. Andhra argued that because of this new law, it had the right to tax sales between states during that time. However, the Madras businesses argued that: (1) section 22 of the Madras General Sales Tax Laws Validation Act, 1956, only made laws that imposed a tax valid, but did not allow a tax to be imposed; (2) the Sales Tax Laws Validation Act went against article 286(2); (3) section 22 of the Madras Act was not a "law of a State" under article 286(2) and section 2 of the challenged Act; (4) the challenged Act only made taxes that had already been collected valid, and did not allow new tax proceedings to start; (5) because section 22 was unconstitutional when it was created and therefore void, no proceedings could be taken under it based on the Validation Act, as the effect of unconstitutionality of the law was to get rid of it from the law books; and (6) the tax was bad because it broke the rule that yarn sales could only be taxed once. They also argued that only Parliament had the power to tax sales between states. They said that the Sales Tax Laws Validation Act was bad because it gave states the power to tax these sales. The court held that section 22 of the Madras General Sales Tax Act, 1939, did tax the sales covered by the explanation in article 286(1)(a). However, this tax only applied if the ban in article 286(2) was lifted by a law from Parliament. Because of this, it was made valid by section 2 of the Sales Tax Laws Validation Act, 1956. The court also said that the previous interpretation of the explanation in article 286(1)(a) of the Constitution (that it only stopped other states from taxing these sales and did not give the delivery state the power to tax them) did not apply here. This was because the Madras law was specifically meant to give the state the power to tax these sales. The court held that the Sales Tax Laws Validation Act, 1956, lifted the ban on taxing sales between states and was within Parliament's power under article 286(2). The court distinguished this case from a previous case. The court also said that the phrase "law of a State" in article 286(2) and section 2 of the Sales Tax Laws Validation Act meant anything that acted as law in the state. Section 22 of the Madras General Sales Tax Act was a law under these rules. The court further held that section 2 of the Sales Tax Laws Validation Act made not only the taxes already collected valid, but also allowed taxes to be imposed on sales that fell under the explanation during the time specified in section 2. The court disapproved of a previous case to the extent that it said the state could not start new proceedings to assess (calculate) taxes. A law can be unconstitutional because the legislature (law-making body) does not have the power to make it, or because even though it has the power, the law violates some constitutional restriction. A law that the legislature does not have the power to make is invalid. However, a law that is within its power but violates a constitutional restriction is only unenforceable. If part of a law is unconstitutional but the rest is valid, and the two parts can be separated, the law is not erased from the law books. The court distinguished this case from some other previous cases. Under Entry 54, List 11, only the State Legislature can make laws about taxes on the sale of goods. This is because the tax is being imposed by Andhra, and the rule only prohibits multiple taxes within the same state. One judge disagreed. He said that the Sales Tax Act does not allow a sale to be taxed if the goods are delivered in Andhra but the ownership of the goods changes hands outside of Andhra. He said that the explanation in section 22 of the Act only considers a state other than Andhra as the state where a sale is considered to have taken place. This case cannot be distinguished from a previous decision.
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Appeal No. 1042 of 1963. Appeal by special leave from the judgment and order dated May 3, 1963, of the Madhya Pradesh High Court in First Appeal No. 46 of 1962. section K. Kapur, B. L. Khanna and B. N. Kirpal, for the appellant. Homi Daji, R. K. Garg, section C. Agarwal, M. K. Ramamurthi and D. P. Singh, for the respondent. December 20, 1963. The Judgment of P. B. Gajendragadkar, A. K. Sarkar, K. N. Wanchoo and K. C. Das Gupta, JJ. was delivered by Gajendragadkar J. N. Rajagopala Ayyangar J. delivered a separate opinion. GAJENDRAGADKAR J. The question of law which this appeal has raised for our decision is in relation to the nature and scope of the enquiry contemplated by sections 97, 100 and 101 of the Representation of People Act, 1951 (No. 43 of 1951) (hereinafter called the Act). The appellant Jabar Singh and the respondent Genda Lal, besides five others, had contested the election to the Madhya Pradesh Assembly on behalf of the Morena Constituency No. 5. This election took place on the 21st February, 1962. In due course, the scrutiny of recorded votes took place and counting followed on the 27th February, 1962. As a result of the counting, the appellant was shown to have secured 5,671 votes, whereas the respondent 5,703 votes. It is not necessary to refer to the votes secured by the other candidates. After the result of the counting was thus ascertained, the appellant applied for recounting of the votes and thereupon, 58 recounting followed as a result of which the appellant was declared elected having defeated the respondent by 2 votes. The recounting showed that the appellant secured 5,656 votes and the respondent 5,654. Thereafter, the respondent filed an election petition from which the present appeal arises. By his petition the respondent challenged the validity of the appellant 's election on the ground ' of improper reception of votes in favour of the appellant and improper rejection of votes in regard to himself. The respondent urged before the Tribunal either for the restoration of the results in accordance with the calculations initially made before recounting, or a re scrutiny of the votes by the Tribunal and declaration of the result according to the calculations which the Tribunal may make. His prayer was that the appellant 's election should be declared to be void and a declaration should be made that the respondent was duly elected. The Election Tribunal found that 10 ballot papers in favour of the respondent had been improperly rejected and 4 had been improperly accepted in favour of the appellant. That led to a difference of 12 votes and the position of the votes was found to be the respondent 5,664 and the appellant 5,652 votes. At this stage, the appellant urged before the Tribunal that there had been improper rejection of his votes and improper acceptance of the votes of the respondent, and his case was that if recounting and re scrutiny was made, it would be found that he had secured a majority of votes. The respondent objected to this course; his case was that since the appellant had not recriminated under section 97 of the Act, it was not open to him to make the plea that a recounting and re scrutiny should be made on the ground that improper votes had been accepted in favour of the respondent and valid votes had been improperly rejected when they were cast in favour of the appellant. The respondent 's contention was that in order to justify the claim made by the appellant it was necessary that he should have complied with the provisions of the proviso to section 97(1) of the Act and should have furnished security as required by it. The failure of the appellant in that behalf precluded him from raising such a contention. 59 The Tribunal rejected the respondent 's contention and held that in order to consider the relief which the respondent had cliamed in his election petition, it was necessary for it to decide whether the respondent had in fact received a majority of votes under section 101 of the Act, and so,. he re examined the ballot papers of the respondent as well as the appellant and came to the conclusion that 22 ballot papers cast in favour of the respondent had been wrongly accepted. The result was that the respondent had, in fact, not secured a majority of votes. As a consequence of these findings, the Tribunal declared that the election of the appellant was void and refused to grant a declaration to the respondent that he had been duly elected. This decision led to two cross appeals before the High Court of Madhya Pradesh, No. 46 of 1952 and No. 1 of 1963 respectively. The appellant challenged the conclusion of the Tribunal that his election was void, whereas the respon dent disputed the correctness of the decision of the Tribunal that no declaration could be granted in his favour that be had been duly elected. In these appeals. the main question which was agitated before the High Court was about the nature and scope of the enquiry permissible under sections 100 and 101 of the Act. In dealing with this question, the High Court based itself upon its own earlier decision in Inayatullah Khan vs Diwanchand Mahajan and Ors.(1). , as well as the decision of this Court in Bhim Sen vs Gopali and Ors. (2) and held that the grievance made by both the parties in their respective appeals was not well founded and that the decision of the Tribunal was right. In the result, both the appeals were dismissed and the decision of the Tribunal was confirmed. Against this decision, the appellant has come to this Court by special leave. Later on, the respondent filed an application for leave to appeal to this Court, but the said application was filed beyond time. When the said application came on for hearing before this Court, the delay made by the respondent in preferring his application for special leave was not condoned, and so, the decision of the High Court against the respondent has become final and is not (1) (2) 60 longer open to challenge in this Court. When the applica tion for leave filed by the appellant was argued and admitted by this Court, it was urged by Mr. Kapoor on his behalf that the observations made by this Court in the case of Bhim Sen(1) on which the High Court substantially relied required reconsideration. That is why the appeal has been placed before a Bench of five Judges for final hearing. In dealing with the question raised by Mr. Kapoor before us, it is necessary to refer to the provisions of the Act in re gard to the presentation of election petitions and the prayers that the petitioners can make therein. Section 81 provides that an election petition calling in question any election on one or more of the grounds specified in sub section (1) of section 100 and section 101 may be presented to the Election Commission by any candidate or any elector within the time specified by the said section. It is thus clear that when a person presents an election petition, it is open to him to challenge the election of the returned candidate under section 100 (1) and claim a declaration that the returned candidate 's election is void. He can also claim a further declaration that he himself or any other candidate has been duly elected. In other words, if the election petition contents itself with claiming a simple declaration that the election of the returned candidate should be declared to be void, the petition falls under section 100 and the Election Tribunal can either grant the said declaration in which case the petition is allowed, or refuse to grant it in which case the petition is dismissed. It is also possible that the election petition may claim two reliefs, one under section 100 (1), and the other under section 101. In this category of cases, the Tribunal first decides the question as to whether the election of the returned candidate is valid or not, and if it is found that the said election is void, it makes a declaration to that effect and then deals with the further question whether the petitioner himself or some other person can be said to have been duly elected. The scope of the enquiry which the Tribunal has to hold in such cases would obviously depend upon the nature of the reliefs claimed by the petition. There is another fact which it is necessary to bear in mind in dealing with the controversy before us in the present ap (1) 61 peal. When elections are held, the declarations of the results are governed by the statutory rules framed under the Act. The counting of votes is dealt with in the relevant rules under Part V. Rule 55 deals with the scrutiny and opening of ballot boxes. Rule 56(1) requires that the ballot papers taken out of each ballot box shall be arranged in convenient bundles and scrutinised. R. 5 6 (2) provides when the returning officer has to reject a ballot paper; the grounds for rejection are specified in clauses (a) to (h). Rules 56(3), (4) and (5) prescribe the procedure for rejecting ballot papers. When the ballot papers have been taken out of the ballot boxes and have been scrutinised, counting follows and that is dealt with by r. 57 and the following Rules. R. 63 provides for recounting of votes; R. 63(1) lays down that after the counting has been completed, the returning officer shall record in the result sheet in Form 20 the total number of votes polled by each candidate and announce the same. R. 63(2) permits an application to be made for a recounting and if that application is allowed, a recounting follows. If a recounting is made, then the result is declared once again on the sheet in Form 20. In pursuance of the result of counting thus announced, the re sult of the election is declared under r. 64 and a certificate of election is granted to the returned candidate. It is significant that r. 57(1) provides that every ballot paper which is not rejected under r. 56 shall be counted as one valid vote, which means that after the ballot papers have been scrutinised and invalid papers are rejected under r. 56(2), all voting papers which have been taken into the counting by the returning officer shall be deemed to be valid under r. 57(1). Similarly, when the scrutiny of the nomination papers is made by the returning officer under section 36 of the Act and as a result, certain nomination papers are accepted, section 36(8) provides that the said acceptance shall be presumed to be valid. In other words, when an election petition is filed before an Election Tribunal challenging the validity of the election of the returned candidate, prima facie the acceptance of nomination papers is presumed to be valid and the voting papers which have been counted are also presumed to be valid. The election petition may challenge the validity of the votes counted, or the validity of the acceptance or rejection of a nomination 62 paper; that is a matter of proof. But the enquiry would commence in every case with prima facie presumption in favour of the validity of the acceptance or rejection of nomination paper and of the validity of the voting papers which have been counted. It is necessary to bear in mind this aspect of the matter in dealing with the question about the scope and nature of the enquiry under sections 100 and 101 of the Act. Let us now read the three relevant sections with which we are concerned in the present appeal. Section 97 provides : "(1) When in an election petition a declaration that any candidate other than the returned candidate has been duly elected is claimed, the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election. Provided that the returned candidate or such other party as aforesaid shall not be entitled to give such evidence unless he has, within fourteen days from the date of commencement of the trial, given notice to the Tribunal of his intention to do so and has also given the security and the further security referred to in sections 117 and 118 respectively. (2) Every notice referred to in sub section (1) shall be accompanied by the statement and particulars required by section 83 in the case of an election petition and shall be signed and verified in like manner". Section 100, sub section (1) reads as under: . (1) Subject to the provisions of subsection (2) if the Tribunal is of opinion (a) that on the date of his election a returned candidate, was not qualified, or was disqualified, to be chosen to fill the seat under the Constitution or this Act; or 63 (b) that any corrupt practice has been committed by a returned candidate or his election agent or by any other person with the consent of a returned candidate or his election agent; or (c) that any nomination has been improperly rejected; or (d) that the result of the election, in so far as it concerns a returned candidate, has been materially affected (i) by the improper acceptance of any nomination, or (ii) by any corrupt practice committed in the interests of the returned candidate by an agent other than his election agent, or (iii) by the improper reception, refusal or rejection of any vote or the reception of any vote which is void; or (iv) by any noncompliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act, the Tribunal shall declare the election of the returned candidate to be void". Section 101 provides that: "If any person who has lodged a petition has, in addition to calling in question the election of the returned candidate, claimed a declaration that he himself or any other candidate has been duly elected and the Tribunal is of opinion (a) that in fact the petitioner. or such other candidate received a majority of the valid votes, or (b) that but for the votes obtained by the returned candidate by corrupt practices the petitioner or such other candidate would have obtained a majority of the valid votes, the Tribunal shall after declaring the election of the returned candidate to be void declare the petitioner or such other candidate, as the case may be, to have been duly elected". 64 Mr. Kapoor contends that in dealing with the cases falling under section 100 (1) (d) (iii), section 97 can have no application and so, the enquiry contemplated in regard to cases falling under that class is not restricted by the prohibition prescribed by section 97(1). He suggests that when the Tribunal decides whether or not the election of the returned candidate has been materially affected by the improper reception, refusal or rejection of any vote, or the reception of any vote which is void, it has to examine the validity of all votes which have been counted in declaring the returned candidate to be elected, and so, no limitation can be imposed upon the right of the appellant to require the Tribunal to consider his contention that some votes which were rejected though cast in his favour had been improperly rejected and some votes which were accepted in favour of the respondent had been improperly accepted. Basing himself on this position, Mr. Kapoor further contends that when section 101 requires that the Tribunal has to come to the conclusion that in fact the petitioner or such other candidate received a majority of the valid votes, that can be done only when a recount is made after eliminating invalid votes, and so, no limitations can be placed upon the scope of the enquiry contemplated by section 101 (a). Since section 100(1)(d)(iii) is outside the purview of section 97, it would make no difference to the scope of the enquiry even if the appellant has not recriminated as required by section 97(1). On the other hand, Mr. Garg who has addressed to us a very able argument on behalf of the respondent, urged that the approach adopted by the appellant in dealing with the problem posed for our decision in the present appeal is in appropriate. He contends that in construing sections 97. 100 and 101, we must bear in mind one important fact that the returned candidate whose election is challenged can face the challenge under section 100 only by making pleas which can be described as pleas affording him a shield of defence, whereas if the election petition besides challenging the validity of the returned candidate claims that some other person has been duly elected, the returned candidate is given an opportunity to recriminate and by way of recrimination he can adopt pleas which can be described as weapons of attack against the validity of the election of the other person. 65 His argument is that though section 100(1)(d)(iii) is outside section 97. it does not mean that in dealing with a claim made by an election petition challenging the validity of his election, a returned candidate can both defend the validity of his election and assail the validity of the votes cast in favour of the petitioner or some other person. It is in the light of these two rival contentions that we must now proceed to decide 'what the true legal position in the matter is. It would be convenient if we take a simple case of an election petition where the petitioner makes only one claim and that is that the election of the returned candidate is void. This claim can be made under section 100. Section 100(1) (a), (b) and (c) refer to three distinct grounds on which the election of the returned candidate can be challenged. We are not concerned with any of these grounds. In dealing with the challenge to the validity of the election of the returned candidate under section 100(1)(d), it would be noticed that what the election petition has to prove is not only the existence ,of one or the other of the rounds specified in clauses (i) to (iv) of section 100(1)(d), but it has also to establish that as a result of the existence of the said ground, the result of the election in so far as it concerns a returned candidate has been materially affected. It is thus obvious that what the Tribunal has to find is whether or not the election in so far as it concerns the returned candidate has been materially affected, and that means that the only point which the Tribunal has to decide is: has the election of the returned candidate been materially affected? And no other enquiry is legitimate or permissible in such a case. This requirement of section 100 (1) (d) necessarily imports limitations on the scope of the enquiry. Confining ourselves to clause (iii) of section 100(1)(d), what the Tribunal has to consider is whether there has been an improper reception of votes in favour of the returned candidate. It may also enquire whether there has been a refusal or rejection of any vote in regard to any other candidate or whether there has been a reception of any vote which is void and this can only be the reception of a void vote in favour of the returned candidate. In other words, the scope of the enquiry in a case failing under section 100(1)(d)(iii) is to determine whether any votes have been improperly cast in favour of the returned candidate, or any votes have been improperly refused or re 134 159 S.C. 5. 66 sected in regard to any other candidate. These are the only two matters which would be relevant in deciding whether the election of the returned candidate has been materially affected or not. At this enquiry, the onus is on the petitioner to show that by reason of the infirmities specified in section 100(1)(d) (iii), the result of the returned candidate 's election has been materially affected, and that, incidentally, helps to determined the scope of the enquiry. Therefore, it seems to us that it, the case of a petition where the only claim made is that the election of the returned candidate is void, the scope of the enquiry is clearly limited by the requirement of section 100(1)(d) itself. The enquiry is limited not because the returned candidate has not recriminated under section 97(1); in fact, section 97(1) has no application to the case falling under section 100(1)(d)(iii); the, scope of the enquiry is limited for the simple reason that what the clause requires to be considered is whether the election of the returned candidate has been materially affected and nothing else. If the result of the enquiry is in favour of the petitioner who challenges the election of the returned candidate, the Tribunal has to make a declaration to that effect, and that declaration brings to an end the proceedings in the election petition. There are, however, cases in which the election petition makes a double claim; it claims that the election of the re turned candidate is void, and also asks for a declaration that the petitioner himself or some other person has been duly elected. It is in regard to such a composite case that section 100 ' as well as section 101 would apply, and it is in respect of the additional claim for a declaration that some other candidate has been duly elected that section 97 comes into play. Section 97(1) thus allows the returned candidate to recriminate and raise pleas in support of his case that the other person in whose favour a declaration is claimed by the petition cannot be said to be validly elected, and these would be pleas of attack and it would be open to the returned candidate to take these pleas, because when he recriminates, he really becomes a counter petitioner challenging the validity of the election of the alternative candidate. The result of section 97(1) therefore, is that in dealing with a composite election petition, the Tribunal enquires into not only the case made out by the petitioner, but also the counter claim made by the returned 67 candidate. That being the nature of the proceedings con templated by section 97(1), it is not surprising that the returned candidate is required to make his recrimination and serve notice in that behalf in the manner and within the time specified by section 97 (1) proviso and section 97 (2). If the returned candidate does not recriminate as required by section 97, then he cannot make any attack against the alternative claim made by the petition. In such a case, an enquiry would be held under section 100 so far as the validity of the returned candidate 's election is concerned, and if as a result of the said enquiry a declaration is made that the election of the returned candidate is void, then the Tribunal will proceed to deal with alternative claim, but in doing so, the returned candidate will not be allowed to, lead any evidence because he is precluded from raising any pleas against the validity of the claim of the alternative candidate. It is true that section 101(a) requires the Tribunal to find that the petitioner or such other candidate for the declaration of whose election a prayer is made in the election petition has in fact received a majority of the valid votes. It is urged by Mr. Kapoor that the Tribunal cannot make a finding that the alternative candidate has in fact received a majority of the valid votes unless all the votes cast at the election are scrutinised and counted. In our opinion, this contention is not well founded. We have already noticed that as a result of rule 57, the Election Tribunal will have to assume that every ballot paper which had not been rejected under r. 56 constituted one valid vote and it is on that basis that the finding will have to be made under section 101(a). Section 97(1) undoubtedly gives an opportunity to the returned candidate to dispute the validity of any of the votes cast in favour of the alternative candidate or to plead for the validity of any vote cast in his favour which has been rejected; but if by his failure to make recrimination within time as required by section 97 the returned candidate is precluded from raising any such plea at the hearing of the election petition, there would be nothing wrong if the Tribunal proceeds to deal with the dispute under section 101(a) on the basis that the other votes counted by the returning officer were valid votes and that votes in favour of the returned candidate, if any, which were rejected. 68 were invalid. What we have said about the presumed validity of the votes in dealing with a petition under section 101 (a) is equally true in dealing with the matter under section 100(1)(d)(iii) We are, therefore, satisfied that even in cases to which section 97 applies, the enquiry necessary while dealing with the dispute under section 101(a) will not be wider if the returned candidate has failed to recriminate. If the returned candidate has recriminated and has raised pleas in regard to the votes cast in favour of the alternative candidate or his votes wrongly rejected, then those pleas may have to be tried after a declaration has been made under s, 100 and the matter proceeds to be tried under section 101(a). In other words, the first part of the enquiry in regard to the validity of the election of the returned candidate must be tried within the narrow limits prescribed by section 100(1)(d)(iii) and the latter part of the enquiry which is governed by section 101(a) will have to be tried on a broader basis permitting the returned candidate to lead evidence in support of the pleas which he may have taken by way of recrimination under section 97 (1). If Mr. Kapoor 's construction of section 100 (1) (d) (iii) is accepted, it would either make section 97 otiose and ineffective or make the operation of section 101 read with section 97 inconsistent with the operation of section 100 (1) (d) (iii). We are therefore satisfied that the High Court was right in coming to the conclusion that the Tribunal was in error in holding that "it was an authority charged with the duty of investigating the validity of votes for and against the petitioning and returned candidate or for a matter of that any other contesting candidate. " It, however, appears that following its own earlier decision in Inayatullah Khan 's(1) case the High Court was disposed to take the view that the enquiry under section 101(a) was wider and that in making its finding under the said provision, it was open to the Tribunal to scrutinise the votes and determine whether in fact, the petitioner or some other person had received a majority of the valid votes. As we have already indicated, this would be the position only if the returned candidate had recriminated; in the absence of recrimination, it would not be open to the Election Tribunal (1) 69 to allow the returned candidate to challenge the validity of votes cast in favour of the petitioner or any other candidate in whose favour a declaration is claimed by the election petition or to contend that any of his votes were improperly rejected. We ought to add that the view taken by the Madhya Pradesh High Court in the case of Inayatullah Khan(1) in regard to the scope of the enquiry under section 101 (a) does not correctly represent the true legal Position in that behalf. Similarly, the view taken by the Allahabad Court in Lakshmi Shankar Yadav vs Kunwar Sripal Singh and Ors. (2), cannot be said to interpret correctly the scope of the enquiry either under section 100 or section 101. The conclusion which we have reached in the present appeal is substantially in accord with the observations made by this Court in the case of Bhim Sen(3) though it appears that the points in question were not elaborately argued before the Court in that case. There is another point to which reference must be made. Mr. Garg contended that even if the view taken by the Tribunal about the scope of the enquiry under section 100 (1) (d) (iii) and section 101 was right, the relief granted by it was not justified by the pleadings of the appellant in the present proceeding In support of this argument, he referred us to paragraph 4 of the Special Pleas filed by the appellant, and relied on the fact that at the initial stage of the hearing, the Tribunal had framed 18 issues including issue No. 16 which consisted of three parts, viz. , (a) Whether any votes cast in favour of respondent No. 1 were wrongly rejected specially pertaining to polling station mentioned in para 4 of the written statement under heading special pleas? (b) Whether many votes were wrongly accepted in favour of the petitioner appertaining to the polling stations mentioned in para 4 of the special pleas in written statement? (c) What is the effect of the above in the case? (1)15 E.L.R.219. (3) E.L.R. 288. (2) 70 Later on, when the respondent contended that in the absence of any recrimination by the appellant these issues did not arise on the pleadings, they were struck out, and yet in its judgment the Tribunal has virtually tried these issues and given relief on grounds which were not included even in his written statement. Since this appeal was admitted mainly on the ground that the appellant wanted this Court to reconsider the observations made by it in the case of Bhin Sen(1), we do not propose to rest our decision on this subsidiary point raised by Mr. Garg. It now remains to refer to two decisions which were cited before us during the course of the arguments. In Vashist Narain Sharma vs Dev Chandra and Ors. (2), this Court has held that section 100(1)(c), as it then stood, places a burden on the objector to substantiate the objection that the result of the election has been materially affected by the improper acceptance or rejection of the nomination paper. In that connection, this Court observed that where the margin of votes is greater than the votes secured by the candidate whose nomination paper had been improperly accepted, the result is not only materially not affected but not affected at all; but where it is not possible to anticipate the result, the petitioner must discharge the burden of proving that fact and on his failure to do so, the election must be allowed to stand. In Hari Vishnu Kamath vs Syed Ahmed Ishaque and others(1), adverting to the expression "the result of the election" in section 100(1)(c), this Court stated that unless there is something in the context compelling a different interpretation, the said expression must be construed in the same sense as in section 66, and there it clearly means the result on the basis of the valid votes. Basing himself on this observation, Mr. Kapoor has urged that while the Tribunal decides the question as to whether the election of the returned candidate has been materially affected or not, the validity of the votes falls to be considered, and that inevitably enlarges the scope of the enquiry. We do not think that the observation on which Mr. Kapoor relies was intended to lay down any such proposition. All that the reference to section 66 denotes is that (1) (3) ; at P 1131. (2) ; 71 after considering the pleas raised, the Tribunal has to decide whether the election of the returned candidate has been materially affected or not, and that only means that if any votes are shown to have been improperly accepted, or any votes are shown to have been improperly refused or rejected, the Tribunal has to make calculations on the basis of its decisions on those points and nothing more. It is necessary to recall that the votes which have not been rejected by the returning officer under r. 56 have to be treated as valid, unless the contrary is specifically pleaded and proved. Therefore, we do not think that Mr. Kapoor is justified in contending that the observations in Hari Vishnu Kamath 's case support his plea that the enquiry under section 100(1)(d)(iii) is wide enough to take in the scrutiny of the validity of all voting papers. In Keshav Laxman Borkar vs Dr. Devrao Laxman Anande(1) this Court has pointed out that the expression " valid votes" has nowhere been defined in the Act, but in ,the light of the provision of section 3 6 (8 ) of the Act read with rule 58, two things are clear, first that the candidates are validly nominated candidates whose nomination papers are accepted by the returning officer after scrutiny, and second that the provision of section 58 provides that the ballot papers which are not rejected under r. 57 are deemed to be "valid ballot papers" and are to be counted as such. It appears that the position under the English Law in regard to the recounting of votes in proceedings under election petitions is substantially similar. As Halsbury points out: "where a petitioner claims the seat for an unsuccessful candidate, alleging that he had a majority of lawful votes, either party must, six days before that appointed for the trial, deliver to the master, and also at the address, if any, given by the other side, a list of the votes intended to be objected to and of the heads of the objection to each of those votes(1)". It further appears that no evidence may be given against the validity of any vote or under any head not specified in the list, unless by leave of the Court upon such terms (1) (2) Halsbury 's Laws of England, p. 306 paras. 553 & 554. 72 as to amendment of the list, postponement of the enquiry, and payment of costs as may be ordered. Where no list of the votes, to which it is intended to take objection, has been delivered within the time specified, the Court has no power to extend the time or to allow evidence of the votes objected to or of the objections thereto to be given at the trial. Therefore, it seems clear that in holding an enquiry either under section 100(1)(d)(iii) or under section 101, where section 97 has not been complied with, it is not competent to the Tribunal to order a general recount of the votes preceded by a scrutiny about their validity. In the result, the appeal fails and is dismissed. We would like to add that though we have accepted the construction of section 100(1)(d)(iii) and section 101 for which Mr. Garg contended, no relief can be granted to the respondent, because his application for special leave to appeal against the decision of the High Court has been dismissed since he was unable to make out a sufficient cause for condoning the delay made by him in preferring the said application. In the circumstances of this. case, we direct that the parties should bear their own costs. We ought to mention that when this appeal was argued before us on the 4th December, 1963, we were told that them fresh election which had been ordered to be held in accordance with the decision of the High Court was fixed for the 6th December, 1963; and so, after the case was argued, we announced our decision and intimated to the learned Advo cates that our reasons will follow. The present judgment gives the reasons for our decision. AYYANGAR J. While I agree that the appeal deserves, to be dismissed for reasons which I shall indicate later, I regret my inability to agree with the construction which my learned brethren have placed on section 100 (1) (d) (iii) of the Representation of the People Act which for shortness I shall call the Act. on which in ultimate analysis the question of law arising in the appeal turns. The facts of the case which have given rise to the proceeding as well as the points involved in the appeal have all been set out in detail in the judgment of Gajendragadkar J. and I consider it unnecessary to repeat 73 them. I shall accordingly state only those facts which are relevant for the purpose of: (1) the construction of section 100(1) (d) of the Act, and (2) the conclusion I have reached that the appeal should be dismissed. The appeal arises out of a contested election to the Morena Constituency of the Madhya Pradesh Legislative Assembly. The polling for the election took place on February 21, 1962 and there were as many as seven candidates who participated in that poll. The appeal is, however, concerned only with two of them Genda Lal and Jabar Singh the latter being the returned candidate and is the appellant before us. The voting procedure adopted was that set out in rule 39, Conduct of Election Rules, 1961, which I shall hereafter refer to as the Rules, under which the voter makes a mark on the ballot paper on or near the symbol of the contesting candidate to indicate his choice. On the first count of the ballot papers the Returning Officer computed the valid votes obtained by Genda Lal as 5,703 as against 5,671 which had been counted in favour of Jabar Singh. Jabar Singh, however, immediately applied for a recount under rule 63 of the 'Rules on the ground that the original scrutiny and counting were defective and this, though opposed, was acceded to by the Returning Office r who carried out a recount. I might mention in passing that the Election Tribunal has found discrepancies. even in the total of the number of ballot papers in some of the polling stations, the figures of the total number of valid votes in 6 polling stations being different from those found in the result sheet prepared under rule 57(2) in Form 20. The scrutiny and recount disclosed that Genda Lal was found to have polled 5,654 votes as against 5,656 votes counted as having been obtained by Jabar Singh. As a result of this recount Jabar Singh was declared elected, he having obtained 2 votes more than his rival Genda Lal. Genda Lal thereupon filed the election petition which has given rise to this appeal in which he sought to have the election of Jabar Singh declared void and also made a claim to the seat. The election was sought to be set aside on various grounds but we are concerned in this appeal 74 solely with one of the them viz., the correctness of the scrutiny and counting of votes at the recount vis a vis the petitioner and the returned candidate. Shortly stated, the allegation in this respect in the election petition was that 49 valid votes cast in favour of the petitioner (who is the respondent before us) were improperly rejected and that 32 votes were improperly accepted in favour of the returned candidate who is the appellant before us. Needless to add these allegations were denied by the returned candidate. Besides the denial, he also pleaded in his written statement that many votes cast in favour of himself had been wrongly rejected in regard to which details were given and that similarly several votes were wrongly accepted in favour of the election petitioner and in regard to which also details were given and it ended with the prayer that if a proper scrutiny and recount were made of the valid votes received by each, it would be found that he 'the returned candidate had. in fact, obtained a larger number of votes than the election petitioner and for this reason he submitted that the election petition ought to be dismissed. Though Genda Lal had by his election petition, besides seeking the relief of having the appellant 's election declared void, claimed the seat for himself under section 84 of the Act, none of the respondents to the petition including the appellant had filed any recrimination in conformity with the provisions of section 97 of the Act against the grant of such further relief and it is the effect of this failure on the rights of the parties that forms the principal point for consideration in the appeal. The Election Tribunal who inquired into the petition framed the necessary issues arising out of these pleadings. Issue 6(a) dealt with the allegation in the petition that 49 valid votes cast in favour of Genda Lal had been improperly rejected. After examining the evidence adduced and considering the validity of those votes in regard to which a dispute was raised, the Election Tribunal recorded the finding that not 49 but only 10 votes of Genda Lal had been improperly rejected. In regard to the question of the improper acceptance of 32 votes cast in favour of Jabar 'Singh which was covered by issue 6(b), the Tribunal found, again after going through the evidence in respect of the 'particular votes in dispute, that not 32 but only 4 had been 75 improperly accepted. The result of these findings on issues 6(a) and 6(b) was that the total number of valid votes polled by Genda Lal became 5,664 as against 5,652 polled by Jabar Singh. The Tribunal consequently held that the ,election of Jabar Singh who had obtained a minority of votes compared to Genda Lal must be declared void under section 100(1)(d)(iii). So far we are on non controversial ground except this that on this state of the voting Genda Lal claimed that he was entitled to the further relief that he be declared elected having obtained the majority of lawful votes satisfying the requirement of section 101(a). The Election Tribunal refused him that relief for reasons which it is unnecessary to set out ,or discuss and that decision having been affirmed by the High Court in appeal and the special leave prayed for to appeal from that decision of the High Court having been dismissed by us, the possibility of the disallowance of this additional relief does not require to be further noticed. The question about the scope of section 100(1)(d)(iii) and its relative place in the scheme of sections 97, 100 and 101 of the Act arises out of the plea made by Jabar Singh that without reference to the irregularities in the counting of the 49 and the 32 votes alleged by Genda Lal and which he had denied, and which were the subject matter of issues 6 (a) and 6 (b) to which I have already adverted, there were other irregularities in the scrutiny and counting which, if examined, would establish that after every error was eliminated, he himself had obtained a majority of 'lawful votes. The question of law that was debated before us was whether on the scheme of the Representation of the People Act, 1951, Jabar Singh was entitled to make such a plea and claim to adduce proof in support thereof in order to sustain his election without filing a recrimination under section 97 of the Act. My learned brethren have held that he could not and it is on that point that I do not find it possible to agree with them. The correct answer to this question would depend. it is common ground, on a proper construction of s.100(1)(d)(iii) read in conjunction with section 101(a). and 76 this I shall first consider. I shall next deal with the place and function of section 97 in this context and its bearing on the interpretation of the provisions on which the decision of this appeal turns. Though there have been a few decisions bearing upon the question of law I have indicated, and they have all been referred to by Gajendragadkar J. it is common ground that there is no binding decision of this Court touching the matter, though some observations in Bhim Sen vs Gopali and Ors.(1) would appear to favour the construction which my learned brethren have adopted. As, however, the appeal was placed before this Bench for the consideration of this question and we have proceeded on the basis that the matter is res integra I do not propose to refer to any of these decisions but shall proceed merely to interpret the provisions without advertence to the authorities to which our attention was invited during the course of the arguments. Section 100(1) (d) reads: "100. Grounds for declaring election to be void (1) Subject to the provisions of sub section (2) if the Tribunal is of o pinion. . . . . . . (d) that the result of the election, in so far as it concerns a returned candidate, has been materially affected (i) by the improper acceptance of any nomination, or (ii) by any corrupt practice committed in the interests of the returned candidate by an agent other than his election agent, or (iii) by the improper reception, refusal or rejection of any vote or the reception of any vote which is void, or (iv) by any non compliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act, the Tribunal (1) 77 shall declare the election of the returned candidate to be void. " The short question arising for consideration in this appeal may be stated thus: In the context of the provisions contained in section 100(1)(d) which permits an election of a returned candidate to be set, aside only on proof of the "result" viz., the election of the returned candidate having been "materially affected" by the improprieties or illegalities referred to in the four clauses numbered (i) to (iv) what is the import of the words "by the improper reception, refusal or rejection of any vote or the reception of any vote which is void". For our present purposes I might omit the reference to the latter part of this provision relating to "the reception of a vote which is void" and concentrate on the earlier part. It is manifest that the jurisdiction of the Tribunal to declare an election void arises only when it is of opinion that "the result of the election has been materially affected" by the defects or improprieties set out in cls. (i) to (iv), so that if notwithstanding that impropriety or illegality of the types set out in the four clauses, the result of the election is not materially affected, the returned candidate is entitled to retain his seat. With this preliminary observation I shall proceed to consider the import of the relevant words. "materially affected by the improper reception, refusal or rejection of any vote" first in a case where there is no complication arising from the petition claiming the seat in 'addition to the relief of having the election of the returned ,candidate declared void. The argument strenuously pressed before us by Mr. Garg learned counsel for the respondent was, that the Tribunal in considering whether the result of an election had been materially affected, was confined to the consideration of any impropriety alleged as regards the reception of the votes of the returned candidate as well as improprieties alleged by the petitioner in. the refusal or rejection of votes stated to have been cast in favour of the petitioner and the denials of these charges or allegations by the returned candidate. His further submission was that the returned candidate could not sustain his seat by showing a similar improper reception of votes in favour of the 78 petitioner or an improper refusal or rejection of his own votes. In other words, the argument was that the Tribunal dealing with a petition under section 100(1)(d) bad jurisdiction to proceed only on the allegations made in the petition and that even where a case had been established for a scrutiny, and a recount is ordered, it would be so confined and that its jurisdiction would not extend to cases of complaints by the returned candidate. It is this argument that I feel unable to accept. When an election petition is filed complaining of the improper reception or rejection of votes and praying for a scrutiny of the ballot papers for the purpose of determining whether the votes have been properly counted by the Returning Officer, the Tribunal would doubtless have to be satisfied that a case is made out for scrutiny and a re count, for it is settled law that the petitioner is not as a matter of right entitled to have such a scrutiny and recount merely because he prays for such a relief, but has to allege, make out and prove the specific grounds to establish that the scrutiny or counting was improper and that the return, was in consequence erroneous. If one reaches that stage and the Tribunal is satisfied that a case for scrutiny and recount is made out it would mean that the Returning Officer had not discharged his duties properly in the matter of the scrutiny of the ballot papers and their counting. If in such circumstances the respondent (the returned candidate ) also makes allegations of the same type regarding the scrutiny and the counting I consider it would be unjust to deprive him of the opportunity of proving his allegations and thus maintain his seat, unless of course, the statutory provision clearly precludes him from doing so. In saying this I am not suggesting that the respondent need make no averment in his pleadings making definite allegations regarding the particular votes regarding which he desires scrutiny and which he says have been wrongly counted either for or against him. Let us take a case where the allegation of the petitioner is that there has been a miscount i.e., a wrong counting of the votes of the returned candidate and nothing more. Let us suppose that A has been declared elected as having secured, say 200 votes as against B who has secured 190. If B in his election petition says that 79 A 's votes have been wrongly counted as 200, whereas, in fact, if they were recounted they would only be 180 and the Tribunal on a recount finds the allegation in the petition made out and that the returned candidate had obtained only 180 votes the acceptance of Mr. Garg 's argument would mean that the election of A would have to be set aside not withstanding that there has been a similar mistake in the counting of B 's votes and if these were properly counted they might not amount to more than 170. Mr. Garg submitted that though if B claimed the seat there would have to be a recount of the votes of both the candidates and this also, only in the event of a recrimination being filed under section 97, still if no seat was claimed the election 'of the returned candidate would be set aside and that the latter had no means whereby he could maintain his election notwith standing that as a fact he had obtained a majority of lawful votes. It is urged that this result flowed from the opening words of section 100(1)(d) which speaks of "the result of the election" being materially affected "so far as it concerns a returned candidate". I do not find it possible to agree with the construction or reasoning on which the submission is based. There is, no doubt, that an election petition is primarily concerned with the validity of the election of the returned candidate. It cannot also be disputed that the election of the returned candidate cannot be declared void, unless, confining oneself to the impropriety or illegality involved in the reception or refusal of votes, the returned candidate is proved to have obtained a minority of votes, for otherwise whatever be the impropriety or its degree or extensiveness, the result of the election would not be materially affected. It is common ground and beyond con troversy that the election petitioner is not restricted as regards the manner or details of the improper reception or refusal of votes which he could allege and prove which would achieve that result. If so much is conceded and is common ground, I do not see any force in the contention that the returned candidate is confined merely to disproving what is alleged to dislodge him from his seat and is for bidden from proving that votes which under the law had to 80 be counted in his favour, have been wrongly omitted to be so counted. The words in cl. (iii) do not impose any such restriction, for they speak of the "improper reception or refusal of any vote", and as the inquiry under section 100(1)(d) is for ascertaining whether the result of the election has been materially affected which in the context of cl. (iii) obviously means "the returned candidate has been proved not to have obtained, in fact, a majority of valid votes", there appears to me no scope for the argument pressed before us by Mr. Garg. On an analysis of the situation the position would appear to be this. Let us for instance assume that the voting procedure adopted in an election was that prescribed in rule 59 i.e., by placing the ballot papers in the ballot boxes set apart for the different contesting candidates. The returning officer counts the valid votes cast in the several boxes and declares A elected as having secured 200 votes as against B whose votes are counted as 198. If B files a petition and alleges that the counting was irregular, that the totals of the ballot papers in the result sheet are not properly computed, and that as a matter of fact A 's papers, if counted, would be 196, Mr. Garg 's submission is that though the discrepancy disclosed in the totals is consider able, A cannot prove that there has been a miscounting of B 's votes also, and that though if properly counted his total is only 190,, still A 's election should be set aside. It is said that the position would be different and the anomaly would be overcome in cases where the election petitioner, besides claiming a declaration that the election of the returned candidate is void, also seeks a further declaration that he should be declared duly elected and the returned candidate files a recrimination against such a prayer and challenges the right to have the further declaration. This, however, obviously furnishes no answer for more than one reason. It is the submission of Mr. Garg, and that is the whole basis upon which the construction which he desires us to adopt of section 100 (1) (d) (iii) turns, that the question raised by the recrimination arises only after the election of the returned candidate is declared void. Therefore we would have the anomalous situation wherein the election of the returned candiate is declared void by reason of his 81 not obtaining the majority of valid votes so far as the decision under section 100(1)(d) is concerned and then after the matter ,set out in the claim to the seat and the recrimination is inquired into and decided the election tribunal holds that the returned candidate had a majority of lawful votes but that this affected only the right of the defeated candidate to claim the seat. In my judgment the provisions of section 100 read with section 101 do not contemplate this position of a candidate 's election being set aside because he did not get a majority of lawful votes but in the same proceedings and as part of the same inquiry he being held to have obtained a majority of lawful votes. A construction of section 100 (1) (d) which would lead to this result must, in my opinion, be rejected as unsound. The apart, there is the further circumstance arising from 'the fact that according to Mr. Garg the enquiry in respect of a recrimination and its defence is identical with what he says is the scope of a petition and its defence. This, of course, is logical, but it suffers from the same anomaly which I have pointed out as resulting from the acceptance ,of the primary argument regarding the construction of section 100(1)(d)(iii). Applying what I have shown already regarding a case where there was no claim to a seat in an election petition in which the election of a returned candi date has to be declared void, notwithstanding that he had, in fact, obtained a majority of valid votes, because he is precluded from proving this fact, similarly in cases where a seat is claimed, the petitioner so claiming would have to be declared elected, notwithstanding that as a fact he has not obtained the majority of lawful votes, but that the returned candidate has obtained such a majority, because the latter is precluded from proving it. If one took a case where there were more candidates than two, the anomaly I have indicated would be seen clearly. If B files a petition against A the returned candidate claiming the seat and impleads as he must C & D who are the other contestants, 'no proof could be led by A to show that some of his own votes have been counted for C or D, though B would be entitled to prove that some of C 's or D 's votes have been wrongly counted as cast in favour of A. In such a case 134 159 S.C. 6. 82 it is obvious that B gains no advantage by recriminating, because recrimination under section 97 could only be against A and not against the other contesting candidates impleaded as respondents. The result, therefore, would be that though, in fact, A has obtained the majority of lawful votes, B, the petitioner, will be declared elected recrimination or no recrimination. I cannot accept the position that either section 100(1)(d)(iii) or section 101(a) contemplate this result which is at once so unjust and anomalous and appears to me. to contradict the basic principles underlying election law viz., (1) that apart from disqualification, corrupt practices etc. , the election of a candidate who obtains the majority of valid votes shall not be set aside, and (2) no candidates shall be declared duly elected who has not obtained the majority of valid votes. I would add that the entire argument proceeds on a mis conception of the procedure involved in a scrutiny. I will take the case where the voting takes place, as in the case of the election before us, in accordance with the provisions of rule 39. Then conformably to Rule 57(3) all the ballot papers which have been held to be valid in each polling station are bundled up and sealed by the Returning Officer, and similarly all the rejected ones of each station are made into another bundle. At the scrutiny by the Tribunal these two sets of bundles are examined to find out whether the votes cast in favour of each of the contesting candidates have been properly counted or not. How this can be done compartmentally, as those cast for A or B or C separately as is suggested by Mr. Garg, I am unable to follow. If the votes cast in favour of each candidate were made into separate bundles, then at least, there might be scope for an argument that the bundle of A or B shall not be opened up, but when all the voting papers have to be scrutinised in order to find out (a) whether the returned candidate has really been proved to have received a minority of valid votes and (b) whether the candidate claiming the seat has obtained a majority of valid votes, this cannot obviously be done without an examination of the ballot papers to which objection is taken and which are contained in the two types of bundles into which these are made up under rule 57(3). 83 Support was sought by Mr. Garg for the construction that he sought to press upon us by reference to the provisions in the other sub clauses of section 100 (1) (d). His point was that if the returned candidate could not put forward the objections contained in those clauses the returned candidate could not likewise allege improprieties in the reception of the votes of any other candidate including the petitioner. I am wholly unimpressed by this argument which does not take into account both the nature of the objections in these other clauses as well as their bearing on the question whether the election of the returned candidate has been materially affected, which is the prime question for consideration in the provision and which furnishes the key to the interpretation of the sub clause now under consideration. Let me take each of the cases provided by the other sub clauses. Sub cl. (i) deals with the improper acceptance of a nomination. It is obvious that allegations and proof by the returned candidate regarding the improper acceptance of a nomination cannot serve to sustain his election. A fortiori so, clause (ii) which reads "(ii) by any corrupt practice committed in the interests of the returned candidate by an agent other than his election agent, or" could have no meaning in the present context nor cl. (iv) unless the non compliance has a bearing on the reception of votes in which case it would be wholly covered by cl. (iii). In the case of cls. (i), (ii) and (iv) it is obvious, having regard to the very nature of the provisions, that the returned candidate can do no more than prove (a) that there was no such impropriety or illegality as is alleged, and (b) that even if there was, the same had not affected the result of his election; in other words, that the impropriety or illegality, if any, was inconsequential so far as his election was concerned. But this would not be the position in regard to the improper reception or rejection of votes. There we have two factors: (1) the impropriety of the reception or rejection, and (2) whether as a result of such improper reception or rejection the result was materially affected. In the case contemplated by cl. (iii) the question whether the result was materially affected or not could not, when 84 the facts are ascertained, be a matter of doubt or dispute but would be one merely of arithmetical calculation and comparison. No doubt, section 100 of the Act casts on the election petitioner the onus of establishing to the satisfaction of the Tribunal that "the result of the election was materially affected" by the impropriety etc., and taking the case of cl. (iii) in hand, of improper reception or rejection of particular votes, but from this it does not follow that the returned candidate is powerless to establish to the satisfaction of the Tribunal that notwithstanding the improper reception or rejection of the particular votes alleged by the petitioner his election has not been materially affected. The argument of Mr. Garg, if accepted, would mean that the returned candidate can merely combat the case alleged against him and is disabled from establishing positively that the result of the election has not been materially affected. If the key words of the provision on the fulfilment of which alone the Tribunal is invested with jurisdiction to set aside an election are taken to be the words "The result of the election has been materially affected. " I do not consider that it is possible to contend that it is beyond the power of the returned candidate to establish this fact which he might do in any manner he likes. He might do this by establishing that though a few votes were wrongly counted as in his favour, still a larger number of his own votes were counted in favour of the petitioner or that votes which ought to have been counted as cast for him, have been improperly counted as cast in favour of defeated candidates other than the petitioner. Without such a scrutiny it would manifestly not be possible to determine whether the election of the returned candidate has been materially affected or not. Nor do I see anything in the language of cl. (iii) which precludes the returned candidate from establishing this. This clause employs the words "improper reception, refusal or rejection of any vote" to confine oneself to its first part. No doubt, when a petitioner complains of a rejection, he obviously means an improper rejection of votes in his own favour and when he speaks of an improper reception he means also obviously an improper reception of votes in favour of the returned candidate. But from this it does not follow that there might not be an improper reception of votes in favour 85 of the election petitioner or of another candidate or of an improper rejection of votes of the returned candidate the clause does not speak of the person in whose favour or as against whom the improper reception or rejection has taken place, its content and significance have to be ascertained from the purpose for which the provision is intended viz., to determine from a counting of the voting papers after a scrutiny whether the election of the returned candidate has been materially affected. For instance, let me take a case within section 100(1)(d)(i) where there has been an improper acceptance of any nomination. The question arises as to whether the election of the returned candidate has been materially affected by that improper acceptance. Obviously, a nomination which is alleged to have been improperly accepted and which is the subject of the charge under s.100 (1) (d) (i) is not the acceptance of the nomination either of the election petitioner where he has been one of the candidates or of the returned candidate but only of one of the other defeated candidates. If after inquiry the nomination is found to have been improperly accepted and the Tribunal proceeds to inquire as to its effect on the election, I take it, it would necessarily have to consider the votes received by that candidate. If this is not to be done it would either mean that in every case of an improper acceptance of a nomination the election is to be declared void or that in no case can such a declaration be made. Now, if the votes cast in favour of that candidate whose nomination was improperly accepted have to be counted, necessarily there has to be a scrutiny and the Tribunal would have to inquire and ascertain the number of valid votes cast for that candidate in order to determine whether the improper reception of votes in favour of that candidate has materially affected the result of the election i.e., has resulted in the election of the returned candidate. In that context the scrutiny of the improper reception of the votes in favour of such candidate would obviously have to take place and that could be done only by virtue of the provision in section 100 (1) (d) (iii). This would at least show that the expression of "any vote" in the clause has to be read as meaning 'any vote cast in the election with which the petition is concerned ' and not 'any vote cast in favour of the returned 86 candidate ', to take the illustration merely of the improper reception of a vote. The construction which I have placed on section 100(1)(d) (iii) would harmonise the provision contained in the opening words of section 100 (1) (d) and section 101 (a). I cannot reasonably conceive of the law providing (unless of course the language employed leaves me no alternative) for the setting aside of an election of the returned candidate because the Tribunal finds that he did not receive the highest number of valid votes cast at the election; but that after this stage is over and the Tribunal proceeds to consider whether the claim to the seat is made out or not its reaching the finding that such a petitioner is not entitled to that relief because on further scrutiny, the returned candidate had, in fact, secured the highest number of votes. Mr. Garg, no doubt, contemplated this anomaly with equanimity suggesting that it was due not to any anomaly at all but a situation arising merely from the application of different tests or being the result of inquiries directed to different ends at different stages of the petition. It is this that I am unable to reconcile myself to. The language used in section 101 (a) is, no doubt, "in fact received the majority of the valid votes". I do not, however, consider that the use of the words 'in fact ' involves scrutiny of a type different from that which the Tribunal conducts for ascertaining whether by reason of the improper reception or rejection of votes the election of a returned candidate has been materially affected so as to justify its being set aside. The inquiries are identical. If every vote which has been improperly received is eliminated and every vote which has been improperly refused or rejected is added you get the totality of the valid votes cast in favour of a candidate. That is precisely the inquiry which is prescribed to be conducted under section 100(1)(d) read with cl. (iii). The words 'in fact ' used in section 101 (a) to my mind do not add any new element as regards either the scrutiny or the counting. If so, on the construction which I have endeavored to explain, when once it is ascertained that the returned candidate has obtained a majority of valid votes there is no question of his election having to be set aside. But it might be shown that he had not obtained the 87 majority of valid votes. in other words, by the scrutiny that has taken place in order to test the validity of his election the Tribunal might have arrived at a conclusion that he had not received the majority of valid votes. Immediately that stage is reached and that conclusion is arrived at the Tribunal proceeds to declare the election void. If there, is no claim to a seat there is nothing more to be done, with the result that it stops with declaring the election void in which event there would be a re election. If, however, the seat is claimed by a defeated candidate or on his behalf there has to be a further inquiry which the Tribunal is called upon to conduct. For the purpose of declaring the election void the Tribunal would have arrived at the figures, ,of the valid votes cast in favour of the several candidates. It might be that the petitioner who made the claim to the. seat or the person on whose behalf that is made might not have obtained the highest number of valid votes in which ,case, of course, a claim to the seat would be rejected. It is this situation which is indicated by section 101(a). It provides that there cannot be a declaration in favour of the claimant to a seat merely because the election of the returned candidate has been declared void but he must in addition have secured the majority of the lawful votes cast. A question might arise as to how this total is to be ascertained. It is obvious that for this purpose the Tribunal ought to scrutinise not merely the ballot papers of the claimant and the returned candidate but also of the other candidates. Thus, for instance, taking the case only of the petitioner who is a claimant, among the votes counted in his favour might be some which were really votes east in favour of a defeated candidate and similarly votes properly cast for him might have been improperly counted as the votes of the other defeated candidates. Undoubtedly the irregularities would have to be pleaded, but I am now concerned with whether even if pleaded, the Tribunal would on a proper interpretation of sections 100 and 101 have jurisdiction to entertain the pleas and embark on such a scrutiny. Proceeding then on the footing that the necessary averments have been made in the pleadings filed there would have to be a scrutiny of the ballot papers before it can be ascertained whether or not the, person who or on whose behalf the seat is claimed has obtain 88 ed a majority of valid votes in order to sustain the claim to. the seat. After this stage is passed and the Tribunal has reached the conclusion that the claimant has, in fact, received the majority of valid votes that the Tribunal embarks on the further inquiry as to whether there are any reasons why he should not be declared elected. And it is at this stage that the provisions of section 97 in regard to recrimination come into play. If no recrimination is filed then on the terms, of section 101(a) the claimant would be immediately declared elected but if there is a recrimination then section 101(b) is attracted and the Tribunal would have to inquire whether if the claimant were a returned candidate there are circumstances in which his election could be declared void. This, would indicate that the recrimination is concerned with a stage which emerges after the scrutiny is completed and assumes that the scrutiny has resulted in the claimant being found to have obtained the majority of valid votes. This construction would harmonise the provisions of sections 97, 100 (1(d) and 101 and would lead to a rational result. This brings me to a submission based upon rule 5 7 (1) to which reference was made by Mr. Garg. He referred us to the words of that rule reading: "Every ballot paper which is not rejected under Rule 56 shall be counted as one valid vote" as throwing some light on the construction of section 100(1)(d) (iii) and as favouring the intrepretation which he invited us to put upon the provision. I consider that the rule has no bearing at all upon the point now in controversy. Rule 57 occurs in Part V of the Rules beginning with rule 50 which is headed 'Counting of votes in Parliamentary and Assembly Constituencies. ' Rule 55 prescribes the scrutiny at the time of the opening of the ballot boxes and rule 56 with the scrutiny and rejection of ballot papers. This last rule lays down which shall be deemed to be a valid vote on a ballot paper and which is not and directs the Returning Officer to follow these directions and make the counting. And it is in that context that we have rule 57 and the provision in sub r. It obviously means only that so far as the Returning Officer is concerned and for the purpose of enabling him to declare the result the ballot papers which are not rejected are to be 89 deemed as valid. It is manifest that if that validity held good even at the stage of the election petition and for the conduct of the inquiry before the Tribunal, that could really be no scrutiny of the ballot papers and section 100 (1) (d) (iii) would become meaningless. The meaning of rule 57(1) is only this that ballot papers not rejected shall be deemed to be valid so far as the Returning Officer is concerned and even as regards himself it is subject to the provision in rule 63 under which a recount may be demanded and granted. His decision has, of course, prima facie validity at the stage of the inquiry by the Election Tribunal because the impropriety of his acceptance or refusal has to be pleaded and proved by the party objecting to this scrutiny and it is only if the Tribunal finds the impropriety established, that the vote would be differently treated or counted. It appears to me to be clear therefore that rule 57 does not bear upon the construction of section 100(1)(d)(iii) or of section 101 (a) for which purpose reliance was placed upon it. The next question that arises is the result of the construc tion which I have endeavoured to explain of the relevant provisions of the Act and now I shall set out a few further findings of the Election Tribunal which bear upon the point next to be considered. The Election Tribunal found after a scrutiny of the voting papers to which objection had been made by the petitioner Genda Lal and on a recount that it resulted in Genda Lal having obtained 5,664 votes as against 5,652 obtained by the returned candidate Jabar Singh which meant that the election of Jabar Singh should be declared void. The Tribunal then proceeded to investigate the allegations made by Jabar Singh as regards the improper reception of votes in favour of Genda Lal and the improper rejection of votes in his own favour and after considering the ballot papers of the several polling stations, it arrived at the result that Genda Lal had been improperly credited with 10 votes and that Jabar Singh had been im properly denied the benefit of 12 votes cast in his favour. If this position could be sustained the result would be that Genda Lal had obtained 5,654 votes as against 5,664 votes polled by Jabar Singh which would mean that the election of Jabar Singh could not be declared void, for "the result of the election had not been materially affected. " It was this 90 that was strenuously urged before us by Mr. Kapoor learned counsel for the appellant Jabar Singh. Both the Tribunal as well as the High Court on appeal therefrom have held that because Jabar Singh had not recriminated this deduction of 10 votes in favour of Genda Lal and the addition of 12 votes in favour of Jabar Singh could not be made and consequently denied to the appellant the benefit of this finding. In view of what I have stated earlier as to the proper construction of sections (100)(1)(d)(iii) and 101(a) the absence of recrimination could not lead to this result and if this finding could be sustained I would have allowed the appeal. But this finding of the Tribunal has proceeded partly without any pleading to support it. When an objection is taken to the improper reception or refusal of a vote the facts upon which such impropriety has occurred have to be set out and the other party has to be given an opportunity to meet the case. Though there might be no express requirement of the Act or any rule made thereunder, I consider that it is implicit in the pleadings required to be filed under sections 81 to 83 of the Act read with the frame of section 100 that a party who alleges an impropriety or error in the scrutiny by the Returning Officer, and needless to add this would apply to every allegation of impropriety or illegality by whosoever committed, must specify with particularity the grounds of attack on the action of the Returning Officer in regard to the scrutiny of the ballot paper or the counting. In the present case it is admitted that though in his written statement, the appellant Jabar Singh challenged the propriety of the reception of certain votes in favour of Genda Lal and the improper rejection of some of his own votes, he did not specify all of these in regard to which impropriety has been found by the Tribunal. The Tribunal has, as I have already stated, found that 10 ballot papers whose numbers have been specified ought not to have been counted in favour of Genda Lal. But of these, it is now admitted, that in regard to 6 of them no plea had been made in the written statement, with the result that only 4 votes could be taken into account as having been wrongly counted, bearing in mind the pleading in the case. Similarly, as regards the rejection of Jabar Singh 's votes the Tirbunal, as stated eariler, has found that 12 votes ought to have been counted in his favour. Of these, however, the written statement con 91 tained allegations only as regards 6 and not as regards the rest. This would mean that the Tribunal had no jurisdiction to find that more than 6 votes had been improperly rejected in his case. If the votes regarding which no plea of impro priety had been raised by Jabar Singh were eliminated, it would follow that as a result of the final scrutiny Genda Lal had obtained properly 5,660 valid votes as against 5,658 polled by Jabar Singh. The result of the election, therefore, was materially affected by the improper reception or refusal of votes and therefore I consider that the election of Jabar Singh was properly set aside and that is why I concur in the order that the appeal should be dismissed. Appeal dismissed.
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The person who won the election (called the appellant) was said to be the winner because they had 2 more votes than the other person (called the respondent). After that, the respondent filed a complaint about the election. The respondent said the election wasn't fair because some votes for the appellant shouldn't have been counted, and some votes for the respondent were wrongly not counted. The respondent asked the court to say that the appellant's election was invalid and that the respondent should be declared the winner instead. The appellant told the court that some of their votes were wrongly not counted, and some of the respondent's votes were wrongly counted. The appellant said that if the votes were counted again carefully, they would be found to have the most votes. The respondent disagreed, saying that the appellant hadn't officially made a counter-claim or provided a security deposit as required by law. Therefore, the appellant shouldn't be allowed to make this argument. The court disagreed with the respondent and allowed the appellant's argument. The court looked at the ballots for both the respondent and the appellant and decided that 22 ballots for the respondent were wrongly counted. This meant the respondent didn't have the most votes. The court then said the appellant's election was invalid, but they didn't declare the respondent the winner. Both the appellant and the respondent appealed this decision to a higher court. The higher court dismissed both appeals and agreed with the original court's decision. So, this is the appeal of that decision. Held: (i) In a case like this, the court needs to find out if any votes were wrongly counted for the winning candidate, or if any votes were wrongly refused or not counted for any other candidate. These are the only two things that matter when deciding if the election result was significantly affected. The person making the complaint has to prove their claims. So, if the complaint only says that the winner's election should be invalid, the court's focus is limited to whether the election result was significantly affected. A specific legal rule (section 97(1)) doesn't apply in this type of case because the court is only looking at whether the winner's election was significantly affected. (ii) Sometimes, a complaint about an election makes two claims: first, that the winner's election is invalid, and second, that the person making the complaint (or someone else) should be declared the winner. In this kind of case, both sections 100 and 101 of the law apply. Section 97 comes into play when there's an additional claim that someone else should be declared the winner. Section 97(1) lets the winner make a counter-claim and present arguments to support their case. This means that when dealing with a complaint with two claims, the court looks at both the claims made by the person complaining and the counter-claims made by the winner. The winner needs to follow the rules in sections 97(1) and 97(2) of the law. If the winner doesn't make a counter-claim as required by section 97, they can't challenge the other person's claim to be declared the winner. In other words, the winner won't be allowed to present evidence because they can't argue against the other person's claim. (iii) The winner's counter-claims under section 97 of the law are considered after the court has made a decision under section 100 of the law. The first part of the court's investigation, about whether the winner's election was valid, is limited to the rules in section 100(1)(d)(iii). The second part, which is covered by section 101(a), is broader and allows the winner to present evidence to support their counter-claims made under section 97(1). However, even in cases where section 97 applies, the investigation under section 101(a) won't be broader if the winner didn't make a counter-claim. In that case, the court doesn't need to count and check all the votes from the election. According to rule 57, the court has to assume that every ballot that wasn't rejected is a valid vote, and the decision under section 101(a) has to be made based on that assumption. So, it's clear that when investigating a case under section 100(1)(d)(iii) or under section 101 where section 97 wasn't followed, the court can't order a general recount of the votes after checking if they're valid. Several previous cases were mentioned and either overruled, relied on, or discussed. Per Ayyangar J.: (i) Section 100 of the law says that the person complaining about the election has to prove that "the election result was significantly affected by wrongly counting or rejecting certain votes." However, this doesn't mean the winner can't try to prove that their election wasn't significantly affected, even if some votes were wrongly counted or rejected. If the most important part of the law is whether "the election result was significantly affected," then the winner can try to prove that it wasn't in any way they want. The winner could show that even though some votes were wrongly counted for them, many of their votes were wrongly counted for the other person, or that votes that should have been counted for them were wrongly counted for other candidates. Without checking the votes carefully, it's impossible to know if the winner's election was significantly affected. There's nothing in the law that stops the winner from proving this. The law doesn't say who wrongly received or had votes rejected, so the meaning of the law has to be understood based on its purpose: to decide, after counting the votes carefully, whether the winner's election was significantly affected. The phrase "any vote" in this part of the law means "any vote cast in the election being complained about," not just "any vote cast for the winner." (ii) Section 101(a) says that a person can't be declared the winner just because the original winner's election was invalid. They also have to have received the most valid votes. This means the court should check not only the ballots of the person claiming to be the winner and the original winner, but also the ballots of all the other candidates. When the court decides, after checking the votes, that the person claiming to be the winner actually received the most valid votes, the court then investigates whether there are any reasons why they shouldn't be declared the winner. It's at this point that the rules about counter-claims in section 97 come into play. If no counter-claim is filed, then the person claiming to be the winner should be declared the winner immediately, according to section 101(a). But if there is a counter-claim, then section 101(b) applies. This explanation makes sections 97, 100(1)(d), and 101 work together and leads to a reasonable result. (iii) Rule 57(1) means that for the person in charge of the election, and for the purpose of announcing the result, ballots that aren't rejected are considered valid. If that validity still applied during the court case and when the court was investigating the election, then there would be no way to check the ballots carefully, and section 100(1)(d)(iii) would be meaningless. The validity of a ballot can be challenged in an election complaint by making the right arguments, and the court can say that a ballot was wrongly received. Rule 57 doesn't affect how sections 100(1)(d)(iii) or 101(a) should be understood.
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By his petition the respondent challenged the validity of the appellant 's election on the ground ' of improper reception of votes in favour of the appellant and improper rejection of votes in regard to himself. At this stage, the appellant urged before the Tribunal that there had been improper rejection of his votes and improper acceptance of the votes of the respondent, and his case was that if recounting and re scrutiny was made, it would be found that he had secured a majority of votes. The respondent objected to this course; his case was that since the appellant had not recriminated under section 97 of the Act, it was not open to him to make the plea that a recounting and re scrutiny should be made on the ground that improper votes had been accepted in favour of the respondent and valid votes had been improperly rejected when they were cast in favour of the appellant. 59 The Tribunal rejected the respondent 's contention and held that in order to consider the relief which the respondent had cliamed in his election petition, it was necessary for it to decide whether the respondent had in fact received a majority of votes under section 101 of the Act, and so,. It is significant that r. 57(1) provides that every ballot paper which is not rejected under r. 56 shall be counted as one valid vote, which means that after the ballot papers have been scrutinised and invalid papers are rejected under r. 56(2), all voting papers which have been taken into the counting by the returning officer shall be deemed to be valid under r. 57(1). Let us now read the three relevant sections with which we are concerned in the present appeal. Section 97 provides : "(1) When in an election petition a declaration that any candidate other than the returned candidate has been duly elected is claimed, the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election. (1) Subject to the provisions of subsection (2) if the Tribunal is of opinion (a) that on the date of his election a returned candidate, was not qualified, or was disqualified, to be chosen to fill the seat under the Constitution or this Act; or 63 (b) that any corrupt practice has been committed by a returned candidate or his election agent or by any other person with the consent of a returned candidate or his election agent; or (c) that any nomination has been improperly rejected; or (d) that the result of the election, in so far as it concerns a returned candidate, has been materially affected (i) by the improper acceptance of any nomination, or (ii) by any corrupt practice committed in the interests of the returned candidate by an agent other than his election agent, or (iii) by the improper reception, refusal or rejection of any vote or the reception of any vote which is void; or (iv) by any noncompliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act, the Tribunal shall declare the election of the returned candidate to be void". or such other candidate received a majority of the valid votes, or (b) that but for the votes obtained by the returned candidate by corrupt practices the petitioner or such other candidate would have obtained a majority of the valid votes, the Tribunal shall after declaring the election of the returned candidate to be void declare the petitioner or such other candidate, as the case may be, to have been duly elected". He suggests that when the Tribunal decides whether or not the election of the returned candidate has been materially affected by the improper reception, refusal or rejection of any vote, or the reception of any vote which is void, it has to examine the validity of all votes which have been counted in declaring the returned candidate to be elected, and so, no limitation can be imposed upon the right of the appellant to require the Tribunal to consider his contention that some votes which were rejected though cast in his favour had been improperly rejected and some votes which were accepted in favour of the respondent had been improperly accepted. Basing himself on this position, Mr. Kapoor further contends that when section 101 requires that the Tribunal has to come to the conclusion that in fact the petitioner or such other candidate received a majority of the valid votes, that can be done only when a recount is made after eliminating invalid votes, and so, no limitations can be placed upon the scope of the enquiry contemplated by section 101 (a). 65 His argument is that though section 100(1)(d)(iii) is outside section 97. it does not mean that in dealing with a claim made by an election petition challenging the validity of his election, a returned candidate can both defend the validity of his election and assail the validity of the votes cast in favour of the petitioner or some other person. In dealing with the challenge to the validity of the election of the returned candidate under section 100(1)(d), it would be noticed that what the election petition has to prove is not only the existence ,of one or the other of the rounds specified in clauses (i) to (iv) of section 100(1)(d), but it has also to establish that as a result of the existence of the said ground, the result of the election in so far as it concerns a returned candidate has been materially affected. It is thus obvious that what the Tribunal has to find is whether or not the election in so far as it concerns the returned candidate has been materially affected, and that means that the only point which the Tribunal has to decide is: has the election of the returned candidate been materially affected? In other words, the scope of the enquiry in a case failing under section 100(1)(d)(iii) is to determine whether any votes have been improperly cast in favour of the returned candidate, or any votes have been improperly refused or re 134 159 S.C. 5. The enquiry is limited not because the returned candidate has not recriminated under section 97(1); in fact, section 97(1) has no application to the case falling under section 100(1)(d)(iii); the, scope of the enquiry is limited for the simple reason that what the clause requires to be considered is whether the election of the returned candidate has been materially affected and nothing else. In such a case, an enquiry would be held under section 100 so far as the validity of the returned candidate 's election is concerned, and if as a result of the said enquiry a declaration is made that the election of the returned candidate is void, then the Tribunal will proceed to deal with alternative claim, but in doing so, the returned candidate will not be allowed to, lead any evidence because he is precluded from raising any pleas against the validity of the claim of the alternative candidate. It is true that section 101(a) requires the Tribunal to find that the petitioner or such other candidate for the declaration of whose election a prayer is made in the election petition has in fact received a majority of the valid votes. Section 97(1) undoubtedly gives an opportunity to the returned candidate to dispute the validity of any of the votes cast in favour of the alternative candidate or to plead for the validity of any vote cast in his favour which has been rejected; but if by his failure to make recrimination within time as required by section 97 the returned candidate is precluded from raising any such plea at the hearing of the election petition, there would be nothing wrong if the Tribunal proceeds to deal with the dispute under section 101(a) on the basis that the other votes counted by the returning officer were valid votes and that votes in favour of the returned candidate, if any, which were rejected. As we have already indicated, this would be the position only if the returned candidate had recriminated; in the absence of recrimination, it would not be open to the Election Tribunal (1) 69 to allow the returned candidate to challenge the validity of votes cast in favour of the petitioner or any other candidate in whose favour a declaration is claimed by the election petition or to contend that any of his votes were improperly rejected. Shortly stated, the allegation in this respect in the election petition was that 49 valid votes cast in favour of the petitioner (who is the respondent before us) were improperly rejected and that 32 votes were improperly accepted in favour of the returned candidate who is the appellant before us. Besides the denial, he also pleaded in his written statement that many votes cast in favour of himself had been wrongly rejected in regard to which details were given and that similarly several votes were wrongly accepted in favour of the election petitioner and in regard to which also details were given and it ended with the prayer that if a proper scrutiny and recount were made of the valid votes received by each, it would be found that he 'the returned candidate had. The question about the scope of section 100(1)(d)(iii) and its relative place in the scheme of sections 97, 100 and 101 of the Act arises out of the plea made by Jabar Singh that without reference to the irregularities in the counting of the 49 and the 32 votes alleged by Genda Lal and which he had denied, and which were the subject matter of issues 6 (a) and 6 (b) to which I have already adverted, there were other irregularities in the scrutiny and counting which, if examined, would establish that after every error was eliminated, he himself had obtained a majority of 'lawful votes. (d) that the result of the election, in so far as it concerns a returned candidate, has been materially affected (i) by the improper acceptance of any nomination, or (ii) by any corrupt practice committed in the interests of the returned candidate by an agent other than his election agent, or (iii) by the improper reception, refusal or rejection of any vote or the reception of any vote which is void, or (iv) by any non compliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act, the Tribunal (1) 77 shall declare the election of the returned candidate to be void. " The short question arising for consideration in this appeal may be stated thus: In the context of the provisions contained in section 100(1)(d) which permits an election of a returned candidate to be set, aside only on proof of the "result" viz., the election of the returned candidate having been "materially affected" by the improprieties or illegalities referred to in the four clauses numbered (i) to (iv) what is the import of the words "by the improper reception, refusal or rejection of any vote or the reception of any vote which is void". "materially affected by the improper reception, refusal or rejection of any vote" first in a case where there is no complication arising from the petition claiming the seat in 'addition to the relief of having the election of the returned ,candidate declared void. When an election petition is filed complaining of the improper reception or rejection of votes and praying for a scrutiny of the ballot papers for the purpose of determining whether the votes have been properly counted by the Returning Officer, the Tribunal would doubtless have to be satisfied that a case is made out for scrutiny and a re count, for it is settled law that the petitioner is not as a matter of right entitled to have such a scrutiny and recount merely because he prays for such a relief, but has to allege, make out and prove the specific grounds to establish that the scrutiny or counting was improper and that the return, was in consequence erroneous. If B in his election petition says that 79 A 's votes have been wrongly counted as 200, whereas, in fact, if they were recounted they would only be 180 and the Tribunal on a recount finds the allegation in the petition made out and that the returned candidate had obtained only 180 votes the acceptance of Mr. Garg 's argument would mean that the election of A would have to be set aside not withstanding that there has been a similar mistake in the counting of B 's votes and if these were properly counted they might not amount to more than 170. Mr. Garg submitted that though if B claimed the seat there would have to be a recount of the votes of both the candidates and this also, only in the event of a recrimination being filed under section 97, still if no seat was claimed the election 'of the returned candidate would be set aside and that the latter had no means whereby he could maintain his election notwith standing that as a fact he had obtained a majority of lawful votes. (iii) do not impose any such restriction, for they speak of the "improper reception or refusal of any vote", and as the inquiry under section 100(1)(d) is for ascertaining whether the result of the election has been materially affected which in the context of cl. Therefore we would have the anomalous situation wherein the election of the returned candiate is declared void by reason of his 81 not obtaining the majority of valid votes so far as the decision under section 100(1)(d) is concerned and then after the matter ,set out in the claim to the seat and the recrimination is inquired into and decided the election tribunal holds that the returned candidate had a majority of lawful votes but that this affected only the right of the defeated candidate to claim the seat. Applying what I have shown already regarding a case where there was no claim to a seat in an election petition in which the election of a returned candi date has to be declared void, notwithstanding that he had, in fact, obtained a majority of valid votes, because he is precluded from proving this fact, similarly in cases where a seat is claimed, the petitioner so claiming would have to be declared elected, notwithstanding that as a fact he has not obtained the majority of lawful votes, but that the returned candidate has obtained such a majority, because the latter is precluded from proving it. If B files a petition against A the returned candidate claiming the seat and impleads as he must C & D who are the other contestants, 'no proof could be led by A to show that some of his own votes have been counted for C or D, though B would be entitled to prove that some of C 's or D 's votes have been wrongly counted as cast in favour of A. If the votes cast in favour of each candidate were made into separate bundles, then at least, there might be scope for an argument that the bundle of A or B shall not be opened up, but when all the voting papers have to be scrutinised in order to find out (a) whether the returned candidate has really been proved to have received a minority of valid votes and (b) whether the candidate claiming the seat has obtained a majority of valid votes, this cannot obviously be done without an examination of the ballot papers to which objection is taken and which are contained in the two types of bundles into which these are made up under rule 57(3). (i), (ii) and (iv) it is obvious, having regard to the very nature of the provisions, that the returned candidate can do no more than prove (a) that there was no such impropriety or illegality as is alleged, and (b) that even if there was, the same had not affected the result of his election; in other words, that the impropriety or illegality, if any, was inconsequential so far as his election was concerned. He might do this by establishing that though a few votes were wrongly counted as in his favour, still a larger number of his own votes were counted in favour of the petitioner or that votes which ought to have been counted as cast for him, have been improperly counted as cast in favour of defeated candidates other than the petitioner. But from this it does not follow that there might not be an improper reception of votes in favour 85 of the election petitioner or of another candidate or of an improper rejection of votes of the returned candidate the clause does not speak of the person in whose favour or as against whom the improper reception or rejection has taken place, its content and significance have to be ascertained from the purpose for which the provision is intended viz., to determine from a counting of the voting papers after a scrutiny whether the election of the returned candidate has been materially affected. Obviously, a nomination which is alleged to have been improperly accepted and which is the subject of the charge under s.100 (1) (d) (i) is not the acceptance of the nomination either of the election petitioner where he has been one of the candidates or of the returned candidate but only of one of the other defeated candidates. If this is not to be done it would either mean that in every case of an improper acceptance of a nomination the election is to be declared void or that in no case can such a declaration be made. Now, if the votes cast in favour of that candidate whose nomination was improperly accepted have to be counted, necessarily there has to be a scrutiny and the Tribunal would have to inquire and ascertain the number of valid votes cast for that candidate in order to determine whether the improper reception of votes in favour of that candidate has materially affected the result of the election i.e., has resulted in the election of the returned candidate. It provides that there cannot be a declaration in favour of the claimant to a seat merely because the election of the returned candidate has been declared void but he must in addition have secured the majority of the lawful votes cast. Proceeding then on the footing that the necessary averments have been made in the pleadings filed there would have to be a scrutiny of the ballot papers before it can be ascertained whether or not the, person who or on whose behalf the seat is claimed has obtain 88 ed a majority of valid votes in order to sustain the claim to. If no recrimination is filed then on the terms, of section 101(a) the claimant would be immediately declared elected but if there is a recrimination then section 101(b) is attracted and the Tribunal would have to inquire whether if the claimant were a returned candidate there are circumstances in which his election could be declared void. The meaning of rule 57(1) is only this that ballot papers not rejected shall be deemed to be valid so far as the Returning Officer is concerned and even as regards himself it is subject to the provision in rule 63 under which a recount may be demanded and granted. If this position could be sustained the result would be that Genda Lal had obtained 5,654 votes as against 5,664 votes polled by Jabar Singh which would mean that the election of Jabar Singh could not be declared void, for "the result of the election had not been materially affected. " The result of the election, therefore, was materially affected by the improper reception or refusal of votes and therefore I consider that the election of Jabar Singh was properly set aside and that is why I concur in the order that the appeal should be dismissed.
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The respondent said the election wasn't fair because some votes for the appellant shouldn't have been counted, and some votes for the respondent were wrongly not counted. The respondent asked the court to say that the appellant's election was invalid and that the respondent should be declared the winner instead. The appellant said that if the votes were counted again carefully, they would be found to have the most votes. The court looked at the ballots for both the respondent and the appellant and decided that 22 ballots for the respondent were wrongly counted. The court then said the appellant's election was invalid, but they didn't declare the respondent the winner. Both the appellant and the respondent appealed this decision to a higher court. So, if the complaint only says that the winner's election should be invalid, the court's focus is limited to whether the election result was significantly affected. A specific legal rule (section 97(1)) doesn't apply in this type of case because the court is only looking at whether the winner's election was significantly affected. (ii) Sometimes, a complaint about an election makes two claims: first, that the winner's election is invalid, and second, that the person making the complaint (or someone else) should be declared the winner. In this kind of case, both sections 100 and 101 of the law apply. This means that when dealing with a complaint with two claims, the court looks at both the claims made by the person complaining and the counter-claims made by the winner. The winner needs to follow the rules in sections 97(1) and 97(2) of the law. If the winner doesn't make a counter-claim as required by section 97, they can't challenge the other person's claim to be declared the winner. (iii) The winner's counter-claims under section 97 of the law are considered after the court has made a decision under section 100 of the law. The first part of the court's investigation, about whether the winner's election was valid, is limited to the rules in section 100(1)(d)(iii). However, even in cases where section 97 applies, the investigation under section 101(a) won't be broader if the winner didn't make a counter-claim. According to rule 57, the court has to assume that every ballot that wasn't rejected is a valid vote, and the decision under section 101(a) has to be made based on that assumption. So, it's clear that when investigating a case under section 100(1)(d)(iii) or under section 101 where section 97 wasn't followed, the court can't order a general recount of the votes after checking if they're valid. Per Ayyangar J.: (i) Section 100 of the law says that the person complaining about the election has to prove that "the election result was significantly affected by wrongly counting or rejecting certain votes." However, this doesn't mean the winner can't try to prove that their election wasn't significantly affected, even if some votes were wrongly counted or rejected. If the most important part of the law is whether "the election result was significantly affected," then the winner can try to prove that it wasn't in any way they want. The law doesn't say who wrongly received or had votes rejected, so the meaning of the law has to be understood based on its purpose: to decide, after counting the votes carefully, whether the winner's election was significantly affected. (ii) Section 101(a) says that a person can't be declared the winner just because the original winner's election was invalid. This means the court should check not only the ballots of the person claiming to be the winner and the original winner, but also the ballots of all the other candidates. When the court decides, after checking the votes, that the person claiming to be the winner actually received the most valid votes, the court then investigates whether there are any reasons why they shouldn't be declared the winner. If no counter-claim is filed, then the person claiming to be the winner should be declared the winner immediately, according to section 101(a). (iii) Rule 57(1) means that for the person in charge of the election, and for the purpose of announcing the result, ballots that aren't rejected are considered valid. If that validity still applied during the court case and when the court was investigating the election, then there would be no way to check the ballots carefully, and section 100(1)(d)(iii) would be meaningless.
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: Special Leave Peti tion (CRL.) No. 1370 of 1986. From the Judgment and Order dated 23.5. 1986 of the Bombay High Court in Crl. W.P. No. 385 of 1986. AND WRIT PETITION NO. 363 OF 1986. (Under Article 32 of the Constitution of India). G.L. Sanghi, D. Canteenwala, V.B. Agarwala, B.R. Agarwa la and Miss Vijay Lakshmi Mannen for the Petitioner. K. Parasaran, Attorney General, C.V. Subba Rao and A. Subba Rao for the Respondent. The following Judgment of the Court was delivered: This petition for special leave directed against the judgment and order of the Bombay High Court dated May 3, 1986, and the connected petition under article 32 of the Con stitution raise common questions and therefore they are disposed of by this common order. The petitioner by a peti tion under article 226 filed before the High Court prayed for the issuance of a writ of habeas corpus which is also the prayer before us, for the release of her husband Mohanlal Jatia, who has been detained by an order of the Additional Secretary to the Government of India, Ministry of Finance, Department of Revenue dated December 13, 1985 under sub section (1) of section 3 of the Conservation of Foreign Exchange & Pre vention of Smuggling Activities Act, 1974 on being satisfied that it was necessary to detain him with a view to prevent ing him from acting in any manner prejudicial to the augmen tation of foreign exchange. Intelligence gathered by the Directorate of Revenue Intelligence, Bombay was that one Subhash Gadia, the broth er in law of the detenu Mohanlal Jatia, a very rich and prosperous businessman of Bombay, was under invoicing the imports of yarn from Japan. On the 55 basis of the said information the officers of the Director ate of Revenue Intelligence and officers the Customs, Bombay searched his residential premises at A 121, Sea Lord Cuffe Parade, Colaba, Bombay under the on June 27, 1985 which resulted in seizure of certain documents. As the seized documents not only revealed violation of the provisions of the but also indicated certain payments and transactions in violation of the Foreign Ex change Regulation Act, 1973, the matter was referred to the office of the Enforcement Directorate for purposes of inves tigation from the angle of the Foreign Exchange Regulation Act on October 24, 1985. The aforesaid Subhash Gadia was summoned under section 40 of the Foreign Exchange Regulation Act and his statement was recorded by R.C. Singh, an officer of the Enforcement Directorate, Bombay on November 5, 1985. In his statement of even date, Subhash Gadia stated that he went to Japan in 1970 seeking employment with a proprietory concern known as Messrs Greenland Corporation, Tolo Build ing, Osaka, Japan owned by a Nepali national and was engaged in exporting yarn, fibre, fabrics, chemicals etc. to India and Middle East countries. Messrs J.M. Trading Corporation, 701, Tulsiani Chambers, 212 Nariman Point, Bombay (of which Mohanlal Jatia is a partner). are the sole selling agents of Messrs Greenland Corporation for yarn and fibre. He further revealed that Satyanarayan Jatia, the eider brother of Mohanlal Jatia who is the partner of Messrs J.M. Trading Corporation, Bombay had been staying in Japan for some 35 years and was the sole representative of Messrs Greenland Corporation in Japan. While explaining the entries in the seized documents from his residence on June 27, 1985, Sub hash Gadia admitted that the bunch marked S.G. 6 containing pages 1 to 94 are written by him in his own writing and that these contained accounts relating to his trade or business including imports and cash transactions and payments. He further confirmed that all the transactions reflected in these documents were his real business transaction dealings and some of which were not reflected in his regular account books. While explaining page 94 of the seized bunch S.G. 4. he stated that this page contained coded account in Indian rupees of his firm Messrs Piyush Corporation and that on the left side of this page credit entries were shown in Indian rupees with two zeros (00) missing and that while writing his account he had deleted two zeros in the credit side as well as debit side (right side) of the page. While decoding the codes he stated that the figure 8582/38 written on the right hand side was actually Rs.8,58,238 and this amount had been debited against A/S investment. Further, that A/S ' investment was his private investment abroad in US dollars which had been utilised by him for under invoicing of sever al imports etc. 56 Paragraph 44 of the grounds of detention revealed trans actions relating to the detenu Mohanlal Jatia and it is extracted: "44. When confronted with the documents seized from Subhash Gadia 's residence even though you have denied any connection in respect of various unauthorised transactions between you, Greenland Corporation. Japan and others abroad, but the following documents clearly revealed that you have been indulging in various unauthorised transactions in violations of provisions of Foreign Exchange Regulation Act. A. Page338 Trial Balance of Greenland S.G. 6 Corporation entries of ML, GN, RN, R.G.T. and Gadia admits before that they are Jatia 's account. B. " M.L. Jatia 's i.e. your account maintained in Japan, how ever. you admit receipt of Gifts by your children such as T.V., Video and M.V.Parts. C. Page215 Keeping U.S. $ 2 lakhs in S.G. 6 fixed deposit on 2.6.83 in Kamal Account, also inclu ding 20 lakhs $ (dollars). D. Page335 American dollar account as S.G. 6 on 31.1. E. Page318 Account in Japanese Yen Final posi S.G. 6 total of 141147.27. tion of Bombay. F.D.R. amount of Japanese Yen 1093 1471.16 to be equally divided between Yen. GN, SN and Laxmiji account/ Capital account. 57 F. Page 214 15 U.S. $ 78000/ converted S.G. 6 into Rs.9, 16,500/ commiss ion of." The Additional Secretary to the Government of India, Ministry of Finance, in exercise of his powers conferred by sub section (1) of section 3 of the ( 'COFEP OSA ') ordered the detention of the aforesaid Mohanlal Jatia by an order dated December 13, 1985 on being ' satisfied that it was necessary to detain him "with a view to preventing him from acting in any manner prejudicial to the augmenta tion of foreign exchange". The petitioner thrice approached the High Court with petitions under article 226 of the Consti tution seeking to challenge the impugned order of detention. Immediately after the passing of the impugned order i.e. on December 16, 1985, she moved the first of these petitions being W.P. No. 2530/85 for an appropriate writ or direction to quash the impugned order of detention and applied for stay. The Writ Petition was admitted but stay was refused. On appeal, a Division Bench in Writ Appeal No. 1162/85 granted interim stay till the disposal of the appeal. On February 28, 1986 the Division Bench dismissed the appeal as well as the Writ Petition. By its subsequent order dated March 4, 1986 the Division Bench granted stay of execution upto April 4, 1986 on certain terms and conditions. The petitioner filed a petition under article 136 in this Court for grant of special leave being SLP No. 3742/86. The Court by its order dated April 3, 1986 dismissed the petition and ordered the detenu to appear before the Commissioner of Police, Bombay on the next day i.e. on April 4, 1986 when the impugned order of detention was to be served upon him and directed that the impugned order was to become effec tive. The further direction made by this Court was that the detenu should immediately be released on parole for a period of 10 days subject to certain terms and conditions. On April 4, 1986 the detenu appeared before the Commissioner of Police, Bombay when he was served with the impugned order of detention together with the grounds of detention and the relevant documents. In compliance with the direction of this Court. the detenu was released on parole. On April 7, 1986 the petitioner filed second petition under article 226 of the Constitution being WP No. 385/86 for quashing the impugned order of detention along with an application for extending the period of parole. On April,14,1986 the parole period having expired, the detenu was taken into custody and lodged in the Central Prison, Bombay. The Writ Petition came up for hearing before the High Court on April 18, 1986 and admitted but the application for extending the period of parole was 58 rejected. Aggrieved by the refusal of interim relief, the petitioner again moved this Court under article 136 of the Constitution which was dismissed as withdrawn. It appears that the impugned order of detention was mainly challenged on two grounds, namely: (1) There was no material on which the satisfaction of the detaining authori ty could be reached that the detention of the detenu was necessary under section 3(1) of the COFEPOSA with a view to preventing him from acting in any manner prejudicial to the augmentation of foreign exchange. And (2) There was total non application of mind on the part of the detaining author ity to the material on record, and in particular to the factual misstatements contained in paragraph 44 of the grounds of detention as detailed in entries 'A to F '. The Division Bench of the High Court did not feel impressed with any of these submissions and by its judgment and order dated May 2/3, 1986 dismissed the Writ Petition. Thereafter, on May 6, 1986 the petitioner filed the present petition under article 136 of the Constitution. On July 11, 1986 she also filed a petition under article 32 challenging the continued detention of her husband. On July 18, 1986 the Court issued notice both on the Special Leave Petition as well as the Writ Petition and in the meanwhile directed that the peti tioner 's husband be released on parole for a week. The Court by its subsequent order dated July 25, 1986 extended the period of parole till August 20, 1986. The Writ Petition filed in this Court on July 11, 1986 is principally based on the ground that there was failure on the part of the detaining authority to consider the alleged representation dated April 11, 1986 made by the detenu against the impugned order of detention addressed to the President of India which was presented through one Ashok Jain at the President 's Secretariat on April 15, 1986 and there had thus been an infraction of the constitutional safeguards enshrined in article 22(5) and section 11 of the COFEPOSA which rendered the continued detention of the detenu without the due process of law and thus illegal, unconstitutional and void. The other substantial question raised is that R.C. Singh was not a gazetted officer of Enforcement within the meaning of section 40 of the Act and therefore the statements recorded by him could not be regarded as valid statements under section 40 and thus did not form the basis upon which the satisfaction of the detaining authority could be reached. The respondents have filed a counter affidavit sworn by S.K. Chaudhary, Under Secretary to the Government of India, Ministry of 59 Finance, Department of Revenue controverting the allegation that the detenu addressed any such representation to the President of India or that the alleged representation was received at the President 's Secretariat. It has been averred that the President 's Secretariat has informed the Ministry of Finance, Department of Revenue that no such representa tion was received from the detenu. Along with the counter affidavit, the respondents have filed copies of the letter of the Under Secretary to the Government of India, Ministry of Finance, Department of Revenue dated August 4, 1986 addressed to the Under Secretary, President 's Secretariat and of the reply of even date sent by the Under Secretary, President 's Secretariat to him which shows that no such representation had been received in the President 's Secre tariat, as alleged. They have also filed a note explaining the manner in which the dak is acknowledged at the Presi dent 's Secretariat. There is a further affidavit filed by K.C. Singh, Deputy Secretary to the President of India explaining the manner of handling the dak at the Rashtrapati Bhawan. The petitioner has filed an affidavit of Ashok Jain claiming to be a friend of the Jatia family supporting the assertion that he handed over the representation in person at the Rashtrapati Bhawan on April 15, 1986. During the pendency of the proceedings, the Union Gov ernment has made an application under section 340 of the Code of Criminal Procedure, 1973 for prosecution of the persons responsible for forging the document purporting to be the alleged representation made by the detenu under section 8(b) of the COFEPOSA on April 15, 1986 as, in fact, no such repre sentation was ever made, and for making certain interpola tions in the dak register kept at the President 's Secretari at. They have produced in a sealed envelope the original dak register maintained at the Rashtrapati Bhawan in which the alleged interpolations have been made. We are informed that the matter has been handed over to the Central Bureau of Investigation for investigation. We shall deal with the application under section 340 of the Code later. In support of these petitions, learned counsel has mainly advanced the following contentions, namely: (1) As is evident from the grounds of detention, the detaining author ity relied upon the statements recorded by R.C. Singh on the assumption that they were valid statements under section 40 of the Act although they were in reality not so, inasmuch as R.C. Singh was not a 'gazetted officer of Enforcement ' within the meaning of section 40 and therefore there was no material on which the satisfaction of the detaining authori ty could be reached. (2) In a habeas corpus petition, the burden was entirely upon the respon 60 dents to produce the relevant records and to substantiate that the detention was strictly according to law. The fail ure on the part of the respondents to produce the relevant notification showing that R.C. Singh was a gazetted officer of Enforcement within section 40 of the FERA when he recorded the statements in question must necessarily lead to the infer ence that he was not a gazetted officer of Enforcement. (3) The impugned order of detention was void ab initio and it could not be sustained by recourse to the de facto doctrine or any assumption that R.C. Singh was acting under the colour o[ his office as a gazetted officer of Enforcement or in treating the statements to be valid being relatable to section 39(b) of the FERA. (4) It is not possible to predicate to what extent, and in what manner, the mind of the detaining authority was influenced by his wrongful assumption that the statements recorded by R.C. Singh who was not a gazetted officer of Enforcement, were statements made under section 40 of the FERA, and even assuming that the statements recorded by R.C. Singh could be treated to be statements relatable to section 39(b) of the FERA, it is not possible to say whether the detaining authority would have based his satisfaction upon such material. (5) There was non application of mind on the part of the detaining authority as the grounds of detention are based on several factual misstatements. According to the learned counsel, the factual errors were self evident as the entries relied upon in paragraph 4 of the grounds of deten tion, do not find place in the account books of Messrs Greenland Corporation. The failure of the Central Government to place before the detaining authority, the original ac count books of Messrs Greenland Corporation, deprived the detaining authority to apply his mind to the correctness or otherwise of the facts stated therein. (6) There was infrac tion of the constitutional safeguards enshrined in article 22(5) inasmuch as there was failure on the part of the detaining authority to consider the representation filed by the detenu under section 8(b) of the COFEPOSA through one Ashok Jain and received at the President 's Secretariat on April 15, 1986 and therefore the impugned order of detention was vitiated and the continued detention of the detenu was rendered illegal and void. Other subsidiary questions were also raised. Having given the matter our anxious considera tion, we are of the considered opinion that none of the contentions can prevail. In order to deal with the rival contentions advanced, it is necessary to set out the relevant provisions of the Foreign Exchange Regulation Act, 1973. The Foreign Exchange Regulation Act, 1973 is an Act, as reflected in the long title. to consolidate and amend economic development of the country. The legislation has been brought in to 61 implement the Government policy for conservation of foreign exchange and for removing the difficulties in implementing the same. The provisions of sections 3, 4 and 5 deal with (i) classes of officers of Enforcement; (ii) appointment and powers of officers of Enforcement and (iii) entrustment of functions of Director or other officer of Enforcement. These provisions provide as follows: "3. Classes of officers of Enforcement There shall be the following classes of officers of Enforcement, namely: (a) Directors of Enforcement; (b) Additional Directors of Enforcement; (c) Deputy Directors of Enforcement; (d) Assistant Directors of Enforcement; and (e) Such other class of officers of Enforcement as may be appointed for the pur poses of this Act." "4. Appointment and powers of officers of Enforcement.: (1)The Central Government may appoint such persons as it thinks fit to be officers of Enforcement. (2) Without prejudice to the provisions of sub section (1), the Central Government may authorise a Director of Enforcement or an Additional Director of Enforcement or a Deputy Director of Enforcement or an Assistant Direc tor of Enforcement to appoint officers of Enforcement below the rank of an Assistant Director of Enforcement. (3) Subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exercise the powers and discharge the duties conferred or imposed on him under this Act." "5. Entrustment of functions of Director of other officer of Enforcement: The Central Government may, by order and subject to such conditions and limitations as it thinks fit to impose, authorise any officer of customs or any Central Excise Officer or any police officer or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforce 62 ment under this Act as may be specified in the order. section 39 deals with the power of the Director of any other officer of Enforcement to examine persons and provides: "39. Power to examine persons The Director of Enforcement or any other officer of Enforce ment authorised in this behalf by the Central Government, by general or special order, may, during the course of any investigation or pro ceeding under this Act , (a) require any person to produce or deliver any document relevant to the investigation or proceeding; (b) examine any person acquainted with the facts and circumstances of the case. " Sub section (1) ors '. 40 reads as follows: "40. Power to summon persons to give evidence and produce documents (1) Any gazetted offi cer of Enforcement shall have power to summon any person whose attendance he considers necessary either to give evidence or to pro duce a document during the course of any investigation or proceeding under this Act. " The main thrust of the argument of Shri G.L. Sanghi, learned counsel appearing for the petitioner revolves around mainly three aspects: (1) R.C. Singh was not a Gazetted Officer of Enforcement and therefore statements recorded by him had no evidentiary value and thus they could not form the basis upon which the satisfaction of the detaining authority could be reached. (2) There was total nonapplica tion of mind by the detaining authority to several factual misstatements as detailed in entries 'A to F ' in the grounds of detention which vitiated the impugned order of detention. And (3) The failure of the Sponsoring authority to forward the account books seized during the course of search at the residential premises of Subhash Gadia shows that the detain ing authority proceeded to make the impugned order of deten tion without due application of mind. According to the learned counsel, if there is one principle more firmly settled than any other in this field of jurisprudence relat ing to preventive detention, it is that even if one of the grounds or reasons which led to the subjective satisfaction of the detaining authority is non existent or misconceived 63 or irrelevant, the order of detention would be invalid since it is not possible to predicate as to whether the detaining authority would have made all order for detention even in the absence of non existent or irrelevant ground. His con tention is that the principle enunciated by this Court some 30 years ago in Shibban Lal Saksena vs The State of Uttar Pradesh & Ors., ; and in Dr. Ram Manonar Lohia vs State of Bihar & Ors., ; which it reiter ated later m Pushkar Mukherjee & Ors. vs The State of West Bengal, ; still holds good despite the change in the law brought about by the introduction of section 5A of the Act that though one or more of the grounds of detention were found to be vague, non existent, not relevant, not connect ed, irrational or invalid for any other reason whatsoever, the detention could be sustained on the remaining grounds. He seeks to draw sustenance from the decision of the Consti tution Bench of this Court in Mohd. Shakeel Wahid Ahmed vs State of Maharashtra & Ors., ; We are afraid, the contention cannot prevail. The decision in Mohd. Shakeel 's case is clearly distinguishable. In Mohd. Shakeel 's case, three of the four grounds of deten tion on which the appellant was detained were held by the High Court to be bad for one reason or another but it held that the remaining ground did not suffer from any defect and was enough to sustain the order of detention. On appeal, Shri Jethmalani, learned counsel for the detenu, sought to challenge the constitutional validity of section 5A of the Act and the case was therefore referred to a Constitution Bench. At the hearing, Shri Jethmalani confined his submission to an altogether different point which ultimately prevailed, namely, that the remaining ground of detention was also bad for the reason that there was failure on the part of the State Government to place before the detaining authority the opinion which the Advisory Board had recorded in favour of another detenu Shamsi who was also detained for his involve ment in the same transaction on an identical ground based on similar 'and identical facts. It was held that although the opinion of the Advisory Board that there was no sufficient cause for Shamsi 's detention may not have been binding on the detaining authority which ordered the detention of the detenu, but the opinion of the Advisory Board in Shamsi case was an important consideration which should and ought to have been taken into account by the detaining authority before passing the order of detention in that case. It was observed that the Court could not exclude a reasonable probability that since the Advisory Board had not sustained Shamsi 's detention on a ground which was common to him and the detenu, the detaining authority would have. if at all, passed the order of detention against the detenu 64 on the three remaining grounds which had been held to be bad. The decision is Shamsi 's case turned on its own facts and certainly is not an authority for the proposition con tended for. So also in Ashadevi vs K. Shiveraj, Addl. Chief Secretary to the Government of Gujarat & Anr., 15 on which reliance was placed there was failure on the part of the State Government to apprise the detaining au thority of the fact that the detenu 's request to have the presence of and consultation with his counsel had been refused, and that the confessional statement upon which the detaining authority had relied, had been retracted while he was in judicial custody, rendered the impugned order of detention invalid and illegal because there was complete non application of mind by the detaining authority to the most material and vital facts. The other decision in Kurjib hai,Dhanjibhai Patel vs State of Gujarat & Ors., is also distinguishable. In that case, there was failure on the part of the sponsoring authority in not furnishing the relevant material to the detaining authority, namely, the reply of the detenu to the show cause notice issued in the adjudication proceedings undertaken by the Customs authorities which was held to be the most relevant material which ought to have been placed before it. It was held that the question was not whether the material which was withheld from the detaining authority formed part of any separate or independent proceedings like the adjudication proceedings as held by the High Court, but the real question was whether the material was relevant and would have influ enced the mind of the detaining authority. In the counter affidavit filed by the Under Secretary to the Government of India, Ministry of Finance it had been averred that the representation of the detenu along with his reply to the show cause had been considered by the Advisory Board and after considering all the facts it was of the opinion that there was sufficient cause for detention. It was held that such ex post facto consideration of the detenu 's reply to the show cause could not fill up the lacuna of non consider ation thereof by the detaining authority before passing the order of detention. Both these decisions proceed on the well settled principle that if material and vital facts which would influence the mind of the detaining authority one way or the other on the question whether or not to make the detention order are not placed, it would vitiate its subjective satisfaction rendering the detention order ille gal. We fail to see the relevance of these decisions to the present case. Before touching upon the merits, we wish to make a few observations. It is not suggested at the bar that the grounds for detention do not set out the facts with suffi cient degree of particularity or that they do not furnish sufficient nexus for forming the subjective satisfaction 65 of the detaining authority. ]he impugned order of detention was therefore not challenged on the ground that the grounds furnished were not adequate or sufficient for the satisfac tion of the detaining authority or for the making of an effective representation. Sufficiency of grounds is not for the Court but for the detaining authority for the formation of his subjective satisfaction that the detention of a person under section 3(1) of the Act is necessary with a view to preventing him from acting in any manner prejudicial to the augmentation of foreign exchange. In Mangalbhai Motiram Patel vs State of Maharashtra & Ors., ; , it was observed at p. 477 of the Report: "The Conservation of Foreign Exchange and prevention of Smuggling Activities Act, 1974 is enacted to serve a laudable object. It is a measure to prevent smuggling of goods into or out of India and to check diversion of foreign exchange by immobilising the persons engaged in smuggling, foreign exchange racketeering and related activities by preventive detention of such persons. Violations of foreign ex change regulations and smuggling activities are having an increasingly deleterious effect on the national economy and thereby a serious adverse effect on the security of the State. Such economic offences disrupt the economic life of the community as a whole. It is neces sary to protect the basic economic order of the nation. Nevertheless, the Act is a law relating to preventive detention. That being so, the power of detention exercisable under sub section (1) of section 3 of the Act is subject to the limitations imposed by the Constitution. As observed by this Court in Narendra Pursho tam Umrao vs B.B. Gujral, 15, when the liberty of the subject is involved, whether it is under the Preventive Detention Act or the Maintenance of Internal Security Act or the Conservation of Foreign Exchange and prevention of Smuggling Activities Act or any other law providing for preventive deten tion," "it is the bounden duty of the court to satis fy itself that all the safeguards provided by the law have been scrupulously observed and that the subject is deprived of his personal liberty otherwise than in accordance with law." Nevertheless, as observed by the Court in Mangalbhai Motiram Patel 's case: 66 "The community has a vital interest in the proper enforcement of its laws, particularly in an area such as conservation of foreign exchange and prevention of smuggling activi ties in dealing effectively with persons engaged in such smuggling and foreign exchange rackteering by ordering their preventive detention and at the same time, assuring that the law is not used arbitrarily to suppress the citizen of his right to life and liberty. " The Government must therefore ensure that the constitutional safeguards of article 22(5) read with sub section (1) of section 3 of the Act are fully complied with. In the instant case, however, there was no infraction of the constitutional safeguards contained in article 22(5). We are satisfied that there was no failure on the part of the Government to discharge its obligation under article 22(5). The relevant records of the Enforcement Directorate have been placed before us. They clearly show that there was sufficient material for the formation of the subjective satisfaction of the detaining authority under sub section (1) of section 3 of the Act. They also show that the detenu was afforded a reasonable opportunity for making an effective representation against his deten tion. It has long been established that the subjective satis faction of the detaining authority as regards the factual existence of the condition on which the order of detention can be made i.e. the grounds of detention constitutes the foundation for the exercise of the power of detention and the Court cannot be invited to consider the propriety or sufficiency of the grounds on which the satisfaction of the detaining authority is based. Nor can the Court, on a review of the grounds substitute its own opinion for that of the authority. But this does not imply that the subjective satisfaction of the detaining authority is wholly immune from the power of judicial review. It inferentially follows that the subjective satisfaction being a condition precedent for the exercise of the power conferred on the executive, the Court can always examine whether the requisite satisfac tion was arrived at by the authority; if it is not, the condition precedent to the exercise of the power would not be fulfilled and the exercise of the power would be bad. The simplest case is where the authority has not applied its mind at all; in such a case, the authority could not possi bly be satisfied as regards the fact in respect of which it is required to be satisfied. See: Khudi Ram Das vs State of West Bengal & Ors., ; , following the case of Emperor vs Shibnath Banerjee & Ors., AIR (1943) FC 75. 67 The substantive contention of learned counsel for the petitioner has therefore been that there was non application of mind on the part of the detaining authority to the grounds of detention and that there was violation of the constitutional safeguards contained in article 22(5). In es sence, three questions arise, namely: (1) Whether the im pugned order of detention was based on no material inasmuch as R.C. Singh was not a gazetted officer of Enforcement and therefore the statements recorded by him had no evidentiary value and thus could not form the basis upon which his subjective satisfaction could be reached; and if not, wheth er the statements recorded by him could be treated to be statements relatable to section 39(b) of the FERA and could still form the basis for such satisfaction. (2) Whether there was non application of mind on the part of the detaining author ity and therefore the impugned order of detention was bad as there were factual mis statements detailed in items A to F of the grounds of the grounds of detention. And (3) Whether there was infraction of the constitutional safeguards con tained in article 22(5) due to the failure on the part of the Central Government to consider the representation filed by the detenu under section 8(b) read with section 11 of the Act, alleged to have been presented through one Ashok Jain and received at the President 's Secretariat on April 15, 1986 and there fore the continued detention of the petitioner was rendered invalid and unconstitutional. We wish to deal with these contentions in seriatim in the order in which they have been advanced. On the first of these questions, we have no hesitation in repelling the contention that there was no material on which the detaining authority could have based the subjec tive satisfaction under sub section (1) of section 3 of the Act. The argument of the learned counsel stems from the hypothesis that R.C. Singh was not a gazetted officer of Enforcement within the meaning of section 40 of the FERA when he issued summons and recorded the statements and that even assuming that the statements recorded by R.C. Singh could be treated to be statements failing under section 39(b) of the Act, it is not possible to say whether the detaining authority would have based his satisfaction upon such material. The learned counsel places emphasis on the word 'gazetted ' in section 40(1) and contends that R.C. Singh for the first time became a gazetted officer of Enforcement on January 13, 1986 when his appointment as such was notified. According to him, the detaining authority has relied upon the statements purport ing to be under section 40(1) though in reality they were not so. According to the learned counsel, there is a sanctity at tached to statements recorded under section 40(1) of the FERA. That is so, because every person summoned by a gazetted officer of Enforcement to make a statement under sub section (1) of section 40 is under a compulsion to state the 68 truth on the pain of facing prosecution under sub section (3) thereof. Further, sub section (4) provides that every such inves tigation or proceeding as aforesaid, shall be deemed to be judicial proceeding within the meaning of sections 193 and 224 of the Indian Penal Code, 1860. Such being the legal position, the learned counsel contends that while a statement recorded by a gazetted Enforcement Officer under section 40( 1 ) can furnish sufficient and adequate material on the basis of which the detaining authority can form his opinion, it may not be so with regard to statements recorded by an officer of Enforcement authorised in that behalf under section 39(b) of the FERA. On the other hand, learned counsel for the respondents contends that there is no basis for the assertion that there was no material on which the detaining authority could have formed the subjective satisfaction under sub section (1) of section 3 of the Act or that there was any factual mis statement in the grounds which showed that there was non application of mind on his part. We may briefly summarise his submission. Factually, the statements were there and the detaining authority was entitled to act upon the statements. The question whether the statements could be acted upon or not is not for the Court. A person summoned to make a statement under section 40(1) has the right to object to the power and authority of the officer issuing the summons. It must there fore logically follow that when the persons summoned like Subhash Gadia and Mohanlal Jatia were examined by R.C. Singh it was not open to others to raise objection that R.C. Singh was competent to record the statements under section 40(1). The statements made by them were not hit by section 25 of the Evi dence Act, 1872 and could be used against the detenu. There is no substance in the contention that R.C. Singh was not a gazetted officer of Enforcement. The word 'gazetted ' does not imply that the appointment of such officer should be published in the official Gazette. All that is required by section 40(1) of the FERA that such officer recording the state ment must be holding a gazetted post of an officer of En forcement, in contradistinction to that of an Assistant Officer of Enforcement which is a nongazetted post. It cannot be disputed that R.C. Singh had been appointed as Enforcement Officer on an ad hoc basis on November 24, 1982 and he continued to function as such at the time when he recorded the statement under section 40(1). The subsequent noti fication issued by the Enforcement Directorate on January 13, 1986 was for his appointment on a regular basis. What is of significance, it is said. is that at the time when R.C. Singh recorded the statements he was holding the gazetted post of an Enforcement Officer and discharging 69 the functions attached to the post. There is, in our opin ion, consideration force in these submissions. In any event, the learned counsel further contends that R.C. Singh was clothed with the insignia of office and he was purporting to exercise the functions and duties of a gazetted officer of Enforcement under section 40(1) of the FERA and therefore the de facto doctrine was attracted. He relies upon the decision of this Court in Gokaraju Rangaraju vs State of Andhra Pradesh; , enunciating the de facto doctrine, born of necessity and public policy to prevent needless confusion and endless mischief. In other words, he contends that where an officer acts under the law, it matters not how the appointment of the incumbent is made so far as the validity of his acts are concerned. We are inclined to the view that in this jurisdiction there is a presumption of regularity in the acts of offi cials and that the evidential burden is upon him who asserts to the contrary. The contention that R.C. Singh was not a gazetted officer of Enforcement within the meaning of section 40(1) of the FERA appears to be wholly misconceived besides being an afterthought. The validity of appointment of R.C. Singh to be an officer of Enforcement under this Act cannot be questioned. The Directorate of Enforcement have along with the counter affidavit placed on record Establishment Order No. 87/82 dated November 24, 1982 which shows that R.C. Singh along with 25 others was appointed by the Direc tor to be an officer of Enforcement on an ad hoc basis against 30 per cent deputation quota. The subsequent Estab lishment Order No. 84/86 dated January 13, 1986 relied upon by the petitioner shows that R.C. Singh along with 29 others was appointed as an officer of Enforcement on an officiating basis. It is not suggested that these officers were not authorised by the Central Government to discharge the func tions and duties of an officer of Enforcement. Under the scheme of the Foreign Exchange Regulation Act, the Director ate of Enforcement is primarily charged with the duty of administering the Act. section 3 defines different classes of officers of Enforcement. The expression 'officers of En forcement ' as defined in section 3 embraces within itself not only (a) a Director (b) Additional Director (c) Deputy Director and (d) Assistant Director of Enforcement but also (e) such other class of officers of Enforcement as may be appointed for the purpose of the Act. Obviously, R.C. Singh who was Assistant Enforcement Officer having been appointed as an officer of Enforcement on an ad hoc basis in 1982 fell within the category 'such other class of officers ' covered by section 3(e). Sub S.(1) of section 4 provides that the 70 Central Government may appoint such persons, as it thinks fit, to be officers of Enforcement. Sub section (2) thereof provides for delegation of such power of appointment by the Central Government to a Director of Enforcement or an Addi tional Director of Enforcement etc. to appoint officers of Enforcement below the rank of an Assistant Director of Enforcement. Sub section (3) of section 4 of the FERA provides that subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exer cise the powers and discharge the duties conferred or im posed on him under the Act. Undoubtedly R.C. Singh was discharging his duties and functions as a gazetted officer of Enforcement under section 40(1) of the FERA when he recorded the statements in question. In our opinion, the expression 'gazetted officer of Enforcement ' appearing in section 40(1) must take its colour from the context in which it appears and it means any person appointed to be an officer of Enforcement under section 4 holding a gazetted post. There is no denying the fact that R.C. Singh answered that description. The conten tion that there was no material on the basis of which the detaining authority could have based his subjective satis faction on the ground that R.C. Singh was not a gazetted officer of Enforcement within the meaning of section 40(1) of the FERA cannot prevail. Even if the contention that R.C. Singh was not a gazet ted officer of Enforcement within the meaning of section 40(1) of the FERA were to prevail, it would be of little consequence. In this case during the investigation statements were re corded by B .T. Gurnsawhney, Assistant Director of Enforce ment and R.C. Singh. There is no dispute regarding the competence of B.T. Gurusawhney to record statements under section 40(1) of the FERA and the only question is as to whether the statements recorded by R.C. Singh under section 40(1) could be acted upon. If evidence is relevant the Court is not concerned with the method by which it was obtained. In Barindra Kumar Ghose & Ors. vs Emperor, ILR (1910) 37 Cal. 467 Sir Lawrence Jenkins repelling the contention that the Court must exclude relevant evidence on the ground that it was obtained by illegal search or seizure, said at p. 500 of the Report: "Mr. Das has attacked the searches and has urged that, even if there was jurisdiction to direct the issue of search warrants, as I hold there was, still the provisions of the Criminal Procedure Code have been completely disre garded. On the assumption he has contended that the evidence discovered by the searches is not admissible, but to this view I cannot accede. For without in any way countenancing disregard of the provisions prescribed by the Code, I hold that what would otherwise be relevant does not become irrel evant because it was discovered 71 in the course of a search in which those provisions were disregarded". The question arose before the Judicial Commit tee of the Privy Council in the well known case of Kuruma vs Reginam, In dealing with the question Lord Goddard, CJ. delivering the judgment of the Privy Council said: "The test to be applied. both in civil and in criminal cases, in considering whether evi dence is admissible, is whether it is relevant to the matters in issue. If it is, it is admissible and the Court is not concerned with how it was obtained. " The learned CJ. further observed: "In their Lordships ' opinion, when it is a question of the admission of evidence strictly it is not whether the method by which it was obtained is tortuous but excusable, but whether what has been obtained is relevant to the issue being tried. " Again, the House of Lords in R.V. Sang; , reiterated the same principle that if evidence was admissi ble it matters not, how it was obtained. Lord Diplock after considering various decisions on the point observed that however much the judge may dislike the way in which a par ticular piece of evidence was obtained before proceedings were commenced, if it is admissible evidence probative of the accused 's guilt 'it is no part of his judicial function to exclude it for this reason ' and added: "He has no discretion to refuse to admit relevant admissible evidence on the ground that it was obtained by improper or unfair means. The court is not concerned with how it was obtained. There is a long line of authority to support the opinion that the Court is not concerned with how evidence is ob tained. The rule is however subject to an exception. The Judge has a discretion to exclude evidence procured. after the commencement of the alleged offence, which although technically admissible appears to the Judge to be unfair. The classical example of such a case is where the prejudi cial effect of such evidence would be out of proportion to its evidential value. Coming nearer home. this Court in Magraj Patodia vs R.K. Birla & Ors., ; held that the fact that a document which was procured by improper or even illegal means could not bar its admissibility 72 provided its relevance and genuineness were proved. In R.M. Malkani vs State of Maharashtra, ; the Court applying this principle allowed the tape recorded conversa tion to be used as evidence in proof of a criminal charge. In Pooran Mal etc. vs Director of Inspection (Investigation) of Income Tax Mayur Bhavan, New Delhi & Ors. , ; the Court held that the income tax authorities can use as evidence any information gathered from the search and seizure of documents and accounts and articles seized. This being the substantive law, it follows that the detaining authority was entitled to rely upon the statements recorded by R.C. Singh under section 40(1) of the FERA. Even if R.C. Singh was not competent to record such statements under section 40(1) of the FERA, the statements were clearly relatable to section 39(b) of the Act. It cannot therefore be said that there was no material on which the detaining authority could have based his subjective satisfaction under sub section (1) of section 3 of the Act. We are unable to accept the submission of the learned counsel for another reason. Where an office exists under the law, it matters not how the appointment of the incumbent is made, so far as validity of its acts are concerned. It is enough that he is clothed with the insignia of the office, and exercises its powers and functions. The official acts of such persons are recognised as valid under the de facto doctrine, born of necessity and public policy to prevent needless confusion and endless mischief. In Gokaraju Ranga raju 's case, supra, Chinnappa Reddy, J. explained that this doctrine was engrafted as a matter of policy and necessity to protect the interest of the public. He quoted the follow ing passage from the judgment of Sir Ashutosh Mukerjee J. in Pulin Behari vs King Emperor, 17 at p. 574: "The substance of the matter is that the de facto doctrine was introduced into the law as a matter of policy and necessity, to protect the interest of the public and the individual where these interests were involved in the official acts of persons exercising the duties of an office without being lawful officers. The doctrine in fact is necessary to maintain the supremacy of the law and to preserve peace and order in the community at large." The learned Judge also relied upon the following passage from the judgment of P. Govindan Nair, J. in P.S. Menon vs State of Kerala & Ors., AIR (1970) Kerala 165 at p. 170; "This doctrine was engrafted as a matter of policy and 73 necessity to protect the interest of the public and individual involved in the official acts of persons exercising the duty of an officer without actually being one in strict point of law. But although these officers are not officers de jure they are by virtue of the particular circumstances, officers, infact, whose acts, public policy requires should be considered valid. " The next substantive contention of learned counsel for the petitioner is that the so called factual mis statements which occur in paragraph 44 of the grounds of detention show that there was nonapplication of mind on the part of the detaining authority and he relies on the observations made in Khudiram Das ' case that the subjective satisfaction of the detaining authority is not wholly immune from the judi cial review and the Court can always examine whether the requisite satisfaction was arrived at by the authority; if it is not, the condition precedent to the exercise of the power would be bad. According to the rule laid down in Khudiram Das ' case which proceeds on well settled princi ples, the simplest case is whether the authority has not applied its mind and that is sufficient to vitiate the order of detention. It is submitted that this was a case of mis taken identity and there was no material before the detain ing authority to show that the initials 'ML ' in the various entries in the accounts of Messrs Greenland Corporation, Japan and the relative telex messages related to the detenu Mohanlal Jatia and not to the other ML meaning ML Kedia, the brother in law of Subhash Gadia. We are afraid, we cannot accept this line of argument. There is no warrant for the submission that the initials 'ML ' refer to ML Kedia and not the detenu Mohanlal Jatia or that a wrong person has been placed under detention. There is no dispute whatever that the initials 'ML ' refer to the detenu Mohanlal Jatia. When confronted during the interrogation with the initials 'ML ' in the books of Messrs Greenland Corporation and the telex messages, the detenu admitted that the initials 'ML ' or 'MLJi ' in the various entries as well as the telex messages stand for himself i.e. Mohanlal Jatia. As to the co called factual mis statements, the argument proceeds on the wrongful assumption that the facts stated in paragraph 44 of the grounds of detention are the 'grounds ' when they are in reality nothing but 'facts '. The High Court has rightly observed that the facts stated in paragraph 44 of the grounds cannot be read in isolation and the grounds of detention have to be read as a whole with the accompanying documents and material. As is quite apparent, the ground of deten 74 tion was only one viz. that the detenu was engaged in activ ities prejudicial to the augmentation of foreign exchange and therefore it became necessary in the public interest to place him under detention. Sufficiency of grounds is not for the Court but for the detaining authority for the perform ance of his subjective satisfaction that the detention of the detenu Mohanlal Jatia under section 3(1) of the Act was necessary. It was a matter of legal inference to be drawn from several facts which appear in the grounds and the facts are not merely in paragraph 44 but also in other paragraphs. It will be seen that paragraph 44 merely recites that when the detenu was confronted with the documents recovered from a search of Subhash Gadia 's residential premises and else where, he denied the various transactions entered into between him and Messrs Greenland Corporation, Japan and others abroad. It then goes on to state that the documents clearly revealed that he had been engaged in various unau thorised transactions in violation of the provisions of the Foreign Exchange Regulation Act. According to the learned counsel, the mistakes which crept in the proposal made by the initiating authority for the detention of the detenu recur in paragraph 44 of the grounds and it shows the casualness with which the grounds of detention were drawn which indicate nonapplication of mind. Although the argument at first blush appears to be attractive, but on deeper consideration does not stand to scrutiny. We wish to enumerate the so called factual mis statements listed as Items A to F in paragraph 44 of the grounds and deal with them in seriatim. Item A at p. 338 of the seized bunch SG 6 is the trial balance sheet of Messrs Greenland Corporation, Japan. On that page, there are var ious entries of ML, GN, RN and RG Jatia. It is mentioned by the detaining authority in paragraph 44 underneath Item A that Gadia 'admits ' that they are Jatia 's account. During interrogation Subhash Gadia stated that bunch of documents SG 6 relates to Messrs Greenland Corporation, Japan and that these entries 'may be related to the Jatia family '. The detaining authority was not wrong in treating the words 'may be ' in the context in which they appear as being an admis sion of fact made by the detenu. The detaining authority was entitled to make use of the decoding formula revealed by Subhash Gadia to connect the detenu Mohanlal Jatia with the initials 'ML ' appearing in various transactions, more so because the relative telex messages sent by Messrs Greenland Corporation were seized from the office premises of Messrs J.M. Trading Corporation, J.M. Textile Pvt. Ltd., Ramgopal Textile Pvt. Ltd., Ram Gopal & Sons, Ram Gopal Synthetics Pvt. Ltd., Kamal Trading Corporation. Kalpana Trading Corpo ratoin, Sudhir Trading Corporation, all situate at 701, Tulsiani cham 75 bers, 212, Nariman Point, Bombay and the detenu admittedly is closely connected with these concerns being Director or shareholder or a partner. The said documents disclose that the detenu Mohanlal Jatia with the initials 'ML ' and his brothers GN, SN and RN, namely. Ganesh Narayan Jatia, Satya Narayan Jatia and Ram Niranjan Jatia are maintaining secret accounts with Messrs Greenland Corporation, Japan. They also clearly indicate that the detenu and his brothers were found to be engaged in transferring funds from or to India in an unauthorised manner on a very large scale. Subhash Gadia in his statement revealed that pp. 316, 317 and 318 of the seized document SG 6 are written in his handwriting and the account is in Yen. He further revealed that the said ac counts relate to Satya Narayan Jatia, Ganesh Narayan Jatia and Mohanlal Jatia. The detenu was furnished a copy of the statement made by Subhash Gadia. As hereinbefore adumbrated, the detenu when confronted denied to have entered into the transaction. However. when confronted with the various entries appearing in the seized document SG 6 the detenu admitted that the initials 'MI. ' or 'MLJi ' relate to him both in the accounts as well as in the telex messages. The various entries show transactions involving foreign exchange to the tune of several crores of rupees. For instance, at p. 318 of SG 6appear the details of FDR account standing in the name of Satya Narayan, Ganesh Narayna and Mohanlal Jatia to be divided equally and the sum total of the amount shown is 1,09,37,471.16 Yen. The said figure also finds place at p. 278 of the file SG 6 which gives details how the figure 1,09,37,471.16 has been arrived at. In the telex message appearing at pp. 35 and 36 in the bunch of seized document SG 6 arc given the details of the FDR account with instruc tions to work out the average rate of interest between the three brothers Satya Narayan, Ganesh Naryana and Mohanlal payable on the FDR for 1,09,37,471.16 Yen. Similarly, Laxmi Ji account with Messrs Greenland Corporation, Japan is a capital account of Satya Narayan, Ganesh Narayan and Mohan lal showing a capital investment of 48,62,96,325 Yen. We need not go into further details. The entries show the magnitude of the operation in foreign exchange carried on by the detenu. We do not see any mistake of fact in Item B which re lates to purchase of a TV 27" and a VCR. There is an entry at p. 338 of SG 6 showing that the detenu 's account was debited with these items although the detenu in his state ment asserted that they were gifted by his brother. That takes us to the effect of the mistake occurring in Item C at p.215 of the seized documents that there is an entry showing that the detenu had a fixed deposit of US $ 2 lakhs. The entry reads: "ML 2 76 lakhs A/S 11.75 dated 2.6.83". Even assuming that it was a mistake to have introduced the words "also including 20 lakhs $ (dollars)" in paragraph 44 of the grounds that would not by itself without more, vitiate the impugned order of detention or necessarily show nonapplication of mind. Even so, the detaining authority was entitled to act upon the entry. relating to US $ 2 lakhs for the formation of his subjective satisfaction. Significance of these entries shows that the detenu was maintaining the secret account and had large sums of money in fixed deposits abroad. The detaining authority has charged the detenu with keeping US $ 2 lakhs in fixed deposit in Kamal Account which is the capital account of the detenu and his brothers Messrs Greenland Corporation, Japan. The words "also including 20 lakhs $ (dollars)" are no doubt not there in the books of accounts but they crept in the proposal and have been reproduced in paragraph 44 of the grounds. It is somewhat strange that these words should be introduced when they were not there in the books of accounts but the fact remains that there is a typographical error. The High Court rightly observes that a single typographical mistake about making a reference to US $ 20 lakhs would not necessarily show the non application of mind when the entry of US $ 2 lakhs (dollars) is reflected in various places in the account such as ML Ji Khata P. 175 and Kamal Account P. 226, copies of which were furnished to the detenu. Even assuming that the words "also including 20 lakhs $ (dollars)" were introduced in paragraph 44 of the grounds that would not be a factor vitiating the impugned order of detention. The detaining authority was still enti tled to act upon the entry relating to fixed deposit of US $ 2 lakhs (dollars) for the formation of his subjective satis faction. As regards Items D and E, the contention of the peti tioner is that reference to American Dollar account as on January 31, 1984 as per p. 335 of SG 6 and Japanese Yen account: Final position at Bombay of 141147.27 set out at p. 318 thereof was totally unintelligible and was unconnected with the detenu nor had any relevance The respondents have controverted this in the counter affidavit filed by M.I,. Wadhawan, Additional Secretary to the Government of India, Ministry of Finance. It is asserted that the aforesaid abstracts clearly indicate that the detenu Mohanlal Jatia and his brothers were found to be engaged in transferring funds from or to India in an unauthorised manner on a very large scale. According to the statement of Subhash Gadia the American Dollar account is as per p. 335 of SG 6, the de tails whereof are given at p. 3 18 and the said amount is credited in the name of SN. GN and ML to be divided equally. The sum total of the amount shown to be divided was 10937,471.16 Yen. This figure also appears at p. 278 77 of file SG 6 giving details as to how this figure 10937,471.16 Yen has been worked out. At p. 318 of SG 6 under the heading Laxmi Ji account. the sum total in Japa nese Yen shown is 48,62,96,325 to be equally divided amongst SN, GN and ML. According to the statement of Subhash Gadia, the Laxmi Ji account was a capital account of SN, GN and ML with Messrs Greenland Corporation, Japan. The amount of 141147.27 apparently shown in Item E represents the detenu 's share. However, the detenu expressed his inability to ex plain the said two accounts American Dollar account and Laxmi Ji account and the telex messages. It appears that imports of yarn in India from Messrs Greenland Corporation, Japan were effected through Messrs J.M. Trading Company of which the detenu is a partner and there was either over pricing of the goods in the invoices or some portion of commission was secretly kept with Messrs Greenland Corpora tion and was being utilised for differential treatment. It can hardly be asserted in view of the facts revealed in the counter affidavit of the Additional Secretary, Ministry of Finance that the detenu was transferring funds either from or to India in a clandastine manner on a very large scale. The remaining Item F at p. 315 of the bunch of documents marked SG 6 is a coded account maintained by the detenu under the name Kamal Account representing the capital in vestment of SN, GN and ML with Messrs Greenland Corporation. It relates to the entry "US $ 78,000 converted into Rs.9,16,500 commission of". At every place in the bunch of seized document SG 6 such as on the reverse of p. 215 there is an entry to the effect that US $ 78,000 were converted into Indian rupees @ Rs. 11.75 equivalent to 9, 16,500 and that the said amount was capitalised on 19.7. 1983 in the name of GN. Paragraph 33 of the grounds involves the com plicity of the detenu by making reference to a secret ac count maintained by SN, GN and ML to the effect: was found that all of you are engaged in transferring funds from or to India on a very large scale. " In this coded account, the modus operandi adopted at every place is to delete two zeros from the converted Indian currency. Learned counsel for the petitioner tried to spell out an argument that the use of the word 'or ' shows that the ground was vague or indefinite. According to the learned counsel, it is quite apparent that the detaining authority was not definite as to the nature of payment i.e. whether the con version of foreign exchange into rupees represented payments made or amounts received. Nothing really turns on this. The fact remains that the detneu had been admittedly keeping a secret account of foreign currency abroad without the per mission of the Reserve Bank of India. 78 It is quite apparent that the so called factual mis statements are not mis statements at all. The High Court rightly held that the alleged mistakes or infirmities point ed out were not so material or serious in nature as to vitiate the impugned order of detention. As already indicat ed, sufficiency of the grounds is for the detaining authori ty and not for the Court. It cannot be said on a perusal of the grounds that there was no material on which the detain ing authority could have acted. There still remains the further question whether the period of parole should be treated as part of the detention period itself. This question has been elaborately considered by this Court in Smt. Poonam Lata vs M.L. Wadhawan & Ors., (J.T. to which one of us (Sen, J.) was a party and it was held therein "that the period of parole has to be excluded in reckoning the period of detention under sub section (1) of Section 3 of the Act" (Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974). addition to the reasons given therein we may add the following by way of supplementary material. Though the element of detention is a common factor in cases of preven tive detention as well as punitive detention, there is a vast difference in their objective. Punitive detention follows a sentence awarded to an offender for proven charges in a trial by way of punishment and has in it the elements of retribution, deferrence, correctional factor and institu tional treatment in varying degrees. On the contrary preven tive detention is an extraordinary measure resorted to by the State on account of compulsive factors pertaining to maintenance of public order, safety of public life and the welfare of the economy of the country. The need for this extraordinary measure i.e. detention without trial was realised by the rounding fathers of the Constitution as an inevitable necessity for safeguarding the interests of the public and the country and hence a specific provision has been made in clause (3) of Article 22 providing for preven tive detention being imposed in appropriate cases notwith standing the fundamental right of freedom and liberty gua ranteed to the citizens by the Constitution. The entire scheme of preventive detention is based on the bounden duty of the State to safeguard the interests of the country and the welfare of the people from the canker of anti national activities by anti social elements affecting the maintenance of public order or the economic welfare of the country. Placing the interests of the nation above the individual liberty of the anti social and dangerous elements who con stitute a grave menace to society by their unlawful acts, the preventive detention laws have been made for effectively keeping out of circulation the detenus during a prescribed 79 period by means of preventive detention. The objective underlying preventive detention cannot be achieved or ful filled if the detenu is granted parole and brought out of detention. Even if any conditions are imposed with a view to restrict the movements of the detenu while on parole, the observance of those conditions can never lead to an equation of the period of parole with the period of detention. One need not look far off to see the reason because the observ ance of the conditions of parole, wherever imposed, such as reporting daily or periodically before a designated authori ty, residing in a particular town or city, traveling within prescribed limits alone and not going beyond etc. will not prevent the detenu from moving and acting as a free agent during the rest of the time or within the circumscribed limits of travel and having full scope and opportunity to meet people of his choice and have dealings with them, to correspond with one and all and to have easy and effective communication with whomsoever he likes through telephone, telex etc. Due to the spectacular achievements in modern communication system, a detenu, while on parole, can sit in a room in a house or hotel and have contacts with all his relations, friends and confederates in any part of the country or even any part of the world and thereby pursue his unlawful activities if so inclined. It will, therefore, be futile to contend that the period of parole of a detenu has all the trappings of actual detention in prison and as such both the periods should find a natural merger and they stand denuded of their distinctive characteristics. Any view to the contrary would not only be opposed to realities but would defeat the very purpose of preventive detention and would also lead to making a mockery of the preventive deten tion laws enacted by the Centre or the States. It will not be out of place to point out here that in spite of the Criminal Procedure Code providing for release of the con victed offenders on probation of good conduct, it expressly provides, when it comes to a question of giving set off to a convicted person in the period of sentence, that only the actual pre trial detention period should count for set off and not the period of bail even if bail had been granted subject to stringent conditions. In contrast, in so far as preventive detentions under the , are concerned, the Act, specifically lays down that a person against whom an order of detention has been passed shall not be released on bail or bail bond or otherwise (vide Section 12 (6) of the Act) and that any revocation or modification of the order of detention can be made only by the Government in exercise of its powers under Section 11. Incidentally. it may be pointed out that by reason of sub section (6) of section 12 of the Act placing an embargo on the grant of bail to a detenu there was no 80 necessity for the Legislature to make a provision similar to sub section (4) of Section 389 of the Code of Criminal Procedure, 1973 (corresponding to sub section (3) of Section 426 of the old Code) for excluding the period of bail from the term of detention period. For these reasons the plea for treating the period of parole as part of the detention period has to necessarily fail. One last point remains. Besides refuting the contention of the petitioner that the detenu had made a written repre sentation addressed to the President of India on April 15, 1986 and that there has been an infraction of the Constitu tional safeguard embodied in Article 22(5" of the Constitu tion and Section 11 of the Act due to the failure of the Central Government to consider the said Representation, the respondents have preferred an application under Section 340 of the Code of Criminal Procedure, 1973 for prosecution of the persons responsible for forging the document purporting to be the alleged Representation made by the detenu under Section 8(4" of the Act and for making certain interpola tions in the Dak Register kept at the Rashtrapati Bhavan. The respondents have placed sufficient material before the Court to show that the alleged Representation addressed to the President of India was neither filed by the detenu nor was it received at the President 's Secretariat on April, 15, 1986. The respondent have placed on record the correspond ence that passed between the Ministry of Finance, Department of Revenue and the President 's Secretariat. They have also produced for our perusal the original Dak Register kept at the Rashtrapati Bhawan. On a careful scrutiny of the corre spondence and the entries in the Dak Register we are more than satisfied that no such Representation was ever made by the detenu and that the attempt to assail the order of detention on the ground of violation of the constitutional safeguard enshrined in Article 22(5) and the violation of Section 11 of the Act by the Central Government is a well planned and ingenuous move on the part of the detenu. We are not only deeply shocked by the daring attempt of the detenu to fabricate a document styled as a representation addressed to the President of India but feel much more perturbed and even alarmed that there should have been willing hands at the President 's Secretariat to lend their services to the alleged agent of the detenu to give a colour of truth and reality to the nefarious scheme. We may now set out the highlights of the disquieting features noticed by us in the case set up by the detenu about a representation being delivered at the President 's Secretariat on 15.4. Before enumerating the suspicious features it has to be borne in mind that the 81 detenu is not a rustic or an uneducated person or a man of no means. On the other hand he is a man of great affluence, having dealings in this country as well as in countries overseas and, therefore, having the means to secure the services of astute and enlightened counsel in the country. He cannot, therefore, take umbrage for his actions on grounds such as lack of knowledge or want of funds or igno rance of law. Now coming to the details. The representation said to have been made was not addressed to the Government of India which is the authority to consider the representa tion but to the President. Be that as it may, the represen tation signed in Bombay could have been sent by registered post/acknowledgement due to the President 's Secretariat but instead it is said to have been brought by a messenger from Bombay to New Delhi. The said messenger does not present the representation at the President 's Secretariat but he is said to have handed it over to one Ashok Jain and the said Ashok Jain is said to have delivered the representation at the President 's Secretariat. As per the affidavit filed by Shri K.C. Singh, Deputy Secretary to the President, President 's Secretariat, a visitor coming with a petition to the Rash trapati Bhavan has first to approach the Reception and then he is given a printed pass and sent with an escort to the Central Registry and after he delivers the letter he will be escorted back to the Reception to return his pass and then leave the building. Ashok Jain in his affidavit has categor ically stated that he went to the Rashtrapati Bhavan at "roughly about 6.00 P.M." and a person at the Reception directed a peon to show him the Central Registry, that no one enquired him about his name or issued him any pass and that he went to the Central Registry as pointed out by the peon and delivered a sealed envelope and obtained an en dorsement of acknowledgement on the Xerox copy of the repre sentation. In view of the conflicting affidavit, there is room for inference that either Ashok Jain did not personally go and deliver the sealed envelope at the President 's Secre tariat or that he was able to wield influence to such an extent as to be taken to the Central Registry without the procedural requirement of every visitor being issued a pass being observed in his case. It also surpasses our comprehen sion how an endorsement of acknowledgement could have been made on a Xerox copy of the alleged representation when the original of the representation is said to have been given in a sealed envelope. There are several other intrinsic fea tures in the endorsement itself evoking grave suspicion. The rubber stamp seal affixed on the Xerox copy does not corre spond to the facsimiles of the two rubber stamps used in the President 's Secretariat as described by Shri K.C. Singh, Deputy Secretary in his affidavit. 'I he endorsement of acknowledgement does not contain the signature or 82 initials of the Receiving Officer. but strangely it contains a Dak Number, "Dy. No. 20 date 15.4.1986". Shri K.C. Singh has set out in his affidavit the procedure to be followed when letters and open petitions are received at the Presi dent 's Secretariat but the procedure set out therein has not been followed in this case. Over and above all these things, a scrutiny of the relevant page in the Dak Register kept in the President 's Secretariat, which was produced before us in a sealed cover, contains tell tale features of a startling nature revealing a planned attempt, but very clumsily exe cuted, to somehow interpolate an entry in the Dak Register to make it appear that an envelope containing the alleged representation had been presented at the President 's Secre tariat. For our present purposes, it is not necessary to give a graphic account of the manipulations made in the Register and it will suffice if we refer only to the broad features. The bottom portion of the page has been torn off, obviously with a view to obliterate some entry made therein. The entry relating to the alleged representation of the detenu has been interpolated between one entry dated 15.4 and another entry dated 16.4. but in order to fit in the serial number, the entry relating to the representation has first been noted as 20(A), then the letter A has been smudged and the entry dated 16.4 has been made 20(A) instead of 20. The entry pertaining to the representation is in different handwriting and ink. Shri K.C.Singh in his affida vit has stated that "this office is enquiring into the circumstances under which the entry came to be inserted in the Dak Register meant only for unopened letters addressed to the President by name. " All these things not only warrant an inference that the detenu and his associates have gone to deplorable lengths to create evidence favourable to the detenu but arouse convul sive thoughts in our minds about the efficiency and integri ty of the concerned sections of the President 's Secretariat. We are constrained to give expression to our feelings of anguish by means of these observations because at the level of the President 's Secretariat every section of the Secre tariat is expected to observe the highest standards of morality, integrity and efficiency. The ease with which and the facile manner in which the detenu 's agent Ashok Jain claims to have entered the President 's Secretariat and delivered the Dak and obtained an endorsement of acknowl edgement in a copy of the representation and the length to which the concerned Secretariat staff have gone to give credence to the version of Ashok Jain not only reveals the deep fall in standards but also the lack of security and vigilance. We feel fully persuaded to hold that this is a fit case in which the 83 detenu, his wife (petitioner herein), Ashok Jain and all other persons responsible for the fabrication of false evidence should be prosecuted for the offences committed by them. Nevertheless we wish to defer the passing of final orders on the.application made under Section 340 of the Code of Criminal Procedure, 1973 by the Union of India at this stage because of the fact the Central Bureau of Investiga tion is said to be engaged in making a thorough investiga tion of the matter so that suitable action could be taken against all the perpetrators of the fraudulent acts and the offences. As such the launching of any. prosecution against the detenu and his set of people at this stage forthwith may lead to a premature closure of the investigation resulting in the Central Bureau of Investigation being unable to unearth the full extent of the conspiracy. Such a situation should not come to pass because the manipulations of the detenu and his agents on the one hand and the connivance of staff in the President 's Secretariat on the other cannot be treated as innocuous features ' or mere coincidence and cannot therefore, be taken lightly or viewed leniently. On the contrary they are matters which have to be taken serious note of and dealt with a high degree of vigilance, cate and concern: Consequently, while making known our opinion of the matter for action being taken under Section 340 of the Code of the Criminal Procedure we defer the passing of final orders on the application under Section 340 till the inves tigation by the Central Bureau Of Investigation is complet ed. The respondents are permitted to move the Court for final orders in accordance with our directions. Accordingly, the special leave petition and the writ petition are dismissed with costs. H.L.C. Petitions dis missed.
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The Petitioner's husband, Mohan Lal Jatia, was arrested based on an order made by a government official. This official believed it was necessary to arrest him to stop him from doing anything that would harm the country's ability to gain foreign money. The home of Subhash Gadia, a rich businessman and the brother-in-law of the arrested man, was searched. This search happened because the Directorate of Revenue Intelligence (a government agency) had information that he was falsely reporting the value of yarn he was importing from Japan. This led to the seizure of some documents. These documents showed that Gadia had broken the Customs Act (laws about importing goods). They also showed illegal payments and deals that violated the Foreign Exchange Regulation Act, 1973 (FERA), which controlled foreign money. So, the case was given to the Enforcement Directorate to investigate the FERA violations. Subhash Gadia was called in to give a statement under section 40 of FERA. This statement was taken by Shri R.C. Singh, an officer of the Enforcement Directorate. The arrest order for Mohan Lal Jatia was based on the documents seized from Subhash Gadia's home and Gadia's statements. These things suggested that Jatia was illegally dealing in foreign money, to the tune of millions of rupees. The Petitioner (Jatia's wife) went to the High Court to challenge the arrest order, using petitions under article 226 of the Constitution (a way to ask the court to review government actions). The High Court dismissed the first petition. So, the Petitioner went to the Supreme Court under article 136 (asking for permission to appeal). The Supreme Court refused to grant permission but ordered that Jatia be released on parole (temporary release) for ten days after appearing before the Commissioner of Police. After that, the Petitioner filed a second petition with the High Court, asking to extend the parole period. The High Court rejected this request. The Supreme Court also rejected the petition filed against the High Court's refusal to extend the parole. Then, the High Court dismissed the main case against the arrest order. The Petitioner then asked the Supreme Court for special permission to appeal and also filed a petition under article 32, challenging the arrest order itself. The Supreme Court issued a notice to the Petitioner and ordered Jatia's release on parole for a week. Later, they extended the parole period further. Both the request for special permission to appeal and the main petition were heard together. In the petition before the High Court, the Petitioner had challenged the arrest order on two grounds: first, that there was not enough evidence to justify the arrest; and second, that the person who ordered the arrest did not properly consider the evidence and made false statements in the arrest order. The petition filed before the Supreme Court mainly argued that the government had failed to follow article 22(5) of the Constitution. This article protects people from being detained without being given a chance to make their case. The detaining authority supposedly did not consider a letter Jatia sent to the President of India, arguing against his detention. Another key argument was that R.C. Singh, the officer who took Subhash Gadia's statement, was not a qualified officer under section 40 of FERA. Therefore, the statements he recorded should not have been used as the basis for the arrest order. Alternatively, it was argued that these statements should not be considered as official statements recorded under section 39 of FERA. The government denied that Jatia had sent any letter to the President. They also asked the court to prosecute those responsible for faking the letter and for making changes in the official record at the President's office. The government also showed an order proving that R.C. Singh had been appointed as an enforcement officer on a temporary basis three years before he questioned Subhash Gadia. The court dismissed both petitions. HELD: 1. (a) The term "officers of Enforcement" in section 3 of the Foreign Exchange Regulation Act, 1973 includes Directors, Additional Directors, Deputy Directors, and Assistant Directors of Enforcement, as well as other officers appointed for the purpose of the Act. R.C. Singh, who was an Assistant Enforcement Officer appointed in 1982, falls into the "other officers" category. Section 4 says that the government can appoint people to be officers of Enforcement. It also allows the government to delegate this power to certain Directors, who can then appoint officers below the rank of Assistant Director. An officer of Enforcement can use the powers and carry out the duties given to them under the Act, as long as they follow the conditions set by the government. R.C. Singh was acting as an officer of Enforcement under section 40(1) when he recorded the statements. The term "gazetted officer of Enforcement" in section 40(1) means anyone appointed as an officer of Enforcement under section 4 who holds a government-approved position. R.C. Singh fits this description. (b) Even if R.C. Singh was not a qualified officer under section 40(1), it does not matter. If evidence is relevant to the case, the court does not care how it was obtained. There is a lot of legal precedent to support this idea. However, there is an exception: a judge can refuse to admit evidence if it was obtained unfairly after the alleged crime began. Because of this, the person who ordered the arrest was allowed to use the statements recorded by R.C. Singh under section 40(1). Even if R.C. Singh was not authorized to record these statements under section 40(1), the statements still relate to section 39(b) of the Act. So, it cannot be said that there was no evidence on which the detaining authority could base their decision. (c) If an office exists under the law, it does not matter how the person holding the office was appointed, as long as they are performing the duties of the office. If someone is acting as an official and using the powers of that office, their actions are considered valid. This is based on the idea that it is necessary for public policy to prevent confusion and problems. (a) It has long been established that the person making the arrest must truly believe that the conditions for the arrest have been met. The court cannot question whether the grounds for the arrest are sufficient. The court also cannot replace the opinion of the person who ordered the arrest with its own opinion. However, this does not mean that the court cannot review the arrest order at all. The court can examine whether the person who ordered the arrest actually believed it was necessary. If they did not, then the arrest is invalid. The simplest example is if the person did not even consider the facts of the case. In this case, the alleged false statements in paragraph 44 of the arrest order are not actually false. The High Court was correct to say that the alleged mistakes were not serious enough to invalidate the arrest order. The High Court also correctly stated that paragraph 44 should not be read alone but should be read with all the documents and evidence. The reason for the arrest was that Jatia was involved in activities that harmed the country's ability to gain foreign money. It was therefore necessary to arrest him in the public interest. A review of the evidence shows that there was enough reason for the person ordering the arrest to act. (b) The argument that the arrest order is invalid if even one of the reasons for the arrest is wrong, irrelevant, or does not exist cannot be accepted. This idea was established by the court 30 years ago. However, the law has changed with the introduction of section 5A of the COFEPOSA Act. Now, even if some of the grounds for the arrest are vague, wrong, irrelevant, or invalid for any reason, the arrest can still be valid based on the remaining grounds. (c) It is up to the person ordering the arrest, not the court, to decide if the grounds are sufficient to justify the arrest under section 3(1) of the COFEPOSA Act. The Act is a law about preventive detention, which means detaining someone to prevent them from committing future crimes. Because of this, the power to arrest someone under section 3(1) of the Act is limited by the Constitution. When someone's freedom is at stake, the court must ensure that all legal safeguards have been followed and that the person's freedom is not taken away illegally. However, the community also has a strong interest in enforcing its laws, especially in areas like protecting foreign money and preventing smuggling. It is important to deal with people involved in these activities by arresting them to prevent future crimes. At the same time, the law must not be used unfairly to take away people's rights. The government must ensure that the constitutional protections of article 22(5) and section 3(1) of the Act are fully followed. In this case, the government did fulfill its obligations under article 22(5). The records from the Enforcement Directorate show that there was enough evidence to justify the arrest. They also show that Jatia was given a reasonable chance to argue against his arrest. 3. (a) Preventive detention is an extraordinary measure used by the government because of serious concerns about public order, safety, and the country's economy. The writers of the Constitution knew this was necessary and included a specific provision for it in article 22. The interests of the country are more important than the individual freedom of criminals who threaten society. Preventive detention laws are meant to keep these people from causing harm during a set period by detaining them. This goal cannot be achieved if the person is released on parole. Even if there are rules to limit the person's movements while on parole, parole is not the same as being in detention. With modern communication, a person on parole can easily contact their friends and partners anywhere in the world and continue their illegal activities. It is wrong to say that parole is the same as being in prison. The Criminal Procedure Code allows for the release of convicted offenders on probation for good behavior. However, when calculating the length of their sentence, only the time they spent in jail before the trial counts, not the time they were out on bail, even if the bail had strict conditions. In contrast, the COFEPOSA Act specifically says in section 12(6) that a person under preventive detention cannot be released on bail. Any changes to the arrest order can only be made by the government under section 11. (b) The court has already considered whether parole should be counted as part of the detention period in the case of Smt. Poonam Lata vs M.L. Wadhawan & Ors. The court decided that the time spent on parole should not be included when calculating the detention period under section 3(1) of the COFEPOSA Act. The government has provided enough evidence to show that the letter supposedly sent to the President of India was not actually filed by Jatia and was not received at the President's office. The attempt to challenge the arrest order based on article 22(5) and section 11 of the Act is a clever trick by Jatia. The facts suggest that Jatia and his associates have gone to extreme lengths to create false evidence. This raises concerns about the efficiency and honesty of the President's office. The ease with which Jatia's agent, Ashok Jain, claims to have entered the President's office and delivered the letter, and the way the staff supposedly confirmed Jain's story, show a decline in standards and a lack of security. The court believes that Jatia, the Petitioner, Ashok Jain, and anyone else responsible for creating false evidence should be prosecuted for their crimes. The court will delay making a final decision on the application filed under section 340 of the Criminal Procedure Code until the Central Bureau of Investigation has completed its investigation.
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The petitioner by a peti tion under article 226 filed before the High Court prayed for the issuance of a writ of habeas corpus which is also the prayer before us, for the release of her husband Mohanlal Jatia, who has been detained by an order of the Additional Secretary to the Government of India, Ministry of Finance, Department of Revenue dated December 13, 1985 under sub section (1) of section 3 of the Conservation of Foreign Exchange & Pre vention of Smuggling Activities Act, 1974 on being satisfied that it was necessary to detain him with a view to prevent ing him from acting in any manner prejudicial to the augmen tation of foreign exchange. The aforesaid Subhash Gadia was summoned under section 40 of the Foreign Exchange Regulation Act and his statement was recorded by R.C. The Additional Secretary to the Government of India, Ministry of Finance, in exercise of his powers conferred by sub section (1) of section 3 of the ( 'COFEP OSA ') ordered the detention of the aforesaid Mohanlal Jatia by an order dated December 13, 1985 on being ' satisfied that it was necessary to detain him "with a view to preventing him from acting in any manner prejudicial to the augmenta tion of foreign exchange". It appears that the impugned order of detention was mainly challenged on two grounds, namely: (1) There was no material on which the satisfaction of the detaining authori ty could be reached that the detention of the detenu was necessary under section 3(1) of the COFEPOSA with a view to preventing him from acting in any manner prejudicial to the augmentation of foreign exchange. The Writ Petition filed in this Court on July 11, 1986 is principally based on the ground that there was failure on the part of the detaining authority to consider the alleged representation dated April 11, 1986 made by the detenu against the impugned order of detention addressed to the President of India which was presented through one Ashok Jain at the President 's Secretariat on April 15, 1986 and there had thus been an infraction of the constitutional safeguards enshrined in article 22(5) and section 11 of the COFEPOSA which rendered the continued detention of the detenu without the due process of law and thus illegal, unconstitutional and void. Singh was not a gazetted officer of Enforcement within the meaning of section 40 of the Act and therefore the statements recorded by him could not be regarded as valid statements under section 40 and thus did not form the basis upon which the satisfaction of the detaining authority could be reached. Along with the counter affidavit, the respondents have filed copies of the letter of the Under Secretary to the Government of India, Ministry of Finance, Department of Revenue dated August 4, 1986 addressed to the Under Secretary, President 's Secretariat and of the reply of even date sent by the Under Secretary, President 's Secretariat to him which shows that no such representation had been received in the President 's Secre tariat, as alleged. Singh was not a 'gazetted officer of Enforcement ' within the meaning of section 40 and therefore there was no material on which the satisfaction of the detaining authori ty could be reached. Singh who was not a gazetted officer of Enforcement, were statements made under section 40 of the FERA, and even assuming that the statements recorded by R.C. Singh could be treated to be statements relatable to section 39(b) of the FERA, it is not possible to say whether the detaining authority would have based his satisfaction upon such material. (5) There was non application of mind on the part of the detaining authority as the grounds of detention are based on several factual misstatements. According to the learned counsel, the factual errors were self evident as the entries relied upon in paragraph 4 of the grounds of deten tion, do not find place in the account books of Messrs Greenland Corporation. (6) There was infrac tion of the constitutional safeguards enshrined in article 22(5) inasmuch as there was failure on the part of the detaining authority to consider the representation filed by the detenu under section 8(b) of the COFEPOSA through one Ashok Jain and received at the President 's Secretariat on April 15, 1986 and therefore the impugned order of detention was vitiated and the continued detention of the detenu was rendered illegal and void. In order to deal with the rival contentions advanced, it is necessary to set out the relevant provisions of the Foreign Exchange Regulation Act, 1973. The provisions of sections 3, 4 and 5 deal with (i) classes of officers of Enforcement; (ii) appointment and powers of officers of Enforcement and (iii) entrustment of functions of Director or other officer of Enforcement. (2) Without prejudice to the provisions of sub section (1), the Central Government may authorise a Director of Enforcement or an Additional Director of Enforcement or a Deputy Director of Enforcement or an Assistant Direc tor of Enforcement to appoint officers of Enforcement below the rank of an Assistant Director of Enforcement. Entrustment of functions of Director of other officer of Enforcement: The Central Government may, by order and subject to such conditions and limitations as it thinks fit to impose, authorise any officer of customs or any Central Excise Officer or any police officer or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforce 62 ment under this Act as may be specified in the order. Power to examine persons The Director of Enforcement or any other officer of Enforce ment authorised in this behalf by the Central Government, by general or special order, may, during the course of any investigation or pro ceeding under this Act , (a) require any person to produce or deliver any document relevant to the investigation or proceeding; (b) examine any person acquainted with the facts and circumstances of the case. " According to the learned counsel, if there is one principle more firmly settled than any other in this field of jurisprudence relat ing to preventive detention, it is that even if one of the grounds or reasons which led to the subjective satisfaction of the detaining authority is non existent or misconceived 63 or irrelevant, the order of detention would be invalid since it is not possible to predicate as to whether the detaining authority would have made all order for detention even in the absence of non existent or irrelevant ground. It was held that although the opinion of the Advisory Board that there was no sufficient cause for Shamsi 's detention may not have been binding on the detaining authority which ordered the detention of the detenu, but the opinion of the Advisory Board in Shamsi case was an important consideration which should and ought to have been taken into account by the detaining authority before passing the order of detention in that case. Chief Secretary to the Government of Gujarat & Anr., 15 on which reliance was placed there was failure on the part of the State Government to apprise the detaining au thority of the fact that the detenu 's request to have the presence of and consultation with his counsel had been refused, and that the confessional statement upon which the detaining authority had relied, had been retracted while he was in judicial custody, rendered the impugned order of detention invalid and illegal because there was complete non application of mind by the detaining authority to the most material and vital facts. In the counter affidavit filed by the Under Secretary to the Government of India, Ministry of Finance it had been averred that the representation of the detenu along with his reply to the show cause had been considered by the Advisory Board and after considering all the facts it was of the opinion that there was sufficient cause for detention. Both these decisions proceed on the well settled principle that if material and vital facts which would influence the mind of the detaining authority one way or the other on the question whether or not to make the detention order are not placed, it would vitiate its subjective satisfaction rendering the detention order ille gal. ]he impugned order of detention was therefore not challenged on the ground that the grounds furnished were not adequate or sufficient for the satisfac tion of the detaining authority or for the making of an effective representation. Sufficiency of grounds is not for the Court but for the detaining authority for the formation of his subjective satisfaction that the detention of a person under section 3(1) of the Act is necessary with a view to preventing him from acting in any manner prejudicial to the augmentation of foreign exchange. They clearly show that there was sufficient material for the formation of the subjective satisfaction of the detaining authority under sub section (1) of section 3 of the Act. It has long been established that the subjective satis faction of the detaining authority as regards the factual existence of the condition on which the order of detention can be made i.e. the grounds of detention constitutes the foundation for the exercise of the power of detention and the Court cannot be invited to consider the propriety or sufficiency of the grounds on which the satisfaction of the detaining authority is based. 67 The substantive contention of learned counsel for the petitioner has therefore been that there was non application of mind on the part of the detaining authority to the grounds of detention and that there was violation of the constitutional safeguards contained in article 22(5). (2) Whether there was non application of mind on the part of the detaining author ity and therefore the impugned order of detention was bad as there were factual mis statements detailed in items A to F of the grounds of the grounds of detention. And (3) Whether there was infraction of the constitutional safeguards con tained in article 22(5) due to the failure on the part of the Central Government to consider the representation filed by the detenu under section 8(b) read with section 11 of the Act, alleged to have been presented through one Ashok Jain and received at the President 's Secretariat on April 15, 1986 and there fore the continued detention of the petitioner was rendered invalid and unconstitutional. On the first of these questions, we have no hesitation in repelling the contention that there was no material on which the detaining authority could have based the subjec tive satisfaction under sub section (1) of section 3 of the Act. Singh could be treated to be statements failing under section 39(b) of the Act, it is not possible to say whether the detaining authority would have based his satisfaction upon such material. Such being the legal position, the learned counsel contends that while a statement recorded by a gazetted Enforcement Officer under section 40( 1 ) can furnish sufficient and adequate material on the basis of which the detaining authority can form his opinion, it may not be so with regard to statements recorded by an officer of Enforcement authorised in that behalf under section 39(b) of the FERA. On the other hand, learned counsel for the respondents contends that there is no basis for the assertion that there was no material on which the detaining authority could have formed the subjective satisfaction under sub section (1) of section 3 of the Act or that there was any factual mis statement in the grounds which showed that there was non application of mind on his part. The question whether the statements could be acted upon or not is not for the Court. Singh was not a gazetted officer of Enforcement. Singh to be an officer of Enforcement under this Act cannot be questioned. Singh was discharging his duties and functions as a gazetted officer of Enforcement under section 40(1) of the FERA when he recorded the statements in question. In our opinion, the expression 'gazetted officer of Enforcement ' appearing in section 40(1) must take its colour from the context in which it appears and it means any person appointed to be an officer of Enforcement under section 4 holding a gazetted post. Singh was not a gazetted officer of Enforcement within the meaning of section 40(1) of the FERA cannot prevail. If it is, it is admissible and the Court is not concerned with how it was obtained. " In R.M. It cannot therefore be said that there was no material on which the detaining authority could have based his subjective satisfaction under sub section (1) of section 3 of the Act. The next substantive contention of learned counsel for the petitioner is that the so called factual mis statements which occur in paragraph 44 of the grounds of detention show that there was nonapplication of mind on the part of the detaining authority and he relies on the observations made in Khudiram Das ' case that the subjective satisfaction of the detaining authority is not wholly immune from the judi cial review and the Court can always examine whether the requisite satisfaction was arrived at by the authority; if it is not, the condition precedent to the exercise of the power would be bad. It is submitted that this was a case of mis taken identity and there was no material before the detain ing authority to show that the initials 'ML ' in the various entries in the accounts of Messrs Greenland Corporation, Japan and the relative telex messages related to the detenu Mohanlal Jatia and not to the other ML meaning ML Kedia, the brother in law of Subhash Gadia. We are afraid, we cannot accept this line of argument. There is no warrant for the submission that the initials 'ML ' refer to ML Kedia and not the detenu Mohanlal Jatia or that a wrong person has been placed under detention. Sufficiency of grounds is not for the Court but for the detaining authority for the perform ance of his subjective satisfaction that the detention of the detenu Mohanlal Jatia under section 3(1) of the Act was necessary. It is mentioned by the detaining authority in paragraph 44 underneath Item A that Gadia 'admits ' that they are Jatia 's account. During interrogation Subhash Gadia stated that bunch of documents SG 6 relates to Messrs Greenland Corporation, Japan and that these entries 'may be related to the Jatia family '. The detaining authority was entitled to make use of the decoding formula revealed by Subhash Gadia to connect the detenu Mohanlal Jatia with the initials 'ML ' appearing in various transactions, more so because the relative telex messages sent by Messrs Greenland Corporation were seized from the office premises of Messrs J.M. The detaining authority has charged the detenu with keeping US $ 2 lakhs in fixed deposit in Kamal Account which is the capital account of the detenu and his brothers Messrs Greenland Corporation, Japan. The High Court rightly observes that a single typographical mistake about making a reference to US $ 20 lakhs would not necessarily show the non application of mind when the entry of US $ 2 lakhs (dollars) is reflected in various places in the account such as ML Ji Khata P. 175 and Kamal Account P. 226, copies of which were furnished to the detenu. According to the statement of Subhash Gadia, the Laxmi Ji account was a capital account of SN, GN and ML with Messrs Greenland Corporation, Japan. The remaining Item F at p. 315 of the bunch of documents marked SG 6 is a coded account maintained by the detenu under the name Kamal Account representing the capital in vestment of SN, GN and ML with Messrs Greenland Corporation. It cannot be said on a perusal of the grounds that there was no material on which the detain ing authority could have acted. was a party and it was held therein "that the period of parole has to be excluded in reckoning the period of detention under sub section (1) of Section 3 of the Act" (Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974). In contrast, in so far as preventive detentions under the , are concerned, the Act, specifically lays down that a person against whom an order of detention has been passed shall not be released on bail or bail bond or otherwise (vide Section 12 (6) of the Act) and that any revocation or modification of the order of detention can be made only by the Government in exercise of its powers under Section 11. it may be pointed out that by reason of sub section (6) of section 12 of the Act placing an embargo on the grant of bail to a detenu there was no 80 necessity for the Legislature to make a provision similar to sub section (4) of Section 389 of the Code of Criminal Procedure, 1973 (corresponding to sub section (3) of Section 426 of the old Code) for excluding the period of bail from the term of detention period. Besides refuting the contention of the petitioner that the detenu had made a written repre sentation addressed to the President of India on April 15, 1986 and that there has been an infraction of the Constitu tional safeguard embodied in Article 22(5" of the Constitu tion and Section 11 of the Act due to the failure of the Central Government to consider the said Representation, the respondents have preferred an application under Section 340 of the Code of Criminal Procedure, 1973 for prosecution of the persons responsible for forging the document purporting to be the alleged Representation made by the detenu under Section 8(4" of the Act and for making certain interpola tions in the Dak Register kept at the Rashtrapati Bhavan. The respondents have placed sufficient material before the Court to show that the alleged Representation addressed to the President of India was neither filed by the detenu nor was it received at the President 's Secretariat on April, 15, 1986. The representation said to have been made was not addressed to the Government of India which is the authority to consider the representa tion but to the President. The said messenger does not present the representation at the President 's Secretariat but he is said to have handed it over to one Ashok Jain and the said Ashok Jain is said to have delivered the representation at the President 's Secretariat. Over and above all these things, a scrutiny of the relevant page in the Dak Register kept in the President 's Secretariat, which was produced before us in a sealed cover, contains tell tale features of a startling nature revealing a planned attempt, but very clumsily exe cuted, to somehow interpolate an entry in the Dak Register to make it appear that an envelope containing the alleged representation had been presented at the President 's Secre tariat. The entry relating to the alleged representation of the detenu has been interpolated between one entry dated 15.4 and another entry dated 16.4. but in order to fit in the serial number, the entry relating to the representation has first been noted as 20(A), then the letter A has been smudged and the entry dated 16.4 has been made 20(A) instead of 20.
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Singh, an officer of the Enforcement Directorate. The arrest order for Mohan Lal Jatia was based on the documents seized from Subhash Gadia's home and Gadia's statements. The Petitioner (Jatia's wife) went to the High Court to challenge the arrest order, using petitions under article 226 of the Constitution (a way to ask the court to review government actions). After that, the Petitioner filed a second petition with the High Court, asking to extend the parole period. Then, the High Court dismissed the main case against the arrest order. The Petitioner then asked the Supreme Court for special permission to appeal and also filed a petition under article 32, challenging the arrest order itself. The Supreme Court issued a notice to the Petitioner and ordered Jatia's release on parole for a week. In the petition before the High Court, the Petitioner had challenged the arrest order on two grounds: first, that there was not enough evidence to justify the arrest; and second, that the person who ordered the arrest did not properly consider the evidence and made false statements in the arrest order. The petition filed before the Supreme Court mainly argued that the government had failed to follow article 22(5) of the Constitution. The detaining authority supposedly did not consider a letter Jatia sent to the President of India, arguing against his detention. Singh, the officer who took Subhash Gadia's statement, was not a qualified officer under section 40 of FERA. Therefore, the statements he recorded should not have been used as the basis for the arrest order. Singh had been appointed as an enforcement officer on a temporary basis three years before he questioned Subhash Gadia. Section 4 says that the government can appoint people to be officers of Enforcement. An officer of Enforcement can use the powers and carry out the duties given to them under the Act, as long as they follow the conditions set by the government. Singh was acting as an officer of Enforcement under section 40(1) when he recorded the statements. Singh was not a qualified officer under section 40(1), it does not matter. If evidence is relevant to the case, the court does not care how it was obtained. Because of this, the person who ordered the arrest was allowed to use the statements recorded by R.C. Singh under section 40(1). Singh was not authorized to record these statements under section 40(1), the statements still relate to section 39(b) of the Act. This is based on the idea that it is necessary for public policy to prevent confusion and problems. However, this does not mean that the court cannot review the arrest order at all. The court can examine whether the person who ordered the arrest actually believed it was necessary. If they did not, then the arrest is invalid. In this case, the alleged false statements in paragraph 44 of the arrest order are not actually false. A review of the evidence shows that there was enough reason for the person ordering the arrest to act. (b) The argument that the arrest order is invalid if even one of the reasons for the arrest is wrong, irrelevant, or does not exist cannot be accepted. Now, even if some of the grounds for the arrest are vague, wrong, irrelevant, or invalid for any reason, the arrest can still be valid based on the remaining grounds. (c) It is up to the person ordering the arrest, not the court, to decide if the grounds are sufficient to justify the arrest under section 3(1) of the COFEPOSA Act. Because of this, the power to arrest someone under section 3(1) of the Act is limited by the Constitution. When someone's freedom is at stake, the court must ensure that all legal safeguards have been followed and that the person's freedom is not taken away illegally. This goal cannot be achieved if the person is released on parole. Even if there are rules to limit the person's movements while on parole, parole is not the same as being in detention. In contrast, the COFEPOSA Act specifically says in section 12(6) that a person under preventive detention cannot be released on bail. Any changes to the arrest order can only be made by the government under section 11. (b) The court has already considered whether parole should be counted as part of the detention period in the case of Smt. The court decided that the time spent on parole should not be included when calculating the detention period under section 3(1) of the COFEPOSA Act. The government has provided enough evidence to show that the letter supposedly sent to the President of India was not actually filed by Jatia and was not received at the President's office.
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Appeals Nos. 124 to 126 of 1954. Appeals by special leave from the judgment and order dated the 10th day of March 1952 of the Madras High Court in C.M.P. Nos. 10427, 10425 and 10426 of 1951 arising gut of the order dated the 23rd day of February 1951 of the Income Tax Appellate Tribunal, Madras Bench in Reference Applications Nos. 312, 310 and 311 of 1950 51. P. R. Das, B. Sen, V. Sethuraman and section Subramaniam for the appellant. C. K. Daphtary, Solicitor Generalfor India, Porus A. Mehta and R. H. Dhebar for P. G. Gokhale for the respondent. September 26. The judgment of the Court was delivered by VENKATARAMA AYYAR J. These appeals arise out of orders of assessment made on the appellant by the Appellate Tribunal, Madras Bench, for the years of account 1941 42, 1942 43 and 1943 44. The appellant applied under section 66(1) of the Indian Income tax Act (hereinafter referred to as the Act) to refer to the High Court certain questions which according to it arose out of the orders; but the Tribunal rejected the applications. The appellant then moved the High Court under section 66(2) of the Act for an order requiring the Tribunal to refer those questions to the court, but the learned Judges held that the questions on which reference was sought by the appellant were pure questions of fact, and dismissed the applications. The matter now comes before us by way of special appeal. 695 The facts material for the purpose of these appeals may shortly be stated. The assessee is a public company registered under the Indian Companies Act, and its Managing Agents are the firm of Messrs K. R. Thyagaraja Chettiar and Co., whose partners are Mr. Thyagaraja Chettiar and his two sons. The company is resident and ordinarily resident in British India, its head office being at Madurai in the Madras State. It carries on business in the manufacture and sale of yarn, and for the purpose of that business it purchases cotton and occasionally sells it. Its profits arise for the most part from the sale of yarn and to some extent from the re sale of cotton. According to the account books of the company, its profits from business for the account year 1941 42 were Rs. 9,25,364, for 1942 43 Rs. 24,09,832 and for 1943 44 Rs. 29,13,88 1. In its returns, the appellant showed these amounts as its income chargeable to tax for the respective years. The Department did not accept the correctness of the figures as shown in the accounts. It contended that the Company had earned more profits than were disclosed in its accounts, and that it had contrived to suppress them by resort to certain devices. According to the Department, the scheme evolved by the appellant for this purpose was this: Suppose the Company sold 25 bales of yarn to X for. Rs. 50,000 at the then market rate and received the full amount of the price. The books of the Company would show neither the sale to X nor its receipt of Rs. 50,000. Instead, there will be an entry in its books showing the sale of these very bales to A for Rs. 20,000 which will be about the cost price and in the books of A these goods will be shown as sold by it to X for Rs. 50,000. If the sale by the Company to A and the connected sale by A to X were genuine, the Company would have made no profit on the sale, whereas A would have made a profit of Rs. 30,000 on it. But in fact,both these sales were sham transactions; the only sale that took place was that by the Company to X and the price actually received by it was not Rs. 20,000 but Rs. 50,000. As a result of these paper transactions and manipulations, the 696 profit of Rs. 30,000 made by the Company was suppressed. This process was reversed when the Company purchased cotton. The appellant purchased, let us say, 100 bales of cotton from X for a price of Rs. 5,000, and paid that amount to X. Neither this purchase from X nor the payment of Rs. 5,000 to him would appear in the books of the Company. Instead, the books of A will show these goods as purchased by it from X for Rs. 5,000, and the books of the appellant will show a purchase from A of those very goods for Rs. 8,000. Both these sales were fictitious, the only real transaction was the sale by X to the Company and the price actually paid therefor by the Company was only Rs. 5,000. By the device of sale by X to A and by A to the Company, the cost price had been inflated by Rs. 3,000, and the real profit had been concealed to that extent. The accounts of the Company, therefore, did not reflect the true position as to the profits actually made by the appellant. The names of the intermediaries who according to the Department played the role of A in the above illustration and they will hereafter be referred to simply as intermediaries are given below with the amount of profits made on the sale of yarn in their names and concealed, or the extent of the cost price inflated on the purchase of cotton from them, as found by the Tribunal: 1941 42 1. Meenakshi & Co. Sale of yarnRs. 35,830 2. Sivagami & Co. do. Rs. 35,443 3. Mangayarkarasi & Co. do. Rs. 34,579 4. Alagu & Co. Purchase of cotton Rs. 34,003 1942 43 1. Meenakshi & Co. Sale of yarnRs. 53,635 2. Sivagami and Co. do. Rs. 58,103 3. Rukmani & Co. Ltd. & Sale of yarn Rs. 3,97,467 4. Sivagami & Co. Ltd. 5. Rukmani & Co., Ltd. Purchase of cotton Rs. 33,533 697 1943 44 1. Pudukottah&Co.,Ltd. Sale of yarn Rs. 18,99,488 Do. Purchase of cotton Rs. 12,703 2. Rukmani & Co., Ltd. do. Rs. 22,504 3. Rajendra Ltd. Sale of yarn Rs. 1,06,436 The contention of the Department was that the amounts shown as profits made by the intermediaries and mentioned above represented in fact the profits actually earned by the appellant, and that they should be added to the figures shown in its accounts as its profits. The appellant contested this position, and maintained that the state of affairs disclosed by its accounts was true, that its sales in favour of the intermediaries were genuine, and that, in fact, little or no profits were made by it in those transactions, that it purchased cotton only from the intermediaries and, did pay them the amounts as shown in the accounts. These contention were closely examined by the Income tax Officer in the first instance, then again by the Appellate Assistant Commissioner on appeal, and finally by the Appellate Tribunal, and on an elaborate consideration of the materials placed before them, they held that the following facts were established: 1. The sale of yarn by the appellant to the intermediaries mentioned above was for a price very much below the market rate, often for the cost price and some times for even less. No acceptable explanation had been given for this unusual feature. The yarn was in that period a scarce commodity, and it was a seller 's market. The amounts lost by the Company on these transactions during the three years, if they were genuine, would far exceed Rs. 25 lakhs. The sales therefore were not bonafide. The firms of Meenakshi and Co., Sivagami and Co. Mangayarkarasi and Co., and Alagu and Co., who were the intermediaries for the year 1941 42 were all newly started for the first time in 1941. The partners of the firm were men of no means, and were all relations of Mr. Thyagaraja Chettiar, the chief 698 partner of the Managing Agents firm and a dominant figure in charge of the Company 's affairs. None of them had done any business in yarn before. The personnel of these firms was drawn in different combinations from a group of half a dozen persons who were all the creatures of Mr. Thyagaraja Chettiar. During the year 1942 43, two of the ' firms, Mangayarkarasi and Co., and Alagu and Co., were closed, and their place was taken by two private limited companies called Rukmani and Co., Ltd. and Sivagami and Co., Ltd. The shareholders of these companies were again drawn from the small group of persons who were partners of the firms, and they were all Mr. Thyagaraja Chettiar 's men. These companies declared no dividends, even though they made con siderable profits and the shareholders received no dividends nor even statements of accounts. In truth, they had no beneficial interest in the concerns. The business of the intermediaries, both firms and the companies, consisted solely in the purchase of yarn from the appellant and not from any other person, and the entirety of the yarn purchased was sold by them en bloc to constituents of the appellant. Thus, the business of the intermediaries was, in fact, only a part of the business carried on by the appellant. The sales by the appellant in favour of these intermediaries were of large quantities of yarn and sometimes on a scale far higher than other genuine commercial transactions, as for example, the sale of 1850 bales on 17 4 1942 to Rukmani and Co. No securities were taken from the intermediaries for this transaction. Having regard to the magnitude of the business, the capital of the intermediaries even on paper was negligible. The intermediaries bad most of them no offices of their own. Even when they had offices, these were arranged by the officers of the appellant. The concerns had no godowns, and their staff was meagre and recruited from the employees and servants of the appellant. Apart from signing the contracts, the intermediaries did nothing. 699 7. The profits earned by the firms were shown in their books as cash in their possession, but on a surprise raid the authorities were unable to discover any cash with them. The amount shown as profits in their accounts was, in fact, in the possession of the appellant Company. The intermediaries had, in fact, never to pay to the appellant for any of the purchases made by them, the course of the business being that they sold the goods purchased from the appellant to its old customers, who paid therefor. The intermediaries did not issue any delivery orders on the appellant in favour of the customers to whom they ostensibly sold the goods, but the goods were despatched directly by the appellant to the customers and delivered to them. The customers to whom the goods were delivered by the appellant as aforesaid paid the full price for which they purchased them from the intermediary firms not to those firms with whom alone they had privity of contract but to the appellant direct, and these payments appear as receipts in the books of the appellant. After the Limited Companies were started in 1942 43 and 1943 44, the course of business adopted by the appellant showed a further mystification. There was firstly a sale of certain quantity of yarn by the appellant to company A, which sold it in turn to company B which in turn sold it to C, which ultimately sold it to the usual customers of the appellant. In spite of the number of links between the appellant and the customers, the goods were directly despatched by the former to the latter, who paid by cheques the full amount due by them to their seller C, who straightaway endorsed them, in favour of the appellant. The intermediaries A and B did no act, and took no part in the ultimate payment of the price by the purchasers. Some of the intermediaries, firms and companies had been ' formed in Pudukottah State. At that time, that Sta was foreign territory, and the profit 700 earned there would become taxable only if it was remitted to British India. Pudukottah is neither a cotton producing area, nor was a market for cotton there. The object with which the intermediaries had been set up in Pudukottah was obviously to screen portions of the profit earned by the appellant. On these facts, the Tribunal came to the conclusion that the contentions of the Department had been fully established, namely , that the intermediaries were dummies brought into existence by the appellant for concealing its profits, that the sales standing in their names were sham and fictitious, and that the, profits ostensibly earned by them on those transactions were, in fact, earned by the appellant, and should be added ,to the amounts shown as profits in its accounts. The point for decision is whether there arises out of the order of the Tribunal any question which can be the subject of reference under section 66(1) of the Act. Under that section, it is only a question of law that can be referred for decision of the court, 'and it is impossible to argue that the conclusion of the Tribunal is anything but one of fact. It has been held on the corresponding provisions in the English Income tax statutes that a finding on a question of fact is open to attack as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse, but that where there is evidence to consider, I the decision of the Tribunal is final even though the court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment. In Great Western Railway Co. vs Bater(1), Lord Atkinson observed: "Their (Commissioners ') determination of questions of pure fact are not to be disturbed, any more than are the findings of a jury, unless it should appear that there was no evidence before them upon which they, as reasonable men, could come to the conclusion to which they have come: and this even though the Court of Review would on the evidence have come to a conclusion entirely different from theirs". (1) , 244. S.C.R. SUPREME COURT REPORTS 701 There is no need to further elaborate this position, because the law as laid down in these observations is well settled and has been adopted in the construction of section 66 of the Act. Now, the determination of the Tribunal in the present proceedings being, one of fact, it is open to review by the court only on the ground that it is not supported by any evidence or that it is perverse. The appellant understood this position quite correctly, and in its application under section 66(1) it stated the only question which it wanted the Tribunal to refer to the court with reference to the present controversy in the following terms: "Whether on the facts and in the circumstances of the case there is any legal evidence to support the finding that the four firms, Meenakshi and Co., Sivagami and Co., Mangayarkarasi and Co., and Alagu and Co., were benamidars for the appellant and that the profits made by these firms were profits made by the appellant". This was for the accounting year 1941 42. The question was similarly worded for the subsequent years also except that the names of the intermediaries were different for the different years. The question as framed assumes, it will be noted, that the Tribunal had held that the intermediaries were benamidars for the appellant, and on this assumption were grounded several contentions which were pressed on behalf of the appellant. Whether this assumption and the contentions based thereon are well founded is a different matter, and will be considered in due course. But apart from that, it will be seen that the only ground of attack which was directed against the finding of the Tribunal was that there was no legal evidence. This is of course a contention open to the appellant; but has that been substantiated? Mr. P. R. Das, learned counsel for the appellant, did, at the start, put his contention as high as that. But it became abundantly clear when his argument began to unfold itself that it amounted to no more than this that the conclusion drawn by the Tribunal from the facts found by it was unsound and erroneous. He did not, it must be stated, dispute the facts them 702 selves, but he took them one after another, and contended that they were susceptible of inferences other than those drawn by the Tribunal. He next offered explanations for them which would 'Make them consistent with the contention of the appellant. And he finally wound up by saying that the conclusion reached by the Tribunal was not justified. This clearly is an erroneous approach to the whole question. When a conclusion has been reached on an appreciation of a number of facts established by the evidence, whether that is sound or not must be determined not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting in the picture as a whole. In Edwards (Inspector of Taxes) vs Bairstow(1). Lord Radcliffe stated: I think that it is rather misleading to speak of there being no evidence to support a conclusion when in cases such as these many of the facts are likely to be neutral in themselves, and only to take their colour from the combination of circumstances in which they are found to occur". This furnishes the corrective to the course adopted by counsel for the appellant in his argument. And a more serious objection to it, and one of substance is that it relates merely to matters of appreciation of evidence, and does not support the position that there is no legal evidence in support of the finding of the Tribunal. For example, one of the facts on which the Tribunal relied for its conclusion was that the partners of the intermediary firms were new to yarn business and came on the scene for the first time in 1941. The appellant contends that no significance could be attached to this, as the partners belonged to the Nattukkottai Chetti caste, which was a trading community. But surely this does not render the evi dence irrelevant or inadmissible. It only affects the weight to be attached to it. ' Then again, the Tribunal has made a point of it that the goods were sold by the appellant to the intermediaries for a price far below the market price, sometimes even below the (1) 703 cost price. The answer of the appellant to this was that they were forward contracts and that the price of yarn on the dates of those contracts was low. But the Tribunal declined to accept this explanation for the reason and that, a good one that there were no contract registers from which the dates on which the contracts were entered into could be verified, and that the contract notes themselves were not serially numbered. If this is not a matter of pure appre ciation of evidence, it is difficult to see what else is. The Tribunal also referred to the fact that the only business which the intermediaries did was to purchase yarn from the appellant and sell it to its own constituents. The answer of the appellant to this was that there was no need for the intermediaries to purchase from other manufacturers when all their needs were met by the appellant and that there was nothing unusual in their selling all their yarn to its customers. it is unnecessary to say anything about the worth of this contention, for that is a matter exclusively for the Tribunal to assess. What has now to be considered is whether this circumstance on which the Tribunal relied is or is not cogent evidence in support of its conclusion. It will be preposterous to contend that it is not. No useful purpose will be served by examining the contentions of the appellant with reference to the other facts on which the Tribunal relied for its conclusion. They are of the same pattern as the above, and bear, at their best, on the weight to be attached to the facts and not to their relevancy or admissibility, and there is no question of want of legal evidence in support of the conclusion of the Tribunal. Reference should also be made in this connection to another contention which wag pressed by Mr. P. R. Das at a later stage of the argument. He contended that the facts found showed that the intermediaries were benamidars not for the appellant but for Mr. Thyagarajan Chettiar of the Managing Agents firm. The significance of this contention lies in this that it grants and Mr. P. R. Das was quite frank about it that the facts found did point to the fact that the 704 intermediaries were dummies, leaving outstanding for decision only the question whether on the evidence they were benamidars for the appellant or for Mr. Thyagarajan Chettiar. That is a question which will be separately considered. But it is manifest that this argument is destructive of the contention of the appellant that there is no legal evidence to support the conclusion of the Tribunal that the intermediaries were mere dummies. The result then is that the finding of the Tribunal viewed as one of fact, which in truth it is supported by evidence, and is not unreasonable and is not open to attack on any of the grounds on which such a finding could be assailed in a reference under section 66(1). It was next contended for the appellant that inference from facts was a question of law, and that as the conclusion of the Tribunal that the intermediaries were dummies and that the sales standing in their names were sham and fictitious was itself an inference from several basic facts found by it was a question of law and that the appellant had the right under section 66(1) to have the decision of the court on its correctness, and support for this position was sought from certain observations in Edwards (Inspector of Taxes) vs Bairstow(1), Bomford vs Osborne(2), Thomas Fattorini (Lancashire), Ltd. vs Commissioners of Inland Revenue(3), Cameron vs Prendergast(" and The Gramophone and Typewriter Company, Ltd. vs Stanley(5). At the first blush, it does sound somewhat of a contradiction to speak of a finding of fact as one of law even when that finding is an inference from other facts, the accepted notion being that questions of law and of fact form antithesis to each other with spheres distinct and separate. When the Legislature in terms restricts the power of the court to review decisions of Tribunals to questions of law, it obviously intends to shut out questions of fact from its jurisdiction. If the contention of the appellant is (1) (2) 1942 I.T.R. Supplt, 27. (3) (4) 8 I.T.R. Supplt. (5) ; correct. , then a finding of fact must, when it is an inference from other facts, be open to consideration not only on the ground that it is not supported by evidence or perverse but also on the ground that it is not a proper conclusion to come to on the facts. In other words, the jurisdiction in such cases is in the nature of a regular appeal on the correctness of the finding. And as a contested assessment and it is only such that will home up before the Tribunal under section 33 of the Act, must involve disputed questions of fast, the determination of which must ultimately depend on findings on various preliminary or evidentiary facts, it must result that practically all orders of assessment of the Tribunal could be brought up for review before courts. That will, in effect, be to wipe out the distinction between questions of law and questions of fact and to defeat the policy underlying sections 66(1) and 66(2). One should hesitate to accept a contention which leads to consequences so startling, unless there are compelling reasons therefor. Far from that being the case, both principle and authority are clearly adverse to it. Considering the question on principle, when there is a, question of fact to be determined it would usually be necessary first to decide disputed facts of a subsidiary or evidentiary character, and the ultimate conclusion will depend on an appreciation of these facts. Can it be said Chat a conclusion of fact, pure and simple, ceases to be that when it is in turn a deduction from other facts? What can be the principle on which a question of fact becomes transformed into a question of law when it involves an inference from basic facts? To take an illustration, let us suppose that in a suit on a promissory note the defence taken is one of denial of execution. The court finds that the disputed signature is unlike the admitted signatures of the defendant. It also finds that the attesting witnesses who speak to execution were not, in fact, present at the time of the alleged execution. On a consideration of these facts, the court comes to the conclusion that the promissory note is not genuine, 706 Here, there are certain facts which are ascertained, and on these facts, a certain conclusion is reached which is also one of fact. Can it be contended that the finding that the promissory note is not genuine is one of law, as it is an inference from the primary facts found? Clearly not. But it is argued against this conclusion that it conflicts with the view expressed in several English decisions, some of them of the highest authority, that it is a question of law what inference is to be drawn from facts. The fallacy underlying this contention is that it fails to take into account the distinction which exists between a pure question of fact and a mixed question of law and fact, and that the observations relied on have reference to the latter and not to the former, which is what we are concerned with in this case. In between the domains occupied respectively by questions of fact and of law, there is a large area in which both these questions run into each other, forming so to say, enclaves within each other. The questions that arise for determination in that area are known as mixed questions of law and fact. These questions involve first the ascertainment of facts on the evidence adduced and then a determination of the rights of the parties on an application of the appropriate principles of law to the facts ascertained. To take an example, the question is whether the defendant has acquired title to the suit property by adverse possession. It is found on the facts that the land is a vacant site that the defendant is the owner of the adjacent. residential house and that he has been drying grains and cloth and throwing rubbish on the plot. The further question that has to be determined is whether the above facts are sufficient to constitute adverse possession in law. Is the user continuous or fugitive? Is it as of right or permissive in character? Thus, for deciding whether the defendant has acquired title by adverse possession the court has firstly to find on an appreciation of the evidence what the facts are. So far, it is a question of fact. It has then to apply the principles of law regarding acquisition of title by adverse possession, and decide whether on the facts 707 established by the evidence, the requirements of law are satisfied. That is a question of law. The ultimate finding on the issue must, therefore, be an inference to be drawn from the facts found, on the application of the proper principles of law, and it will be correct to say in such cases that an inference from facts is a question of law. In this respect, mixed questions of law and fact differ from pure questions of fact in which the final determination equally with the finding or ascertainment of basic facts does not involve the application of any principle of law. The proposition that an inference from facts is one of law will be correct in its application to mixed questions of law and fact but not to pure questions of fact. The following observations of Lord Atkinson ' in Herbert vs Samuel Fox and Co., Ltd.(1) clearly bring out the principle above stated: ". Your Lordships were pressed with the usual argument, that as the County Court judge though a judge of law and facts, is the sole judge of fact, his findings cannot be disturbed if there was any evidence before him upon which he, as a reasonable man, could find as he has found. That argument is quite sound if it be applied to pure findings of fact. It is utterly unsound if it be applied either to findings on, pure questions of law or on mixed questions of law and fact . It is wholly illegitimate, in my view, in cases such as the present, by finding in the words of the statute to endeavor to secure for 'a finding on a pure question of law, or on a mixed question of law and fact, that unassailability which properly belongs only to a finding on a question of pure fact". These observations were made in a case under the Workmen 's Compensation Act, 1904. But the same principles have been applied to revenue cases, and it has consistently been held that inferences from facts may themselves be inferences of fact and not of law, and that such inferences are not open to review by the court. In the Queen vs Special Commissioners of Income tax(2) Esher M. R. observed: (1) , 413. (2) , 290 291. 92 708 ". . it seems to me that is a question of fact. It is a question of the true inference which they (Commissioners) had to draw as a matter of evidence upon the facts which they had in evidence before them. But to draw an inference of fact from evidence before you is not a question of law at all. The inference is a question of fact just as much as the direct evidence of fact, and it would be an appeal against facts, which we are not entitled to entertain and consequently there can be no Mandamus". A clearer and more, emphatic refutation of the appellant 's contention cannot be found. The law is thus summed up in Simon 's Income Tax, 1952 Edition, Volume I, page 281: "There can be no doubt that it is for the Commissioners, and for the Commissioners alone, to discover and state the basic or 'primary ' facts of the case . From the primary facts the Commissioners will almost always need to draw some inference or inferences by the exercise of reasoning, and it is this process of inference which may, according to its nature, be a finding of law or of fact, or mixed finding of law and fact". The result of the authorities then is that inference from facts would be a question of fact or of law according as the point for determination is one of pure fact or mixed question of law and fact. Is there anything in the authorities cited by the appellant which militates against this conclusion? In Edwards (Inspector of Taxes) vs Bairstow(1), the point for determination was whether the transaction entered into by the assessee was an adventure in the nature of trade. The finding of the Commissioner was that it was not. But that was reversed by the House of Lords who held that on the facts found it was an adventure in the nature of trade. The very expression "in the nature of trade" requires that the adventure should possess certain elements which in law would invest it with the characteristics of a trade. The question is, therefore, one of a mixed law and fact. That is precisely how the matter is dealt with by (1) 709 Lord Radcliffe. He observes at page 589: "My Lords, I think that it is a question of law what meaning is to be given to the words of the Income Tax Act 'trade, manufacture, adventure or concern in the nature of trade ' and for that matter what constitutes 'profits or gains ' arising from it. Here we have a statutory phrase involving a charge of tax and it is for the courts to interpret its meaning having regard to the context in which it occurs and to the principles which they bring to bear upon the meaning of 'income ' ". Lord Somervell agreed with the opinion expressed by Lord Radcliffe. The Lord Chancellor, dealing with this aspect of the case, referred to the decisions in Cooper vs Stubbs(1) and Jones vs Leeming(2), where it had been held that whether trading activities amounted to carrying on business was a pure question of fact, and observed at page 587: "Yet it must be clear that to say that such an inference is one of fact postulates that the character of that act which is inferred is a matter of fact. To say that a transaction is or is not an adventure in the nature of trade is to say that it has or has not the characteristics which distinguish such an adventure. But it; is a question of law, not of fact, what are those characteristics, or in other words, what the statutory language means ". In the view of Viscount Simonds, therefore, the question was one of mixed law and fact. But be was also prepared to decide the case on the footing that it was a question of fact and observed at pp. 585 586: "This appeal must be allowed and the assessments must be confirmed, For it is universally conceded that though it is a pure finding of fact, it may be set aside on grounds which have been stated in various ways but are, I think, fairly summarised by saying that the court should take that course if it appears that the Commissioners have acted without any evidence or upon a view of the facts which could not reasonably be entertained". That is to say, even if the question was one of pure (1) (2) 710 fact, the finding of the Commissioners was liable to be set aside on the ground that there was no evidence in support of it or that on the evidence it was perverse. What is of significance in this is that the Lord Chancellor dealing with the question whether the adventure was in the nature of trade as one of fact does not hold that the ultimate finding was one of law by reason of its being one of inference from facts but treats it only as a finding of fact and open to attack as such. This decision, therefore, is no authority for the position that where a findig is given on a question of fact based upon an inference from facts, that is always a question of law, and the following observation of Lord Radcliffe at page 592 is directly against it: "I do not think that inferences from other facts are incapable of being themselves findings of fact although there is value in the distinction between primary facts and inferences drawn from them". In Bomford vs Osborne(1), the Commissioners had held that 230 acres out of a plot of 550 acres belonging to the assessee should be separately assessed as "gardens for the sale of produce", while the remaining lands should be taxed on the basis of their annual value. The assessee disputed the correctness of this finding, and contended that the 230 acres in question were not gardens as contemplated by Rule 8 of Schedule B of the Income tax Act, 1918. The House of Lords agreed with this contention, and discharged the assessment. One of the points raised on behalf of the Crown was that the finding of the Commissioner was one of fact and was therefor& final. This contention was repelled on the ground that whether the lands were gardens within rule 8 was not a pure question of fact. The following observations in the speech of Lord Wright at page 38 may be quoted: "It has been strenuously contended as a main argument on behalf of the Crown that the questions here to be discussed are questions of 'fact and degree '. But, in my opinion, the true effect of the facts found cannot be ascertained until the true construction of r. 8 has been examined and its true application to (1) [1942] I.T.R. Supplt. 711 the facts ascertained. There are, in addition to incidental questions, two main questions of law, namely, what is the meaning of "gardens for the sale of produce" and how is that meaning to be applied to acreage which is worked as a single mixed farm in one unit". Thus, the basis of the judgment was that the question decided by the Commissioners was one of mixed law and fact, and that their determination was open to review by the courts. There is nothing in this decision again which supports the contention of the appellant that findings on questions of fact based on inference from other facts should be regarded as questions of law. On the other hand, the following observations of Viscount Simon at page 22 are really against this contention: "No doubt, there are many cases in which Commissioners, having bad proved or admitted before them a series of facts, may deduce therefrom further conclusions which are themselves conclusions of pure fact, but in such cases the determination in point of law is that the facts proved or admitted provide evidence to support the Commissioner 's conclusions". These observations clearly establish that inferences from facts found need not necessarily be inferences of law but may be conclusions of fact, and such conclusions of fact could be attacked on grounds on which findings of fact could be attacked, namely, there is no evidence to support them as for example, if the conclusion does not follow even if all the facts found are accepted. That does not certainly support the contention of the appellant. In Thomas Fattorini (Lancashire), Ltd. vs Inland Revenue Commissioners(1), the point for decision was whether the appellant company bad failed to declare within a reasonable time dividend out of the profits earned by it, in which case under section 21 of the Finance Act, 1922 the income is deemed to be income of the members and chargeable to super tax. The finding of the Board of Referees was that distribution of profits had not been made within a reasonable time, (1) ; 712 but their decision was reversed by the House of Lord& on the ground that there was no evidence in support of it. Thus, there is nothing in the decision itself which has any bearing on the present controversy. The appellant, however, relies on the following observations in the speech of Lord Porter at page 667: "I. think that the final conclusion is not a fact but an inference from facts previously set out, and that, therefore, that conclusion is not binding upon the tribunal to which the case is referred unless it appears from the previous findings that there are facts which support it. In the present case I cannot find such support. " In the context, what these remarks mean is that when the final conclusion is one of fact and is itself an inference from other facts, it is open to attack on the ground that the basic facts themselves do not constitute evidence in support of the final conclusion a position which does not arise here. Then there is the observation of Lord Maugham in Cameron vs Prenderga8t(1) that "inferences from facts stated by the Commissioners are matters of law and can be questioned on appeal". Does this remark mean that inferences from facts found are questions of law in all cases, whether these inferences are inferences of facts or of law? There. being nothing in the observation to throw any light on this question, we must examine the facts of the case to ascertain its true import. There, the assessee who had been a Director in a building company for 44 years wanted to resign his office, but be was persuaded to continue as an advisory Director on a reduced remuneration and a payment of C45,000, and this arrangement was embodied in a deed. The question was whether these amounts were taxable as profits arising from an office. The Commissioners had held that the consideration for the payments was the promise of the assessee not to resign his office, and that therefore they were not profits arising from any office. The House of lords held, affirming the judgment of the majority of the Court of Appeal that the amounts were paid to (1) 8 I.T.R. Supplt. 75, 81. 713 the assessee in consideration of his continuing as a Director, and were therefore taxable. Thus, the only point for determination in the case was as to the character of the payments made to the appellant, and that depended on the true interpretation to be put on the agreement, and that really was a question of law. There was no question of the Commissioners recording findings on primary facts and then of drawing further inferences therefrom. The dictum relied on by the appellant therefore could have no reference to the question now under consideration. It is possible that having regard to the observations follow 'ing the one quoted above that "the same remark is true as to the construction of documents", what was meant to be conveyed was that the legal effect of facts stated in the deed of agreement was a question of law. In the context, it is impossible to construe the observation as an authority in support of the present contention of the appellant, and it should be mentioned that there is nothing about this in take judgments of the other members of the court. One other argument advanced on behalf of the appellant must now be considered. This is based on the following observations of Cozens Hardy M.R. in The Gramophone and Typewriter Ltd. vs Stanley(1): "It is undoubtedly true that if the Commissioners find a fact, it is not open to this court to question that finding unless there is no evidence to support it. If, however, the Commissioners state the evidence which was before them, and add that upon such evidence they hold that certain results follow, I think it is open, and was intended by the Commissioners that it should be open, to the court to say whether the evidence justified what the Commissioners held. I am satisfied that the case stated by the Commissioners falls under the latter head". these observations, the argument of the appellant was that whenever the Tribunal found certain basic facts and stated its conclusions thereon,, its determination was open to review by court, and that it was immaterial whether these conclusions were of fact or (1) 714 of law. The answer to this contention is furnished by the decision in The American Thread Company vs Joyce(1), wherein the true scope of these observations has been fully considered and authoritatively settled. There, Hamilton J. pointed out that what the observations meant was Chat if the Commissioners merely stated certain findings of fact and while expressing what according to them was their effect, did not intend that the expression should be taken as their finding thereon, then it must be taken that they had referred to the decision of the court the question as to what inference should be drawn from the basic findings, but that if they had not merely stated the basic findings but had also stated their conclusions thereon intending that they should be their determinations on the question, then those determinations, if conclusions of fact, would be binding on the court and that the assessee would then have been stated out of court. Dealing with the statement of the Commissioners which was under reference before him, the learned Judge observed at page 22: "It appears to me, therefore, that it is quite clear that the Commissioners have done this: they have stated their determination, with which the appellants are dissatisfied; they have stated the facts as found upon which they so determined. The facts as found they have stated in the first part of paragraph 17, and then they have stated in the previous paragraphs the materials on which they so found, and in so doing they have invited, and only invited, the de termination in point of law of the question whether there was evidence upon which they could reasonably arrive at the conclusion at which they did arrive". The decision in. The Gramophone and Typewriter Company Ltd. vs Stanley(2) is thus really not a pronouncement on what is a question of law but on what construction was to be put on the statement of the Commissioners which was before the court. It should be added that the situation envisaged by Cozens Hardy M. R. in The Gramophone and Typewriter Company (1) (2) 715 Ltd. vs Stanley(1) cannot arise under section 66 of the Act, as the Tribunal is itself charged with the duty to decide whether a question of law arises out of its order, and it cannot therefore merely pass it on for the determination of the court. The decision in The American Thread Company vs Joyce (2) was taken on appeal and confirmed by the Court of Appeal, of which it may be noted two of the members, Fletcher Moulton L.J. and Buckley L.J. were. parties to the decision in The Gramophone and Typewriter Company Ltd. vs Stanley(1), and they expressed themselves in agreement with the view taken by Hamilton J. There was a further appeal to the House of Lords, which in confirming the decision of the courts below expressly approved of the observations of Hamilton J. The Earl of Halsbury observed: "It is enough to say that they (the Commissioners) have found it and that there was evidence upon which they might find it, and if they did find it and if there was evidence upon which they might find it, there is no question of appeal here at all . I should have been contented absolutely to say that I entirely agree with every word of Mr. Justice Hamilton 's iudgment". (The American Thread Company vs Joyce). This decision is particularly important as the finding in that case was itself, as appears from the judgment of Hamilton J., an inference from facts found and, nevertheless, it was decided that it was a question of fact on which the finding of the Commissioners was final. I must now refer to another catena of cases relied on by the appellant in support of its contention that inferences from facts are questions of law. They are decisions of the Privy Council as to when a court of second appeal having authority to review decisions of the lower appellate court on a question of law could interfere with its findings of fact. In Ramgopal vs Shamskhaton(4), one Daud Rao was sought to be made liable on a mortgage to which he was not a (1) ; (3) , 165. 93 (2) (4) [1891] 921 19 I. A. 228, 716 party on the ground that be had knowledge of it and had accepted it. In holding that the acts found did not establish any ground of liability, Sir Richard Couch observed: "A finding that the bond shewed that the mortgage deed was accepted by the defendant, as binding obligation upon him, would be an inference of law, an inference which, in their Lordships ' opinion is not a just one from the facts which the Commissioner held to be proved. The knowledge of the mortgage and saying that the money due upon it was repayable, do not amount to an agreement by him to be bound byit. As the mortgage did not purport to be made in any way on behalf of Daud Rao it was not a case for ratification. A new agreement was necessary to bind him". Then, after referring to the observations of Lord Watson in Ramratan Sukal vs Mussumat Nandu(1) that "it has now been conclusively settled that the third Court, which was in this case the court of the Judicial Commissioner, cannot entertain an appeal upon any question as to the soundness of findings of ' fact by the second court; if there is evidence to be considered, the decision of the second Court, however unsatisfactory it might be if examined, must stand final", Sir Richard Couch continued: ". . the present case does not come within that rule. The facts found need not be questioned. It is the soundness of the conclusion from them that is in question, and this is a matter of law". It is this last observation that is relied upon for the appellant. But when read along with the other passages quoted above, it clearly recognises the distinction between findings of pure questions of fact and of mixed question of law and fact. In, Nafar Chandra Pal vs Shukur(2), Lord Buckmaster observed: "Questions of law and of fact are sometimes difficult to disentangle. The proper legal effect of a proved fact is essentially a question of law, so also is the question of admissibility of evidence and the (1) [1891 92] 19 I.A. 1. (2) [1917 18] 45 I.A. 183, 187. 717 question of whether any evidence has been offered by one side or the other; but the question whether the fact has been proved, when evidence for and against has been properly admitted, is necessarily a pure question of fact". The expression "the proper legal effect of a proved fact" is itself indicative that inferences from facts are not all of them questions of law open to consideration in second appeal but only those which involve the application of some legal principle. The actual decision in that case was that the question as to the character of land was one of fact not open to consideration in second appeal. In Dhanna Mal vs Motisagar(1), the point for determination was whether the facts proved were sufficient to establish a right of permanent occupancy. Discussing how far a finding on that question by the lower appellate court could be disturbed in second appeal, Lord Blanesburgh observed at page 185: "It is clear, however, that the proper effect of a proved fact is a question of law, and the question whether a tenancy is permanent or precarious seems to them, in a case like the present, to be a legal inference from facts and not itself a question of fact. The High Court has described the question here as a mixed question of law and fact a phrase not unhappy if it carries with it the warning that, in so far as it depends upon fact, the finding of the court of first appeal must be accepted". These observations again emphasise the distinction between inferences which are themselves questions of fact and inferences on mixed questions of law and fact. This question was the subject of further consideration by the Privy Council in Wali Mohammad vs Mohammad Baksh(2), Secretary of State for India in Council vs Rameswaram Devasthanam(3) and Lakshmidhar Misra vs Rangalal(1). In, Wali Mohammad vs Mohammad Baksh(2), Sir Benod Mitter (1) [1927] L.R. 54 I.A. 178. (2) [1929] L.R. 57 I.A 86:59M.L.J. 53. (3) [1984] L.R. 61 I.A. 163: (4) [1949] L.R. 76 I.A. 271: 718 exhaustively reviewed the authorities on the questions and stated the law in the following terms: "No doubt questions of law and fact are often difficult to disentangle, but the following propositions are clearly established: (1) There is no jurisdiction to entertain a second appeal on the ground of erroneous finding of facts, however gross the error may seem to be. (See Musumat Durga Choudrain vs Jawahir Singh Choudhri(1)). (2) The proper legal effect of a proved fact is essentially a question of law, but the question whether a fact has been proved when evidence for and against has been properly admitted is necessarily a pure question of fact. (Nafar vs Shukur(2)). (3) Where the question to be decided is one of fact, it does not involve an issue of. law merely because documents which were not instruments of title or otherwise the direct foundation of rights but were really historical matters, have to be construed for the purpose of deciding the question. (See Midnapur Zamindary Co. vs Uma Charan Mandal(3)). (4) A second appeal would not lie because some portion of the evidence might be contained in a document or documents and the first appellate court had made a mistake as to its meaning. (See Nowbutt Singh vs Chutter Dharee Singh(4)). Great reliance was placed by the appellants counsel on Dhanna Mal vs Moti Sagar(5) but there, the tenancy was admitted and the question was whether it was permanent or not, and the solution of it depended upon what was the legal inference to be drawn from proved facts, or in other words, the question was what was the legal effect. of proved facts". In Secretary of State for India in Council vs Rameswaram Devasthanam(6) where a finding of fact reached by the lower appellate court on a consideration of the documentary evidence was reversed in second appeal, Sir John Wallis in holding that the High Court had, in interfering with the finding of (1) [1889 90] 17 I.A. 122. (2) [1917 18) 45 I.A. 183. (3) P.C.; (4) 19 W.R. 222. (5) [1927] L.R. 54 I.A. 178. (6) [1934] L.R. 61 I.A. 163. 719 fact, acted in excess of its powers under section 100 observed "The question is mainly one of fact, and it is well settled that under section 100 of the Code of Civil Procedure the High Court has no jurisdiction to reverse the findings of fact arrived at by the lower appellate court however erroneous, unless they are vitiated by some error of law. Subsequently to the date of the judgments under appeal the Board has had occasion to emphasis the fact that this rule is, equally applicable to cases such as this in which the findings of the lower appellate court are based on inferences drawn from the documents exhibited in evidence". If an inference from documents exhibited in evidence is a question of fact, an inference from facts found on the evidence must equally be so. There is one more decision of the Privy Council bearing on this question. In Lakshmidhar Misra vs Rangalal(1), the question was whether the finding of the Subordinate Judge in appeal that there had been a dedication of certain lands as cremation ground could be reversed in second appeal. In ' holding that the finding was open to review by the High Court, Lord Radcliffe observed: "Issue No. 5, (whether the land was a cremation ground) is essentially a mixed question of law and fact. There are findings of fact by the Subordinate Judge which must indeed be accepted as binding in any consideration of this matter on further appeal: but his actual conclusion that there had been a dedication or lost grant is more properly regarded as a proposition of law derived from those facts than as a finding of fact itself". These observations lend no support to the broad contention of the appellant that inferences from facts are of necessity and always questions of law. We have discussed the authorities at great length, as some of the observations contained therein appear, at first sight, to render plausible the contention of the appellant, and it seems desirable that the true (1) [1949] L.R. 76 I.A. 271, 720 meaning of those observations Should be clarified, lest error and misconception should embarrass and fog the administration of law. The position that emerges on the authorities may thus be summed up: (1)When the point for determination is a pure question of law such as construction of a statute or document of title, the decision of the Tribunal is open to reference to the court under section 66(1). (2)When the point for determination is a mixed question of law and fact; while the finding of the Tribunal on the facts found is final its decision as to the legal effect of those finding is a question of law which can be reviewed by the court. (3) A finding on a question of fact is open to attack, under section 66(1) as erroneous in law when there is no evidence to support it or if it is perverse. (4) When the finding is one of fact, the fact that it is itself in inference from other basic facts will not alter its character as one of fact. Applying these principles, admittedly there is no question here of construction of any statutory provision or document of title. The issues which arise for determination whether the sales entered in the books of the appellant in the names of the intermediaries were genuine and if not, to whom the goods were sold and for what price are all questions of fact. Their determination does not involve the application of legal principles to facts established in the evidence. The findings of the Tribunal are amply supported by evidence and are eminently reasonable. It should, therefore, follow that there is no question which could be referred to the court under section 66(1). it was argued for the appellant that what the Tribunal had found was that the intermediaries, firms and companies were benamidars for the appellant, that a question of benami was one of mixed law and fact, and that accordingly a finding thereon was open to review under section 66(1). Whether that is a correct reading of what the Tribunal bad found will presently be considered. Assuming that such is the finding, what is the ground for holding that a finding of benami is one of mixed law and fact? The only basis 721 for such a contention is that the finding that a transaction is benami is a matter of inference from various primary basic facts such as who paid the consideration, who is in enjoyment of the properties and the like. But that is not sufficient to make the question one of mixed law and fact unless, as already stated, there are legal principles to be applied to the basic findings before the ultimate conclusion is drawn. But no such principles arise for application to the determination of the question of. benami, which is purely one of fact, and none has been suggested by the ap pellant. In Gangadara Ayyar vs Subramania Sastrigal(1), the Federal Court had to consider whether concurrent findings of benami by the courts below could be reviewed by it, and it was held that it could not be clone as the practice of the court was not to interfere with concurrent findings of fact unless there were exceptional grounds therefor and that there were none such in that case. It should be noted that the finding of benami in that case was a matter of inference from primary facts found which are set out at page 573. But it was nevertheless held to be a question of fact. In Misrilal vs Surji(2), it was held by the Privy Council that a finding of benami was one of fact not open to attack in second appeal. This contention of the appellant must accordingly be rejected. It was next contended that the finding of the Tribunal that the intermediaries, firms and companies were benamidars. for the appellant was bad for the following reasons: (1)It had been reached without due consideration of several matters relevant for such a determination. (2)The finding of benami in so far as it related to the companies was bad for not considering the tests laid down in Smith, Stone and Knight vs Birmingham Corporation(3) as material for a decision on the point. (1) [1949] 1 M.L.J. 568: A.I.R. 1949 F.C. 88 (2) A.I.R. 1950 P.C. 28: (3) 722 (3) On the facts found,, the proper conclusion to come to was that the intermediaries were benamidars not for the appellant but for Mr. Thyagarajan Chettiar of the Managing Agents firm. These contentions will now be considered. As regards the first contention, the argument on behalf of the appellant was this: An important test for determining whether a transaction is benami is to discover the source of consideration for the transfer. When the question is whether firms and companies are benamidars for another person, what has to be found is whether it was the latter who found the capital of those concerns. The firms and companies had according to their books their own capital, and there is no finding that the appellant subscribed it. Another important test of benami is to find who has been in enjoyment of the benefits of the transaction. It has not been shown that the profits of the intermediaries had been utilised by the appellant. Therefore, the finding that the intermediaries were benamidars of the appellant could not stand. Now, the assumption underlying this argument is that the Tribunal had found in its order that the intermediaries were benamidars for the appellant, but there is no basis for this in the order. In this connection, it is necessary to note that the word 'benami ' is used to denote two classes of transactions which differ from each other in their legal character and incidents. In one sense, it signifies a transaction which is real, as for example when A sells properties to B but the sale deed mentions X as the purchaser. Here the sale itself is genuine, but the real purchaser is B, X being his benamidar. This is the class of transactions which is usually termed as benami. But the word 'benami ' is also occasionally used, perhaps not quite accurately, to refer to a sham transaction, as for example, when A purports to sell his property to B without intending that his title should cease or pass to B. The fundamental difference between these, two classes of transactions is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none 723 such, the transferor continuing to retain the title notwithstanding the execution of the transfer deed. It is only in the former class of cases that it would be necessary, when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the consideration for the transfer, X or B. But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the consideration but whether any consideration was paid. Therefore, there will be force in the contention of the appellant that a finding as to who furnished the capital for the intermediaries was requisite before they could be held to be benamidars, if the Tribunal had held them to be benamidars in the former sense but not in the latter. We must. , therefore, examine what it is that the Tribunal has actually found. Now, the Tribunal has not held that any of the transactions with which the assessment proceedings are concerned are benami. Indeed, the word 'benami ' does not find a place anywhere in its order. It is only in the question which the appellant framed for reference to the court in its application under section 661) that it has chosen for the first time to introduce the word 'benamidar '. That apart, looking at the substance of the finding, the point that arose for determination before the taxing authorities was what profit the appellant had made on certain sales standing in its books in the names of the intermediaries. If the sales were true, the amounts shown in the books as price received therefor would be the basis for working out the profits, and that was the stand of the appellant; but the authorities held that those sales were sham and the entries relating to the payment of price therefor fictitious. Then, they found that the concerned goods were sold by the appellant directly to its own constituents, that the price paid by them was actually received by it, and that should be the basis for calculating its profits. Thus, the point which was actually in issue in the proceedings was a question of benami in the second sense and not in the first, and to decide that, the Tribunal bad only to 724 find whether any price was paid by the intermediaries for the sales and not who paid the price for them. It is scarcely necessary to add that no question arises as to whether the intermediaries are benamidars for the ultimate purchasers, because the claim of the former is that they had sold the goods to the latter under fresh contracts at different prices. Nor could there be a question of benami in the first sense, as that could arise only between a party to a deed and another who is economic not a party to it but claims to be beneficially entitled to the properties conveyed by the deed. Therefore, on the findings of the Tribunal, the question whether the intermediaries were benamidars for the appellant could not arise, and the further question as to who found the capital for the intermediaries is altogether irrelevant. Likewise, on the finding that the yarn was really sold by the appellant not to the intermediaries but to its own constituents and that they paid the price therefor to the appellant, the question who had the benefit of the transaction could not arise either. (2)It is next contended that some of the intermediaries were private limited companies registered in accordance with the provisions of the Companies Act and were in law distinct legal entities as held in Solomon vs Solomon & Company(1), and that they could not be held to be benamidars for the appellant without deciding the matters mentioned by Atkinson J. in Smith, Stone and Knight vs Birmingham Corporation (2) . The learned Judge observed at page 121: "It seems therefore to be a question of fact in each case, and those cases indicate that the question is whether the subsidiary was carrying on the business as the company 's business or as its own. I have looked at a number of cases they are all revenue cases to see what the courts regarded as of importance for determining that question. There is San Paulo Brazilian Rly. Carter(3), Apthorpe vs Peter Schoenhofen Brewery Co. Ltd. (4), Frank Jones Brew (1) ; (2) (3) [1896] A.G. 31: (4) 725 ing Co. vs Apthorpe(1), St. Louis Breweries vs Apthorpe(2), and I find six points which were deemed relevant for the determination of the question: who was really carrying on the business? In all the cases, the question was whether the company, an English company here, could be taxed in respect of all the profits made by some other company, a subsidiary company, being carried on elsewhere. The first point was: Were the profits treated as the profits of the Company? wben I say 'the company ' I mean the parent company secondly, were the persons conducting the business appointed by the parent company? Thirdly, was the company the head and the brain of the trading venture? Fourthly, did the company govern the adventure, decide what should be done and what capital should be embarked on the venture? Fifthly, did the company make the profits by its skill and direction? Sixthly, was the company in effectual and constant control?" The contention of the appellant is that before the intermediaries could be held to be benamidars for the appellant, findings ought to have been recorded on the six points mentioned in the judgment of Atkinson, J. This contention proceeds on a misapprehension as to the true scope of the above observations and of the decisions referred to therein. In those cases, the question was whether the profits earned by a subsidiary company X could be held to be profits earned by the parent company A and taxed in the hands of company A. It was held that the fact that X was a legal entity did not stand in the way of its profits being treated as profits of A, if, as observed by Lord Sterndale in Inland Revenue Commissioners vs Samson(3), X was doing the business of A and not its own, and various tests were laid down for ascertaining whether it was A who was running the business of X. But here, no such question arises. The true scope of the assessment proceedings is to discover what profits were really made on certain sales effected by the appellant, and the intermediaries came into (1) (2) (3) ; 726 the picture only as the persons in whose names the sales were made. The question whether apart from those sales the intermediaries were genuine commercial bodies having existence independent of the appellant did not arise for determination, as a finding that they were such bodies would have had no effect on the chargeability of the appellant to tax on the profits made by it on the sales in question. The question of the true status of the intermediaries would have assumed practical importance if they had done business other than the sales in question and had made profits thereon, and those profits were sought to be taxed as profits made by the appellant. It would then be a legitimate contention for the appellant to advance that could not be done unless the intermediaries were found to have been really benamidars for it. In that case, it would have been important to consider who found the capital for the concerns and who was running them. But here, the tax is levied only on the profits ostensibly earned by the intermediaries on the sales which stand in the books of the appellant in their names. If those sales are sham, then the order of assessment must stand even if the intermediaries were real concerns, which had found their own capital and earned their own profits in other transactions. If an individual A carrying on his own business lends his name to the business transaction of B. the latter cannot escape the obligation to pay the tax on these transactions on the ground that A had also his own genuine business. Likewise if companies doing their own business lend their names to business transactions of other persons, those other persons cannot be heard to say that they are not taxable on the profits of these transactions for the reason that the companies were also carrying on their own business. Therefore, on the finding that the sales were sham, no question arises as to the constitution or status of the intermediaries. It is true that the Tribunal has directed that all the profits earned by the intermediaries should be added to the profits of the appellant but that is because it has found that the intermediaries 727 did no business of her than the transactions of the appellant. And this finding clearly reveals how hollow and unsubstantial the contentions of the appellant are as to the sources of capital for the intermediaries and the application of the tests laid down in Smith, Stone and Knight vs Birmingham Corporation(1). It is a most unreal question to raise of firms and companies whose only business consists of sham transactions as to who found the capital for them or who was running them. (3) It is next contended that though the facts proved might justify a finding that the intermediaries were benamidars, they did not necessarily lead to the conclusion that they were benamidars for the appellant. It is argued that on the findings of the Tribunal that it was Mr. Thyagaraja Chettiar, the Managing Agent of the appellant, that had setup the intermediaries, that it was his relations and men who had been put up as partners and shareholders of these concerns, and that it was he that generally had the control of the business, the proper inference to draw was that the intermediaries were benamidars for Mr. Tbyagaraja Chettiar, and that in consequence their profits were liable to be added to his and not to those of the appellant. This argument again proceeds on the assumption that the profits of the intermediaries have been taxed in the hands of the appellant on the ground that they are its benamidars. But, as already stated, that is not the true position. What are sought to be taxed in these proceedings are the profits made on certain sales and not the profits made by the intermediaries as distinct entities chargeable to tax under section 3 of the Act, and the only relevant points for decision are, what profits were made on those sales and by whom. On the finding that the appellant sold the goods direct to the ultimate purchasers and recovered the price therefor, it is only the appellant that could be taxed for the profits made thereon and not the Managing Agent. It is of no consequence that in form the order is that the profits of the intermediaries should be added to those of the (1) [1939] 4 A.E.R.116. 728 appellant, because, as pointed out in discussing the previous contention of the appellant of which the present is but a repetition in another form, the intermediaries did no other business than the sales concerned in this assessment, so that the profits of the business mean the same thing as profits made on the concerned sales. There is another aspect of the matter, which calls for notice. If the contention of the appellant that the intermediaries were benamidars for Mr. Thyagaraja Chettiar is accepted, it means that he had, by availing himself of his position as Managing Agent, unjustly enriched himself at the expense of the shareholders to the tune of over Rs. 25 lakhs. Now, Mr. Thyagaraja Chettiar is the dominant member of the firm of Managing Agents. It is this firm that has been in management of the affairs of the company at all times and has been representing it in the assessment proceedings at all stages, and it is through this firm that the appellant speaks in the present appeals. The position then is that Mr. Thyagaraja Chettiar as Managing Agent of the appellant charges himself in his individual capacity with conduct which is grossly fraudulent and infamous, so that the company might escape its liability to tax. This, to our minds, is a most surprising position to take. But we are not concerned here with the ethics of it and must consider it on its merits so long as the law does not bar it. But what are its merits The position which the appellant took up with reference to this matter at the several stages of the assessment has been neither uniform nor even consistent. Thus, before the Appellate Assistant Commissioner its argument was that the Managing Agent had been the protector of the interests of the ' company at all times, that he had "Stood by it in its lean years" and should "not therefore be presumed to have acted against the interests of the company" and that therefore the transactions in the names of the intermediaries should be accepted as genuine. Before. the Tribunal, the contention was that even if the intermediaries were bogus concerns "it might be that some other individual got the bene 730 fit and not the company". Thus, the contention now advanced was not thought of in the earlier stages and was still nebulous and in the making, when the matter was before the Tribunal, and it is only in the, argument that it has assumed a definite and concrete shape. Dealing with the contention as advanced before it,. the Tribunal referred to several facts such as that the sales in favour of the intermediaries were for unusually large quantities and for prices far below the market rate and even the cost of production, that the appellant was a public company with a Board of Directors in charge of its business, and that they must have known all about these transactions. Is it likely that the Directors would have accepted these sales involving such huge loss to the company and carried on regularly from month to month and year to year during the whole of this period as proper and genuine, unless they considered that it was the company and not Mr. Thyagaraia Chettiar who was to have the benefit of them? it was argued by the learned Solicitor General for the respondent that if on the facts two inferences were possible and the Tribunal chose to draw one and not the other, it was not a matter in which the court could interfere, if the inference is one of fact. That is a proposition of law well settled, and has not been disputed. Now, on the facts, two inferences are possible. One is that the object of the Managing Agent was to defraud the shareholders by purchasing goods himself at a low valuation for his own benefit and that the intermediaries were set up by him for that purpose. The other is that they were set up for the purpose of concealing portions of the profits earned by the company so as to reduce the tax to which it was liable to be assessed. The former involves cheating the shareholders; the latter, evad ing the tax due to the State. Is it an unreasonable inference for the Tribunal to draw that the motive by which the Managing Agent was actuated was the latter and not the former? Is it not more legitimate to presume that the Managing Agent wanted to benefit the shareholders by reducing the 730 tax rather than he wanted to defraud them by himself purchasing the goods for a low price in the names of the intermediaries? If the Tribunal came to the former conclusion and it is one which could reasonably be come to on the materials, it is not one which the court can review, being one of fact. This ground. of attack also must be rejected. In the result, all the contentions of the appellant based on the assumption that the intermediaries had been held to be benamidars for the appellant must be overruled on the ground that on the findings of the Tribunal they do not really arise. Lastly, it was contended that the profits earned by the intermediaries bad not been brought into the books of the company_ as its income, had not been included in its balance sheet and had not been distributed as dividends or added to its reserves, and, not having been treated as its income or profits, could not be taxed. The decisions in St. Lucia Usines and Estates Co. vs St. Lucia (Colonial Treasurer) (1), Commissioner of Taxes vs Melbourne Trust(2) and Commissioner of Income tax, Bihar and Orissa vs Maha rajadhiraja of Darbhanga(3) were quoted in support of this contention. This question is, however, no longer res integral and is covered by the decision of this Court in Commissioner of Income tax vs K. B. M. T. T. Thyagaraja Chetty(1). There, the assessee which was no other than the firm of Messrs K.R.M.T.T. Thyagaraja Chettiar and Co., the Managing Agents of the present appellant, failed to bring into its profit and loss account a certain amount which it had earned as commission, and the point for decision was whether that amount was liable to tax. The contention of the assessees was that it was not liable as it had not been treated as profits by the assessee and the decisions in St. Lucia Usines and Estates Co. vs St. Lucia (Colonial Treasurer)(1), Commissioner of Taxes vs Melbourne Trust(2) and Commissioner of Income tax, Bihar and Orissa vs Maharajadhiraja of Darbhanga(3) were relied on in support of this position. But this Court disagreed with this contention, and (1) [1924] A.G. 508. (2) (3) 60 I.A. 146. (4) 731 held that the liability to pay tax on the income arose when it had arisen or accrued and that how the assessee dealt with it subsequently did not affect that liability, and distinguished the decisions in St. Lucia Usines and Estates Co. vs St. Lucia (Colonial Treasurer) (1) and Commissioner of Taxes vs Melbourne Trust(2) on the ground that they were pronouncements on the particular statutes there under con sideration and were not authorities on the question of assessment of profits and gains under the Indian Income tax Act. Applying this decision, the appellant having been found to have sold its goods to the ultimate purchasers and received the prices, there can be no question but that the profits had accrued to it both in the business and in the legal sense and that liability to tax had arisen. If an individual were to sell goods and receive the price therefor, that would be income accrued or arisen liable to tax in his hands even though he should have failed to enter it in his accounts. A party cannot avoid tax by adopting the simple expedient of not disclosing its receipt in his books. That will be a case of income accrued or arisen but concealed and not of income not accrued or arisen. This is conceded by the appellant. But it is argued that different considerations arise in the case of companies registered under the Indian Companies Act, because there are provisions in the Act as to how the profits are to be disposed of, such as distribution of dividends or adding to the reserve and until that was done, there was no accrual of income or of profits under the statute. This is to confuse accrual of income with the disposal of it. Income which has accrued to an assessee might remain undisposed of by him, but the liability to tax attaches to it under the provisions of the Indian Income tax Act as soon as it accrues. It is no concern of the revenue how and when profits are disposed of by the assessees, and for this purpose it makes no difference whether the assessee is an individual or a company, both of them being equally liable to tax 'on income and profits when they have arisen or accrued. The (1) (1924] A.C. 508. 95 (2) 732 provisions of the Companies Act as to the disposal of profits are designed to protect the interests of the shareholders and have no effect on the right which the State has under the provisions of the Act to impose a tax on income when it arises or accrues. It should also be mentioned that though the decision in Commissioner of Income tax, Madras vs K. R. M. T. T. Thyagaraja Chetty(1) relates to a firm and not a company, the decisions in St. Lucia Usines and Estates Co. vs St. Lucia (Colonial Treasurer) (2) an(? Commissioner of Taxes vs Melbourne Trust(3) which were held to be inapplicable to the imposition of a charge under the Indian Income tax Act related to companies, and the argument and the decision pro ceeded on the footing that principles applicable were the same both to firms and companies. The decision in Commissioner of Income tax, Madras vs K. R. M. T. T. Thyagaraja Chetty(1) must accordingly be held to conclude this question against the appellant. It must be said of this contention that it was raised before the Tribunal and negatived. Being a question of law, the appellant bad a right to have it referred to the court under section 66(1). But the question as framed by the appellant in its application under section 66(1) did not specifically raise this point; nor does it appear to have been argued in the High Court. As the matter is now concluded by authority, it will be an idle formality to direct the Tribunal to refer the question for the decision of the court. The powers of this Court in appeal under article 136 are not intended to be exercised for such a purpose. That disposes of the main and substantial questions that have been agitated in these proceedings. There is one other matter in respect of which the appellant sought reference to the court in its application under section 66(1). The facts relating to this matter are that during the periods of assessment with which the appeals are concerned, the appellant opened branches in the States of Travancore, Cochin, Pudukkottah and Mysore, and sold yarn to its consti (1) [1964] S.C.R. 258: (2) , (3) 733 tuents in those States through these branches. The point in dispute is whether the profits made by the appellant on those sales are chargeable to tax. The contention of the appellant before the Tribunal was that the matter was governed by section 14(2) (c), and that the profits could be taxed only if they were remitted to British India. That was not disputed by the Department, but they contended that as the appellant sold in the States goods manufactured by it in British India, the governing provisions were sections 42(1) and 42(3), and that under these provisions, the appellant was liable to be taxed on such portions of the profits as were apportionable to the manufacture of the goods in British India. That was accepted by the Tribunal, and the profits were apportioned in the ratio of 85:15. In its application under section 66(1), the appellant raised the contention that sections 42 (1) and 42 (3) applied 'only to nonresidents, and that it was only section 14(2) (c) that would apply to residents and applied to have that question referred to the decision of the court. But the Tribunal held that the decision of this Court in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai and Co.(1) had settled that sections 42(1) and 42(3) applied both to residents as well as nonresidents and consequently declined to refer the question ' The correctness of this decision does not appear to have been contested before the High Court, the only point dealt with in the judgment of the learned Judges being as to the correctness of the ratio in which the apportionment was made. Even in this Court, it was only this question that was pressed on the strength of the decision in Commissioner of Income tax and Excess Profits Pax vs section Sen(2), Section 14 was mentioned in the course of the argument, but no contention was advanced that sections 42(1) and 42(3) ap plied only to non residents, and the decision in Com Missione; of Income tax vs Ahmedbhai Umarbhai and Co.(1) was not even so much as referred to in the (1) ; (2) 734 course of the argument, and the appellant did not even ask for this question being referred. That apart,in view of the decision in Commissioner of Income tax vs Ahmedbhai Umarbhai and Co.(1), no purpose would be served by directing a reference of this question,and the Tribunal was right in observing that "it is not even of academic interest to refer the said question to the High Court". On the question whether the fixation of ratio was correct, we are of opinion that it is a pure question of fact, and is not open to reference under section 66(1). In the result, the appeals fail, and are dismissed with costs.
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A conclusion based on facts, even if it's drawn from other facts that were proven with evidence, is not a legal question. This means it can't be sent to the High Court for a decision under section 66(1) of the Indian Income Tax Act. Such a conclusion can only be a legal question if the issue is a mix of law and facts. Based on established legal rules, only questions about these things can be considered legal questions under this section: (1) how to understand a law or a legal document; (2) the legal impact of the facts when the issue is a mix of law and facts; (3) a conclusion of fact that has no evidence to support it, or is unreasonable and illogical. Even though a factual conclusion without any supporting evidence or that is unreasonable can be challenged as a legal error, the Tribunal's (court) decision is still final if there is evidence to consider. It doesn't matter if the Court might disagree with the Tribunal's view. The court used the principles established in the case of Great Western Railway Co. vs Bater. To judge if a conclusion based on many facts is correct, you have to look at all the facts together. It's wrong to look at each fact separately to try and explain them in a different way, and to suggest that the Tribunal should have drawn different conclusions. The court considered the principles established in the case of Edwards (Inspector of Taxes) vs Bairstow. Simply misunderstanding evidence is not the same as having no evidence at all. Unless the evidence is irrelevant or can't be used in court, the Tribunal's conclusion can't be challenged just because it's supposedly based on no legal evidence. Whether a question is about facts or a mix of law and facts depends on this: When deciding a factual question, you don't need to use any legal principles to find the basic facts or reach a final conclusion. But when dealing with a mix of law and facts, you have to use legal principles to reach the final conclusion based on the basic facts. The court considered the principles established in the cases of Herbert vs Samuel Fox and Co. Ltd. and The Queen vs Special Commissioners of Income tax. Some English court decisions suggest that drawing conclusions from facts is a legal question. But this really refers to questions that are a mix of law and facts. The court made reference to and clarified the legal points made in the cases of Edwards (Inspector of Taxes) vs Bairstow, Bam ford v Osborne, Thomas Fattorini (Lancashire) Ltd. vs Commissioners of Inland Bevenue, and Cameron vs Prendergast. The principles established in The Gramaphone and Typewriter Company Ltd. vs Stanley, were determined to not be relevant. The court used the principles established in The American Thread Company vs Joyce. Also, rulings made by the Privy Council (a former court of appeal) do not support the idea that conclusions from facts are always legal questions. The court made reference to and clarified the legal points made in the cases of Ram Gopal vs Shamskhaton, Nafar Chandra Pal vs Shukur, Dhanna Mal vs Moti Sagar, Wali Mohammad vs Mohammad Baksh, Secretary of State for India in Council vs Bameswaram Devasthanam, and Lakshmidhar Misra vs Bangalal. Therefore, in this specific case, the Appellate Tribunal (court) looked at the facts and found strong evidence that the assessee company (the company being taxed) had created fake sales. These sales were made under the names of other companies and firms, which were created only to hide the assessee's profits. These other companies seemed to have no other business besides these sales. The Tribunal concluded that these sales were fake, and the profits were actually earned by the assessee company, which sold the goods and received the money. Therefore, the Tribunal decided that these profits should be added to the assessee's reported profits. In this situation, there is no legal question that needs to be sent for review under section 66(1) of the Act. The question of "benami" (holding property in someone else's name) is a purely factual question, not a mix of law and facts. This is because it doesn't require applying any legal principles to decide it. The court considered the principles established in the cases of Gangadhara Ayyar vs Subramania Sastrigal, and Misrilal vs Surji. The word "benami" has two meanings, which have different legal effects. In one case, the sale is real, and the property ownership is transferred, but the person who appears to be the new owner is not the real owner. In the other case, the sale to the "benamidar" (the person holding the property in their name) is fake, and the original owner doesn't intend to give up ownership. The key difference is that in the first case, the new owner actually owns the property. In the second case, the original owner still owns it. If there's a dispute, who paid for the property matters only in the first case. In the second case, the only question is whether any payment was made at all. So, in this case, the issue is "benami" in the second sense. The Tribunal had to decide if the other companies actually paid for the goods that the assessee company supposedly sold to them. It wasn't necessary for the Tribunal to decide if these other companies had their own independent existence, because that wouldn't change whether the assessee company had to pay taxes. The court distinguished and held the principles established in Smith, Stone and Knight vs Birmingham corporation, to not be applicable. Under the Indian Income Tax Act, the responsibility to pay taxes begins as soon as the income is earned, whether the person or company is registered or not. The way a company chooses to manage its profits does not affect its tax responsibility. The Indian Companies Act is meant to protect the shareholders' interests, but it doesn't affect the government's right to collect taxes. Even though there was a legal question that could have been reviewed under section 66(1), the assessee company didn't bring it up in their application under that section. So, the Court won't order a new review, because the issue is now clear based on a previous court decision. The court considered the principles established in Commissioner of Income tax, Madras vs K.B.M.T.T. Thiagaraja Chetty. The Tribunal was correct in refusing to review whether sections 42(1) and 42(3) of the Indian Income Tax Act only apply to non-residents, as the assessee company argued. These sections apply to both residents and non-residents. The court considered the principles established in Commissioner of Income tax vs Ahmedbhai Umarbhai and Co. Deciding how to divide the profits between where the goods were made and where they were sold, and whether the Tribunal's division was correct, is purely a question of fact. It can't be reviewed by the Court under section 66(1) of the Act.
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312, 310 and 311 of 1950 51. 20,000 which will be about the cost price and in the books of A these goods will be shown as sold by it to X for Rs. If the sale by the Company to A and the connected sale by A to X were genuine, the Company would have made no profit on the sale, whereas A would have made a profit of Rs. But in fact,both these sales were sham transactions; the only sale that took place was that by the Company to X and the price actually received by it was not Rs. Both these sales were fictitious, the only real transaction was the sale by X to the Company and the price actually paid therefor by the Company was only Rs. By the device of sale by X to A and by A to the Company, the cost price had been inflated by Rs. The appellant contested this position, and maintained that the state of affairs disclosed by its accounts was true, that its sales in favour of the intermediaries were genuine, and that, in fact, little or no profits were made by it in those transactions, that it purchased cotton only from the intermediaries and, did pay them the amounts as shown in the accounts. On these facts, the Tribunal came to the conclusion that the contentions of the Department had been fully established, namely , that the intermediaries were dummies brought into existence by the appellant for concealing its profits, that the sales standing in their names were sham and fictitious, and that the, profits ostensibly earned by them on those transactions were, in fact, earned by the appellant, and should be added ,to the amounts shown as profits in its accounts. Under that section, it is only a question of law that can be referred for decision of the court, 'and it is impossible to argue that the conclusion of the Tribunal is anything but one of fact. It has been held on the corresponding provisions in the English Income tax statutes that a finding on a question of fact is open to attack as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse, but that where there is evidence to consider, I the decision of the Tribunal is final even though the court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment. Now, the determination of the Tribunal in the present proceedings being, one of fact, it is open to review by the court only on the ground that it is not supported by any evidence or that it is perverse. The appellant understood this position quite correctly, and in its application under section 66(1) it stated the only question which it wanted the Tribunal to refer to the court with reference to the present controversy in the following terms: "Whether on the facts and in the circumstances of the case there is any legal evidence to support the finding that the four firms, Meenakshi and Co., Sivagami and Co., Mangayarkarasi and Co., and Alagu and Co., were benamidars for the appellant and that the profits made by these firms were profits made by the appellant". But apart from that, it will be seen that the only ground of attack which was directed against the finding of the Tribunal was that there was no legal evidence. The Tribunal also referred to the fact that the only business which the intermediaries did was to purchase yarn from the appellant and sell it to its own constituents. The significance of this contention lies in this that it grants and Mr. P. R. Das was quite frank about it that the facts found did point to the fact that the 704 intermediaries were dummies, leaving outstanding for decision only the question whether on the evidence they were benamidars for the appellant or for Mr. Thyagarajan Chettiar. The result then is that the finding of the Tribunal viewed as one of fact, which in truth it is supported by evidence, and is not unreasonable and is not open to attack on any of the grounds on which such a finding could be assailed in a reference under section 66(1). It was next contended for the appellant that inference from facts was a question of law, and that as the conclusion of the Tribunal that the intermediaries were dummies and that the sales standing in their names were sham and fictitious was itself an inference from several basic facts found by it was a question of law and that the appellant had the right under section 66(1) to have the decision of the court on its correctness, and support for this position was sought from certain observations in Edwards (Inspector of Taxes) vs Bairstow(1), Bomford vs Osborne(2), Thomas Fattorini (Lancashire), Ltd. vs Commissioners of Inland Revenue(3), Cameron vs Prendergast(" and The Gramophone and Typewriter Company, Ltd. vs Stanley(5). , then a finding of fact must, when it is an inference from other facts, be open to consideration not only on the ground that it is not supported by evidence or perverse but also on the ground that it is not a proper conclusion to come to on the facts. On a consideration of these facts, the court comes to the conclusion that the promissory note is not genuine, 706 Here, there are certain facts which are ascertained, and on these facts, a certain conclusion is reached which is also one of fact. The fallacy underlying this contention is that it fails to take into account the distinction which exists between a pure question of fact and a mixed question of law and fact, and that the observations relied on have reference to the latter and not to the former, which is what we are concerned with in this case. That is a question of law. The ultimate finding on the issue must, therefore, be an inference to be drawn from the facts found, on the application of the proper principles of law, and it will be correct to say in such cases that an inference from facts is a question of law. The proposition that an inference from facts is one of law will be correct in its application to mixed questions of law and fact but not to pure questions of fact. It is a question of the true inference which they (Commissioners) had to draw as a matter of evidence upon the facts which they had in evidence before them. The result of the authorities then is that inference from facts would be a question of fact or of law according as the point for determination is one of pure fact or mixed question of law and fact. The finding of the Commissioner was that it was not. The Lord Chancellor, dealing with this aspect of the case, referred to the decisions in Cooper vs Stubbs(1) and Jones vs Leeming(2), where it had been held that whether trading activities amounted to carrying on business was a pure question of fact, and observed at page 587: "Yet it must be clear that to say that such an inference is one of fact postulates that the character of that act which is inferred is a matter of fact. 585 586: "This appeal must be allowed and the assessments must be confirmed, For it is universally conceded that though it is a pure finding of fact, it may be set aside on grounds which have been stated in various ways but are, I think, fairly summarised by saying that the court should take that course if it appears that the Commissioners have acted without any evidence or upon a view of the facts which could not reasonably be entertained". That is to say, even if the question was one of pure (1) (2) 710 fact, the finding of the Commissioners was liable to be set aside on the ground that there was no evidence in support of it or that on the evidence it was perverse. What is of significance in this is that the Lord Chancellor dealing with the question whether the adventure was in the nature of trade as one of fact does not hold that the ultimate finding was one of law by reason of its being one of inference from facts but treats it only as a finding of fact and open to attack as such. This decision, therefore, is no authority for the position that where a findig is given on a question of fact based upon an inference from facts, that is always a question of law, and the following observation of Lord Radcliffe at page 592 is directly against it: "I do not think that inferences from other facts are incapable of being themselves findings of fact although there is value in the distinction between primary facts and inferences drawn from them". There is nothing in this decision again which supports the contention of the appellant that findings on questions of fact based on inference from other facts should be regarded as questions of law. These observations clearly establish that inferences from facts found need not necessarily be inferences of law but may be conclusions of fact, and such conclusions of fact could be attacked on grounds on which findings of fact could be attacked, namely, there is no evidence to support them as for example, if the conclusion does not follow even if all the facts found are accepted. The finding of the Board of Referees was that distribution of profits had not been made within a reasonable time, (1) ; 712 but their decision was reversed by the House of Lord& on the ground that there was no evidence in support of it. The appellant, however, relies on the following observations in the speech of Lord Porter at page 667: "I. think that the final conclusion is not a fact but an inference from facts previously set out, and that, therefore, that conclusion is not binding upon the tribunal to which the case is referred unless it appears from the previous findings that there are facts which support it. In the context, what these remarks mean is that when the final conclusion is one of fact and is itself an inference from other facts, it is open to attack on the ground that the basic facts themselves do not constitute evidence in support of the final conclusion a position which does not arise here. There. Thus, the only point for determination in the case was as to the character of the payments made to the appellant, and that depended on the true interpretation to be put on the agreement, and that really was a question of law. in The Gramophone and Typewriter Ltd. vs Stanley(1): "It is undoubtedly true that if the Commissioners find a fact, it is not open to this court to question that finding unless there is no evidence to support it. There, Hamilton J. pointed out that what the observations meant was Chat if the Commissioners merely stated certain findings of fact and while expressing what according to them was their effect, did not intend that the expression should be taken as their finding thereon, then it must be taken that they had referred to the decision of the court the question as to what inference should be drawn from the basic findings, but that if they had not merely stated the basic findings but had also stated their conclusions thereon intending that they should be their determinations on the question, then those determinations, if conclusions of fact, would be binding on the court and that the assessee would then have been stated out of court. were. This decision is particularly important as the finding in that case was itself, as appears from the judgment of Hamilton J., an inference from facts found and, nevertheless, it was decided that it was a question of fact on which the finding of the Commissioners was final. It is the soundness of the conclusion from them that is in question, and this is a matter of law". 717 question of whether any evidence has been offered by one side or the other; but the question whether the fact has been proved, when evidence for and against has been properly admitted, is necessarily a pure question of fact". Discussing how far a finding on that question by the lower appellate court could be disturbed in second appeal, Lord Blanesburgh observed at page 185: "It is clear, however, that the proper effect of a proved fact is a question of law, and the question whether a tenancy is permanent or precarious seems to them, in a case like the present, to be a legal inference from facts and not itself a question of fact. (2)When the point for determination is a mixed question of law and fact; while the finding of the Tribunal on the facts found is final its decision as to the legal effect of those finding is a question of law which can be reviewed by the court. (3) A finding on a question of fact is open to attack, under section 66(1) as erroneous in law when there is no evidence to support it or if it is perverse. The issues which arise for determination whether the sales entered in the books of the appellant in the names of the intermediaries were genuine and if not, to whom the goods were sold and for what price are all questions of fact. It should, therefore, follow that there is no question which could be referred to the court under section 66(1). it was argued for the appellant that what the Tribunal had found was that the intermediaries, firms and companies were benamidars for the appellant, that a question of benami was one of mixed law and fact, and that accordingly a finding thereon was open to review under section 66(1). But that is not sufficient to make the question one of mixed law and fact unless, as already stated, there are legal principles to be applied to the basic findings before the ultimate conclusion is drawn. When the question is whether firms and companies are benamidars for another person, what has to be found is whether it was the latter who found the capital of those concerns. It has not been shown that the profits of the intermediaries had been utilised by the appellant. Now, the assumption underlying this argument is that the Tribunal had found in its order that the intermediaries were benamidars for the appellant, but there is no basis for this in the order. Therefore, there will be force in the contention of the appellant that a finding as to who furnished the capital for the intermediaries was requisite before they could be held to be benamidars, if the Tribunal had held them to be benamidars in the former sense but not in the latter. Thus, the point which was actually in issue in the proceedings was a question of benami in the second sense and not in the first, and to decide that, the Tribunal bad only to 724 find whether any price was paid by the intermediaries for the sales and not who paid the price for them. Therefore, on the findings of the Tribunal, the question whether the intermediaries were benamidars for the appellant could not arise, and the further question as to who found the capital for the intermediaries is altogether irrelevant. Likewise, on the finding that the yarn was really sold by the appellant not to the intermediaries but to its own constituents and that they paid the price therefor to the appellant, the question who had the benefit of the transaction could not arise either. In all the cases, the question was whether the company, an English company here, could be taxed in respect of all the profits made by some other company, a subsidiary company, being carried on elsewhere. In those cases, the question was whether the profits earned by a subsidiary company X could be held to be profits earned by the parent company A and taxed in the hands of company A. It was held that the fact that X was a legal entity did not stand in the way of its profits being treated as profits of A, if, as observed by Lord Sterndale in Inland Revenue Commissioners vs Samson(3), X was doing the business of A and not its own, and various tests were laid down for ascertaining whether it was A who was running the business of X. It would then be a legitimate contention for the appellant to advance that could not be done unless the intermediaries were found to have been really benamidars for it. It is true that the Tribunal has directed that all the profits earned by the intermediaries should be added to the profits of the appellant but that is because it has found that the intermediaries 727 did no business of her than the transactions of the appellant. It is argued that on the findings of the Tribunal that it was Mr. Thyagaraja Chettiar, the Managing Agent of the appellant, that had setup the intermediaries, that it was his relations and men who had been put up as partners and shareholders of these concerns, and that it was he that generally had the control of the business, the proper inference to draw was that the intermediaries were benamidars for Mr. Tbyagaraja Chettiar, and that in consequence their profits were liable to be added to his and not to those of the appellant. What are sought to be taxed in these proceedings are the profits made on certain sales and not the profits made by the intermediaries as distinct entities chargeable to tax under section 3 of the Act, and the only relevant points for decision are, what profits were made on those sales and by whom. it was argued by the learned Solicitor General for the respondent that if on the facts two inferences were possible and the Tribunal chose to draw one and not the other, it was not a matter in which the court could interfere, if the inference is one of fact. In the result, all the contentions of the appellant based on the assumption that the intermediaries had been held to be benamidars for the appellant must be overruled on the ground that on the findings of the Tribunal they do not really arise. Applying this decision, the appellant having been found to have sold its goods to the ultimate purchasers and received the prices, there can be no question but that the profits had accrued to it both in the business and in the legal sense and that liability to tax had arisen. But the Tribunal held that the decision of this Court in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai and Co.(1) had settled that sections 42(1) and 42(3) applied both to residents as well as nonresidents and consequently declined to refer the question ' The correctness of this decision does not appear to have been contested before the High Court, the only point dealt with in the judgment of the learned Judges being as to the correctness of the ratio in which the apportionment was made. Even in this Court, it was only this question that was pressed on the strength of the decision in Commissioner of Income tax and Excess Profits Pax vs section Sen(2), Section 14 was mentioned in the course of the argument, but no contention was advanced that sections 42(1) and 42(3) ap plied only to non residents, and the decision in Com Missione; of Income tax vs Ahmedbhai Umarbhai and Co.(1) was not even so much as referred to in the (1) ; (2) 734 course of the argument, and the appellant did not even ask for this question being referred. On the question whether the fixation of ratio was correct, we are of opinion that it is a pure question of fact, and is not open to reference under section 66(1).
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A conclusion based on facts, even if it's drawn from other facts that were proven with evidence, is not a legal question. This means it can't be sent to the High Court for a decision under section 66(1) of the Indian Income Tax Act. Such a conclusion can only be a legal question if the issue is a mix of law and facts. Based on established legal rules, only questions about these things can be considered legal questions under this section: (1) how to understand a law or a legal document; (2) the legal impact of the facts when the issue is a mix of law and facts; (3) a conclusion of fact that has no evidence to support it, or is unreasonable and illogical. Even though a factual conclusion without any supporting evidence or that is unreasonable can be challenged as a legal error, the Tribunal's (court) decision is still final if there is evidence to consider. The court used the principles established in the case of Great Western Railway Co. vs Bater. To judge if a conclusion based on many facts is correct, you have to look at all the facts together. It's wrong to look at each fact separately to try and explain them in a different way, and to suggest that the Tribunal should have drawn different conclusions. The court considered the principles established in the case of Edwards (Inspector of Taxes) vs Bairstow. Unless the evidence is irrelevant or can't be used in court, the Tribunal's conclusion can't be challenged just because it's supposedly based on no legal evidence. Whether a question is about facts or a mix of law and facts depends on this: When deciding a factual question, you don't need to use any legal principles to find the basic facts or reach a final conclusion. The court considered the principles established in the cases of Herbert vs Samuel Fox and Co. Ltd. and The Queen vs Special Commissioners of Income tax. The principles established in The Gramaphone and Typewriter Company Ltd. vs Stanley, were determined to not be relevant. The court used the principles established in The American Thread Company vs Joyce. These sales were made under the names of other companies and firms, which were created only to hide the assessee's profits. These other companies seemed to have no other business besides these sales. The Tribunal concluded that these sales were fake, and the profits were actually earned by the assessee company, which sold the goods and received the money. Therefore, the Tribunal decided that these profits should be added to the assessee's reported profits. The question of "benami" (holding property in someone else's name) is a purely factual question, not a mix of law and facts. This is because it doesn't require applying any legal principles to decide it. The court considered the principles established in the cases of Gangadhara Ayyar vs Subramania Sastrigal, and Misrilal vs Surji. In the other case, the sale to the "benamidar" (the person holding the property in their name) is fake, and the original owner doesn't intend to give up ownership. The key difference is that in the first case, the new owner actually owns the property. In the second case, the original owner still owns it. In the second case, the only question is whether any payment was made at all. So, in this case, the issue is "benami" in the second sense. The Tribunal had to decide if the other companies actually paid for the goods that the assessee company supposedly sold to them. It wasn't necessary for the Tribunal to decide if these other companies had their own independent existence, because that wouldn't change whether the assessee company had to pay taxes. Under the Indian Income Tax Act, the responsibility to pay taxes begins as soon as the income is earned, whether the person or company is registered or not. The Indian Companies Act is meant to protect the shareholders' interests, but it doesn't affect the government's right to collect taxes. The court considered the principles established in Commissioner of Income tax, Madras vs K.B.M.T.T. Thiagaraja Chetty. The Tribunal was correct in refusing to review whether sections 42(1) and 42(3) of the Indian Income Tax Act only apply to non-residents, as the assessee company argued. The court considered the principles established in Commissioner of Income tax vs Ahmedbhai Umarbhai and Co. Deciding how to divide the profits between where the goods were made and where they were sold, and whether the Tribunal's division was correct, is purely a question of fact. It can't be reviewed by the Court under section 66(1) of the Act.
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Nos. 97, 97A, 44, 86 to 88, 111, 112, 85, 158, 211 to 251 and 225 to 229 of 1956. Under Article 32 of the Constitution of India for the enforcement of Fundamental Rights ' N. C. Chatterji A. K. Sen, B. P. Maheshwari and Tarachan Brijmohan Lal, for the petitioners in Petitions Nos. 97 and 97A of 1956. N. C. Chatterji and V. section Sawhney, for the petitioners in Petitions Nos. 44., 86 to 88, Ill and 112 of 1956. N. C. Chatterji and D. N. Mukherji, for the petitioners in Petition No. 85 of 1956. Purshottam Tirukumdas and 0. P. Lal, for the petitioners in Petitions Nos. 211 to 215 of 1956. section C. Isaacs and K. R. Chaudhuri. for the petitioners in Petitions Nos. 225 to 229 of 1956. Bhagirth Das and M. L. Kapur, for the petitioner in petition No. 158 of 1956. C. K. Daphtary, Solicitor General of India, G. N. Joshi, Porpus A. Mehta and R. H. Dhebar, for the respondents (Union, of India, the Central Board of Revenue and various Income tax Officers in all petitions.) B. Sen and P. K. Ghose, for the State of West Bengal (Respondents Nos. 2 and 3 in Petitions Nos.211 to 215 of 1956). December 21. The Judgment of the Court was delivered by BHAGWATI J. These petitions under article 32 of the Constitution raise a common question of law whether section 5 (7A) of the Indian Income tax Act, hereinafter 236 called the Act, is ultra vires the Constitution as infringing the fundamental rights enshrined in article 14 and article 19 (1) (g). The facts which led to the filing of the petitions 'nay be shortly stated. petitions Nos. 97 & 97 A of 1956: The petitioners are M/s. pannalal Binjrai, Oilmill owners, merchants and commission agents, carrying on business at Sahibganj in the district of Santhal Pargans, having their branch at 94 Lower Chitpur Road, Culcutta, petitioner No. 1, and R. B. Jamuna Das Chowdhury, resident of the same place and erstwhile karta of the Hindu undivided family, which carried on business in the name and style of M/S. Pannalal Binjr petetioner No. 2. Before September 28, 1954, they, being assessed by the Income tax officer, Special Circle, Patna. On September 28, 1954, the Central Board of Revenue made an order transferring their cases to the Income.tax Officer, Central Circle XI, Calcutta. On January 22, 1955, the Central Board of Revenue transferred the cases of petitioner No. 2 to the Income tax Officer Central Circle VI,Delhi, and on July 12, 1955, it similarly transferred the cases of petitioner No. I to the same officer. Prior to June 29, 1959, he had been assessed to income tax by the Income tax Officer, Special Survey Circle VII, Calcutta. On June 29, 1955, the Central Board of Revenue transferred his case to the Income tax Officer, Special Circle, Ambala,, and the said officer continued the proceedings in the transferred case and also instituted further proceedings against the petitioner and assessed him under section 23 (4) of the Act for the assessment years 1946 47 and 1947 48. Demands were made upon the petitioner for payment of the amount of income tax thus assessed whereupon he filed this petition impeaching the validity of the order of the Central Board 'of Revenue dated June 29, 1955, and the proceedings entertained by the Income tax Officer, Special ' Circle, Ambala,on the ground that section 5 (7A) of the Act was ultra vires the Constitution. Before October 20, 1953, they were being assessed by the Income tax Officer,, Hoshiarpur, but on that date their case was transferred under section 5 (7A) of the Act by the Commissioner of Income tax to the Income tax Officer, Special Circle, Ambala. The said officer continued the said case and reopened the assessment for the years 1944 45 to 1050 51 and completed the assessment for the assessment, years 1947 48, 1950 51 and 1951 52. These petitioners also thereupon filed the petition challenging the validity of the order of transfer made by the Commissioner of Income tax on October 20, 1953, and the proceedings entertained by the Income tax Officer, Special Circle, Ambala, thereafter, on the same ground of the ultra vires character of section 5 (7A) of the Act. of M/s bhagwan Das Sud & Sons and the cases of both these petitionrs were transferred to the Income tax Officer, Special 238 Circle, Ambala, as above, by the said respective orders. Petitions Nos. 86, 87, 88, 111, 112 and 158 of 1956: These petitions may be compendiously described as the Amritsar group. The petitioner in Petition No. 86/56 is Sardar Gurdial Singh, son of section Narain Singh. The petitioner in Petition No. 87/56 is Dr. Sarmukh Singh, son of section Narain Singh. The petitioner in Petition No. 112156 is section Ram Singh, soil of section Narain Singh. These three are brothers and the petitioner in Petition No. 88/56 is the father, section Narain Singh, son of section Basdev Singh. The father and the three sons were the directors in the Hindustan Embroidery Mills (Private) Ltd., petitioner No. 1 in Petition No. 111/56, which is located at Chheharta near Amritsar. All these petitioners were, prior to the orders of transfer made by the Commissioner of Income tax under section 5(7A) of the Act, being assessed by the Income tax Officer, 'A ' Ward, Amritsar, but their cases were transferred on or about June 29, 1953, from the Income tax Officer, 'A ' Ward, Amritsar, to the Income tax Officer, Special Circle, Amritsar. These cases were continued by the latter officer and notices under a. 34 of the Act were also issued by him against them for the assessment years 1947 48 to ' 1951 52. Each one of them filed a separate petition challenging the said orders of transfer by the Commissioner of Income tax and the proceedings entertained by the Income tax Office r, Special Circle, Amritsar, against them on the score of the unconstitutionality of section 5 (7A) of the Act. The petitioner in Petition No. 158/56 is one Shri Ram Saran Das Kapur, the head and karta of the Hindu undivided family carrying on business outside Ghee Mandi Gate, Amritsar. His case also whichprior to the order complained against, was being entertained by the Income tax Officer, 'F ' Ward, Amritsar, was transferred on some date in 1954 by an order of the Commissioner of Income tax under section 5(7A) of the Act to the Income tax Officer, Special Circle, Amritsar. No objection wag taken by the 239 petitioner to this order of transfer until after the assess. ment order was passed against him but he also challenged the validity of the said order of transfer and the proceedings entertained by the Income tax Officer, Special Circle, Amritsar, thereafter, on the same grounds as the other petitioners. Petitions NOs.211 to 215 of 1956: These petitions may be described as the Sriram Jhabarmull group. Though ' separately filed, the petitioner in each of them is the same individuals Nandram Agarwalla, who is the sole proprietor Of a business which he carries on under the name and style of I Sriram Jhabarmull '. It is a business, inter alia, of import and export of piece goods ' as commission agents, and dealers in raw wool and other materials. The principal place of business is at Kalimpong, in the district of Darjeeling, though there is also a branch at Calcutta. Prior to the orders of the Commissioner of Income tax under section 5(7A) of the Act complained against, the petitioner was being assessed by the Income tax Officer, Jalpaiguri, Darjeeling. On June 8, 1946, there was a further transfer assigning the cases to the Income tax Officer, Central Circle 1, Calcutta, and on July 27, 1946, orders were passed by the Commissioner of Income tax Central, Calcutta, under section 5(7A) transferring the cases of the petitioner to the Income tax Officer, Central Circle IV, Calcutta. These are the orders which are complained against as unconstitutional and void invalidating the proceedings which were continued and subsequently instituted by the Income tax Officer, Central Circle IV, Calcutta, against the petitioner on the score of the unconstitutionality of section 5(7A) of the Act. It may be noted, however that these orders were all prior to the Constitution and 240 having been made on July 27, 1946, as aforesaid were followed up by completed assessment proceedings in respect of the said respective years and also certificate proceedings under section 46(2) of the Act. There were further orders dated December 15, 1947, and sometime in September, 1948, transferring the cases of the petitioner from the Income tax Officer, Central Circle IV, Calcutta, to the Income tax Officer, Central Circle 1, Calcutta, and back from him to the Income tax Officer, Central Circle,IV Calcutta. dated July 27, 1946, which was passed under section 5(7A) of the Act. Petitions Nos. 225 to 229 of 1956: These Petitions may be classed as the Raichur group. They concern the assessment for the respective assessment years 1950 5l, 1951 52, 1952 53, 1953 54 and 1954 55. The petitioner in each of them is the same individual, one Kalloor Siddannal who resides and carries on business in Raichur in the State of Hyderabad as commission agent and distributor of agricultural products. Income tax was first imposed in the Hyderabad State in 1946 by a special Act of the Legislature and the petitioner was assessed under the Hyderabad Income tax Act by the Additional Income tax Officer, Raichur, for the assessment years 1948 49 and 1949 50. As from April 1, 195o, the Indian Income tax Act was applied to Hyderabad but the Additional Income tax Officer, Raichur, continued to assess the petitioner. The cases in respect of the assessment years 1950 51, 1951 52 and 1952 53 were pending before that officer and proceedings were taken in connection with the assessment for those years. On December 21, 1953, however, the Commissioner of Income tax Hyderabad, issued a notification under section 5(7) ordering that the case of the petitioner should be transferred from the Additional income tax Officer, Raichur, to the Income tax Officer, Special Circle, Hyderabad. The latter officer continued the assessment proceedings and issued notices under section 22(.4) of the Act on July 1, 1954, November 2, 1954, November 30,1954, 241 December 19, 1954, and March 11, 1955, in respect of the said years of assessment. Assessments for the said years were made on March 21, 1955, and on April 24, 1955, the petitioner made an application under section 27 of the Act to reopen the assessment for the year 1950 51 as on default under section 23 (4) of the Act. It appears, however, that shortly before May 19, 1955, the Commissioner of Income tax, Hyderabad, made another order under section 5 (7A) and section 64 (5)(b) of the Act transferring all the cases of the petitioner to the main Income tax Officer, Raichur. Curiously enough, the petitioner challenged both the orders one dated December 21, 1953, and the other made sometime in May, 1955, under section 5 (7A) of the Act and the proceedings continued and instituted by the respective officers thereunder as unconstitutional and void on the ground that section 5 (7A) was ultra vires the Constitution even though ultimately he was being assessed by the main Income tax Officer, Raichur, under the latter order. This is the common question in regard to the ultra vires character of section 5 (7A) of the Act which is raised in all these petitions, though in regard to each group there are several questions of fact involving the consideration of the discriminatory character of the specific orders passed therein which we shall deal with hereafter in their appropriate places. Section 5 (7A) of the Act runs as under: " 5 (7A) : The Commissioner of Income tax may transfer any ease from one Income tax Officer subordinate to him to another, and the Central Board of Revenue may transfer any case from any one Income tax Officer to another. Such transfer may be made at any 'stage of the proceedings, and shall not render necessary the reissue of any notice already issued by the Income tax Officer from whom the case is transferred. " This sub section was inserted by section 3 of the Indian Income tax Amendment Act, 1940 (XL of 1940) which was passed as a result of the decision of the Bombay High Court in Dayaldas Kushiram vs Commissioner of Income tax, (Central) (1) I.L.R. , 31 242 By the Indian Income tax Amendment Act, 1956 (XXVI of 1956) an explanation was added to section 5(7A) in the terms following as a result of the decision of this Court in Bidi Supply Co. v The Union of India(1): " Explanation : In this sub section, I case ' in relation to any person whose name is specified in the order of transfer means all proceedings under this Act in respect of any year which may be pending on the date of the transfer,, and includes all proceedings under this Act which may be commenced after the date of the transfer in respect of any year. " Section 5(7A) together with the explanation thus falls to be considered by us in these petitions. The argument on behalf of the petitioners is that a. 64, sub sections(1) and (2) of the Act confer upon the assessee a valuable right and he is entitled to tell the taxing authorities that he shall not be called upon to attend at different places and thus upset his business. Section 5(7A) invests the Commissioner of Income tax and the Central Board of Revenue with naked and arbitrary power to transfer any case from any one Income tax Officer to another without any limitation in point of time, a power which is unguided and uncontrolled and is discriminatory in its nature and it is open to the Commissioner of Income tax or the Central Board of Revenue to pick out the case of one assessee from those of others in a like situation and transfer the same from one State to another or from one end of India to the other without 'specifying any object and without giving any reason, thus subjecting the particular assessee to discriminatory treatment whereas the other assessees similarly situated with him would continue to be assessed at the places where they reside or carry on business under section 64 (1) and (2) of the Act. The discrimination involved in section 5(7A) is substantial in character and, therefore, infringes the fundamental right enshrined,in article 14 of the Constitution. It also infringes article 19 (1) (g) in so far as it imposes an unreasonable restriction on the fundamental right to carry on trade or business (Vide Himmatlal Harilal Mehta vs The State of Madhya Pradesh(1)). The very same question as regards the unconstitutionality of section 5(7A) of the Act had come up for decision before this Court in Bidi Supply Co. vs The Union of India (supra). The case of the assessee there had been transferred by the Central Board of Revenue under section 5(7A) of the get from the Income tax Officer, District 111, Calcutta, to the Income tax Officer, Special Circle, Ranchi. The order was an omnibus wholesale order of transfer expressed in general terms without any reference to any particular case and with out any limitation as to time and was challenged as void on the ground that section 5(7A) under which it had been passed was unconstitutional. This Court, by a majority judgment, after discussing the general principles underlying article 14, did not adjudicate upon that question, observing at p. 276: "We do not consider it necessary, for the purpose of this case, to pause to consider whether the constitutionality of Sub section.(7A) of section 5 can be Supported on the principle of any reasonable classification laid down by this Court or whether the Act lays down any principle for guiding or regulating the exercise of discretion by the Commissioner or Board of Revenue or whether the sub section confers an unguided and arbitrary power on those authorities to pick and choose individual assessee and place that assessee at a disadvantage in comparison with other assessees. All assessees are entitled to the benefit of those provisions except where a particular case or cases of a particular assessee for a particular year or years is or are transferred under sub section (7A) of section 5, assuming that section to be valid and if a particular case or cases is or are transferred his right under section 64 still remains as regards his other case or cases. " The majority judgment then proceeded to consider the effect of such an omnibus order unlimited in point of time on the rights of the assessee and further observed in that context at p. 277: " This order is calculated to inflict considerable inconvenience and harassment on the petitioner. Its books of account will have to be produced before the Income tax Officer, Special Circle, Ranchi a place hundreds of miles from Calcutta, which is its place of business. There may be no suitable place where they can put up during that period. There will certainly be extra expenditure to be incurred by it by way of railway fare, freight and hotel expenses. Therefore the reality of the discrimination cannot be gainsaid. In the circumstances this substantial discrimination has been inflicted on the petitioner by an executive fiat which is not founded on any law and no question of reasonable classification for purposes of legislation can arise. Here "the State" which includes its Income tax department has by an illegal order denied to the petitioner, as compared with other Bidi mer chants who are similarly situate, equality before the law or the equal protection of the laws and the petitioner can legitimately complain of an infraction of his fundamental right under Article 14 of the Constitution. " The question as to the constitutionality of section 5 (7A) of the Act was thus left open and the decision turned merely on the construction of the impugned order. 245 Learned counsel for the petitioners, however, lays particular stress on the observations of Bose, J., in the minority judgment which he delivered in that case whereby he held that sections 5 (7A) and 64 (5) (b) of the Act were themselves ultra vires article 14 of the Constitution and not merely the order of the Central Board of Revenue. The learned Judge referred to a passage from the judgment of Fazl Ali, J., in The State of West Bengal vs Anwar Ali Sarkar(1) and also pointed out the decision of this Court in M/S. Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh and Two Others(2) and observed: " What is the position here? There is no hearing, no reasons are recorded: just peremptory orders transferring the case from one place to another without any warning; and the power given by the Act is to transfer from one end of India to the other; nor is that power unused. We have before us in this Court a case pending in which a transfer has been ordered from Calcutta in West Bengal to Ambala in the Punjab." (p. 283) " If the Legislature itself had done here what the Central Board of Revenue has done and had passed an Act in the bald terms of the order made here transferring the case of this petitioner, picked out from others in a like situation, from one State to another, or from one end of India to the other, without specifying any object and without giving any reason, it would, in my judgment, have been bad. I am unable to see how the position is bettered because the Central Board of Revenue has done this and not Parliament." (p. 284 5) " In my opinion, the power of transfer can only be conferred if it is hedged round with reasonable restrictions, the absence or existence of which can in the last instance be determined by the courts; and the exercise of the power must be in conformity with the rules of natural justice, that is to say, the parties affected must be heard when that is reasonably possible, and the reasons for the order must be reduced, however briefly, to writing so that men may know that (1) ; , 309 310.`(2) ; 246 the powers conferred on these quasi judicial bodies are being justly and properly exercised." (p. 287) The answer furnished on behalf of the State to this argument is fourfold: (i)that the provision contained in section 5 (7A) of the Act is a measure of administrative convenience enacted with a view to more conveniently and effectively deal with the cases of the assessees where the Commissioner of Income tax considers it necessary or desirable to transfer any case from one Income tax Officer subordinate to him to another or the Central Board of Revenue similarly considers it necessary or desirable to transfer any case from any one Income tax Officer to another. The real object with which section 5 (7A) was inserted by the Indian Income tax Amendment Act, 1940 (XL of 1940), has been thus set out in the affidavit of Shri V. Gouri Shankar, Under Secretary, Central Board of Revenue, dated November 19, 1956, which is the pattern of all the affidavits filed on behalf of the State in these petitions: " 4. I say that the provisions of section 5 (7A) were inserted by the Income tax Amendment Act, XL of 1940, with the object of minimising certain procedural difficulties. Before this amendment was passed there was no specific provision in the Act for transferring a case from one Income tax Officer to another except by a long and circuitous course even at the request of the assessees. In order therefore to be able to transfer the case from one 1. to another either because of the request of the assessee or for dealing with cases involving special features such as cases of assessees involving widespread activities and large ramifications or inter related transactions, power to transfer cases was conferred upon the Central Board of Revenue and the Commissioner of Income tax as the case may be. I say that the provisions of section 5 (7A) ate thus administrative in character. . (ii)that the assessee whose case is thus transferred is not subjected to any discriminatory procedure in the matter of his assessment. The Income tax Officer to whom his case is transferred deals with it under the same procedure which is laid down in the relevant 247 provisions of the Act. The decision of the Income tax Officer is subject to appeal before the Appellate Assistant Commissioner and the assessee has the further right to appeal to the Income tax Appellate Tribunal and to approach the High Court and ultimately the Supreme Court, as provided in the Act. All assessees, whether they are assessed by the Income tax Officer of the area where they reside or carry on business or their cases are transferred from one Income tax Officer to another, are subject to the same procedure and are entitled to the same rights and privileges in the matter of redress of their grievances, if any, and there is no dis crimination whatever between assessees and assessees; (iii)that the right, if any, conferred upon the assessee under section 64 (1) and (2) of the Act is not an absolute right but is circumscribed by the exigencies of tax collection and can be negatived as it has been in cases where the Commissioner of Income tax or the Central Board of Revenue, as the case may be, think it necessary or desirable to transfer his case from one Income tax Officer to another under section 5 (7A) of the Act having regard to all the circumstances of the case. The argument of inconvenience is thus sought to be met in the same affidavit: " 5. 1 further say that as a result of any transfer that may be made under the provisions of section 5 (7A) there is no discriminatory treatment with regard to the procedure and that no privileges and rights which are given to the assessees by the Income tax Act are taken away nor is the assessee exposed to any increased prejudice, punitary consequences or differential treatment. I say that in cases where transfers under this section are made otherwise than on request from assessees, the convenience of the assessees is taken into consideration by placing the case in the hands of an Income tax Officer who is nearest to the area where it will be convenient for the assessee to attend. If on account of administrative exigencies this is not possible and the assessee requests that the examination of accounts or evidence to be taken should be in a place convenient to him, the I.T.O. complies with the request 248 of the assessee and holds the hearing at the place requested. " Even if there be a difference between assessees who reside or carry on business in a particular area by reason of such transfers the difference is not material. It is only a minor deviation from a general standard and does not amount to a denial of equal rights; (iv)that the power which is thus vested is a discretionary power and is not necessarily discriminatory in its nature and that abuse of power is not to be easily assumed where discretion is vested in such high officials of the State. Even if abuse of power may sometimes occur, the validity of the provision cannot be contested because of such apprehension. What may be struck down in such cases is not the provision itself but the discriminatory application thereof. The petitioners rejoin by relying upon the following passage from the judgment of Fazl Ali, J., in The State Of West Bengal vs Anwar Ali Sarkar, (Supra), which was referred to by Bose, J., in his minority judgment in Bidi Supply Co. vs The Union of India, (Supra), at page 281: " It was suggested that the reply to this query is that the Act itself being general and applicable to all persons and to all offenses, cannot be Said to discriminate in favour of or against any particular case or classes of persons or cases, and if any charge of discrimination can be leveled at all, it can be levelled only against the act of the executive authority if the Act is misused. This kind of argument however does not appear to me to solve the difficulty. The result of accepting it would be that even where discrimination is quite evident one cannot challenge the Act simply because it Is couched in general terms; and one cannot also challenge the act of the executive authority whose duty it is to administer the Act, because that authority will say: I am not to blame as I am acting under the Act. It is clear that if the argument were to be ,accepted, article 14 could be easily defeated. I think the fallacy of the argument lies in overlooking the fact that the I insidious discrimination complained of is incorporated in the Act itself ', it being so drafted 249 that whenever any discrimination is made such discrimination would be ultimately traceable to it. The pivot of the whole argument of the petitioners is the provisions contained in section 64(1) and (2) of the Act which prescribe the place of assessment. They are: " 64. (1) Where an assessee carries on a business, profession or vocation at any place, he shall be assessed by the Income tax Officer of the area in which that place is situate or, where the business, profession or vocation is carried on in more places than one, by the Income tax Officer of the area in which the principal place of his business, profession or vocation is situate. (2)In all other cases, an assessee shall be assessed by the Income tax Officer of the area in which he resides. " These provisions were construed by the Bombay High Court in Dayaldas Kushiram vs Commissioner Income tax, (Central), (supra), and Beaumont, C.J., observed at p. 657: " In my opinion section 64 was intended to ensure that as far as practicable an assessee should be assessed locally, and the area to which an Income tax Officer is appointed must, so far as the 'exigencies of tax collection allow, bear some reasonable relation to the place where the assessee carries on business or resides." Kania, J., as he then was, went a step further and stated at p. 660: "A plain reading of the section shows that the same is imperative in terms. It also gives to the assessee a valuable right. He is entitled to tell the taxing authorities that he shall not be called upon to attend at different places and thus upset his business. " The learned Judges there appear to have treated the provisions of section 64(1) and (2) more as a question of right than as a matter of convenience only. If there were thus a right conferred upon the assessee by the provisions of section 64(1) and (2) of the Act and that right continues to be enjoyed. by all the assessees except the 32 250 assessee whose case is transferred under section 5(7A) of the Act to another Income tax Officer outside the area where he resides or carries on business, the assessee can urge that, as compared with those other assessees, he is discriminated against and is subjected to inconvenience and harassment. It is, therefore, necessary to consider whether any such right is conferred upon the assessee by section 64(1) and (2) of the Act. Prima facie it would appear that an assessee is entitled under those provisions to be assessed by the Income tax Officer of the particular area where he ,resides or carries on business. Even where a question arises as to the place of assessment such question is under section 64(3) to be determined by the Commissioner or the Commissioners concerned if the question is between places in more States than one or by the Central Board of Revenue if the latter are, not in agreement and the assessee is given an opportunity of representing his views before any such question is determined. This provision also goes to show that the convenience of the assessee is the main consideration in determining the place of assessment. Even so the exigencies of tax collection have got to be considered and the primary object of the Act, viz., the assessment of income tax, has got to be achieved. The hierarchy of income tax authorities which is set up under Chapter 11 of the Act has been so set up with a view to assess the proper income tax payable by the assessee and whether the one or the other of the authorities will proceed to assess a particular assessee has got to be determined not only having regard to the convenience of the assessee but also the exigencies of tax collection. In order to assess the tax payable by an assessee more conveniently and efficiently it may be necessary to have him assessed by an Income tax Officer of an area other than the one in which, he resides or carries on business. It may be that the nature and volume of his business operations are such as require investigation into his affairs in a place other than the one where he resides or carries on business or that he is so, connected with various other individuals or organiza tions in the way of his earning his income as to render 251 such extra tertitorial investigation necessary: before he may be properly assessed. These are but instances of the various situations which may arise wherein it may be thought necessary by the Income tax authorities to transfer his case from the Income tax, Officer of the area in which he resides or carries on business to, another Income tax Officer whether functioning in the same State or beyond it. This aspect of the question wag emphasized by Beaumont, C.J., in Dayaldas Kushiram vs Commissioner of Income tax, (Central), (supra), at page 146, when he used the expression " as far as practicable " in connection with the assessee 's right to be assessed locally and the expression " so far as exigencies of tax collection allow " in connection with the appointment of the Income tax Officer to assess the tax payable by the particular assessee. In the later case of Dayaldas Kushiram vs Commissioner of Income tax, (Central)(1), Beaumont, C.J., expressed himself as follows: " The Income tax Act does not determine the place of assessment. What it does is to determine the Officer who is to have power to assess and in some cases it does so by reference to locality but I apprehend that an appeal would be not against an order of the Commissioner as to the place of assessment, but against the order of assessment of the Income tax, Officer," thus stating in effect that this section does not give a right to the assessee to have his assessment, at a parti cular place but determines the Income tax Officer who is to have power to assess him. This aspect was further emphasized by the Federal Court in Wallace Brothers & Co. vs Commissioner of, Income tax, Bombay, Sind & Baluchistan (2), where Spens, C.J., observed: Clause (3) of section 64 provides that any question as to the place of assessment shall be determined ' by the Commissioner or by the Central Board of Revenue Proviso 3 to the clause enacts that if the place of assessment is called in question by the assessee, the Income tax Officer shall, if not satisfied, with the (1) , 101.(2) A.I.R. 1945 F.C. 9,13.252 correctness of the claim, refer the matter for determination under this sub section before assessment is made. These provisions clearly indicate that the matter is more one of administrative convenience than of jurisdiction and that in any event it is not one for adjudication by the Court. " It may be noted, however, that in the passage at page 276 of the majority judgment in Bidi Supply Co. vs The Union of India (supra), this court regarded the benefit conferred on the assessee by these provisions of a. 64(1) and (2) of the Act as a right and it is, too late in the day for us to say that no such right to be assessed by the Income tax Officer of the particular area, where he resides or carries on his business is conferred on the assessee. This right, however, according to the authorities above referred to, is hedged in with the limitation that it has to yield to the exigencies of tax collection. The position, therefore, is that the determination of the, question whether a particular Income tax Officer should assess the case of the assessee depends on (1) the convenience of the assessee as posited in section 64 (1) and (2) of the Act, and (2) the exigencies of tax collection and it would be open to the Commissioner of Income tax and the Central Board of Revenue who are the highest amongst the Income tax. Authorities under the Act to transfer the case of a particular assessee from the Income tax Officer of the area within which he resides or carries on business to any other Income tax Officer if the exigencies of tax collection warrant the same. It is further to be noted that the infringement of such a right by the order of transfer, under section 5 (7A) of the Act is not a material infringement. It is only a deviation of a minor character from the general standard and does not necessarily involve a denial of equal rights for the simple reason that even after such transfer the case is dealt with under the normal procedure which is prescribed in the Act. The production and investigation of the books of account, the enquiries to be made by the Income tax Officer and the whole of the procedure as to assessment including the further 253 appeals after the assessment is made by the Incometax Officer are the same in a transferred case as in others which remain with the Income tax Officer of the area in which the other assesees reside or carry on business. There is thus no differential treatment and no scope for the argument that the particular assessee is discriminated against with reference to others similarly situated. It was observed by this Court in, M. K. Gopalan vs The State of Madhya Pradesh(1): " In support of the objection raised under article 14 of the Constitution, reliance is placed on the decision of this Court in Anwar Ali Sarkar 's case. In the pre ' sent case, the Special Magistrate under section 14 of the Criminal Procedure Code has to try the case entirely under the normal procedure, and 'no discrimination of the kind contemplated by the decision in Anwar Ali Sarkar 'd case and the other cases following it arises here. A law vesting discretion in an authority under such circumstances cannot be said to be discriminatory as such, and is therefore not hit by article 14 of the Constitution. There is, therefore, no substance in this contention." To a similar effect were the observations of Mukherjea, J., as he then was, in The State of West Bengal vs Anwar Ali Sarkar, (supra), at p. 325: "I agree with the Attorney General that if the differences are not material, there may not be any discrimination in the proper sense of the word and minor deviations from the general standard might not amount to denial of equal rights deemed never at any time to have applied to an assessee where, in consequence of any transfer made under section 5 (7A), a particular Income tax Officer has been charged with the function of assessing that assessee. section 64 (5) was incorporated by the Income tax Law Amendment Act, 1940 (XL of 1940) simultaneously with section 5 (7A). It is ' therefore, urged that an assesse whose case has been thus transferred has no right under section 64 (1) and (2) and those assessees alone who do not come within the purview of section 64 (5) can have the benefit of section 64 (1) and (2). This argument, however, ignores the fact that section 5 (7A) is the very basis of the enactment of the relevant provision in section 64 (5) and if a. 5 (7A) cannot stand by virtue of its being discriminatory in character, the relevant portion of section 64 (5) also must fall with it. It is then contended that a. 5 (7A) is in itself discriminatory and violative of the fundamental right en shrined in article 14. The power which is vested in the Commissioner of Income tax and the Central Board of Revenue is a naked and arbitrary power unguided and uncontrolled by any rules. No rules have been framed and no directions given which would regulate or guide their discretion or on the basis of which such transfers can be made and the whole matter is left to the unrestrained will of the Commissioner of Income tax or the Central Board of Revenue without there being anything which could ensure a proper execution of the power or operate as a check upon the injustice that might result from the improper execution of the same. To use the words of Mr. Justice Matthews in the case of Yick Wo vs Hopkins(1): ". when we remember that this action or nonaction may proceed from enmity or prejudice, from partisan zeal or animosity, from favoritism and other improper influences and motives easy of concealment and difficult to be detected and exposed, it becomes unnecessary to suggest or comment upon the injustice capable of being wrought under cover of such a power, for that becomes apparent to every one who gives to the subject a moment 's consideration." , 373; , 227.255 In other words, " it is not a question of an uncon stitutional administration of a statute otherwise valid on its face but here the unconstitutionality is writ large on the face of the statute itself " (Per Das, J., as he then was, in The State of West Bengal vs Anwar Ali, Sarkar, (supra) at p. 346). It has to be remembered that the purpose of the Act is to levy income tax, assess and collect the same. The preamble of the Act does not say so in terms it being an Act to consolidate and amend the law relating to income tax and super tax but that is the purpose of the Act as disclosed in the preamble of the First Indian Income tax Act of 1886 (Act II of 1886). It follows, therefore, that all the provisions contained in the Act have been designed with the object of achieving that purpose. There is in the first instance, the charge of income tax. Then we find set up the various authorities in the hierarchy who are entrusted with the function of assessing the income tax, the Central Board of Revenue being at the apex. There is also an Appellate Tribunal which is established for hearing appeals against the decisions of the Appellate Assistant Commissioners. Then follow the provisions in regard to taxable income, mode of assessment and cognate provisions. The Income tax Officers are invested with the duty ' of assessing the income tax of the assessees in the first instance. The Assistant Commissioners of Income tax, are the appellate authorities over the decisions of the Income tax Officers and the Income tax Appellate Tribunal is the final appellate authority barring of course references under section 66(1) of the Act to the High Court on questions of law. The Commissioners of Income tax and the Central Board of Revenue are mainly administrative authorities over the Income tax Officers and the Assistant Commissioners of Income tax and they are to distribute and control the work to be done by these authorities. All officers and persons employed in the execution of the Act are to observe and follow the orders instructions and directions of the. Central Board of Revenue which is the highest authority in the hierarchy and, even though normally in accordance 256 with the provisions of section 64 (1) and (2) the work of assessment is to be done by the Income tax Officers of the area within which the assessees reside or carry on business, power is given by section 5(7A) to the Commissioner of Income tax to transfer any case from one Income tax Officer subordinate to him to another and to the Central Board of Revenue to transfer any case from any one Income tax Officer to another. This is the administrative machinery which is set up for assessing the incomes of the assessees which are chargeable to income tax. There is, therefore, considerable force in the contention which has been urged on behalf of the State that section 5(7A) is a provision for administrative convenience. Nevertheless this power which is given to the Commissioner of Income tax and the Central Board of Revenue has to be exercised in a manner which is not discriminatory. No rules or directions having been laid down in regard to the exercise of that power in particular cases, the appropriate authority has to determine what are the proper cases in which such power should be exercised having regard to the object of the Act and the ends to be achieved. The cases of the assessees which come for assessment before the income tax authorities are of various types and no one case is similar to another. there are complications introduced by the very nature of the business which is carried on by the assessees and there may be, in particular cases, such widespread activities and large ramifications or inter related transactions as might require for the convenient and efficient assessment of income tax the transfer of such cases from one Income tax Officer to another. In such cases the Commissioner of Income tax or the Central Board of Revenue, as the case may be, has to exercise its discretion with due regard to the exigencies of tax collection. Even though there may be a common attribute between the assesses whose case is thus transferred and the assessees; who continue to be assessed by the Income tax Officer of the area within which they reside or carry on business, the other attributes would not be common. One assessee may 257 have such widespread activities and ramifications as would require his case to be transferred from the Income tax Officer of the particular area to an Income tax Officer of another area in the same State or in another State, which may be called " X ". Another assessee, though belonging to a similar category may be more conveniently and efficiently assessed in another area whether situated within the State or without it, called " Y ". The considerations which will weigh with the Commissioner of Income tax or the Central Board of Revenue in transferring the cases of such assessee either to the area " X " or the area " Y " will depend upon the particular circumstances of each case and no hard and fast rule can be laid down for determining whether the particular case should , be transferred at 'all or to an Income tax Officer of a particular area. Such discretion would necessarily have to be vested in the authority concerned and merely because the case of a particular assessee is transferred from the Income tax Officer of an area within which he resides or carries on business to another Income tax Officer whether wit in or without the State will not by itself be sufficient to characterize the exercise of the discretion as discriminatory. Even if there is a possibility of discriminatory treatment of persons falling within the same group or category, such possibility cannot necessarily invalidate the piece of legislation. It may also be remembered that this power is vested not in minor officials but in top ranking authorities like the Commissioner of Income tax and the Central Board of Revenue who act on the information supplied to them by the Income tax Officers concerned. This power is discretionary and not necessarily discriminatory and abuse of power cannot be easily assumed where the discretion is vested in such high officials. (Vide Matajog Dobey vs H. section Bhari(1)). There is moreover a presumption that public officials will discharge their duties honestly and in accordance with the rules of law. (Vide People of the State of (1) ; , 932.33 258 New York vs John E. Van De Carr, etc.(1) It has also been observed by this Court in A. Thangal Kunju Musaliar vs M. Venkitachalam Potti(2) with reference to the possibility of discrimination between assessees in the matter of the reference of their cases to the Income tax Investigation Commission that " It is to be presumed, unless the, contrary were shown, that the 'administration of a particular law would be done I not with an evil eye and unequal hand ' and the selection made by the Government of the cases of persons to be referred for investigation by the Commission would not be discriminatory." This presumption, however, cannot be stretched too far and cannot be carried to the extent of always holding that there must be some undisclosed and unknown reason for subjecting certain individuals or corporations to hostile and discriminatory treatment (Vide Gulf, Colorado, etc. vs W. H. Ellis (3)). There may be cases where improper execution of power will result in injustice to the parties. It is pointed that it will be next to impossible for the assessee to challenge a particular order made by the Commissioner of Income tax or the Central Board of Revenue, as the case may be, as discriminatory because the reasons. which actuated the authority in making the order will be known to itself not being recorded in the body of the order itself or communicated to the assesse. This apprehension is, however, ill founded. Though the (1) ; (1905) 310 199 U.S. 552; (2) (1955)2 section C. R. 1196. (3) ; ; 41 L.Ed. 666. (4) [1955] I S.C.R. 140. 259 burden of proving that there is an abuse of power,lies on the assessee who challenges the order as discriminatory, such burden is not by way of proof to the hilt. There are instances where in the case of an accused person rebutting a presumption or proving an. exception which will exonerate him from the liability for the offence with which he has been charged, the burden is held to be discharged by evidence satisfying the jury of the probability of that which the accused is called upon to establish (Vide Rex vs Carr Briant (1)), or in the case of a detenue under the Preventive Detention Act seeking to make out a case of want of bona fides in the detaining authority, the burden of proof is held not to be one which requires proof to the hilt but such as will render the absence of bona fides reasonably probable (Vide Ratanlal Gupta vs The District Magistrat of Ganjam also Brundaban Chandra Dhir Narendra vs The State of Orissa (Revenue Department) (3)). If, in a particular ,case, the assessee seeks to impeach the order of transfer is an abuse of power pointing out circumstances which prima facie and without anything more would make out the exercise of the power discriminatory qua him, it will be incumbent on the authority to explain the circumstances under which the order has been made. The court will, in that event, scrutinize these Circumstances having particular regard to the object sought to be achieved by the enactment of section 5(7A) of the Act as set out in para 4 of the affidavit of Shri V. Gouri Shankar, Under Secretary, Central Board of Revenue, quoted above, and come to its own conclusion as to the bona fides of the order and if it is not satisfied that the order was made by the authorities in bona fide exercise of the power vested in them under section 5(7A) of the Act, it will certainly quash the lame. (3) I.L.R. 1952 Cuttack 529, 573.260 record. The observations of Fazl Ali, J., in The State of West Bengal vs Anwar Ali Sarkar, (supra), at pages 309 310 that the authority will say " I am not to blame as I am acting under the Act " will not necessarily save the order from being challenged because even though the authority purported to act under the Act its action will be subject to scrutiny in the manner indicated above and will be liable to be set aside if it was found to be mala fide or discriminatory qua the assessee. Particular stress is laid on behalf of the petitioners on the observations at page 277 of the majority judgment in Bidi Supply Co. vs The Union of India, (supra), which in the context of the omnibus wholesale order in question emphasized the substantial discrimination to which the assessee there had been subjected as compared with other bidi merchants who were similarly situated. The inconvenience and harassiment to which the assessee was thus put were considered to be violative of article 14 of the Constitution and it is urged that section 5 (7A) is unconstitutional in Boar as it is open to the Commissioner of Income tax or the Central Board of Revenue, as the case may be, to make an order of transfer subjecting the assessee to such inconvenience and harassment at their sweet will and pleasure. This argument of inconvenience, however, is not conclusive. There is no fundamental right in an assessee to be assessed in a particular area or locality. Even considered in the context of section 64 (1) and (2) of the Act this right which is conferred upon the assessee to be assessed in a particular area or locality is not an absolute right but is subject to the exigencies of tax collection. The difference, if any, created in the position of the assessee qua others who continue to be assessed by the Income tax Officer of the area in which they reside or carry on business is not a material difference but a minor deviation from the general standard and would, therefore, not amount to the denial of equal rights (Per Mukherjea, J., as he then was, in The State of West Bengal vs Anwar Ali Sarkar., (supra), at 261 p. 325)). There is also the further fact to be borne mind that this inconvenience to the assessee is sough to be minimised by the authority concerned transferring the case of such assessee to the Income tax Officer who is nearest to the area where it would be convenient for the assessee to attend and if, on account of administrative exigencies, this is not possible an the assessee requests that the examination of account or evidence to be taken should be in a place convenient to him, by the Income tax Officer complying with the request of the assessee and holding the hearing at the place requested. We are bound to take the statement contained in para 5 of the affidavit of Shri.V. Gouri Shankar at its face value and if this is done as it should be, the assessee will not be put to any inconvenience or harassment and the proper balance between the rights of the subject and public interest will be preserved. It is, therefore, clear that the power which is veste in the Commissioner of Income tax or the Central Board of Revenue, as the case may be, under section 5 (7A) of the Act is not a naked and arbitrary power, unfettered, unguided or uncontrolled so as to enable the authority to pick and choose one assessee out of those similarly circumstanced thus subjecting him to discriminatory treatment as compared with others who fall within the same category. The power is guided and controlled by the purpose which is to be achieved by the Act itself, viz., the charge of income tax, the assessment and collection thereof, and is to be exercised for the more convenient and efficient collection of the tax A wide discretion is given to the authorities concerned for the achievement of that purpose, in the matter of the transfer of the cases of the assessees from one Income tax Officer to another and it cannot be urged that such power which is vested in the authorities is discriminatory in its nature. There is a broad distinction between discretion which has to be exercised with regard to a fundamental right guaranteed by the Constitution and some other right which is given by the statute. If the statute deals with a right which is not fundamental in character 262 the statute can take it away but a fundamental right the statute cannot take away. Where, for example, a discretion is given in the matter of issuing licences for carrying on trade, profession or business or where restrictions are imposed on freedom of speech, etc., by a imposition of censorship, the discretion must be controlled by clear rules so as to come within the category of reasonable restrictions. Discretion of that nature must be differentiated from discretion in respect of matters not involving fundamental rights such as transfers of cases. An inconvenience resulting from a change of place or venue occurs when any case is transferred from one place to another but it is not open to a party to say that a fundamental right has been infringed by such transfer. Ili other words, the discretion vested has to be looked at from two points of view, ViZ., (1) does it admit of the possibility of any real and substantial discrimination, and (2) does it impinge on a fundamental right guaranteed by the Constitution? Article 14 can be invoked only when both these conditions are satisfied. Applying this test, it is clear that the discretion which is vested in the Com missioner of Income tax or the Central Board of Reevenue, as the case may be, under section 5 (7A) is not at all discriminatory. It follows, therefore, that section 5 (7A) of the Act is not violative of article 14 of the Constitution and also does not impose any unreasonable restriction on the fundamental right to carry on trade or business enshrined in article 19 (1) (g) of the Constitution. If there is any abuse of power it can be remedied by appropriate action either under article 226 or under article 32 of the constitution and what can be struck down is not the provision contained in section 5 (7A) of the Act but the order passed thereunder which may be mala fide or violative,of these fundamental rights. This challenge of the vires of section 5 (7A) of the Act, therefore, fails. We may, however, before we leave this topic observe that it would be prudent if the principles of natural justice are, followed, where circumstances permit, before any order of transfer under section 5 (7A) of the Act is made by the Commissioner of Income tax or the 263 Central Board of Revenue, as the case may be, and notice is given to the party affected and he is afforded a reasonable opportunity of representing his views on the question and the reasons of the order are reduced however briefly to writing. It is significant that when any question arises under section 64 as to the place of assessment and is determined by the Commissioner or Commissioners or by the Central Board of Revenue, as the case may be, the assessee is given an opportunity under section 64(3) of representing his views before any such question is determined. If an opportunity is given to the assessee in such case, it is all the more ,surprising to find that, when an order of transfer under section 5(7A) is made transferring the case of the assessee from one Income tax 'Officer to another irrespective of the area or locality where he resides or carries on business, he should not be given such an opportunity. There is no presumption against the bona fides or the honesty of an assessee and normally the Income tax authorities would not be justified in refusing to an assessee a reasonable opportunity of representing his views when any order to the prejudice of the normal procedure laid down in section 64 (1) and (2) of the Act is sought to be made against him, be it a transfer from one Income tax Officer to another within the State or from an Income tax Officer within the State to an Income tax Officer without it, except of course where the very object of the transfer would be frustrated if notice was given to the party affected. If the reasons for making the order are reduced however briefly to writing it will also help the assessee in appreciating the circumstances which make it necessary or desirable for the Commissioner of Income tax or the Central Board of Revenue, as the case may be, to transfer his case under section 5(7A) of the Act and it will also help the court in determining the bona fides of the order as passed if and when the same is challenged in court as mala fide or discriminatory. It is to be hoped that the Income tax authorities will observe the above procedure wherever feasible. The next point of attack is that the orders which Were made by the Commissioner of Income tax or the 264 Central Board of Revenue, as the case may be, in these petitions are omnibus wholesale orders of transfer coming within the mischief of Bidi Supply Co. vs The Union of India, (supra), and are, therefore, hit by the majority judgment in that case. The answer of the State is that the orders are valid by virtue of the explanation to section 5(7A) which was added by the Indian Income tax Amendment Act, 1956 (26 of 1956). The main structure of section 5(7A) was, however, maintained and the explanation was added thereto in order to expand the connotation of the word " case " which was used in section 5(7A). The manner in which this result was brought about is subject to criticism that the word ,case" was thus really equated with the word " file " and when a case of a particular assessee was transferred under section 5(7A) it was meant that his whole file would be transferred from one Income tax Officer to another. This inartistic mode appears, however to be adopted by the supposed necessity of maintaining section 5(7A) in the form in which it stood but what we have got to see is whether the desired result has been achieved by adding the explanation in the manner in which it was done. Reading section 5(7A) and the explanation thereto, it is clear that when any case of a particular asssssee which is pending before an Income tax Officer is transferred from that officer to another Income tax Officer whether within the State or without it, all proceedings which are pending against him under the Act in respect of the same year as also previous years are meant to be transferred simultaneously and all proceedings under the 265 Act which may be commenced after the date of such transfer in respect of any year whatever are also included therei in so that the Income tax Officer to whom such case is transferred would be in a position to continue the pending proceedings and also institute further proceedings against the assessee in respect of any year. The proceedings pending at the date of transfer can be thus continued but in the case of such proceedings the provision in regard to the issue of notices contained in the main body of section 5(7A) would apply and it would not be necessary to reissue any notice already issued by the Income tax Officer from whom the case is transferred. This provision applies to pending proceedings which have been transferred leaving unaffected the further proceedings which may be commenced against the assessee after the date of the transfer where fresh notices would have to be issued. It is, however, contended that the cases of the assessee which have been already closed in the previous years cannot be reopened by the Income tax Officer to whom the case of the assessee is thus transferred and the words " after the date of transfer in respect of any year " occurring at the end of the explanation are sought to be construed to mean " after the date of the transfer in respect of the year of transfer " thus rendering it incompetent to the Income tax Officer to whom the case is transferred to institute further proceedings in respect of cases of the assessee which have been already closed before the date of transfer. This contention is, in our opinion, unsound. The words used are " in respect of any year" and not " in respect of the year ". Moreover they are to be read with the preceding words "may be commenced " and not with the words "after the date of transfer". A proper reading of the explanation will be that the inclusive part thereof refers to all proceedings under the Act which may be commenced in respect of any year after the date of the transfer. The date of the transfer has relation only to the particular year in which the case of the assessee is thus transferred and to attach the words " in respect of any year " to the words " after 34 266 the date of transfer" do not make any sense. The words " in respect of any year " appropriately go with the words " which may commenced" and read in this juxtaposition render the inclusive part of the explanation susceptible of a proper meaning. The language of the explanation read in the manner suggested above is thus sufficient to dispel this contention of the petitioners. it follows, therefore, that the omnibus wholesale orders of transfer made against the petitioners by the Commissioner of Income tax or the Central Board of Revenue, as the case may be, are saved by the explanation to section 5(7A) and are not unconstitutional and void: It remains now to consider whether the individual orders against the petitioners are discriminatory in fact or are mala fide and in abuse of the power vested in the Commissioner of Income tax or the Central Board of Revenue, as the case may be, under section 5(7A) of the Act. Petitions Nos. 211 to 215 of 1956, i.e., the Shiram Jhabarmull group, may be dealt with in the first instance as they have a peculiar characteristic of their own. The orders complained against in these petitions were all made by the Commissioner of Income tax Central, Calcutta, on July 27, 1946, and further proceedings were entertained against the petitioners by the Income tax Officer, Central Circle IV, Calcutta, immeasurable thereafter. All these proceedings culminated in assessment orders and certificate proceedings under section 46(2) of the Act were also taken by the authorities against the petitioners for recovery of the tax so assessed before the advent of the Constitution. The question, therefore, arises whether these orders of transfer can be challenged by the petitioners as unconstitutional and void. It is settled that article 13 of the Constitution has no retrospective effect and if, therefore, any action was taken before the commencement of the Constitution in pursuance of the provisions of any law which was a valid law at the time when such action was taken, such action cannot be challenged and the law under 267 which such action was taken cannot be questioned as unconstitutional and void on the score of its infringing the fundamental rights enshrined in Part III of the Constitution (See Keshavan Madhava Menon vs The State of Bombay(1)). The following observations of Das, J., as he then was, at p. 235 of that case, may be appropriately referred to in this context: "As already explained, article 13(1) only has the effect of nullifying or rendering all inconsistent existing laws ineffectual or nugatory and devoid of any legal force or binding effect only with respect to the exercise of fundamental rights on and after the date of the commencement of the Constitution. It has no retrospective effect and if, therefore, an act was done before the commencement of the Constitution in contravention of any law which, after the Constitution, becomes void with respect to the exercise of any of the fundamental rights, the inconsistent law is not wiped out so far as the past act is concerned, for, to say that it is, will be to give the law retrospective effect. . So far as the past acts are concerned the law exists, notwithstanding that it does not exist with respect to the future exercise of fundamental rights." (See also Syed Qasim Razvi vs The State of Hyderabad(2) and Laxmanappa Hanumanthappa Jamkhandi vs Union of India(1)). It is clear, therefore, that the petitioners are not entitled to complain against the said orders of transfer dated July 27, 1946. 225 to 229 of 1956, i.e., the Raichur group, and Petitions Nos. 86, 87, 88, 111, 112 and 158 of 1956, i.e., the Amritsar group, all belong to the same category. In the first group, there was an order of transfer on December 21, 1953, passed by the Commissioner of Income tax, Hyderabad, transferring the cases of the petitioner from the Additional Income tax Officer, Raichur, to the Income tax, Officer, Special Circle, Hyderabad. There was, however, an order passed by the Commissioner shortly before May 19, 1955, transferring the cases of the petitioner from the Income tax (1) ; , 235. (2) (3) ; 268 Officer, Special Circle, Hyderabad, to the main Income tax Officer, Raichur. The petitioner thus reverted to the Income tax Officer, Raichur, and it passes one 's imagination what possible argument he can urge on the score of inconvenience and harassment. The whole attitude of the petitioner is motivated by an intention to delay the payment of income tax legitimately due by him to the Revenue trying to take advantage of a mere technicality. In the second group, there were orders passed by the Commissioner of Income tax transferring the cases of the petitioners from the Income tax Officer, "AWard, Amritsar, or the Income tax Officer, 'F 'Ward, Amritsar, to the Income tax Officer, Special Circle, Amritsar. Both these officers were situated in the same building and under the same roof. The argument of inconvenience and harassment can, under these circumstances, be hardly advanced by them. There is moreover another feature which is common to both these groups and it is that none of the petitioners raised any objection to their cases being transferred in the manner stated above and in fact submitted to the jurisdiction of the Income tax Officers to whom their cases had been transferred. It was only after our decision in Bidi Supply Co. vs The Union of India, (supra), was pronounced on March 20, 1956, that these petitioners woke up and asserted their alleged rights, the Amritsar group on April 20, 1956, and the Raichur group on November 5, 1956. If they acquiesced in the jurisdiction of the Income tax Officers to whom their cases were transferred, they were certainly not entitled to invoke the jurisdiction of this Court under article 32. It is well settled that such conduct of the petitioners would disentitle them to any relief at the hands of this Court (Vide Halsbury 's Laws of England ', Vol. II, 3rd Ed., p. 140, para 265; Rex vs Tabrum, Ex Parte Dash(1); 0. A. 0. K. Lakshmanan Chettiar vs Commissioner, Corporation of Madras and Chief Judge,Court of Small Causes, Madras(2) ). The orders of transfer made by the Commissioner of Income tax or the Central Board of Revenue, as the (1) (2) [1927] 1. L. R. 269 case may be, against the three groups of petitioners, viz., Sriram Jhabarmull group, the Raichur group and the Amritsar group, cannot, therefore, be challenged by them as unconstitutional and void This leaves two sets of petitioners, the petitioners in Petitions Nos. 97 & 97 A of 1956 and the petitioners in Petitions Nos. 44/56 and 85/56. Petitions Nos. 97 & 97 A of 1956 : The petitioners are oilmill owners, merchants and commission agents, carrying on business at Sahibganj in the district of Santhal Parganas and have a branch at 97, Lower Chitpur Road, Calcutta. They were alleged to have concealed income exceeding Rs. 8 lakhs and indulged in business activities spread over a wide area resulting in large profits not disclosed in the books of account or in the various returns filed by them. After the judgment of this Court in Surajmull Mohta & Co. vs A. V. Viswanatha Sastri(2), about 320 cases referred to the Income tax Investigation Commission under section 5 (4) of Taxation on Income Investigation Commission Act (XXX of 1947) were affected and had to be reopened under section 34 (IA) of the Income tax Act. To dispose of these cases, "since they involved many back years ' cases" quickly and promptly, special circles without reference to area were created at Bombay and Calcutta, because the existing circles, whose hands were full, could not take up this extra work. These 320 cases were distributed between these circles on the basis of the geographical area to which these assessees belonged. The petitioners belonged to Bihar and had a branch at Calcutta and their cases were, therefore, allotted to one of the Central Circles at Calcutta. Later on in October 1954, this Court struck down section 5 (1) of the Taxation on Income Investigation Commission Act (XXX of 1947) in Meenakshi Mills Ltd. vs Viswanatha Sastri. (2 ) and as a result thereof cases referred under that section and pending with the (I) [1055] 1 S.C. R. 448. (2) [1955] I S.C. R. 787. 270 Income tax Investigation Commission on July 17,1954, could not be preceded with under the provisions of that Act. These cases numbering about 470 had to be reopened under section 34 (1A) of the Income tax Act. The Government thought that as in the earlier lot of cases, it would help speedier disposal of the cases, if they were allotted to Income tax Officers appointed without reference to area to deal with the same. In addition to the circles already created in Bombay and Calcutta, five more circles at Calcutta and 4 more circles at Bombay and 9 more circles at important centers such as Kanpur, Ahmedabad, Madras and Delhi were set up to deal with all these cases. As a result of the influx of these cases, it was found that the 9 circles at Calcutta had about 280 cases of assessees belonging to Calcutta itself to dispose of and therefore cases not belonging to that area had to be taken out and assigned to one of the newly created circles, Where the work load was low. It was found then that Central Circle VI had a lower work load compared to other circles and, therefore, the cases of the petitioners were transferred to the Income tax Officer, Central Circle VI, Delhi. Having regard to these circumstances which are disclosed in the affidavits of Shri V. Gouri Shankar, Under Secretary, Central Board of Revenue, dated November 19, 1956, and December 3, 1956, it is clear that the transfer of the cases of the petitioners, firstly, from the Income tax Officer, Special Circle, Patna, to the Income tax Officer, Central Circle XI, Calcutta, and next, from the latter officer to the Income tax Officer, Central Circle VI, Delhi, were made as a matter of administrative convenience only. It further appear; from the said affidavits that the examination of accounts and the evidence was done at the places desired by the assessees in order to suit their convenience and the Income tax Officers were instructed accordingly. As a matter of fact the Income tax Officer, Central Circle VI, Delhi, went to Sahibganj and examined the accounts there in the case of the petitioner No. 1 and when the assessee voluntarily requested the Income tax Officer to have 271 the examination done at Delhi (the assessee had then come to Delhi for some other work of his) the Income tax Officer promptly posted the case and examined the accounts. If these were the circumstances under which the cases of the petitioners were transferred from Patna to Calcutta and from Calcutta to Delhi and the petitioners were afforded all conveniences in the matter of the examination of their accounts and evidence, there is no basis for the charge that the orders of transfer made against these petitioners were in any manner whatever discriminatory. Petitions Nos. 44 and 85 of 1956 The petitioner in Petition No. 44/56 is Shri A. L. Sud who originally belonged to Hoshiarpur district in Punjab and since 1948 resides and has his office in Calcutta. Bhagwan Das Sud as the karta thereof. This Hindu undivided family has been carrying on business at Hoshiarpur and at various other places like Bareilly, Calcutta and Bombay. The said joint family of Bhagwan Das Sud & Sons was alleged to have evaded income tax to a large extent and had inter related transactions in respect of their dealings, the petitioner being a copartner of the said joint family. It was, therefore, considered necessary in order to have a proper assessment of the petitioner 's income that his case also should be dealt with by the Income tax Officer assessing the joint family and the petitioner was informed that, in the matter of hearing, he would be put to least inconvenience. These were the circumstances under which his case was transferred from the Income tax Officer, Survey Circle, Calcutta, to the Income tax Officer, Special Circle, Ambala, by an order of the Central Board of Revenue dated June 29, 1955. The case of M/S. Bhagwan Das Sud & Sons, petitioners in Petition No. 85/56; had already been 272 transferred by the Commissioner of Income tax from the Income tax Officer, Hoshiarpur, to the Income tax Officer, Special Circle, Ambala, by an order under section 5(7A) of the Act dated October 20, 1953. The petitioners had their office at Hoshiarpur in Punjab but their activities were scattered in various parts of India some of them being in Assam, Bombay, Bareilly, Calcutta and Kanpur in respect of the contracts they undertook with the Government and other parties. They were alleged to have concealed income assessable to income tax exceeding Rs. 30 lakhs and it was thought necessary to make proper investigation of their widespread activities resulting ' in extensive evasion of income tax. These were the circumstances under which their case was transferred to the Incometax Officer, Special Circle, Ambala, as above. That officer, however, agreed to examine the accounts and evidence at Hoshiarpur itself to suit the convenience of the petitioners but the petitioners did not agree on the ground that their Advocate was to come from Delhi and therefore Ambala would suit them as well. The cases of both the petitioners thus came to be transferred from the respective Income tax Officers who used to assess them at Calcutta and Hoshiarpur respectively to the Income tax Officer, Special Circle, Ambala, and all conveniences were afforded to them in the matter of the examination of their accounts and evidence. The argument of discrimination and inconvenience and harassment thus loses all its force and the orders of transfer made against them cannot be challenged as in any way discriminatory. It may be noted that in the last mentioned four petitions, viz., Petitions Nos. 97 & 97 A of 1956 and Petitions Nos. 44/56 and 85/56, the Central Board of Revenue or the Commissioner of Income tax, as the case may be, instructed the Income tax Officers concerned to minimise the inconvenience caused to the assessees and even proceed to their respective residences or places of business in order to examine the accounts and evidence. Inspite of the denials of the assessees in the affidavits which they filed in 273 rejoinder, we presume that such facilities will continue to be afforded to them in the future and the inconvenience and harassment which would otherwise be caused to them will be avoided. A humane and considerate administration of the relevant provisions of the Income tax Act would go a long way in allaying the apprehensions of the assessees and if that is done in the true spirit, no assessee will be in a position to charge the Revenue with administering the provisions of the Act with " an evil eye and unequal hand ". We have, therefore, come to the conclusion that there is no substance in these petitions and they should be dismissed with costs. There will, be, however, one set of costs between respondents in each of the petitions and one set of costs in each group of these petitions, viz., (1) Petitions Nos.97 & 97 A of 1956, (2) Petitions Nos.44/56 and 85/56, (3) Petitions Nos. 86/56, 87/56, 88/56, 111/56, 112/56 and 158/56, (4) Petitions Nos.211 to 215 of 1956, and (5) Petitions Nos. 225 to 229 of 1956.
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These court cases are about whether a part of the Indian Income Tax Act, section 5(7A), is constitutional or not. The same question was brought up before, but not decided, in a previous case. People argued that this section of the law, along with its explanation, gives too much power to tax officials. They said it lets officials unfairly transfer cases. This violates the right to equality (article 14) and the right to do business (article 19(1)(g)) under the Constitution. They also argued that the widespread transfer orders, done without looking at each specific case or setting time limits, are unfair. This goes against what the court said in the previous case. The Central Board of Revenue (the tax authority) argued that the section is meant to make things easier for them. They said that after a case is transferred, the same tax rules apply as to everyone else. They try to make things easier for the person being taxed by moving the case to a nearby area. If that's not possible, they'll review their records where it's convenient for them. They also said that the explanation covers the widespread transfer orders. The Court decided that section 5(7A) is constitutional and valid. It's just a way to make things easier for the tax office and doesn't violate anyone's rights. The explanation covers the transfer orders in question, so they are also valid. The right to be taxed in a certain place, given by sections 64(1) and (2) of the Act, is not absolute. It's subject to the main goal of the Act: to assess and collect income tax. If tax collection requires it, the tax officials can transfer a case to another officer, even outside the area where the person lives or works. Any difference this makes compared to others is small and doesn't deny equality under the law. The power given to officials to override a person's right must be different from the power used when dealing with basic rights in the Constitution. To decide if it's unfair, we must ask: (1) Could it lead to real discrimination? and (2) Does it violate a basic right under the Constitution? The power given to officials by section 5(7A) is not discriminatory and doesn't unreasonably limit the right to do business. Several previous court cases were referenced as part of this decision. The explanation added to the section in 1956 was meant to broaden the definition of "case." This includes ongoing cases and future cases under the Act, even after the transfer date. So, the orders in question are not unconstitutional or invalid. However, the tax authorities are bound by what they say in their official statements. If someone can show that the officials are acting unfairly or with bad intentions, the Court will look closely at the situation. If needed, the Court can stop the abuse of power. The tax authorities should follow the rules of fairness. If possible, they should tell the person about the planned transfer so they can share their views. The officials should also record the reasons for the transfer, even briefly. This helps the Court decide if the transfer was unfair or done with bad intentions, if challenged.
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97, 97A, 44, 86 to 88, 111, 112, 85, 158, 211 to 251 and 225 to 229 of 1956. On June 29, 1955, the Central Board of Revenue transferred his case to the Income tax Officer, Special Circle, Ambala,, and the said officer continued the proceedings in the transferred case and also instituted further proceedings against the petitioner and assessed him under section 23 (4) of the Act for the assessment years 1946 47 and 1947 48. Demands were made upon the petitioner for payment of the amount of income tax thus assessed whereupon he filed this petition impeaching the validity of the order of the Central Board 'of Revenue dated June 29, 1955, and the proceedings entertained by the Income tax Officer, Special ' Circle, Ambala,on the ground that section 5 (7A) of the Act was ultra vires the Constitution. Before October 20, 1953, they were being assessed by the Income tax Officer,, Hoshiarpur, but on that date their case was transferred under section 5 (7A) of the Act by the Commissioner of Income tax to the Income tax Officer, Special Circle, Ambala. All these petitioners were, prior to the orders of transfer made by the Commissioner of Income tax under section 5(7A) of the Act, being assessed by the Income tax Officer, 'A ' Ward, Amritsar, but their cases were transferred on or about June 29, 1953, from the Income tax Officer, 'A ' Ward, Amritsar, to the Income tax Officer, Special Circle, Amritsar. His case also whichprior to the order complained against, was being entertained by the Income tax Officer, 'F ' Ward, Amritsar, was transferred on some date in 1954 by an order of the Commissioner of Income tax under section 5(7A) of the Act to the Income tax Officer, Special Circle, Amritsar. On June 8, 1946, there was a further transfer assigning the cases to the Income tax Officer, Central Circle 1, Calcutta, and on July 27, 1946, orders were passed by the Commissioner of Income tax Central, Calcutta, under section 5(7A) transferring the cases of the petitioner to the Income tax Officer, Central Circle IV, Calcutta. Curiously enough, the petitioner challenged both the orders one dated December 21, 1953, and the other made sometime in May, 1955, under section 5 (7A) of the Act and the proceedings continued and instituted by the respective officers thereunder as unconstitutional and void on the ground that section 5 (7A) was ultra vires the Constitution even though ultimately he was being assessed by the main Income tax Officer, Raichur, under the latter order. This sub section was inserted by section 3 of the Indian Income tax Amendment Act, 1940 (XL of 1940) which was passed as a result of the decision of the Bombay High Court in Dayaldas Kushiram vs Commissioner of Income tax, (Central) (1) I.L.R. , 31 242 By the Indian Income tax Amendment Act, 1956 (XXVI of 1956) an explanation was added to section 5(7A) in the terms following as a result of the decision of this Court in Bidi Supply Co. v The Union of India(1): " Explanation : In this sub section, I case ' in relation to any person whose name is specified in the order of transfer means all proceedings under this Act in respect of any year which may be pending on the date of the transfer,, and includes all proceedings under this Act which may be commenced after the date of the transfer in respect of any year. " Section 5(7A) invests the Commissioner of Income tax and the Central Board of Revenue with naked and arbitrary power to transfer any case from any one Income tax Officer to another without any limitation in point of time, a power which is unguided and uncontrolled and is discriminatory in its nature and it is open to the Commissioner of Income tax or the Central Board of Revenue to pick out the case of one assessee from those of others in a like situation and transfer the same from one State to another or from one end of India to the other without 'specifying any object and without giving any reason, thus subjecting the particular assessee to discriminatory treatment whereas the other assessees similarly situated with him would continue to be assessed at the places where they reside or carry on business under section 64 (1) and (2) of the Act. The case of the assessee there had been transferred by the Central Board of Revenue under section 5(7A) of the get from the Income tax Officer, District 111, Calcutta, to the Income tax Officer, Special Circle, Ranchi. All assessees are entitled to the benefit of those provisions except where a particular case or cases of a particular assessee for a particular year or years is or are transferred under sub section (7A) of section 5, assuming that section to be valid and if a particular case or cases is or are transferred his right under section 64 still remains as regards his other case or cases. " (p. 287) The answer furnished on behalf of the State to this argument is fourfold: (i)that the provision contained in section 5 (7A) of the Act is a measure of administrative convenience enacted with a view to more conveniently and effectively deal with the cases of the assessees where the Commissioner of Income tax considers it necessary or desirable to transfer any case from one Income tax Officer subordinate to him to another or the Central Board of Revenue similarly considers it necessary or desirable to transfer any case from any one Income tax Officer to another. All assessees, whether they are assessed by the Income tax Officer of the area where they reside or carry on business or their cases are transferred from one Income tax Officer to another, are subject to the same procedure and are entitled to the same rights and privileges in the matter of redress of their grievances, if any, and there is no dis crimination whatever between assessees and assessees; (iii)that the right, if any, conferred upon the assessee under section 64 (1) and (2) of the Act is not an absolute right but is circumscribed by the exigencies of tax collection and can be negatived as it has been in cases where the Commissioner of Income tax or the Central Board of Revenue, as the case may be, think it necessary or desirable to transfer his case from one Income tax Officer to another under section 5 (7A) of the Act having regard to all the circumstances of the case. 1 further say that as a result of any transfer that may be made under the provisions of section 5 (7A) there is no discriminatory treatment with regard to the procedure and that no privileges and rights which are given to the assessees by the Income tax Act are taken away nor is the assessee exposed to any increased prejudice, punitary consequences or differential treatment. I say that in cases where transfers under this section are made otherwise than on request from assessees, the convenience of the assessees is taken into consideration by placing the case in the hands of an Income tax Officer who is nearest to the area where it will be convenient for the assessee to attend. The petitioners rejoin by relying upon the following passage from the judgment of Fazl Ali, J., in The State Of West Bengal vs Anwar Ali Sarkar, (Supra), which was referred to by Bose, J., in his minority judgment in Bidi Supply Co. vs The Union of India, (Supra), at page 281: " It was suggested that the reply to this query is that the Act itself being general and applicable to all persons and to all offenses, cannot be Said to discriminate in favour of or against any particular case or classes of persons or cases, and if any charge of discrimination can be leveled at all, it can be levelled only against the act of the executive authority if the Act is misused. by all the assessees except the 32 250 assessee whose case is transferred under section 5(7A) of the Act to another Income tax Officer outside the area where he resides or carries on business, the assessee can urge that, as compared with those other assessees, he is discriminated against and is subjected to inconvenience and harassment. The hierarchy of income tax authorities which is set up under Chapter 11 of the Act has been so set up with a view to assess the proper income tax payable by the assessee and whether the one or the other of the authorities will proceed to assess a particular assessee has got to be determined not only having regard to the convenience of the assessee but also the exigencies of tax collection. These are but instances of the various situations which may arise wherein it may be thought necessary by the Income tax authorities to transfer his case from the Income tax, Officer of the area in which he resides or carries on business to, another Income tax Officer whether functioning in the same State or beyond it. What it does is to determine the Officer who is to have power to assess and in some cases it does so by reference to locality but I apprehend that an appeal would be not against an order of the Commissioner as to the place of assessment, but against the order of assessment of the Income tax, Officer," thus stating in effect that this section does not give a right to the assessee to have his assessment, at a parti cular place but determines the Income tax Officer who is to have power to assess him. 64(1) and (2) of the Act as a right and it is, too late in the day for us to say that no such right to be assessed by the Income tax Officer of the particular area, where he resides or carries on his business is conferred on the assessee. The position, therefore, is that the determination of the, question whether a particular Income tax Officer should assess the case of the assessee depends on (1) the convenience of the assessee as posited in section 64 (1) and (2) of the Act, and (2) the exigencies of tax collection and it would be open to the Commissioner of Income tax and the Central Board of Revenue who are the highest amongst the Income tax. Authorities under the Act to transfer the case of a particular assessee from the Income tax Officer of the area within which he resides or carries on business to any other Income tax Officer if the exigencies of tax collection warrant the same. A law vesting discretion in an authority under such circumstances cannot be said to be discriminatory as such, and is therefore not hit by article 14 of the Constitution. Central Board of Revenue which is the highest authority in the hierarchy and, even though normally in accordance 256 with the provisions of section 64 (1) and (2) the work of assessment is to be done by the Income tax Officers of the area within which the assessees reside or carry on business, power is given by section 5(7A) to the Commissioner of Income tax to transfer any case from one Income tax Officer subordinate to him to another and to the Central Board of Revenue to transfer any case from any one Income tax Officer to another. In such cases the Commissioner of Income tax or the Central Board of Revenue, as the case may be, has to exercise its discretion with due regard to the exigencies of tax collection. Such discretion would necessarily have to be vested in the authority concerned and merely because the case of a particular assessee is transferred from the Income tax Officer of an area within which he resides or carries on business to another Income tax Officer whether wit in or without the State will not by itself be sufficient to characterize the exercise of the discretion as discriminatory. The court will, in that event, scrutinize these Circumstances having particular regard to the object sought to be achieved by the enactment of section 5(7A) of the Act as set out in para 4 of the affidavit of Shri V. Gouri Shankar, Under Secretary, Central Board of Revenue, quoted above, and come to its own conclusion as to the bona fides of the order and if it is not satisfied that the order was made by the authorities in bona fide exercise of the power vested in them under section 5(7A) of the Act, it will certainly quash the lame. The inconvenience and harassiment to which the assessee was thus put were considered to be violative of article 14 of the Constitution and it is urged that section 5 (7A) is unconstitutional in Boar as it is open to the Commissioner of Income tax or the Central Board of Revenue, as the case may be, to make an order of transfer subjecting the assessee to such inconvenience and harassment at their sweet will and pleasure. There is no fundamental right in an assessee to be assessed in a particular area or locality. There is also the further fact to be borne mind that this inconvenience to the assessee is sough to be minimised by the authority concerned transferring the case of such assessee to the Income tax Officer who is nearest to the area where it would be convenient for the assessee to attend and if, on account of administrative exigencies, this is not possible an the assessee requests that the examination of account or evidence to be taken should be in a place convenient to him, by the Income tax Officer complying with the request of the assessee and holding the hearing at the place requested. It is, therefore, clear that the power which is veste in the Commissioner of Income tax or the Central Board of Revenue, as the case may be, under section 5 (7A) of the Act is not a naked and arbitrary power, unfettered, unguided or uncontrolled so as to enable the authority to pick and choose one assessee out of those similarly circumstanced thus subjecting him to discriminatory treatment as compared with others who fall within the same category. The power is guided and controlled by the purpose which is to be achieved by the Act itself, viz., the charge of income tax, the assessment and collection thereof, and is to be exercised for the more convenient and efficient collection of the tax A wide discretion is given to the authorities concerned for the achievement of that purpose, in the matter of the transfer of the cases of the assessees from one Income tax Officer to another and it cannot be urged that such power which is vested in the authorities is discriminatory in its nature. If there is any abuse of power it can be remedied by appropriate action either under article 226 or under article 32 of the constitution and what can be struck down is not the provision contained in section 5 (7A) of the Act but the order passed thereunder which may be mala fide or violative,of these fundamental rights. If an opportunity is given to the assessee in such case, it is all the more ,surprising to find that, when an order of transfer under section 5(7A) is made transferring the case of the assessee from one Income tax 'Officer to another irrespective of the area or locality where he resides or carries on business, he should not be given such an opportunity. There is no presumption against the bona fides or the honesty of an assessee and normally the Income tax authorities would not be justified in refusing to an assessee a reasonable opportunity of representing his views when any order to the prejudice of the normal procedure laid down in section 64 (1) and (2) of the Act is sought to be made against him, be it a transfer from one Income tax Officer to another within the State or from an Income tax Officer within the State to an Income tax Officer without it, except of course where the very object of the transfer would be frustrated if notice was given to the party affected. Reading section 5(7A) and the explanation thereto, it is clear that when any case of a particular asssssee which is pending before an Income tax Officer is transferred from that officer to another Income tax Officer whether within the State or without it, all proceedings which are pending against him under the Act in respect of the same year as also previous years are meant to be transferred simultaneously and all proceedings under the 265 Act which may be commenced after the date of such transfer in respect of any year whatever are also included therei in so that the Income tax Officer to whom such case is transferred would be in a position to continue the pending proceedings and also institute further proceedings against the assessee in respect of any year. It is, however, contended that the cases of the assessee which have been already closed in the previous years cannot be reopened by the Income tax Officer to whom the case of the assessee is thus transferred and the words " after the date of transfer in respect of any year " occurring at the end of the explanation are sought to be construed to mean " after the date of the transfer in respect of the year of transfer " thus rendering it incompetent to the Income tax Officer to whom the case is transferred to institute further proceedings in respect of cases of the assessee which have been already closed before the date of transfer. it follows, therefore, that the omnibus wholesale orders of transfer made against the petitioners by the Commissioner of Income tax or the Central Board of Revenue, as the case may be, are saved by the explanation to section 5(7A) and are not unconstitutional and void: It remains now to consider whether the individual orders against the petitioners are discriminatory in fact or are mala fide and in abuse of the power vested in the Commissioner of Income tax or the Central Board of Revenue, as the case may be, under section 5(7A) of the Act. In the first group, there was an order of transfer on December 21, 1953, passed by the Commissioner of Income tax, Hyderabad, transferring the cases of the petitioner from the Additional Income tax Officer, Raichur, to the Income tax, Officer, Special Circle, Hyderabad. The orders of transfer made by the Commissioner of Income tax or the Central Board of Revenue, as the (1) (2) [1927] 1. Having regard to these circumstances which are disclosed in the affidavits of Shri V. Gouri Shankar, Under Secretary, Central Board of Revenue, dated November 19, 1956, and December 3, 1956, it is clear that the transfer of the cases of the petitioners, firstly, from the Income tax Officer, Special Circle, Patna, to the Income tax Officer, Central Circle XI, Calcutta, and next, from the latter officer to the Income tax Officer, Central Circle VI, Delhi, were made as a matter of administrative convenience only. If these were the circumstances under which the cases of the petitioners were transferred from Patna to Calcutta and from Calcutta to Delhi and the petitioners were afforded all conveniences in the matter of the examination of their accounts and evidence, there is no basis for the charge that the orders of transfer made against these petitioners were in any manner whatever discriminatory. 85/56; had already been 272 transferred by the Commissioner of Income tax from the Income tax Officer, Hoshiarpur, to the Income tax Officer, Special Circle, Ambala, by an order under section 5(7A) of the Act dated October 20, 1953.
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These court cases are about whether a part of the Indian Income Tax Act, section 5(7A), is constitutional or not. The same question was brought up before, but not decided, in a previous case. People argued that this section of the law, along with its explanation, gives too much power to tax officials. They said it lets officials unfairly transfer cases. This violates the right to equality (article 14) and the right to do business (article 19(1)(g)) under the Constitution. They also argued that the widespread transfer orders, done without looking at each specific case or setting time limits, are unfair. This goes against what the court said in the previous case. The Central Board of Revenue (the tax authority) argued that the section is meant to make things easier for them. They said that after a case is transferred, the same tax rules apply as to everyone else. They try to make things easier for the person being taxed by moving the case to a nearby area. If that's not possible, they'll review their records where it's convenient for them. They also said that the explanation covers the widespread transfer orders. The Court decided that section 5(7A) is constitutional and valid. It's just a way to make things easier for the tax office and doesn't violate anyone's rights. The explanation covers the transfer orders in question, so they are also valid. The right to be taxed in a certain place, given by sections 64(1) and (2) of the Act, is not absolute. It's subject to the main goal of the Act: to assess and collect income tax. If tax collection requires it, the tax officials can transfer a case to another officer, even outside the area where the person lives or works. Any difference this makes compared to others is small and doesn't deny equality under the law. The power given to officials to override a person's right must be different from the power used when dealing with basic rights in the Constitution. To decide if it's unfair, we must ask: (1) Could it lead to real discrimination? and (2) Does it violate a basic right under the Constitution? The power given to officials by section 5(7A) is not discriminatory and doesn't unreasonably limit the right to do business. Several previous court cases were referenced as part of this decision. The explanation added to the section in 1956 was meant to broaden the definition of "case." This includes ongoing cases and future cases under the Act, even after the transfer date. So, the orders in question are not unconstitutional or invalid. However, the tax authorities are bound by what they say in their official statements. If someone can show that the officials are acting unfairly or with bad intentions, the Court will look closely at the situation. If needed, the Court can stop the abuse of power. The tax authorities should follow the rules of fairness. If possible, they should tell the person about the planned transfer so they can share their views. The officials should also record the reasons for the transfer, even briefly. This helps the Court decide if the transfer was unfair or done with bad intentions, if challenged.
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ivil Appeal No. 215 of 1955. Appeal from the judgment and decree dated April 1, 1953, of the Calcutta High Court in Appeal from Original Decree No. 89 of 1946, arising, out of the judgment and decree dated December 4, 1945, of the Subordinate Judge, Darjeeling, in Money Suit No. 5 of 1940. 409 L. K. Jha and D. N. Mukherjee, for the appellant. C. B. Aggarwala, K. B. Bagchi and Sukumar Ghosh, for Respondents Nos. 1 to 5. 1959. March 26. The Judgment of the Court was delivered by SUBBA RAO, J. This appeal filed against the judgment of the High Court of Judicature at Calcutta raises the question of the legality of a partnership to carry on business in wagering contracts. The facts lie in a small compass. They, omitting those not germane to the controversy before us, are as follows: The appellant, Gherulal Parakh, and the first respondent, Mahadeodas Maiya, managers of two joint families entered into a partnership to carry on wagering contracts with two firms of Hapur, namely, Messrs. Mulchand Gulzarimull and Baldeosahay Surajmull. It was agreed between the partners that the said contracts would be made in the name of the respondents on behalf of the firm and that the profit and loss resulting from the transactions would be borne by them in equal shares. In implementation of the said agreement, the first respondent entered into 32 contracts with Mulchand and 49 contracts with Baldeosahay and the nett result of all these transactions was a loss, with the result that the first respondent had to pay to the Hapur merchants the entire amount due to them. As the appellant denied his liability to bear his share of the loss, 'the first respondent along 'With his sons filed O. section No. 18 of 1937 in the Court of the Subordinate Judge, Darjeeling, for the recovery of half of the loss incurred in the transactions with Mulchand. In the plaint he reserved his right to claim any further amount in respect of transactions with Mulchand that might be found due to him after the accounts were finally settled with him. That suit was referred to arbitration and on the basis of the award, the Subordinate Judge made a decree in favour of the first respondent and his sons for a sum of Rs. 3,375. After the final accounts were settled between the first respondent and the two merchants of Hapur and after 52 410 the amounts due to them were paid, the first respondent instituted a suit, out of which the present appeal arises, in the Court of the Subordinate Judge, Darjeeling, for the recovery of a sum of Rs. 5,300 with interest thereon. Subsequently the plaint was amended and by the amended plaint the respondents asked for the same relief on the basis that the firm had been dissolved. The appellant and his sons, inter alia, pleaded in defence that the agreement between the parties to enter into wagering contracts was unlawful under section 23 of the Contract Act, that as the partnership was not registered, the suit was barred under section 69(1) of the Partnership Act and that in any event the suit was barred under section 2, Rule 2 of the Code of Civil Procedure. The learned Subordinate Judge found that the agreement between the parties was to enter into wagering contracts depending upon the rise and fall of the market and that the said agreement was void as the said object was forbidden by law and opposed to public policy. He also found that the claim in respect of the transactions with Mulchand so far as it was not included in the earlier suit was not barred under section 2, Rule 2, Code of Civil Procedure, as the cause of action in respect of that part of the claim did not arise at the time the said suit was filed. He further found that the partnership was between the two joint families of the appellant and the first respondent respectively, that there could not be in law such a partnership and that therefore section 69 of the Partnership Act was not applicable. In the result, he dismissed the suit with costs. On appeal, the learned Judges of the High Court held that the partnership was not between the two joint families but was only between the two managers of the said families and therefore it was valid. They found that the ' partnership to do business was only for a single venture with each one of the two merchants of Hapur and for a single season and that the said partnership was dissolved after the season was over and therefore the suit for accounts of the dissolved firm was not hit by the provisions of subsections (1) and (2) of section 69 of the Partnership Act. 411 They further found that the object of the partnere was to deal in differences and that though the said transactions, being in the nature of wager, were void under section 30 of the , the object was not unlawful within the meaning of section 23 of the said Act. In regard to the claim, the learned Judges found that there was no satisfactory evidence as regards the payment by the first respondent on account of loss incurred in the contracts with Mulchand but it was established that he paid a sum of Rs. 7,615 on account of loss in the contracts entered into with Baldeosahay. In the result, the High Court gave a decree to the first respondent for a sum of Rs. 3,807 8 0 and disallowed interest thereon for the reason that as the suit in substance was one for accounts of a dissolved firm, there was no liability in the circumstances of the case to pay interest. In the result, the 'High Court gave a decree in favour of the first respondent for the said amount together with another small item and dismissed the suit as regards " the plaintiffs other than the first respondent and the defendants other than the appellant ". Before we consider the questions of law raised in the case, it would be convenient at the outset to dispose of questions of fact raised by either party. The learned Counsel for the appellant contends that the finding of the learned Judges of the High Court that the partnership stood dissolved after the season was over was not supported by the pleadings or the evidence adduced in the case. In the plaint as originally drafted and presented to the Court, there was no express reference to the fact that the business was dissolved and no relief was asked for accounts ' of the dissolved firm. But the plaint discloses that the parties jointly entered into contracts with two merchants between March 23, 1937, and June 17, 1937, that the plaintiffs obtained complete accounts of profit and loss on the aforesaid transactions from the said merchants after June 17, 1937, that they issued a notice to the defendants to pay them a sum of Rs. 4,146 4 3, being half of the total payments made by them on account of 412 the said contracts and that the defendants denied their liability. The suit was filed for recovery of the said amount. The defendant filed a written statement on June 12, 1940, but did not raise the plea based on section 69 of the Partnership Act. He filed an additional written statement on November 9, 1941, expressly setting up the plea. Thereafter the plaintiffs prayed for the amendment of the, plaint by adding the following to the plaint as paragraph 10: " That even Section 69 of the Indian Partnership Act is not a bar to the present suit as the joint business referred to above was dissolved and in this suit the Court is required only to go into the accounts of 'the said joint business ". On August 14, 1942, the defendant filed a further additional written statement alleging that the allegations in paragraph 2 were not true and that as no date of the alleged dissolution had been mentioned in the plaint, the plaintiffs ' case based on the said alleged dissolution was not maintainable. It would be seen from the aforesaid pleadings that though an express allegation of the fact of dissolution of the partnership was only made by an amendment on November 17, 1941, the plaint as originally presented contained all the facts sustaining the said plea. The defendants in their written statement, inter alia, denied that there was any partnership to enter into forward contracts with the said two merchants and that therefore consistent with their case they did not specifically deny the said facts. The said facts, except in regard to the question whether the partnership was between the two families or only between the two managers of the families on which there was difference of view between the Court of the Subordinate Judge and the High Court, were concurrently found by both the Courts. It follows from the said findings that the partnership was only in respect of forward contracts with two specified individuals and for a particular season. But it is said that the said findings were not based on any evidence in the case. It is true that the documents did not clearly indicate any period limiting the operation of the partnership, but from the attitude adopted by the 413 defendants in the earlier suit ending in an award and that adopted in the present pleadings, the nature of the transactions and the conduct of the parties, no other conclusion was possible than that arrived at by the High Court. If so, section 42 of the Partnership Act directly applies to this case. Under that section in the absence of a contract to the contrary, a firm is dissolved, if it is constituted to carry out one or more adventures or undertakings, by completion thereof. In this case, the partnership was constituted to carry out contracts with specified persons during a particular season and as the said contracts were closed, the partnership was dissolved. At this stage a point raised by the learned Counsel for the respondents may conveniently be disposed of. The learned Counsel contends that neither the learned Subordinate Judge nor the learned Judges of the High Court found that the first respondent entered into any wagering transactions with either of the two merchants of Hapur and therefore no question of illegality arises in this case. The law on the subject is wellsettled and does not call for any citation of cases. To constitute a wagering contract there must be proof that the contract was entered into upon terms that the performance of the contract should not be demanded, but only the difference in prices should be paid. There should be common intention between the parties to the wager that they should not demand delivery of the goods but should take only the difference in prices on the happening of an event. Relying upon the said legal position, it is contended that there is no evidence in the case to establish that there was a common intention between the first respondent and the Hapur merchants not to take delivery of possession but only to gamble in difference in prices. This argument, if we may say so, is not really germane to the question raised in this case. The suit was filed on the basis of a dissolved partnership for accounts. The defendants contended that the object of the partnership was to carry on wagering transactions, i. e., only to gamble in differences without any intention to give or take delivery of goods. The Courts, on the evidence, both 414 direct and circumstantial, came to the conclusion that the partnership agreement was entered into with the object of carrying on wagering transactions wherein there was no intention to ask for or to take delivery of goods but only to deal with differences. That is a concurrent finding of fact, and, following the usual practice of this Court, we must accept it. We, therefore, proceed on the basis that the appellant and the first respondent entered into a partnership for carrying on wagering transactions and the claim related only to the loss incurred in respect of those transactions. Now we come to the main and substantial point in the case. The problem presented, with its different facets, is whether the said agreement of partnership is unlawful within the meaning of section 23 of the . Section 23 of the said Act, omitting portions unnecessary for the present purpose, reads as follows : " The consideration or object of an agreement is lawful, unless it is forbidden by law, or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. " Under this section, the object of an agreement, whether it is of partnership or otherwise, is unlawful if it is forbidden by law or the Court regards it as immoral or opposed to public policy and in such cases the agreement itself is void. The learned Counsel for the appellant advances his argument under three sub heads: (i) the object is forbidden by law, (ii) it is opposed to public policy, and (iii) it is immoral. We shall consider each one of them separately. (i) forbidden by law: Under section 30 of the , agreements by way of wager are void; and no suit shall be brought for recovering anything 415 alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made. Sir William Anson 's definition of " wager " as a promise to give money or money 's worth upon the determination or ascertainment of an uncertain event accurately brings out the concept of wager declared void by section 30 of the Contract Act. As a contract which provides for payment of differences only without any intention on the part of either of the parties to give or take delivery of the goods is admittedly a wager within the meaning of section 30 of the Contract Act, the argument proceeds, such a transaction, being void under the said section, is also forbidden by law within the meaning of section 23 of the Contract Act. The question, shortly stated, is whether what is void can be equated with what is forbidden by law. This argument is not a new one, but has been raised in England as well as in India and has uniformly been rejected. In England the law relating to gaming and wagering contracts is contained in the Gaming Acts of 1845 and 1892. As the decisions turned upon the relevant provisions of the said Acts, it would help to appreciate them better if the relevant sections of the two Acts were read at this stage: Section 18 of the Gaming Act, 1845: " Contracts by way of gaming to be void, and wagers or sums deposited with stakeholders not to be recoverable at law Saving for subscriptions for prizes. . . . All contracts or agreements, whether by parole or in writing, by way of gaming or wagering, shall be null and void; and. . no suit shall be brought or maintained in any court of law and equity for recovering any sum of money or valuable thing alleged to be won upon any wager, or which shall have been deposited in the hands of any person to abide the event on which any wager shall have been made: Provided always, that this enactment shall not be deemed to apply to any subscription or contribution, or agreement to subscribe or contribute, for or towards any plate, prize or sum of money to be awarded to the winner or winners of any lawful game, sport, pastime or exercise." 416 Section 1 of the Gaming Act, 1892: " Promises to repay sums paid under contracts void by 8 & 9 Viet. c 109 to be null and void. Any promise, express or implied, to pay any person any sum of money paid by him under or in respect of any contract or agreement rendered null and void by the Gaming Act, 1845, or to pay any sum of money by way of commission, fee, reward, or otherwise in respect of any such contract, or of any services in relation thereto or in connexion therewith, shall be null and void, and no action shall be brought or maintained to recover any such sum of money. " While the Act of 1845 declared all kinds of wagers or games null and void, it only prohibited the recovery of money or valuable thing won upon any wager or desposited with stakeholders. On the other hand, the Act of 1892 further declared that moneys paid under or in respect of wagering contracts dealt with by the Act of 1845 are not recoverable and no commission or reward in respect of any wager can be claimed in a court of law by agents employed to bet on behalf of their principals. The law of England till the passing of the Act of 1892 was analogous to that in India and the English law on the subject governing a similar situation would be of considerable help in deciding the present case. Sir William Anson in his book " On Law of Contracts " succinctly states the legal position thus, at page 205: ". . . the law may either actually forbid an agreement to be made, or it may merely say that if it is made the Courts will not enforce it. In the former case it is illegal, in the latter only void; but inasmuch as illegal contracts are also void, though void contracts are not necessarily illegal, the distinction is for most purposes not important, and even judges seem sometimes to treat the two terms as inter changeable. " The learned author proceeds to apply the said general principles to wagers and observes, at page 212, thus: "Wagers 'beidg only void, no taint of illegality attached to a transaction, whereby one man employed another to make bets for him; the ordinary rules which 417 govern the relation of employer and employed applied in such a case. " Pollock and Mulla in their book on Indian Contract define the phrase ',forbidden by law " in section 23 thus, at page 158: "An act or undertaking is equally forbidden by law whether it violates a prohibitory enactment of the Legislature or a principle of unwritten law. But in India, where the criminal law is codified, acts forbidden by law seem practically to consist of acts punishable under the Penal Code and of acts prohibited by special legislation, or by regulations or orders made under authority derived from the Legislature. " Some of the decisions, both English and Indian, cited at the Bar which bring out the distinction between a contract which is forbidden by law and that which is void may now be noticed. In Thacker vs Hardy (1), the plaintiff, a broker, who was employed by the defendant to speculate for him upon the stock Exchange, entered into contracts on behalf of the defendant with a third party upon which he (the plaintiff) became personally liable. He sued the defendant for indemnity against the liability incurred by him and for commission as broker. The Court held that the plaintiff was entitled to recover notwithstanding the provisions of 8 & 9 Viet. c. 109, section 18 (English Gaming Act, 1845). Lindley, J., observed at page 687: " Now, if gaming and wagering were illegal, I should be of opinion that the illegality of the transactions in which the plaintiff and the defendant were engaged would have tainted, as between themselves, whatever the plaintiff had done in futherance of their illegal designs, and would have precluded him from claiming, in a court of law, any indemnity from the defendant in respect of the liabilities he had incurred: Cannan vs Bryce ; McKinnell vs Robinson ; ; Lyne vs Siesfeld (1 H. & N. 278). But it has been held that although gaming and wagering contracts cannot be enforced, they are (1) 53 418 not illegal. Fitch vs Jones ; is plain to that effect. Money paid in discharge of a bet is a good consideration for a bill of exchange: Oulds vs Harrison ; ; and if money be so paid by a plaintiff at the request of a defendant, it can be recovered by action against him : Knight vs Camber ; ; Jessopp vs Lutwyoho ; ; Rosewarne vs Billing (15 C. B. (N. section) 316); and it has been held that a request to pay may be inferred from an authority to bet: Oldham vs Ramsden Having regard to these decisions, I cannot hold that the statute above referred to precludes the plaintiff from maintaining this action. " In Read vs Anderson.(1) where an agent was employed to make a bet in his own name on behalf of his principal, a similar question arose for consideration. Hawkins, J., states the legal position at page 104 : " At common law wagers were not illegal, and before the passing of 8 & 9 Vict. c. 109 actions were constantly brought and maintained to recover money won upon them. The object of 8 & 9 Viet. c. 109 (passed in 1845) was not to render illegal wagers which up to that time had been lawful, but simply to make the law no longer available for their enforcement, leaving the parties to them to pay them or not as their sense of honour might dictate." After citing the provisions of section 18 of that Act, the learned Judge proceeds to observe thus, at page 105 : " There is nothing in this language to affect the legality of wagering contracts, they are simply rendered null and void; and not enforceable by any process of law. A host of authorities have settled this to be the true effect of the Statute." This judgment of Hawkins, J., was confirmed on appeal (reported in 13 Q. B. 779) on the ground that the agency became irrevocable on the making of the bet. The judgment of the Court of Appeal cannot be considered to be a direct decision on the point. The said principle was affirmed by the Court of Appeal again in Bridger vs Savage (2). There the plaintiff sued his (1) (2) 419 agent for the amount received by him in respect of the winnings from the persons with whom the agent had betted. Brett, M. R., observed at page 366 : ". . the defendant has received money which he contracted with the plaintiff to hand over to him when he had received it. That is a perfectly legal contract ; but for the defendant it has been contended that the statute 8 & 9 Vict. c. 109, section 18, makes that contract illegal. The answer is that it has been held by the Courts on several occasions that the statute applies only to the original contract made between the persons betting, and not to such a contract as was made here between the plaintiff and defendant. " Bowen, L. J., says much to the same effect at page 367: "Now with respect to the principle involved in this case, it is to be observed that the original contract of betting is not an illegal one, but only one which is void. If the person who has betted pays his bet, he does nothing wrong; he only waives a benefit which the statute has given to him, and Confers a good title to the money on the person to whom he pays it. Therefore when the bet is paid the transaction is completed, and when it is paid to an agent it cannot be contended that it is not a good payment for his prin cipal. . So much, therefore, for the principle governing this case. As to the authorities, the cases of Sharp vs Taylor , Johnson vs Lansley (12 C. B. 468), and Beeston vs Beeston (I exhibit D. 13), all go to shew that this action is maintainable, and the only authority the other way is that of Beyer vs Adams , and that case cannot be supported, and is not law. " This case lays down the correct principle and is supported by earlier authorities. The decision in Partridge vs Mallandaine (1) is to the effect that persons receiving profits from betting systematically carried on by them are chargeable with income tax on such profits in respect of a " vocation " under 5 & 6 Vict. c. 35 (the Income Tax Act) Schedule D. Hawkins, J., rejecting the argument that the (1) 420 profession of bookmakers is not a calling within the meaning of the Income Tax Act, makes the following observations, at page 278: "Mere betting is not illegal. It is perfectly lawful for a man to bet if he likes. He may, however, have a difficulty in getting the amount of the bets from dishonest persons who make bets and will not pay. " The decision in Hyams vs Stuart King (1) deals with the problem of the legality of a fresh agreement between parties to a wager for consideration. There, two bookmakers had betting transactions together, which resulted in the defendant giving the plaintiff a cheque for the amount of bets lost to him. At the request of the defendant, the cheque was held over by the plaintiff for a time, and part of the amount of the cheque was paid by the defendant. Subsequently a fresh verbal agreement was come to between the parties, by which, in consideration of the plaintiff holding over the cheque for a further time and refraining from declaring the defendant a defaulter and thereby injuring him with his customers, the defendant promised to pay the balance owing in a few days. The balance was never paid and the plaintiff filed a suit to recover the money on the basis of the fresh verbal agreement. The Court of Appeal, by a majority, Fletcher Moulton, L. J., dissenting, held that the fresh verbal agreement was supported by good consideration and therefore the plaintiff was entitled to recover the amount due to him. At page 705, Sir Gorell Barnes posed the following three questions to be decided in the case: (1) Whether the new contract was itself one which falls within the provisions of 8 & 9 Vict. c. 109, section 18; (2) whether there was any illegality affecting that contract; and (3) whether that contract was a lawful contract founded on good consideration. Adverting to the second question, which is relevant to the present case, the President made the following observations at page 707: ". . . it is to be observed that there was nothing illegal in the strict sense in making the bets. (1) 421 They were merely void under 8 & 9 Vict. c. 109, and there would have been no illegality in paying them. There is no doubt whatever about this. There was also nothing illegal in giving the cheque nor would there have been any illegality in paying it, though the defendants could not have been compelled by the plaintiff to pay it, because by statute it was to be deemed and taken to have been made and given for an illegal consideration, and therefore void in the hands of the plaintiff. . The statutes do not make the giving or paying of the cheque illegal, and impose no penalty for so doing. Their effect and intention appear only, so far as material, to be that gaming or wagering contracts cannot be enforced in a Court of Law or Equity. . . " The view expressed by the President is therefore consistent with the view all along accepted by the Courts in England. This case raised a now problem, namely, whether a substituted agreement for consideration between the same parties to the wager could be enforced, and the majority held that it could be enforced, while Fletcher Moulton, L. J., recorded his dissent. We shall have occasion to notice the dissenting view of Fletcher Moulton, L. J., at a later stage. The aforesaid decisions establish the proposition that in England a clear distinction is maintained between a contract which is void and that which is illegal and it has been held that though a wagering contract is void and unenforceable between parties, it is not illegal and therefore it does not affect the validity of a collateral contract. 'The same principle has been applied to collateral contracts of partnership also. In Thwaites vs Coulthwaite (1) the question of legality of a partnership of bookmaking and betting was raised. There the plaintiff and defendant were partners in a bookmakers and betting business, which was carried on by the defendant; the plaintiff claimed an account of the profits of the partnership, and the defendant contended that, having regard to the nature of the business, no such relief could be obtained. Chitty, J., rejected the (1) 422 plea holding that the partnership was valid, for the following reasons, among others, and stated at page 498: " The Gaming Act, 1845 (8 & 9 Vict. c. 109), did not make betting illegal; this statute, as is well known, merely avoided the wagering contract. A man may make a single bet or many bets; he may habitually bet; he may carry on a betting or bookmakers business within the statute, provided the business as carried on by him does not fall within the prohibition of the Betting Act, 1853. " In Thomas vs Day (1), a similar question arose. There the plaintiff claimed an account and money due under a partnership which he alleged had existed between himself and the defendant to take an office and carry on a betting business as bookmakers. Darling, J., held that a partnership to carry on the business of a bookmaker was not recognized by law, that even if there was such a legal partnership, an action for account would not lie as between the two bookmakers founded on betting and gambling transactions. This judgment certainly supports the appellant; but the learned Judge did not take notice of the previous decision on the subject and the subsequent decisions have not followed it. When a similar objection was raised in Brookman vs Mather (2), Avery, J., rejected the plea and gave a decree to the plaintiff. There the plaintiff and the defendant entered into a partnership to carry on a betting business. Two years thereafter, in 1910, the partnership was dissolved and a certain amount was found due to the plaintiff from the defend ant and the latter gave the former a promissory note for that amount. A suit was filed for the recovery of the amount payable under the promissory note. Avery, J., reiterated the principle that betting was not illegal per se. When the decision in Thomas vs Day(1) was cited in support of the broad principle that the betting business could not be recognized as legal in a Court of Justice, the learned Judge pointed out that that case was decided without reference to Thwaites (1) (2) 423 vs Coulthwaite (1). This judgment, therefore, corrected the deviation made by Darling, J., in Thomas vs Day(2 ) and put the case law in line with earlier precedents. The earlier view was again accepted and followed in Keen vs Price (3) where an action by one of the partners in a bookmakers and betting business against the other for an account of the partnership dealings was entertained. But the Court gave liberty to the defendant to object to repaying anything which represented profits in such business. The reason for this apparent conflict between the two parts of the decision is found in the express terms of the provisions of the Gaming Act of 1892. Commenting upon Thwaites vs Coulthwaite (1) in which Chitty, J., held that such an action would lie for an account of the profits of the partnership, Sargant, J., pointed out that in that case the Gaming Act, 1892, was not referred to. At page 101, the learned Judge says: " Curiously enough, in that case the Gaming Act, 1892, was not referred to, and although the decision is a good one on the general law, it cannot be regarded as a decision on the Act of 1892. " This judgment confirms the principle that a wager is not illegal, but states that after the Gaming Act, 1892, a claim in respect of that amount even under a collateral agreement is not maintainable. In O 'Connor and Ould vs Ralston (4), the plaintiff, a firm of bookmakers, filed a suit claiming from the defendant the amount of five cheques drawn by him upon his bank in payment of bets which he had lost to them and which had been dishonoured on presentation. Darling, J., held that as the plaintiffs formed an association for the purpose of carrying on a betting business, the action would not lie. In coming to that conclusion the learned Judge relied upon the dissenting view of Fletcher Moulton, L. J., in Hyams vs Stuart King We shall consider that decision at a later stage. (1) (2) (3) (4) (5) 424 The opinion of Darling, J., was not accepted in Jeffrey Co. vs Bamford (1) wherein McCardie, J., held that a partnership for the purpose of carrying on a betting and bookmakers business is not per se illegal or impossible in law. The learned Judge says at page 356: ". . betting or wagering is not illegal at common law. . It has been repeatedly pointed out that mere betting on horse races is not illegal ". The learned Judge, after noticing the earlier decisions already considered by us and also some of the observations of Fletcher Moulton, L. J., came to the conclusion that the partnership was not illegal. We shall now scrutinize the decision in Hill vs William Hill (I) to see whether there is any substance in the argument of the learned Counsel for the appellant that this decision accepted the dissenting view of Fletcher Moulton, L. J., in Hyams vs Stuart King (3) or the view of Darling, J., in Thomas vs Day (4) and O 'Connor and Ould vs Ralston (5). The facts in that case were: The appellant had betting transactions with the respondents, a firm of bookmakers. As a result of those transactions, the appellant lost pound 3,635 12 6. As the appellant was unable to pay the amount, the matter was referred to the committee of Tattersalls, who decided that the appellant should pay the respondents a sum of pound 635 12 6 within fourteen days and the balance by monthly instalments of pound 100. It was laid down that if the appellant failed to make those payments, he was liable to be reported to the said committee which would result in his being warned off Newmarket Heath and posted as defaulters The appellant informed the respondents that he was unable to pay the pound 635 12 6 within the prescribed time and offered to send them a cheque for that sum post dated October 10, 1946, and to pay the monthly instalments of pound 100 thereafter. On the respondents agreeing to that course, the appellant sent a post dated cheque to (1) (2) (3) (4) (5) 425 them and also enclosed a letter agreeing to pay the monthly instalments. As the post dated cheque was dishonoured and the appellant failed to pay the entire amount, the respondents filed a suit claiming the amount due to them under the subsequent agreement. The respondents contended that the sum the appellant had promised to pay was not money won upon a wager within the meaning of the second branch of section 18, but was money due under a new lawful and enforceable agreement and that even if the sum was to be regarded as won on a wager, the agreement was outside the scope of the second branch of section 18 of the Gaming Act, 1845. The House of Lords by a majority of 4 to 3 held that the agreement contained a new promise to pay money won upon a wager and that the second branch of section 18 applied to all suits brought to recover money alleged to have been won on a wager and therefore the contract was unenforceable. In coming to that conclusion, Viscount Simon, one of the Judges who expressed the majority view, agreed with Fletcher Moulton, L. J., in holding that the bond constituted an agreement to pay money won upon a wager, notwithstanding the new consideration, and was thus unenforceable under the second limb of section 18. In Hyams vs Stuart King(1), the facts of which we have already given, the suit was filed on the basis of a subsequent agreement between the same parties to the wager. The majority of the Judges held that the subsequent agreement was supported by good consideration, while Fletcher Moulton, L. J., dissented from that view. The basis for the dissenting view is found at page 712. After reading section 18 of the Gaming Act, 1845, the learned Judge proceeded to state: " In my opinion too little attention has been paid to the distinction between the two parts of this enactment, and the second part has been treated as being in effect merely a repetition of the first part. I cannot accept such an interpretation. So far as the actual wagering contract is concerned, the earlier provision is ample. It makes that contract absolutely void, (1) 54 426 and it would be idle to enact in addition that no suit should be brought upon a contract that had thus been rendered void by statute. The language of the later provision is in my opinion much wider. It provides with complete generality that no action shall be brought to recover anything alleged to be won upon any wager, without in any way limiting the application of the provision to the wagering contract itself. In other words, it provides that wherever the obligation under a contract is or includes the payment of money won upon a wager, the Courts shall not be used to enforce the performance of that part of the obligation ". These observations must be understood in the context of the peculiar facts of that case. The suit was between the parties to the wager. The question was whether the second part of the concerned section was comprehensive enough to take in an agreement to recover the money won upon a wager within the meaning of that part. Fletcher Moulton, L. J., held that the second part was wide and comprehensive enough to take in such a claim, for the suit was, though on the basis of a substituted agreement, for the recovery of the money won upon a wager within the meaning of the words of that part of the section. The second question considered by the learned Judge was whether the defendants ' firm which was an association formed for the purpose of a betting business was a legal partnership under the English Law. The learned Judge relied upon the Gaming Act. 1892 in holding that it was not possible under the English law to have any such partnership. At page 718, the learned Judge observed : In my opinion no such partnership is possible under English law. Without considering any other grounds of objection to its existence, the language of the Gaming Act, 1892, appears to me to be sufficient to establish this proposition. It is essential to the idea of a partnership that each partner is an agent. of the partnership and (subject to the provisions of the partnership deed) has authority to make payments on its behalf for partnership purposes, for which he is entitled 427 to claim credit in the partnership accounts and thus receive, directly or indirectly, repayment. But by the Gaming Act, 1892, all promises to pay any person any sum of money paid by him in respect of a wagering contract are null and void. These words are wide enough to nullify the fundamental contract which must be the basis of a partnership, and therefore in my opinion no such partnership is possible, and the action for this reason alone was wrongly framed and should have been dismissed with costs ". It would be seen from the said observations that Fletcher Moulton, L. J., laid down two propositions: (i) The second part of section 18 of the Gaming Act, 1845, was comprehensive enough to take in a claim for the recovery of money alleged to be won upon a wager though the said claim was based upon a substituted contract between the same parties; and (ii) by reason of the wide terms of the Gaming Act, 1892, even the fundamental contract, which was the basis of a partnership, was itself a nullity. The learned Lord Justice did not purport to express any opinion on the effect of a void contract of wager on a collateral contract. In Hill 's case (1) the only question that arose was whether the second part of section 18 was a bar to the maintainability of a suit under a substituted agreement for the recovery of money won upon a wager. The majority accepted the view of Fletcher Moulton, L. J., on the first question. The second question did not arise for consideration in that case. The House of Lords neither expressly nor by necessary implication purported to hold that collateral contract of either partnership or agency was illegal; and that the long catena of decisions already referred to by us were wrongly decided. This judgment does not therefore support the contention of the learned Counsel for the appellant. The legal position in India is not different. Before the Act for Avoiding Wagers, 1848, the law relating to wagers that was in force in British India was the common law of England. The Judicial Committee in Ramloll Thackoorseydass vs Soojumnull Dhondmull (2) (1) (2) (1848) 4 M.I.A. 339. 428 expressly ruled that the common law of England was in force in India and under that law an action might be maintained on a wager. The wager dealt with in that case was upon the average price which opium would fetch at the next Government sale at Calcutta. Lord Campbell in rejecting the plea that the wager was illegal observed at page 349: " The Statute, 8 & 9 Viet. c. 109, does not extend to India ' and although both parties on the record are Hindoos, no peculiar Hindoo law is alleged to exist upon the subject; therefore this case, must be decided by the common law of England ". It is a direct decision on the point now mooted before us and it is in favour of the respondents. Again the Privy Council considered a similar question in Doolubdass Pettamberdass vs Ramloll Thackoorseydass and others There again the wager was upon the price that the Patna opium would fetch at the next Government sale at Calcutta. There the plaintiff instituted a suit in the Supreme Court of Bombay in January, 1847, to recover the money won on a wager. After the suit was filed, Act 21 of 1848 was passed by the Indian Legislature where under all agreements whether made in speaking, writing, or otherwise, by way of gaming or wagering, would be null and void and no suit would be allowed in any Court of Law or Equity for recovering any sum of money or valuable thing alleged to be won on any wager. This section was similar in terms to that of section 18 of the Gaming Act, 1845. Their Lordships held that the contract was not void and the Act 21 of 1848 would not invalidate the contracts entered into before the Act came into force. Adverting to the next argument that under Hindu Law such contracts were void, they restated their view expressed in Ramloll Thackoorserdas vs Soojumnull Dhondmull (2) thus at page 127: " Their Lordships have already said that they are not satisfied from the authorities referred to, that such is the law among the Hindoos. " The Judicial Committee again restated the law in similar terms in Raghoonauth Sahoi Chotayloll vs (1) (1850) 5 M.I.A. 109. (2) (1848) 4 M.I.A. 339. 429 Manickchund and Kaisreechund (1). There the Judicial Committee held that a wagering contract in India upon the average price opium would fetch at a future Government sale, was legal and enforceable before the passing of the Legislative Act, No. 21 of 1848. The aforesaid three decisions of the Privy Council clearly establish the legal position in India before the enactment of the Act 21 of 1848, namely, that wagering contracts were governed by the common law of England and were not void and therefore enforceable in Courts. They also held that the Hindu Law did not prohibit any such wagers. The same view was expressed by the Indian Courts in cases decided after the enactment of the Contract Act. An agent who paid the amount of betting lost by him was allowed to recover the same from his principal in Pringle vs Jafar Khan (2). The reason for that decision is given at page 445: " There was nothing illegal in the contract; betting at horse races could not be said to be illegal in the sense of tainting any transaction connected with it. This distinction between an agreement which is only void and one in which the consideration is also unlawful is made in the Contract Act. Section 23 points out in what cases the consideration of an agreement is unlawful, and in such cases the agreement is also void, that is, not enforceable at law. Section 30 refers to cases in which the agreement is only void, though the consideration is not necessarily unlawful. There is no reason why the plaintiff should not recover the sum paid by him. . " In Shibho Mal vs Lachman Das (3) an agent who paid the losses on the wagering transactions was allowed to recover the amounts he paid from his principal. In Beni Madho Das vs Kaunsal Kishor Dhusar (4) the plaintiff who lent money to the defendant to enable him to pay off a gambling debt was given a decree to recover the same from the defendant. Where two partners entered into a contract of wager with a third (1) (1856) 6 M.I.A. 251. (3) All. (2) All. (4) All. 430 party and one partner had satisfied his own and his co partner 's liability under the contract, the Nagpur High Court, in Md. Gulam Mustafakhan vs Padamsi (1) held that the partner who paid the amount could legally claim the other partner 's share of the loss. The learned Judge reiterated the same principle accepted in the decisions cited supra, when he said at page 49: " Section 30 of the does not affect agreements or transactions collateral to wagers. . " The said decisions were based upon the well settled principle that a wagering contract was only void, but not illegal, and therefore a collateral contract could be enforced. Before closing this branch of the discussion, it may be convenient to consider a subsidiary point raised by the learned Counsel for the appellant that though a contract of partnership was not illegal, in the matter of accounting, the loss paid by one of the partners on wagering transactions, could not be taken into consideration. Reliance is placed in support of this contention on Chitty 's Contract, p. 495, para. 908, which reads: " Inasmuch as betting is not in itself illegal, the law does not refuse to recognise a partnership formed for the purpose of betting. Upon the dissolution of such a partnership an account may be ordered. Each partner has a right to recover his share of the capital subscribed, so far as it has not been spent; but he cannot claim an account of profits or repayments of amounts advanced by him which have actually been applied in paying the bets of the partnership. " In support of this view, two decisions are cited. They are: Thwaites vs Coulthwaite (2 ) and Saffery vs Mayer(3). The first case has already been considered by us. There, Chitty, J., in giving a decree for account left open the question of the legality of certain transactions till it arose on the taking of the (1) A.I.R. (1923) Nag. 48. (2) (3) 431 account. Far from helping the appellant, the observations and the actual decision in that case support the respondents ' contention. The reservation of the question of particular transactions presumably related only to the transactions prohibited by the Betting Act, 1853. Such of the transactions which were so prohibited by the Betting Act would be illegal and therefore the contract of partnership could not operate on such transactions. The case of Saffery vs Mayer(1) related to a suit for recovery of money advanced by one person to another for the purpose of betting on horses on their joint account. The appellate Court held that by reason of the provisions of the Gaming Act, 1892, the action was not maintainable. This decision clearly turned upon the provisions of the Gaming, Act, 1892. Smith, M. R., observed that the plaintiff paid the money to the defendant in respect of a contract rendered null and void and therefore it was not recoverable under the second limb of that section. The other Lord Justices also based their judgments on the express words of the Gaining Act, 1892. It will be also interesting to note that the Court of Appeal further pointed out that Chitty, J., in Thwaites ' Case(2) in deciding in the way he did omitted to consider the effect of the provisions of the Gaming Act, 1892, on the question of maintainability of the action before him. The aforesaid passage in Chitty 's Contract must be understood only in the context of the provisions of the Gaming Act, 1892. The aforesaid discussion yields the following results: (1) Under the common law of England a contract of wager is valid and therefore both the primary contract as well as the collateral agreement in respect thereof are enforceable; (2) after the enactment of the Gaming Act, 1845, a wager is made void but not illegal in the sense of being forbidden by law, and thereafter a primary agreement of wager is void but a collateral agreement is enforceable; (3) there was a conflict on the question whether the second part of section 18 of the Gaming Act, 1845, would cover a case for the recovery of money or valuable thing alleged to be won upon (1) (2) 432 any wager under a substituted contract between the same parties: the House of Lords in Hill 's Case,(1) had finally resolved the conflict by holding that such a claim was not sustainable whether it was made under the original contract of wager between the parties or under a substituted agreement between them; (4) under the Gaming Act, 1892, in view of its wide and comprehensive phraseology, even collateral contracts, including partnership agreements, are not enforceable; (5) section 30 of the is based upon the provisions of section 18 of the Gaming Act, 1845, and though a wager is void and unenforceable, it is not forbidden by law and therefore the object of a collateral agreement is not unlawful under section 23 of the Contract Act; and (6) partnership being an agreement within the meaning of section 23 of the , it is not unlawful, though its object is to carry on wagering transactions. We, therefore, hold that in the present case the partnership is not unlawful within the meaning of section 23(A) of the Contract Act. (ii) Public Policy: The learned Counsel for the appellant contends that the concept of public policy is very comprehensive and that in India, particularly after independence, its content should be measured having regard to political, social and economic policies of a welfare State, and the traditions of this ancient country reflected in Srutis, Smritis and Nibandas. Before adverting to the argument of the learned Counsel, it would be convenient at the outset to ascertain the meaning of this concept and to note how the Courts in England and India have applied it to different situations. Cheshire and Fifoot in their book on " Law of Contract ", 3rd Edn., observe at page " 280 thus: ' The public interests which is designed to protect are so comprehensive and heterogeneous, and opinions as to what is injurious must of necessity vary so greatly with the social and moral convictions, and at times even with the political views, of different judges, that it forms a treacherous and unstable (1) 433 ground for legal decision These questions have agitated the Courts in the past, but the present state of the law would appear to be reasonably clear. Two observations may be made with some degree of assurance. First, although the rules already established by precedent must be moulded to fit the new conditions of a changing world, it is no longer legitimate for the Courts to invent a new head of public policy. A judge is not free to speculate upon what, in his opinion, is for the good of the community. He must be content to apply, either directly or by way of analogy, the ' principles laid down in previous decisions. He must expound, not expand, this particular branch of the law. Secondly, even though the contract is one which prima facie falls under one of the recognized heads of public policy, it will not be held illegal unless its harmful qualities are indisputable. The doctrine, as Lord Atkin remarked in a leading case, " should only be invoked in clear cases in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences of a few judicial minds . . In popular language . the contract should be given the benefit of the doubt ". " Anson in his Law of Contract states the same rule thus, at p. 216: "Jessel, M. R., in 1875, stated a principle which is still valid for the Courts, when he said: ' You have this paramount public policy to consider, that you are not lightly to interfere with the freedom of contract '; and it is in reconciling freedom of contract with other public interests which are regarded as of not less importance that the difficulty in these cases arises. . We may say, however, that the policy of the law has, on certain subjects, been worked into a set of tolerably definite rules. The application of these to particular instances necessarily varies with the conditions of the times and the progressive development of public opinion and morality, but, as Lord Wright has said public policy, like any other branch of the Common Law, ought to be, and I think is, governed by 55 434 the judicial use of precedents. If it is said that rules of public policy have to be moulded to suit new conditions of a changing world, that is true; but the same is true of the principles of the Common Law generally. " In Halsbury 's Laws of England, 3rd Edn., Vol. 8, the doctrine is stated at p. 130 thus: " Any agreement which tends to be injurious to the public or against the public good is void as being contrary to public policy. . . . It seems, however, that this branch of the law will not be extended. The determination of what is contrary to the so called policy of the law necessarily varies from time to time. Many transactions are upheld now which in a former generation would have been avoided as contrary to the supposed policy of the law. The rule remains, but its application varies with the principles which for the time being guide public opinion. " A few of the leading cases on the subject reflected in the authoritative statements 'of law by the various authors may also be useful to demarcate the limits of this illusive concept. Parke, B., in Egerton vs Brownlow(1), which is a leading judgment on the subject, describes the doctrine of public policy thus at p. 123: " 'I Public policy ' is a vague and unsatisfactory term, and calculated to lead to uncertainty and error, when applied to the decision of legal rights; it is capable of being understood in different senses; it may, and does, in its ordinary sense, mean I political expedience ', or that which is best for the common good of the community; and in that sense there may be every variety of opinion, according to education, habits, talents, and dispositions of each person, who is to decide whether an act is against public policy or not. To allow this to be a ground of judicial decision, would lead to the greatest uncertainty and confusion. It is the province of the statesman, and not the lawyer, to discuss, and of the Legislature to determine, what is best for the public good, and to provide for it by proper enactments. It 1s the province of the judge (1) ; , 123; ; ,408. 435 to expound the law only; the written from the statutes; the unwritten or common law from the decisions of our predecessors and of our existing Courts, from text writers of acknowledged authority, and upon the principles to be clearly deduced from them by sound reason and just inference; not to speculate upon what is the best, in his opinion, for the advantage of the community. Some of these decisions may have no doubt been founded upon the prevailing and just opinions of the public good ; for instance, the illegality of covenants in restraint of marriage or trade. They have become a part of the recognised law, and we are therefore bound by them, but we are not thereby authorised to establish as law everything which we may think for the public good, and prohibit everything which we think otherwise. " In Janson vs Driefontein Consolidated Mines, Ltd.(1) an action raised against British underwriters in respect of insurance of treasures against capture during its transit from a foreign state to Great Britain was resisted by the underwriters on the ground that the insurance was against public policy. The House of Lords rejected the plea. Earl of Halsbury, L.C., in his speech made weighty observations, which may usefully be extracted. The learned Lord says at page 491: In treating of various branches of the law learned persons have analysed the sources of the law, and have sometimes expressed their opinion that such and such a provision is bad because it is contrary to public policy; but I deny that any Court can invent a new head of public policy ; so a contract for marriage brokerage, the creation of a perpetuity, a contract in restraint of trade, a gaming or wagering contract, or, what is relevant here, the assisting of the King 's enemies, are all undoubtedly unlawful things; and you may say that it is because they are contrary to public policy they are unlawful; but it is because these things have been either enacted or assumed to be by the common law unlawful, and not because a judge or Court have a right to declare that such and such (1) 436 things are in his or their view contrary to public policy. Of course, in the application of the principles here insisted on, it is inevitable that the particular case must be decided by a judge; he must find the facts, and he must decide whether the facts so found do or do not come within the principles which I have endeavoured to describe that is, a principle of public policy, recognised by the law, which the suggested contract is infringing, or is supposed to infringe. " These observations indicate that the doctrine of public policy is only a branch of common law and unless the principle of public policy is recognised by that law, Court cannot apply it to invalidate a contract. Lord Lindley in his speech at p. 507 pointed out that public policy is a very unstable and dangerous foundation on which to build until made safe by decision. A promise made by one spouse, after a decree nisi for the dissolution of the marriage has been pronounced, to marry a third person after the decree has been made absolute is not void as being against public policy: see Fender vs St. John Mildmay (1). In that case Lord Atkin states the scope of the doctrine thus at p. 12: " In popular language, following the wise aphorism of Sir George Jessel cited above, the contract should be given the benefit of the doubt. But there is no doubt that the rule exists. In cases where the promise to do something contrary to public policy which for short I will call a harmful thing, or where the consideration for the promise is the doing or the promise to do a harmful thing a judge, though he is on slippery ground, at any rate has a chance of finding a footing. . But the doctrine does not extend only to harmful acts, it has to be applied to harmful tendencies. Here the ground is still less safe and more treacherous ". Adverting to the observation of Lord Halsbury in Janson vs Driefontein Consolidated Mines Ltd. Lord Atkin commented thus, at page 11: ". . . Lord Halsbury indeed appeared to decide that the categories of public policy are closed, (1) (2) 437 and that the principle could not be invoked anew unless the case could be brought within some principle of public policy already recognised by the law. I do not find, however, that this view received the express assent of the other members of the House; and it seems to me, with respect, too rigid. On the other hand, it fortifies the serious warning illustrated by the passages cited above that the doctrine should only be invoked in clear cases in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences of a few judicial minds ". Lord Thankerton summarised his view in the following terms, at p. 23: " In the first place, there can be little question as to the proper function of the Courts, in questions of public policy. Their duty is to expound, and not to expand, such policy. Thai does not mean that they are precluded from applying ail existing principle of public policy to a new set of circumstances, where such circumstances are clearly within the scope of the policy. Such a case might well arise in the case of safety of the State, for instance. But no such case is suggested here. Further, the Courts must be watchful not to be influenced by their view of what the principle of public policy, or its limits, should be ". Lord Wright, at p. 38, explains the two senses in which the words " public policy" are used : " In one sense every rule of law, either common law or equity, which has been laid down by the Courts, in that course of judicial legislation which has evolved the law of this country, has been based on considerations of public interest or policy. In that, sense Sir George Jessel, M. R., referred to the paramount public policy that people should fulfil their contracts. But public policy in the narrower sense means that there are considerations of public interest which require the Courts to depart from their primary function of enforcing contracts, and exceptionally to refuse to enforce them. Public policy in this sense is disabling 438 Then the noble Lord proceeds to lay down the following principles on which a judge should exercise this peculiar and exceptional jurisdiction: (1) It is clear that public policy is not a branch of law to be extended ; (2) it is the province of the judge to expound the law only; (3) public policy, like any other branch of the common law, is governed by the judicial use of precedents ; and (4) Courts apply some recognised principles to the new conditions, proceeding by way of analogy and according to logic and convenience, just as Courts deal with any other rule of the common law. The learned Lord on the basis of the discussion of case law on the subject observes at p. 40: " It is true that it has been observed that certain rules of public policy have to be moulded to suit now conditions of a changing world : but that is true of the principles of common law generally. I find it difficult to conceive that in these days any new head of public policy could be discovered ". The observations of the aforesaid Law Lords define the concept of public policy and lay down the limits of its application in the modern times. In short, they state that the rules of public policy are ' well settled and the function of the Courts is only to expound them and apply them to varying situations. While Lord Atkin does not accept Lord Halsbury 's dictum that the categories of public policy are closed, he gives a warning that the doctrine should be invoked only in clear cases in which the harm to the public is substantially incontestable, Lord Thankerton and Lord Wright seem to suggest that the categories of public policy are well settled and what the Courts at best can do is only to apply the same to new set of circumstances. Neither of them excludes the possibility of evolving a new bead of public policy in a changing world, but they could not conceive that under the existing circumstances any such head could be discovered. Asquith, L. J., in Monkland vs Jack Barclay Ltd. (1) restated the law crisply at p. 723: "The Courts have again and again said, that where a contract does not fit into one or other of these (1) 439 pigeon holes but lies outside this charmed circle, the courts should use extreme reserve in holding a contract to be void as against public policy, and should only do so when the contract is incontestably and on any view inimical to the public interest ". The Indian cases also adopt the same view. A division bench of the Bombay High Court in Shrinivas Das Lakshminarayan vs Ram Chandra Ramrattandas observed at p. 20: " It is no doubt open to the Court to hold that the consideration or object of an agreement is unlawful on the ground that it is opposed to what the Court regards as public policy. This is laid down in section 23 of the and in India therefore it cannot be affirmed as a matter of law as was affirmed by Lord Halsbury in Janson vs Driefontein Consolidated Mines, Limited at p. 491) that no Court can invent a new head of public policy, but the dictum of Lord Davey in the same case that " public policy is always an unsafe and treacherous ground for legal decision " may be accepted as a sound cautionary maxim in considering the reasons assigned by the learned Judge for his decision ". The same view is confirmed in Bhagwant Genuji Girme vs Gangabisan Ramgopal (2) and Gopi Tihadi vs Gokhei Panda (3). The doctrine of public policy may be summarized thus: Public policy or the policy of the law is an illusive concept; it has been described as " untrustworthy guide ", " variable quality ", " uncertain one ", " unruly horse ", etc. ; the primary duty of a Court of Law is to enforce a promise which the parties have made and to uphold the sanctity of contracts which form the basis of society, but in certain cases, the Court may relieve them of their duty on a rule founded on what is called the public policy; for want of better words Lord Atkin describes that something done contrary to public policy is a harmful thing, but the doctrine is extended not only to harmful cases but also to harmful tendencies; this doctrine of public policy is only a branch of common law, and, (1) I.L.R. (2) I.L.R. 1941 Bom 71. (3) I.L.R. 1953 Cuttack 558. 440 just like any other branch of common law, it is governed by precedents; the principles have been crystallized under different heads and though it is permissible for Courts to expound and apply them to different situations, it should only be invoked in clear and incontestable cases of harm to the public; though the heads are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world, it is advisable in the interest of stability of society not to make any attempt to discover new heads in these days. This leads us to the question whether in England or in India a definite principle of public policy has been evolved or recognized invalidating wagers. So far as England is concerned, the passages from text books extracted and the decisions discussed in connection with the first point clearly establish that there has never been such a rule of public policy in that country. Courts under the common law ' of England till the year 1845 enforced such contracts even between parties to the transaction. They held that wagers were not illegal. After the passing of the English Gaming Act, 1845 (8 & 9 Vict. c. 109), such contracts were declared void. Even so; the Courts held that though a wagering contract was void, it was not illegal and therefore an agreement collateral to the wagering contract could be enforced. Only after the enactment of the Gaming Act, 1892 (55 Vict. c. 9), the collateral contracts also became unenforceable by reason of the express words of that Act. Indeed, in some of the decisions cited supra the question of public policy was specifically raised and negatived by Courts: See Thacker vs Hardy (1); Hyams vs Stuart King (2) ; and Michael Jeffrey & Company vs Bamford (3). It is therefore abundantly clear that the common law of England did not recognize any principle of public policy declaring wagering contracts illegal. The legal position is the same in India. The Indian Courts, both before and after the passing of the Act (1) (2) (3) 441 21 of 1848 and also after the enactment of the Contract Act, have held that the wagering contracts are not illegal and the collateral contracts in respect of GI. them are enforceable. We have already referred to these in dealing with the first point and we need not A,, cover the ground once again, except to cite a passage from the decision of the Judicial Committee in Ramloll Thackoorseydass vs Soojumnull Dhondmull (1), which is directly in point. Their Lordships in considering the applicability of the doctrine of public policy to a wagering contract observed at p. 350: " We are of opinion, that, although, to a certain degree, it might create a temptation to do what was wrong, we are not to presume that the parties would commit a crime; and as it did not interfere with the performance of any duty, and as if the parties were not induced by it to commit a crime, neither the interests of individuals or of the Government could be affected by it, we cannot say that it is contrary to public policy. " There is not a single decision after the above cited case, which was decided in 1848, up to the present day wherein the Courts either declared wagering contracts as illegal or refused to enforce any collateral contract in respect of such wagers, on the ground of public policy. It may, therefore, be stated without any contradiction that the common law of England in respect of wagers was followed in India and it has always been held that such contracts, though void after the Act of 1848, were not illegal. Nor the legislatures of the States excepting Bombay made any attempt to bring the law in India in line with that obtaining in England after the Gaming Act, 1892. The Contract Act was passed in the year 1872. At the time of the passing of the Contract Act, there was a Central Act, Act 21 of 1848, principally based on the English Gaming Act, 1845. There was also the Bombay Wagers (Amendment) Act, 1865, amending the former Act in terms analogous to those later enacted by the Gaming Act, 1892. Though the Contract (1) (1848) 4 M.I.A. 339. 56 442 Act repealed the Act 21 of 1848, it did not incorporate in it the provisions similar to those of the Bombay Act; nor was any amendment made subsequent to the passing of the English Gaming Act, 1892. The legislature must be deemed to have had the knowledge of the state of law in England, and, therefore, we may assume that it did not think fit to make wagers illegal or to hit at collateral contracts. The policy of law in India has therefore been to sustain the legality of wagers. The history of the law of gambling in India would also show that though gaming in certain respects was controlled, it has never been absolutely prohibited. The following are some of the gambling Acts in India: The Public Gambling Act (111 of 1867); The Bengal Public Gambling Act (11 of 1867); The Bombay Prevention of Gambling Act (IV of 1887); Madhya Bharat Gambling Act(LI of 1949); Madhya Pradesh Public Gambling Act; Madras Gaming Act (111 of 1930); The Orissa Prevention of Gambling Act (XVII of 1955); the Punjab Public Gambling Act (111 of 1867); the Rajasthan Public Gambling Ordinance (Ordinance XLVIII of 1949) and the U.P. Public Gambling Act. These Acts do not prohibit gaming in its entirety, but aim at suppressing gaming in private houses when carried on for profit or gain of the owner or occupier thereof and also gaming in public. Gaming without contravening the provisions of the said Acts is legal. Wherever the State intended to declare a particular form of gaming illegal, it made "an express statute to that effect: See section 29 A of the Indian Penal Code. In other respects, gaming and wagering are allowed in India. It is also common knowledge that horse races are allowed throughout India and the State also derives revenue therefrom. The next question posed by the learned Counsel for the appellant is whether under the Hindu Law it can be said that gambling contracts are held to be illegal. The learned Counsel relies upon the observations of this Court in The State of Bombay vs R. M. D. Chamarbaugwala (1). The question raised in that case was (1) ; 443 whether the Bombay Lotteries and Prize ' Competition Control and Tax (Amendment) Act of 1952 extending the definition of " prize competition " contained in section 2(1)(d) of the Bombay Lotteries and Prize Competition Control and Tax Act of 1948, so as to include prize competition carried on through newspapers printed and published outside the State, was constitutionally valid, It was contended, inter alia, that the Act offended the fundamental right of the respondents, who were conducting prize competitions, under article 19(1) (g) of the Constitution and also violated the freedom of inter State trade under article 301 thereof This Court held that the gambling activities in their very nature and essence were extra commercium and could not either be trade or commerce within the meaning of the aforesaid provisions and therefore neither the fundamental right of the respondents under article 19(1)(g) or their right to freedom of interState trade under article 301 is violated. In that context Das, C. J., has collected all the Hindu Law texts from Rig Veda, Mahabharata, Manu, Brihaspati, Yagnavalkya, etc., at pp. 922 923. It is unnecessary to restate them here, but it is clear from those texts that Hindu sacred books condemned gambling in unambiguous terms. But the question is whether those ancient text books remain only as pious wishes of our ancestors or whether they were enforced in the recent centu ries. All the branches of the Hindu Law have not been administered by Courts in India; only questions regarding succession, inheritance, marriage, and religious usages and institutions are decided according to the Hindu Law, except in so far as such law has been altered by legislative enactment. Besides the matters above referred to, there are certain additional matters to which the Hindu Law is applied to the Hindus, in some cases by virtue of express legislation and in others on the principle of justice, equity and good conscience. These matters are adoption, guardianship, family relations, wills, gifts and partition. As to these matters also the Hindu Law is to be applied subject to such alterations as have been made by legislative enactments: See Mulla 's Hindu Law, para. 444 3, p. 2. In other respects the ancient Hindu Law was not enforced in Indian Courts and it may be said that they became obsolete. Admittedly there, has not been a single instance in recorded cases holding gambling or wagering contracts illegal on the ground that they are contrary to public policy as they offended the principles of ancient Hindu Law. In the circumstances, we find it difficult to import the tenets of Hindu Law to give a novel content to the doctrine of public policy in respect of contracts of gaming and wagering. To summarize: The common law of England and that of India have never struck down contracts of wager on the ground of public policy ; indeed they have always been held to be not illegal notwithstanding the fact that the statute declared them void. Even after the contracts of wager were declared to be void in England, collateral contracts were enforced till the passing of the Gamina Act of 1892, and in India, except in the State of Bombay, they have been enforced even after the passing of the Act 21 of 1848, which was substituted by section 30 of the Contract Act. The moral prohibitions in Hindu Law texts against gambling were not only not legally enforced but were allowed to fall into desuetude. In practice, though gambling is controlled in specific matters, it has not been declared illegal and there is no law declaring wagering illegal. Indeed, some of the gambling practices are a perennial source of income to the State. In the circumstances it is not possible to hold that there is any definite head or principle of public policy evolved by Courts or laid down by precedents which would directly apply to wagering contracts. Even if it is permissible for Courts to evolve a new head of public policy under extraordinary circumstances giving rise to incontestable harm to the society, we cannot say that wager is one of such instances of exceptional gravity, for it has been recognized for centuries and has been tolerated by the public and the State alike. If it has any such tendency, it is for the legislature to make a law prohibiting such contracts and declaring them illegal and not for this Court to resort to judicial legislation. 445 Re. Point 3 Immorality: The argument under this head is rather broadly stated by the learned Counsel for the appellant. The learned counsel attempts to draw an analogy from the Hindu Law relating to the doctrine of pious obligation of sons to discharge their father 's debts and contends that what the Hindu Law considers to be immoral in that context may appropriately be applied to a case under section 23 of the Contract Act. Neither any authority is cited nor any legal basis is suggested for importing the doctrine of Hindu Law into the domain of contracts. Section 23 of the Contract Act is inspired by the common law of England and it would be more useful to refer to the English Law than to the Hindu Law texts dealing with a different matter. Anson in his Law Of Contracts states at p. 222 thus : " The only aspect of immorality with which Court of Law have dealt is sexual immorality. . . " Halsbury in his Laws of England, 3rd Edn., Vol. makes a similar statement, at p. 138: " A contract which is made upon an immoral consideration or for an immoral purpose is unenforceable and there is no distinction in this respect between immoral and illegal contracts. The immorality here alluded to is sexual immorality. " In the Law of Contract by Cheshire and Fifoot, 3rd Edn., it is stated at p. 279: " Although Lord Mansfield laid it down that a contract contra bonos mores is illegal, the law in this connection gives no extended meaning to morality but concerns itself only with what is sexually reprehensible." In the book on the by Pollock and Mulla it is stated at p. 157: " The epithet " immoral " points, in legal usage, to conduct or purposes which the State, though disapproving them, is unable, or not advised, to visit with direct punishment." The learned authors confined its operation to acts which are considered to be immoral according to the standards of immorality approved by Courts. The case law both in England and India confines the operation of the doctrine to sexual immorality. To cite 446 Only some instances: settlements in consideration of encubinage, contracts of sale or hire of things to be used in a brothel or by a prostitute for purposes incidental to her profession, agreements to pay money for future illicit cohabitation, promises in regard to marriage for consideration, or contracts facilitating divorce are all held to be void on the ground that the object is immoral. The word " immoral " is a very comprehensive word. ordinarily it takes in every aspect of personal conduct deviating from the standard norms of life. It may also be said that what is repugnant to good conscience is immoral. Its varying content depends upon time, place and the stage of civilization of a particular society. In short, no universal standard can be laid down and any law based on such fluid concept defeats its own purpose. The provisions of section 23 of the Contract Act indicate the legislative intention to give it a restricted meaning. Its juxtaposition with an equally illusive concept, public policy, indicates that it is used in a restricted sense; otherwise there would be overlapping of the two concepts. In its wide sense what is immoral may be against public policy, 'for public policy covers political, social and economic ground of objection. Decided cases and authoritative text book ' writers, therefore, confined it, with every justification, only to sexual immorality. The other limitation imposed on the word by the statute, namely, " the court regards it as immoral ", brings out the idea that it is also a branch of the common law like the doctrine of public policy, and, therefore, should be confined to the Principles recognized and settled by Courts. Precedents confine the said concept only to sexual immora lity and no case has been brought to our notice where it has been applied to any head other than sexual immorality. In the circumstances, we cannot evolve a new head so as to bring in wagers within its fold. Lastly it is contended by the learned Counsel for the appellant that wager is extra commercium and therefore there cannot be in law partnership for wager within the meaning of section 4 of the Partnership Act; for partnership under that section is relationship between 447 persons who have agreed to share the profits of a business. Reliance is placed in respect of this contention on the decision of this Court in The State of Bombay vs R. M. D. Chamarbaugwala (1). This question was not raised in the pleadings. No issue was framed in respect of it. No such case was argued before the learned Subordinate Judge or in the High Court; nor was this point raised in the application for certificate for leave to appeal to the Supreme Court filed in the High Court. Indeed, the learned Advocate appearing for the appellant in the High Court stated that his client intended to raise one question only, namely, whether the partnership formed for the purpose of carrying on a business in differences was illegal within the meaning of section 23 of the Contract Act. Further this plea was not specifically disclosed in the statement of case filed by the appellant in this Court. If this contention had been raised at the earliest point of time, it would have been open to the respondents to ask for a suitable amendment of the plaint to sustain their claim. In the circumstances, we do not think that we could with justification allow the appellant to raise this new plea for the first time before us, as it would cause irreparable prejudice to the respondents. We express no opinion on this point. For the foregoing reasons we must hold that the suit partnership was not unlawful within the meaning of section 23 of the . In the result, the appeal fails and is dismissed with costs. Appeal dismissed.
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The main question in this appeal was whether a partnership agreement to make bets was against the law, according to Section 23 of the Indian Contract Act. The appellant (person making the appeal) and respondent (person responding to the appeal) made a deal to partner up. They wanted to make contracts to buy and sell wheat with two other companies. The respondent would make the deals, and they would split any profit or loss equally. The deals ended up losing money, and the respondent paid the full amount to the other companies. The appellant refused to pay their half of the loss. So, the respondent sued them to get the money back. The appellant argued that the agreement to make bets was illegal under Section 23 of the Contract Act. The trial court agreed with the appellant and dismissed the case. The High Court, on appeal, said that while the bets were not valid under Section 30 of the Indian Contract Act, the purpose of the partnership itself was not illegal according to the law. So, they ruled in favor of the respondent. The appellant argued that: (1) because betting contracts are not valid, they are also against the law under Section 23; (2) that "public policy" is very important in India, and these kinds of contracts go against it; (3) that betting contracts are illegal under Hindu Law; and (4) that they are not moral, based on the Hindu Law idea that sons should pay their father's debts. The court decided that these arguments were not valid and could not be accepted. Even though a betting contract is not valid and cannot be enforced under Section 30 of the Contract Act, it is not against the law. So, an agreement related to a betting contract is not illegal under Section 23 of the Contract Act. A partnership to make bets is therefore not against the law. The court agreed with the rulings in several previous cases. The court also referred to several other cases. The court discussed another case. The idea of "public policy" is just one part of common law (laws based on court decisions). Like other parts of common law, it follows past court decisions. The rules for public policy are well-established, and while they can be used in different situations, they should only be used when there is clear harm to the public. It is possible to create a new rule of public policy in very special situations. However, this is not a good idea because it can make society less stable. The court agreed with the rulings in several previous cases. The court referred to several other cases. Like the common law in England, which does not say that betting contracts are against public policy, Indian courts have also said that betting contracts are not illegal. So, contracts related to them can be enforced. The court referred to a previous case. Courts in India have never said that gambling or betting contracts are illegal because they go against public policy or ancient Hindu Law. It is not possible to change the meaning of public policy to include gaming and betting contracts. The court discussed another case. The common law in England and India has never said that betting contracts are illegal based on public policy. These contracts have always been seen as valid, even though laws say they cannot be enforced. The moral rules against gambling in Hindu Law were not enforced and were eventually ignored. There is no clear rule of public policy made by courts that applies to betting contracts. There is no legal reason to use the Hindu Law idea that sons should pay their father's debts in contract law. Section 23 of the Contract Act is based on English common law and should be understood in that way. The word "immoral" has a broad meaning that can change. It is hard to make a law based on such a changing idea. The words of Section 23 suggest that the lawmakers wanted the word "immoral" to have a limited meaning. The phrase "the Court regards it as immoral" shows that this is also part of common law. It should only include ideas that courts have already recognized and decided on. Court decisions have limited "immoral" to mean sexual immorality, and betting cannot be added as a new type of immorality.
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This appeal filed against the judgment of the High Court of Judicature at Calcutta raises the question of the legality of a partnership to carry on business in wagering contracts. He also found that the claim in respect of the transactions with Mulchand so far as it was not included in the earlier suit was not barred under section 2, Rule 2, Code of Civil Procedure, as the cause of action in respect of that part of the claim did not arise at the time the said suit was filed. He further found that the partnership was between the two joint families of the appellant and the first respondent respectively, that there could not be in law such a partnership and that therefore section 69 of the Partnership Act was not applicable. They found that the ' partnership to do business was only for a single venture with each one of the two merchants of Hapur and for a single season and that the said partnership was dissolved after the season was over and therefore the suit for accounts of the dissolved firm was not hit by the provisions of subsections (1) and (2) of section 69 of the Partnership Act. 411 They further found that the object of the partnere was to deal in differences and that though the said transactions, being in the nature of wager, were void under section 30 of the , the object was not unlawful within the meaning of section 23 of the said Act. The learned Counsel contends that neither the learned Subordinate Judge nor the learned Judges of the High Court found that the first respondent entered into any wagering transactions with either of the two merchants of Hapur and therefore no question of illegality arises in this case. Under this section, the object of an agreement, whether it is of partnership or otherwise, is unlawful if it is forbidden by law or the Court regards it as immoral or opposed to public policy and in such cases the agreement itself is void. As a contract which provides for payment of differences only without any intention on the part of either of the parties to give or take delivery of the goods is admittedly a wager within the meaning of section 30 of the Contract Act, the argument proceeds, such a transaction, being void under the said section, is also forbidden by law within the meaning of section 23 of the Contract Act. On the other hand, the Act of 1892 further declared that moneys paid under or in respect of wagering contracts dealt with by the Act of 1845 are not recoverable and no commission or reward in respect of any wager can be claimed in a court of law by agents employed to bet on behalf of their principals. But it has been held that although gaming and wagering contracts cannot be enforced, they are (1) 53 418 not illegal. Money paid in discharge of a bet is a good consideration for a bill of exchange: Oulds vs Harrison ; ; and if money be so paid by a plaintiff at the request of a defendant, it can be recovered by action against him : Knight vs Camber ; ; Jessopp vs Lutwyoho ; ; Rosewarne vs Billing (15 C. B. The judgment of the Court of Appeal cannot be considered to be a direct decision on the point. Bowen, L. J., says much to the same effect at page 367: "Now with respect to the principle involved in this case, it is to be observed that the original contract of betting is not an illegal one, but only one which is void. There was also nothing illegal in giving the cheque nor would there have been any illegality in paying it, though the defendants could not have been compelled by the plaintiff to pay it, because by statute it was to be deemed and taken to have been made and given for an illegal consideration, and therefore void in the hands of the plaintiff. The aforesaid decisions establish the proposition that in England a clear distinction is maintained between a contract which is void and that which is illegal and it has been held that though a wagering contract is void and unenforceable between parties, it is not illegal and therefore it does not affect the validity of a collateral contract. Darling, J., held that a partnership to carry on the business of a bookmaker was not recognized by law, that even if there was such a legal partnership, an action for account would not lie as between the two bookmakers founded on betting and gambling transactions. Commenting upon Thwaites vs Coulthwaite (1) in which Chitty, J., held that such an action would lie for an account of the profits of the partnership, Sargant, J., pointed out that in that case the Gaming Act, 1892, was not referred to. At page 101, the learned Judge says: " Curiously enough, in that case the Gaming Act, 1892, was not referred to, and although the decision is a good one on the general law, it cannot be regarded as a decision on the Act of 1892. " This judgment confirms the principle that a wager is not illegal, but states that after the Gaming Act, 1892, a claim in respect of that amount even under a collateral agreement is not maintainable. betting or wagering is not illegal at common law. We shall now scrutinize the decision in Hill vs William Hill (I) to see whether there is any substance in the argument of the learned Counsel for the appellant that this decision accepted the dissenting view of Fletcher Moulton, L. J., in Hyams vs Stuart King (3) or the view of Darling, J., in Thomas vs Day (4) and O 'Connor and Ould vs Ralston (5). The facts in that case were: The appellant had betting transactions with the respondents, a firm of bookmakers. The respondents contended that the sum the appellant had promised to pay was not money won upon a wager within the meaning of the second branch of section 18, but was money due under a new lawful and enforceable agreement and that even if the sum was to be regarded as won on a wager, the agreement was outside the scope of the second branch of section 18 of the Gaming Act, 1845. The House of Lords by a majority of 4 to 3 held that the agreement contained a new promise to pay money won upon a wager and that the second branch of section 18 applied to all suits brought to recover money alleged to have been won on a wager and therefore the contract was unenforceable. Fletcher Moulton, L. J., held that the second part was wide and comprehensive enough to take in such a claim, for the suit was, though on the basis of a substituted agreement, for the recovery of the money won upon a wager within the meaning of the words of that part of the section. But by the Gaming Act, 1892, all promises to pay any person any sum of money paid by him in respect of a wagering contract are null and void. It would be seen from the said observations that Fletcher Moulton, L. J., laid down two propositions: (i) The second part of section 18 of the Gaming Act, 1845, was comprehensive enough to take in a claim for the recovery of money alleged to be won upon a wager though the said claim was based upon a substituted contract between the same parties; and (ii) by reason of the wide terms of the Gaming Act, 1892, even the fundamental contract, which was the basis of a partnership, was itself a nullity. This judgment does not therefore support the contention of the learned Counsel for the appellant. After the suit was filed, Act 21 of 1848 was passed by the Indian Legislature where under all agreements whether made in speaking, writing, or otherwise, by way of gaming or wagering, would be null and void and no suit would be allowed in any Court of Law or Equity for recovering any sum of money or valuable thing alleged to be won on any wager. This section was similar in terms to that of section 18 of the Gaming Act, 1845. Adverting to the next argument that under Hindu Law such contracts were void, they restated their view expressed in Ramloll Thackoorserdas vs Soojumnull Dhondmull (2) thus at page 127: " Their Lordships have already said that they are not satisfied from the authorities referred to, that such is the law among the Hindoos. " The reason for that decision is given at page 445: " There was nothing illegal in the contract; betting at horse races could not be said to be illegal in the sense of tainting any transaction connected with it. This distinction between an agreement which is only void and one in which the consideration is also unlawful is made in the Contract Act. Section 23 points out in what cases the consideration of an agreement is unlawful, and in such cases the agreement is also void, that is, not enforceable at law. The said decisions were based upon the well settled principle that a wagering contract was only void, but not illegal, and therefore a collateral contract could be enforced. Before closing this branch of the discussion, it may be convenient to consider a subsidiary point raised by the learned Counsel for the appellant that though a contract of partnership was not illegal, in the matter of accounting, the loss paid by one of the partners on wagering transactions, could not be taken into consideration. Each partner has a right to recover his share of the capital subscribed, so far as it has not been spent; but he cannot claim an account of profits or repayments of amounts advanced by him which have actually been applied in paying the bets of the partnership. " Such of the transactions which were so prohibited by the Betting Act would be illegal and therefore the contract of partnership could not operate on such transactions. The aforesaid discussion yields the following results: (1) Under the common law of England a contract of wager is valid and therefore both the primary contract as well as the collateral agreement in respect thereof are enforceable; (2) after the enactment of the Gaming Act, 1845, a wager is made void but not illegal in the sense of being forbidden by law, and thereafter a primary agreement of wager is void but a collateral agreement is enforceable; (3) there was a conflict on the question whether the second part of section 18 of the Gaming Act, 1845, would cover a case for the recovery of money or valuable thing alleged to be won upon (1) (2) 432 any wager under a substituted contract between the same parties: the House of Lords in Hill 's Case,(1) had finally resolved the conflict by holding that such a claim was not sustainable whether it was made under the original contract of wager between the parties or under a substituted agreement between them; (4) under the Gaming Act, 1892, in view of its wide and comprehensive phraseology, even collateral contracts, including partnership agreements, are not enforceable; (5) section 30 of the is based upon the provisions of section 18 of the Gaming Act, 1845, and though a wager is void and unenforceable, it is not forbidden by law and therefore the object of a collateral agreement is not unlawful under section 23 of the Contract Act; and (6) partnership being an agreement within the meaning of section 23 of the , it is not unlawful, though its object is to carry on wagering transactions. We, therefore, hold that in the present case the partnership is not unlawful within the meaning of section 23(A) of the Contract Act. 8, the doctrine is stated at p. 130 thus: " Any agreement which tends to be injurious to the public or against the public good is void as being contrary to public policy. Parke, B., in Egerton vs Brownlow(1), which is a leading judgment on the subject, describes the doctrine of public policy thus at p. 123: " 'I Public policy ' is a vague and unsatisfactory term, and calculated to lead to uncertainty and error, when applied to the decision of legal rights; it is capable of being understood in different senses; it may, and does, in its ordinary sense, mean I political expedience ', or that which is best for the common good of the community; and in that sense there may be every variety of opinion, according to education, habits, talents, and dispositions of each person, who is to decide whether an act is against public policy or not. The learned Lord says at page 491: In treating of various branches of the law learned persons have analysed the sources of the law, and have sometimes expressed their opinion that such and such a provision is bad because it is contrary to public policy; but I deny that any Court can invent a new head of public policy ; so a contract for marriage brokerage, the creation of a perpetuity, a contract in restraint of trade, a gaming or wagering contract, or, what is relevant here, the assisting of the King 's enemies, are all undoubtedly unlawful things; and you may say that it is because they are contrary to public policy they are unlawful; but it is because these things have been either enacted or assumed to be by the common law unlawful, and not because a judge or Court have a right to declare that such and such (1) 436 things are in his or their view contrary to public policy. Of course, in the application of the principles here insisted on, it is inevitable that the particular case must be decided by a judge; he must find the facts, and he must decide whether the facts so found do or do not come within the principles which I have endeavoured to describe that is, a principle of public policy, recognised by the law, which the suggested contract is infringing, or is supposed to infringe. " These observations indicate that the doctrine of public policy is only a branch of common law and unless the principle of public policy is recognised by that law, Court cannot apply it to invalidate a contract. Lord Wright, at p. 38, explains the two senses in which the words " public policy" are used : " In one sense every rule of law, either common law or equity, which has been laid down by the Courts, in that course of judicial legislation which has evolved the law of this country, has been based on considerations of public interest or policy. Public policy in this sense is disabling 438 Then the noble Lord proceeds to lay down the following principles on which a judge should exercise this peculiar and exceptional jurisdiction: (1) It is clear that public policy is not a branch of law to be extended ; (2) it is the province of the judge to expound the law only; (3) public policy, like any other branch of the common law, is governed by the judicial use of precedents ; and (4) Courts apply some recognised principles to the new conditions, proceeding by way of analogy and according to logic and convenience, just as Courts deal with any other rule of the common law. The learned Lord on the basis of the discussion of case law on the subject observes at p. 40: " It is true that it has been observed that certain rules of public policy have to be moulded to suit now conditions of a changing world : but that is true of the principles of common law generally. This is laid down in section 23 of the and in India therefore it cannot be affirmed as a matter of law as was affirmed by Lord Halsbury in Janson vs Driefontein Consolidated Mines, Limited at p. 491) that no Court can invent a new head of public policy, but the dictum of Lord Davey in the same case that " public policy is always an unsafe and treacherous ground for legal decision " may be accepted as a sound cautionary maxim in considering the reasons assigned by the learned Judge for his decision ". ; the primary duty of a Court of Law is to enforce a promise which the parties have made and to uphold the sanctity of contracts which form the basis of society, but in certain cases, the Court may relieve them of their duty on a rule founded on what is called the public policy; for want of better words Lord Atkin describes that something done contrary to public policy is a harmful thing, but the doctrine is extended not only to harmful cases but also to harmful tendencies; this doctrine of public policy is only a branch of common law, and, (1) I.L.R. Even so; the Courts held that though a wagering contract was void, it was not illegal and therefore an agreement collateral to the wagering contract could be enforced. The Indian Courts, both before and after the passing of the Act (1) (2) (3) 441 21 of 1848 and also after the enactment of the Contract Act, have held that the wagering contracts are not illegal and the collateral contracts in respect of GI. Their Lordships in considering the applicability of the doctrine of public policy to a wagering contract observed at p. 350: " We are of opinion, that, although, to a certain degree, it might create a temptation to do what was wrong, we are not to presume that the parties would commit a crime; and as it did not interfere with the performance of any duty, and as if the parties were not induced by it to commit a crime, neither the interests of individuals or of the Government could be affected by it, we cannot say that it is contrary to public policy. " There is not a single decision after the above cited case, which was decided in 1848, up to the present day wherein the Courts either declared wagering contracts as illegal or refused to enforce any collateral contract in respect of such wagers, on the ground of public policy. It may, therefore, be stated without any contradiction that the common law of England in respect of wagers was followed in India and it has always been held that such contracts, though void after the Act of 1848, were not illegal. The next question posed by the learned Counsel for the appellant is whether under the Hindu Law it can be said that gambling contracts are held to be illegal. Even after the contracts of wager were declared to be void in England, collateral contracts were enforced till the passing of the Gamina Act of 1892, and in India, except in the State of Bombay, they have been enforced even after the passing of the Act 21 of 1848, which was substituted by section 30 of the Contract Act. In the circumstances it is not possible to hold that there is any definite head or principle of public policy evolved by Courts or laid down by precedents which would directly apply to wagering contracts. Even if it is permissible for Courts to evolve a new head of public policy under extraordinary circumstances giving rise to incontestable harm to the society, we cannot say that wager is one of such instances of exceptional gravity, for it has been recognized for centuries and has been tolerated by the public and the State alike. Lastly it is contended by the learned Counsel for the appellant that wager is extra commercium and therefore there cannot be in law partnership for wager within the meaning of section 4 of the Partnership Act; for partnership under that section is relationship between 447 persons who have agreed to share the profits of a business. No such case was argued before the learned Subordinate Judge or in the High Court; nor was this point raised in the application for certificate for leave to appeal to the Supreme Court filed in the High Court.
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The main question in this appeal was whether a partnership agreement to make bets was against the law, according to Section 23 of the Indian Contract Act. The appellant (person making the appeal) and respondent (person responding to the appeal) made a deal to partner up. They wanted to make contracts to buy and sell wheat with two other companies. The respondent would make the deals, and they would split any profit or loss equally. The deals ended up losing money, and the respondent paid the full amount to the other companies. The appellant refused to pay their half of the loss. So, the respondent sued them to get the money back. The appellant argued that the agreement to make bets was illegal under Section 23 of the Contract Act. The trial court agreed with the appellant and dismissed the case. The High Court, on appeal, said that while the bets were not valid under Section 30 of the Indian Contract Act, the purpose of the partnership itself was not illegal according to the law. So, they ruled in favor of the respondent. The appellant argued that: (1) because betting contracts are not valid, they are also against the law under Section 23; (2) that "public policy" is very important in India, and these kinds of contracts go against it; (3) that betting contracts are illegal under Hindu Law; and (4) that they are not moral, based on the Hindu Law idea that sons should pay their father's debts. The court decided that these arguments were not valid and could not be accepted. Even though a betting contract is not valid and cannot be enforced under Section 30 of the Contract Act, it is not against the law. So, an agreement related to a betting contract is not illegal under Section 23 of the Contract Act. A partnership to make bets is therefore not against the law. The court agreed with the rulings in several previous cases. The court also referred to several other cases. The court discussed another case. The idea of "public policy" is just one part of common law (laws based on court decisions). Like other parts of common law, it follows past court decisions. The rules for public policy are well-established, and while they can be used in different situations, they should only be used when there is clear harm to the public. It is possible to create a new rule of public policy in very special situations. However, this is not a good idea because it can make society less stable. The court agreed with the rulings in several previous cases. The court referred to several other cases. Like the common law in England, which does not say that betting contracts are against public policy, Indian courts have also said that betting contracts are not illegal. So, contracts related to them can be enforced. The court referred to a previous case. Courts in India have never said that gambling or betting contracts are illegal because they go against public policy or ancient Hindu Law. It is not possible to change the meaning of public policy to include gaming and betting contracts. The court discussed another case. The common law in England and India has never said that betting contracts are illegal based on public policy. These contracts have always been seen as valid, even though laws say they cannot be enforced. The moral rules against gambling in Hindu Law were not enforced and were eventually ignored. There is no clear rule of public policy made by courts that applies to betting contracts. There is no legal reason to use the Hindu Law idea that sons should pay their father's debts in contract law. Section 23 of the Contract Act is based on English common law and should be understood in that way. The word "immoral" has a broad meaning that can change. It is hard to make a law based on such a changing idea. The words of Section 23 suggest that the lawmakers wanted the word "immoral" to have a limited meaning. The phrase "the Court regards it as immoral" shows that this is also part of common law. It should only include ideas that courts have already recognized and decided on. Court decisions have limited "immoral" to mean sexual immorality, and betting cannot be added as a new type of immorality.
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itions Nos. 111,150 151, 180, 205 210, 220,226, 270 271, 346 352, 355, 403, 396 398, 599, 541, 543, 626, 635 639, 661, 687 692 and 758/77, 154, 178, 571 574, 600, 603, 605, 610, 611,257,221 and 1134 1134/77. 1055 (Under Article 32 of the Constitution) A. K. Sen, section C. Banerjee, Y. section Chitale, K. K. Sinha, section K. Sinha, Pradeep Hajela, section K. Verma, A. K. Srivastava, M. P. Jha, C. K. Ratnaparkhi, B. N. Lala, Surajdeo Singh, D. P. Mukherjee and A. K. Ganguli for the Petitioners in W.Ps. Nos. 111, 150 151, 154, 178, 610 611 661, 180, 270 271, 599, 220, 226, 205 210, 396 398 and 600 of 1977. H. M. Seervai, Kamal Nayan Choubey, A. K. Srivastava, B. P. Singh and Bimal Kumar Sinha for the Petitioners in WP Nos. 237, 571 574, 603, 605, 355, 346 of 1977. D. Goburdhan for the Petitioners in WP Nos. 687, 692, 635 639, 352, and Respondent No. 12 in WP Nos. 150 151/77. A. K. Sen, section C. Bannerjee, Y. section Chitale, section B. Sanyal, A. K. Banerjee and A. K. Nag for the Petitioners in WP Nos. 626, 541, 543 and Respondent No. 15 in WP 154/77. section V. Gupte, section N. Kacker, U. R. Lalit, section P. Nayar, R. N. Sachthey and Gobind Mukhoty for the Respondents Nos. 1, 9 12 in WP No. 111, RR. 1, 7, 11 in WP Nos. 150 151, RR. 1, 8 to 12 in WP. 154, RR. 1&7 in WP. 178, RR. 1&7 in WPs. 610 611 RR. 1,5,6 & 8 in WP. 661, RR. 1 & 7 in WP Nos. 270 271, RR 1 & 7 in WP in 599, RR. 1, 8, 9 12 & 15 in WPs. Nos 571 574, RR. 1, 8 13 & 16 in WP No. 603. 1,2&9 in WP 605,RR.1,2,10,11,14&15 in WP. 355, RR. 1, 8 12 in WP 346, RR. 1, 3 5, 8, 9 in WP No. 626, RR. 1, 6 10 & 14 in WP. 541, RR. 1 5 & 9 in WP. 543, RR. 1, 8 & 12 and 15 in WP. 758, RR 1, 7 in WP. 257, RR. 1&7 in WPs. 220 and 226 RR. 1&8 in WPs. 205 210, RR. 1&8 in WP. 600, RR. 1, 3, 11 15 in WP 403, RR. 1, 9 & 10 in WP No. 180/77. Lal Narain Sinha, U. P. Singh, Shambhu Nath Jha and U. section Prasad for the Respondents Nos. 2 8 in WP Nos. 111, 2 7 in 154, 2 6 in 610 611, 2 4, 7 & 8 in 661, 2 8 in 180, 2 6, 10 12 in 270 271, 2 6 and 10 13 in 599, 2 7 in 571 574, 2 7, 14 15, 17 20 & 23 in 603, 2 7 in 605, 3 8, 12, 13, 16 18 in 335, 2 6 in 687 692, 2 6 in 635 637, 2 6 in 352, 2, 6, 7 & 10 in 626, 2 5, 11 13 in 541, 6 8 in 543, 2 6 in 758/77, 2 7, 13, 14 & 16 in 257, 2 6 in 220 and 226, 2 6, 13, 14 in 205 210, 2 7 in 600, 2 6 in 638 639, 2, 4 to 10 in 403/77. Mr. P. section Khera for Intervener No. 1 in WP. 111/77. section K. Verma for the Intervener No. 2 in WP. 111/77. A. P. Chatterjee and G. section Chatterjee for Respondents 2 & 6 in WPs. 150 151 & 2 to 6 in 396 398/77. M. P. Jha for the Petitioner in WP. No. 758/77. 1056 The Judgment of the Court was delivered by CHANDRACHUD, C. J. This is a group of 61 Writ Petitions under article 32 of the Constitution challenging the validity of the Coal Mines (Nationalisation) Amendment Act 67 of 1976, on the ground that it is violative of the provisions of articles 14, 19(1)(f), 19(1) (g) and 31 of the Constitution. For understanding the basis of that challenge, it will be enough to refer to the broad facts of two representative groups of petitions. The facts of writ petitions 270 and 271 of 1977 are, by and large, typical of cases in which the petitioners claim to be lessees of coal mines, while the facts of writ petition 257 of 1977 are typical of cases in which the petitioners claim to be lessees of composite mines containing alternate seems of coal and fireclay. Most of the facts are undisputed and only a few of them are in controversy. In writ petitions 270 and 271 of 1977, petitioner No. 1 claims to be the sole proprietor of 'S.D. Coal Company ' which is engaged in coal business and coal mining operations. Petitioner No. 2 is said to be the agent of the company. Both the surface and underground rights in Mouza Bundu in the District of Hazaribagh, Bihar, previously belonged to the Raja of Ramgarh from whom or whose successors in interest, the South Karanpura Coal Co. Ltd. appears to have obtained a lease of 242 Bighas of coal bearing lands in Mouza Bundu, called the 'Bundu Colliery '. After the enactment of the Bihar Land Reforms Act 30 of 1950, all rights of tenure holders landlords and Zamindars, including the rights in mines and minerals, vested in the State of Bihar but, by virtue of section 10 of that Act, subsisting leases of mines and minerals in any estate or tenure became leases under the State Government. It is alleged that on 12th June, 1975 the South Karanpura Coal Co. Ltd. entered into an agreement with the section D. Coal Company or prospecting, developing, raising and selling coal from the Bundu Colliery and that on the strength of that agreement, petitioner No. 1 was put in possession of the entire area of 242 Bighas of coal bearing land. The section D. Coal Company is stated to have made large investments in the colliery and to have started paying rents and royalty to the State of Bihar. The petitioners have cited various facts and figures in support of their contention that they have been in working possession of the coal mine area in question and that they were entitled to remove nearly 30,000 tonnes of coal raised by them at a heavy cost. It appears that in a proceeding under section 144 of the Criminal Procedure Code, the Sub divisional Magistrate (Sadar), Hazaribagh, had made the rule absolute against the South Karanpura Coal Co. Ltd. as well as the section D. Coal Company, on the ground that 1057 the State Government had taken over the Bundu Colliery. But, in C.R. Case No. 18318(W) of 1975, the High Court of Calcutta is stated to have set aside the order of the State Government cancelling the lease of petitioner 1 in respect of the Bundu Colliery. Since that lease stands terminated under the Coal Mines (Nationalisation) Amendment Act 1976, the petitioners have filed writ petitions to challenge the validity of that Act. On the factual aspect, the contention of the State of Bihar is that the lease of the Bundu Colliery which was held by M/s South Karanpura Coal Co. Ltd. was terminated by the Bihar Government on November 24, 1975 on account of the violation of Rule 37 of the Mineral Concession Rules, 1960 and that, actual possession of the colliery was taken by the State Government on November 26, 1975 prior to the coming into force of the Amendment Act of 1976. In writ petition No. 257 of 1977, the petitioner Nirode Baran Banerjee made an application dated September 17, 1966 for the grant of a mining lease in respect of fireclay covering an area of 1640.60 acres of the Hesalong Colliery. On September 19, 1966 he made a similar application in respect of the same area, for a coal mining lease. These applications were deemed to have been rejected since the State Government did not pass any order thereon within the prescribed period. In a Revision application preferred by the petitioner, the Central Government directed the State Government to consider the petitioner 's application for the grant of a mining lease in respect of fireclay. The dispute relating to the petitioner 's application for a coal mining lease was brought to the Supreme Court, as a result of which the Central Government on April 1, 1972 directed the State Government to grant a coal mining lease to the petitioner. On October 17, 1973 a formal lease was executed by the State of Bihar in favour of the petitioner in respect of both coal and fireclay. The lease was registered on October 18. According to the petitioner, the Hesalong Colliery in respect of which he holds the mining lease for coal and fireclay is situated in an interior area of the hilly portion of the District of Hazaribagh which has its own peculiar nature, trait and character. The reserves of coal in the area are said to be in isolated small pockets and are not sufficient for scientific or economical development in a co ordinated and integrated manner. The coal is ungraded and is not required to be transported by rail. On the composite nature of the mine, the petitioner has made a specific averment in paragraph 6 of his writ petition to the following effect: 1058 The coal and fireclay deposits in the said area are so mixed up that one cannot work either for extraction of coal or for extraction of fireclay without disturbing each of the said two minerals. The deposits are such that at one layer there is coal, the next layer is fireclay, the other layer is coal, the next layer is again fireclay and so on. In paragraph 15 of his writ petition the petitioner has stated that in the Hesalong Mines, the deposit of fireclay is spread over the entire area of 1640.60 acres in the first layer and just beneath that, there is a deposit of coal in the second layer, so on and so forth. According to the petitioner, it is absolutely impossible to carry on mining operations in coal without disturbing the fireclay and any such disturbance and inadvertent extraction of either coal or fireclay by different lessees, if the composite lease is split up, will amount to unauthorise mining. The petitioner contends that he employs about 9,000 workers, has invested a huge amount for making the colliery workable and that a large amount of coal, which was lying exposed and unprotected, was ready for despatch. Since his composite lease too was in jeopardy under the Amendment Act, he filed a writ petition in this Court to challenge the validity of the Act, contending in addition that the Act is not applicable to composite mines having alternate layers of fireclay and coal. Some of the petitioners had filed writ petitions in the High Courts under article 226 of the Constitution challenging the validity of the Amendment Act of 1976. Rules were issued in those petitions and interim orders were passed under which the status quo was maintained on certain terms and conditions. After the passing of the 42nd Constitution Amendment Act, the High Courts became incompetent to grant any relief in those petitions whereupon, writ petitions were filed in this Court. The petitions were argued on behalf of the petitioners by Shri A. K. Sen, Shri H. M. Seervai, Shri Y. section Chitale, Shri B. K. Sinha, Shri D. Goburdhan and Shri A. K. Nag. The Attorney General argued in support of the validity of the impugned Act and so did the Solicitor General, appearing on behalf of the Union of India. Shri Lal Narain Sinha and Shri A. P. Chatterjee argued respectively on behalf of the State of Bihar and the State of West Bengal. Shri P. section Khera and Shri section K. Verma appeared on behalf of the interveners. Before examining the contentions advanced before us by the various learned counsel, it will be useful to trace briefly the history of laws bearing on the working of mines and exploitation of minerals, 1059 the taking over of management and the nationalisation of mines and finally the termination of certain leases under the impugned Act. According to "India 1976" (Publications Division, Ministry of Information and Broadcasting, Government of India), coal mining was first started at Raniganj, West Bengal, in 1774. Coal is an important mineral as a source of energy and in India it constitutes a prime source of energy. On the attainment of independence, the importance of coal to industrial development was realised by the Planners and the problems of the coal industry were identified by the Planning Commission in its report on the First Five Year Plan. The Fifth Plan provided for a production target of 13.5 million tonnes of coal by 1978 79, which amounted to an increase of 5.7 million tonnes from the level of production of 7.79 million tonnes at the end of the Fourth Five Year Plan. In 1950, after coal mining was stepped up, the production was 32 million tonnes. In 1974 75 it reached a record figure of 88.4 million tonnes. The overall reserves of coal, both coking and non coking were estimated in 1976 at 8,095 crore tonnes. But, howsoever high the coal reserves may be, they are not inexhaustible, which underlines the need for a planned development of the natural resources. The reckless and unscientific methods of mining which were adopted by most of the colliery owners without regard to considerations of conservation of the mineral and safety and welfare of workers led the Parliament to pass various legislations on the subject in the light of its accumulated experience. The coking coal mines were nationalised in 1972 and the non coking coal mines were nationalised in the following year. The production of coal in the country is now almost completely controlled by the public sector with the exception of isolated pockets wherein reserves are not sufficient for scientific and economical development and the production is consumed locally. The only important mines which are not nationalised are the captive coking coal mines of the two private sector Steel Companies coking coal being a vital ingredient in the production of Steel. The production of coal in the public sector is organised through three companies: the Coal Mines Authority Ltd., the Bharat Coking Coal Ltd., and the Singareni Collieries Company Ltd. A holding company, Coal India Limited, was formed in 1975 incorporating the Coal Mines Authority, the Bharat Coking Coal and the Coal Mines Planning and Design Institute as separate Divisions, besides other subsidiaries. Entry 23 List II, Schedule VII of the Constitution read with article 246(3) confers legislative power on the State legislatures in respect of 1060 "Regulation of mines and mineral development" but that power is "subject to the provisions of List I with respect to regulation and development under the control of the Union". Entry 54 List I enables Parliament to acquire legislative power in respect of "Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest". Entry 24 List II relates to "Industries subject to the provisions of entries 7 and 52 of List I". Entry 7, List I, relates to Industries declared by Parliament by law to be necessary for the purpose of defence or for the prosecution of war. Entry 52, List I, enables Parliament to acquire legislative power in respect of "Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest". The Industries (Development and Regulation) Act, 65 of 1951, which came into force on May 8, 1952 contains a declaration in section 2 that it was expedient in the public interest that the Union should take under its control the industries specified in the First Schedule. Item 2(1) of the First Schedule comprises 'coal, lignite, coke and their derivatives ' under the heading 'Fuels '. The Act provides for the establishment of a Central Advisory Council and Development Councils, registration and licensing of industrial undertakings, the assumption of management or control of industrial undertakings by the Central Government control of supply, distribution and price of certain articles, etc. The Mines Act, 35 of 1952, which came into force on July 1, 1952, was passed by the Parliament in order to amend and consolidate the law relating to the regulation of labour and safety in mines. That Act was evidently passed in the exercise of power under Entry 55, List I, "Regulation of labour and safety in mines and oil fields". The Mines and Minerals (Regulation and Development) Act, 67 of 1957, which came into force on June 1, 1958 was passed in order to provide for the regulation of mines and the development of minerals under the control of the Union. Section 2 of that Act contains a declaration that it was expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent provided in the Act. The Act provides, inter alia, for general restrictions on undertaking prospecting and mining operations, the procedure for obtaining prospecting licences or mining leases in respect of lands in which the minerals vest in the Government, the rule making power for regulating the grant of prospecting licences and mining leases, special powers of 1061 Central Government to undertake prospecting or mining operations in certain cases, and for development of minerals. There was a lull in legislative activity in regard to the enactment of further regulatory measures for controlling mines and minerals. The Coking Coal Mines (Emergency Provisions) Ordinance, 12 of 1971, was passed on October 16, 1971, It was replaced by the Coking Coal mines (Emergency Provisions) Act, 64 of 1971, which received the President 's assent on December 23, 1971 but was given retrospective operation from the date of the Ordinance. The Act was passed to provide for the taking over, in the public interest, of the management of coking coal mines and coke oven plants, pending nationalisation of such mines and plants. By section 3 (1), the management of all coking coal mines vested in the Central Government from the appointed day October 17, 1971. Section 6(1) provided that every owner of coking coal mine shall be given by the Central Government an amount, in cash, for vesting in it, under section 3, the management of such mine. Such amount was to be calculated in accordance with the provisions of section 6(2). The , 36 of 1972, was passed in order, inter alia, to provide for the acquisition and transfer of the right, title and interest of the owners of the coking mines and coke even plants. Sections 30 and 31 of that Act dealing respectively with penalties, and offences by companies came into force at once but the remaining provisions were deemed to have come into force on May 1, 1972. Section 3(c) defines "coking coal mine" to mean "a coal mine in which there exists one or more seams of coking coal, whether exclusively or in addition to any seam of other coal". By section 4(1) the right, title and interest of the owners in relation to the coking coal mines specified in the First Schedule shall stand transferred to, and shall vest absolutely in, the Central Government, free from all incumbrances. By section 4(2), after the appointed day, that is May 1, 1972 if any other coal mine was found to contain coking coal the provisions of the were to apply to such mine until it was nationalised by an appropriate legislation. By section 6(1), the Central Government becomes the lessee of the State Government where the rights of the owner under any mining lease granted in relation to a coking coal mine by the State Government or any other person, vest in the Central Government under section 4. Section 7(1) empowers the Central Government to direct that the right, title and interest of 1062 the owners in relation to coking coal mines or coke oven plants shall vest in a government company. Sections 10 and 11 of the Act provide for payment of the amounts to owners of the coking coal mines and coke oven plants for the vesting of their right, title and interest in the Central Government. By an Amendment Act, 56 of 1972, which came into force on September 12, 1972, section 4A was added to the . That section provides for premature termination of mining leases and the grant of fresh leases to Government companies or Corporations owned or controlled by Government. The Coal Mines (Taking over of Management) Act, 15 of 1973, which received the assent of the President on March 31, 1973 was given retrospective effect from January 30, 1973 except section 8(2) which came into force at once. The Act was passed in order "to provide for the taking over, in the public interest, of the management of coal mines, pending nationalisation of such mines, with a view to ensuring rational and co ordinated development of coal production and for promoting optimum utilisation of the coal resources consistent with the growing requirements of the country, and for matters connected therewith or incidental thereto. " Section 2(b) of the Act defines a "coal mine" to mean a mine "in which there exists one or more seams of coal." Section 3(1) provides that on and from the appointed day (that is, January 31, 1973) the management of all coal mines shall vest in the Central Government. By section 3(2), the coal mines specified in the Schedule shall be deemed to be the coal mines the management of which shall vest in the Central Government under sub section (1). Under the proviso to section 3(2), if, after the appointed day, the existence of any other coal mine comes to the knowledge of the Central Government, it shall by a notified order make a declaration about the existence of such mine, upon which the management of such coal mine also vests in the Central Government and the provisions of the Act become applicable thereto. Section 3(5) casts an obligation on every person in charge of the management of a coal mine, immediately before the date on which the Act received the assent of the President, to intimate the Central Government within 30 days from the said date the name and location of the mine as well as the name and the address of the owner, if the mine is not included or deemed to be included in the Schedule. All contracts providing for the management of any coal mine made before the appointed day between the owner of the mine and any per 1063 son in charge of the mine and any person in charge of the management thereof are to be deemed to have been terminated on the appointed day, under section 4, Section 6(1) empowers the Central Government to appoint Custodians for the purpose of taking over of the management of the mines. Section 7(1) provides that every owner of a coal mine shall be given by the Central Government an amount in cash for the vesting in it under section 3, of the management of such mine. Section 18(1)(a) excludes from the operation of the Act any coal mine owned, managed or controlled by the Central Government, or by a Government Company or by a corporation which is owned, managed or controlled by the Government. Clause (b) of section 18(1) also excludes from the operation of the Act a coal mine owned by or managed by a company engaged in the production of iron and steel. The , 26 of 1973, was given retrospective operation with effect from May 1, 1973 except sections 30 and 31 which came into force at once. This Act was passed, "to provide for the acquisition and transfer of the right, title and interest of the owners in respect of the coal mines specified in the Schedule with a view to re organising and reconstructing such coal mines so as to ensure the rational, co ordinated and scientific development and utilisation of coal resources consistent with the growing requirements of the country, in order that the ownership and control of such resources are vested in the State and thereby so distributed as best to subserve the common good, and or matters connected therewith or incidental thereto. " Section 2(b) defines a coal mine in the same way as the corresponding provision of the Management Act viz., a mine "in which there exists one or more seams of coal." Section 3(1) provides that on the appointed day (that is, May 1, 1973) the right, title and interest of the owners in relation to the coal mines specified in the Schedule shall stand transferred to, and shall vest absolutely in the Central Government free from all incumbrances. Section 4(1) provides that where the rights of an owner under any mining lease granted, or deemed to have been granted, in relation to a coal mine, by a State Government or any other person, vest in the Central Government under section 3, the Central Government shall, on and from the date of such vesting, be deemed to have become the lessee of the State Government or such other person, as the case may be, in relation to such coal mine as if a mining lease in relation to such coal mine had been granted to the Central Government. The period of such lease 1064 is to be the entire period for which the lease could have been granted by the Central Government or such other person under the Mineral Concession Rules and thereupon all the rights under the mining lease granted to the lessee are to be deemed to have been transferred to, and vested in, the Central Government. By section 4(2), on the expiry of the term of any lease referred to in sub section (1), the lease, at the option of the Central Government, is liable to be renewed on the same terms and conditions on which it was held by the lessor for the maximum period for which it could be renewed under the Mineral Concession Rules. Section 5(1) empowers the Central Government under certain conditions to direct by an order in writing that the right, title and interest of an owner in relation to a coal mine shall, instead of continuing to vest in the Central Government, vest in the Government company. Such company, under section 5(2), is to be deemed to have become the lessee of the coal mine as if the mining lease had been granted to it. By section 6(1), the property which vests in the Central Government or in a Government company is freed and discharged from all obligations and incumbrances affecting it. The mortgagees and other holders of incumbrances are required by section 6(2) to give intimation thereof to the Commissioner within the prescribed time. Section 7(1) provides that the Central Government or the Government company shall not be liable to discharge any liability of the owner, agent, manager or managing contractor of a coal mine in respect of any period prior to the appointed day. Section 8 requires that the owner of every coal mine or group of coal mines specified in the second column of the Schedule shall be given by the Central Government in cash and in the manner specified in Chapter VI, for the vesting in it under section 3 of the right, title and interest of the owner, an amount equal to the amount specified against it in the corresponding entry in the fifth column of the Schedule. By section 11(1), the general superintendance, direction, control and management of the affairs and business of a coal mine, the right, title and interest of an owner in relation to which have vested in the Central Government under section 3, shall vest in the Government company or in the Custodian as the case may be. For the purpose of disbursing the amount payable to the owner, the Central Government is required by section 17(1) to appoint a Commissioner of Payments. By section 18(1), the Central Government shall within thirty days from the specified date, pay, in cash, to the Commissioner for payment to the owner of a coal mine, an amount equal to the amount specified against the coal mine in the Schedule and also such sums as may be due to the owner under section 9. Section 26(1) provides that if out of the monies paid to the Commissioner, any balance is left after meeting the liabilities of all the secured and un 1065 secured creditors of the coal mine, he shall disburse the same to the owner. The Coal Mines (Nationalisation) Amendment Ordinance which was promulgated on April 29, 1976 was replaced on May 27, 1976 by the Coal Mines (Nationalisation) Amendment Act, 67 of 1976. The Amendment Act consists of five sections by which certain amendments were introduced into the Principal Act, namely, the , 26 of 1973. The Statement of objects and Reasons of the Nationalisation Amendment Act reads thus: "After the nationalisation of coal mines, a number of persons holding coal mining leases unauthorisedly started mining of coal in the most reckless and unscientific manner without regard to considerations of conservation, safety and welfare of workers. Not only were they resorting to slaughter mining by superficial working of outcrops and thereby destroying a valuable national asset and creating problems of water logging fires, etc. for the future development of the deeper deposits, their unsafe working also caused serious and fatal accidents. They were making larger profits by paying very low wages, and by not providing any safety and welfare measures. Thefts of coal from adjacent nationalised mines were also reported after the commencement of these unauthorised operations which had shown an increasing trend of late. Areas where illegal and unauthorised operations were carried on, were without any assessment of reserves in regard to quality and quantity of coal which could be made available after detailed exploration work was undertaken and results analysed. No scientific exploitation of these deposits could be undertaken in the nationalised sector without these details. It was, therefore, considered that it would not be appropriate either to nationalise these unauthorisedly worked mines after taking them over under the Coal Mines (Taking Over of Management) Act, 1973 or to get the concerned mining leases prematurely terminated and regranted to Government Companies under the Mining and Minerals (Regulation and Development) Act, 1957. In view of the policy followed by the Central Government that the Coal Industry is to be in the nationalised sector, it was decided that the Coal Mines Nationalisation Act, 1973 should be enacted to provide for termination of all privately held coal leases except those held by privately owned steel companies, so that it may be possible for the Central Government, Government company or Corporation to take 1066 mining leases where necessary, after the necessary exploration has been made as to the extent of the deposits of coal, etc". Sections 2 and 3 of the Nationalisation Amendment Act were brought into operation with effect from April 29, 1976. By section 2 of the Amendment Act a new section, section 1A, was introduced under Sub section (1) of which it was declared that it was expedient in the public interest that the Union should take under its control the regulation and development of coal mines to the extent provided in subsections 3 and 4 of section 3 of the Nationalisation Act and subsection 2 of section 30. By sub section 2 of section 1A, the declaration contained in sub section (1) was to be in addition to and not in derogation of the declaration contained in section 2 of the . By section 3 of the Amendment Act a new sub section, namely, sub section 3, was introduced in section 3 of the principal Act. Under clause (a) of the newly introduced sub section 3 of section 3, on and from the commencement of section 3 of the Amendment Act no person other than (i) the Central Government or a Government company or a corporation owned, managed or controlled by the Central Government, or (ii) a person to whom a sub lease, referred to in the proviso to clause (c) has been granted by any such Government, company or corporation, or (iii) a company engaged in the production of iron and steel, shall carry on coal mining operation, in India, in any form. Under clause (b) of sub section 3, excepting the mining leases granted before the Amendment Act in favour of the Government, company or corporation referred to in clause (a), and any sub lease granted by any such Government, company or corporation, all other mining leases and sub leases in force immediately before such commencement shall in so far as they relate to the winning or mining of coal, stand terminated. Clause (c) of the newly introduced sub section 3 of section 3 provides that no lease for winning or mining coal shall be granted in favour of any person other than the Government, company or corporation referred to in clause (a). Under the proviso to clause (c), the Government, the company or the corporation to whom a lease for winning or mining coal has been granted may grant a sublease to any person in any area if, (i) the reserves of coal in the area are in isolated small pockets or are not sufficient for scientific and economical development in a co ordinated and integrated manner, and (ii) the coal produced by the sub lessee will not be required to be transported by rail. By sub section 4 of section 3, where a mining lease stands terminated under sub section 3, it shall be lawful for the Central Government or a Government company or corporation owned 1067 or controlled by the Central Government to obtain a prospecting licence or mining lease in respect of the whole or part of the land covered by the mining lease which stands terminated. Section 4 of the Amendment Act introduces an additional provision in Section 30 of the Principal Act by providing that any person who engages, or causes any other person to be engaged, in winning or mining coal from the whole or part of any land in respect of which no valid prospecting licence or mining lease or sub lease is in force, shall be punishable with imprisonment for a term which may extend to two years and also with fine which may extend to ten thousand rupees. Section 5 of the Nationalisation Amendment Act repeals the Coal Mines (Nationalisation) Amendment Ordinance, 1976. As stated at the beginning of this Judgment, we are concerned in these writ petitions to determine the validity of the Coal Mines Nationalisation (Amendment) Act, 67 of 1976, to which we will refer as 'The Nationalisation Amendment Act '. Shri Seervai, who appears on behalf of the petitioners in writ petition No. 257 of 1977, challenges the legislative competence of the Parliament to enact the Nationalisation Amendment Act. Article 246 (1) confers upon the Parliament, notwithstanding anything contained in clauses 2 and 3 of that Article, the exclusive power to make laws with respect to any of the matters enumerated in List I of the Seventh Schedule, called the 'Union List '. Clause 2 of Article 246 deals with the power of the Parliament and the State Legislatures to make laws with respect to any of the matters enumerated in the Concurrent List, while clause 3 deals with the power of the State Legislatures to make laws with respect to any of the matters enumerated in the State List. The relevant entries in List I are Entries 52 and 54 which read thus: Entry 52: Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest. Entry 54: Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest. Entry 24 of the State List reads thus: Entry 24: Industries subject of the provisions of entries 7 and 52 of List I. 1068 We are not concerned here with Entry 7 of List I which relates to 'Industries declared by Parliament by law to be necessary for the purpose of defence or for the prosecution of war '. Shri Seervai 's argument runs thus: (a) Laws made in the exercise of power conferred by Entry 54 must stand the test of public interest because the very reason for the Parliament acquiring power under that entry is that it is in public interest that the regulation of mines and minerals should be under the control of the Union. In other words, Entry 54 confers a legislative power which is purposive, that is to say, any law made in the exercise of the power under Entry 54 must be designed to secure the regulation and development of coal mines in public interest or else it must fail. The Nationalisation Amendment Act is not such a law which Parliament can pass under Entry 54 because, that Act not only terminates all leases but it destroys the contracts of service of thousands of workmen, and indeed it destroys all other contracts and all securities for moneys lent without even so much as making a provision for priorities for the payment of debts. Since the Nationalisation Amendment Act terminates all leases, it is a complete negation of the integrated scheme of taking over the management of mines, acquisition of the rights of lease holders and the running of the mines. (b) The word 'Regulation ' in Entry 54 does not include 'Prohibition '. 'Regulation ' should not also be confused with the expression 'Restrictions ' occurring in Article 19(2) to (6) of the Constitution. In the very nature of things, there cannot be a power to prohibit 'the regulation and development of mines and minerals '. Section 3(4) inserted by the Nationalisation Amendment Act imposes no obligation on the Central Government or any other authority to obtain a mining lease and work the mines, the leases in respect of which stands terminated under the Act. The words "it shall be lawful" for the Central Government to obtain a lease are words of discretionary power which create no obligation. They only enable the Central Government to obtain a lease, making something legal and possible for which there would otherwise be no 1069 right or authority to do. Section 3 (4) does not confer a power coupled with a duty; it merely confers a faculty or power. No Court can by a Writ of Mandamus or otherwise compel the Central Government to obtain a lease of coal mine and to run it under any of the provisions of the Nationalisation Amendment Act. (c) Where the Legislative power is distributed among different legislative bodies, the Legislature may transgress its legislative power either directly or manifestly, or covertly or indirectly. In the instant case, the exercise of power by the Parliament is colourable because although in passing the Nationalisation Amendment Act it purported to act within the limits of its legislative power, in substance and in reality it transgressed that power, the transgression being veiled by what appears on proper examination to be a mere pretence or disguise. (d) In order to tear off the veil or disguise and in order to get at the substance of the law behind the form, the Court must examine the effect of the legislation and take into consideration its object, purpose and design, Where the legislative entry is purposive, like Entry 54 of the Union List, it is the object or purpose of the legislation which requires consideration. The purpose for which the Parliament is permitted to acquire legislative power of Regulation and Development of mines must dictate the nature of law made in the exercise of that power because public interest demands that power. Under the provisions of the Nationalisation Amendment Act, not only is there no obligation on the Central Government to run a mine, but there is no obligation imposed upon it even to carry out prospecting or investigation in order to decide whether a particular mine should be worked at all. Section 3(4) merely authorises the Central Government to apply for "a prospecting licence or a mining lease in respect of the whole or part of the land covered by the mining lease which stands determined". A close examination of the Act thus discloses that far from providing for regulation and development of coal mines, it totally prohibits all mining activity even if the State Government wants to run a mine. It does 1070 not impose prohibition as a step towards running the mines since there is neither any obligation to carry out the prospecting or investigation nor to run the mines. (e) The Nationalisation Amendment Act runs directly counter to the whole policy of the of 1973, to acquire and run the mines. The Parent Act becomes a dead letter in regard to several of its provisions ass a result of the amendment Act. It only adopts a colourable device to amend the Nationalisation Act while completely negativing it in fact. The Act therefore lacks legislative competence and is, in the sense indicated, a colourable piece of legislation. (f) Article 31(A)(1)(e) only lifts a restriction on the legislative competence in so far as violation of fundamental rights is concerned. The most benign motive cannot make a law valid if the legislative competence is lacking. In support of his submission that the provisions of the Nationalisation Amendment Act are not conceived in public interest and therefore they transgress the limitations of Entry 56, List I, learned counsel relies on the circumstance that whereas the Coal Mines Management Act and the Coal Mines Nationalisation Act of 1973 contain elaborate preambles, the Amendment Act contains no preamble setting out the mischief to be remedied or the benefit to be secured, for which the parent Act had failed to provide. At first blush, it is said, it would appear that the preamble to the parent Act can be read into the Nationalisation Amendment Act but that is impermissible since that preamble provides for acquisition and running of the mines and can have no application to an Act which provides for termination simpliciter of all mining leases. The preambles to the Management Act and the Nationalisation Act are said to be significant in that they show that those Acts were enacted in public interest with a view to rational and co ordinated development of coal production and for promoting the optimum utilisation of coal production consistently with the growing requirements of the country. Learned counsel has also compared and contrasted the provisions of these two Acts with the provisions of the Nationalisation Amendment Act for making good his point that the latter serves no public interest since it merely terminates all existing leases. The contrast, it is argued, is also provided by section 4A of the Mines and Mineral Regulation and Development Act 1957 which, while providing for premature termination of mining leases, requires that 1071 such termination has to be followed by the granting of a fresh mining lease so that the mines will continue to work. Reliance is placed by counsel on the decision of this Court in K. C. Gajapati Narayan Deo & Ors. vs The State of Orissa to show how although the legislature in passing an Act purports to act within the limits of its legislative power, in substance and in reality it can transgress that power, the transgression being veiled by what appears on proper examination to be a mere pretence or disguise. Attention is then drawn to the decision in Attorney General of Alberta vs Attorney General of Canada as showing that in order to tear off the veil or disguise or in order to get at the substance of the law behind the form, the court can examine the effect of the legislation and take into consideration its object, purpose or design. In support of the submission that the word regulation in Entry 54 does not include prohibition, reliance is placed on the decision of the Federal Court in Bhola Prasad vs The King Emperor wherein after setting out two decisions of the Privy Council in Municipal Corporation of City of Toronto vs Virgo and Attorney General for Ontario vs Attorney General for Canada in which it was held that 'regulation ' did not include 'prohibition ', Gwyer, C.J. Observed that he saw no reason to differ from the view expressed in those cases. The central theme of these diverse points is only one: that the laws made in the exercise of power conferred by Entry 54, List I, must stand the test of public interest since the very reason for the Parliament acquiring power under that Entry is that it is in the public interest that the regulation of mines and mineral development should be under the control of the Union. The contention is that since the Nationalisation Amendment Act does not impose upon the Government the duty to run the mines which are taken over or even to carry out prospecting and investigation but simply provides for the termination of mining leases, the Act is not in public interest. What is in public interest is the regulation and development of coal mines, not total prohibition of their working. On a careful consideration of this argument which was made plausible in its presentation, we see no substance in it. The learned Attorney General and the learned Solicitor General have drawn our attention to various facts and circumstances and to the provisions of various Acts including the Nationalisation Amendment Act which make it impossible to hold that the provisions of that Act are a mere 1072 facade for terminating mining leases without any obligation in the matter of regulation of mines and mineral development. Granting that Entry 54, List I is purposive since it qualifies the power to pass a law relating to "Regulation of Mines and Mineral Development" by the addition of a restrictive clause, "to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest", the provisions of the Nationalisation Amendment Act show that they are designed to serve progressively the purpose of Entry 54. The Nationalisation Amendment Act, as its very title shows, is an amending Act. It amended the , 26 of 1973. One must primarily have regard to the object and purpose of that Act in order to find out whether the Nationalisation Amendment Act destroys the structure of that Act and is a mere pretence for acquiring new rights without providing for payment of any amount for such acquisition. The was passed in order to provide for the acquisition and transfer of the right, title and interest of the owners in respect of the Coal mines specified in the Schedule to that Act. This was done with a view to reorganising and reconstructing such coal mines so as to ensure the rational, co ordinated and scientific development and utilisation of coal resources consistent with the growing requirements of the country. The high purpose of that Act was to ensure that the ownership and control of such resources are vested in the State and thereby so distributed as best to subserve the common good. In order to achieve that purpose, the Nationalisation Act provides by section 3(1) that: On the appointed day, the right, title and interest of the owners in relation to the coal mines specified in the Schedule shall stand transferred to, and shall vest absolutely in, the Central Government free from all incumbrances. The appointed day is May 1, 1973. For the removal of doubts it was declared by section 3(2) that: If, after the appointed day, the existence of any other coal mine comes to the knowledge of the Central Government, the provisions of the Coal Mines (Taking over of Management) Act, 1973, shall until that mine is nationalised by an appropriate legislation, apply to such mine. 1073 By section 4, the Central Government became the lessee of the scheduled coal mines while, section 5 empowers it to transfer its leasehold rights to a Government company. Chapter II of the Coal Mines (Nationalisation Act deals with acquisition of the rights of owners of coal mines, Chapter III with payment of amounts to owners of coal mines, Chapter IV with management of coal mines, Chapter V lays down provisions relating to employees of coal mines, Chapter VI contains provisions governing the payments of amounts to be made by the Commissioner of Payments and the last Chapter, Chapter VII, contains miscellaneous provisions. We have already set out the provisions of the Nationalisation Amendment Act in extenso, a little before enumerating the various points made out by Shri Seeravai during the course of his argument. It will now be enough to say by way of a summing up of the provisions of the Nationalisation Amendment Act that: (1) by section 3(3) (a) of the which was introduced by the Nationalisation Amendment Act, no person other than those mentioned in clauses (i) to (iii) can carry on coal mining operations after April 29, 1976, being the date on which section 3 of the Nationalisation Amendment Act came into force; (2) by section (3)(3)(b) all mining leases and sub leases stood terminated except those granted before April 29, 1976 in favour of the Central Government, a Government company or corporation owned, managed or controlled by the Central Government; (3) section (3)(c) prohibits the granting of a lease for winning or mining coal in favour of any person other than the Government, a Government company or a corporation of the above description provided that a sub lease could be granted by these authorities to any person if the two conditions mentioned in the proviso are satisfied; and (4) when a mining lease stands terminated under section 3(3), "it shall be lawful" for the Central Government or the Government company or the corporation owned or controlled by the Central Government to obtain a prospecting licence or a mining lease in respect of the whole or part of the land covered by the mining lease which stands terminated. Section 4 of the Nationalisation Amendment Act introduced an additional penal provision in the parent Act. We are unable to appreciate the argument so meticulously woven that these provisions are a direct negation of the principles of the parent Act and that they destroy the integral scheme of taking over the management of mines, of acquiring the rights of lease holders and continuing to run the mines. On the contrary, the Nationalisation Amendment Act is manifestly in furtherance of the object of nationalisation mentioned in the preamble to the parent Act and effec 1074 tuates the purpose mentioned in sections 3(1) and 3(2) of that Act by the addition of a new sub section, sub section (3), which terminates all coal mining leases and sub leases except those referred in sub section (3)(b). The circumstance that the marginal note to section 3 and the title of Chapter II of the Nationalisation Act are not amended by the Nationalisation Amendment Act, despite the addition of a new sub section, is of little or no consequence. That sub section is a logical extension of the scheme envisaged by the original sub sections (1) and (2) of section 3. Besides, marginal notes to the sections of a statute and the titles of its chapters cannot take away the effect of the provisions contained in the Act so as to render those provisions legislatively incompetent, if they are otherwise within the competence of the legislature to enact. One must principally have regard to the object of an Act in order to find out whether the exercise of the legislative power is purposive, unless, of course, the provisions of the Act show that the avowed or intended object is a mere pretence for covering a veiled transgression committed by the legislature upon its own powers. Whether a particular object can be successfully achieved by an Act, is largely a matter of legislative policy. The Nationalisation Amendment Act needs no preamble, especially when it is backed up by a statement of objects and reasons. Generally, an amendment Act is passed in order to advance the purpose of the parent Act as reflected in the preamble to that Act. Acquisition of coal mines, be it remembered, is not an end in itself but is only a means to an end. The fundamental object of the Nationalisation Act as also of the Nationalisation Amendment Act is to bring into existence a state of affairs which will be congenial for regulating mines and for mineral development. In regard to the scheduled mines, that purpose was achieved by the means of acquisition. In regard to mines which were not included in the Schedule, the same purpose was achieved by termination of leases and sub leases and by taking over the right to work the mines. Termination of leases, vesting of lease hold properties in the State Governments and the grant of leases to the Central Government or Government Companies are together the means conceived in order to achieve the object of nationalisation of one of the vital material resources of the community. An infirmity in Shri Seervai 's argument is its inarticulate premise that mere acquisition of coal mines is the end of the Nationalisation Act. It is also important to bear in mind while we are on the purposiveness of the Nationalisation Amendment Act that nothing contained in the later analogous Acts can be construed as in derogation of the principle enunciated in section 18 of the Mines and Minerals Regulation and (Development) Act, 67 of 1957, which provides that it 1075 shall be the duty of the Central Government to take all such steps as may be necessary for the conservation and development of minerals in India. Therefore, even in regard to matters falling under the Nationalisation Amendment Act which terminates existing leases and makes it lawful for the Central Government to obtain fresh leases, the obligation of section 18 of the Act of 1957 will continue to apply in its full rigour. As contended by the learned Solicitor General, section 18 contains a statutory behest and projects a purposive legislative policy. The later Acts on the subject of regulation of mines and mineral development are linked up with the policy enunciated in Section 18. Much was made by Mr. Seervai of the circumstance that the Nationalisation Amendment Act, While providing by section 3(4) that "it shall be lawful" for the Central Government, etc., to obtain a prospecting licence or a mining lease, did not impose an obligation on any one to work the mine of which the mining lease stood statutorily terminated. No mandamus, it was urged, could therefore issue to compel, for example the Central Government to work any particular mine. This argument overlooks that Entry 54 refers to two things: (1) regulation of mines and (2) mineral development. It is true that the Entry is purposive, since the exercise of the power under Entry 54 has to be guided and governed by public interest. But neither the power to regulate mines nor the power to ensure mineral development postulates that no sooner is a mining lease terminated by the force of the statute, than the Central Government must begin to work the mine of which the lease is terminated. It is possible that after the Nationalisation Amendment Act came into force, there was a hiatus between the termination of existing leases and the granting of fresh ones. But, the Nationalisation Amendment Act does not provide that any kind or type of mine shall not be developed or worked. Conservation, prospecting and investigation, developmental steps and finally scientific exploitation of the mines and minerals is the process envisaged by the Nationalisation Amendment Act. It is undeniable that conservation of minerals, which is brought about by the termination of existing leases and sub leases, is vital for the development of mines. A phased and graded programme of conservation is in the ultimate analysis one of the most satisfactory and effective means for the regulation of mines and the development of minerals. Learned counsel contended that the Nationalisation Amendment Act is destructive of the provisions of the parent Act. This contention 1076 is wholly unjustified. The destruction which the Nationalisation Amendment Act brings about is of the lease or the sub lease and not of its subject matter, namely, the mine itself. In terminating the lease of a house one does not destroy the house itself. It may be arguable that prohibiting the use of the house for any purpose whatsoever may, for practical purposes, amount to the destruction of the house itself. But we cannot accept the contention that the Nationalisation Amendment Act contains provisions directed at prohibiting the working of mines, the leases in respect of which are terminated. A simple provision for granting sub leases shows that the object of the Nationalisation Amendment Act is to ensure that no mine will lie idle or unexplored. Interregnums can usefully be utilised for prospecting and investigation. They do not lead to destruction of mines. In fact, it is just as well that the Amendment Act does not require the new lessee to undertake an adventure, reckless and thoughtless, which goes by the name of 'scratching of mines ', which ultimately results in the slaughtering of mines. Natural resources, howsoever large, are not inexhaustible, which makes it imperative to conserve them. Without a wise and planned conservation of such resources, there can neither be a systematic regulation of mines nor a scientific development of minerals. The importance of conservation of natural resources in any scheme of regulation and development of such resources can be seen from the fact that the Parliament had to pass in August 1974 an Act called the Coal Mines (Conservation and Development) Act, 28 of 1974, in order, principally, to provide for the conservation of coal and development of coal mines. Section. 4(1) of that Act enables the Central Government, for the purposes of conservation of coal and for the development of coal mines, to exercise such powers and take or cause to be taken such measures as it may be necessary or proper or as may be prescribed. By section 5(1), a duty is cast on the owners of coal mines to take such steps as may be necessary to ensure the conservation of coal and development of the coal mines owned by them. While moving the Nationalisation Amendment Act in the Lok Sabha on May 17, 1976, the Minister of Energy said that: for proper scientific working of coal mines, you have to have the geological data; you have to have mine plans; you have to know the size of the coal reserves, the quantity of coal that can be mined; the quality of coal etc. For this, the detailed exploration has to be undertaken. It is only after all this is done that the experts can decide whether it will be economically viable and technically feasible technical feasibility comes first and then economic viability to 1077 mine the coal in that particular area. No scientific exploration of coal is possible from these areas until all the facts are known, until investigation is done. The nationalised sector cannot step in unless all this information is gathered. (Lok Sabha Debates, 5th series, volume 61, May 17, 1976, columns 91 92.) Measures taken for judicious preservation and distribution of natural resources may involve restrictions on their use and even prohibition, upto a degree, of the unplanned working of the repositories of such resources. We may in this connection refer usefully to a passage at page 383 of the First Five Year Plan: "Though a mining industry has been in existence in this country for about half a century, only a comparatively small number of mines are being worked in an efficient manner under proper technical guidance. Many units are too small in size or too poorly financed for such working. Lack of a conservation policy is also responsible for the present condition of the industry. There is large wastage, especially in minerals of marginal grades, as these are either abandoned in the mines or thrown away on the mine dumps. Ways and means must be devised for the mining and recovery of these low grade materials. Ores which it is not possible to work economically under normal conditions should be left in the mines so that they may be extracted at a later date without serious loss. The mine dumps all over the country have to be carefully examined and sampled so that their valuable mineral content may be recovered by methods of beneficiation now available. It should be a rule that selective mining of high grade minerals alone should not be undertaken and that all grades should be worked and wherever possible, blended to produce marketable grades. " It was observed in Attorney General for Ontario (supra) that a power to regulate assumes, naturally if not necessarily, the conservation of the thing which is to be made the subject of regulation. This position does not militate against what was observed by Lord Davey in Virgo (supra) that "there is marked distinction to be drawn between the prohibition or prevention of a trade and the regulation or governance of it, and indeed a power to regulate and govern seems to imply the continued existence of that which is to be regulated or governed". In the former case, the Canada Temperance Act, 1886 was held ultra vires the Dominion as it purported to repeal the prohibitory clauses of a provincial Act, but its own provisions were held 1078 valid when duly brought into operation in any provincial area as relating to the peace, order, and good Government of Canada. In Virgo the question turned on the scope of power to frame by laws and the decision of the Privy Council was that a statutory power conferred upon a municipal corporation to make by laws for 'regulating and governing ' a trade, "does not authorise the making it unlawful to carry on a lawful trade in a lawful manner". It may be borne in mind that different considerations apply in the construction of power to frame by laws but even then, the Privy Council qualified the above statement of law by adding the clause, "in the absence of an express power of prohibition". In support of his submission that under the Nationalisation Amendment Act there is no obligation on any person or authority to run a mine, Shri Seervai relies on a passage in Craies on Statute Law, 6th edition, page 284, to the following effect: Statutes passed for the purpose of enabling something to be done are usually expressed in permissible language, that is to say, it is enacted that 'it shall be lawful ', etc. or that 'such and such a thing may be done '. Prima facie, these words import a discretion, and they must be construed as discretionary unless there be anything in the subject matter to which they are applied, or in any other part of the statute, to show that they are meant to be imperative". But the very passage, after enunciating this principle, refers to a decision in Julius vs Bishop of Oxford in which Lord Cairns said that though the words 'it shall be lawful ' are words making that legal and possible which there would otherwise be no right or authority to do and that though those words confer a faculty or power, still "there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed to exercise that power when called upon to do so". It seems to us clear, and we have discussed that aspect at length, that section 3(4) uses an enabling or permissive expression in order that regulation of mines and mineral development may be ensured after a scientific prospecting, investigation and planning. It is doubt 1079 less that, in the language of Lord Cairns in Julius, there is something in the nature of the thing which the Nationalisation Amendment Act empowers to be done, something in the object for which it is to be done and something in the conditions under which it is to be done which couples the power conferred by the Act with a duty, the duty being not to act in haste but with reasonable promptitude depending upon the nature of the problem under investigation. An obligation to act does not cease to be so merely because there is no obligation to act in an ad hoc or impromptu manner. It is in the context of a conglomeration of these diverse considerations that one must appreciate why, in section 3(4) which was introduced by the Nationalisation Amendment Act, Parliament used the permissive expression "it shall be lawful". Thus, a broad and liberal approach to the field of legislation demarcated by Entry 54, List I, an objective and practical understanding of the provisions contained in the Nationalisation Amendment Act and a realistic perception of constitutional principles will point to the conclusion that the Parliament had the legislative competence to enact the Nationalisation Amendment Act. The argument which we have just disposed of is common to all the matters before us. The contention to which we will now turn is limited in its application to composite mines which contain layers of coal and some other mineral, usually fireclay. This branch of Shri Seervai 's argument relates to the construction of the , 26 of 1973, and the Nationalisation Amendment Act. The argument is that leases of composite mines in which there are alternate seams of coal and fireclay do not fall within the scope of these Acts. The pleadings in this behalf are full and complete in Writ Petition No. 257 of 1977 argued by Shri Seervai and they are tolerably adequate in a few other petitions. It is expressly averred and not effectively traversed in Writ Petition 257 of 1977 that: the coal and fireclay deposits in the said area are so mixed up that one cannot work either for extraction of coal or for extraction of fireclay without disturbing each of the said two minerals. The deposits are such that at one layer there is coal, the next layer is fireclay, the other layer is coal, the next layer is again fireclay and so on. Nirode Baran Banerjee, who is the petitioner in that Writ Petition, holds a composite lease dated October 17, 1973 for mining coal as well as fireclay. 1080 It is urged by the learned counsel that the Nationalisation Amendment Act terminates mining leases in respect of coal only and that the law terminating leases for mining coal cannot apply to a mine which contains not only coal but fireclay also. The totality of the submission on this point may be put thus: (a) Under Article 31(1) of the Constitution, no person can be deprived of his property without the authority of law. Article 31A(1) which exempts the laws mentioned in clauses (a) to (e) from invalidity under Articles 14, 19 and 31 does not dispense with the necessity of the authority of law for depriving a person his property, because the opening words of Article 31A(1) are ". no law providing for . " matters mentioned in clauses (a) to (e) shall be deemed to be void as offending Articles 14, 19 and 31. (b) The Nationalisation Amendment Act confers no authority to terminate a composite lease for mining coal and fireclay. The right to mine fireclay is given to the petitioner by law and it can only be taken away by law. (c) Though the Nationalisation Amendment Act does not in terms prohibit the petitioner from mining fireclay, the effect of the law in a practical business sense, is to prohibit the petitioner from mining fireclay and, therefore, the position is the same as though the Act had enacted the prohibition in express terms. The Court must look at the direct impact of the law on this right of the party, and if that impact prohibits him from exercising his right, the fact that there is no express prohibition in the Act is immaterial, (d) The Nationalisation Amendment Act by making it punishable to mine coal, in substance and in a practical business sense, prohibits the petitioner from mining fireclay. For this prohibition the Amendment Act does not provide, and therefore, there is no authority of law for it. Coal and fireclay are two distinct minerals as shown by Schedule II to the , 67 of 1957, wherein item 1 is coal and item 15 is fireclay. The dictionary meanings of coal and fireclay also show that they are two distinct minerals. In support of these submissions Shri Seervai relies very strongly on the definition of 'coal mine ' in section 2(b) of the Coal Mines (Nationalisation Act, 26 of 1973, and the definition, by contrast, of 'coking coal mine ' in section 3(c) of the , 36 of 1972. 1081 These submissions are met by the learned Attorney General with the answer that if a mine has a seam of coal it is a coal mine within the meaning of section 2(b) of Act 26 of 1973, and that, for the purposes of that definition, it makes no difference whether the mine has seams of fireclay also. The Attorney General says further that the definition of 'coking coal mine ' in section 3(c) of Act 36 of 1972 contains words of surplusage which ought rather to be ignored than be allowed to determine the scope of the definition contained in section 2(b) of Act 26 of 1973. The contention, in other words, is that a coal mine is a mine in which there is at least one seam of coal, no matter whether there are seams therein of fireclay or any other mineral. The learned Solicitor General contends that the authority of Law extends to whatever is the necessary consequence of that which is authorised. In other words, authority to do a thing necessarily includes the authority to do all other things which are necessary for the doing of that which is authorised. If law authorises the termination of coal mining leases, it must be taken to authorise whatever is necessarily incidental to and consequential upon it. Therefore, composite leases cannot be excepted from the provisions of an Act which terminates coal mining leases. Section 3(3) (a) introduced by the Nationalisation Amendment Act, it is contended, prohibits persons other than those mentioned in clauses (i) to (iii) from carrying on coal mining operation in any form. If a person holding a composite lease can do fireclay mining without mining coal, he may do so; otherwise section 3(3) (a) is the authority of law to prevent him from mining fireclay. In other words, according to the learned Solicitor General, the necessary implication of law is that though a composite lease for mining coal and fireclay may remain outstanding after the enactment of the Nationalisation Amendment Act, the lessee cannot work it, if it involves a coal mining operation. The point raised by Shri Seervai is so nicely balanced that it is as difficult to reject it wholly as it is to accept it wholly. The contrast in definitions favours him. The , 26 of 1973, defines a coal mine by section 2(b) thus: "Coal mine" means a mine in which there exists one or more seams of coal. If this definition is considered in isolation, the learned Attorney General could perhaps be right in his submission that any mine in which there is one seam of coal, at least one, is a coal mine. The definition takes no account of whether there are seams of other minerals, and if so, how many, in the mine. One seam of coal is enough to make a mine a coal mine. For reasons which we will presently mention, it is not easy to 1082 stretch the definition as far as logic may take it, for that will produce the result that just one seam of coal at the roof of a mine or at its base will be enough to bring a mine within the definition contained in section 2(b). The scheme of the Coal Nationalisation Acts on which Shri Seervai relies has a relevance of its own on this point. The of 1972 and the of 1973 cover the whole field of 'Coal ' which was intended to be nationalised. The titles of the two Acts and the various provisions contained therein show that what was being nationalised was three distinct categories of mines: mines containing seams of coking coal exclusively; mines containing seams of coking coal along with seams of other coal; and mines containing seams of other coal. Though Parliament had power under Article 31A(1) (e) of the Constitution to terminate mining leases without payment of any compensation or 'amount ', it decided to nationalise coal mines on payment of amounts specified in the Schedules to the Nationalisation Acts of 1972 and 1973. Besides, even when something apart from coking coal mines was acquired, namely, 'coke oven plants ', provision was separately made in section 11 of the Nationalisation Act of 1972, read with the 2nd Schedule, for payment of amounts to owners of coke oven plants. Thus, whatever was intended to be acquired was paid for. This scheme is prima facie inconsistent with the Parliament intending to acquire lease hold rights in other minerals like fireclay, without the payment of any amount. Coupled with this is the unambiguous wording of section 3(3) (b) and section 3(3) (c) of the Nationalisation Act of 1973, which were introduced therein by section 3 of the Nationalisation Amendment Act. Section 3(3)(b) says that excepting the mining leases and sub leases granted before the commencement of the Act in favour of or by certain bodies or authorities, all other mining leases and sub leases in force before such commencement, "shall in so far as they relate to the winning or mining of coal, stand terminated". (emphasis supplied) Section 3(3)(c) provides that: "no lease for winning or mining coal shall be granted in favour of any person other than the Government, company or corporation, referred in clause (a)". (emphasis supplied). These provisions carry the scheme of the Nationalisation Acts to their logical conclusion by emphasising that the target of those Acts is coal mines, pure and simple. What stands terminated under 1083 section 3(3)(b) is certain mining leases and sub leases in so far as they relate to the winning or mining of coal. The embargo placed by section 3(3)(c) is on the granting of leases for winning or mining coal to persons other than those mentioned in section 3(3)(a). Since the definition of 'coal mine ' in section 2(b) of the has an uncertain import and the scheme of that Act and of the makes it plausible that rights in minerals other than coke and coal were not intended to be acquired under the two Nationalisation Acts, it becomes necessary to compare and contrast the definition of 'coal mine ' in section 2(b) of the Act of 1973 with the definition of 'coking coal mine ' in section 3(c) of the of 1972. Section 3(c) of the latter Act says: " 'coking coal mine ' means a coal mine in which there exists one or more seams of coking coal, whether exclusively or in addition to any seam of other coal". (emphasis supplied). This definition justifies Shri Seervai 's argument that whereas in regard to coking coal mines, the existence of any seam of other coal was regarded as inconsequential, the existence of any seam of another mineral was not considered as inconsequential in regard to a coal mine. The definition of coal mine in section 2(b) of the Act of 1973 scrupulously deleted the clause, "whether exclusively or in addition to" any other seam. The same Legislature which added the particular clause in the definition of 'coking coal mine ' in the 1972 Act, deleted it in the definition of 'coal mine ' in the 1973 Act. The position in regard to the coking coal mines is crystal clear, namely, that by section 4(1) of the Act of 1972, the right, title and interest of owners in relation to the coking coal mines specified in the First Schedule to the Act stood transferred to and vested absolutely in the Central Government free from all incumbrances on the appointed day. The same position obtained under section 5 of that Act in regard to coke oven plants specified in the Second Schedule. But in so far as coal mines are concerned, we have, willy nilly, to proceed on the basis that by reason of the definition of coal mine contained in section 2(b) of the Act of 1973, and the definition of coking coal mine in section 3(c) of the Act of 1972 which presents a striking contrast to the definition in section 2(b), composite coal mines, that is to say, coal mines in which there are seams of coal and fireclay (we are only concerned with fireclay in these petition), do not fall within the scope of the definition of 'coal mine ' in section 2(b) of the 1084 Act of 1973. To that extent Shri Seervai 's contention must succeed. But what then is the sequitur? Can the lessees of composite mines (like the petitioners in Writ Petitions Nos. 257, 220, 111, 600, 1130 1134, 352, 221 and 178 of 1977) who hold composite mining leases for winning coal and fireclay, continue their mining operations unabated despite the provisions of the Nationalisation Amendment Act? We think not. It is one thing to say that a composite mine is outside the scope of the definition of coal mine in section 2(b) of the Nationalisation Act of 1973 and quite another to conclude therefrom that the other provisions introduced into that Act by the Nationalisation Amendment Act will have no impact on composite leases for winning coal and fireclay. Section 3(3) (a) which was introduced into the parent Act by the Nationalisation Amendment Act provides expressly that on and from the commencement of section 3 of the Amendment Act, that is, from April 29, 1976, no person other than those mentioned in clauses (i) to (iii) shall carry on "coal mining operation, in India, in any form". Section 4 of the Nationalisation Amendment Act which introduced sub section (2) in section 30 of the parent Act provides: "Any person who engages, or causes any other person to be engaged in winning or mining coal from the whole or part of any land in respect of which no valid prospecting licence or mining lease or sub lease is in force, shall be punishable with imprisonment for a term which may extend to two years and also with fine which may extend to ten thousand rupees". These provisions of sections 3(3)(a) and 30(2) of the parent Act will apply of their own force, whether or not the lessee holds a composite lease for winning coal and fireclay and whether or not the mine is a composite mine containing alternate seams of coal and fireclay. In other words, as contended by the learned Solicitor General, if a person holding a composite lease can do fireclay mining without mining coal, he may do so. But if he cannot win or mine fireclay without doing a coal mining operation, that is, without winning or mining coal, he cannot do any mining operation at all. If he does so, he will be liable for the penal consequences provided for in section 30(2) of the Nationalisation Act of 1973. The provision contained in section 3(3)(a) totally prohibiting the generality of persons from carrying on coal mining operation in India in any form and the penal provision of section 30(2) virtually 1085 Leave with the lessees of composite mines the husk of a mining interest. That they cannot win or mine coal is conceded and, indeed, there is no escape from that position in view of the aforesaid provisions. The only surviving question then is whether they can win or mine fireclay since their composite lease is outside the scope of section 2(b) of the Nationalisation Act of 1973. The answer has to be in the negative on the basis of the very averments made by the petitioners in their Writ Petitions. For example, the petitioner in Writ Petition No. 257 of 1957 has stated in his petition, more particularly in paragraph 5 thereof, that the seams of coal and fireclay are so situated in the mine of which he is a lessee, that it is not possible to mine fireclay without mining coal. This position was not only admitted but reiterated by Shri Seervai, both during the course of his oral argument and in his written brief. The conclusion is therefore inevitable that the lessees of composite mines will, for all practical purposes, have to nurse their deeds of lease without being able to exercise any of the rights flowing from them. On their own showing, they will be acting at their peril if they attempt to win fireclay. If they cannot win fireclay without winning coal, they cannot win fireclay either, even if they hold composite leases under which they are entitled to win coal and fireclay. This position fortifies the argument of the learned Solicitor General that though the Parliament provided for the payment of amounts for acquisition of certain interests under the Nationalisation Acts of 1972 and 1973, it did not intend to pay any compensation or amount for the termination of leasehold rights in respect of composite mines. Mines which have alternate seams of coal and fireclay are in a class by themselves and they appear to be far fewer in number as compared with the coking coal mines and coal mines, properly so called. The authority of law for the termination of the rights of composite lessees is the provision contained in section 3(3) (a), the violation of which attracts the penal provisions of section 30(2) of the Nationalisation Act of 1973. The Parliament has deprived composite lessees of their right to win fireclay because they cannot do so without winning coal. The winning of coal by the generality of people is prohibited by the section 3(3) (a) of the Act of 1973. This is just as well, because Parliament could not have intended that such islands of exception should swallow the main stream of the Nationalisation Acts. Obviously, no rights were intended to be left outstanding, once the rights in respect of coking coal mines and coal mines were brought to an end. 1086 The petitioners in Writ Petitions Nos. 257, 220, 111, 600, 1130 1134, 352, 221 and 178 of 1977 hold composite mining leases for mining fireclay and coal. In these Petitions we had passed the following order on May 5, 1978: "These petitions are allowed partly in that the petitioners therein shall be entitled, for the duration of the unexpired portion of their existing leases, to carry on mining operations for the purpose of winning fireclay so long as, and to the extent that, they do not carry on any coal mining operation or engage in winning or mining coal. In these Writ Petitions there will be no order as to costs". As we have already stated, no tangible benefit will accrue to the petitioners from this order because, on their own showing, they cannot carry on mining operations for the purpose of winning fireclay without carrying on a coal mining operation or without engaging in winning or mining coal. That is how the matter rests. The only other arguments which requires consideration is the one made principally by Shri A. K. Sen which, like Shri Seervai 's argument of legislative competence, is common to all the writ petitions. Shri Sen 's argument may be stated thus: (1) The Nationalisation Amendment Act affects, in substance, two kinds of transfers: the transfer of the leasehold interests of the lessees in favour of the lessor, namely the State; and the transfer of the mining business of the lessees in favour of the Central Government. Since these transfers amount to acquisition within the meaning of Article 31(2), the Act is open to challenge under Articles 14, 19(1) (g) and 31 of the Constitution. (2) The Nationalisation Amendment Act is open to challenge under Article 14 because lessees who fall within that Act are patently discriminated against in comparison with lessees of other mines, both coking and non coking, who were paid compensation when their property was taken over, first for management under the Management Acts and then under the Nationalisation Acts. (3) The Nationalisation Amendment Act is open to challenge under Article 19(1) (g) because the prohibition against lessees from carrying on their business and the transfer of their business, in substance, to the Central Government or a Company is an unreasonable restriction on the 1087 right of the lessees to hold their lease hold property and to carry on their business of mining. (4) The Act is open to challenge under Article 31 because no provision is made for the payment of any amount whatsoever to the lessees whose mining business is taken over under the Act. No public purpose is involved either in the termination of the lessees ' interest or in the acquisition of their business. Expropriation without payment of any amount requires a very heavy public purpose. (5) Since no provision whatsoever is made for the payment of any amount to the lessees whose leases are terminated, the Nationalisation Amendment Act is not a 'Law ' within the meaning of Article 31(2) and therefore Article 19 (1) (f) is attracted. (6) The Act is not saved from the challenge of Articles 14, 19 and 31 by Article 31A(1)(e) because that Article provides for extinguishment which does not amount to acquisition by the State. If extinguishment amounting to acquisition was intended to be saved under Article 31A(1) (e), the subject matter dealt with by clause (e) would have been included in clause (a) of that Article. It shall have been noticed that the entire argument hinges around the premise that, by the Nationalisation Amendment Act, the petitioners right to property has been acquired without the payment of any amount and that they have been unreasonably deprived of their right to carry on the business of mining. A close and careful examination of the provisions of the and of the amendments made to that Act by the Nationalisation Amendment Act will show that there is no substance in either of these contentions. The ) nationalised coal mines by providing by section 3(1) that on the appointed day, that is on May 1, 1973, the right, title and interest of the owners in relation to the coal mines specified in the Schedule shall stand transferred to, and shall vest absolutely in, the Central Government free from all incumbrances. The Scheduled mines, 711 in number and situated in reputed coal bearing areas, were the ones which were engaged openly, lawfully and uninterruptedly in doing coal mining business. Since it was possible to ascertain and verify the relevant facts pertaining to these undertakings, they were taken over on payment of amounts 1088 mentioned in the Schedule to the Act, which varied from mine to mine depending upon the value of their assets, their potential and their profitability. In the very nature of things, the list of mines in the Schedule could not be exhaustive because there were and perhaps even now there are, unauthorised mines worked by persons who did not possess the semblance of a title or right to do mining business. Persons falling within that category cannot cite the Constitution as their charter to continue to indulge in unauthorised mining which is unscientific, unsystematic and detrimental to the national interests by reason of its tendency to destroy the reserve of natural resources. But alongside these persons, there could conceivably be mine operators who may have been doing their business lawfully but who were not easily or readily identifiable. Section 3(2) of the Nationalisation Act, 1973 made provision for taking over the management of such mines by declaring for "the removal of doubts" that if, after the appointed day, the existence of any other coal mine comes to the knowledge of the Central Government, the provisions of the Coal Mines (Taking Over of Management) Act, 1973, shall, until that mine is nationalised by an appropriate legislation, apply to such mine. Owners of mines whose mines were not included in the Schedule but whose right, title and interest was to vest eventually in the Central Government under "an appropriate legislation" envisaged by section 3(2) of the Nationalisation Act were, by this method, placed on par with the owners of mines of which the management was taken over under the Coal Mines (Taking Over of Management) Act, 1973. That Act provides by section 7(1) that every owner of a coal mine shall be given by the Central Government an amount in cash for the vesting in it, under section 3, of the management of such mine. By section 7(2), for every month during which the management of a coal mine remains vested in the Central Government, the amount referred to in sub section (1) shall be computed at the rate of twenty paise per tonne of coal on the highest monthly production of coal from such mine during any month in the years 1969, 1970, 1971 and 1972. The two provisos to that sub section and the other sub sections of section 7 provide for other matters relating to payment of amounts to the owners of coal mines of which the management was taken over. The Nationalisation Amendment Act carried the scheme of these two Acts to its logical conclusion by terminating the so called leases and sub leases which might have remained outstanding. Thus, the purpose attained by these Acts is (1) to vest in the Central Government the right of management of all coal mines; (2) to nationalise the mines mentioned in the Schedule; (3) to provide for the taking over of management of coal mines the existence of which comes to the knowledge of the Central Government after the appoint 1089 ed day and lastly (4) to terminate all mining leases. The Management Act and the Nationalisation Act provide for payment of amounts, by no means illusory, to the owners of coal mines whose rights were taken over. In the normal course of human affairs, particularly business affairs, it is difficult to conceive that owners of coal mines who had even the vestige of a title thereto would not bring to the notice of the Central Government the existence of their mines, when such mines were not included in the Schedule to the Nationalisation Act. Those who did not care to bring the existence of their mines to the knowledge of the Central Government, even though amounts are payable under the Management Act for the extinguishment of the right of management, did not evidently possess even the semblance of a title to the mines. The claims of lessees, holding or allegedly holding under such owners, would be as tenuous as the title of their putative lessors. The Nationalisation Amendment Act by section 3(3) (b) undoubtedly terminates all existing leases and sub leases except those already granted in favour of persons referred to in clauses (i) to (iii) of section 3 (3)(a). Similarly, section 3 (3)(a) imposes an embargo on all future coal mining operations except in regard to the persons mentioned in clauses (i) to (iii). But the generality of leases which are alleged to have remained outstanding despite the coming into force of the Management Act and the Nationalisation Act, were mostly precarious, whose holders could at best present the familiar alibi that the origin of their rights or of those from whom they derived title was lost in antiquity. Neither in law, nor in equity and justice, nor under the Constitution can these lessees be heard to complain of the termination of their lease hold rights without the payment of any amount. The provision contained in section 3(3)(b) of the Nationalisation Amendment Act was made ex majore cautela so as not to leave any lease of a coal mine surviving after the enactment of the Management Act and the Nationalisation Act. There was no reasonable possibility of a lawful lease surviving the passing of those Acts; but if, per chance, anyone claimed that he held a lease, that stood terminated under section 3(3)(b). Once the real nature of the scheme envisaged by the Management Act the Nationalisation Act and the Nationalisation Amendment Act is appreciated, it will be easy to see that section 3(3) (b) of the Nationalisation Amendment Act brings about an extinguishment simpliciter of coal mining leases within the meaning of Article 31A (1)(e) of the Constitution. That Article, as it stood prior to the 44th Amendment, read thus: 1090 "31A. (1) Notwithstanding anything contained in Article 13, no law providing for (e) the extinguishment or modification of any rights accruing by virtue of any agreement, lease or licence for the purpose of searching for, or winning, any mineral or mineral oil, or the premature termination or cancellation of any such agreement, lease or licence, shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31". We are not concerned with the amendment introduced by the 44th Amendment Act which deleted the reference to Article 31, since that Amendment Act came into force prospectively with effect from June 20, 1979. We are unable to accept that the termination of the mining leases and sub leases brought about by section 3(3)(b) of the Nationalisation Amendment Act is a mere pretence for the acquisition of the mining business of the lessees and the sub lessees. We have already shown how, in the context of the scheme of the Management Act, the Nationalisation Act and the Nationalisation Amendment Act, it is impossible to hold that the true intent of the last mentioned Act was to 'acquire ' anyone 's business. This would be so whether the word 'acquire ' is understood in its broad popular sense or in the narrow technical sense which it has come to possess. Whatever rights were intended to be acquired were paid for by the fixation of amounts or by the laying down of a formula for ascertaining amounts payable for acquisition. It is hard to believe that having provided for payment of amounts for acquisition of management and ownership rights, the legislature resorted to the subterfuge of acquiring the mining business of the surviving lessees and sub lessees by the device of terminating their leases and sub leases. The legislative history leading to the termination of coal mining leases points to one conclusion only that, by and large, every lawful interest which was acquired was paid for; the extinguishment of the interest which survived or which is alleged to have survived the passing of the Management Act and the Nationalisation Act was provided for merely in order to ensure that no loophole was left in the implementation of the scheme envisaged by those Acts. 1091 This will provide a short answer to Shri Sen 's argument that persons whose leases and sub leases are terminated without payment of any amount are discriminated against in comparison with other lessees who were paid amounts when their property was taken over. The answer is that persons dealt with by section 3(3)(b) of the Nationalisation Amendment Act are differently situated from those who were dealt with by the two earlier Acts. No violation of Article 14 is therefore involved. Likewise, we see no substance in the contention that no public purpose is involved in the termination of the interest of the lessees and sub lessees which was brought about by the Nationalisation Amendment Act. The public purpose which informs that Act is the same which lies behind its two precursors, the Management Act and the Nationalisation Act. The purpose is to reorganize and re structure coal mines so as to ensure the rational, coordinated and scientific development and utilisation of coal resources consistent with the growing requirements of the country. The Statement of Objects and Reasons of the Nationalisation Amendment Act points in the direction. Public purpose runs like a continuous thread through the well knit scheme of the three Acts under consideration. This discussion is sufficient to meet the contention of the petitioners that the interest of the lessees and sub lessees has been "acquired" under the Nationalisation Amendment Act by the termination of leases and sub leases. But, we may examine that contention in the light of the relevant Constitutional provisions and principles. It was observed in Dwarkadas Shrinivas vs The Sholapur Spinning & Weaving Co. Ltd. that the provisions of the Constitution touching fundamental rights must be construed broadly and liberally in favour of those on whom the rights have been conferred. "The form is unessential. It is the substance that we must seek". Making every allowance in favour of the right to property which was available at the relevant time and having regard to the substance of the matter and not merely to the form adopted for terminating the interest of the lessees and the sub lessees, we are of the opinion that the Nationalisation Amendment Act involves no acquisition of the interest of the lessees and the sub lessees. It merely brings about in the language of Article 31A(1)(e) "the extinguishment" of their right, if any, to win coal. Whichever right, title and interest was lawful and identifiable was acquired by the Management Act and the Nationalisation Act. And whichever interest was acquired was paid for. Tenuous and furtive interests 1092 which survived the passing of those Acts were merely extinguished by the Nationalisation amendment Act. In Ajit Singh vs State of Punjab, it was observed by Hindayatullah, J. in the dissenting judgment which he gave on behalf of himself and Shelat, J., that in the case of extinguishment within the meaning of Article 31A, if all the rights in a property are extinguished the result would be nothing else than acquisition, because no property can remain in suspense without the rights therein being vested in some one or the other. These observations made by the learned Judge are not contrary to anything contained in the majority judgment delivered by Sikri, J., and naturally therefore, great reliance is placed upon them by the petitioners. Even greater sustenance is drawn by the petitioners from the judgment of a 7 Judge Bench of this Court in Madan Mohan Pathak vs Union of India & Ors. In that case, a settlement which the Life Insurance Corporation had arrived at with its employees was substantially set at naught by the Life Insurance Corporation (Modification of Settlement) Act, 1976. It was held by this Court that the Act was violative of Article 31(2) since it did not provide for payment of any amount for the compulsory acquisition of the debts owed by the Life Insurance Corporation to its employees; that the direct effect of the impugned Act was to transfer ownership of the debts due and owing to Class III and Class IV employees in respect of annual cash bonus to the Life Insurance Corporation and that, since the Corporation is owned by the State, the impugned Act was a law providing for compulsory acquisition of the debts by the State within the meaning of Article 31(2A). These decisions have no application to the instant case because the interest of the lessees and sub lessees which was brought to termination by section 3(3) (b) of the Nationalisation Amendment Act does not come to be vested in the State. The Act provides that excepting a certain class of leases and sub leases, all other leases and sub leases shall stand terminated in so far as they relate to the winning or mining of coal. There is no provision in the Act by which the interest so terminated is vested in the State; Nor does such vesting flow as a necessary consequence of any of the provisions of the Act. Sub section (4) of section 3 of the Act provides that where a mining lease stands terminated under sub section (3), it shall be lawful for the Central Government or a Government company or a corporation owned or controlled by the Central government to obtain a prospecting licence or a mining lease in respect of the whole or part of the land covered by the mining lease which stands so terminated. 1093 The plain intendment of the Act, which, may it be reiterated, is neither a pretence nor a facade, is that once the outstanding leases and subleases are terminated, the Central Government and the other authorities will be free to apply for a mining lease. Any lease hold interest which the Central Government, for example, may thus obtain does not directly or immediately flow from the termination brought about by section 3(3)(b). Another event has to intervene between the termination of existing leases and the creation of new interests. The Central Government, etc. have to take a positive step for obtaining a prospecting licence or a mining lease. Without it, the Act would be ineffective to create of its own force any right or interest in favour of the Central Government, a Government Company or a Corporation owned, managed or controlled by the Central Government. As observed by Sikri, J., in Ajit Singh, (supra) the essential difference between "acquisition by the State" on the one hand and "modification or extinguishment of rights" on the other, is that in the first case the beneficiary is the State while in the second the beneficiary is not the State. The Nationalisation Amendment Act merely extinguishes the rights of the lessees and the sub lessees. It does not provide for the acquisition of those rights, directly or indirectly, by the State. Article 31(2A) will therefore come into play, by which, "Where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a corporation owned or controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of property, notwithstanding that it deprives any person of his property. " The position in Madan Mohan Pathak (supra) was entirely different because the direct effect of the impugned Act was to transfer ownership of the debts due and owing to Class III and Class IV employees in respect of annual cash bonus to the Life Insurance Corporation; since the L.I.C. is a Corporation owned by the State, the impugned Act was held to be a law providing for compulsory acquisition of these debts by the State within the meaning of clause (2A) of Article 31. Shri Sen 's argument on the question of acquisition of the rights of lessees and sub lessees by the State therefore fails. It follows that the Nationalisation Amendment Act must receive the protection of Article 31A(1)(e) of the Constitution, that is to say, that the Act cannot be deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights conferred by Articles 14, 19 and 31. 1094 These are our reasons for the order passed by us on May 5, 1978 which reads thus : The stay orders passed in these Writ Petitions are vacated except in those Writ Petitions, viz., Writ Petitions Nos. 257, 220, 111, 600, 1130 1134, 352, 221 and 178/77 in which composite mining leases have been granted for mining both fireclay and coal. The stay orders in these latter petitions shall stand modified as from to day on the lines of the order recorded below. All the Writ Petitions are dismissed with costs except Writ Petitions Nos. 257, 220, 111, 600, 1130 1134, 352, 221 and 178/77 in each of which there is a composite mining for mining fireclay and coal. These Petitions are allowed partly in that the petitioners therein shall be entitled, for the duration of the unexpired portion of their existing leases, to carry on mining operations for the purpose of winning fireclay so long as, and to the extent that, they do not carry on any coal mining operation or engage in winning or mining coal. In these writ petitions there will be no order as to costs. We have already indicated how, though the petitioners holding composite leases were permitted to carry on mining operations for the purpose of winning fireclay, they, according to their own showing, cannot win or mine fireclay without doing a coal mining operation or without engaging in winning or mining coal. It is self evident that in attempting to win fireclay, they will have to act at their own peril since they will run the risk of being prosecuted under section 30(2) of the . Petition Nos. 111, 178, 220, 221, 257, 352, 600 and 1130 1134 partly allowed. Petition Nos. 150, 151, 180, 205 210, 226, 270 271, 346, 355, 403, 396 398, 599, 541, 543, 626, 635 639, 661, 687 692, 758/77 and 154, 571 574, 603, 605, 610 and 611/77 dismissed.
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Article 246(1) of the Indian Constitution says that only the Parliament can make laws about the things listed in List I of the Seventh Schedule. This list is called the Union List. This power is not limited by clauses 2 and 3 of the same Article. Clause 2 says that both the Parliament and state governments can make laws about the things listed in the Concurrent List. Clause 3 says that only state governments can make laws about the things listed in the State List. Entry 23 in List II of Schedule VII, along with Article 246(3), gives state governments the power to make laws about "Regulation of mines and mineral development." However, this power is "subject to" List I, which deals with regulation and development under the central government's control. Entry 54 in List I lets the Parliament make laws about "Regulation of mines and mineral development" if the Parliament says it is necessary for the public good that the central government controls this regulation and development. Entry 24 in List II deals with "Industries subject to" Entries 7 and 52 of List I. Entry 7 in List I deals with industries that the Parliament says are needed for defense or war. Entry 52 in List I lets the Parliament make laws about "Industries" if the Parliament says it is necessary for the public good that the central government controls them. Using these powers, the Parliament passed several laws, including the Industries (Development & Regulation) Act of 1951, the Mines Act of 1952, and the Mines and Minerals (Regulation and Development) Act of 1957. It also passed laws about coal mines in the 1970s. Later, the Coal Mines (Nationalisation) Amendment Act of 1976 was passed. The reason for this law was that after coal mines were taken over by the government ("nationalized"), some people started mining coal illegally. They were doing it unsafely and without caring about the environment or the workers. They were also making a lot of money by paying low wages and not providing safety measures. Coal was also being stolen from the nationalized mines. The areas where illegal mining was happening had not been studied to see how much coal was there or what quality it was. The government couldn't properly develop these areas without this information. So, the government decided it wasn't right to either take over these illegal mines under an existing law or give the mining rights to government companies. Since the government wanted the coal industry to be nationalized, it passed the 1973 Coal Mines Nationalisation Act. This law ended all private coal leases, except for those held by privately owned steel companies. This allowed the government to explore the land and then take over the mining rights if needed. The people who had their coal mine leases taken away by the 1976 Amendment Act challenged the law in court. They argued that the Parliament didn't have the power to pass it and that the law was not valid. (a) They said that laws made under Entry 54 must be for the public good because that's why the Parliament was given the power in the first place. In other words, any law made under Entry 54 must be designed to regulate and develop coal mines for the public good, or it's not valid. The 1976 law was not such a law because it ended all leases, destroyed jobs, and ruined contracts without providing for how debts would be paid. Since the 1976 law ended all leases, it went against the idea of taking over the mines and continuing to run them. (b) They also argued that the word "Regulation" in Entry 54 doesn't mean "Prohibition" (stopping something completely). "Regulation" is different from "Restrictions" mentioned in Article 19 of the Constitution. There can't be a power to completely stop the regulation and development of mines and minerals. The 1976 law doesn't require the government to get a mining lease and operate the mines that were taken over. The words "it shall be lawful" (it will be legal) for the government to get a lease only give the government the option to do so, not an obligation. No court can force the government to get a lease and run a coal mine under the 1976 law. (c) When law-making power is divided among different groups, a group can overstep its power either directly or indirectly. In this case, the Parliament was acting deceptively. It appeared to be acting within its power, but in reality, it was overstepping that power. (d) To see the true purpose of the law, the court must look at its effect and consider its goal. When the law is for a specific purpose, like Entry 54, the purpose of the law is what matters. The reason the Parliament is allowed to regulate and develop mines must determine the kind of law it makes because the public good demands it. Under the 1976 law, the government isn't required to run a mine or even investigate whether a mine should be worked at all. The law only allows the government to apply for a license or lease for the land that was covered by the terminated lease. So, the law doesn't provide for regulation and development of coal mines; it completely stops all mining activity, even if the state government wants to run a mine. It doesn't stop mining as a step towards running the mines because there's no requirement to investigate or run the mines. (e) The 1976 law goes directly against the policy of the 1973 Coal Mines Nationalisation Act, which was to take over and run the mines. The original law becomes useless in several ways because of the 1976 law. It's just a deceptive way to change the Nationalisation Act while completely undoing it in reality. The law is therefore not valid. (f) Article 31(A)(1)(e) only removes a restriction on law-making power when it comes to violating basic rights. Even the best intentions can't make a law valid if the law-making power is lacking. (g) Under Article 31(1) of the Constitution, no one can be deprived of their property without legal authority. Article 31A(1), which protects certain laws from being invalid under Articles 14, 19, and 31, doesn't get rid of the need for legal authority to take someone's property. (h) The 1976 law doesn't give authority to end a lease that covers both coal and fire clay mining. The right to mine fire clay is given to the petitioner (the person making the request to the court) by law, and it can only be taken away by law. (i) Even though the 1976 law doesn't specifically stop the petitioner from mining fire clay, the effect of the law is to do so. The court must look at the direct impact of the law on the party's right. If that impact stops him from exercising his right, it doesn't matter that there's no specific prohibition in the law. (j) The 1976 law makes it a crime to mine coal, which in effect stops the petitioner from mining fire clay. But the law doesn't provide for this prohibition, so there's no legal authority for it. Coal and fire clay are different minerals, as shown in Schedule II of the Mines and Minerals (Regulation and Development) Act of 1957. (k) The 1976 law affects two kinds of transfers: the transfer of the lease interests from the lessees (renters) to the lessor (owner), which is the state; and the transfer of the mining business from the lessees to the central government. Since these transfers are considered "acquisition" (taking ownership) under Article 31(2), the law can be challenged under Articles 14, 19(1)(g), and 31 of the Constitution. (l) The 1976 law can be challenged under Article 14 because lessees who are affected by the law are being unfairly treated compared to lessees of other mines who were paid compensation when their property was taken over. (m) The 1976 law can be challenged under Article 19(1)(g) because the prohibition against lessees running their business and the transfer of their business to the government is an unreasonable restriction on their right to hold their lease and run their mining business. (n) The law can be challenged under Article 31 because no provision is made for paying any amount to the lessees whose mining business is taken over. There is no public purpose involved in ending the lessees' interest or taking over their business. Taking property without paying anything requires a very strong public purpose. (o) Since no provision is made for paying any amount to the lessees whose leases are ended, the 1976 law is not a "Law" under Article 31(2), so Article 19(1)(f) applies. (p) The law is not protected from being challenged under Articles 14, 19, and 31 by Article 31A(1)(e) because that Article provides for ending rights, which is not the same as the government taking ownership. The Court dismissed most of the petitions, but allowed some of them in part. The Court HELD: (1) The 1976 law is not just a way to end mining leases without any obligation to regulate mines and develop minerals. Even though Entry 54, List I is specific because it limits the power to pass a law about "Regulation of Mines and Mineral Development" by adding "to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest," the 1976 law is designed to serve the purpose of Entry 54. The Coal Mines (Nationalisation) Act was passed to take over the ownership of coal mines so they could be reorganized and developed in a way that would best use the coal resources for the country's needs. The main goal of that law was to ensure that the ownership of these resources was held by the government and used for the common good. The 1976 law has several parts: (1) Section 3(3)(a) says that only certain people can mine coal after April 29, 1976; (2) Section 3(3)(b) says that all mining leases were ended, except those granted to the government; (3) Section 3(3)(c) prohibits granting a lease for mining coal to anyone other than the government; and (4) Section 3(4) says that when a mining lease is ended, the government can get a license or lease for the land. Section 4 of the 1976 law added a penalty to the original law. These parts of the law don't directly go against the original law, and they don't destroy the idea of taking over the mines and continuing to run them. Instead, the 1976 law helps the goal of nationalization mentioned in the original law and puts into effect the purpose mentioned in the original law by ending all coal mining leases except those granted to the government. The fact that the title of the law wasn't changed doesn't matter. The new section is a logical addition to the original law. 2. Also, the titles of the sections of a law can't take away the effect of the law's contents if those contents are within the law-making power of the legislature. One must mainly consider the purpose of a law to find out whether the law-making power is being used for a specific purpose, unless the law shows that the stated purpose is just a cover for overstepping the legislature's power. Whether a particular goal can be achieved by a law is mostly a matter of policy. 3. The 1976 law doesn't need a statement of purpose because it's supported by a statement of objects and reasons. Generally, an amendment is passed to further the purpose of the original law as stated in that law's statement of purpose. Taking over coal mines is not the ultimate goal but a way to achieve a goal. The main purpose of both the Nationalisation Act and the 1976 law is to create a situation that will help regulate mines and develop minerals. For the mines listed in the law, that purpose was achieved by taking them over. For mines that were not listed, the same purpose was achieved by ending leases and taking over the right to work the mines. Ending leases, giving the lease properties to the state, and granting leases to the government are all ways to achieve the goal of nationalizing vital natural resources. 4. Section 18 of the Mines and Mineral (Regulation and Development) Act of 1957 contains a legal order and shows a specific policy. Later laws about regulating mines and developing minerals are connected to the policy stated in section 18. So, nothing in the later laws can be interpreted as going against the principle stated in section 18 of the 1957 law, which says that the government must take steps to conserve and develop minerals in India. So, even for matters under the 1976 law, which ends existing leases and allows the government to get new leases, the obligation of section 18 of the 1957 law still applies. 5. Entry 54 refers to two things: (1) regulation of mines and (2) mineral development. It's true that the Entry is specific because the power under Entry 54 must be guided by the public interest. But neither the power to regulate mines nor the power to develop minerals means that the government must start working a mine as soon as the lease is ended. It's possible that there was a gap between ending existing leases and granting new ones after the 1976 law came into effect. But, the 1976 law doesn't say that any kind of mine cannot be developed or worked. The law envisions conservation, investigation, development, and finally scientific use of the mines and minerals. Conserving minerals by ending existing leases is important for developing mines. A step-by-step program of conservation is one of the best ways to regulate mines and develop minerals. 6. The 1976 law doesn't destroy the original law. The destruction that the 1976 law causes is of the lease, not of the mine itself. Ending the lease of a house doesn't destroy the house itself. It could be argued that stopping the use of the house for any purpose would destroy the house. The 1976 law doesn't contain provisions to stop the working of mines whose leases have been ended. A simple provision for granting sub-leases shows that the purpose of the 1976 law is to ensure that no mine is left idle or unexplored. Gaps in time can be used for investigation. They don't lead to destruction of mines. In fact, it's good that the Amendment Act doesn't require the new lessees to recklessly "scratch" the mines, which would ultimately destroy them. Natural resources are not endless, so it's important to conserve them. Without careful conservation, there can't be systematic regulation of mines or scientific development of minerals. The importance of conservation can be seen in the fact that the Parliament passed the Coal Mines (Conservation and Development) Act of 1974 to provide for the conservation of coal and development of coal mines. That Act allows the government to take measures necessary for the conservation of coal and development of coal mines. It also requires mine owners to take steps to conserve coal and develop their mines. Steps taken to preserve and distribute natural resources may involve restrictions on their use and even stopping, to some extent, unplanned working of the resources. The Attorney General case and the Municipal Corporation case were explained and referred to. Section 3(4) of the Act uses enabling words so that regulation of mines and mineral development can be ensured after investigation and planning. The power given by the Act is connected to a duty to act with reasonable speed, depending on the problem being investigated. The fact that there's no obligation to act immediately doesn't mean there's no obligation to act at all. It's in this context that the Parliament used the words "it shall be lawful" in section 3(4). A broad view of the law-making area defined by Entry 54, List I, an understanding of the provisions in the 1976 law, and a realistic view of constitutional principles will lead to the conclusion that the Parliament had the power to pass the 1976 law. The Julius vs Bishop of Oxford case was referred to. The laws of 1972 and 1973 cover the entire field of "Coal" that was intended to be nationalized. The names of the laws and their contents show that three types of mines were being nationalized: mines with only coking coal, mines with coking coal and other coal, and mines with only other coal. Even though the Parliament had the power under Article 31A(1)(e) of the Constitution to end mining leases without paying any compensation, it decided to nationalize coal mines by paying the amounts listed in the laws of 1972 and 1973. Also, even when something other than coal mines was taken over, such as "coke oven plants," the law provided for payment to the owners of those plants. So, whatever was intended to be taken over was paid for. This is inconsistent with the idea that the Parliament intended to take over rights to other minerals, like fire clay, without paying anything. This is supported by the wording of section 3(3)(b) and section 3(3)(c) of the 1973 law, which were added by the 1976 law. These provisions show that the focus of the laws is coal mines. What is ended under section 3(3)(b) are certain mining leases as far as they relate to mining coal. The restriction placed by section 3(3)(c) is on granting leases for mining coal to anyone other than those mentioned in section 3(3)(a). The definition of "coal mine" in section 2(b) of the law is unclear, but the laws make it likely that rights in minerals other than coke and coal were not intended to be taken over. A comparison of the definition of "coal mine" in section 2(b) of the 1973 law with the definition of "coking coal mine" in section 3(c) of the 1972 law shows that the existence of any other coal was not important for coking coal mines, but the existence of any other mineral was important for coal mines. The definition of coal mine in section 2(b) of the 1973 law removed the clause "whether exclusively or in addition to" any other mineral. The same legislature that added the clause to the definition of "coking coal mine" in the 1972 law deleted it in the definition of "coal mine" in the 1973 law. So, coal mines in which there are seams of coal and fire clay don't fall within the definition of "coal mine" in section 2(b) of the 1973 law. 9. Therefore, lessees of coal and fireclay mines cannot continue their mining operations despite the 1976 law. It's one thing to say that a mine is outside the scope of the definition of coal mine in section 2(b) of the 1972 law, but it's another to conclude that the new provisions in the 1976 law will have no effect on leases for coal and fireclay. Section 3(3)(a) says that after April 29, 1976, no one other than those mentioned in clauses (i) to (iii) can carry on "coal mining operation" in India. These provisions will apply whether or not the lessee holds a composite lease for coal and fireclay. In other words, if a person holding a lease can mine fireclay without mining coal, he may do so. But if he can't mine fireclay without mining coal, he can't do any mining at all. If he does so, he will be punished as provided in section 30(2) of the 1973 law. The provision in section 3(3)(a) completely prohibiting people from carrying on coal mining operations and the penalty in section 30(2) leave the lessees of composite mines with very little. They can't mine coal, and they can't mine fireclay without mining coal. 10. The lessees of composite mines cannot mine fireclay even though their lease is outside the scope of section 2(b) of the 1973 law. The lessees of composite mines will have to keep their leases without being able to use them. They will be acting at their own risk if they try to mine fireclay. If they can't mine fireclay without mining coal, they can't mine fireclay even if they hold leases that allow them to mine both. (10). Even though the Parliament provided for payments for taking over certain interests under the laws of 1972 and 1973, it didn't intend to pay any compensation for ending lease rights in composite mines. Mines that have seams of coal and fireclay are unique and appear to be fewer in number compared to coking coal mines and coal mines. The legal authority for ending the rights of composite lessees is the provision in section 3(3)(a), which carries the penalty in section 30(2) of the 1973 law. The Parliament has deprived composite lessees of their right to mine fireclay because they can't do so without mining coal. The mining of coal by most people is prohibited by section 3(3)(a) of the 1973 law. This is a good thing because the Parliament couldn't have intended that these special cases should undermine the main purpose of the Nationalisation Acts. It's clear that no rights were intended to be left after the rights in coking coal mines and coal mines were ended. 11. A close examination of the laws and the amendments made to that law by the 1976 law makes it clear that the 1976 law has not taken the petitioners' right to property without paying anything, nor has it unreasonably deprived them of their right to carry on the business of mining. The nationalized coal mines provided in section 3(1) that the rights of the owners in the coal mines listed in the law would be transferred to the government. The mines listed in the law were the ones that were openly and legally doing coal mining. Since it was possible to verify the facts about these businesses, they were taken over on payment of amounts listed in the law, which varied depending on the value of their assets and their potential. The list of mines in the law couldn't be complete because there were, and may still be, unauthorized mines worked by people who didn't have the right to do mining. People in that category can't use the Constitution as their right to continue illegal mining, which is harmful to the national interest because it destroys natural resources. But there could be mine operators who were doing business legally but were not easily identified. Section 3(2) of the 1973 law made provision for taking over the management of those mines. Owners of mines that were not included in the law but whose rights would eventually be given to the government were treated the same as the owners of mines whose management was taken over under the Coal Mines (Taking Over of Management) Act of 1973. That law provides that every owner of a coal mine will be given an amount of money for the government taking over the management of the mine. The amount was based on the highest monthly production of coal from the mine during any month in the years 1969, 1970, 1971, and 1972. The 1976 law carried out the purpose of these two laws by ending the leases that might have remained. So, the purpose of these laws is (1) to give the government the right to manage all coal mines; (2) to nationalize the mines listed in the law; (3) to provide for taking over the management of coal mines that the government finds out about after the law is passed; and (4) to end all mining leases. The Management Act and the Nationalisation Act provide for payments to the owners of coal mines whose rights were taken over. It's unlikely that owners of coal mines who had any legal right to the mines would not tell the government about their mines when payments were being made. Those who didn't tell the government about their mines didn't have a clear right to the mines. The claims of lessees holding leases from those owners would be as weak as the title of their lessors. 12. The 1976 law ends all existing leases, except those granted to people already referred to. Similarly, the law prohibits all future coal mining operations except for those same people. But the leases that remained after the Management Act and the Nationalisation Act were mostly uncertain, and their holders claimed that the origin of their rights was lost in the past. Neither in law, nor in fairness, nor under the Constitution can these lessees complain about the ending of their leases without any payment. The provision in section 3(3)(b) of the 1976 law was made to be extra careful so that no lease of a coal mine would survive after the Management Act and the Nationalisation Act. There was no reasonable chance of a legal lease surviving the passage of those laws, but if someone claimed to hold a lease, that lease was ended under section 3(3)(b). 13. Section 3(3)(b) of the 1976 law ends coal mining leases under Article 31A(1)(e) of the Constitution. The ending of mining leases caused by section 3(3)(b) is not just a cover for taking over the mining business of the lessees. The true goal of the 1976 law was not to "acquire" anyone's business. Whatever rights were intended to be taken over were paid for. Having provided for payment for taking over management and ownership rights, it's unlikely that the legislature used the trick of taking over the mining business of the remaining lessees by ending their leases. The history of the law leading to the ending of coal mining leases shows that every legal interest that was taken over was paid for. The ending of the interests that remained after the Management Act and the Nationalisation Act was provided for to ensure that no loophole was left in putting the laws into effect. People dealt with by section 3(3)(b) of the 1976 law are in a different situation from those who were dealt with by the earlier laws. So, there is no violation of Article 14. 14. The public purpose behind the 1976 law is the same as that behind the two earlier laws. The purpose is to reorganize coal mines to ensure that coal resources are developed and used in a way that meets the growing needs of the country. The Statement of Objects and Reasons of the 1976 law also points in this direction. Public purpose runs through all three laws. 15. Considering the right to property and the form used to end the interest of the lessees, the 1976 law does not involve taking over the interest of the lessees. It only brings about "the ending" of their right to mine coal. Every right that was legal was taken over by the Management Act and the Nationalisation Act. And every interest that was taken over was paid for. Uncertain interests that remained after the passage of those laws were simply ended by the 1976 law. The interest of the lessees that was ended by section 3(3)(b) of the 1976 law does not become the property of the state. The law says that all other leases will be ended. There is no provision in the law by which the interest ended is given to the state, nor does that happen as a result of any of the provisions of the law. Section 3(4) of the law provides that where a mining lease is ended, the government can get a license. The purpose of the law is that once the leases are ended, the government will be free to apply for a mining lease. Any lease interest that the government obtains does not directly result from the ending caused by section 3(3)(b). The government has to take a step to get a license. Without it, the law would not create any right in favor of the government. The difference between "acquisition by the State" and "modification or ending of rights" is that in the first case, the state benefits, while in the second, the state does not. The 1976 law only ends the rights of the lessees. It does not provide for the government taking over those rights. So, the 1976 law is protected by Article 31A(1)(e) of the Constitution, meaning that the law cannot be considered invalid because it is inconsistent with or takes away any of the rights given by Articles 14, 19, and 31. The Ajit Singh case and the Madan Mohan Pathak case were discussed and distinguished. The Dwarkadas Shrinivas case was applied.
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111, 2 7 in 154, 2 6 in 610 611, 2 4, 7 & 8 in 661, 2 8 in 180, 2 6, 10 12 in 270 271, 2 6 and 10 13 in 599, 2 7 in 571 574, 2 7, 14 15, 17 20 & 23 in 603, 2 7 in 605, 3 8, 12, 13, 16 18 in 335, 2 6 in 687 692, 2 6 in 635 637, 2 6 in 352, 2, 6, 7 & 10 in 626, 2 5, 11 13 in 541, 6 8 in 543, 2 6 in 758/77, 2 7, 13, 14 & 16 in 257, 2 6 in 220 and 226, 2 6, 13, 14 in 205 210, 2 7 in 600, 2 6 in 638 639, 2, 4 to 10 in 403/77. No. In writ petitions 270 and 271 of 1977, petitioner No. The dispute relating to the petitioner 's application for a coal mining lease was brought to the Supreme Court, as a result of which the Central Government on April 1, 1972 directed the State Government to grant a coal mining lease to the petitioner. Entry 23 List II, Schedule VII of the Constitution read with article 246(3) confers legislative power on the State legislatures in respect of 1060 "Regulation of mines and mineral development" but that power is "subject to the provisions of List I with respect to regulation and development under the control of the Union". The Mines and Minerals (Regulation and Development) Act, 67 of 1957, which came into force on June 1, 1958 was passed in order to provide for the regulation of mines and the development of minerals under the control of the Union. By section 4(2), after the appointed day, that is May 1, 1972 if any other coal mine was found to contain coking coal the provisions of the were to apply to such mine until it was nationalised by an appropriate legislation. By section 6(1), the Central Government becomes the lessee of the State Government where the rights of the owner under any mining lease granted in relation to a coking coal mine by the State Government or any other person, vest in the Central Government under section 4. By section 3(2), the coal mines specified in the Schedule shall be deemed to be the coal mines the management of which shall vest in the Central Government under sub section (1). Section 4(1) provides that where the rights of an owner under any mining lease granted, or deemed to have been granted, in relation to a coal mine, by a State Government or any other person, vest in the Central Government under section 3, the Central Government shall, on and from the date of such vesting, be deemed to have become the lessee of the State Government or such other person, as the case may be, in relation to such coal mine as if a mining lease in relation to such coal mine had been granted to the Central Government. The period of such lease 1064 is to be the entire period for which the lease could have been granted by the Central Government or such other person under the Mineral Concession Rules and thereupon all the rights under the mining lease granted to the lessee are to be deemed to have been transferred to, and vested in, the Central Government. By section 11(1), the general superintendance, direction, control and management of the affairs and business of a coal mine, the right, title and interest of an owner in relation to which have vested in the Central Government under section 3, shall vest in the Government company or in the Custodian as the case may be. In view of the policy followed by the Central Government that the Coal Industry is to be in the nationalised sector, it was decided that the Coal Mines Nationalisation Act, 1973 should be enacted to provide for termination of all privately held coal leases except those held by privately owned steel companies, so that it may be possible for the Central Government, Government company or Corporation to take 1066 mining leases where necessary, after the necessary exploration has been made as to the extent of the deposits of coal, etc". By section 2 of the Amendment Act a new section, section 1A, was introduced under Sub section (1) of which it was declared that it was expedient in the public interest that the Union should take under its control the regulation and development of coal mines to the extent provided in subsections 3 and 4 of section 3 of the Nationalisation Act and subsection 2 of section 30. By section 3 of the Amendment Act a new sub section, namely, sub section 3, was introduced in section 3 of the principal Act. Under clause (a) of the newly introduced sub section 3 of section 3, on and from the commencement of section 3 of the Amendment Act no person other than (i) the Central Government or a Government company or a corporation owned, managed or controlled by the Central Government, or (ii) a person to whom a sub lease, referred to in the proviso to clause (c) has been granted by any such Government, company or corporation, or (iii) a company engaged in the production of iron and steel, shall carry on coal mining operation, in India, in any form. Under clause (b) of sub section 3, excepting the mining leases granted before the Amendment Act in favour of the Government, company or corporation referred to in clause (a), and any sub lease granted by any such Government, company or corporation, all other mining leases and sub leases in force immediately before such commencement shall in so far as they relate to the winning or mining of coal, stand terminated. Under the proviso to clause (c), the Government, the company or the corporation to whom a lease for winning or mining coal has been granted may grant a sublease to any person in any area if, (i) the reserves of coal in the area are in isolated small pockets or are not sufficient for scientific and economical development in a co ordinated and integrated manner, and (ii) the coal produced by the sub lessee will not be required to be transported by rail. By sub section 4 of section 3, where a mining lease stands terminated under sub section 3, it shall be lawful for the Central Government or a Government company or corporation owned 1067 or controlled by the Central Government to obtain a prospecting licence or mining lease in respect of the whole or part of the land covered by the mining lease which stands terminated. As stated at the beginning of this Judgment, we are concerned in these writ petitions to determine the validity of the Coal Mines Nationalisation (Amendment) Act, 67 of 1976, to which we will refer as 'The Nationalisation Amendment Act '. Shri Seervai 's argument runs thus: (a) Laws made in the exercise of power conferred by Entry 54 must stand the test of public interest because the very reason for the Parliament acquiring power under that entry is that it is in public interest that the regulation of mines and minerals should be under the control of the Union. Section 3(4) inserted by the Nationalisation Amendment Act imposes no obligation on the Central Government or any other authority to obtain a mining lease and work the mines, the leases in respect of which stands terminated under the Act. No Court can by a Writ of Mandamus or otherwise compel the Central Government to obtain a lease of coal mine and to run it under any of the provisions of the Nationalisation Amendment Act. Under the provisions of the Nationalisation Amendment Act, not only is there no obligation on the Central Government to run a mine, but there is no obligation imposed upon it even to carry out prospecting or investigation in order to decide whether a particular mine should be worked at all. In support of his submission that the provisions of the Nationalisation Amendment Act are not conceived in public interest and therefore they transgress the limitations of Entry 56, List I, learned counsel relies on the circumstance that whereas the Coal Mines Management Act and the Coal Mines Nationalisation Act of 1973 contain elaborate preambles, the Amendment Act contains no preamble setting out the mischief to be remedied or the benefit to be secured, for which the parent Act had failed to provide. The contention is that since the Nationalisation Amendment Act does not impose upon the Government the duty to run the mines which are taken over or even to carry out prospecting and investigation but simply provides for the termination of mining leases, the Act is not in public interest. Granting that Entry 54, List I is purposive since it qualifies the power to pass a law relating to "Regulation of Mines and Mineral Development" by the addition of a restrictive clause, "to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest", the provisions of the Nationalisation Amendment Act show that they are designed to serve progressively the purpose of Entry 54. The was passed in order to provide for the acquisition and transfer of the right, title and interest of the owners in respect of the Coal mines specified in the Schedule to that Act. For the removal of doubts it was declared by section 3(2) that: If, after the appointed day, the existence of any other coal mine comes to the knowledge of the Central Government, the provisions of the Coal Mines (Taking over of Management) Act, 1973, shall until that mine is nationalised by an appropriate legislation, apply to such mine. It will now be enough to say by way of a summing up of the provisions of the Nationalisation Amendment Act that: (1) by section 3(3) (a) of the which was introduced by the Nationalisation Amendment Act, no person other than those mentioned in clauses (i) to (iii) can carry on coal mining operations after April 29, 1976, being the date on which section 3 of the Nationalisation Amendment Act came into force; (2) by section (3)(3)(b) all mining leases and sub leases stood terminated except those granted before April 29, 1976 in favour of the Central Government, a Government company or corporation owned, managed or controlled by the Central Government; (3) section (3)(c) prohibits the granting of a lease for winning or mining coal in favour of any person other than the Government, a Government company or a corporation of the above description provided that a sub lease could be granted by these authorities to any person if the two conditions mentioned in the proviso are satisfied; and (4) when a mining lease stands terminated under section 3(3), "it shall be lawful" for the Central Government or the Government company or the corporation owned or controlled by the Central Government to obtain a prospecting licence or a mining lease in respect of the whole or part of the land covered by the mining lease which stands terminated. In regard to mines which were not included in the Schedule, the same purpose was achieved by termination of leases and sub leases and by taking over the right to work the mines. It is also important to bear in mind while we are on the purposiveness of the Nationalisation Amendment Act that nothing contained in the later analogous Acts can be construed as in derogation of the principle enunciated in section 18 of the Mines and Minerals Regulation and (Development) Act, 67 of 1957, which provides that it 1075 shall be the duty of the Central Government to take all such steps as may be necessary for the conservation and development of minerals in India. Much was made by Mr. Seervai of the circumstance that the Nationalisation Amendment Act, While providing by section 3(4) that "it shall be lawful" for the Central Government, etc., to obtain a prospecting licence or a mining lease, did not impose an obligation on any one to work the mine of which the mining lease stood statutorily terminated. The importance of conservation of natural resources in any scheme of regulation and development of such resources can be seen from the fact that the Parliament had to pass in August 1974 an Act called the Coal Mines (Conservation and Development) Act, 28 of 1974, in order, principally, to provide for the conservation of coal and development of coal mines. 4(1) of that Act enables the Central Government, for the purposes of conservation of coal and for the development of coal mines, to exercise such powers and take or cause to be taken such measures as it may be necessary or proper or as may be prescribed. 1080 It is urged by the learned counsel that the Nationalisation Amendment Act terminates mining leases in respect of coal only and that the law terminating leases for mining coal cannot apply to a mine which contains not only coal but fireclay also. For this prohibition the Amendment Act does not provide, and therefore, there is no authority of law for it. The contention, in other words, is that a coal mine is a mine in which there is at least one seam of coal, no matter whether there are seams therein of fireclay or any other mineral. If a person holding a composite lease can do fireclay mining without mining coal, he may do so; otherwise section 3(3) (a) is the authority of law to prevent him from mining fireclay. (emphasis supplied) Section 3(3)(c) provides that: "no lease for winning or mining coal shall be granted in favour of any person other than the Government, company or corporation, referred in clause (a)". Since the definition of 'coal mine ' in section 2(b) of the has an uncertain import and the scheme of that Act and of the makes it plausible that rights in minerals other than coke and coal were not intended to be acquired under the two Nationalisation Acts, it becomes necessary to compare and contrast the definition of 'coal mine ' in section 2(b) of the Act of 1973 with the definition of 'coking coal mine ' in section 3(c) of the of 1972. But in so far as coal mines are concerned, we have, willy nilly, to proceed on the basis that by reason of the definition of coal mine contained in section 2(b) of the Act of 1973, and the definition of coking coal mine in section 3(c) of the Act of 1972 which presents a striking contrast to the definition in section 2(b), composite coal mines, that is to say, coal mines in which there are seams of coal and fireclay (we are only concerned with fireclay in these petition), do not fall within the scope of the definition of 'coal mine ' in section 2(b) of the 1084 Act of 1973. It is one thing to say that a composite mine is outside the scope of the definition of coal mine in section 2(b) of the Nationalisation Act of 1973 and quite another to conclude therefrom that the other provisions introduced into that Act by the Nationalisation Amendment Act will have no impact on composite leases for winning coal and fireclay. Section 3(3) (a) which was introduced into the parent Act by the Nationalisation Amendment Act provides expressly that on and from the commencement of section 3 of the Amendment Act, that is, from April 29, 1976, no person other than those mentioned in clauses (i) to (iii) shall carry on "coal mining operation, in India, in any form". These provisions of sections 3(3)(a) and 30(2) of the parent Act will apply of their own force, whether or not the lessee holds a composite lease for winning coal and fireclay and whether or not the mine is a composite mine containing alternate seams of coal and fireclay. But if he cannot win or mine fireclay without doing a coal mining operation, that is, without winning or mining coal, he cannot do any mining operation at all. 257 of 1957 has stated in his petition, more particularly in paragraph 5 thereof, that the seams of coal and fireclay are so situated in the mine of which he is a lessee, that it is not possible to mine fireclay without mining coal. In these Petitions we had passed the following order on May 5, 1978: "These petitions are allowed partly in that the petitioners therein shall be entitled, for the duration of the unexpired portion of their existing leases, to carry on mining operations for the purpose of winning fireclay so long as, and to the extent that, they do not carry on any coal mining operation or engage in winning or mining coal. (3) The Nationalisation Amendment Act is open to challenge under Article 19(1) (g) because the prohibition against lessees from carrying on their business and the transfer of their business, in substance, to the Central Government or a Company is an unreasonable restriction on the 1087 right of the lessees to hold their lease hold property and to carry on their business of mining. (5) Since no provision whatsoever is made for the payment of any amount to the lessees whose leases are terminated, the Nationalisation Amendment Act is not a 'Law ' within the meaning of Article 31(2) and therefore Article 19 (1) (f) is attracted. That Act provides by section 7(1) that every owner of a coal mine shall be given by the Central Government an amount in cash for the vesting in it, under section 3, of the management of such mine. (1) Notwithstanding anything contained in Article 13, no law providing for (e) the extinguishment or modification of any rights accruing by virtue of any agreement, lease or licence for the purpose of searching for, or winning, any mineral or mineral oil, or the premature termination or cancellation of any such agreement, lease or licence, shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31". We are unable to accept that the termination of the mining leases and sub leases brought about by section 3(3)(b) of the Nationalisation Amendment Act is a mere pretence for the acquisition of the mining business of the lessees and the sub lessees. The legislative history leading to the termination of coal mining leases points to one conclusion only that, by and large, every lawful interest which was acquired was paid for; the extinguishment of the interest which survived or which is alleged to have survived the passing of the Management Act and the Nationalisation Act was provided for merely in order to ensure that no loophole was left in the implementation of the scheme envisaged by those Acts. Sub section (4) of section 3 of the Act provides that where a mining lease stands terminated under sub section (3), it shall be lawful for the Central Government or a Government company or a corporation owned or controlled by the Central government to obtain a prospecting licence or a mining lease in respect of the whole or part of the land covered by the mining lease which stands so terminated. 257, 220, 111, 600, 1130 1134, 352, 221 and 178/77 in which composite mining leases have been granted for mining both fireclay and coal. 257, 220, 111, 600, 1130 1134, 352, 221 and 178/77 in each of which there is a composite mining for mining fireclay and coal.
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Entry 54 in List I lets the Parliament make laws about "Regulation of mines and mineral development" if the Parliament says it is necessary for the public good that the central government controls this regulation and development. It also passed laws about coal mines in the 1970s. So, the government decided it wasn't right to either take over these illegal mines under an existing law or give the mining rights to government companies. There can't be a power to completely stop the regulation and development of mines and minerals. The 1976 law doesn't require the government to get a mining lease and operate the mines that were taken over. So, the law doesn't provide for regulation and development of coal mines; it completely stops all mining activity, even if the state government wants to run a mine. There is no public purpose involved in ending the lessees' interest or taking over their business. Even though Entry 54, List I is specific because it limits the power to pass a law about "Regulation of Mines and Mineral Development" by adding "to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest," the 1976 law is designed to serve the purpose of Entry 54. The Coal Mines (Nationalisation) Act was passed to take over the ownership of coal mines so they could be reorganized and developed in a way that would best use the coal resources for the country's needs. The 1976 law has several parts: (1) Section 3(3)(a) says that only certain people can mine coal after April 29, 1976; (2) Section 3(3)(b) says that all mining leases were ended, except those granted to the government; (3) Section 3(3)(c) prohibits granting a lease for mining coal to anyone other than the government; and (4) Section 3(4) says that when a mining lease is ended, the government can get a license or lease for the land. For the mines listed in the law, that purpose was achieved by taking them over. For mines that were not listed, the same purpose was achieved by ending leases and taking over the right to work the mines. Even though the Parliament had the power under Article 31A(1)(e) of the Constitution to end mining leases without paying any compensation, it decided to nationalize coal mines by paying the amounts listed in the laws of 1972 and 1973. The definition of "coal mine" in section 2(b) of the law is unclear, but the laws make it likely that rights in minerals other than coke and coal were not intended to be taken over. A comparison of the definition of "coal mine" in section 2(b) of the 1973 law with the definition of "coking coal mine" in section 3(c) of the 1972 law shows that the existence of any other coal was not important for coking coal mines, but the existence of any other mineral was important for coal mines. So, coal mines in which there are seams of coal and fire clay don't fall within the definition of "coal mine" in section 2(b) of the 1973 law. It's one thing to say that a mine is outside the scope of the definition of coal mine in section 2(b) of the 1972 law, but it's another to conclude that the new provisions in the 1976 law will have no effect on leases for coal and fireclay. The nationalized coal mines provided in section 3(1) that the rights of the owners in the coal mines listed in the law would be transferred to the government. The list of mines in the law couldn't be complete because there were, and may still be, unauthorized mines worked by people who didn't have the right to do mining. So, the purpose of these laws is (1) to give the government the right to manage all coal mines; (2) to nationalize the mines listed in the law; (3) to provide for taking over the management of coal mines that the government finds out about after the law is passed; and (4) to end all mining leases. The provision in section 3(3)(b) of the 1976 law was made to be extra careful so that no lease of a coal mine would survive after the Management Act and the Nationalisation Act. The ending of mining leases caused by section 3(3)(b) is not just a cover for taking over the mining business of the lessees. The law says that all other leases will be ended. There is no provision in the law by which the interest ended is given to the state, nor does that happen as a result of any of the provisions of the law.
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Appeal No. 1 of 1976. Appeal by Special Leave from the Judgment and Order dated 23 5 1975 of the Allahabad High Court in First Appeal No. 392/ 64. Shana Bhushan, V.P. Goel and Subodh Markendeya, for the Appellant. L.N. Sinha, Solicitor General of India and O.P. Rana, for the Respondent No. 1. Bal Kishan Gaur and Amlan Ghosh, for Respondent No. 2. Yogeshwar Prasad and Rani Arora, for Respondent No. 3. The Judgment of the Court was delivered by KRISHNA IYER, J. Two principal submissions, whose implications ' perhaps are of profound moment and have public impact, have been, at wide ranging length, urged in this appeal by certificate, by Shri Shanti Bhushan, for the appellant/defendant and, with effective brevity, controvert ed by the Solicitor General, for respondent/1st plaintiff. The two focal points of the controversy are: (a) Is the appeal to the High Court by the State 1st plaintiff at all competent, entitlement as a 'party aggrieved ' being absent, having regard to the provisions of the U.P. Zamindari Aboli tion and Land Reforms Act, 1950 (U.P. Act 1 of 1951) (for short, the Act) ?; and (b) Is it sound to conceptualise 'area appurtenant to buildings ' in section 9 of the Act so nar rowly as has been ' done by the High Court ? There were two plaintiffs the State of Uttar Pradesh and the Gaon Sabha of Bedpura claiming common but alternative reliefs. The suit was for injunction or ejectment, on title, of the sole defendant who was the quondam zamindar of the 'estate ' which is the 'subject matter of the suit. The trial Court dis missed the suit whereupon the 2nd plaintiff dropped out of the litigation, as it were, and the State alone pursued the matter by way of appeal against the decree. The High Court partially allowed the appeal and the aggrieved defendant is the appellant before us. An expose of the facts may now be given to the extent necessary for explaining the setting of the contention between the parties. The State of Uttar Pradesh extin guished all zamindari estates by the Act and implemented a scheme of settlement of lands with intermediaries, tenants and others by first vesting all estates in the State and empowering it to vest, divest and re vest flora time to time according to flexible needs and ad hoc requirements, the same estate 's in Gaon Sabhas or other local authorities. Settlement of trees, buildings and other specified items in the intermediaries was also part of the agrarian reform. A skeletal picture of the legislation may now be projected. But, before that, a short sketch of the actual dispute may illumine the further discussion. The suit lands were part of an estate owned and.pos sessed by the defendant zamindarini. The statutory conse quence of the abolition of all zamindaris by force of section 4 is spelt out in section 6, to wit, the 1075 cesser of the ownership of the zamindar and vesting of title and possession in the State. By a notification under section 117(1) of the Act the area of lands was vested by the State in the 2nd plaintiff Gaon Sabha. The legislative nullifica tion notwithstanding, the defendant who had been conducting a lucrative bi weekly cattle fair, the best in the district, persisted in this profitable adventure strengthened by section 9 of the Act which settles in the intermediary all buildings and area appurtenant thereto. This resulted in possessory disputes between the Gaon Sabha and the defendant proceed ings under section 145 upholding the latter 's possession and the present suit for declaration of title and consequential injunction or ejectment. The estate, which is the site of the rural cattle mar ket, has a large number of trees on it, a temple in one plot, a (veterinary) clinic in another and quite a number of cattle stands and other auxiliary structures which are facilities for the bovine display and transaction of business. Taking advantage of the provisions of the Act, the defendant successfully claimed before the High Court that the trees and the two plots with the shrine and the oushadhalaya should be deemed to have been settled with her. Her ambitious demand, based on some provisions which we will presently X ray more carefully, was that the entire estate with all the buildings thereon was enjoyed as a unum quid and th.e vacant lands were as much necessary for the mean ingful running of the cattle fair as the structures them selves. To dissect and detach the buildings from the vacant spaces was to destroy the functional wholeness of the serv ice rendered. In short, the large intervening areas sur rounding the chabutras and other edifices were essential adjuncts or appurtenant lands which, together in their original entirety, should be settled under section 9 of the Act with the erstwhile intermediary viz., the defendant. The High Court declined to go the whole hog with the defendant but granted the plea to the limited degree of giving all the structures and a space of 5 yards running round each 'build ing '. In the view of the Court hats, bazars, and melas could not be held by a private owner under the scheme of the Act and reliance on the conduct of the cattle market as an indicator of 'appurtenant ' area was, therefore, impermissi ble. The suit was decreed pro tanto. The Gaon Sabha, when defeated in the trial Court, discreetly stepped out of the risks of an appeal but the Government, first plaintiff, claiming to be gravely ag grieved, challenged the dismissal of the suit and was faced with the plea that the land having vested in the Gaon Sabha, on the issue of the notification under section 117 (1 ) of the Act, .the State had no surviving interest in the property and, therefore, forfeited the position of a person ag grieved, who alone could competently appeal against a de cree. This contention, negatived by the High Court. has been reiterated before us with resourceful embellishments and that, logically, is the first question of law falling for our decision and is the piece de resistance, if we may say so, in this appeal. If the 1st plaintiff 's entire interests, by subsequent plenary vesting in the 2nd plain tiff, have perished, the former cannot, as of right, appeal under section 96 C.P.C. Survival after death is unknown to 1076 real property law and suits, without at least apprehended injury, are beyond the ken of the procedural law. To put it in a nutshell, has the State current interest in the estate, sufficient to sustain an appeal ? The anatomy of the Act, so far as this dispute is con cerned, needs to be ' set out and alongside thereof, the exercises in statutory construction necessary to resolve the two legal disputes. The Act had for its primary object, as testified by its Preamble, the extinction of intermediary rights viz., zamindaris and the like. The goal of the legislation must make its presence felt while the judicial choice of meanings of words of ambiguous import or plurality of significations is made. Section 4 is the foundational provision, the very title deed of the State; and it runs, to read: "section 4. Vesting of estates in the State. (1 ) As soon as may be after the commence ment of this Act, the State Government may, by notification, declare that, as from a date to be specified, all estate situate in the Uttar Pradesh shall vest in the State and as from the beginning of the date so specified (herin after called the date of vesting), all such estates shall stand transferred to and vest except as hereinafter provided, in the State free from all encumbrances. (2) It shall be lawful for the State Government, if it so considers necessary, to issue, from time to time, the notification referred to in sub section (1) in respect only of such area or areas as may be specified and all the provisions of sub section (1), shall be applicable to. and in the case of every such notification." Section 6 sets out the legal consequences of such vesting more specifically. We may extract the provision: "6. Consequences of the vesting of an estate in the State. When the notification under section 4 has been published in the Gazette then, notwith standing anything contained in any contract or document or in any other law for the time being in force and save as otherwise provided in this Act, the consequences as hereinafter set forth shall, from the begining of the date of vesting, ensue in the area to which the notification relates, namely (a) all rights, title and interest of all the intermediaries (i) in every estate in such area including land (cultivable or barren), grove land, forests whether within or outside village boundaries, trees (other than trees in village abadi, holding or grove), fisheries, tanks, ponds, water channels, fernes, pathways, abadi sites, hats, bazars and meals other than hats, bazars and melas held upon land to which clauses (a) to (c) of sub section (1) of Section 18 apply, and 1077 (ii) in all sub soil in such estates including rights, if any in mines and miner als, whether being worked or not; shall 'cease and be vested in the State of Uttar Pradesh free from all encumbrances; * * * * Reading the two sister sections together, certain clear conclusions emerge. Emphatically, three things happened on the coming into force of the Act. By virtue of section 4 the right, title and interest of all intermediaries in every estate, including hats, bazars and melas, stood terminated. Secondly, this whole bundle of interests came to be vested in the State, free from all encumbrances, the quality of the vesting being absolute. 'Thirdly, one and only one species of property in hats, bazars and melas was expressly excluded from the total vesting of estates in the State, viz., such as had been held on lands to which section 18(1)(a) to (c) ap plied. Section 9, at this stage, needs to be read since it is geared to the nationalisation of zamindaris by providing for settlement, under the State, of some kind 's of landed interests in existing owners or occupiers. Section 9 states: "Private wells, trees in abadi and buildings to be settled with the existing owners or occupiers thereof All wells, trees in abadi, and all build ings situate within the limits of an estate, belonging to or held by an intermediary or tenant or other person, whether residing in the village or not, shall continue to belong to. or be held by such intermediary, tenant or persons, as the case may be,, and the site, of the wells or the buildings which are appurte nant thereto: shall be. deemed to. be settled with him by the State Government on such terms and conditions as may be prescribed" A close up of this section is called for since the basic plank of the defendant 's case is the claim to the whole set of plots as building and appurtenant area of land statutori ly settled with her. If she is such a settlee, the substan tive merit of the plaintiff 's title fails. We will examine this aspect after a survey of the sections relevant to the locus standi of the State is done. So we shift to Chapter VII which relates to Gaon Sabhas vesting by the State of resumed estates in them and the limitations and other conditions to which it is subject. Attributed legal personality by s.3, the Gaon Sabhas are bodies corporate which, under the various provisions of Chapter VII, have been invested with legal viability right to own and hold property, to transfer and otherwise deal with movables and immovables and manage their landed assets through the executive agency of Land Management Com mittees. This comprehensive 'proprietary personality of the Sabha is indisputable but unhelpful for our purpose. 1078 The controversy before us comes into focus when we read section 117 (1), (2) and (6), all the limbs being taken as belong ing to a legally living corporate body. Section 117, cls. (1) and (2), provide: "117. Vesting of certain lands etc., in Gaon Shabhas and other local authorities. (1 ) At any time after the publication of the notification referred to in Section 4, the State Government may, by general or special order to be published in the manner pre scribed, declare that as from a date to be specified in this behalf, all or any of the following things, namely * * * * * (v) hats, bazars and melas except hats, bazars, and melas held on land to which, the provisions of clauses (a) to (c) of sub sec tion (1) of section 18 apply or on sites and areas referred to in section 9, and * * * * * which had vested in the State under this Act shall vest in the Gaon Sabhas or and other local authority established t.or the whole or part of the village in which the said things are situate, or partly in one such local authority (including a Gaon Sabha) and partly in another: Provided that it shall be lawful for the State Govern ment to make the declaration aforesaid subject to such exceptions and conditions as may be specified in the notifi cation. (2) Notwithstanding anything contained in this Act or in any other law ' for the time being in force, the State Government may, by general or special order to be published in the manner prescribed in the Gazette, declare that as from a date to be specified in this behalf, all or any of the things specified in clauses (i) to (vi) of sub section (1) which alter their vesting in the State under this Act had been vested in a Gaon Sabha or any other local authority, either under this Act or under section 126 of the Uttar Pradesh Nagar Mahapalika Adhiniyam 1959 (U.P. Act II of 1959) shall vest in any other .local au thority (including a Gaon Sabha) established for the whole or part of the village in which the said things are situated. " Section 117(6) injects a precarious does into the system of estates vested in Gaon Sabhas by sub s.(1) and goes on to state: "117(6). The State Government may, at any time, by general or special order to be published in the manner prescribed, amend or cancel any declaration or notification made in respect of any of the things aforesaid. ' whether 1079 generally or in the case of any Gaon Sabha or other local authority, and resume such thing and whenever the State Government so resumes any such thing, the Gaon Sabha or other. local authority, as the case may be, shall be enti tled to receive and be paid compensation on account only of the development, if any, effected by it in. or over that thing: Provided that the State Government may, after such resumption, make a fresh declara tion under sub section (1) or sub section (2) vesting the thing resumed in the same or any other local authority (including a Gaon Sabha) and the provisions of sub sections (3), (4) and (5) as the case may be, shall mutatis mutandis, apply to such declaration. * * * * * Before moving further, we may glance at a group of sections which have more than peripheral impact on the legal equation between Government and Sabha visa vis estates vested in the latter by the former. Section 119 carves out a power for the State Government to take away hats, bazars and melas vested in a Gaon Sabha and transfer them to a zilla parishad or other authority. Sections 122A and 122B create and regulate the Land Management Committee which is to administer the estates vested in the Sabha and section 126, quite importantly, gives the power to the State Government to issue orders and directions to the Management Committee. Pausing here for an instant, let us look back on the status of the State which, through its Executive branch, vests a resumed estate in a Gaon Sabha, retaining power, at any time, and without conditions or even compensation (save for actual developmental work done), to divest the land so vested and make it over to another like local authority. In such a situation where the State remains the legal master with absolute powers of disposition over the land vested pro tempore in a particular Gaon Sabha, can it be postulated that it has no legal interest in the preservation of that over which it has continuous power of operation, creation and deprivation? Government, despite vesting estates in Gaon Sabhas on the wholesome political princi ple of decentralisation and local self government, has and continues to have a constant hold on these estates, may be like a brooding omnipotence descending, when it chooses, to take away what it had given possession of to a Sabha. This is plainly present legal interest in Government and a sort of precarium tenans in the Sabha, notwithstanding the illu sory expression 'vesting ' which may mislead one into the impression that an absolute and permanent ownership has been created. An overview of these legal prescriptions, makes one sceptical about the statutory ideology of autonomous village self government since, so far as estates are concerned, these Sabhas have been handcuffed and thrown at the mercy or mood of the State Government. The pragmatics of the Act has reduced Gaon Sabhas to obedient 1080 holders, for the nonce, of the limited bounty of estates vested in them a formal, fickle, homage to article 40 of the Constitution! Shri Shanti Bhushan did draw our attention to certain cousin statutes and other 'remotely related provisions but the soul of his submission does not suffer by their omission in the discussion. We pass on to the spinal issues agitat ed before us. Locus standi The estates first vest in the State. The fulfilment of the purpose of the Act, the setting in which the corner stone for the statutory edifice is laid and the categorical language used, especially 'free from all encumbrances ', leave no doubt in our minds, nor was it disputed before us, that this initial vesting is absolute and inaugurates the scheme of abolition. The consequence of vesting articulated by section 6 only underscore this conclusion. What next ensues. when the State Government, acting under s.117(1), notifies a further vesting in a Gaon Sabha is the cardinal question. Does the State retain a residu ary legal interest, sufficient to make it a 'person ag grieved ', competent to challenge in appeal an adverse de cree? And can the State canvas for the position that a proprietary right persists in it albeit its act of vesting the same estate earlier in a local authority? Does the key word 'vest ' connote and denote divergent things in the same section and Act visa vis Government and the Gaon Sabha? Had drafting skills been better, this unlovely ambiguity could have been avoided. But courts have no choice but to take the text as it is. Zeroing in on the relevant provisions, we are inclined to concur with the High Court. With certi tude one may assert that the State has that minimal interest to follow the proprietary fortunes of the estate so as to. entitle it to. take legal action to interdict its getting into alien hands. The legislative project and the legal engineering visua lised by the Act are clear and the semantics of the words used in the provisions must bend, if they can, to subserve them. To be literal or be blinkered by some rigid canon of construction may be to miss the life of the law itself. Strength may be derived for this interpretative stand from the observation in a recent judgment of this Court(1) "A word can have many meanings. To find out the exact connotation of a word in a statute, we must look to the context in which it is used. The context would quite often provide the key to meaning of the word and the sense it ' should carry. Its setting would give colour to it and provide a cue to the inten tion of the legislature in using it. A word, as said by Holmes, is not a crystal, trans parent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used." (1) Thiru Manickaru & Co. vs The State of Tamil Nadu. [1977] 1 S.C.R. 950. 1081 In the instant case the Act contemplates taking over of all zamindari rights as part of land reform. However, instead of centralising management of all estates at State level, to stimulate local self government, the Act gives an ena bling power not obligatory duty to make over these estates to Gaon Sabhas which, so long as they are in their hands, will look after them through management committees which will be under the statutory control of Government under s.126. Apart from management, No. power is expressly vested in the Sabhas to dispose of the estates absolutely. The fact that as a body corporate it can own and sell property does not mean that the estates vested in a Sabha can be finally sold away, in the teeth of the provisions striking a contrary note. For, under s.117(6), if, for any reasons of better management or other, the State (Government is but the operational arm of the State and cannot, as contended, be delinked as a separate entity, in this context) the. State thinks fit to amend or cancel the earlier vesting declara tion or notification, it can totally deprive the Sabha of, and resume from it, any estate. This plenary power to emasculate or extinguish the Sabha 's right to the estate is tell tale. True, this cut back on the amplitude of the vesting is not an incident of the estate created but is provided for by the Act itself. Even so, we have to envi sion, in terms of realty law, what are the nature and inci dents of the interest vested in the Sabha full ownership divestible under no circumstances or partial estate with the paramount interest still surviving in praesenti in the State ? It is reasonable to harmonize the statutory provisions to reach a solution which will be least incongruous with legal rights we are cognisant of in current jurisprudence. Novelty is not a favoured child of the law. So it is right to fix the estate created by s.117 into familiar moulds if any. Such an approach lends to the position that the vesting in the State was absolute but the vesting in the Sabha was limited to possession and management subject to divestiture by Government. Is such a construction of 'vesting ' in two different senses in the same section, sound ? Yes. It is, because 'vesting ' is a word of slippery import and has many meanings. The context controls the text and the purpose and scheme Project the particular semantic shade or nuance of meaning. That is why even definition clauses allow themselves to be modified by con textual compulsions. So the sense of the situation suggests that in s.117(1) of the Act "vested in the State ' carries a plenary connotation, while 'shall vest in the Gaon Sabha ' imports a qualified disposition confined to the right to full possession and enjoyment so long as it lasts. Lexico graphic support is forthcoming, for this meaning. Black 's Law Die 1082 tionary gives as the sense of 'to vest as 'to give an imme diate fixed right of present or future enjoyment, to clothe with possession, to deliver full possession of land or of an estate, to give seisin '. Webster 's III International Dic tionary gives the meaning as 'to give to a person a legally fixed immediate right of present or furture enjoyment '. The High Court has sought some Engilsh judicial backing(1) for taking liberties with strict and pedantic construction. A ruling of this Court(2) has been aptly pressed into service. There is thus authority for the position that the ex pression 'vest ' is of fluid or flexible content and can if the context so dictates, bear the limited sense of being in possession and enjoyment. Indeed, to postulate vesting of absolute title in the Gaon Sabha by virtue of the declara tion under s.117(1) of the Act is to stultify s.117(6). Not that the legislature cannot create a right to divest what has been completely vested but that an explanation of the term 'vesting ' which will rationalise and integrate the initial vesting and the subsequent resumption is prefera ble, more plausible and better fulfils the purpose of the Act. We hold that the State has title to sustain he action in ejectment. Aside from this stand, it is easy to take the view that the 1st plaintiff is a person I aggrieved and has the competence to carry an appeal against the dismissal of the suit. Of course, he who has a proprietary right, which has been or is threatened to be violated, is surely an 'ag grieved person '. A legal injury creates a remedial right in the injured person. But the right to a remedy apart, a larger circle of persons can move the court for the protec tion of defence or enforcement of a civil right or to ward off or claim compensation for a civil wrong, even if they are not proprietarily or personally linked with the cause of action. The nexus between the lis and the plaintiff need not necessarily be personal although it has to be more than a wayfarer 's allergy to an unpalatable episode. 'A person aggrieved ' is an expression which has expanded with the larger urgencies and felt necessities of our times. Processual jurisprudence is not too jejune to respond to societal changes and challenges: "Law necessarily has to carry within it the impress of the past traditions, the capacity to respond to the needs of the present and enough resilience to cope with the demands of the future. A code of law, especially in the social fields, is not a document for fastid ious dialectics; properly drafted and rightly implemented it can be the means of the order ing of the life of a people. "(3) (1) Richardson vs Robertson (1862) 6 L R 75; & .Hiride vs Chorlton (1866) 2 CP 104, 116. (2) Fruit & Vegetable Merchant 's Union vs The Delhi Improvement Dust, ; (3) Address by Khanna 1. at the Birth Centenary of Sir Tej Bahadur Sapru d/16 10 76 at Allahabad. 1083 The classical concept of a 'person aggrieved ' is delin eated in Re : Sidebotham ex p. Sidebotham (1880 14 Ch.D. 258). But the amplitude of 'legal grievance ' has broadened with social compulsions. The State undertakes today activ ities whose beneficiaries may be the general community even though the legal right to the undertaking may not vest in the community. The State starts welfare projects whose effective implementation may call for collective action from the protected group. or any member of them. New movements like consumerism, new people 's organs like harijan or mahila samajams or labour unions, new protective institutions like legal aid societies operate on the socio legal plane, not to beat 'their golden wings in the void ' but to intervene on behalf of the weaker classes. Such burgeoning of collec tive social action has, in turn, generated gradual processu al adaptations. Test suits, class actions and representa tive litigation are the beginning and the horizon is ex pending, with persons and organisations not personally injured but vicariously concerned being entitled to. invoke the jurisdiction of the court for redressal of actual or imminent wrongs. In this wider perspective, who is a 'person aggrieved '? Dhabolkar gives the updated answer: "The test is whether the words 'person ag grieved ' include a person who has a genuine grievance because an order has been made which prejudicially affects his inter ests '." (p. 315) "American jurisprudence has recognised, far instance, the expanding importance of consumer protection in the economic system and permit ted consumer organisations to. initiate or intervene in actions, although by the narrow rule of 'locus standi ', such a course could not have been justified (see p. 807 New York University Law Review, Vol. 46, 1971). In fact, citizen organisations have recently been compaigning for using legal actions for pro tection of community interest, broadening the scope of 'standing ' in legal proceedings (see p. 403 Boston University Law Review, Vol.51. 1971). In the well known case of Attorney General of the Gambia vs Peirra Sarr N. 'Jie 1961 A.C. 617), Lord Denning observed about the Attor ney General 's standing thus: " . The words 'person aggrieved ' are of wide import and should not be subjected to a restrictive interpretation. They do not in clude, of course, a mere busy body who is interfering in things which do not concern him; but they do include a person who has a genuine grievance because an order has been made which prejudicially affects his interests." (p. 324 325) Where a wrong against community interest is done, 'no locus standi ' will not always be a plea to non suit an interested public body chasing the wrong doff in court. In the case before us, Govern 1084 ment, in the spacious sense of 'person aggrieved ' is comfortably placed. Its, right of resumption from the Gaon Sabha, meant to be exercised in public interest, will be seriously jeopardised if the estate slips into the hands of a trespasser. The estate belonged to the State, is vested in the Gaon Sabha for community benefit, is controlled by the State through directions to the Land Management Commit tee and is liable to be divested without ado any time. The wholesome object of the legislature of cautiously decen tralised vesting of estates in local self governing units will be frustrated, if the State, the watchdog of the whole project, is to be a helpless. spectator of its purposeful bounty being wasted or lost. It must act, out of fidelity to the goal of the statute and the continuing duty to sal vage public property for public use. Long argument is otiose to make out a legal grievance in such a situation of peril and, after all, the star of processual actions pro bono publico has to be on the. ascendant in a society where supineness must be substituted by activism if the dynamic rule of law is to fulfil itself. 'Locus standi ' has a larger ambit in current legal semantics than the accepted, individualistic jurisprudence of old. The legal dogmas of the quiet past are no longer adequate to. assail the social injustices of the stormy present. Therefore, the State, in the present case, is entitled to appeal under section 96 of the Code of Civil Procedure. The second, and from a practical point of view equally potent ground of defence, is that 'appurtenant ' space envelops the whole area around the buildings and the suit for recovery of possession deserves to be dismised in toto. Let us examine this submission. Section 9 of the Act obligates the State to settle (indeed, it is deemed to be settled) with the intermediary certain items in the estate. That provision has been set out earlier. The short enquiry is whether the entire land is 'appurtenant ' to the buildings. The contention of the defendant flows along these lines. The structures accepted by the High Court as 'buildings ' within the scope of section 9 were part of a cattle fair complex. Even the mandir and the oushadalya fitted in to the hat total and the integrity of the whole could not be broken up without violating the long years of common enjoyment. It would also be, a double injury: (a) to the defendant; and (b) to the community. The hat or mela could not be held by the defendant if the land were snatched away and the Government could do. nothing on a land without the buildings belonging to the defendant. Maybe there is some sociological substance in the: presenta tion but the broader purpose of the ' section cannot be sacrificed to the marginal cases .like the. present. The larger objective is to settle with the former intermediary only. such land as is strictly appurtenant to buildings, all the rest going to the State for implementation of the agrarian reform policy. The key to the solution of the dispute lies in ascer taining whether land on which the cattle fair was being held was appurtenant to the buildings or not on the strength of its use for the hat. The Solicitor General made a two pronged attack on the defendant 's proposition. 1085 Firstly, he argued that hats, bazars and melas were a dis tinct interest in the scheme of Indian agrestic life and agrarian law. This right had been virtually nationalised by the Act and only the State or the Gaon Sabha. save where section 18(a) to (c) otherwise provided, could hold a 'fair. A ruling by this Court on an analogous subject lends support to this contention (See State of Bihar vs Dulhin Shanti Devi: AIR 1967 SC 427 relating to Bihar Land Reforms Act). The heated debate at the bar on this and allied aspects need not detain us further also because of our concurrence with the second contention of the Solicitor General that the large open spaces cannot be regarded as appurtenant to the terraces, stands and structures. What is integral is not necesarily appurtenant. A position of subordination, something incidental or ancillary or dependant is implied in appurtenance. Can we say that the large spaces are subsidi ary or ancillary to or inevitably implied in the enjoyment of the buildings qua buildings? that much of space required for the use of the structures as such has been excluded by the High Court itself. Beyond that may or may not be necessary for the hat or mela but not for the enjoyment of the chabutras as such. A hundred acres may spread out in front of a club house for various games like golf. But all these abundant acres are unnecessary for nor incidental to the enjoyment of the house in any reasonable manner. It is confusion to miss the distinction, fine but real. "Appurtenance ', in relation to a dwelling, or to a school, college . includes all land occupied therewith and used for the purpose thereof (Words and Phrases Legally Defined Butterworths, 2nd edn). "The word 'appurtenances ' has a distinct and definite meaning . Prima facie it imports nothing more than what is strictly appertaining to the subject matter of the devise or grant, and which would, in truth, pass without being specially mentioned:Ordinarily, what is necessary for the enjoyment and has been used for the purpose of the building, such as easements, alone will be appurtenant. Therefore, what is necessary for the enjoy ment of the building is alone covered by the expression 'appurtenance '. If some other purpose was being fulfilled by the building and the lands, it is not possible to contend that those lands are covered by the expression 'appurte nances '. Indeed 'it is settled by the earliest authority, repeated without contradiction to the latest, that land cannot be appurtenant to land. The word 'appurtenances ' includes all the incorporeal hereditaments attached to the land granted or demised, such as rights of way, of common . but it does not include lands in addition to that granted '. (Words and Phrase, supra). In short, the touchstone of 'appurtenance ' is dependence of the building on what appertains to it for its use as a building. Obviously, the hat, bazar or mela is not an appurtenance to the building. The law thus leads to the clear conclusion that even if the buildings were used and enjoyed in the past with the whole stretch of vacant space for a hat or mela, the land is not appurtenant to the prin cipal subject granted by section 9, viz., buildings. This conclustion is inevitable, although the contrary argument may be ingenious. What the High Court has grant ed, viz., 5 yards of 1086 surrounding space, is sound in law although based on guess work in fact. The appeal fails and is dismissed but, in the circumstances, without costs. P.B.R. Appeal dismissed. 13.385CI/76 GIPF. INDEX ACCOMPLICE: Whether a pointer an accomplice [See Representation of the People Act.] . 525 ACCUSED PLEADED GUILTY If lesser sentence could be awarded. Murlidhar Meghraj Loya etc. vs State of Maharashtra etc. . 1 ADMISSIONS: admissibility in evidence [See Evidence Act] . 967 ADMINISTRATION OF EVACUEE PROPERTY ACT, 1950 S.40(4) (a) and rule 22 Scope of, section 10(2) (n) out of the funds in his possession meaning of. Custodian of Evacuee Property vs Smt. Rabia Bai . 255 ALTERNATE REMEDY Whether a bar to writ jurisdiction under article 226 of the Constitution under Art 226 of the constitution. . 64 [See Constitution of India, 1950] . 64 ANDHRA PRADESH (ANDHRA AREA) Electricity Supply Undertaking(Acquisition) Act (Andhra 15of 1954), Ss. 5(3)(vi), 6(2)(a) (iii) and 10(2)(b)(iii) Amounts due to undertaking from consumers prior to vesting in State If can be recovered by State from the licence. Vijayawada Municipal Council vs Andhra Pradesh State Elec tricity Board and Anr. . 846 ANDHRA PRADESH GENERAL SALES TAX ACT, 1957 Excise and countervailing duty paid by the buyers directly into the Treasury Neither the invoice nor books of the assessee (manufacturer) show the excise duty Excise duty. If fails under "any sums charge by the dealer" occurring in the definition of "turnover". M/s Mc Dowell & Company Ltd. etc. vs Commercial Tax Office VII Circle Hyderabad etc. APPEAL AGAINST ACQUITT OF AN OFFENCE OF CONSUMING LIQUOR Mem because the High Court took view that a fur ther charge "possession of liquor" she have been framed setting aside the acquittal without find whether the order of acquittal erroneous and ordering re t is bad Bombay Prohibition A 1949 (Bern. XXV Sec. 66(1) r/w Sec. 378 Criminal Procedure Code (Act 11 of 1974) 1973. Patel Jethabhai Chatur vs State of Gujarat , Contract between lay parties not be thwarted by narrow pedal and legalistic interpretatic Intendment of parties regarding validity of arbitraror 's appointment, whether material. Union of India vs M/s D.M. R. &Co . ATTESTING WITNESS [See Succession Act] BENAMI TRAINSACTION Pr of Benami nature. Union of India vs Moksh Buil and Financiers and Ors. BIHAR AND ORISSA EXC ACT, 1951 as amended Amending Acts of 1970 and 1 Ss. 22 and 29 Power of State 2 to auction exclusive privilege to vend liquor Nature of payment received. Lakhan Lal etc. vs The State of Orissa and Ors. BIHAR ELECTRICITY DUTY ACT, 1948 (As amended) S.3(2) (e) Scope of. Damodar Valley Corporation vs State of Bihar and Ors. . 118 HAR LAND REFORMS ACT, 1950 Ss. 4(a) and 10 Lessee of nines If a tenure holder or intermediary under the Act. Sone Valley Portland Cement Co. Ltd. vs The General Mining Synidicate (P) Ltd. 359 BOMBAY INDUSTRIAL RELATIONS ACT, 1946 section 98(1)(a) schedule III item 6(ii) Scope of Workmen laid off Lock out de clared later alleging unruly behaviour Lockout if illegal. priya Laxmi Mills Ltd. vs Mazdoor Maharan Mandal, Baroda . 709 BOMBAY PROHIBITION ACT, 949 (Bom. XXV) Sec. 66(1)(b). [See Appeal against acquittal] . 872 BOMBAY PROVINCIAL MUNICIPAL CORPORATIONS ACT, As applied in Gujarat (Bom. 59 of 1949), S.284N Applicability of .5A, Land Acquirition Act. Farid Ahmed Abdul Samad and Anr. vs The Municipal Corpora tion of the City of Ahmedabad and Anr. . 71 BOMBAY RENT, HOTEL AND LODGING HOUSE RATES ACT, 1947 Sub. Section 13(1)(B) Suit for eviction on the grond of bonafide and personal need of a landlord Whether right to sue survives to his heirs Requirement of firm in which landlord is a partner whether his requirement Whether decree passed in favour of landlord can be disturbed on his death. Shantilal Thakordas and Ors. vs Chimanlal Maganlal Telwala . 341 5(4A) Indian Easements Act 1882 Sec. 52 62(c) Revocation of licence by efflux of time Presiden cy Small Causes Courts Act 1882 Sec. ' 47 Effect of filing of application for eviction Meaning of licence under a Subsisting agreement Interpretation of statutes Practice. D.H. Manjar & Ors. vs Waman Laxman Kudav . .403 BOMBAY VILLAGE PANCHAYAT ACT (BOM. 6 OF 1933) S.89 'House ' if includes 'building '. Tata Engineering & Locomotive Company Ltd. vs Gram Panchay at pimpri Waghere. . 306 BURDEN OF establishing urgency under the . Land Acquisition Act [See Land Acquisition Act] . 763 CENTRAL CIVIL SERVICE (CLASSIFICATION, CONTROL AND APPEAL) Rules, 1965 Scope of Rules applicable only when disciplinary proceedings are taken. Union of India and Anr. K.S. Subramanian . 87 1. 2(b) 9 Andhra Pradesh General Sales Tax Act 1957, Central Government selling foodgrains and fertilisers, whether a dealer Profit motive, if relevant Whether State carried on business. Joint Director of Food, Visakapatham vs The State of Andhra Pradesh. . 59 3 2. section 15(b) Scope of Assessee bought declared goods and paid States Sales Tax Sale by way of inter state sale If entitled to refund of State Sales Tax. Thiru Manickam and Co. vs The State of TamilNadu . .950 3. (74 of 1956) section 8(3)(6) and Central Sales Tax (Regulation and Turnover) Rules, 1957, r. 13Goods used in the manufac ture or processing of goods for sale Scope of Fertilizers used for growing tea plants, if could be included in goods used in the manufacture of tea for sale. Travancore Tea Estates Co. Ltd. vs State of Karnataka & Ors. 755 4. (74 of 1956) S.9(1), proviso Scope of. M/s Karam Chand Thapar and Bros. (Coal Sales) Ltd. vs State of Uttar Pradesh and Ant. . 25 CHARGE Fresh charge on appreciation of evidence can be ordered to be framed by the High Court in exercise of its appellate jurisdiction Criminal Procedure Code (Act. II of 1974), 1973 Secs. 386(a), 464(I) and 462(2)(a). Patel Jethabhai Chatur vs State of Gujarat . 872 CITY OF BANGALORE MUNICIPAL CORPORATION SERVICES (GENERAL) CADRE AND RECRUITMENT REGULATIONS 1971, Reg. 3 'Absorption of Senior Health Inspectors by Corporation contrary to provi sions in Reg. 3 Effect of. C. Muniyappa Naidu etc. vs State of Karnataka & Ors. CITY OF MYSORE IMPROVEMENT ACT, 1903, Ss. 16, 18 and 33(1) Relevant date for determining market value for purposes of compensation, what is. Special Land Acquisition Officer City Improvement Trust Board, Mysore vs P. Govindan. . 549 CIVIL SERVICE 1. Powers of relaxation Whether rules can be made retro spectively Andhra Pradesh State and Subordinate Serv ices Rules 1962 Rule 47 Andhra Pradesh Civil ' Services (Co operation Branch) Government of Andhra Pradesh and Ors. vs Sri D. Janardhana Rao and Anr. 702 2. Seniority Irregular recruitment Regularisation Appointments through Public Service Commission Recruitment through centralised recruitment scheme. P.C. Patel and Ors. vs Smt. T.H. Pathak and Ors. . 677 CODE OF CIVIL PROCEDURE Res Judicata, whether invocable in subsequent stage of same proceedings. Y.B. Patel and Ors. vs Y. L. patil . 320 2. Ss. 79 and 80, suit for compensation against railway administration whether impleading Union of India as a party necessary. State of Kerala vs The General Manager, Southern Railway Madras. . 419 3. S.80 Whether applicable to suits filed under s.9(1) of the (M.P.) Public Trusts Act, 1951. State of Maharashtra & Anr. vs Shri Chartder Kant . 993 4. S.115 Jurisdiction of High Court to interfere with the Trial Court 's discretionary order, when exercisable. 4 M/s Mechelec Engineers & Manu facturers vs M/s Basic Equipment Corporation. 1060 5. (Act 5 of 1908) Order VI r/w Order, XIV, rule 1(5) Courts should not allow parties to go to trial in the absence of proper pleadings. Union of India vs Sita Ram Jaiswal . 979 6. (Act v of 1908) Order V], Rule 17. [See Pleadings] . 728 7. Act V of 1908 Section 11 Principle of res judicata Applicability when gratuity was awarded in a previous proceedings under the Payment of Wages Act i.n the teeth of the clear provision of Rule 8.01 Scope of Rule 8.01. Andhra Pradesh State Road Transport Corporation Hyderabad vs Venkateswara Rao etc. . . 248 CODE OF CRIMINAL PROCEDURE 1908 1. Whether Magistrate has jurisdiction to recall dismissal order made u/s 203 Application for recalling dismissal order, whether amounts to fresh complaint. Bindeshwari Prasad Singh vs Kali Singh . 125 2. S.99 A Scope of Whether 'Statement of grounds ' a mandatory provision. State of Uttar Pradesh vs Lalai Singh Yadav . 616 3. (Act 2 of 1974)Ss. 235 and 465 Scope of. Santa Singh vs The State of Punjab . 229 4. (Act II of 1974), 1973 section 378. [See Appeal against ac quittal] . 872 5. (Act 2 of 1974) S.494 Prosecution applying for with drawal of prosecution Principles to be considered by Court in granting consent. State of Orissa vs Chandrika Mohapalra & Ors. 335 COMPULSORY RETIREMENT Compulsory retirement made in public interest under the Government of lndia Decision No. 23 dated 30th November 1962 below Fundamental Rule 56 (later substituted as a new rule FR 56(i) Mere reference to a non subsisting rule does not invalidate the order when retirement is in public interest and bona fide. Mayconghoan Rahamohan ,Singh vs The Chief Commissioner(Administration) Manipur and Ors. . 1022 2. [see Constitution of India] . 128 CONDONATION OF DELAY in applying for renewal of stage permits under the Motor Vehicles Act. [See Motor Vehicles Act] . 503 CONDUCT OF ELECTION RULES 1961, rr. 42 and 56(6) . Tendered ballot paper, what is and use of. Dr. Wilfred D 'Souza vs Francis Menino Jesus Ferrao . 942 CONSTITUTION OF INDIA 1. article 14 Combines Seniority Scheme introduced by the Reserve Bank of India to equalise opportunities of confirma tion and pro motion of Clerks Some Clerks affected ad versely by unforseen circumstances if violative of equal opportunity clause Right of State to integrate Cadres and lay down principles of seniority. Reserve Bank of India & Ors. N. C. Paliwal & Ors. . 377 5 2. articles 14, 16 Civil Service Seniority Direct Re cruits and promotees Quota Whether roster implicit Bene fit of service Words and Phrases "As far as practicable." N.K. Chauhan and Ors. vs State of Gujarat and Ors. . 1037 3. article 15(4) Reservation of seats for socially and educa tionally backward classes in educational institutions Annual family income test if valid. Kumari K.S. Jayasree and Anr. vs The State of Kerala and Anr. . 194 4. article 19(6)(ii) and 269(g): [See ] . 59 5. article 3IA(1) Second Proviso article 31(b) Meaning of right conferred 9th Schedule Whether different ceiling can be imposed for different persons Whether second proviso to article 31(A)(1) imposed a feter on the legislative competence Gujarat Agricultural Land Ceiling Act 1961 (Gujarat Act 27 of 1961) Section 2 (21), 6. Hasmukhlal Dahayabhai and Ors. vs State of Gujarat & Ors. . 103 6. article 131 Disputes between State and Union Jurisdic tion of High Court Charge of Excise Duty Condition of Whether an article manufactured or produced before the levy is imposed is excisable. Union of India vs State of Mysore . 842 7. article 136 Practice and Procedure Whether a Court of Criminal Appeal Whether can interfere with concurrent findings of fact Interference when grave and substantial injustice. Dalbir Kaur and Ors. vs State of Punjab . .280 8. article 226 High Court if could interefere with the Appellate orders of Income Tax Appellate Tribunal under article 226. Income Tax Officer, Lucknow vs M/s S.B. Singbar Singh and Sons and Anr. .214 9. article 226 When alternative remedies available, whether writ petition maintainable. G. Sarana vs University of Lucknow and Ors. . 64 10. article 226, whether concurrent findings of facts by the Revenue Authorities, can be reopened in writ petition. Y.B. Patel and Ors. vs Y. L. Patil . 32 11. article 235 Disciplinary action over subordinate judiciary Governor If bound by the recommendation of the High Court Consultation with State Public Service Commis sion If warranted by article 235. Baldev Raj Guliani and Ors. vs The Punjab & Haryana High Court and Ors. . 425 12. article 288(2) Scope of. Damodar Valley Corporation vs State of Bihar and Ors. . 118 13. articles 309, 310 and 311 Scope of article 310 Visa Vis articles 309 and 311. Union of India and Anr. vs K. section Subramanian . 87 14. article 311 Termination of services of temporary servant Protection of Article when applicable. State of U. P. vs Ram Chandra Trivedi . 462 15. article 311(2), violation of Penalty of compulsory retirement Hyderabad Civil Service (Classification, Control and Appeal Rules,) reasonable opportunity of defence at the stages of enquiry and punishment 6 Consideration of extraneous matters in recommendation of penalty by High Court Chief Justice, whether valid. State of Andhra Pradesh vs S.N. Nizamuddin Ali Khan . 128 CONTEMPT OF COURT ACT (ACT NO. 70 OF 1971) Ss. 2(b) 10 and 12(1) read with Article 215, Constitution of India Remitting the punishment awarded after accepting the apolo gy, tendered by the contemnor and ordering him to pay the cost of paper books, whether valid Whether endorsing to the Registrar a copy of the wireless message, addressed to the State Counsel for information only amounts to contempt. Arun Kshetrapal vs Registrar, High Court, Jabalpur & Anr. 98 2. 1971, S.19(1)(b) Finding of committal of contempt is basis of acceptance of apology Judge exposing himself to public controversy cannot shelter behind his office. Ram Pratap Sharma and Ors. vs Daya Nand and Ors. CONTRACT OF SALE OF GOODS Whether interstate or intra state Sale. [See sale] . 631 CORRUPT PRACTICE: [See Election] . .490 COSTS: tax matters when there is conflict among High Courts. [See Practice] . 9 , Ss. 28, 131(1)(3) and (5): [See Limitation] . .983 DEALER: Whether Central Government selling foodgrains and ferti lizers a dealer. [See ] . DELEGATION OF POWERS TO OFFICERS for execution of contracts under s.122(1) of Jammu & Kashmir Constitution Contracts containing arbitration clause validity executed on behalf of the Government cannot be questioned on the plea of violation of section 122(1.). Timber Kashmir (P) Ltd. etc. vs Conservator of Forests, Jammu and Ors. . 937 DEVELOPMENT REBATE Whether dividend when withdrawn. [See Income Tax Act] . 638 DIRECTORATE GENERAL OF TECHNICAL DEVELOPMENT (CLASS II POSTS) RECRUITMENT (AMENDMENT) RULES, 1974, Rule 2, inter pretation of whether officer on special duty in the same grade as Development Officers. section Ramaswamy vs Union of India and Ors. 221 DISCIPLINARY ACTION : Over subordinate judiciary by High Court. [See Constitution of India] . DISMISSAL ORDER, recall of [See Code of Criminal Procedure] . 125 DOCTRINE OF WAIVER Bar of waiver, whether applicable to later grievance against 'bias. ' G. Sarana vs University of Lucknow and Ors. ELECTION Representation of the People Act, 1951 Sec. 123(2) Sec. 100(1)(b) Corrupt practice Undue influ ence Conduct of Election Rules 1961 Rules 39(2) Ballot paper containing mark on the reverse of the symbol 7 Can be rejected as invalid Charge of Corrupt practice If of quasi criminal nature Degree of proof Interference with appreciation of evidence by High Court Whether elec tion result can be lightly interfered with. M. Narayana Rao vs G. Venkata Reddy & Ors. 490 ELECTRICITY ACT 1910 Section 22B Electricity Supply Act. 1948 Sections 18, 49 and 79(j) Whether section 49 invalid for excessive delegation Whether Electricity Board can reduce the quota of consumption if the State Government has done so Board having determined the quota, whether can further reduce it Whether Board can fix the quota with out framing regulations Practice and Procedure Whether appellant can be allowed to raise a new question of facts for the first time. Adoni Cotton Mills etc. vs The Andhra Pradesh State Electricity Board and Ors. .133 EMPLOYEES ' STATE INSURANCE ACT, 1948 Sec. 61 If debars grant of sick leave If the Act deals with all aspects of sickness. The Alembic Glass Industries Ltd. Baroda and Ors. vs The Workmen and Ors. 80 ESCAPED ASSESSMENT [See Income Tax ] . 207 ESTATE DUTY ACT (34 of 1953) 1. Ss. 2(15), 9 and 27 Scope of. Controller of Estate Duty, Gujarat vs Shri Kantilal Trikam lal . S.5 Land covered with wild. and natural forest growths of agricultural land. Controller of Estate Duty, Kerala v V. Venugopala Verma Rajah . 346 3. S.10 Gift of property the deemed to be part of the State of deceased doner. Controller of Estate Duty, Keral vs M/s R.V. Vishwanathan and Ors. . 64 EVIDENCE ACT (1 of 1872) 1. Ss. 17 and 33 Evidence of admission Admissibility. Union of India vs Moksh Builder and Financiers and Ors. . 96 2. S.43 and Code of Civil Procedure (Act 5 of 1908) 0.41 r. 2 Admission of Judgments in land acquisition preceedings an additional evidence. The Land Acquisition Officer, City Improvement Trust Board vs H. Narayaniah etc. 3. S.68 Discharge of onusproban by propounder when execut ic of will surrounded by suspicious circumstances. Seth Beni Chand (since dead) no by 1. rs. vs Smt. Kamla Kunwar and Ors. . 57 4. 116 Whether tenant cadeny the landlord 's title. Sri Ram Pasricha vs Jagannat and Ors. FINAL LIST, when may be set asid by Court. Union of India vs Dr. R.D. Nanjia and Ors. FINDINGS OF FACT [See Constitution of India] . 32 FIRST INFORMATION REPORT delay in lodging. [See Penal Code] . 280 FUNDAMENTAL RULE 56(j): [See Compulsory retirement] . 1025 GENERAL CLAUSES ACT 189 ' Section 3(42) Meaning of per son Whether legislatur 8 bound to follow definition in General Clauses Act. Hasmukhalal Dayabhai and Ors. vs State of Gujarat and Ors. etc. . 103 OLD CONTROL RULES, 1963, whether includes smuggled gold within their ambit. Triveni Prasad Ramkaran Verma State of Maharashtra . 519 GRATUITY, entitlement to whether a former employee of he Nizam 's State Railway can claim gratuity aS of right in addition to provident Fund Government of Hyderabad Railway establishment Code, 1949, Rule . 01, 8.02, 8.05, 8.12, 8.13, .15, 8.16, 8.17 and 8.19 read with para 17 Chapter VII interpretation of. Andhra Pradesh State .Road Transport Corporation, Hyderabad vs Venkateswara .Rao. GUJARAT MUNICIPALITIES 1963, section 38 (10)(b)(i) "act as Councillor" ScoPe of President of the Municipality applying or lease of land If debarred taking land on lease General power of supervision conferred on the President If resident should be deemed to have acted within the meaning of 38(1)(b)(i) when lease was ranted to him by the Chief officer. Rustamji Nasorvanji Danger vs shri Joram Kunverji Ganatra and Ors. . 884 HINDU LAW If a co widow can relinquish ght of survivorship Whether after relinquishment, a widow an dispose of property by will. Rindumati Bai vs Nrarbada ' Prasad . .988 RELIGIOUS ENDOWMENT Hindu temple forming part of a Jain Institution When may be treated as a Hindu religious endow ment. Commissioner of Hindu Religious & Charitable Endowments Mysore vs Sri Ratnavaram Heggde (deceased) by 1. .889 IDENTIFICATION PARADE: [See Penal Code] . 280 INCOME TAX ACT 1922 1. S.2.(4) When can single and isolated sale be a busi ness transaction within the meaning of Onus probandi on the Taxation Department Initial purchase with intention of advantageous sale Earning profit on delivery of goods not necessary. Dalmia Cement Ltd., vs The Commissioner of Income Tax, New Delhi. . 5 54 2. (11 of 1922) Ss. 2 (6A)(e) 'and 10(2) (vi b) Development rebate treated as accumulated profits Withdrawal of amount by shareholder from Company 's account if withdrawal can be treated as dividend since amount withdrawn is within accumulated profits. P.K. Badiani vs The Commissioner of Income Tax, Bombay . .638 3. S.9 Irrevocable rent If could be deducted from income from property of only one year Exemption If could be given only once. Commissioner of Income Tax, Lucknow vs Shri Madho Parsad Jatia. . 202 2(1) to Sec. 23A(1) Meaning of investment Companies, whether restricted to shares stocks and other securities or used in contradistinction with manufacturing processing and trading operations Indian Companies 87(f) Companies Act 1956 Sec. 372(11). Nawn Estates (P) Ltd. vs C.I.T., West Bengal . 798 5. 23A and 35(1) Whether income tax officer has power under section 35(1) to rectify an order passed under section 23A. Commissioner of Income Tax, Kanpur. vs M/s. J.K. Commercial Corporation Ltd. etc. 512 for partition and disruption of the Hindu Undivided family disallowed by I.T.O. Appeal under the Act filed against the orders of. I.T.O. also dis missed No reference under the Act challenging the Tribu nal 's order dismissing the appeal was taken, but subse quentiy got a preliminary decree for partition passed by the civil court during the pendency of the apPeal Whether t he Income Tax Authorities are bound by the subsequent parti tion decree of the civil court. Narendra kumar J. Madi vs Commissioner of Income Tax, Guja rat 11, Ahmedabad . 112 7. Ss. 34 and 42, Income Tax Act (43 of 1961) section 147 and Income Tax Rules, 1922, r. 33 corresponding to r. 10 of 1962 Rules One 0 f t he met hods mentioned in corresponding to r. 10 of 1962 Rules One of the methods mentioned in r. 33 applied for assessment Higher tax liability if another method in rule adopted If a case of income escaping as sessment. Commissioner of Income Tax, West Bengal 1, Calcutta vs Simon Carves Ltd. 207 8. section 5(2) Non resident company receiving income outside India Income if accrued in India. 84SCI/77 The Performing Right Socio)Ltd. & Anr. vs The Commr. Income Tax and Ors. . 1 INDUSTRIAL DISPUTES A( 1907 Sec. 2(00) Meaning of trenchment Can termination service by efflux of time cover by the expression retrenchment Hindustan Steel Ltd. vs The p siding Officer, Labour. Court Orissa and Ors. . 6 legal practioners can appear before the Tribunal Whether Secs. 36(1) an 36(2) is controlled by section '36(4) Pradip Port Trust, Pradip Their Workmen . 5 INTER STATE SENIORITY [See State 's Reorganisation Act] . INTERPRETATION 1. Amendment of a section could be used to interpret earlier provision in the Act. Sone Valley Portland Cem Co. Ltd. vs The General Mini Syndicate (P) Ltd. 3 2. "Refund meaning of Subsequent amendment of Section If could. be used to interpr earlier ambiguous provision. Thiru Manickam & Co. vs Sic of Tamil Nadu . 9 3. "should" contained in a clause "should" possesses a post graduate degree and requist experience whether mandato ry or directory "Post gradual Meaning of. Juthika Bhattacharya The State of Madhya prad and Ors. . 4 4. Contract of. [See ] INTERPRETATION OF DOCUMENTS Principles application 10 to interpretation of document Notifications Nos. F. 9/5/59 R & S published in gazette dt. 17 1 60 u/s 507 of the Delhi Municipal Corporation Act, 1957 (66 of 1957) and Notifica tion GSR 486 u/s 1(2) of Delhi Rent Control Act, 1958 (59 of 1958) gazetted on 21 4 62 Whether the whole of Mauza Chowkri Mubarakbad and whole of Onkar Nagar and Lekhpura were meant to be notified. Jangbirv. Mahavir Prasad Gupta . 670 INTERPRETATION OF STATUTES [See Bombay Rents/ Hotel and Lodging House Rates Control Act, 1947] . Estate Duty Act and other taxing statutes Principles. Controller of Estate Duty, Gujarat vs Shri Kantilal Trikam lal Expressions not being terms of art whether to be construed in technical sense or ordinary popular sense as used by businessmen Legislative history as guide to construction Genesis and development of law as key to interpretation Whether English decisions useful guides or construction of analogous provisions, fundamental concepts and general principles. Nawn Estates (P) Ltd. C.I.T., West Bengal . 798 Provision in Act substituted by another Amending provision avoid Effect. State of Maharashtra vs The Central Provinces Manganese Ore Co. Ltd. 1002 Rules as an aid Use of Statement of objects and reasons. Tata Engineering & Locomotive Company Ltd. vs Gram Panchayat Pimpri Waghere. . 306 6. Statute when retrospective. K. Eapen Chacko vs The Provident Investment Co. P. Ltd. 1026 7. When a statute could be read retrospectively. State of Kerala vs philomina etc. & Ors. . 273 JAMMU & KASHMIR CONSTITUTION, section 122 [See Delegation of Powers] . 937 Admission of judgments in Land Acquisition proceedings. [See Land Acquisition] . 178 JURISDICTION 1. of High Courts to interfere with the trial Court 's discretionary order. [See C.P.C.] . 1061 2. of High Court under article 226 to interfere with orders of the Income Tax Appellate Tribunal. [See Constitution of India ] . 214 KARNATAKA LAND REFORMS ACT, 1961, Ss. 107 and 133 'Whether applicable to land unauthorisedly held after expiry of lease. Corporation of the City of Bangalore vs B.T. Kampanna . KARNATAKA RECRUITMENT OF GAZETTED PROBATIONERS (Class I and 11 Posts appointment by competitive examination) Rules, 1966 R. 9 read with Part IV of Schedule II Scope of Awarding block marks in interview If violative of the Rule. State of Karnataka and Anr. vs M. Farida & Ors. . 323 KERALA LAND REFORMS ACT 1. 1963 section 84 Scope of interpretation When a statute could be read retrospectively. 11 State of Kerala and Ors. vs Philomina etc. and Ors. . 273 2. 1964 Secs. 81, 83, 84, 85, 85A and 86 Voluntary trans fers made after notified date whether valid. State of Kerala and Ors. vs K.A. Gangadharan . 960 3. (Kerala 1 of 1964) as amended in 1969 and 1971, Secs. 3(1), 50A, 52, 73, 108, 125 and 132(3) Scope of. K. Eapen Chacko vs The Provident Investment Co. P. Ltd. 1026 LAND ACQUISITION ACT 1. City of Bangalore Improvement Act, 1945, Ss. 16, 18 and 27 Notification under Ss. 16 and 18 on different dates Date for determining market .value for awarding compensation for acquisition of land. The Land Acquisition Officer, City Improvement Trust, Board vs 11. Narayaniah etc. 178 Ss. 5A, 6 and 17(4) Burden of establishing urgency On whom lies. Narayan Govind Gayate etc. vs State of Maharashtra . 763 3. (1 of 1894) s.6A If mandatory Effect of non compliance in case of beneficial schemes. Farid Ahmed Abdul Samad and Anr. vs The Municipal Corpn. of the City of Ahmedabad and Anr. LEGAL ENTITY [See Railways Act, 1890] . .419 LIMITATION 1. for rectification under the U.P. Sales Tax Act, 1948, section 22. [See U.P. Sales Tax Act, 1948] . Period of limitation in respect of suo moto revision by Central Government to annul or modify any order of erroneous refund of duty when begins Customs Act, , 131(1)(3)(5) scope of. Geep Flashlight Industries Ltd. vs Union of India & Ors. .983 LIMITATION ACT 1. 1963 Ss. 5 and 29(23) If applicable. Mohd. Ashfaq vs State Transport Appellate Tribunal M.P. and Ors. 563 2. whether applicable to revision petitions filed under section 10, U.P. Sales Tax Act. Time spent in obtaining second copy of. impugned order, whether to be excluded in computing limitation period for filing revi sion petitions. Commissioner of Sales Tax, U.P. vs Madan Lal and Sons Ba reilly. MADHYA pRADESH MUNICIPAL CORPORATION ACT 1956Sec. 138(b) Madhya Pradesh Accommodation Control Act Sec. 7 Must rental value under the Municipal Act follow the standard rent under Accommodation Control Act When premises let out When used by owner. Municipal Corporation, Indore, and Ors. vs Smt. Ratna Prabha ana Ors. . 1017 MADHYA PRADESH PUBLIC TRUSTS ACT 1951s. 9(1): [See Code of Civil Procedure] . 993 MADRAS GENERAL SALES TAX ACT 1959, Schedule 11, items 7(a and (b) If ultra vires. M/s. Guruviah Naidu and Sons etc vs State of T.N. and Anr. State Government reserved certain areas for exploitation of minerals in public sector If had the power to do so. State Governments If could reject application of private persons. Amritlal Nathubhai Shah and Ors. vs Union Government of India and Anr . 372 2. S.30A Scope of. State of Bihar and Anr. vs Khas Karampura Collieries Ltd. etc. 157 , Entry 22 Explanation of Schedule, construction of word includes Whether ,potteries Industry includes manufacture of Mangalore pattern roofing tiles. The South Gujarat .Roofing Tiles Manufacturers Associations and Ant. vs The State of Gujarat and Anr . 878 MONOPOLY OF BUS ROUTES Whether permitting the existing private operators to operate till the date of expiry of their permits creates a monopoly. Sarjoo Prasad Singh vs The State of Bihar and Ors. 661 MOTOR VEHICLES ACTS 1939 1. section 43(1) State Government can direct imposition of fiscal rates on stage carriage operators for carrying mails as condition of permit Ss. 48(3) and 59(3)(c) such direc tions do not interfere with quasi judicial functions of Regional Transport Authority. Special provisions of section 48(3) (XV) do not override general provisions of section 43(1)(d)(1). Sree Gajana Motor Transport Co. Ltd. vs The State of Karna taka and Ors. . 665 Motor Vehicles Rules, 1951 Rule 108(c) Whether considerations in Sec.47 for grant of stage permits to be mentioned in the order. Ikram Khan vs State Transport Appellate Tribunal and Ors. . 459 3. S.58(2) proviso Delay in.applying for renewal of exist ing permit If could be condoned Chapter IVA If a self contained code Renewal application under section 68F(ID) Whether section 57 applicable. Mohd. Ashfaq vs State Transport Appellate Tribunal U.S. and Ors. 563 of 'Whether there should be a finding on each and every separate objection raised. Sarjoo prasad Singh vs The State of Bihar and Ors. 661 MURDER: Distinction between S.299 and 300 I.P.C. [See Penal Code] . 601 NECESSARY PARTY: [See Civil Procedure Code] . 419 NEW CASE Courts ' Whether can make a [See Partnership Act] . 583 NEW DELHI HOUSE RENT CONTROL ORDER 1939 C1. Standard rent of house fixed in 1944 Rateable value enhanced on the basis of rent received in 1966 Whether rating should be correlated to actual income. New Delhi Municipal Committee vs M.N. Soi and Anr. NEW PLEA [See Adoni Cotton Mills vs Andhra Pradesh State Elec tricity Board] . 133 NOLLES PROSEQUE: Principle to be followed by court (See Criminal Procedure Code Act 2 of 1974) . .335 13 OTHER RIGHTS in Explanation 2 to section 2(15) meaning of. Controller of Estate Duty, Gujarat vs Shri Kantilal Trikam lal . 9 PARTNERSHIP ACT Whether mandatory Whether suit can be filed by unregistered firm Dissolution of firm Suit by a 'partner of erstwhile unregistered firm, If other partners of erstwhile firm necessary parties Materi al alterations in a document Effect of Suit for Specific and ascertained amount Whether court can make out new case and grant partial relief on another basis. Loonkaran Setia etc. vs Ivan E. Johan and Ors. . 853 PENAL CODE S.34 Specific evidence for infliction of fatal wound not required Community of intent with participatory presence fixes constructive liability. Harshadsingh @ Baba Pahalvansingh Thakura vs The State of Gujarat . 626 2. Ss. 299 and 300 Culpable homicide not amounting to murder and murder Distinction Tests to be applied in each case S.300 Thirdly I.P.C. Scope of. State of Andhra Pradesh vs Rayavarapu Punnayya and Anr. .601 3. Section 302 Non examination of eye witnesses Interest ed witnesses Meaning of Necessity of examining independent witnesses Motive Delay in lodging F/R and despatch to Magistrate Identification parade, necessity of. Dalbir Kaur and Ors. vs State of Punjab . 280 PLEADINGS 1. Amendments to Amendment to the pleadings to introduce an entirely different case, under the guise of permisible inconsistent pleas which is likely to cause prejudice to the other side cannot be allowed Civil Procedure Code (Act V of 1908) Order VI Rule 17. M/s Modi Spinning and Weaving Mills Co. Ltd. and Anr. vs M/s Ladha Ram and Col . .728 2. Under section 70 of the Contract (Act 9) of 1872 Ingre dients necessary to be pleaded. Union of India vs Sita Ram Jaiswal. . 979 POSSESSION "Possession" to attract criminal liability must be "conscious possession". Patel Jethabhai Chatur vs State of Gujarat . 872 POWERS OF OFFICER to rectify an order passed u/s 23A [See Income Tax Act] . 512 POWER TO AUCTION exclusive privilege to vend liquor [See Bihar and Orissa Excise Act. .811 PRACTICE 1. Costs in tax matters when there is conflict among High Courts Controller of Estate Duty, Gujrart vs Shri Kantilal Trikamalal . 2. Duty of High Court when there is conflict between deci sions the Supreme Court Upsetting concurrent findings of fact second appeal Propriety. State of U.P . vs Ram Chandrs Trivedi . 46: 3. Duty of High Court where there, is conflict between the view expressed by Divisional bench and larger benches of the Supreme Court. Union of India and Anr. K.S. Subramanian. Non suiting for want of proper pleadings at the appellate stage by the Supreme Court when parties went to trial and issues were raised and the litigation went through the course of trial and appeal is not desirable. Union of India vs Sita .Ram Jaiswal . 979 5. Supreme Court will not entertain a complaint on facts and interfere with a finding of facts by the appellate Court under Article 136 of the Constitution of India. Patel Jethabhai Chatur vs State of Gujarat . 872 PRACTICE AND PROCEDURE 1. Further plea taken in the affidavit rejoinder to the writ petition shall not be allowed to be agitate Sarjoo Prasad Singh vs The State of Bihar and Ors. 861 2. High Court 's duty to give reasons even in cases of sum mary dismissal. Shankar Gopinath Apte vs Gangabai Hariharrao Patwardhan . 411 3. Interference with findings on reliability of evidence only in exceptional circumstances. Harshadsingh@ Baba pahalvansingh Thakur vs The State . 626 5. Re appraisal of evidence by Supreme Court in spite of concurrent findings of fact, proper when miscarriage of justice has occurred. Mohammad Aslam vs State of Uttar Pradesh . 689 Whether High Court can direct a Minister to be impleaded as a party and file his personal affidavit. State of Punjab ana Anr. vs Y.P. Duggal and Ors. . 96 PREVENTION OF CORRUPTION ACT, and 5(1)(d) Sec. 5(2) Misappropriating Govt. funds. Retaining Govt. Funds by a Govt. Servant Evidence Act, Sec. 154 When can witness be declared hostile Can evidence of a hostile witness be accepted Evidence Act Sec. 105 Onus of proving exceptions in IPC on accused Degree of proof Criminal Trial Effect of non examination of materi al witness Conviction on evidence of a solitary witness Whether adverse inference can be drawn against accused for not leading evidence Onus of prosecution Pre sumption of innocence. Rabindra Kumar Dey vs State of Orissa . .439 PREVENTION OF FOOD ADULTERATION ACT 1910. 1. section 16 Proviso Scope of. Murlidhar Meghraj etc. vs State of Maharashtra etc. . 1 2. sec. 16(1) (a) (2) (1) 2(1) (c) 2(1) (j) 2(1) Preven tion of Food Adulteration of Rules. Rules 23, 28 and 29 Can conviction be based on sole testimony of Food Inspector Can an article fail under clause (j) and (i) of Sec. 2(i) Are they mutually exclusive or overlapping When rules are silent about colouring material can use of dye be punished Do provisions of Probation of Offenders Act apply to offences under the Prevention of Food Adulteration Act. Prem Ballab and Anr vs The State (Delhi Admn.) . 592 PRIVITY OF CONTRACT When a company has severa branches and there is a contract between the buyer and one of the branches, the contract of sale is between the company and the buyer. English Electric Company of India 1Ltd. vs The Deputy Commercial Tax Officer and Ors. . 631 15 PROBATION OF OFFENDERS ACT, 1958 Applicability to cases under POFA [See Prevention of Food Adulteration Act, 1950] . 59 PROCEDURE When a court of appeal can interfere in the lower court 's Judgment. Padma Uppal etc. vs State of Punjab and Ors. . 329 PROMOTIONS Right to promotion Whether promotion of class III employees to Class is governed by "Advance Correction Slip No. 7)" introducing w.e. f. March, 11, 1973, new rules 324 to 328 and substituting a new rule 301 in Chapter III of the Indian Railway Establishment Manual Scope and applica bility of Rules 301 and 328 (2) (4) and (5) S.K. Chandan vs Union of India and Ors. . 785 PROPERTY right to dispose of by will by a widow [See Hindu Law] . PROVIDENT FUND Illegal payment of gratuity in the past will not affect legal claims to Provident Fund. Andhra Pradesh State Road Transport Corporation, Hyd. P. Venkateswara Rao etc. 248 PUNJAB GENERAL SALES TAX ACT (Punjab Act 46 of 1948), section 11(2) Notice under Whether should be issued within a par ticular period. The Indian Aluminium Ltd. & Anr. vs The Excise and Taxa tion Officer and Anr. .716 PUNJAB CIVIL SERVICE RULES, Vol. 1 Rules 2.49 and 3.10 to 3.16 Junior Vernacular Cadre teachers officiating in senior vernacular cadre enti tled to benefit of their substantive post . State of Punjab and Ors. v, Labh Ram and Ors. . 832 RAILWAYS ACT, 1890 section 3(6), Railway Administration, whether a separate legal entity. State of Kerala vs The General Manager. S.R. Madras . .419 RAILWAYS ESTABLISHMENT CODE Para 157 Whether the para graph empowers the Railway Board to make rules for the gazetted Railway servants Construction of para 157. S.K. Chandan vs Union of India and Ors. 785 RAILWAY ESTABLISHMENT MANUAL Whether Rule 328 (2) providing for the invalidity of promotions made in the Diesel Locomotive Works from August 1, 1961 to March 11, 1973 casts an obligation on the Railway Board to recall all promotions and to form a fresh panel Meaning of "Promotion made in the Diesel Locomotive Works in Rule 328 (2) and promotion to the higher grades in Rules 328(4)". S.K. Chartdan vs Union of India and Ors. .785 RATEABLE VALUE (See New Delhi House Rent Control Order) . 731 REAPPRAISAL of Evidence by Supreme Court. (See Practice and Procedure) . 689 REASONABLE OPPORTUNITY See Constitution of India . 128 2. to be heard. (See State 's Reorganisation Act) . .827 REHABILITATION ACT, 1954 section 14(1) (b) "Such cash balances Meaning of. 16 Custodian of Evacuee Property, vs Smt. Rabia Bai . .255 . Election petition Not accompanied by impugned pamphlet If liable to be rejected Printer If could be called an accom plice Failure to send pamphlet to District Magistrate as required by section 127 A(2) If makes the printer an accom plice. Thakur Virendra Singh v . Vimal Kumar . 525 See. 15, 21, 22, 23"Preparation and revision of electoral roll Amendment, transposition or deletion of entries in electoral roll Provision of Sec. 23, if mandatory Repre sentation of the People Act, 1951 Every person on elec toral roll whether entitled to vote even if name not brought in accordance with law Sec. 100(1) See. 123(1) (A) Bribery Proof of Quasi criminal in nature inter ference with appreciation of evidence by High Court, Bihar and Orissa Act, Ramji Prasad Singh vs Ram Bilas Jha and four Ors. .741 . section 9A Contract signed as President, Gram Panchayat Rejection of nomination paper If valid Improper rejection If courts could give relief under section 100(1) (c). Jugal Kishore Patnaik vs Ratnakar Mohanty . Incurring expenses in excess of what is per missible Interference by this Court with appreciation of evidence by High Court. Nangthomban Ibomeha Singh vs Leisanghem Chandramoni Singh and Ors, . 573 RES JUDICATA. (See Civil Procedure Code). 320 RETRENCHMENT Meaning of (See industrial Disputes Act) . 586 RETROSPECTIVITY. service rules. (See Civil Service) . REVISION suo moto limitation for (See Limitation) . 983 RIGHT OF MANAGEMENT Hindu Law Joint Hindu Undivided family Whether a junior member of the family can act as Karta with the consent of all the other members, if the senior member gives up his right. Narendra Kurnar J. Modi vs Commissioner of Income Tax Gujarat 11. Ahmedabad . 112 RIGHT TO PLEAD by legal Practitioners before the Labour Tribunal. (See IndustriaI Disputes Act). 537 RIGHT TO SUE by the heirs (See Bombay Rents Hotel and Lodging House Rates Control Act, 1947) . 341 RIGHT TO SUE for eviction by a co owner. (See West Bengal Premises Tenancy Act, 1956) . SALE Contract for sale of goods, whether inter State sale or intraState sale Ingredients Central Sales Tax Act Section 3(a). English Electric Company of India Ltd. vs The Deputy Commercial Tax Officer and Ors. . 631 SALES REORGANISATION ACT (37 of 1956) section 115 Oppertunity to hear after final inter state seniority list is prepared 17 after giving opportunity to aggrieved officers to make representation against provisional list If should be given. Union of India vs Dr. R.D. Nanjiah and Ors. 827 SALES TAX Central Provinces Bear Sales Tax Act, 1947 section 2(g) Expln. II Goods within States at the time of contract of sale, mixed up outside state and the mixture sold 'sale ' if taxable. State of Maharashtra etc. vs Central Provinces Manganese Ore. Co. Ltd. 1002 2. Supply of crude oil by Oil and Natural Gas Commission from Assam to refinery of Indian Oil Corporation in Bihar Supply under directions of Government at price fixed, by Government If inter state sale liable to Central Sales Tax. Oil and Natural Gas Commission vs State of Bihar and Ors. 364 SECOND APPEAL 1 Disturbance of concurrent finding of fact without consid ering the objects of the notification or discussing any principle of construction of documents which could indicate that a point of law had really arisen for a decision is patently exceeding the jurisdiction of the High Court Civil Procedure Code (Act V) 1908, section 100. Jangbir vs Mahavir Prasad Gupta . 670 2. Propriety of upsetting concurrent findings in (See Practice) . 462 SENIORITY 1. Direct recruits of Promotees. (See Constitution of India) . 1037 2. When recruitment irregular. (See Civil Service) . 677 SENIORITY SCHEME Right of State to lay down principles of seniority (See Constitution of India) . 377 SENTENCE Judicial Jurisdiction to soften the sentence in economic crimes and food offences. (See ) . 1 SICKNESS BENEFIT (See ) . 80 SOLE WITNESS conviction based on (See Prevention of Corruption Act) . SPECIAL RULES 1962 Rule 4. Government of A.P. and Ors. vs Shri D. Janardhana Rao Anr. . 702 SUCCESSION ACT, 1925 Sec. 6" legal will Genuineness of Suspicious circumstances Burden of proof Degree of proof. Jaswant Kaur vs Amrit Kaur and Ors. . 925 2. 1975, section 63 (c), Attesting witness defined. Seth Beni Chand (Since dead now by 1. rs. vs Smt. Kamh Kunwar and Ors. . 578 SUMMARY DISMISSAL Court 's duty to give reasons. (See Practice and Procedure) . .411 SUSPENDED OFFICER REINSTATED AND LATER COMPULSORILY RETIRED Effect of If order of suspension merge with order of reinstatement. Baldev Raj Guliani and Ors. vs The Punjab & Haryana High Court and Ors, . 42 18 SUSPENSION ORDERS Whether merges with order of Retirement (See Suspended Officer) . .425 TERMINATION of services of temporary servants. (See Constitution of India) . 462 TRANSFER OF PROPERTY ACT (4 of 1882) section 53A, Indian Easements Act (5 of/882) section 60(b) and Indian Contract Act (9 of 1872) section 221 Scope of. Shankar Gopinath Apte vs Gangs bai Hariharrao Patwardhan . 411 U.P. INTERMEDIATE EDUCATION ACT, 1921 Whether the basic section of a college is within the scope of. Commissioner, Lucknow Division and Ors. vs Kumari Prem Lata Misra. 957 U.P. SALES TAX ACT, 1948 section 3 A, Notification issued under Rule for constructing words Whether carbon paper is taxable as 'Paper ' Whether ribbon is accessory or part of typewriter. State of Uttar Pradesh vs M/s Kores (India) Ltd. 837 section 22 Order of rectification passed within 3 years of orginal order, but served beyond 3 years /f barred by limitation. M/s Karam Chand Thapar and Bros. (Coal Sales ) Ltd. vs State of U.P. and Anr. . 25 U.P. ZAMINDARI ABOLITION AND LAND REFORMS ACT, 1950, Section 117 Scope of State vests lands in Gaon Sabha Suit for eject ment .Goan Sabha did not appeal State If had locus standi. Maharaj Singh vs State of Uttar 5. Pradesh and Ors. 1072 UNION AND STATE DISPUTES (See Constitution of India) . 842 VOLUNTARY TRANSFERS (See Kerala Land Reforms Act) . .960 WEALTH TAX ACT (27 of 1957) S.2(e)(i) Agricultural Lands, What are Tests for determining. Commissioner of Wealth Tax, A.P. vs Officer in charge (Court of Wards ) Paigah. . 146 WEST BENGAL PREMISES TENANCY ACT (f) Whether one of the co owners can file suit for eviction without impleading other co owners Whether a co owner, an owner for the purpose of an eviction suit Stage for raising objection about frame of suit. Sri Ram Pasricha vs Jagannath and Ors. 395 WILL genuineness of legal will degree of proof. (See Succession Act, 1925) . 925 WORDS AND PHRASES 1. "As far as Practicable" (See Constitution of India) . 1037 2. "House, if it concludes buildings". (See Bombay Village Panchayat Act) . 306 3. "Other rights" in Explanation 2 to section 2(15) of the Estates Duty Act, meaning of. (See "Other rights") . 9 4. "Out of the funds in his possession" and "such cash balances". Meaning of Custodian of Evacuee Property vs Smt. Rabia Bai . .255 5. See "Person" meaning of General Clauses Act) . 103 19 6. "Post graduate" Meaning of (See Interpretation) . .477 7. "restoration" in Section 70 of the Contract Act, meaning of. union of India vs Sita Barn Jaiswal . 979 8. "Substituted" meaning of. State of Maharashtra etc. vs The General Provinces Manganese Ore. Co. Ltd. 1002 9. Vest Persons aggrieved Appurtenance meaning of. Maharaj Singh vs State of Uttar Pradesh and Ors. 1072 WRIT JURISDICTION High Court cannot interfere with a finding .of fact based upon relevant circumstances and when it is not shown to be perverse The Constitution of India, Article 226. Khazan Singh Ors. vs Hukan Singh and Ors. . 636 WRIT JURISDICTION OF THE HIGH COURT Scope for interference with findings of depart. mental authorities. Mis Khushiram Behari Lal and Co. vs The Assessing Authority Sangrur Anr. . 752 M 184 SCI/77 2500 9 8 77 GIPF.
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According to section 4 of the U.P. Zamindari Abolition & Land Reforms Act, 1950, all rights and ownership of land were given to the State. This included rights held by landlords in estates, markets, and fairs. Section 9 says that wells, trees near houses, and buildings on an estate that belonged to a landlord would still belong to them. The land where these buildings were located would be considered settled with the landlord by the State Government. Section 117(1) allows the State Government to give land to village councils (Gaon Sabhas) or other local groups. Section 117(6) gives the State Government the power to take back land from a Gaon Sabha that was previously given to it. Following section 117(1), the State Government gave the land in the village to the Gaon Sabha. The defendant, who used to be the landlord, was running a cattle fair on the disputed estate. There were also some buildings on the estate. The plaintiffs, which are the State and the Gaon Sabha, sued to remove the defendant from the estate, but the trial court dismissed the case. The Gaon Sabha did not appeal the decision. However, the State appealed to the High Court as someone who was "aggrieved" (negatively affected). The High Court rejected the defendant's arguments that the State Government had no right to appeal because the land was given to the Gaon Sabha under section 117(1), and that the State was not an "aggrieved person." However, the High Court allowed the defendant to keep the buildings and a 5-yard space around each building. The appeal was dismissed. HELD: (1) The State has the right to sue to remove the defendant. Even after giving the estates to Gaon Sabhas, the government still has control over them. It can take back what it gave to a Gaon Sabha. This shows that the government has a "present legal interest" in the estates, and the Gaon Sabha has a temporary right to them. (a) The Act aims to take over all landlord rights as part of land reform. Instead of managing all estates at the State level, the Act allows these estates to be given to Gaon Sabhas. The Sabhas are given the power to manage the estates, but not to sell them completely. If the State wants to change or cancel the earlier decision to give the estate to the Sabha, it can take the estate back. The State has complete ownership, but the Sabha only has the right to possess and manage the estate, which can be taken away by the government. The word "vest" (give ownership) can have different meanings in the same section. In section 117(1), "vested in the State" means complete ownership, while "shall vest in the Gaon Sabha" means a limited right to possess and enjoy the land as long as it lasts. If the Gaon Sabha had complete ownership under section 117(1), section 117(6) would not make sense. (b) The State is an "aggrieved person." Someone who has a property right that has been or might be violated is an "aggrieved person." Besides the right to a remedy, more people can go to court to protect a civil right or to get compensation for a civil wrong, even if they are not directly connected to the issue. The connection between the lawsuit and the plaintiff (the one suing) does not have to be personal. The term "person aggrieved" has become broader over time. (c) The idea of "legal grievance" has expanded because of social needs. The State now does things that benefit the whole community, even if the community doesn't legally own the project. The State starts projects that require collective action from the people being helped. Test cases and group lawsuits are becoming more common. People and organizations who are not personally harmed but are concerned can go to court to fix actual or potential wrongs. 'Locus standi' (the right to bring a case to court) is broader than it used to be. Therefore, the State has the right to appeal under section 96 of the Code of Civil Procedure. (2) If something wrong is done to the community, "no locus standi" will not always prevent a public body from suing the wrongdoer. In this case, the government is the "aggrieved person." Its right to take back the land from the Gaon Sabha, which is meant to be used for the public good, will be seriously harmed if a trespasser takes over the estate. The estate belongs to the State, is given to the Gaon Sabha for the community's benefit, is controlled by the State through the Land Management Committee, and can be taken back by the State. The goal of the legislature to carefully give estates to local groups will fail if the State cannot stop its gift from being wasted or lost. (3)(a) The test for "appurtenance" (something that belongs to something else) is whether the building depends on it to be used as a building. A market or fair is not something that a building depends on. Even if the buildings were used with the open space for a market or fair in the past, the land is not appurtenant to the buildings under section 9. (b) The main goal of section 9 is to only give the former landlord the land that is strictly appurtenant to the buildings. The rest of the land goes to the State to carry out land reform. (c) The large open spaces cannot be considered appurtenant to the terraces, stands, and structures. Something that is integral (essential) is not necessarily appurtenant. Appurtenance implies a subordinate position, something that is incidental or dependent. The High Court has already excluded the space needed for the use of the structures. More space might be needed for the market or fair, but not for the use of the structures themselves. (d) "Appurtenance" in relation to a house includes all land used with it for its purposes. The word "appurtenances" has a specific meaning. It generally means only what strictly belongs to the thing being given or granted. Only what is needed for the enjoyment of the building and has been used for that purpose, such as an easement (right to use someone else's land), will be appurtenant. The word "appurtenance" includes rights of way attached to the land, but does not include additional lands. (e) The High Court's decision to grant 5 yards of surrounding space is legally sound.
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1 of 1976. Appeal by Special Leave from the Judgment and Order dated 23 5 1975 of the Allahabad High Court in First Appeal No. The two focal points of the controversy are: (a) Is the appeal to the High Court by the State 1st plaintiff at all competent, entitlement as a 'party aggrieved ' being absent, having regard to the provisions of the U.P. Act 1 of 1951) (for short, the Act) ? ; and (b) Is it sound to conceptualise 'area appurtenant to buildings ' in section 9 of the Act so nar rowly as has been ' done by the High Court ? The suit was for injunction or ejectment, on title, of the sole defendant who was the quondam zamindar of the 'estate ' which is the 'subject matter of the suit. The High Court partially allowed the appeal and the aggrieved defendant is the appellant before us. The statutory conse quence of the abolition of all zamindaris by force of section 4 is spelt out in section 6, to wit, the 1075 cesser of the ownership of the zamindar and vesting of title and possession in the State. By a notification under section 117(1) of the Act the area of lands was vested by the State in the 2nd plaintiff Gaon Sabha. Taking advantage of the provisions of the Act, the defendant successfully claimed before the High Court that the trees and the two plots with the shrine and the oushadhalaya should be deemed to have been settled with her. In the view of the Court hats, bazars, and melas could not be held by a private owner under the scheme of the Act and reliance on the conduct of the cattle market as an indicator of 'appurtenant ' area was, therefore, impermissi ble. The Gaon Sabha, when defeated in the trial Court, discreetly stepped out of the risks of an appeal but the Government, first plaintiff, claiming to be gravely ag grieved, challenged the dismissal of the suit and was faced with the plea that the land having vested in the Gaon Sabha, on the issue of the notification under section 117 (1 ) of the Act, .the State had no surviving interest in the property and, therefore, forfeited the position of a person ag grieved, who alone could competently appeal against a de cree. To put it in a nutshell, has the State current interest in the estate, sufficient to sustain an appeal ? Section 4 is the foundational provision, the very title deed of the State; and it runs, to read: "section 4. (1 ) As soon as may be after the commence ment of this Act, the State Government may, by notification, declare that, as from a date to be specified, all estate situate in the Uttar Pradesh shall vest in the State and as from the beginning of the date so specified (herin after called the date of vesting), all such estates shall stand transferred to and vest except as hereinafter provided, in the State free from all encumbrances. (2) It shall be lawful for the State Government, if it so considers necessary, to issue, from time to time, the notification referred to in sub section (1) in respect only of such area or areas as may be specified and all the provisions of sub section (1), shall be applicable to. When the notification under section 4 has been published in the Gazette then, notwith standing anything contained in any contract or document or in any other law for the time being in force and save as otherwise provided in this Act, the consequences as hereinafter set forth shall, from the begining of the date of vesting, ensue in the area to which the notification relates, namely (a) all rights, title and interest of all the intermediaries (i) in every estate in such area including land (cultivable or barren), grove land, forests whether within or outside village boundaries, trees (other than trees in village abadi, holding or grove), fisheries, tanks, ponds, water channels, fernes, pathways, abadi sites, hats, bazars and meals other than hats, bazars and melas held upon land to which clauses (a) to (c) of sub section (1) of Section 18 apply, and 1077 (ii) in all sub soil in such estates including rights, if any in mines and miner als, whether being worked or not; shall 'cease and be vested in the State of Uttar Pradesh free from all encumbrances; * * * * Reading the two sister sections together, certain clear conclusions emerge. or be held by such intermediary, tenant or persons, as the case may be,, and the site, of the wells or the buildings which are appurte nant thereto: shall be. be settled with him by the State Government on such terms and conditions as may be prescribed" A close up of this section is called for since the basic plank of the defendant 's case is the claim to the whole set of plots as building and appurtenant area of land statutori ly settled with her. So we shift to Chapter VII which relates to Gaon Sabhas vesting by the State of resumed estates in them and the limitations and other conditions to which it is subject. (1 ) At any time after the publication of the notification referred to in Section 4, the State Government may, by general or special order to be published in the manner pre scribed, declare that as from a date to be specified in this behalf, all or any of the following things, namely * * * * * (v) hats, bazars and melas except hats, bazars, and melas held on land to which, the provisions of clauses (a) to (c) of sub sec tion (1) of section 18 apply or on sites and areas referred to in section 9, and * * * * * which had vested in the State under this Act shall vest in the Gaon Sabhas or and other local authority established t.or the whole or part of the village in which the said things are situate, or partly in one such local authority (including a Gaon Sabha) and partly in another: Provided that it shall be lawful for the State Govern ment to make the declaration aforesaid subject to such exceptions and conditions as may be specified in the notifi cation. (2) Notwithstanding anything contained in this Act or in any other law ' for the time being in force, the State Government may, by general or special order to be published in the manner prescribed in the Gazette, declare that as from a date to be specified in this behalf, all or any of the things specified in clauses (i) to (vi) of sub section (1) which alter their vesting in the State under this Act had been vested in a Gaon Sabha or any other local authority, either under this Act or under section 126 of the Uttar Pradesh Nagar Mahapalika Adhiniyam 1959 (U.P. Act II of 1959) shall vest in any other .local au thority (including a Gaon Sabha) established for the whole or part of the village in which the said things are situated. " local authority, as the case may be, shall be enti tled to receive and be paid compensation on account only of the development, if any, effected by it in. or over that thing: Provided that the State Government may, after such resumption, make a fresh declara tion under sub section (1) or sub section (2) vesting the thing resumed in the same or any other local authority (including a Gaon Sabha) and the provisions of sub sections (3), (4) and (5) as the case may be, shall mutatis mutandis, apply to such declaration. Sections 122A and 122B create and regulate the Land Management Committee which is to administer the estates vested in the Sabha and section 126, quite importantly, gives the power to the State Government to issue orders and directions to the Management Committee. Pausing here for an instant, let us look back on the status of the State which, through its Executive branch, vests a resumed estate in a Gaon Sabha, retaining power, at any time, and without conditions or even compensation (save for actual developmental work done), to divest the land so vested and make it over to another like local authority. In such a situation where the State remains the legal master with absolute powers of disposition over the land vested pro tempore in a particular Gaon Sabha, can it be postulated that it has no legal interest in the preservation of that over which it has continuous power of operation, creation and deprivation? The fulfilment of the purpose of the Act, the setting in which the corner stone for the statutory edifice is laid and the categorical language used, especially 'free from all encumbrances ', leave no doubt in our minds, nor was it disputed before us, that this initial vesting is absolute and inaugurates the scheme of abolition. And can the State canvas for the position that a proprietary right persists in it albeit its act of vesting the same estate earlier in a local authority? The legislative project and the legal engineering visua lised by the Act are clear and the semantics of the words used in the provisions must bend, if they can, to subserve them. To find out the exact connotation of a word in a statute, we must look to the context in which it is used. A word, as said by Holmes, is not a crystal, trans parent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used." The fact that as a body corporate it can own and sell property does not mean that the estates vested in a Sabha can be finally sold away, in the teeth of the provisions striking a contrary note. For, under s.117(6), if, for any reasons of better management or other, the State (Government is but the operational arm of the State and cannot, as contended, be delinked as a separate entity, in this context) the. True, this cut back on the amplitude of the vesting is not an incident of the estate created but is provided for by the Act itself. Such an approach lends to the position that the vesting in the State was absolute but the vesting in the Sabha was limited to possession and management subject to divestiture by Government. So the sense of the situation suggests that in s.117(1) of the Act "vested in the State ' carries a plenary connotation, while 'shall vest in the Gaon Sabha ' imports a qualified disposition confined to the right to full possession and enjoyment so long as it lasts. Indeed, to postulate vesting of absolute title in the Gaon Sabha by virtue of the declara tion under s.117(1) of the Act is to stultify s.117(6). Not that the legislature cannot create a right to divest what has been completely vested but that an explanation of the term 'vesting ' which will rationalise and integrate the initial vesting and the subsequent resumption is prefera ble, more plausible and better fulfils the purpose of the Act. Aside from this stand, it is easy to take the view that the 1st plaintiff is a person I aggrieved and has the competence to carry an appeal against the dismissal of the suit. But the right to a remedy apart, a larger circle of persons can move the court for the protec tion of defence or enforcement of a civil right or to ward off or claim compensation for a civil wrong, even if they are not proprietarily or personally linked with the cause of action. The estate belonged to the State, is vested in the Gaon Sabha for community benefit, is controlled by the State through directions to the Land Management Commit tee and is liable to be divested without ado any time. Therefore, the State, in the present case, is entitled to appeal under section 96 of the Code of Civil Procedure. Section 9 of the Act obligates the State to settle (indeed, it is deemed to be settled) with the intermediary certain items in the estate. The short enquiry is whether the entire land is 'appurtenant ' to the buildings. The structures accepted by the High Court as 'buildings ' within the scope of section 9 were part of a cattle fair complex. It would also be, a double injury: (a) to the defendant; and (b) to the community. The hat or mela could not be held by the defendant if the land were snatched away and the Government could do. The key to the solution of the dispute lies in ascer taining whether land on which the cattle fair was being held was appurtenant to the buildings or not on the strength of its use for the hat. This right had been virtually nationalised by the Act and only the State or the Gaon Sabha. that much of space required for the use of the structures as such has been excluded by the High Court itself. Beyond that may or may not be necessary for the hat or mela but not for the enjoyment of the chabutras as such. The law thus leads to the clear conclusion that even if the buildings were used and enjoyed in the past with the whole stretch of vacant space for a hat or mela, the land is not appurtenant to the prin cipal subject granted by section 9, viz., buildings. vs State of Maharashtra etc. 967 ADMINISTRATION OF EVACUEE PROPERTY ACT, 1950 S.40(4) (a) and rule 22 Scope of, section 10(2) (n) out of the funds in his possession meaning of. 255 ALTERNATE REMEDY Whether a bar to writ jurisdiction under article 226 of the Constitution under Art 226 of the constitution. 64 [See Constitution of India, 1950] . vs The State of Orissa and Ors. Damodar Valley Corporation vs State of Bihar and Ors. vs The Municipal Corpora tion of the City of Ahmedabad and Anr. Land Acquisition Act [See Land Acquisition Act] . 763 CENTRAL CIVIL SERVICE (CLASSIFICATION, CONTROL AND APPEAL) Rules, 1965 Scope of Rules applicable only when disciplinary proceedings are taken. 386(a), 464(I) and 462(2)(a). vs State of Karnataka & Ors. Patel and Ors. Patel and Ors. S.115 Jurisdiction of High Court to interfere with the Trial Court 's discretionary order, when exercisable. Act V of 1908 Section 11 Principle of res judicata Applicability when gratuity was awarded in a previous proceedings under the Payment of Wages Act i.n the teeth of the clear provision of Rule 8.01 Scope of Rule 8.01. (Act 2 of 1974)Ss. (Act II of 1974), 1973 section 378. [see Constitution of India] . 42 and 56(6) . vs State of Gujarat and Ors. vs The State of Kerala and Anr. vs State of Gujarat & Ors. 842 7. article 136 Practice and Procedure Whether a Court of Criminal Appeal Whether can interfere with concurrent findings of fact Interference when grave and substantial injustice. vs State of Punjab . .280 8. article 226 High Court if could interefere with the Appellate orders of Income Tax Appellate Tribunal under article 226. Patel and Ors. vs The Punjab & Haryana High Court and Ors. Damodar Valley Corporation vs State of Bihar and Ors. State of Andhra Pradesh vs S.N. 128 CONTEMPT OF COURT ACT (ACT NO. [See sale] . [See ] . [See Income Tax Act] . section Ramaswamy vs Union of India and Ors. [See Constitution of India] . vs The Andhra Pradesh State Electricity Board and Ors. vs The Workmen and Ors. vs State of Gujarat and Ors. 23A and 35(1) Whether income tax officer has power under section 35(1) to rectify an order passed under section 23A. vs M/s. Income Tax and Ors. Court Orissa and Ors. & Ors. [See Land Acquisition] . 178 JURISDICTION 1. of High Courts to interfere with the trial Court 's discretionary order. [See C.P.C.] 1061 2. of High Court under article 226 to interfere with orders of the Income Tax Appellate Tribunal. [See Constitution of India ] . 1963 section 84 Scope of interpretation When a statute could be read retrospectively. 11 State of Kerala and Ors. and Ors. State of Kerala and Ors. vs K.A. vs State of Maharashtra . Sales Tax Act, 1948, section 22. [See U.P. and Ors. vs Union Government of India and Anr . vs The State of Gujarat and Anr . Sarjoo Prasad Singh vs The State of Bihar and Ors. Sarjoo prasad Singh vs The State of Bihar and Ors. vs State of Punjab . State of U.P . Supreme Court will not entertain a complaint on facts and interfere with a finding of facts by the appellate Court under Article 136 of the Constitution of India. Further plea taken in the affidavit rejoinder to the writ petition shall not be allowed to be agitate Sarjoo Prasad Singh vs The State of Bihar and Ors. vs Y.P. 105 Onus of proving exceptions in IPC on accused Degree of proof Criminal Trial Effect of non examination of materi al witness Conviction on evidence of a solitary witness Whether adverse inference can be drawn against accused for not leading evidence Onus of prosecution Pre sumption of innocence. vs State of Maharashtra etc. 59 PROCEDURE When a court of appeal can interfere in the lower court 's Judgment. vs State of Punjab and Ors. 785 PROPERTY right to dispose of by will by a widow [See Hindu Law] . State of Punjab and Ors. 525 See. 100(1) See. Incurring expenses in excess of what is per missible Interference by this Court with appreciation of evidence by High Court. (See Constitution of India) . (See ) . and Ors. vs The Punjab & Haryana High Court and Ors, . (See Constitution of India) . 462 TRANSFER OF PROPERTY ACT (4 of 1882) section 53A, Indian Easements Act (5 of/882) section 60(b) and Indian Contract Act (9 of 1872) section 221 Scope of. Pradesh and Ors. (See Succession Act, 1925) . "Other rights" in Explanation 2 to section 2(15) of the Estates Duty Act, meaning of. See "Person" meaning of General Clauses Act) . "restoration" in Section 70 of the Contract Act, meaning of. Maharaj Singh vs State of Uttar Pradesh and Ors. 1072 WRIT JURISDICTION High Court cannot interfere with a finding .of fact based upon relevant circumstances and when it is not shown to be perverse The Constitution of India, Article 226.
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Zamindari Abolition & Land Reforms Act, 1950, all rights and ownership of land were given to the State. Section 9 says that wells, trees near houses, and buildings on an estate that belonged to a landlord would still belong to them. The land where these buildings were located would be considered settled with the landlord by the State Government. Section 117(1) allows the State Government to give land to village councils (Gaon Sabhas) or other local groups. Section 117(6) gives the State Government the power to take back land from a Gaon Sabha that was previously given to it. Following section 117(1), the State Government gave the land in the village to the Gaon Sabha. The defendant, who used to be the landlord, was running a cattle fair on the disputed estate. The plaintiffs, which are the State and the Gaon Sabha, sued to remove the defendant from the estate, but the trial court dismissed the case. The Gaon Sabha did not appeal the decision. However, the State appealed to the High Court as someone who was "aggrieved" (negatively affected). The High Court rejected the defendant's arguments that the State Government had no right to appeal because the land was given to the Gaon Sabha under section 117(1), and that the State was not an "aggrieved person." It can take back what it gave to a Gaon Sabha. This shows that the government has a "present legal interest" in the estates, and the Gaon Sabha has a temporary right to them. (a) The Act aims to take over all landlord rights as part of land reform. The State has complete ownership, but the Sabha only has the right to possess and manage the estate, which can be taken away by the government. The word "vest" (give ownership) can have different meanings in the same section. In section 117(1), "vested in the State" means complete ownership, while "shall vest in the Gaon Sabha" means a limited right to possess and enjoy the land as long as it lasts. If the Gaon Sabha had complete ownership under section 117(1), section 117(6) would not make sense. Someone who has a property right that has been or might be violated is an "aggrieved person." Besides the right to a remedy, more people can go to court to protect a civil right or to get compensation for a civil wrong, even if they are not directly connected to the issue. The State now does things that benefit the whole community, even if the community doesn't legally own the project. People and organizations who are not personally harmed but are concerned can go to court to fix actual or potential wrongs. 'Locus standi' (the right to bring a case to court) is broader than it used to be. Therefore, the State has the right to appeal under section 96 of the Code of Civil Procedure. (2) If something wrong is done to the community, "no locus standi" will not always prevent a public body from suing the wrongdoer. In this case, the government is the "aggrieved person." Its right to take back the land from the Gaon Sabha, which is meant to be used for the public good, will be seriously harmed if a trespasser takes over the estate. The estate belongs to the State, is given to the Gaon Sabha for the community's benefit, is controlled by the State through the Land Management Committee, and can be taken back by the State. The goal of the legislature to carefully give estates to local groups will fail if the State cannot stop its gift from being wasted or lost. (3)(a) The test for "appurtenance" (something that belongs to something else) is whether the building depends on it to be used as a building. A market or fair is not something that a building depends on. Even if the buildings were used with the open space for a market or fair in the past, the land is not appurtenant to the buildings under section 9. (b) The main goal of section 9 is to only give the former landlord the land that is strictly appurtenant to the buildings. More space might be needed for the market or fair, but not for the use of the structures themselves. (d) "Appurtenance" in relation to a house includes all land used with it for its purposes. Only what is needed for the enjoyment of the building and has been used for that purpose, such as an easement (right to use someone else's land), will be appurtenant. The word "appurtenance" includes rights of way attached to the land, but does not include additional lands.
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s Nos. 114 and 115 of 1961. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. 832 M. K. Nambiar, M. K. Govind Bhatt, section N. Andley, and Rameshwar Nath, for the petitioners. M. C. Setalvad, Attorney General of India, K. K. Mathew, Advocate General for the State of Kerala, Sardar Bahadur, George Pudissary and V. A. Seyid Muhammad, for the respondents. December 5. The Judgment of Gajendra gadkar, Wanchoo and Das Gupta, JJ., was deliverd by Wanchoo, J. Sarkar, J. and Ayyangar, J. delivered separate Judgment. WANCHOO, J. These two writ petitions which were heard along with Purushothaman Nambudiri vs The State of Kerala (1) raise the constitutionality of the Kerala Agrarina Relations Act, No. IV of 1961 hereinafter referred to as the Act. The petitioners come from that part of the State of Kerala which was formerly in the South Canara district of the State of Madras and came to the State of kerala by the State Reorganisation Act of 1956. Their lands are situate in Hosdrug and kasargod Taluks which have now been made part of the Cannanore District in the State of Kerala. They hold large areas of lands, the major part of which is held by them as ryotwari parradars, of Madras under the Board 's Standing Orders of that State. In these lands they have areca and pepper plantations besides rubber plantation. They also grow other crops on some of the lands. The Act is being attacked on the ground that it contravenes articles 14, 19 and 31 of the Constitution. Besides this, it is also contended on behalf of the petitioners that the Bill which became the Act lapsed under the provisions of the Constitution, and therefore the assent given to the Bill by the President was of no effect and did not result in the Bill becoming an Act. We do not think it necessary to set out the details of the attack on this last score in the present petitions as the matter 833 has been considered in full in the judgment in the connected Writ Petition No. 105 of 1961. The petitioners further submit that their lands which they hold as ryotwari pattadars are not estates within the meaning of article 31A (2)(a) of the Constitution and therefore the Act so far as it affects them is not protected under article 31A, and it is open to them to assail it as violative of the rights conferred on them by articles 14, 19 and 31 of the Constitution. They have attacked the Act on a number of grounds as ultra vires the Constitution in view of the provisions of articles 14, 19 and 31. We do not however think it necessary to detail all the attacks on the constitutionality of the Act for present purposes. It is enough to say that the main attack on the constitutionality of the Act has been made on the following six grounds: (1) The Bill which became the Act had lapsed before it was assented to by the President and therefore the assent of the President to a lapsed bill was of no avail to turn it into law. (2) The Act is a piece of colourable legislation as it has made certain deductions from the compensation payable to landholders under Chap. II and to others who held excess land under Chap. III and this amounts to acquisition of money by the State which it is not competent to do under the power conferred on it in Lists II and III of the Seventh Schedule to the Constitution. (3) The properties of the petitioners who are ryotwari pattadars are not estates within the meaning of article 31A of the Constitution and therefore the Act is not protected under that Article so far as it applies to lands of ryotwari pattadars like the petitioners. (4) The Act exempts plantation of tea, coffee, rubber and cardamom from certain 834 provisions thereof, but no such exemption has been granted to plantations of areca and pepper, and this is clearly discriminatory and is violative of article 14. (5) The manner in which ceiling is fixed under the Act results in discrimination and is therefore violative of article 14. (6) The compensation which is payable under Chapters II and III of the Act has been reduced by progressive cuts as the amount of compensation increase and this amounts to discrimination between persons similarly situate and is therefore violative of article 14. The petitions have been opposed on behalf of the State and its contention is, firstly, that the Bill did not lapse and the President 's assent was rightly given to it rightly became law; secondly, that the petitioners ' estates lands are estates within the meaning of article 31A (2)(a) and the Act is therefore protected under that Article; thirdly, that the Act is not a piece of colourable legislation and the State Legislature was competent to enact the Act under item 18 of List II and item 42 of List III of the Seventh Schedule and there is no acquisition of money by the state under the Act and reference is made to section 80 of the Act in this connection; and lastly, that the discrimination alleged with respect to plantations, the fixation of ceiling and the deductions from compensation payable under Chapters II and III is really no discrimination at all and the provisions in that behalf are based on an intelligible differentia which is in accordance with the object and purpose of the Act. The question whether the Bill which finally received the assent of the President on January 21, 1961, had lapsed because the legislative assembly which originally passed it was dissolved and a new legislative assembly which came into being after 835 the general elections reconsidered and re passed it under article 201 of the Constitution has been considered by us in Writ Petition No. 105 of 1961, judgment in which has just been delivered and it has been held there that the bill did not lapse and therefore it validly became law when the President assented to it. The attack on the Act therefore on this grounds must fail. We now come to the attack made on the Act on the ground that it is a piece of colourable legislation beyond the legislative competence of the State legislature. What is colourable legislation is now well settled: see K. C. Gajapati Narayan Deo vs The State of Orissa (1), where it was held "that the question whether a law was a colourable legislation and as such void did not depend on the motive or bona fides of the legislature in passing the law but upon the competency of the legislature to pass that particular law, and what the courts have to determine in such cases is whether though the legislature has purported to act within the limits of its powers, it has in substance and reality transgressed those powers, the transgession being veiled by what appears, on proper examination, to be a mere pretence or disguise. The whole doctrine of colourable legislating is based upon the maxim that you cannot do indirectly what you cannot do directly. The Act has been passed under the legislative powers vested in the State legislature under item 18 of List II and item 42 of List III of the Seventh Schedule. Item 18 of List II deals inter alia with "land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents" Item 42 of list III deals with "acquisition and requisitioning of property. " The contention on behalf of the petitioners is that in the guise of legislating under these two entries the State legislature by the employment of certain 836 devices has taken away money, which should have gone to land owners or to those from whom excess lands were being acquired. The attack is based on the facts that in section 52 of the Act compensation payable to a land owner is reduced after the purchase price to be paid by the tenant to whom the land is to be assigned has been ascertained, and that in section 64 of the Act the compensation payable to a person from whome excess land is taken in reduced by certain percentage after the market value of the land has been determined. It is urged that by these devices the State is acquiring money which should properly have gone to the land owner to whome compensation is payable under section 52 and to the person who surrenders excess land to whome compensation is payable under section 64. There is no doubt that certain deductions are made from the purchase price payable by the tenant under section 45 and from the market value before compensation is arrived at for payment to the land owner under section 52 and to the person surrendering excess land under section 64. But if one looks at the purpose and object of the Act it will be clear that the main provisions of the Act are clearly within the legislative competence of the State legislature under item 18 of List II and item 42 of List III. The scheme of the Act so far as Chap. II dealing with extinction of the land owner 's right is concerned is that the land owner 's right vested in the State under sections 41 and 42 on a day to be notified by the Government in that behalf. Thereafter, section 43 provides that cultivating tenants of the lands which have vested in the State shall have a right to assignment of the right, title and interest so vested in the State on payment of a certain price which is calculated under section 45 and is called the purchase price. After the purchase price is determined, the compensation to be paid to the land owner is provided by section 52 and there is reduction in the purchase price for the purpose of given compensation. It is however obvious that the object of Chap. II is to vest proprietorship in the land in the 837 cultivating tenants and for that purpose Chap. II provides for carrying out the object in two stages. In the first stage, the property of the landowner is vested in the State. Thereafter the tenant is given the right to acquire that property from the State. What price the tenant is to pay for the land is worked out under section 45, and what compensation the State is to pay to the land owner is worked out under section 52, which however reduces the purchase price arrived at under section 45 for the purpose of giving compensation. It is however clear that tenants are not bound to apply to acquire the land which they hold as tenants and where they do not do so, section 44 (3) provides that they become the tenants of Government and shall be liable to pay to the Government the rent payable in respect of the land from the date on which the right, title and interest over the land vested in the Government. It cannot therefore be said that the scheme which provides for two stages, namely, first acquisition by Government and secondly assignment to tenants is a camoflage devised for the purpose of taking away the money which would otherwise have been payable to the land owner in case the interest of the landowner was directly transferred to the cultivating tenants. It is also clear that there is bound to be a time lag between the acquisition under sections 41 and 42 and the assignment to tenants under section 43 and the subsequent sections and in the meantime the Government would be the owner of the rights acquired. Clearly, therefore Chap. II of the Act envisages first the acquirement of the land owner 's interest by the State for which compensation is payable under s.52. Thereafter the State will assign to such cultivating tenants as may apply the rights acquired by the State and there is likely to be an interval between the two transactions. Besides some cultivating tenants may not apply at all and that part of the property will remain with the State Government. In these circumstances it cannot be said that the scheme evolved in Chap. II is a device for 838 taking away any part of the money to the landowner from the tenant to whom his interest may eventually be assigned. Besides the adequacy of compensation provided under section 52 for acquisition by the State of the interest of the land owner cannot be challenge on the ground that the compensation provided by the law is not adequate: See article 31(2). It is only because the compensation provided under section 52 is a percentage of the purchase price as calculated under section 45 that it appears as if the State is taking away a part of the compensation due to the landowner. Section 52 is however only a method for determining compensation and the whole compensation due to the land owner is to be found in section 52 and it cannot therefore be said that any part of the compensation is being taken away by the State. Similarly the scheme of Chap. III which provides a ceiling is that any land in excess of the ceiling shall vest in the Government under section 62. Thereafter the land so vested in Government can be assigned under section 70 to persons who do not possess any land or possess land less than 5 acres of double crop nilam or its equivalent. It is true that Government may assign the lands to those who apply under section 70 but it is not bound to do so and here again there will be a time lag between the vesting of the excess land in the Government under s.62 and its assignment to those who are eligible under section 70. The charge that in this Chapter there is a device for taking away the compensation due to the land owner is based on the fact that section 72 the person to whom the land is assigned under section 70 has to pay 55 per cent. Of the market value of the land while the person from whom the excess land is taken is not always paid 55 per cent. Of the market value, inasmuch as the percentage goes down to 25 per cent. Of the market value in certain circumstances. But here again the compensation is provided entirely under section 64 and it is that section which sets out the manner in which the compensation is to be 839 provided. The adequacy of that compensation cannot be questioned in view of article 31(2). The fact that under sections 70 and 72 when the Government in its turn assigns land to those who are eligible for such assignment, a different percentage of market value is fixed would not make these provisions a device to take away the money due to those who surrender excess land. As we have already said the compensation to those who surrender excess land is all provided by section 64 and even if there is a difference between the price payable under section 72 by the assignee and the compensation payable to the landowner under section 64 that would not amount to taking away the money of the landowner by a device particularly when the assignment is bound to take place sometime after the property has been acquired by Government. It is also clear from the provisions contained in Chapters II and III of the Act that the main purpose of the Act is to do away with intermediaries and to fix a ceiling and give the excess land, if any, to the landless or those who hold land much below the ceiling. The method employed to carry out this object is first to acquire the land for the State and thereafter to assign it to the cultivating tenants or to the landless or to those with small amounts of land. The main provisions of the Act therefore are clearly within the legislative competence of the State legislature under item 18 of List II and item 42 of List III and this is not being disputed on behalf of the petitioners. But what they contend is that in the process of doing this, the Government has by adopting certain devices taken away the money which was due to the land owner or to the person from whom the excess land is acquired. This argument is however fallacious because the compensation due to the land owner or the person from whom excess land is acquired is not what is provided by section 45 and s 72 but what is provided in section 52 and s 64. The adequacy of that compensation cannot be 840 challenged in view of article 31(2), and there is therefore no justification for saying that the money due to the landowner or the person from whom the excess land is acquired is being taken away by the State. That argument would only be possible if the compensation was the whole amount arrived at under section 45 or under section 72 and from that the Government deducted money due to the landowner. That however is not so and the compensation to which the landowner or the person from whom the excess land is acquired is to be found only in sections 52 and 64 and there is thus no question of taking away any money due to the landowner. Further, whatever unfairness might appear because of the difference between sections 45 and 52 on the one hand and sections 64 and 72 on the other and the manner in which the compensation is shown as a percentage of the purchase price or the market value is removed by the provision in section 80 of the Act. That section provides for the constitution of an agriculturist rehabilitation fund in which the surplus, if any, of the purchase price after the disbursement therefrom of the compensation is to be put along with other moneys. This surplus does not to go to the revenues of the State and the State cannot be said to have taken away for its own purpose any part of the compensation. Further section 80 provides that the fund shall be utilised for rendering help by way of loan, grant or otherwise to persons affected by the Act who are eligible for the same in accordance with the rules framed by the Government. The fund therefore created under section 80 of the surplus, if any, is to be utilised for rendering help to persons affected by the Act. That in our opinion clearly means either the landowners whose rights are affected by Chap. II or the persons from whom excess land is taken under Chap. The surplus money therefore is to be utilised for the benefit of the persons affected by the Act as indicated above. This section also 841 provides that the Government will frame rules with respect to the persons affected and their eligibility for help from the fund. Our attention in this connection has been drawn to the eligibility rules framed under this section for the administration of the fund, and in particular to r. 161 which provides for eligibility for grants and loan. That rule in our opinion goes beyond the scope of section 80 in so far as it provides for making of grants or loans to persons not affected by the Act. We may in this connection refer to r. 161 (a)(i) and (ii) and r. 161 (b) (i) and (ii) which are so framed as to take within their scope even persons not affected by the Act, though r. 161 (a)(iii) and r. 161(b)(iii) are with respect to persons who may be affected by the Act. Rule 161(a)(i) and (ii) and r. 161(b)(i) and (ii) in so far as they take in persons not affected by the Act are ultra vires of the provisions of section 80 and must be struck down on that ground and may have to be replaced by more suitable rules. But the rules which have been actually framed will not affect the provisions of section 80 which clearly show that the fund is for the benefit of those who are affected by the Act, namely, those who are affected by Chapters II and III of the Act, i.e., those landowners whose rights have been acquired under sections 41 and 42 and those persons from whom excess land is taken away under section 62. Section 80 thus clearly shows that any surplus that may arise is not taken away by the State for its own revenue purposes but is meant to be used for the benefit of those affected by the Act and therefore even the apparent result of the difference between sections 45 and 62 and ss 64 and 72 is taken away by the constitution of the fund under section 80, and it cannot be said at all under the circumstances that any device has been employed in the Act to take away the moneys of the landowners or the persons from whom excess land is taken away for the purpose of adding to the revenue of the State. We are therefore of opinion that 842 the Act" cannot be struck down as a colourable piece of legislation which is beyond the competence of the State Legislature. Article 31A was inserted in the Constitution by the Constitution (First Amendment) Act, 1951, with retrospective effect so that it must be deemed to have been in the Constitution from the very beginning, i.e., January 26, 1950. The article was further amended by the Constitution (Fourth Amendment) Act, 1955 which was also made retrospective and therefore article 31A as it stands today must be deemed to have been part of the Constitution right from the start, i.e., January 26, 1950. We are not concerned in the present petitions with cl. (1) of article 31A, which was extensively amended in 1955 but only with cl. This clause originally read as follows: "In this article, (a) the expression 'estate ' shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and shall also include any jagir, inam or muafi or other similar grant. (b) the expression 'right ' in relation to an estate, shall include any rights vesting in a proprietor, sub proprietor, under proprietor, tenure holder or other intermediary and any rights or privileges in respect of land revenue. " In 1955, in sub cl. (a) the words "and in the States of Madras and Travancore Cochin any janmam rights " were added at the end while in sub cl. (b) the words " raiyat under raiyat " were added after the word " tenure holder " and before the words "or other intermediary". 843 It will be seen therefore that so far as the meaning of the word "estate" is concerned, there was no change in sub cl. (a) and the only change was with respect to the inclusive part of the definition of the word "estate". The word "estate has all along been defined to have the same meaning in relation to any local area as that expression or its local equivalent has in the existing law relating to landtenures in force in that area. It is also remarkable that the word "intermediary" does not occur in sub cl. (a) though it occurs in sub cl. The definition in sub cl. (a) is self contained and there is no scope for importing any idea of intermediary in the definition from sub cl. The reason why the words "other intermediary" are used in sub cl. (b) which defines rights in relation to an estate, is that sub clause mentions a number of intermediaries as such, like sub proprietors, under proprietors, tenure holders but does not give a complete enumeration of all intermediaries that may be existing in an estates all over India and therefore uses the words "other intermediary" to bring in all kinds of intermediaries existing in an estate. As an example we may mention that formerly in Uttar Pradesh there were fixed rate tenants in the permanently settled districts who were also intermediaries and it is such persons or their likes who were brought in within the sweep of the definition of rights in relation to an estate by the use of the words "other intermediary". Therefore, when the words "raiyat, under raiyat " were added in sub cl. (b) in 1955, it was further enumeration within a class already there; further as held in The State of Bihar vs Rameshwar Pratap Narain Singh (1), their inclusion in the circumstances and in the particular setting showed that the words "or other intermediary" did not necessarily qualify or colour the meaning to be attached to these new tenures. The meaning of the word "estate" has however to be found in 844 sub cl. (a) and it is the words used in that sub clause only which will determine its meaning irrespective of whether any intermediary existed in an estate or not. The meaning of the word "estate" in sub cl (a) is the same as it might be in the existing law relating to land tenure in force in a particular area. Where therefore there is an existing law in a particular area in which the word "estate" as such is defined the word would have that meaning for that area and there is no necessity then for looking for its local equivalent. But if in existing law of a particular area the word "estate" as such is not defined, but there is a definition of some other term which in that area is the local equivalent of the word "estate" then the word "estate" would have the meaning assigned to that term in the existing law in that area. In order, however, that one may be able to say that a particular term in an existing law in a particular area is a local equivalent of the word "estate" used in sub cl (a) it is necessary to have some basic idea of the meaning of the word "estate" for that purpose. That basic idea seems to be that the person holding the estate should be the proprietor of the soil and should be in direct relationship with the State paying land revenue to it, when it is not remitted in whole or in part. If a term therefore is defined in any existing law in a local area which corresponds to this basic idea of an estate that term would be a local equivalent of the word "estate" in that area. It is unnecessary to pursue the matter further because this aspect of the case has also been considered in Writ Petition No. 105 of 1961. It may be added that as the definition of the word "estate" came into the Constitution from January 26, 1950, and is based on existing law we have to look into law existing on January 26, 1950, for the purpose of finding out the meaning of the word "estate" in article 31A. 845 Let us therefore look at state of the law as it was in the State of Madras on January 26, 1950, for the area from which these petitions come was then in the district of South Canara, which was then a part of the Province of Madras, which became the State of Madras on January 26, 1950. The usual feature of land tenure in Madras was the ryotwari form but in some districts, a landlord class had grown up both in the northern and southern parts of the Presidency of Madras as it was before the Constitution. The permanent settlement was introduced in a part of the Madras Presidency in 1802. There were also various tenures arising out of revenue free grants all over the Province (see Chap. IV, Vol. III of land Systems of British India by Baden Powell) and sometimes in some districts both kinds of tenures, namely, landlord tenures and the ryotwari tenures were prevalent. There were various Acts in force in the Presidency of Madras with respect to landlord tenures while ryotwari tenures were governed by the Standing orders of the Board of Revenue. Eventually, in 1908, the Madras legislature passed the Madras Estate Land Act, No. 1 of 1908, which was later amended from time to time. It contains a definition of the word "estate" as such in section 3(2) and when the Constitution came into force the relevant part of the definition was as follows: "Estates ' means: (a) any permanently settled estate or temporarily settled zamindari; (b) any portion of such permanently settled estate or temporarily settled zamindari which is separately registered in the office of the Collector; (c) any unsettled palaiyam or jagir; (d) any inam village of which the grant has been made, confirmed or recognised by the British Government, notwithstanding that 846 subsequent to the grant, the village has been partitioned among the grantees or the successors in title of the grantee or grantees. " This Act applied to the entire Presidency of Madras except the Presidency town of Madras, the district of Malabar and the portion of the Nilgiri district known as South East Wynaad. It thus applied to the district of South Canara from where these petitions come. So far therefore as the District of South Canara was concerned, there was an existing law which defined the word "estate" for that local area. Shortly before the Constitution came into force the Madras legislature had passed the Madras Estates (Abolition and Conversion into Ryotwari) Act No. XXVI of 1948. That Act provided for the abolition of estates subject to certain restrictions with which we are not concerned. It also provided for repeal of the Madras Permanent Settlement Regulation, 1802, and the Estates Land Act of 1908 to the extent and from the date on which notifications were made under section 3 of that Act. There was thus no repeal of Act I of 1908 by the Act of 1948, and it is not in dispute that Act No. 1 of 1908 was in force on January 26, 1950, in large parts of the Province of Madras including South Canara, and is still in force in such parts of it as have not been notified under section 3 of the Act of 1948. Therefore, we reach the position that when article 31 became applicable from January 26, 1950, Act No. 1 of 1908 was still in force in large parts of the Madras State and it contained a definition of the word "estate" as such. Further, Act I of 1908 was clearly a law of land tenures as a brief review of its provisions will show. Section 6 of the Act conferred occupancy rights on tenants of certain lands in "estates" as defined in the Act of 1908. Chapter II dealt with the general rights of landlords and tenants. Chapter III dealt with provisions relating to rate of rent payable by tenants and provided for enhancement, reduction, commutation, alteration 847 and remission of rent. Chapter IV dealt with pattas and muchilikas. Chapter V provided for payment of rent and for realisation of arrears of rent. Chapter VI provided the procedure for recovery of rent. Other Chapters dealt with other matters including Chap. X which dealt with relinquishment and ejectment. It is clear therefore that the Act of 1908 was a law relating to landtenures. Therefore, we reach the position that in a law relating to land tenures which was in force in the State of Madras when the Constitution came into force the word "estate" was specifically defined. This law was in force in the whole of the State of Madras except some parts and was thus in force in the area from which the present petitions come. This area was then in the south Canara district of the State of Madras. We are therefore of opinion that the word "estate" in the circumstances can only have the meaning given to it in the Act of 1908 as amended up to 1950 in the State of Madras as it was on the date the Constitution came into force. We have already said that the Act of 1908 dealt with landlord tenures of Madras and was an existing law relating to land tenures. The other class of land tenures consisted of ryotwari pattadars which were governed by the Board 's Standing Orders, there being no Act of the legislature with respect to them. The holders of ryotwari pattas used to hold lands on lease from Government. The basic idea of ryotwari settlement is that every bit of land is assessed to a certain revenue and assigned a survey number for a period of years, which is usually thirty and each occupant of such land holds it subject to his paying the land revenue fixed on that land. But it is open to the occupant to relinquish his land or to take new land which has been relinquished by some other occupant or become otherwise available on payment of assessment, (see Land Systems of British India by Baden Powell, Vol. III, Chap. IV, section II, p. 128). Though, theoretically, according to some authorities, the occupant of ryotwari 848 land held it under an annual lease (see Macleane, Vol. I Revenue Settlement, p. 104), it appears that in fact the Collector had no power to terminate the tenant 's holding for any cause whatever except failure to pay the revenue or the ryot 's own relinquishment or abandonment. The ryot is generally called a tenant of Government but he is not a tenant, from year to year and cannot be ousted as long as he pays the land revenue assessed. He has also the right to sell or mortgage or gift the land or lease it and the transferee becomes liable in his place for the revenue. Further, the lessee of a ryotwari pattadar has no rights except those conferred under the lease and is generally a sub tenant at will liable to ejectment at the end of each year. In the Manual of Administration, as quoted by BadenPowell, in Vol. III of Land Systems of British India at p. 129, the ryotwari tenure is summarised as that of a tenant of the State enjoying a tenant right which can be inherited, sold, or burdened for debt in precisely the same manner as a proprietary right subject always to payment of the revenue due to the State". Though therefore the ryotwari pattadar is virtually like a proprietor and has many of the advantages of such a proprietor, he could still relinquish or abandon his land in favour of the government. It is because of this position that the ryotwari pattadar was never considered a proprietor of the land under his patta, though he had many of the advantages of a proprietor. Considering, however, that the Act of 1908 was in force all over the State of Madras but did not apply to lands held on ryotwari settlement and contained a definition of the word "estate" which was also applicable throughout the State of Madras except the areas indicated above, it is clear that in the existing law relating to land tenures the word "estate" did not include the lands of ryotwari pattadars, however valuable might be their rights in lands as they eventually came to be recognised. 849 Turning now to the district of South Canara and the areas from which the present petitions come it appears that originally the ryotwari settlement was not in force in this area and two kinds of tenures were recognised, namely, mulawargdar and Sarkarigniwargdar. It is, however, unnecessary to go into the past history of the matter, for it is not in dispute that the ryotwari system was introduced in South Canara district in the early years of this century. The history will be found in the Book "Land Tenures in the Madras Presidency" by section Sunderaraja Iyengar, IIEdn., pp. 45 47, where it is said that "after the introduction of the ryotwari system into South Canara, no distinction now exists between the wargadar, the mnulawargadar and kudutaledar and they are all ryotwari pattadars" Therefore, when the Constitution came into force the ryotwari pattadars of South Canara were on the same position as the ryotwari pattadars of the rest of the State of Madras. Further, as the Act of 1908 was in force in South Canara also, though there may not be many estates as defined in that Act in this area it follows that in this area also the word "estate" would have the same meaning as in the Act of 1908 and therefore ryotwari pattadars and their lands would not be covered by the word "estate". Further, there can be no question of seeking for a local equivalent so far as this parts of the State of Kerala which has come to it from the former State of Madras is concerned. We are therefore of opinion that lands held by ryotwari pattadars in this part which has come to the State of Kerala by virtue of the States Reorganisation Act from the State of Madras are not estates within the meaning of article 31A (2)(a) of the Constitution and therefore the Act is not protected under article 31A (I) from attack under articles 14, 19 and 31 of the Constitution. 850 Re. The next contention on behalf of the petitioners is that the Act makes a discrimination between areca and pepper plantations on the one hand and certain other plantations on the other and should therefore be struck down as violative of article 14 of the Constitution. Section 2(39) of the Act defines "plantation" to mean any land used by a person principally for the cultivation of tea, coffee, rubber or cardamom or such other kind of special crops as may be specified by the Government by notification in the gazette. Areca and pepper plantations have however not been included in this definition. It is urged on behalf of the petitioners that in this part of the State there are a large number of areca and pepper plantations which are practically run on the same lines as tea, coffee and rubber plantations and there is no reason why discrimination should be made between areca and pepper plantations on the other hand and tea, coffee and rubber plantations on the other. The discrimination is said to arise from the provisions of section 3 and section 57 of the Act. Section 3(viii) which occurs in Chap. II dealing with the acquisition of the interest of landowners by tenants excepts tenancies in respect of plantations exceeding thirty acres in extent from the application of that chapter. The result of this is that tenants in plantations exceeding thirty acres in extent cannot acquire the interest of the landowners with respect to such plantations and the landowners continue to own such plantations as before. Further section 57 which is in Chap. III provides for exemption of all plantations whatever their extent from the provisions of that Chapter. Thus the ceiling area provided in section 58 will not apply to plantations which will be left out in calculating the ceiling area for the purpose of s.58. Further, s.59(2) provides that in calculating the ceiling area any cashew estate if it was a cashew estate on April, 11, 1957 and continued as such at the 851 commencement of section 59 (provided the cashew estate was principally planted with cashewnuts tree and be a contiguous area not below 10 acres) will continue to be owned or held as before, though the ceiling in such cases would be reduced to half of that provided in s.58. These provisions inter alia confer benefits on those who hold plantations as defined in section 2(39) and also on those who have cashew estates as defined in the Explanation to section 59(2). The contention on behalf of the petitioners is that there is no reason why the same benefits which have been conferred on plantations as defined in the Act should not be conferred on those who hold areca and pepper plantations, and that there are no intelligible differentia which would justify the State legislature in treating the pepper and areca plantations differently from rubber, tea and coffee plantations. Article 14 has been the subject of consideration by this Court on a number of occasions and the principles which govern its application have been summarised in Shri Ram Krishna Dalmia vs Shri Justice section R. Tendolkar (1), in these words: "(a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles; (c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems 852 made manifest by experience and that its discriminations are based on adequate grounds; (d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest; (e) that in order to sustain the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and (f) that while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. " The petitioners rely on cl.(f) of this summary and contention is that there is nothing to show either in the Act or even in the affidavit filed on behalf of the State in reply to the petitions or in the circumstances brought to the notice of the court that the classification in this case which excludes areca and pepper plantations and includes tea, coffee and rubber plantations is a proper classification based on intelligible differentia which are related to the objects and purposes of the Act. 853 This brings us to a consideration of the reasons which may have impelled the legislature to treat plantations as a class differently from other lands. The objective of land reform including the imposition of ceilings on land holdings is to remove all impediments which arise from the agrarian structure inherited from the past in order to increase agricultural production, and to create conditions for evolving as speedily as possible an agrarian economy with a high level of efficiency and productivity (see p. 178 of the Second Five Year Plan). It is with this object in view that ceiling on land holdings has been imposed in various States. Even so, it is recognised that some exemptions will have to be granted from the ceiling in order that production may not suffer. This was considered in the Second Five Year Plan at p. 196 and three main factors were taken into account in deciding upon exemptions from the ceiling, namely: (1) integrated nature of operations, especially where industrial and agricultural work are undertaken as a composite enterprise, (2) specialised character of operations, and (3) from the aspect of agricultural production the need to ensure that efficiently managed farms which fulfil certain conditions are not broken up. Bearing these criteria in mind it was recommended in the Second Five Year Plan (see p. 196) that the following categories of farms may be exempted from the operation of ceiling namely: "(1)tea, coffee and rubber plantation; (2) orchards where they constitute reasonably compact areas; 854 (3) specialised farms engaged in cattle breeding, dairying, wool raising etc; (4) sugarcane farms operated by sugar factories; and (5) efficiently managed farms which consist of compact blocks, on which heavy investment or permanent structural improvements have been made and whose break up is likely to lead to a fall in production. " The same view has been reiterated in Chap. XIV of the Third Five Year Plan dealing with Land Reform and ceiling on agricultural holdings and para 28 thereof refers to the grounds of exemption envisaged by the Second Five Year Plan. It is obvious therefore that when the State legislature in this case exempted tea, coffee, rubber and cardamom plantations from the ceiling under Chap. III and treated plantations of over 30 acres as a special case for the purpose of Chap. II, it must have had the principles enunciated above in mind to differentiate them from ordinary cultivation of other crops. If that be so, the question immediately arises whether there is any reason for treating areca and pepper plantations differently. If there is none and areca and pepper plantations stand so far as these conditions are concerned on the same footing as tea, coffee and rubber plantations there will clearly be a discrimination against them by the provisions of the Act referred to above. Turning now to pepper plantations, first, we may refer to the information contained in Farm Bulletin No. 55 relating to pepper cultivation in India issued by the Farm Information Unit, Directorate of Extension, Ministry of Food and Agriculture, New Delhi in September 1959. It appears from this bulletin that Kerala is the most important pepper producing State in India, where pepper is cultivated on an organised plantation scale over 855 fairly extensive areas. There are three distinct regions of the pepper growing belt, namely, (1) The Travancore and Cochin region. (2) The Malabar and South Canara region, and (3) the Coorg and North Canara region. Though pepper is essentially a homestead garden crop, growers were encouraged to grow it on plantation scale since 1928 when the price of pepper rose to about Rs. 700/ per candy. Since then there has been a further rise in the price of pepper with the result that new homestead gardens and plantations have sprung up and pepper cultivation has extended a good deal. During the last fifty years, pepper which was largely a household garden crop has emerged as a plantation crop and fairly large sized plantations of pepper exist in the submontane eastern parts of North Malabar and the Hosdrug taluk of South Canara, (the area from which these petitions come). In Hosdrug taluk in particular pepper is grown mostly on large scale plantations and it is here that the finest and the best organised pepper plantations in India exist. Some of the largest plantations among them have an area of a 100 to 150 acres. Pepper vines commence yielding usually from the third year, the yield increasing gradually until the vines come to full bearing in about ten years. The economic life of a vine varies from place to place. From the tenth to the 25th year, the vines are in full bearing, and the yield begins to decline after the 30th year. The initial outlay on pepper plantations is heavy and the pepper crop requires continuous attention and care. The total area under pepper is over 2 lakhs acres out of which about 20,000 acres are under pure pepper plantations. The initial expenditure on laying out a pepper plantation can be recovered only after several years and the best organised and most extensive pepper plantations of India are in the Hosdrug taluk, South Canara (from where these petitions come) and North Malabar. 856 This information taken from Farm Bulletin 55 shows that in the last fifty years pepper in India has reached the plantation stage and in particular in Hosdrug taluk from where these petitions come there are the best organized and most extensive pepper plantations in India. The initial cost of laying out a pepper plantation is heavy and the pepper vines yield nothing for three years and full production comes only in the tenth year. Therefore, where pepper is cultivated as a plantation crop on a large scale the cost is heavy and may be comparable to the outlay on large scale tea, coffee and rubber plantations. It is in these circumstances that we have to consider whether there has been discrimination against pepper plantations when they have not been included in the definition of plantation under section 2(39) of the Act. Turning to arecanut, reference may be made to Farm Bulletin No. 14 issued by the same authority. The major arecanut growing belt in India is again the same regions, i.e., South Canara, Malabar, Coorg and Travancore Cochin along with parts of Mysore, Bengal and Assam. Arecanut is also grown on plantation scale. Since the crop begins to bear fruit after about eight years, large sums have to be expended up to the bearing stage without any income till then. The estimated life of an arecanut garden is about 50 to 60 years, though some of the palms in the garden will be dying occasionally or becoming uneconomic and it will be necessary to replace them. For this reason underplanting is taken up periodically. It appears further from the Proceedings of the Ninth Annual General Special and Twelfth Ordinary Meetings of the Indian Central Arecanut Committee held on January 23, 1958, that the question whether arecanut gardens should be put under ceiling or not and whether there would be hampering of production which would be against national interest if a ceiling were imposed on such gardens had been referred to a Sub committee for consideration. 857 The Sub committee reported that if areca gardens were brought under the ceiling it would hamper production which would be against the national interest and recommended to the Planning Commission, the Central Government and the State Governments that, as proposed by the Planning Commission in respect of tea, coffee and rubber plantations, orchards, specialised farms and efficiently managed farms, arecanut gardens be also similarly exempted from ceiling. The Sub committee also noticed that arecanut cultivation involved heavy capital outlay in establishing, maintaining and protecting the arecanut trees. This recommendation of the Sub committee came up for consideration before the Indian Central Arecanut Committee on January 23, 1958, and was accepted. Thus these proceedings show that fixation of ceiling on arecanut gardens would hamper production which would be detrimental to national economy. It is in this background therefore that we have to consider whether the non inclusion of areca and pepper plantations in the definition in section 2(39) with the result that areca and pepper plantations do not enjoy similar benefits as others, is discriminatory. From what we have said above it has not been shown that there is any appreciable difference between the economics of tea, coffee and rubber plantations and areca and pepper plantations. It is true that plantations in areca and pepper are not so widespread as tea, coffee and rubber plantations but it is equally true that in this particular area from which these petitions come areca and pepper plantations are very common. The fact however that areca and pepper plantations are very common only in this area of the State of Kerala is no reason for treating them differently from tea, coffee and rubber plantations which are apparently more evenly distributed throughout the State. If the criteria evolved by the Planning Commission, as already indicated, apply to tea, coffee and rubber 858 plantations in our opinion they equally apply to areca and pepper plantations and there is no reason for differentiating between these two sets of plantations. So far as areca is concerned we have the recommendation of the Sub committee, mentioned above, endorsed by the Indian Central Arecanut Committee, that it would be detrimental to national economy not to extend the benefit of exemption from ceiling to arecanut plantations in the same way as is done in the case of tea, coffee and rubber plantations. As for pepper we have it from Farm Bulletin No. 55 that the best organised and most extensive pepper plantations of India are in Hosdrug Taluk of South Canara and that some of them are even as large as 100 to 150 acres each. The result of the application of the ceiling and other provisions of the Act would mean the break up of these plantations and may result in fall in production. It is to avoid the break up of tea, coffee and rubber plantations and the consequent fall in production that ceiling has not been imposed on these plantations. The same reasons in our opinion lead to the conclusion that pepper plantations should also be treated similarly. In this connection reference may be made to the opinion expressed in Farm Bulletin No. 55 where the author has said that it is impossible to keep a large plantation of pepper in good tip top condition, without incurring heavy expenditure and without great efforts and has added that in the existing conditions no one planter should have more than 10 acres of pepper plantation. This would seem to suggest that 10 acres is the economic optimum limit for pepper plantations. It is not clear however on what basis this recommendation is based, for undoubtedly the bulletin shows that there are plantations of much larger extent in this area and the plantations here are the best organised and the most extensive throughout the whole of India. The only reason which seems to have been given in support of the opinion that 859 10 acres is the optimum area for a pepper plantation is that one planter in that region was of the view that unless the price of one candy of pepper remained at a high level of anything between Rs. 1,500/ and Rs. 2,000/ it will be impracticable and unprofitable to maintain large scale plantations of pepper in these regions, and if prices go down for below this level, large scale pepper plantations may have even to be abandoned. This does not afford a sufficient basis for holding that 10 acres is the optimum holding for a pepper plantation. In the first place, it is mentioned at p. 8 of the bulletin that pepper began to be grown on plantation scale when the price rose to about Rs. 700/ per candy in 1928. Therefore even if the price falls below Rs. 1,500/ to Rs. 2,000/ per candy there is no reason why pepper cultivation on a plantation scale should become impracticable, particularly as it is unlikely that the cost of only pepper will fall and not all other commodities. At p. 72 the bulletin mentions that the cost of cultivation of pepper can be brought down only if the general price level is brought down substantially. Now there is no reason to suppose that there would be a catastrophic fall in the price level of pepper only which would make all pepper plantations above 10 acres uneconomic and unprofitable. In any case this is not the reason urged on behalf of the State in support of not including pepper plantations in the definition of plantation. In this connection we ought to add that the counter affidavit filed by the respondent is very unsatisfactory; no serious attempt has been made at all to justify the exclusion of pepper and arecanut from the exemption granted to tea, coffee, rubber and cardamom; no facts are stated and no data supplied in reply to the detailed allegations made in the petitions challenging the validity of the classification in question. The only reason given by the State in the counter affidavit is that a plantation crop is generally understood 860 to refer only to tea, coffee and rubber and cardamom. It is not quite clear what exactly is meant by this one sentence in the counter affidavit in support of the definition. If a plantation crop is generally understood to refer to only tea, coffee, rubber and cardamom, it is not understood why the definition provides for extending the word "plantation to other crops by notification. The very fact that power has been reserved for extending the definition by notification to other crops shows that other crops can also be grown on plantation scale. In view therefore of what we have said above with respect to the economics of areca and pepper cultivation, it is obvious that no sufficient reason has been shown for differentiating areca and pepper plantations in this area from tea, coffee and rubber plantations in the State. Making all the presumptions in favour of the classification made under s.2(39) it is clear that there is nothing on the face of the law or the surrounding circumstances which has been brought to our notice in this case on which the classification contained in section 2(39) can be said to be reasonably based. Considering the object and purpose of the Act and the basis on which exemption has been granted under Chapters II and III to plantations as defined in the Act, there appears to be no reason for making any distinction between tea, coffee and rubber on the one hand and areca and pepper on the other in this particular case. It is not as if tea, coffee and rubber are grown only on a large scale while areca and pepper are mostly grown on a small scale. We find from the report of the Plantation Inquiry Commission, 1956, that small holdings exist in tea, coffee and rubber plantations also and are in fact the majority of such plantations. For example, in the report of the Plantation Inquiry Commission relating to coffee at pp. 9 and 14 we find that out of the total number of registered estates more than 4,500 are between 5 acres and 25 acres while only about 2,200 861 estates are above 25 acres. Further there are more than 24,000 estates below 5 acres. Similarly at p. 97, Chap. XI, Part III of the Report dealing with rubber, out of the total of over 26, 709 rubber estates, 23,300 are up to 5 acres, 1,900 up to 10 acres and only about 1,500 above 10 acres. So it appears that the large majority of plantations whether they be of coffee or rubber are below 10 acres and that is also the case with area and pepper plantations. Thus there is no reason for giving preference to plantations of tea, coffee and rubber over plantations of area and pepper for the conditions in the two sets of plantations whether for the purpose of ceiling under Chap. III or for the purpose of acquisition of landowners ' rights under Chap. II are the same. The reasons therefore which call for exemption of tea, coffee and rubber plantations equally apply to areca and pepper plantations and there is no intelligible differentia related to the object and purpose of the Act which would justify any distinction in the case of tea, coffee and rubber plantations as against area and pepper plantations. We are therefore of opinion that the provisions relating to plantations are violative of article 14 of the Constitution. The next question is whether these provisions are severable, that is to say, whether the Kerala legislature would have passed the Act without these provisions. That depends upon the intention of the legislature and as far as we can judge that intention from the provisions of the Act, it seems clear to us that the legislature did not intend that the provisions relating to acquisition by tenants and ceilings should apply to plantations as defined in the Act, so that they may have to be broken up with consequent loss of production and detriment to national economy. It seems that the legislature could not have intended in order to carry out the purpose of the legislation to do so even after breaking up all the plantations which 862 existed in the State. It follows therefore that the legislature would not have passed the rest of the Act without the provisions relating to plantations. As these provisions affect the entire working out of Chapter II and III of the Act which are the main provisions thereof, it follows that these provisions relating to plantations cannot be severed from the Act and struck down only by themselves. Therefore, the whole Act must be struck down as violative of article 14 of the Constitution so far as it applies to ryotwari lands in those areas of the State which were transferred to it from the State of Madras, and we order accordingly. Then we come to the attack that the Act is violative of article 14 on account of the manner in which ceiling has been fixed under section 58 thereof. Section 2(12) defines a "family" as meaning husband, wife and their unmarried minor children or such of them as exist. There are three kinds of families existing in this State namely, the joint Hindu family, Marumakhathayam family and Aliyasanthana family, the latter two being matriarchal. In the matriarchal family the husband and wife are not members of the same family but belong to different families. The joint Hindu family does not merely consist of the husband, wife and unmarried minor children; it consists at least of the husband wife and all the children whether married or unmarried and whether minor or adult. The definition of "family" therefore in the Act is an artificial one which does not conform to any of the three kinds of families prevalent in the State. Turning now to section 58, the ceiling has been fixed in two ways. The first is by reference to a family as defined in the Act of not more than five members which is allowed 15 acres of double crop nilam or its equivalent with an addition of one acre of double crop nilam or its equivalent for each 863 member in excess of five, so however that the total extent of the land shall not exceed 25 acres of double crop nilam or its equivalent. The second is by reference to an adult unmarried person who is allowed 7.50 acres of double crop nilam or its equivalent. It has been urged on behalf of the State that the provisions as they stand do not make any discrimination whatsoever for there is the same provision for all adult unmarried persons and the same for all families as defined in the Act. This in our opinion is an over simplification of the provision relating to ceiling under section 58. On an argument of this kind no provision would ever be discriminatory for it is unlikely that a provision would on the face of it make a discrimination. The discriminatory nature of the provision has to be judged from the results that follow from it and we have no doubt that the results which follow from this double provision as to ceiling are bound to be discriminatory. If the ceiling had been fixed with respect to one standard whether it be of an individual person or of a natural family by which we mean a family recognised in personal law, the results may not have been discriminatory. But where the ceiling is fixed as in the present case by a double standard and over and above that the family has been given an artificial definition which does not correspond with a natural family as known to personal law, there is bound to be discrimination resulting from such a provision. A simple illustration will explain how the results of the manner in which the ceiling has been fixed by section 58 will lead to clear discrimination between person and person. Take the case of an adult unmarried person and a minor who is an orphan with no father, mother brother or sister. Assume further that each owns 25 acres of land under personal cultivation. The former who is an adult unmarried person will retain 7 acres and will have to surrender 17.50 acres as excess land. The latter will be an artificial family under the definition of that word 864 in section 2(12). This follows from the fact that a family consists of husband, wife and their unmarried minor children or such of them as exist. This is also made clear by section 61(2) which shows that even a minor who has no parents, and no brothers or sisters will constitute a family under section 2(12). This minor therefore as constituting a family will be entitled to 15 acres of land and will have to surrender only 10 acres as excess land. No justification has been shown to us on behalf of the State for this discriminatory treatment of two individual persons; nor are we able to understand why such discrimination which clearly results from the application of the provisions of section 58(1)is not violative of article 14 of the Constitution. Examples can be multiplied with reference to joint Hindu families also, which would show that in many cases discrimination will result on the application of these provisions to joint Hindu families. Similar would in our opinion be the case with Marumakhathayam and Aliyasanthana families where as we have already pointed out the husband and wife do not belong to the same family as known to personal law. Discrimination therefore is writ large on the consequences that follow from the provisions of section 58(1). We are therefore of opinion that section 58(1) is violative of the fundamental right enshrined in article 14; as that section is the basis of entire Chap. III the whole Chapter must fall with it. This would be an additional reason why Chap. III should be struck down as violative of Art 14 in its application to ryotwari landas which have come to the State of Kerala from the State of Madras. (6) It is contended that the manner in which the compensation is cut down progressively in sections 52 and 64 of the Act is violative of article 14. The Compensation payable under section 52 is determined in this manner. First the purchase price is arrived at under section 45. Thereafter section 52(2)(b) provides that the landowner or the intermediary, except in the 865 case of religious, charitable and educational institution of a public nature, would be entitled to compensation. The compensation would consist of (1) the value of structures, wells and embankments of a permanent nature situated in the land and belonging to the landowner or the intermediary, as the case may be, and (2) the percentage of the value of interest of the landowner or the intermediary in respect of the land and the improvements other than those falling under sub cl. (i) according to the scales specified in Sch. Schedule II then provides that the first Rs. 15,000/ . of the compensation will be paid in full. Thereafter there will be a reduction of 5 per cent. in each slab of Rs. 10,000/ till we reach compensation above Rs. 1,45,000/ Thereafter the compensation arrived at under section 52 read with section 45 is reduced by 70 per cent so that the landowner or the intermediary gets only 30 per cent of what has been arrived at under section 52 (2) (b) read with section 45. Similarly in section 64 the compensation payable for excess land surrendered is (i) the full value of any structures, wells and embankments of a permanent nature situate in the land and belonging to the person who surrenders such land, and (ii) the percentage of the market value of the land and improvements other than those specified above. Here again on the first Rs. 15,000/ compensation at 60 per cent is to be paid. Thereafter the compensation is reduced by 5 per cent for each slab of Rs. 15,000/ till we reach over Rs. 1,75,000/ when the compensation is reduced by 75 per cent. The contention on behalf of the petitioners is that there is no intelligible differentia on which the purchase price determined under section 45 or the market value is to be reduced by different percentages depending on the total purchase price or the total market value of the interest to be acquired. The reply on behalf of the State is that there is really no discrimination inasmuch 866 as the same percentage is reduced where the compensation payable to different persons is the same. That is undoubtedly so. But that alone is not in our opinion the end of the matter. The question which is posed for our consideration is why a person in whose case the purchase price or the market value Rs. 15,000/ should get the full purchase price or suffer a reduction in the market value at a certain rate while another person in whose case compensation is more than Rs. 15,000/ should suffer reductions at a different rate which reductions become progressively higher as the purchase price or the market value increases. We could understand once the purchase price or the market value had been determined a uniform cut therefrom for all persons entitled to compensation. That would then raise the question of adequacy of compensation and unless the cut was so large as to make the compensation illusory the cut may be protected by Art.31(2). But in the present case there is not a uniform cut on the purchase price or the market value for all persons, the cut is higher as the purchase price or the market value gets bigger and bigger after the first slab of Rs. 15,000/ . This difference in cut in being justified on behalf of the State on the same principle on which (for example) the slab system exists for purposes of income tax. We are however of opinion that there is no comparison between the slab system of income tax rates and the present cuts. Taxation is a compulsory levy from each individual for the purpose of the maintenance of the State. We may therefore reasonably expect that a rich man may be required to make a contribution which may be higher than what may be proportionately due from his income for that purpose as compared to a poor man. This principle cannot be applied in a case where a person is deprived of his property under the power of eminent domain for which he is entitled to compensation. There is no reason why when two persons are deprived of their property one richer than the other, they should be paid at 867 different rates when the property of which they are deprived is of the same kind and differs only in extent. No such principle can be applied in case where compensation is being granted to a person for deprivation of his property. Where one person owns property valued at Rs. 15,000/ while another owns property valued at Rs. 30,000/ , both are equally deprived of the property. When therefore it comes to a question of payment of compensation we can see no reason why a person whose compensation amounts to Rs. 15,000/ should get the whole of it or a large part of it while another person whose compensation amounts to (say) Rs. 30,000/ should get something less than the first person. It is not as if there is some difference in the nature of the property which might justify different payments of compensation. What the Act provides is to work out the purchase price or the market value first for the purpose of determining compensation and then make different cuts from the purchase price or the market value according to whether in one case the purchase price or the market value is Rs. 15,000/ and in another case it is more than Rs. 15,000/ . No justification, is pointed out for this discrimination except the principle on which the slab system for the purpose of income tax is justified. That principles as we have just pointed out does not apply to a case of compensation. Nor are we able to see any rational classification which would justify different cuts based simply on the amount of compensation worked out on the basis of purchase price or market value. The only thing we can see is that because a person is possibly richer he must be paid less for the same type of land while a person who is poorer must be paid more. This kind of discrimination in the payment of compensation cannot in our opinion be possibly justified on the objects and purposes of the Act. The object and purpose of the Act, as we have already said, is to grant rights to cultivating tenants so that they may 868 improve their lands resulting in larger production to the benefit of the national economy. Secondly, the object of the Act is to provide land for the landless and to those who may have little land by taking excess land from those who have large tracts of lands so that peasant proprietorship may increase with consequent increase in production due to greater interest of the cultivator in the soil. But these objects have no rational relation which would justify the making of different cuts from the purchase price or the market value for the purpose of giving compensation to those whose interests are being acquired under the Act. We can therefore see no justification for giving different compensation based on different cuts from the purchase price or the market value as provided in sections 52 and 64 of the Act. We may in this connection refer to Kameshwar Singh vs The State of Bihar (1), in which similar question with respect to compensation provided in the Bihar Land Reforms Act, 1950, came up for consideration. There the Act provided compensation at different rates depending upon the net income. The landowner having the smallest net income below Rs. 500/ was to get twenty times the net income as compensation while the landowner having the largest net income, i. e., above 1,00,000/ was to get only three times of the net income. Intermediate slabs provided different multiples for different amounts of net income. That provision was struck down by the Special Bench of the Patna High Court as violative of article 14. It may be mentioned that decision was given before the Constitution (First Amendment) Act adding article 31A and the Ninth Schedule to the Constitution was passed. Three learned Judges composing the Special Bench who heard that case were unanimously of the 869 opinion that such difference in payment was violative of article 14 and the principle of progressive taxation did not apply to compensation for land acquired. We are of opinion that the view taken in that case is correct and the same applies to the present case. We may point out that case came in appeal to this Court (see, The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh (1) ). The appeal however was heard after article 31A and the Ninth Schedule had been introduced in the Constitution and therefore this Court had no occasion to consider whether such difference in payment of compensation would be violative of article 14. We are therefore clearly of opinion that the manner in which progressive cuts have been imposed on the purchase price under section 52 and the market value under section 64 in order to determine the compensation payable to land owners or intermediaries in one case and to persons from whom excess land is taken in another results in discrimination and cannot be justified on any intelligible differentia which has any relation to the objects and purposes of the Act. As the provision as to compensation is all pervasives, the entire Act must be struck down as violative of article 14 in its application to ryotwari lands which have come to the State of Kerala from the State of Madras. In view of what we have said above on the main points urged in the petitions, it is unnecessary to consider other subsidiary points attacking particular sections of the Act on the ground that they were unreasonable restrictions on the right to acquire, hold and dispose of property under article 19(1)(f). We therefore allow the petitions and strike down the Act in relation to its application to ryotwari lands which have come to the State of Kerala from the State of Madras. The petitioners will get their costs from the State of Kerala, one set of hearing costs. 870 SARKAR, J. I wish to say a few words on two of the questions that arise in these cases. The Act, the validity of which is challenged, provides for acquisition of lands for equitable distribution among the people who require it for cultivation by themselves. It provides for payment of compensation to those whose interests are acquired. It also provides for a mode of valuation of these interests. Then it provides by sections 52 and 64 for payment of compensation at a progressively smaller rate for larger valuations. For the higher slabs in the valuation made as provided by the Act, less and less is paid by way of compensation. It is said that these provisions for progressively diminishing compensation are discriminatory and unconstitutional. This is the first point with which I propose to deal. The question is whether the payment of compensation at a progressively smaller rate as the valuation is higher offends article 14 of the Constitution. Now it is not disputed that progressively higher rate of taxation by an Act taxing income is not unconstitutional. I think such taxation is too well recognised now to be challenged. If that is so and that was the basis on which arguments proceeded in this case I am unable to see that a statute providing for acquisition of property and for payment of compensation at a progressively lower rate for the higher slabs of valuation can be unconstitutional. "The reason for progressive taxation in the case of inheritance taxes and income taxes is the ability of those receiving or giving to pay": Willis 's Constitutional Law (1936 ed.) p. 597. The cases in America that I have looked up also put the matter on the same basis. The classification by progressively higher taxation in a taxing statute is therefore good if based on the tax payers ' ability to pay. It is however said that what applies in the case of a taxing statute cannot apply to a statute 871 permitting acquisition of property on payment of compensation. I do not see why ? I am not aware that the test for determining whether there has been unequal treatment is different with different varieties of statutes, that the test for a taxing statute is not the same as that for a statute providing for acquisition on payment of compensation. I think the test is the same for all statutes, and it is that there must be an intelligible differentia having a rational relation to the object of the Act. Now the object of a taxing statute is to collect revenue for the governance of the country. Ability to pay is acknowledged to be an intelligible differentia having a relation to such an object. The object of the statute with which we are concerned is to acquire land on payment of compensation so that the land may be equitably distributed among the people. If under a statute whose object is to collect revenue more can be legitimately demanded from a person having more, it seems to me that under a statute whose object is to acquire land by paying compensation less can equally legitimately be paid to a person who has more. Ability to pay, or which is the same thing as ability to bear the loss arising from smaller payment received, would in either case be an intelligible differentia having a rational relation to the object of the Act. In one case it serves the object by collecting more revenue for adding to the resources for governing the country and in the other case it serves the object by making it possible for the State by payment of less money out of its resources to acquire lands for better distribution. In both cases the State resources are benefited, in one by augmentation and in the other by prevention of larger depletion. Therefore, I would accept the learned Attorney General 's argument that sections 52 and 64 of the Act cannot be held to be discriminatory and void for the same reason on which 872 progressive rates of taxation are held not to be so in the case of an Income tax Act. The next question on which I wish to say a few words concerns those provisions of the Act which exempt plantations of tea, coffee, rubber or cardamom or such other kinds of special crops as the Government may specify, from certain provisions of the Act. Plantations have been defined in section 2(39) of the Act as land used by a person principally for the cultivation of tea, coffee, rubber or cardamom or other notified crops. No other crop appears to have been notified yet. Section 58 of the Act provides the ceiling area of land which may be held by any individual proprietor. Land above the ceiling has to be surrendered to the Government. Section 57 of the Act provides that this provision would not apply to plantations as defined in section 2(39). Again, Ch. 2 of the Act which gives the tenants the right to purchase land from the landlords and vests in the Government the lands of the landlords not themselves cultivating them above the ceiling fixed, is by section 3 (viii) not made applicable to plantations exceeding thirty acres in extent. The question is whether the benefit so given to the plantations as defined in the Act is discriminatory. The petitioners own large scale cultivation of areca and pepper. They contend that no legitimate differentiation is possible between lands on which areca and pepper are grown and lands on which tea, coffee, rubber and cardamom are grown. No doubt the presumption is that a statute is constitutional but such presumption is not conclusive. It is also true that a court is entitled to assume the existence of all rational basis on which the classification made by an Act may be justified. Even so, it seems to me, that the present classification is, on the materials now before us not justified. It may be that plantations of tea, coffee 873 rubber and cardamom, especially the first three, are usually large in size and require big investments. It may be that they are carried on as industries which give employment to a large labour force. These characteristics may however only justify the putting of large plantations of these crops in a class. The Act however exempts all lands on which tea, coffee, rubber or cardamom is grown irrespective of the size of the business carried on or of labour employed on them, as a class. Materials have been placed before us to show that there are a very large number of smaller plantations growing tea, coffee and rubber. There are also many areca and pepper plantations exceeding thirty acres in area. There is no reason to put tea, coffee, rubber and cardamom plantations in a class as distinguished from similar sizes of plantations of areca and pepper. None at least has been shown by the State of Kerala to exist. The only ground shown in the affidavit of the State of Kerala seeking to justify the classification of tea, coffee, rubber and cardamom plantations in one class is that "plantation crop is generally understood to refer only to tea, coffee, rubber and cardamom" and that "areca and pepper are not generally grown on a plantation scale". I am unable to think that these afford sufficient justification for making a discrimination in favour of tea, coffee, rubber and cardamom plantations. It would appear from the Planning Commission 's Report that other kinds of crops might profitably be grown as plantation crops. In any case, a general understanding even if there was one, is not sufficient basis for discrimination. With regard to the other statements of the State, it is enough to say that the Act does not make a discrimination because of the size of the plantations. Therefore, there is no point in saying that areca and pepper are not grown on a plantation scale. For these reasons I think the provisions in the Act making a discrimination in favour of tea, 874 coffee, rubber and cardamom plantations cannot be upheld. For the same reason, I think the discriminatory treatment made in favour of cashew plantation also cannot be sustained. Sections 3(viii), 57(1)(d) and 59(2) of the Act are therefore, in my opinion, invalid. I think however that these provisions are severable from other parts of the Act. I think it cannot be reasonably said that the legislature would not put the Act into operation if these provisions are taken out of it. The deletion of the provisions does not further make it impossible for the rest of the Act to operate. I am, therefore, unable, to hold that because the sections mentioned above are bad, the whole Act should be declared to be bad. That is all I wish to say in this judgment. With regard to the other matters arising in this case, I agree with the judgment delivered by Wanchoo J. AYYANGAR, J. I entirely agree with the order that the petitions should be allowed and the impugned Act struck down in relation to its application to ryotwari lands which came into the State of Kerala from the State of Madras this being the only relief which the petitioners seek from this Court. My only reason for this separate judgment is because I do not agree with that portion of the reasoning in the judgment just now pronounced in these petitions where it deals with the interpretation of article 31A(2). In my judgment in the companion case Writ Petition No. 105 of 1961 I have endeavored to point out what according to me is the proper construction of this Article and I adhere to that view. I consider that on article 31A(2) as it stands even after the fourth Amendment, properties held on ryotwari tenures and the interest of the royt in such lands would not be "estates" for the purposes of that Article. No doubt as pointed out by me in the 875 other judgment, if there was a law existing on the date of the Constitution in relation to land tenures under which "estate" were defined as including not merely lands held by intermediaries and of others holding under favourable tenurers, but also of ryotwari proprietors having direct relationship with the Government and paying full assessment, such latter category of interests might also be comprehended within the term "estate" by reason of the words "have the same meaning as that expression. .has in the existing law relating to land tenures in force in that area" in Art.31A(2)(a). That is the real basis and the ratio underlying the decisions of this Court in Ram Ram Narain Medhi vs State of Bombay(1), and Atma Ram vs State of Punjab(2). In all other cases (apart from the two categories specially added by the Fourth Amendment) no lands other than those held by intermediaries or held on a favourable tenure would fall within the definition of "an estate" this being according to me the central concept or the thread which runs through the entire definition. The choice between the different interpretations of the Article does not however present itself for the disposal of this petition which has to be answered in favour of the petitioner even on the view of the scope of article 31A which has commended itself to my colleagues. Where an "existing law in relation to land tenures in force in an area" contains a definition of an "estate" and that definition excludes the interest of a roytwari proprietor, the very words of Art.31A(2)(a) which I have extracted earlier would negative the applicability of its provisions to that tenure. article 31A being out of the way I agree that the provision in (1) section 2 (39) of the Act which by definition excludes pepper and areca plantations from the category of the plantations which are named in it which are exempted from the operative provisions of the impugned Act, (2)s. 58 for the 876 determination of the ceiling in respect of different individuals who are brought within the scope of the enactment, and (3) ss.52 and 64 for determining the compensation payable to the several classes of persons whose lands are acquired under Act, all these are violative the guarantee of the equal protection of laws under article 14 of the Constitution. I therefore agree in the order proposed that the petitions be allowed, and with costs. Petitions allowed.
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The Kerala Agrarian Relations Act was challenged in court for several reasons. The court decided that a bill passed by one group of lawmakers, then re-passed by a new group after an election, was still valid. It became law when the President approved it. This follows the earlier decision in *Purushothaman Nambudiri vs State of Kerala*. The Act took certain amounts from the money paid to landowners as compensation. The court said this was not a sneaky way for the state to illegally take money from landowners and add it to the state's funds. The Act set up a fund to help people hurt by the law, giving them loans or grants. But the rules for who could get this help were too broad. They included people not actually affected by the Act. These rules were not allowed because they went beyond what the law intended. Some land in Kerala used to be part of Madras. The people who owned land there (called "ryotwari pattadars") did not have "estates" as defined by the Constitution. This means the Act was not protected from being challenged under certain articles (14, 19, and 31) of the Constitution. This refers to *State of Bihar vs Rameshwar Pratap Narain Singh*. The Act treated tea, coffee, and rubber plantations differently than areca and pepper plantations. The court said there was no good reason for this difference. So, the parts of the Act about plantations violated the Constitution's guarantee of equal treatment (Article 14). These plantation rules could not be removed from the rest of the Act. The entire Act was ruled unconstitutional as it applied to ryotwari lands that came from Madras. The way the Act set limits on how much land a person could own (called a "ceiling") was also unfair and violated Article 14. This ceiling rule was the basis for a whole section of the Act, so that whole section was also struck down. The way the Act reduced the price paid for land based on its value was also unfair. This discrimination could not be justified. Because the compensation rules were so important, the whole Act was unconstitutional as it applied to ryotwari lands from Madras. One judge, Justice Sarkar, disagreed. He said that lowering compensation for more valuable land was not a violation of Article 14. He also said that the special treatment for tea, coffee, rubber, cardamom, and cashew plantations was wrong, but those parts could be removed without striking down the entire Act. Another judge, Justice Ayyangar, said that ryotwari lands were not "estates" under the Constitution, even after it was changed. He referred to previous cases (*Ram Ram Narain Medhi, vs State of Bombay* and *Atma Ram vs State of Punjab*). He also said that excluding pepper and areca plantations, setting land ownership limits, and setting compensation amounts all violated the Constitution's guarantee of equal protection under the law (Article 14).
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The petitioners come from that part of the State of Kerala which was formerly in the South Canara district of the State of Madras and came to the State of kerala by the State Reorganisation Act of 1956. In these lands they have areca and pepper plantations besides rubber plantation. The petitioners further submit that their lands which they hold as ryotwari pattadars are not estates within the meaning of article 31A (2)(a) of the Constitution and therefore the Act so far as it affects them is not protected under article 31A, and it is open to them to assail it as violative of the rights conferred on them by articles 14, 19 and 31 of the Constitution. (4) The Act exempts plantation of tea, coffee, rubber and cardamom from certain 834 provisions thereof, but no such exemption has been granted to plantations of areca and pepper, and this is clearly discriminatory and is violative of article 14. (6) The compensation which is payable under Chapters II and III of the Act has been reduced by progressive cuts as the amount of compensation increase and this amounts to discrimination between persons similarly situate and is therefore violative of article 14. The petitions have been opposed on behalf of the State and its contention is, firstly, that the Bill did not lapse and the President 's assent was rightly given to it rightly became law; secondly, that the petitioners ' estates lands are estates within the meaning of article 31A (2)(a) and the Act is therefore protected under that Article; thirdly, that the Act is not a piece of colourable legislation and the State Legislature was competent to enact the Act under item 18 of List II and item 42 of List III of the Seventh Schedule and there is no acquisition of money by the state under the Act and reference is made to section 80 of the Act in this connection; and lastly, that the discrimination alleged with respect to plantations, the fixation of ceiling and the deductions from compensation payable under Chapters II and III is really no discrimination at all and the provisions in that behalf are based on an intelligible differentia which is in accordance with the object and purpose of the Act. The attack is based on the facts that in section 52 of the Act compensation payable to a land owner is reduced after the purchase price to be paid by the tenant to whom the land is to be assigned has been ascertained, and that in section 64 of the Act the compensation payable to a person from whome excess land is taken in reduced by certain percentage after the market value of the land has been determined. There is no doubt that certain deductions are made from the purchase price payable by the tenant under section 45 and from the market value before compensation is arrived at for payment to the land owner under section 52 and to the person surrendering excess land under section 64. It is however clear that tenants are not bound to apply to acquire the land which they hold as tenants and where they do not do so, section 44 (3) provides that they become the tenants of Government and shall be liable to pay to the Government the rent payable in respect of the land from the date on which the right, title and interest over the land vested in the Government. Besides the adequacy of compensation provided under section 52 for acquisition by the State of the interest of the land owner cannot be challenge on the ground that the compensation provided by the law is not adequate: See article 31(2). It is only because the compensation provided under section 52 is a percentage of the purchase price as calculated under section 45 that it appears as if the State is taking away a part of the compensation due to the landowner. Section 52 is however only a method for determining compensation and the whole compensation due to the land owner is to be found in section 52 and it cannot therefore be said that any part of the compensation is being taken away by the State. It is true that Government may assign the lands to those who apply under section 70 but it is not bound to do so and here again there will be a time lag between the vesting of the excess land in the Government under s.62 and its assignment to those who are eligible under section 70. As we have already said the compensation to those who surrender excess land is all provided by section 64 and even if there is a difference between the price payable under section 72 by the assignee and the compensation payable to the landowner under section 64 that would not amount to taking away the money of the landowner by a device particularly when the assignment is bound to take place sometime after the property has been acquired by Government. It is also clear from the provisions contained in Chapters II and III of the Act that the main purpose of the Act is to do away with intermediaries and to fix a ceiling and give the excess land, if any, to the landless or those who hold land much below the ceiling. This argument is however fallacious because the compensation due to the land owner or the person from whom excess land is acquired is not what is provided by section 45 and s 72 but what is provided in section 52 and s 64. The adequacy of that compensation cannot be 840 challenged in view of article 31(2), and there is therefore no justification for saying that the money due to the landowner or the person from whom the excess land is acquired is being taken away by the State. That however is not so and the compensation to which the landowner or the person from whom the excess land is acquired is to be found only in sections 52 and 64 and there is thus no question of taking away any money due to the landowner. We may in this connection refer to r. 161 (a)(i) and (ii) and r. 161 (b) (i) and (ii) which are so framed as to take within their scope even persons not affected by the Act, though r. 161 (a)(iii) and r. 161(b)(iii) are with respect to persons who may be affected by the Act. But the rules which have been actually framed will not affect the provisions of section 80 which clearly show that the fund is for the benefit of those who are affected by the Act, namely, those who are affected by Chapters II and III of the Act, i.e., those landowners whose rights have been acquired under sections 41 and 42 and those persons from whom excess land is taken away under section 62. Section 80 thus clearly shows that any surplus that may arise is not taken away by the State for its own revenue purposes but is meant to be used for the benefit of those affected by the Act and therefore even the apparent result of the difference between sections 45 and 62 and ss 64 and 72 is taken away by the constitution of the fund under section 80, and it cannot be said at all under the circumstances that any device has been employed in the Act to take away the moneys of the landowners or the persons from whom excess land is taken away for the purpose of adding to the revenue of the State. The meaning of the word "estate" in sub cl (a) is the same as it might be in the existing law relating to land tenure in force in a particular area. 845 Let us therefore look at state of the law as it was in the State of Madras on January 26, 1950, for the area from which these petitions come was then in the district of South Canara, which was then a part of the Province of Madras, which became the State of Madras on January 26, 1950. We are therefore of opinion that the word "estate" in the circumstances can only have the meaning given to it in the Act of 1908 as amended up to 1950 in the State of Madras as it was on the date the Constitution came into force. Considering, however, that the Act of 1908 was in force all over the State of Madras but did not apply to lands held on ryotwari settlement and contained a definition of the word "estate" which was also applicable throughout the State of Madras except the areas indicated above, it is clear that in the existing law relating to land tenures the word "estate" did not include the lands of ryotwari pattadars, however valuable might be their rights in lands as they eventually came to be recognised. Further, as the Act of 1908 was in force in South Canara also, though there may not be many estates as defined in that Act in this area it follows that in this area also the word "estate" would have the same meaning as in the Act of 1908 and therefore ryotwari pattadars and their lands would not be covered by the word "estate". We are therefore of opinion that lands held by ryotwari pattadars in this part which has come to the State of Kerala by virtue of the States Reorganisation Act from the State of Madras are not estates within the meaning of article 31A (2)(a) of the Constitution and therefore the Act is not protected under article 31A (I) from attack under articles 14, 19 and 31 of the Constitution. The next contention on behalf of the petitioners is that the Act makes a discrimination between areca and pepper plantations on the one hand and certain other plantations on the other and should therefore be struck down as violative of article 14 of the Constitution. It is urged on behalf of the petitioners that in this part of the State there are a large number of areca and pepper plantations which are practically run on the same lines as tea, coffee and rubber plantations and there is no reason why discrimination should be made between areca and pepper plantations on the other hand and tea, coffee and rubber plantations on the other. The discrimination is said to arise from the provisions of section 3 and section 57 of the Act. The contention on behalf of the petitioners is that there is no reason why the same benefits which have been conferred on plantations as defined in the Act should not be conferred on those who hold areca and pepper plantations, and that there are no intelligible differentia which would justify the State legislature in treating the pepper and areca plantations differently from rubber, tea and coffee plantations. Article 14 has been the subject of consideration by this Court on a number of occasions and the principles which govern its application have been summarised in Shri Ram Krishna Dalmia vs Shri Justice section R. Tendolkar (1), in these words: "(a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles; (c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems 852 made manifest by experience and that its discriminations are based on adequate grounds; (d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest; (e) that in order to sustain the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and (f) that while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. " It is obvious therefore that when the State legislature in this case exempted tea, coffee, rubber and cardamom plantations from the ceiling under Chap. If there is none and areca and pepper plantations stand so far as these conditions are concerned on the same footing as tea, coffee and rubber plantations there will clearly be a discrimination against them by the provisions of the Act referred to above. Therefore, where pepper is cultivated as a plantation crop on a large scale the cost is heavy and may be comparable to the outlay on large scale tea, coffee and rubber plantations. It is in these circumstances that we have to consider whether there has been discrimination against pepper plantations when they have not been included in the definition of plantation under section 2(39) of the Act. It is true that plantations in areca and pepper are not so widespread as tea, coffee and rubber plantations but it is equally true that in this particular area from which these petitions come areca and pepper plantations are very common. The only reason which seems to have been given in support of the opinion that 859 10 acres is the optimum area for a pepper plantation is that one planter in that region was of the view that unless the price of one candy of pepper remained at a high level of anything between Rs. In view therefore of what we have said above with respect to the economics of areca and pepper cultivation, it is obvious that no sufficient reason has been shown for differentiating areca and pepper plantations in this area from tea, coffee and rubber plantations in the State. Considering the object and purpose of the Act and the basis on which exemption has been granted under Chapters II and III to plantations as defined in the Act, there appears to be no reason for making any distinction between tea, coffee and rubber on the one hand and areca and pepper on the other in this particular case. So it appears that the large majority of plantations whether they be of coffee or rubber are below 10 acres and that is also the case with area and pepper plantations. Thus there is no reason for giving preference to plantations of tea, coffee and rubber over plantations of area and pepper for the conditions in the two sets of plantations whether for the purpose of ceiling under Chap. The reasons therefore which call for exemption of tea, coffee and rubber plantations equally apply to areca and pepper plantations and there is no intelligible differentia related to the object and purpose of the Act which would justify any distinction in the case of tea, coffee and rubber plantations as against area and pepper plantations. We are therefore of opinion that the provisions relating to plantations are violative of article 14 of the Constitution. That depends upon the intention of the legislature and as far as we can judge that intention from the provisions of the Act, it seems clear to us that the legislature did not intend that the provisions relating to acquisition by tenants and ceilings should apply to plantations as defined in the Act, so that they may have to be broken up with consequent loss of production and detriment to national economy. As these provisions affect the entire working out of Chapter II and III of the Act which are the main provisions thereof, it follows that these provisions relating to plantations cannot be severed from the Act and struck down only by themselves. Therefore, the whole Act must be struck down as violative of article 14 of the Constitution so far as it applies to ryotwari lands in those areas of the State which were transferred to it from the State of Madras, and we order accordingly. It has been urged on behalf of the State that the provisions as they stand do not make any discrimination whatsoever for there is the same provision for all adult unmarried persons and the same for all families as defined in the Act. This minor therefore as constituting a family will be entitled to 15 acres of land and will have to surrender only 10 acres as excess land. No justification has been shown to us on behalf of the State for this discriminatory treatment of two individual persons; nor are we able to understand why such discrimination which clearly results from the application of the provisions of section 58(1)is not violative of article 14 of the Constitution. When therefore it comes to a question of payment of compensation we can see no reason why a person whose compensation amounts to Rs. We are therefore clearly of opinion that the manner in which progressive cuts have been imposed on the purchase price under section 52 and the market value under section 64 in order to determine the compensation payable to land owners or intermediaries in one case and to persons from whom excess land is taken in another results in discrimination and cannot be justified on any intelligible differentia which has any relation to the objects and purposes of the Act. As the provision as to compensation is all pervasives, the entire Act must be struck down as violative of article 14 in its application to ryotwari lands which have come to the State of Kerala from the State of Madras. Therefore, I would accept the learned Attorney General 's argument that sections 52 and 64 of the Act cannot be held to be discriminatory and void for the same reason on which 872 progressive rates of taxation are held not to be so in the case of an Income tax Act. Plantations have been defined in section 2(39) of the Act as land used by a person principally for the cultivation of tea, coffee, rubber or cardamom or other notified crops. Section 57 of the Act provides that this provision would not apply to plantations as defined in section 2(39). The only ground shown in the affidavit of the State of Kerala seeking to justify the classification of tea, coffee, rubber and cardamom plantations in one class is that "plantation crop is generally understood to refer only to tea, coffee, rubber and cardamom" and that "areca and pepper are not generally grown on a plantation scale". For these reasons I think the provisions in the Act making a discrimination in favour of tea, 874 coffee, rubber and cardamom plantations cannot be upheld. With regard to the other matters arising in this case, I agree with the judgment delivered by Wanchoo J. AYYANGAR, J. I entirely agree with the order that the petitions should be allowed and the impugned Act struck down in relation to its application to ryotwari lands which came into the State of Kerala from the State of Madras this being the only relief which the petitioners seek from this Court. No doubt as pointed out by me in the 875 other judgment, if there was a law existing on the date of the Constitution in relation to land tenures under which "estate" were defined as including not merely lands held by intermediaries and of others holding under favourable tenurers, but also of ryotwari proprietors having direct relationship with the Government and paying full assessment, such latter category of interests might also be comprehended within the term "estate" by reason of the words "have the same meaning as that expression. article 31A being out of the way I agree that the provision in (1) section 2 (39) of the Act which by definition excludes pepper and areca plantations from the category of the plantations which are named in it which are exempted from the operative provisions of the impugned Act, (2)s. 58 for the 876 determination of the ceiling in respect of different individuals who are brought within the scope of the enactment, and (3) ss.52 and 64 for determining the compensation payable to the several classes of persons whose lands are acquired under Act, all these are violative the guarantee of the equal protection of laws under article 14 of the Constitution.
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The Kerala Agrarian Relations Act was challenged in court for several reasons. The court decided that a bill passed by one group of lawmakers, then re-passed by a new group after an election, was still valid. It became law when the President approved it. This follows the earlier decision in *Purushothaman Nambudiri vs State of Kerala*. The Act took certain amounts from the money paid to landowners as compensation. The court said this was not a sneaky way for the state to illegally take money from landowners and add it to the state's funds. The Act set up a fund to help people hurt by the law, giving them loans or grants. But the rules for who could get this help were too broad. They included people not actually affected by the Act. These rules were not allowed because they went beyond what the law intended. Some land in Kerala used to be part of Madras. The people who owned land there (called "ryotwari pattadars") did not have "estates" as defined by the Constitution. This means the Act was not protected from being challenged under certain articles (14, 19, and 31) of the Constitution. This refers to *State of Bihar vs Rameshwar Pratap Narain Singh*. The Act treated tea, coffee, and rubber plantations differently than areca and pepper plantations. The court said there was no good reason for this difference. So, the parts of the Act about plantations violated the Constitution's guarantee of equal treatment (Article 14). These plantation rules could not be removed from the rest of the Act. The entire Act was ruled unconstitutional as it applied to ryotwari lands that came from Madras. The way the Act set limits on how much land a person could own (called a "ceiling") was also unfair and violated Article 14. This ceiling rule was the basis for a whole section of the Act, so that whole section was also struck down. The way the Act reduced the price paid for land based on its value was also unfair. This discrimination could not be justified. Because the compensation rules were so important, the whole Act was unconstitutional as it applied to ryotwari lands from Madras. One judge, Justice Sarkar, disagreed. He said that lowering compensation for more valuable land was not a violation of Article 14. He also said that the special treatment for tea, coffee, rubber, cardamom, and cashew plantations was wrong, but those parts could be removed without striking down the entire Act. Another judge, Justice Ayyangar, said that ryotwari lands were not "estates" under the Constitution, even after it was changed. He referred to previous cases (*Ram Ram Narain Medhi, vs State of Bombay* and *Atma Ram vs State of Punjab*). He also said that excluding pepper and areca plantations, setting land ownership limits, and setting compensation amounts all violated the Constitution's guarantee of equal protection under the law (Article 14).
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tition No. 350/ of 1977 etc. Under Article 32 of the Constitution of India. S.K. Jain and S.S. Khanduja for the Petitioners. R.N. Poddar and Ms. A. Subhashini for the Respondents. The following Judgments were delivered 877 CHANDRACHUD, C.J.: A large group of persons holding vacant lands in different urban agglomerations in the country had filed writ petitions in this Court, challenging the validity of some of the key provisions of the Urban Land (Ceiling and Regulation) Act, 33 of 1976. Those writ petitions were disposed of on November 13, 1980 by a Constitution Bench consisting of Krishna Iyer J., Talzapurkar J., A.P.Sen J., and the two of us. Each of our three learned Brethren delivered a full judgment. We delivered a short judgment and stated that fuller reasons will follow later. We had discussed with one another the several points arising in the writ petitions. But, we were running against time, not an unusual predicament, since Krishna Iyer J. was due to retire on November 15, 1980, Tulzarpurkar J. differed from all of us, holding that the impugned Act is not protected under Article 31 C or under Article 31 B since, it did not further the Directive principles contained in clauses (b) and (c) of Article 39 of the Constitution. The learned Judge held further that since Chapter III of the Act, comprising the substratum of the very scheme of the Act was invalid the entire Act had to be struck down as unconstitutional. A.P. Sen J. agreed with us on all the points except that according to him, subsections (1), (2) and (3) of section 23 and the opening words of section 23(4) of the Act are unconstitutional, not being protected by Articles 31 B and 31 C of the Constitution. Krishna Iyer J. concurred with us in holding that the entire Act is valid save and except section 27(1), insofar as that section imposes restrictions on the transfer of any urban or urbanisable land with a building or a portion of such building, which is within the ceiling area. We took the view that the impugned Act was intended to and did in fact implement or achieve the purpose of clauses (b) and (c) of Article 39 and that, the vice from which a few provisions of the Act could be shown to suffer, would not justify a contrary conclusion. We are free to confess that if the full text of the judgment of Krishna Iyer J. were available to us sufficiently in advance we would not have delivered a separate order stating that fuller reasons will follow later. The judgment had to be pronounced on November 13, 1980 since, Krishna Iyer J. was due to retire two days later. As we have stated earlier, all of us had together discussed the various points arising in these cases and we knew the conclusions to which we had respectively come. But, it is not possible to express agreement with the line of reasoning of a judgment, without examining 878 the judgment carefully. That opportunity became available to us latter. We have gone through Krishna Iyer J. 's judgment closely and find that there is nothing that we can usefully add to it. The only further order which we propose to pass now is say that we agree fully with the reasons given by Krishna Iyer J. in his judgment reported in 1981(1) S.C.C. 166. CHANDRACHUD, C.J. We have perused the judgment prepared by Brother Tulzapurkar with care but, with respect, we are unable to agree with him that the Urban Land (Ceiling and Regulation) Act 33 of 1976, does not further the Directive Principles of State Policy in clauses (b) and (c) of Article 39 of the Constitution. The vice from which a provision here or a provision there of the impugned Act may be shown to suffer will not justify the conclusion that the Act is not intended to or does not, by its scheme, in fact implement or achieve the purposes of clauses (b) and (c) of Article 39. The definition of 'family ' in section 2(f), which in relation to a person means the individual, the wife or husband, as the case may be, of such individual, and their unmarried minor children, will not necessarily lead to concentration of wealth in the hands of a few person or families. Such is not the intendment, nor the drive, nor the direct and inevitable consequence of the aforesaid definition of 'family '. Section 23 of the Act is in our opinion valid and does not suffer from any constitutional infirmity. The definition of the word 'industry ' in clause (b) of the Explanation to that section is undoubtedly unduly wide since it includes "any business, profession, trade, undertaking or manufacture". If sub section (1) of section 23 were to stand alone, no doubt could have arisen that the Urban Land Ceiling Act is a facade of a social welfare legislation and that its true, though concealed, purpose is to benefit favoured private individuals or associations of individuals. But the preponderating provision governing the disposal of excess vacant land acquired under the Act is the one contained in sub section (4) of section 23 whereby, all vacant lands deemed to have been acquired by the State Government under the Act "shall be disposed of. to subserve the common good". The provisions of sub section (4) are "subject to the provisions of sub sections (1), (2) and (3) "but the provisions of sub section (1) 879 are enabling and not compulsive and those of sub sections (2) and (3) are incidental to the provisions of sub section (1). The disposal of excess vacant lands must therefore be made strictly in accordance with the mandate of sub section (4) of section 23, subject to this, that in a given case such land may be allotted to any person; for any purpose relating to, or in connection with, any 'industry ' or for the other purposes mentioned in sub section (1), provided that by such allotment, common good will be subserved. The governing test of disposal of excess land being 'social good ', any disposal in any particular case or cases which does not subserve that purpose will be liable to be struck down as being contrary to the scheme and intendment of he Act. The Preamble to the Act ought to resolve interpretational doubts arising out of the defective drafting of section 23, It shows that the Act was passed with the object of preventing concentration of urban land in the hands of a few persons and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve the common good. 'Common good ' being the writing on the wall, any disposal which does not serve that purpose will be outside the scope of the Act and therefore lacking in competence in diverse senses. Private property cannot under our Constitution be acquired or allotted for private purposes though an enabling power like that contained in sub section (1) of section 23 may be exercised in cases where the common good dictates the distribution of excess vacant land to an industry, as defined in clause (b) of the Explanation to section 23. Section 11(6) which provides that the amount payable under sub section (1) or sub section (5) of section 11 shall, in no case, exceed two lakhs of rupees is valid. The amount thus payable is not illusory and the provision is not confiscatory. Rupees two lakhs is not like a farthing even if the excess land may be a fortune. Finally, we are of the opinion that subsection (1) of section 27 of the Act is invalid in as far as it imposes a restriction on transfer of any urban or urbanisable land with a building or a portion only of such building, which is within the ceiling area. Such property will therefore be transferable without the constraints mentioned in sub section (1) of section 27 of the Act. The Writ Petitions are accordingly dismissed except for the restricted striking down of section 27(1) of the Act. There will be no order as to costs 880 Fuller reasons will follow latter. KRISHAN IYER, J. I agree with the learned Chief Justice both regarding the constitutionality of the legislation and regarding the partial invalidation of section 27 (1). Nevertheless, I consider it necessary to strike a few emphatic notes of concordance having special regard to the discordance of my learned brother Tulzapurkar, J. I have carefully perused the judgment of Tulzapurkar, J, but must express my deferential disagreement because on a few fundamentals there is sharp divergence between us. I proceed to turn the focus only on three issues, namely, the alleged artificiality of "family ' as defined in section 2 (f) of the Urban Land (Ceiling and Regulation) Act, 1976 (for short, the Act), the invalidity of section 23 of the Act as discriminatory and, therefore, unconstitutional and the invalidity of section 11 (6) of the Act on the score that the compensation offered is illusory and, therefore, violative of article 31 (2) of the Constitution. The legislation, as its title indicates, is obviously a measure for inhibiting concentration of urban lands in the hands of a few persons and fore quitetable distribution of such land to subserve the common good. Article 39 (b) and (c) of the Constitution are directly attracted and there is no doubt that the fullest exploitation of the material resources of the community undoubtedly requires distribution of urban land geared to the common good. It is also a notorious fact that concentration of urban land in private hands is an effective forbiddance of the maximum use of such land for industrial purposes at a critical juncture when the nation is fighting for survival through industrialisation. It needs no argument to conclude that the objective of the legislation as set out in the long title and in the statutory scheme is implementation of Part IV of the Constitution. The Directive principles of State policy being paramount in character and fundamental in the country 's governance, distributive justice envisaged in article 39 (b) and (c) has key role in the developmental process of the socialist Republic that India has adopted. The conclusion is inevitable that is a broad measure of State policy, ceiling on and regulation of urban land ownership is an imperative of economic independence and is, therefore, on the national agenda of planned development. Indeed, there was no controversy on this question before us. One of the points which has been argued and has found approval with my learned brother 881 Tulzapurkar, J., turns on the gross inadequacy of compensation fixed under section 11 (6) of the Act. There is a specific case before us that urban land worth a few crores will fall a prey to acquisition under this Act, but thanks to section 11 (6), "the amount" payable in return to the owner shall not exceed Rs. 2 lakhs. This, it is contended, is an illusory compensation in reckless disregard of the market value of the property acquired. I am unable to agree with this submission. The taking over of large conglomerations of vacant land is a national necessity if article 39 is a constitutional reality. "Law can never be higher than the economic order and the cultural development of society brought to pass by that economic order." (Marx). Therefore, if article 38 of the Constitution which speaks of a social order informed by economic justice, is to materialise, law must respond effectively and rise to the needs of the transformation invisioned by the founding fathers. But it is contended that any legislation which violates article 31 (2) or article 19 (1) (f) (both of them have since been deleted by the 44th Amendment to the Constitution although on the relevant date they were part of part III) must fail notwithstanding the fact that articles 31B and 31 C shield the legislation in question. It is said that the Act is vulnerable for the reason that right to property armoured by the above two Articles is inviolable unless the taking is for a public purpose in contrast to a private industry and the payment in return, even if not an equivalent, is be fair enough so as not to be castigated as illusory. The various amendments to article 31 culminating in the present provision which provides for the payment of an "amount" disclose a determined approach by parliament in exercise of its constituent power to ensure that full compensation or even fair compensation cannot be claimed as a fundamental right by the private owner and that short of paying a 'farthing for a fortune ' the question of compensation is out of bounds for the court to investigate. The question is whether in the light of Kesavananda Bharati (especially the observations of Chandrachud, J), a sum of Rs. 2 lakhs in section 11 (6) is a farthing for a fortune. I repudiate the proposition that payment of a sum of Rs. 2 lakhs, whatever the total value of the property in the market may be is so fictitious and flimsy as to be a farthing. There are no absolutes in law as in life and the compulsions of social realities must unquestionably enter the judicial verdict. 882 What is the dimension of Indian penury? What is the basis of our constitutional order? What is the goal of the Republic? What is the meaning of the egalitarian ethos of our society? What do we mean by "We, the people of India"? Unless these profound roots of our social constitutional order are probed, we can never reach an effective answer to legal formal issues. The roots and fruits of our National Charter depend on a clear grasp of the constitutional fundamentals. In this context, it is important to remember what, right at the beginning even as the proceedings of the constituent Assembly were culminating, Nehru had warned: If we cannot solve this problem soon, all our paper constitutions will become useless and purposeless. If India goes down, all will go down; if India thrives, all will thrive; and if India lives, all will live. He had repeated with emphasis: The first task of this Assembly is to free India through a new constitution, to feed the starving people and to clothe the naked masses, and to give every Indian the fullest opportunity to develop himself according to his capacity. Indeed, the tryst with destiny that India made when it became free found expression in a historic speech by the then Prime Minister, Jawahar Lal Nehru: The service of India means the service of the millions who suffer. It means the ending of poverty and ignorance and disease and inequality of opportunity. The ambition of the greatest man of our generation has been to wipe every tear from every eye. That may be beyond us, but as long as there are tears and suffering, so long our work will not be over. We must notice the Indian human condition. "Indian poverty, to many who have an acquaintance with poverty in similar societies is unique", writes Segal in his book The Crisis of India: "It is unique in its depths, which seems incapable of supporting life at all; unique in its blatancy, for it is everywhere, in city and village, and concealed among chimneys or trees, not isolated like an epidemic in an 883 inaccessible slum, but everywhere, on the movement of one 's feet, always some where in the circle of one 's sight; unique in its sheer magnitude for in India the poor are not to be numbered in hundreds of thousands, but in hundreds of millions; unique in the quality of its submission, which registers a kind of glazed pride." In this context we may also read what Rajen Babu stated as a framer of the Constitution: To all we give the assurance that it will be our endeavour to end poverty and squalor and its companions hunger and disease, to a abolish distinctions and exploitation and to ensure decent conditions of living. We may have to remember that a galaxy of Constitution makers like Sardar Patel and B. Pant and Rajagopalachari, not to speak of Jawahar Lal Nehru, where doubtful about the court being given the power to pronounce upon the question of compensation when the State acquired property. Indeed, it is revealing to read the debates in condensed form given by Granville Austin: Sardar Patel closed the debate with a speech that sounded like a requiem for land lords. What did 'public use ' mean he wondered. Pant then said: Suppose the government acquires zamindari rights and then abolishes them. Or what if the Government takes over Connaught Place (the central shopping and office area of New Delhi) and then redistributes the buildings to the tenants? The first stage is acquisition. Does that come under this clause? To Ayyar 's answer of 'Certainly ', Pant replied that he opposed the wording if it means that the government would not be free to determine the compensation it would have to pay. If this clause covers all cases of acquisition said Rajagopalachari, then the question of the justness of compensation will go to the courts 'with the result that government functioning will be paralysed '. Panikkar suggested that they should take out the 'just ' so that it would not be justiciable. Pant replied that if this covered acquisition for social purposes, 'then I submit payment of compensation should not even be compulsory '. Patel concluded the discussion. 884 'If the word 'just ' is kept, ' he said, 'we come to the conclusion that every case will go to the Federal Court. ' Therefore "just" is dropped . . The Assembly greeted the committee 's actions favourably. We need not go into the details except to state that even Gandhiji took the view that anything like compensation could possibly not be given when property was taken from the property owners by the State for community benefit. I mention this only to drive home the point that right to property is not part of the basic structure of the Constitution even as right to poverty is not the basic structure of India for ever. The whole adventure of the Constitution is to remove poverty and in that process remove concentration of property, not for a return, but for almost free, if the justice of the situation commended it self to the legislation to take it that way. Of course, it may be a deception to say that an "amount" is paid if nothing is paid except a tittle. So what we have to consider is whether the amount of Rs. 2 lakhs is so utterly deceptive and totally nominal as to be discarded as a farthing with contempt. Having regard to the human condition of a large percentage of pavement dwellers and slum dewllers in our urban areas and proletarian miserables in our rural vastnesses, any one who gets Rs. 2 lakhs can well be regarded as having got something substantial to go by. In a society where half of humanity lives below the breadline, to regard Rs. 2 lakhs as a farthing is farewell to poignant facts and difficult to accept. In my view, with the greatest respect for my learned brother, I am unable to assent to the view that section 11 (6) contravenes article 31 (2) because the Payment stipulated is a mere mockery. To put a ceiling on the maximum amount payable when property is taken is reasonable and does not spell discrimination unless the maximum itself is a hoax, being trivial. In a Constitution which creates a Socialist Republic egalite is the rule of life and where gross inequalities mar the economic order, a measure of equalization is but one strategy of promoting equality and has to be viewed as part of the dynamics of social justice. Indeed, even in the Income Tax Act, at a certain stage, almost all the income is taken away by a steep rate of tax leaving next to nothing to the income earner. We have to be pragmatic and show empathy with the values 885 of the Constitution. Chief Justice Earl Warren 's statement is apposite as a reminder to our judicial conscience: Our judges are not monks or scientists, but participants in the living stream of our national life, steering the law between the dangers of rigidity on the one hand and of formlessness on the other. Our system faces no theoretical dilemma but a single continuous problem: how to apply to ever changing conditions the never changing principles of freedom. I have no hesitation in holding section 11(6) as invulnerable. 'Family ' as defined in s.2(f) has been held invalid by my learned brother Tulzapurkar, J, as an arbitrary, artificial creation of the statute inconsistent with the natural unit prevalent in the country. Here again. I must emphasise that law is never static and must respond to the challenges of change: The law is not an end in itself, nor does it provide ends. It is preeminently a means to serve what we think is right . .Law is here to serve! To serve what? To serve, insofar as law can properly do so, within limits that I have already stressed, the realization of man 's ends, ultimate and mediate, Law cannot stand aside from the social changes around it. It is possible that in the last century the prevalent concept of family was of a certain pattern. Indeed, in the diversity of Indian social structure the concept of 'family ' has varied from region to region and even from community to community and we cannot postulate any parameters in this behalf. Moreover, fission, not fusion, is the modern trend and wherever might have been the situation in Indian rural life in the 1950s there is no doubt that nuclear families are becoming the vogue in the late 1970s and 1980s of Indian urban life. In the Western countries the family unit consists of the parents and their minor children and the West has invaded the East in life style 886 atleast in our cities. Whatever may be the pastoral life of old or the idyllic picture we may cherish the social facts tell a different tale in contemporary India of the cities. There is hardly space for a unclear family to live in urban conditions and to think of large joint families as the natural unit is to resurrect by gone ways of life and turn the blind eye to the rapid growth of the small family of man and wife 'we two and we shall have two ' is the desideratum and social factum. In these days of family planning and self reliance of the adult we cannot condemn as arbitrary, by a process of judicial ratiocination, the legislative provision that a family shall be defined as the parents plus their minor children. I, therefore, hold that 'family ' as defined in section 2(f) of the Act accords with the current lifestyle in urban conditions and is neither artificial nor arbitrary nor violative of Act 14. It is noteworthy that many agrarion legislations have been upheld by this court in a spate of recent cases where the definition of 'family ' is substantially the same. I may permit myself a few observations on section 23 of the Act and the grounds of invalidation relied on by the challengers. The section has been loosely or ambivalently drafted and runs thus: 23. Disposal of vacant land acquired under the Act. (1) It shall be competent for the State Government to allot, by order, in excess of the ceiling limit any vacant land which is deemed to have been acquired by the State Government under this Act or is acquired by the State Government under any other law to any person for any purpose relating to, or in connection with, any industry or for providing residential accommodation of such type as may be approved by the State Government to the employees of any industry and it shall be lawful for such person to hold such land in excess of the ceiling limit. Explanation For the purposes of this section, (a) where any land with a building has been acquired by the State Government under any other law and such building has been subsequently demolished by the State Government, than, such land shall be deemed to be vacant land acquired under such other law: 887 (b) "industry" means any business, profession, trade, undertaking or manufacture. . (4) Subject to the provisions of sub sections (1), (2) and (3), all vacant lands deemed to have been acquired by the State Government under this Act shall be disposed of by the State Government to subserve the common good on such terms and conditions as the State Government may deem fit to impose. Certain basics must be remembered as ideological tools of legal interpretation. The purpose of the enactment, garnered from the Preamble, is to set a ceiling on vacant urban land, to take over the excess and to distribute it on a certain basis of priority. The whole story of the legislation, the long gestation of pre legislative consideration, the brooding presence of article 39(b) and (c) and the emphasis in section 23(4) on common good as the guiding factor for distribution point to public purpose, national development and social justice as the cornerstone of the policy of distribution. It is not and never can be compulsory taking from some private owners to favour by transfer other private owners. The prevalent pathology of corrupt use of public power cannot be assumed by the court lest the same charge be levelled against its echelons. The wide definition of 'industry ' or the use of general words like 'any person ' and 'any purpose ' cannot free the whole clause from the inarticulate major premise that only a public purpose to subserve the common good and filling the bill of article 39(b) and (c) will be permissible. Even a private industry may be for a national need and may serve common good. Even a medical clinic, legal aid bureau, engineering consultant 's office, private ambulance garage, pharmacist 's shop or even a funeral home may be a public utility. Professions for the people, trade at the service of the community and industry in the strategic sector of the nation 's development may well be in private hands in the transitional stage of our pluralist economy undergoing a fabian transformation. Why should lands allotted to such private industries or professionals be condemned? The touchstone is public purpose, community good and like criteria. If the power is used for favouring a private industrialist or for nepotistic reasons the oblique act will meet with its judicial Waterloo. To presume as probable graft, nepotism, patronage, political cloth, 888 friendly pressure or corrupt purpose is impermissible. The law will be good, the power will be impeccable but if the particular act of allotment is mala fide or beyond the statutory and constitutional parameters such exercise will be a casualty in court and will be struck down. We must interpret wide words used in a statute by reading them down to fit into the constitutional mould. The confusion between the power and its oblique exercise is an intellectual fallacy we must guard against. Fanciful possibilities, freak exercise and speculative aberrations are not realistic enough for constitutional invalidation. The legislature cannot be stultified by the suspicious improvidence or worse of the Executive. I wholly agree with the perspective of my learned brother Sen, J. that Part IV which seeks to build a Social Justice Society, is basic to our constitutional order. Any transgression of article 39(b) and (c) is beyond the scope of section 23(1) and disposal of land thereunder must subserve the common good and not the reverse. This limitation on the wide words of section 23(1) is a matter of semantics and reading down meanings of words with loose lexical amplitude is permissible as part of the judicial process. To sustain a law by interpretation is the rule. To be trigger happy in shooting at sight every suspect law is judicial legicide. Courts can and must interpret words and read their meanings so that public good is promoted and power misuse is interdicted. As Lord Denning said: "A judge should not be a servant of the words used. He should not be a mere mechanic in the power house of semantics". May Lord Denning live long, and his shadow never grow less. " The power of judicial review to stricke at excess or mala fides is always there for vigilant exercise untrammeled by the narrow precedents of Victorian vintage. Prof. H.W.R. Wade 's note of judicial activism, in his recent Hamlyn Lectures, will set the sights right: Brainwashed though British lawyers are in their professional infancy by the dogma of legislative sovereignty, they ought to excuse rather than criticise the logical contortions and evasions to which Judges must resort in their struggle to preserve their powers. I do not see how 889 they can fairly be accused, to borrow words used by Lord Devlin, of moving too far from their base. They would be much more open to criticism if they remained content with the wretchedly narrow base to which they confined themselves 30 years ago, when they took clauses of the "if the minister is satisfied" type at face value. For judicial control, particularly over discretionary power, is a constitutional fundamental. In their self defensive campaign the judges have almost given us a constitution, establishing a kind of entrenched provision to the effect that even Parliament cannot deprive them of their proper function. They may be discovering a deeper constitutional logic than the crude absolute of statutory omnipotence. I have no doubt even the crude drafting of section 23 (4) by the unwanted 'subject to ' will not whittle down the power, why the obligation, to distribute vacant land, not according to personal, political or official fancy but strictly geared to the good set down in article 39 (b) and (c) The question of basic structure being breached cannot arise when we examine vires of an ordinary legislation as distinguished from a constitutional amendment. Kesavananda Bharati cannot be the last refuge of the proprietariat when being legislation takes away their 'excess ' for societal weal. Nor, indeed, can every breach of equality spell disaster as a lethal violation of the basic structure. Peripheral inequality is inevitable when large scale equalisation processes are but into action. If all the judges of the Supreme Court in solemn session sit and deliberate for half a year to produce a legislation for reducing glaring economic inequality their genius will let them down if the essay is to avoid even peripheral inequalities Every large cause claims some martyr, as sociologists will know. Therefore, what is a betrayal of the basic feature is not a mere violation if article 14 but a shocking, unconscienable or unscrupulous travesty of the quintessence of equal justice. If a legislation does go that far it shakes the democratic foundation and must suffer the death penalty. But to permit the Bharati ghost to haunt the corridors of the court brandishing fatal writs for every feature of 890 inequality is judicial paralysation of parliamentary function. Nor can the constitutional fascination for the basic structure doctrine be made a Trojen horse to penetrated he entire legislative camp fighting for a new social order and to overpower the battle for abolition of basic poverty by the 'basic structure ' missile. Which is more basic? Eradication of die hard, deadly and pervasive penury degrading all human rights or upholding of the legal luxury of perfect symmetry and absolute equality attractively presented to preserve the status quo ante? To use the Constitution to defeat the Constitution cannot find favour whit the judiciary I have no doubt that the strategy of using the missile of 'equality ' to preserve die hard, dreadful societal inequality is a stratagem which must be given short shrift by this court. The imperatives of equality and development are impatient for implementation and judicial scapegoats must never be offered so that those responsible for stalling economic transformation with a social justice slant may be identified and exposed of. Part IV is a basic goal of the nation and now that the court upholds the urban ceiling law, a social audit of the Executive 's implementation a year or two later will bring to light the gaping gap between verbal valour of the statute book and the executive slumber of law in action. The court is not the anti hero in the tragedy of land reform urban and agrarian. After all, in a rapidly changing society running on the rails of the rule of law and operated according to constitutional paradigms, the proprietariat is bound to suffer but the country cannot defer the transformation because, then, hunger will know no law. This is the root of the matter. And then comes the irony of continual litigative Clamour and the periodic chorus for property. Dosn 't thou 'ear my 'erse 's, as they canters awaay? Proputty, proputty, proputty than 's what I 'ears 'em saay. And holders and hoarders of wealth may pensively reflect: Few rich men own their own property. The property owns them. 891 I have not had the leisurely advantage of my learned brothers ' full judgments save some discussions but my impending retirement impels a hurried recording of my reasons for subscribing to the order passed just now. 'Tomorrow to fresh woods and pastures new ', but to day must be fulfilled before tomorrow arrives, and so, I deliver this judgment as is my duty to do, TULZAPURKAR, J. By these writ petitions the petitioners, who are holders of vacant land in the urban agglomerations in various States, are seeking to challenge the vires of some of the salient provisions of the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) and since, according to them, some of the impugned provisions are pivotal and non severable, having an impact on its entire scheme, the whole Act is liable to be struck down as being invalid and unconstitutional. The petitioners have, therefore, prayed for an order quashing notices issued to them by the concerned competent authorities under the Act and a mandamus directing the respondents not to implement the provisions thereof against them. The impugned enactment has its genesis in the resolutions passed by eleven sponsoring States under article 252 (1) of the Constitution. The State Legislatures of Andhra Pardesh, Gujarat, Haryana, Himachal Pradesh, Karnataka, Maharashtra, Orissa, Punjab, Tripura, Uttar Pradesh and West Bengal considered it desirable to have an uniform legislation enacted by Parliament for the imposition of ceiling on urban property for the country as a whole and as required by the first part of article 252 (1) of the Constitution passed a resolution to that effect. Parliament accordingly enacted the Urban Land (Ceiling and Regulation) Act, 1976. It received the assent of the President on February 17, 1976 and, in the first instance, it come into force on that day in all the Union Territories and the 11 States which had passed the requisite resolution under the first part of article 252 (1). Subsequently, the Act was adopted, by passing resolutions under the second part of article 252 (1) by the State Legislatures of Rajasthan on March 9, 1976, Manipur on March 12, 1976, Assam on March 25, 1976, Bihar on April 1, 1976, Meghalaya on April 7, 1976 and Madhya Pradesh on September 9, 1976. Thus, the enactment is in force in 17 States and all the Union Territories in the country. It seeks to impose ceiling on vacant lands in urban agglomerations having a population of two lakhs or more and for that purpose classifies such urban agglomerations in various cities and towns in all the State and Union Territories into four categories 892 and fixes the ceiling limit for each of the categories thus: Ceiling limit on vacant land is fixed at 500 sq. metres for the urban agglomerations of the metropolitan areas of Delhi, Bombay, Calcutta and Madras having a population exceeding ten lakhs falling under category 'A ', at 1,000 sq. metres for urban agglomerations with a population of ten lakhs and above, excluding the four metropolitan areas, falling under category 'B ', at 1,500 sq. metres for urban agglomerations with a population between three lakhs and ten lakhs falling under category 'C ' and at 2,000 sq. metres for urban agglo merations with a population between two lakhs and three lakhs falling under category 'C ': vide s.4 read with Schedule I of the Act. The said Schedule does not mention the urban agglomerations having a population of one lakh and above but if a particular State which passed a resolution under article 252 (1) (first part) or if a State which subsequently adopts the Act by passing a resolution under article 252 (1) (second part) wants to extend the Act to such areas, it could do so by a Notification under section 2 (n) (A) (ii) or section 2 (n) (B), as the case may be, after obtaining the previous approval of the Central Government. Chapter III, being the main Chapter, comprising sections 3 to 24, deals principally with imposition and limits of ceiling on vacant land, acquisition and vesting in the State Government of vacant land in excess of the ceiling limits, payment to be made to the holders for such acquisition, disposal of excess vacant land so acquired and exemptions from the applicability of this Chapter. Chapter IV comprising sections 25 to 30 deals with regulation of transfer and the use of urban property; while Chapter V which includes sections 31 to 47, deals with appeals, revisions, offences and punishments and other miscellaneous matters. The primary object and purpose of the Act, as its long title and the Preamble show, is to provide for the imposition of a ceiling on vacant land in urban agglomerations, for the acquisition of such land in excess of the ceiling limit, to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons and speculation and profiteering therein and with a view to bring about an equitable distribution of land in urban agglomerations to subserve the common good, presumably in furtherance of the Directive Principles of State policy contained in article 39 (c) and (b) respectively. The enactment has also been but in the Ninth Schedule as Item 132 by the Constitution (Fortieth Amendment) Act, 1976, in other words, the enactment enjoys the benefit of protective umbrella 893 of both the articles, article 31B and 31C as it stood prior to its amendment by the Constitution (Forty second Amendment) Act, 1976. Dealing with these two articles, namely, articles 31B and 31C and the protective umbrella provided by them in the context of the decision in Kesavananda Bharati 's case this Court in Waman Rao and others vs Union of India & others, has by its order passed on May 9, 1980, held thus: "In Kesavananda Bharati decided on April, 24, 1973 it was held by the majority that Parliament has no power to amend the Constitution so as to damage or destroy its basic structure. We hold that all amendments to the Constitution which were made before April 24, 1973 and by which the 9th Schedule to the Constitution was amended from time to time by the inclusion of various Acts and Regulations therein, are valid and constitutional. Amendments to the Constitution made on or after April 24, 1973 by which the 9th Schedule to Constitution was amended from time to time by the inclusion of various Acts and Regulations therein, are open to challenge on the ground that they, or any one or more of them, are beyond the constituent power of the parliament since they damage the basic or essential features of the Constitution or its basic structure. We do not pronounce upon the validity of such subsequent constitutional amendments except to say that if any Act or Regulation included in the 9th Schedule by a constitutional amendment made after April 24, 1973 is saved by Article 31C as it stood prior to its amendment by the 42nd Amendment, the challenge to the validity of the relevant Constitutional Amendment by which that Act or Regulation is but in the 9th Schedule, on the ground that the Amendment damages or destroys a basic or essential feature of the Constitution or its basic structure as reflected in Articles 14, 19 or 31, will became otiose. 894 Article 31C of the Constitution, as it stood prior to its amendment by section 4 of the Constitution (42nd Amendment) Act, 1976, is valid to the extent to which its constitutionality was upheld in kesavonanda Bharati. Article 31C, as it stood prior to the Constitution (42nd Amendment) Act does not damage any of the basic or essential features of the Constitution or its basic structure. " Since the impugned Act has been put in the Ninth Schedule by the Constitution (Fortieth Amendment) Act, 1976 i. e. after April 24, 1973, the said Constitutional Amendment would be open to challenge on the ground that the same is beyond the constituent power of the Parliament if it damages the essential features or basic structure of the Constitution; but at the same time the impugned Act has, apparently, received the protective umbrella of article 31C as it stood prior to its amendment by 42nd Amendment Act inasmuch as it seems to have been enacted in furtherance of the Directive Principles contained in article 39 (b) and (c) with the result that in order to succeed in their challenge the petitioners will have to cross two hurdles. In the first place they will have to establish that the Act is outside the pale of the protective umbrella of article 31C which they can do by showing that though purporting to do so, it does not, in fact, further any of the said Directive Principles. A scrutiny of the Directive Principles contained in article 39 (b) and (c) clearly shows that the basic postulate underlying the former obviously is that diffusion of ownership and control of the material resources of the community is always in public interest and hence the State is directed to ensure such distribution (equitable) there of as best to subserve the common good, while the postulate underlying the latter obviously is that concentration of wealth as well as means of production in the hands of few is detrimental to common interest and hence the State is directed to ensure such economic system to operate which prevents such concentration. It would, therefore, be clear that if by the impugned enactment the aforesaid objectives of these Directive Principles are not furthered or if the provisions of the enactment run counter to these objectives the Act would lose the benefit of the protective umbrella of article 31 C. Secondly, after crossing this hurdle, the petitioners will have to show further that the 40th Amendment Act by which the impugned Act was included in the Ninth Schedule was beyond the constituent power of the Parliament since it has damaged the basic structure or the 895 essential features of the Constitution as reflected in articles 14, 19 and 31, which of course, they will be able to do by showing that the impugned Act itself flagrantly violates aspects of articles 14, 19 and 31 which constitute the basic structure or the essential features of the Constitution. It may be stated that Counsel for the petitioners principally attacked four provisions of the impugned Act (a) artificial definition of 'family ' given in section 2 (f) in relation to the prescription of ceiling area, (b) provision contained section 11 relating to amounts payable in respect of excess vacant land acquired by the State (c) provision containedins. 23 relating to disposal of excess vacant land acquired by the State and (d) prohibition or restriction on transfer of a building or a part thereof or a flat therein, though unconcerned with excess vacant land, without permission, as being flagrantly violative of those aspects of the petitioners ' fundamental rights under articles 14, 19 and 31 as constitute the essential features or basic structure of the Constitution. Counsel for the petitioners also contended that some of the aforesaid impugned provisions which are pivotal and have an impact on the entire scheme of the Act, in fact, run counter to the Directive Principles of article 39 (b) and (c) and, there fore, but the entire Act outside the pale of the protective umbrella of article 31C of the Constitution. Counsel, therefore, urged that both the 40th Amendment to the extent it inserted the impugned Act in the Ninth Schedule and the impugned Act deserve to be struck down. On the other hand, the learned Attorney General appearing on behalf of the Union of India and counsel for the concerned States of Rajasthan, Andhra Pradesh, Uttar Pradesh and for the concerned competent authorities under the Act, refuted the contentions urged on behalf of the petitioners. It was denied that any provision of the Act runs counter to the Directive Principles of article 39 (b) and (c) of the Constitution. It was pointed out that the impugned Act having been put in the Ninth Schedule and having been enacted in further of the Directive Principles of the State policy contained in article 39 (b) and (c) of the Constitution was protected both under article 31B and 31C of the Constitution. It was disputed that any provision of the Act violated the petitioners ' fundamental rights under articles 14, 19 and 31 and, it was contended that even if there was any such violation, the Act and its provisions could not be 896 challenged by the petitioners on that ground because of the protective umbrella of article 31B and 31C of the Constitution and, therefore, the petitions were liable to be dismissed. I shall first deal with those impugned provisions of the Act, which according to the petitioners, not merely violate their fundamental rights but also have an adverse impact on the protective umbrella afforded by article 31C of the Constitution. In this behalf counsel for the petitioners referred to two provisions, namely. section 2(f) which gives an artificial definition of 'family ' in relation to prescription of ceiling area and section 23 which contains provision relating to disposal of excess vacant land acquitted by the State. Re: section 2(f) in relation to prescription of ceiling area. It is by section 3 of the Act that the ceiling on vacant land in any urban agglomeration is imposed. That section runs thus: "3. Except as otherwise provided in this Act, on and from the commencement in this Act, on person shall be entitled to hold any vacant land in excess of the ceiling limit in the territories to which this Act applies under sub section (2) of section 1. " The ceiling limits referred to in the above section, as stated earlier, have been fixed at 500 sq. metres, 1,000 sq. metres, 1,500 sq. metres and 2,000 sq. metres for vacant lands in urban agglomerations falling in categories A,B,C and D respectively under section 4(1). Section 2(i) defines 'person ' as including an individual, a family, a firm, a company, or not association or body of individuals, whether incorporated or not; while section 2(f) defines 'family ' thus: "Family", in relation to a person means the individual, the wife or husband, as the case may be, of such individual and their unmarried minor children." And the Explanation to this clause states that "minor" means a person who has not completed his or her age of eighteen years. There is no doubt that the aforesaid definition of 'family ' is an artificial one inasmuch as is evcludes from its scope major children two 897 are normally included in the concept of a family; it further completely ignores the normal Joint Hindu Family. Counsel for the petitioners pointed out that if this artificial definition of 'family ' is considered in the context of ceiling limits prescribed under section 4(1) it produces discriminatory results because of adoption of double standard for fixing the ceiling limit one for the artificial family as defined and another for a normal family which includes major children or for Joint Hindu Family governed by Mitakshara Law obtaining in several parts of the country. For instance, in an urban agglomeration falling under category 'A ' where the ceiling limit is prescribed at 500 sq. metres, a family of a father, mother and say three minor sons (being in all five) together will be entitled to retain for itself only 500 sq. metres of vacant land whereas a family of a father and four major sons (being in all five) will be entitled to retain for itself 2,500 sq. metres of vacant land (500 sq. metres for father as a person and 500 sq. metres each for four sons as persons). Counsel urged that such discrimination or inequality arises from the classification made between minor children and major children belonging to a family but such classification is not based on any intelligible differentia having any nexus to the object sought to be achieved by the Act, which is to acquire excess vacant land after leaving the ceiling area to a family and as such the same is clearly violative of article 14 of the Constitution. Counsel strongly relied upon two decisions of this Court in this behalf, namely, decisions in Karimbil Kunhikoman vs State of Kerala and A.P. Krishnasami Naidu etc. vs State of Madras, where on similar ground the whole of Chapter III of Kerala Agrarian Relations Act, 1961 and the whole of Chapter II of the Madras Land Reforms (Fixation of Ceiling on Land) Act, 1961, respectively were struck down by this Court inasmuch as the artificial definition of family together with adoption of double standard for fixing ceiling limit formed the basis of the concerned Chapter in each Act. I find considerable force in counsel 's contention. I may point out that when the agricultural ceiling matters were argued before us counsel for the petitioners therein had raised a similar contention in the context of the artificial definition of 'family ' and the adoption of double standard for fixing ceiling limits obtaining in the several concerned Acts and in support of such contention counsel had placed reliance on the aforesaid two decisions of this 898 Court but we rejected the contention on the ground that ample material had been produced before the Court justifying the adoption of artificial definition of 'family ' and double standard for fixing the ceiling limits in those Acts. Production of such justifying material distinguished the agricultural ceiling matters before us from the said two decisions relied upon by counsel but in the instant case no material whatsoever has been placed before the Court by the respondents justifying the adoption of the artificial definition of 'family ' in section 2(f) and double standard of fixation of ceiling in the impugned Act. It has not been shown that the so called nuclear families allegedly in vogue have replaced normal families which include major sons or joint Hindu families in urban areas. Besides, if the object of the impugned Act is to acquire excess vacant land in urban agglomerations after leaving permissible ceiling area to a family the classification made between minor children and major children belonging to a family has no nexus whatsoever to that object. In my view, therefore, the artificial definition of 'family ' given in section 2(f) when considered in relation to the prescription of the ceiling area under section 4(1) is clearly violative of and strikes at the root of the equality clause contained in article 14 of the Constitution. It cannot be disputed that this artificial definition together with the double standard adopted for fixing the ceiling area runs though and forms the basis of Chapter III of the Act and the discriminatory results or inequalities produced thereby are bound to have an impact on the scheme of that Chapter and, therefore, along with it the whole Chapter III must fall as being violative of article 14. There is yet one more aspect which needs consideration in connection with this adoption of the artificial definition of 'family ' given in s.2 (f) and the double standard for fixing ceiling area. Apart from the discriminatory results which it produces the question is what is its impact in the context of the directive principle contained in article 39 (c) of the Constitution? As stated earlier the postulate underlying the said directive principle in that concentration of wealth in the hands of few is deterimental to common interest and as such the State should ensure such economic system which prevents such concentration and the Act has been put on the Statute book professedly to achieve that objective. But, by adopting the artificial definition of 'family ' in section 2(f) and having double standard for fixing ceiling limit a contrary result is obtained inasmuch as the Act actually permits an unwarranted and unjustified concentration of 899 wealth (urban vacant land) in the hands of a family having major sons in it as compared to the family having minor children. In the illustration given above a family of a father with four major sons is allowed to retain with itself 2,500 sq. metres of vacant land while a family of a father mother and three minor sons is permitted to retain only 500 sq. metres. The position becomes more glaring if I take the illustration of a Joint Hindu Family consisting of five brothers, each having five major sons, as, in such a case the said Joint Hindu Family will be entitled to retain 15,000 sq. metres of vacant land as against 500 sq. metres permitted to be retained by the artificial family. It cannot be said that large joint Hindu families are unknown in urban agglomerations in various cities and towns of the country and instances more glaring than the preceding illustration could be multiplied. In other words, by adopting the artificial definition of 'family ' and double standard for fixing the ceiling area the Act enables unwarranted and unjustified concentration of wealth in the hands of few rather than preventing the same and this certainly would be in teeth of and not in furtherance of the directive principle of article 39(c); in fact, it is a negation of that principle. It is not possible to take the view that the Parliament out of inadvertance ignored joint Hindu Family or forgot the possible concentration of vacant land in the hands of major members of large joint Hindu families, because in another context the concept of Joint Hindu Family was present to the mind of the draftsman as is clear from section 4(7) of the Act. In my view, therefore, the adoption of the artificial definition of 'family ' and double standard for fixing ceiling area one for a family with minor children and another for a family with major children and completely ignoring the concept of Joint Hindu Family in relation to prescription of ceiling area clearly lead to results which run counter to the directive principle contained in article 39(c) of the Constitution. The Act which contains such provision being in teeth of that directive principle must fall outside the pale of protective umbrella of article 31C. Re: s.23 relating to disposal of excess vacant land acquired under the Act. It may be stated that under s.6 every person holding vacant land in excess of the ceiling limit at the commencement of the Act is required to file within the period prescribed a statement before the competent authority having jurisdiction giving full particulars there of 890 and also specifying the vacant land within the ceiling limit which he desires to retain. Sections 8 and 9 provide for preparation of draft statement as regards vacant land held in excess of the ceiling limit, holding of an inquiry in that behalf and preparation of final statement and service thereof on the concerned person by the competent authority, Section 10 provides for acquisition of excess vacant land by the concerned State Government and determination of claims of all persons interested in such excess vacant land and under sub s.(3) it is provided that upon the publication of a notification in that behalf such excess vacant land as may be specified therein shall be deemed to have been acquired by the State Government and the same shall vest absolutely in the State Government free from all encumbrances with effect from the date specified in the notification. Then comes s.23 which deals with disposal of such excess vacant land acquired by the State Government under the Act. It runs as follows: "23.(1) It shall be competent for the State Government to allot, by order, in excess of the ceiling limit, any vacant land, which is deemed to have been acquired by the State Government under this act or is acquired by the State Government under any other law, to any person for any purpose relating to, or in connection with, any industry or for providing residential accommodation of such type as may be approved by the State Government to the employees of any industry and it shall be lawful for such person to hold such land in excess of the ceiling limit. Explanation, For the purposes of this section, (a) Where any land with a building has been acquired by the State Government under any other law and such building has been subsequently demolished by State Government, then, such land shall be deemed to be vacant land acquired under such other law; (b) "Industry" means any business, profession, trade, undertaking or manufacture. (c) In making an order of allotment under sub section (1), the State Government may impose such conditions 901 as may be specified therein including a condition as to the period within which the industry shall be put in operation or, as the case may be, the residential accommodation shall be provided for: Provided that if, on a representation made in this behalf by the allottee, the State Government is satisfied that the allottee could not put the industry in operation, or provide the residential accommodation, within the period specified in the order of allotment, for any good and sufficient reason, the State Government may extend such period to such further period or periods as it may deem fit. (3) Where any condition imposed in an order of allotment is not complied with by the allottee, the State Government shall, after giving an opportunity to the allottee to be heard in the matter, cancel the allotment with effect from the date of the non compliance of such condition and the land allotted shall revest in the State Government free from all encumbrances. (4) Subject to the provisions of sub sections (1), (2) and (3), all vacant lands deemed to have been acquired by the State Government under this Act shall be disposed of by the State Government to subserve the common good on such terms and conditions as the State Government may deem fit to impose. (5) Notwithstanding anything contained in sub sections (1) to (4), where the State Government is satisfied that it is necessary to retain or reserve any vacant land, deemed to have been acquired by that Government under this Act, for the benefit of the public, it shall be competent for the State Government to retain or reserve such land for the same." Five or six aspects or peculiar features emerge clearly from the provisions contained in section 23 in the context of the entire Act. In the first place unlike agrarian ceiling which deals with land as means of production, urban ceiling under the impugned Act deals with vacant 902 land in urban agglomerations not as a means of production but as a part of the holder 's wealth or capital asset. Secondly, unlike agrarian ceiling which has the objective of distributing surplus agricultural land straightway among landless persons, under the impugned Act excess vacant land in urban agglomerations is acquired by and vests in the State to be disposed of as indicated in the section; clearly a legislation in exercise of the State 's power of eminent domain (i.e. power of compulsory acquisition of private property). Thirdly, such excess vacant land thus acquired is to be disposed of by the State Government "for any purpose relating to or connected with industry or for providing residential accommodation to the employees of any Industry". Fourthly, under cl. (b) of the Explanation, 'industry ' has been very widely defined for the purposes of this section to mean any business, profession, trade, undertaking or manufacture; the word 'any ' clearly suggests that business, profession, trade, undertaking or manufacture even in private sector is included. Fithly. sub section (1) confers absolute power and discretion on the State Government to allot any amount of such excess vacant land to any person for any industry. Reading the fourth and fifth aspects together, it is clear that it is open to the State Government to allot any extent of such excess vacant land to any professional person, say a lawyer a medical practitioner or even an astrologer for the purpose of carrying on his private profession. Sixthly, the section contemplates utilisation of such excess vacant land by the State Government in three ways: (a) allotment for industry (b) allotment to subserve the common good and (c) retention or reservation for the benefit of the public, but, the priorities in the matter of disposal or distribution of such excess vacant land have been peculiarly fixed in the section these priorities, as indicated in sub sections (1) and (4), are:=(i) allotment for the purpose of an industry, namely any business, profession, undertaking trade or manufacture, (ii) allotment for the purpose of construction of houses for the employees of an industry specified in item (i) above and (iii) disposal to subserve the common good which would include allotment of vacant land for governmental purpose or local authorities or for institutions etc. In other words, it is after the disposal of such excess vacant land for items (i) and (ii) above that the balance thereof can be disposed of "to subserve the common good" which means private purposes have precedence over public purposes, and this is clear from the fact that disposal under sub section (4) is "subject to" the prior disposal under sub section (1) for purposes of industry. In fact, disposal of excess vacant land for subserving the common good is last in the priorities Sub. s (5) undoubtedly has an 903 overriding effect over sub sections (1) to (4) but that provision deals not with disposal or distribution of excess vacant land but with retention and reservation of such vacant land by State Government for the benefit of the public like social housing and provision for basic arenities etc. Having regard to the aforesaid peculiar features that energe from a consideration of the provisions contained in s.23, counsel for the petitioners contended that the acquisition of excess vacant land in urban agglomerations cannot be said for a public purpose at all and hence the ehactment which is primarily for compulsory acquisition of private property runs counter to a valid exercise of the State 's power of 'eminent domain '. He pointed out that no scheme for any industrial development for any urban agglomeration has been indicated in the Act, nor any such scheme seems to have been prepared by any State Government or even by the Union Government before undertaking the legislative measure in hand and no definite public purpose of industrialisation with any plan or blue print with set specifications or standards seems to have been within the contemplation of the sponsoring States or the Union Government; at any rate no material in that behalf has been placed on record before the Court and, therefore, according to counsel, compulsory acquisition of all excess vacant land in all urban agglomerations throughout the Union Territories and the 17 States of the country for achieving a bald, indefinite and unspecified objective of an 'industry ' would not be a valid exercise of the power of eminent domain. Alternatively, counsel contended that even if it were assumed for the purpose of argument that a bald, indefinite and unspecified objective of 'industry ' is a public purpose, when that concept of 'industry ' is widely defined so as to include any business, trade or profession in private sector, the purpose sheds its character as a real public purpose, which position is further componded by the priorities laid down in the section and the acquisition becomes acquisition for private purpose amounting to an invalid exercise of the States 's power of eminent domain. Counsel, therefore, urged that section 23 flagrantly violates article 31 (2) and is, therefore, ultra vires and unconstitutional and since it is a pivotal provision having an impact on the entire Ceiling scheme and at the same a non severable provision from the rest of the provisions contained in that chapter, the whole of Chapter III must fall with it. Article 31 of the Constitution has more than one facet, it undoubtedly confers upon individuals (including non citizens) and 904 corporate bodies a fundamental right to property but because of conflict of views in Keshavanada Bharati 's case (supra) it may be debatable whether that right forms part of basic structure or not, but that apart, article 31 incorporates in our Constitution the concept of State 's power of eminent domain i. e. power of compulsory acquisition of private property and prescribes two conditions precedent to the exercise of the power, namely, (i) such acquisition cannot be except for a public purpose and (ii) it must be on payment of compensation (now termed 'amount ') to the claimant having interest in the property. In Kameshwar Singh 's case this position has been clarifie where Mahajan, J., after referring to some authoritative books has summed up the definition of the concept in one sentence thus "Authority is universal in support of the amplified definition of 'eminent domain ' as the power of the sovereign to take property for public use without the owner 's consent upon making just compensation," The requirement of just compensation under the latter condition is diluted to payment of non illusory amount under the 25th Amendment of the Constitution and subsequent decisions of this Court. But it is well settled that these two conditions precedent are sine qua non for the exercise of the State 's power of eminent domain ' and, in my view, represent those aspects of the right to property under article 31 which constitute the essential or basic features of our Constitution and for that matter these would be so of any democratic constitution and, therefore, any law authorising expropriation of private property in breach of any one of those conditions would damage or destroy the basic structure of our constitution. It is extremely doubtful whether a bald, indefinite and unspecified objective like 'industry ' simpliciter without any attempt at dovetailing it by having a proper scheme for industrial development will constitute a valid public purpose for the exercise of the power of 'eminent domain '. It is because of the absence of any definite scheme for industrial development with plans or blue prints with set specifications or standards for any of the urban agglomerations that wide power has been conferred on the State Government under sub section (1) in vague terms to allot any extent of such excess vacant land to any person for any industry. I am conscious that in Kameshwar Singh 's case (supra) this Court speaking through Mahajan, J., observed that "the phrase 'public purpose ' has to be 905 construed according to the spirit of times in which the particular legislation is enacted" and held that so construed, acquisition of estates for the purpose of preventing the concentration of huge blocks of land in the hands of a few individuals and to do away with intermediaries was for a public purpose. But that case dealt with three statutes (the Bihar Land Reforms Act, 1950, the M. P. Abolition of proprietory Rights Act, 1950 and the U. P. Zamindari Abolition and Land Reforms Act, 1950), the common aim of which, generally speaking, was to abolish zamindaries and other proprietory estates and tenures in the three States, so as to eliminate the intermediaries by means of compulsory acquisition of their rights and interests and to bring the raiyats and other occupants of lands in those areas into direct relation with the Government and therefore, that case is distinguishable and its ratio would not apply to the instant case where the purpose of acquisition of excess vacant (urban) land is a bald objective like 'industry ' simpliciter, surely different considerations would apply. In my view it is extremely doubtful whether compulsory acquisition of all the excess vacant land in all urban agglomerations throughout the country for a bald, indefinite and unspecified objective like 'industry ' simpliciter would be a valid exercise of the power of 'eminent domain '. However, it is not necessary for me to decide this larger question inasmuch as in my view the alternative submission of counsel for the petitioners clinches the issue in this case. Assuming that a bald objective of 'industry ' simpliciter partakes of the character of a public purpose, what Parliament intended by the said objective has been expressly clarified by cl. (b) of the Explanation where 'industry ' has been very widely defined so as to include any business, trade or profession in private sector which makes a mockery of such public purpose. Whatever be the merits or demerits of a wide definition of 'industry ' for the purposes of industrial cum labour relations, adoption of such wide definition of the concept in the context of eminent domain is clearly suicidal. By adopting such definition for the purposes of section 23 the State Government has been empowered under sub section (1) to allot any extent of such excess vacant land to any businessman, trader or professional man like a lawyer, doctor and astrologer to enable him to carry on his private business, trade or profession. In other words, acquisition of excess vacant land in urban agglomeration would clearly be for private purposes and what is worse is that under the priorities laid down such private purposes are to be catered to first and then comes the disposal or distribution thereof to subserve common good. This clearly smacks of depriving peter of his property to give it to Paul 906 and, therefore, clearly amounts to an invalid exercise of State 's power of 'eminent domain '. Section 23, which thus authorises compulsory acquisitions of property for private purposes flagrantly violates those aspects of article 31 which constitute the essential or basic features of the Constitution and is, therefore, ultra vires and unconstitutional. Further, indisputably it is the most vital, integral and non severable part of the entire scheme of urban ceiling as without it the scheme will merely remain a scheme for unjust and illegal enrichment of the State and, therefore, the whole of Chapter III, in which it occurs, must fall with it. Apart from the unconstitutionality of s.23 as indicated above, it is clear that the wide definition of 'industry ' and the priorities for disposal or distribution of excess vacant land laid down therein have adverse impact on the directive principle contained in Art.39(b). In the first place instead of confining the objective of industrialisation to public sector or cooperative sector and the like where benefit to community or public at large would be the sole consideration, the concept is widely defined to include any business, trade or profession in private sector which enables the disposal or distribution of excess vacant land for private purposes and sub s.(1) authorises the State Government to allot any extent of such land to individuals or bodies for private purposes. Secondly, the priorities in the matter of disposal or distribution of the excess vacant land under sub sections (1) and (4) are as indicated above, which show that disposal or distribution of excess vacant land for subserving the common good comes last in the priorities. I have already indicated that the postulate underlying the directive principle of article 39(b) is that diffusion of ownership and control of the material resources of the community is always in the public interest and, therefore, the State is directed to ensure such distribution (equitable) thereof as best to subserve the common good but the priorities prescribed in sub sections (1) and (4) of s.23 in regard to distribution of material resource produce contrary results or results in the opposite direction inasmuch as private purposes receive precedence over common good. The enactment which contains such provisions that produce contra results cannot be said to be in furtherance of the directive principle of article 39(b) and cannot receive the benefit of the protective umbrella of article 31C. Counsel for the respondents, however, relied upon three aspects to counter act the aforesaid result flowing from the priorities 907 given in section 23(1) and (4). It was urged that the disposal of excess vacant land acquired by the State under the Act will be guided by the Preamble which says that enactment was put on the Statute Book with a view to bringing about the equitable distribution of land in urban agglomerations to subserve the common good. In the first place, it is well settled that it is only when there is some ambiguity in test of any provision in the enactment that the preamble could be looked at and here there is no ambiguity whatsoever in s.23(1) and (4). Secondly, far from there being any ambiguity there is express provision in s.23(1) and (4) indicating the priorities in the matter of disposal or distribution of excess vacant land, in face of which, the preamble cannot control, guide or direct the disposal or distribution in any other manner. Next, reliance was placed on section 46(1) which empowers the Central Government to make rules for carrying out the provisions of the Act and the disposal or distribution of excess vacant land could be prescribed by rules. It may, however be stated that no rules under s.46 have so far been framed by the Central Government and, in any event, no rules framed thereunder can over ride the express provisions of s.23. Lastly, reliance was placed on certain guidelines issued by the Central Government in its Ministry of Works and Housing under the Act and at page 83 of the "Compendium of Guidelines" (a Govt. of India publication dated February 22, 1977) a note containing guidelines on utilization of excess vacant land acquired under the Act is published. Paragraphs 3 and 4 of the said Note deal with the topic of priorities. In para 3 the disposal or distribution of excess vacant land as per the priorities in section 23 has been set out (which are the same as given above) while para 4 sets out the priorities in accordance with the recommendations made by the 9th Conference of State Ministers of Housing and Urban Development held at Calcutta on the 17th, 18th and 19th December, 1976, which considered the matter and the priorities indicated are: (i) Retention/reservation for the 'benefit of the Public ' like social housing, provision of basic amenities, etc. (ii) Disposal 'to subserve common good ' which may include allotment of vacant land for Government purposes, local authorities, institutions ' etc. (iii) Allotment for the purpose of construction of houses for the employees of industries specified in item (iv) A below (v) Allotment for the purpose of industry, viz., any business, profession trade, undertaking of non polluting manufacture; cottage and small scale and wherever possible ancillary industry; manufacture. It will appear clear that the recommendations made by the 9th Conference of State Ministers of Housing and Urban Development seek to furnish 908 improved guidelines but in the process reverse the priorities given in the section in the matter of disposal or distribution of excess vacant land. It is obvious that the priorities given in section 23 and as have been summarised in para 3 of the Note must prevail over the priorities indicated in the guidelines contained in para 4 of the Note and the latter are of no avail. It is thus clear that the priorities as given in section 23(1) and (4) in the matter of disposal or distribution of excess vacant land acquired under the Act run counter to and in a sense operate to negate the directive principle of Art.39(b). It was then faintly argued by counsel for the respondents that the law in order to receive the protection of article 31C need not fulfil the objectives of both article 39(b) and (c) and even if it fulfils the objective under article 39(c) and not under article 39(b) it will be protected by article 31C. But here section 23 by no stretch deals with the objective of article 39(c) at all but only deals with the objective underlying the directive principle of article 39(b) and its provisions as discussed above clearly run counter to that objective and as such the enactment which contains such provisions must forfeit the benefit of the protective umbrella of article 31C. Faced with the situation that the constitutional invalidity of section 23 was likely to have adverse repercussion not only on Chapter III in which it occurs but also on the entire Act, counsel for the respondents made a valiant effort to salvage the said section by indulging in interpretative acrobatics with a view to relieve it from the two vices attaching to it, namely, (i) the adoption of the wide definition of 'industry ' in cl. (b) of the Explanation which makes a mockery of the Public purpose indicated by the bald objective like 'industry ' simpliciter and (ii) the priorities mentioned therein governing the disposal or distribution of excess vacant land acquired under the Act. It was suggested that the definition of 'industry ' should be read down by the court so as to confine the same to industries in public sector or co operative sector or the like where benefit to community or public at large would be the sole consideration, so that allotment of excess vacant land acquired under the Act to private entrepreneurs for private purposes which runs counter to the doctrine of eminent domain would be completely eschewed. It is impossible to read down the definition in the manner suggested because parliament has for the purposes of the section (i.e. for purposes of disposal or distribution 909 of such excess vacant land) deliberately and in express terms adopted a vary wide definition which includes within its scope not merely trading or manufacturing activity but also any business or profession in private sector and reading down the definition as suggested would be doing violence to the Parliament 's intention stated in express terms. It was then submitted that sub section (1) of section 23 should be construed as an enabling provision which merely permits the State Government to allot excess vacant land for the purposes of industry, while the real obligation in the matter of disposal of excess vacant land arises under sub section (4) which speaks of disposal of such land "to subserve the common good"; in other words, the disposal under sub section (4) should over ride the disposal under sub section (1); at any rate the "common good" spoken of in sub section (4) should permeate the disposal under sub section It is impossible to read sub section (1) of s.23 as containing merely an enabling provision; the scheme of sub sections (1) and (4) read together clearly shows that the disposal of the excess vacant land is first to be done under sub s.(1) and disposal under sub s.(4) comes thereafter. The opening words of sub s.(4) "subject to sub ss.(1), (2) and (3)" cannot be read as constituting a non obstante clause giving an over riding effect to sub section (4) nor can sub s.(4) be read as if the opening words were absent. By indulging in such interpretative acrobatics the Court cannot reach the opposite result than is warranted by the plain text of the provision. Further, to say that every disposal of excess vacant land under sub s.(1) must be for "common good" is to read into that sub section something which is not there; it amounts to re writing that sub section, which cannot be done, the Preamble notwithstanding. It is the conferral of such unrestricted power (not its oblique exercise) that is being attacked and hence the submission to read into sub s.(1) this kind of limitation. These submissions require the re structuring of the entire section a function legitimately falling within the domain of the Legislature. Moreover, sub ss.(1), (2), (3) and (4) of s.23 are integral parts of one whole scheme dealing with disposal of excess vacant land acquired under the Act and as such cannot be severed from one another. The attempt to salvage s.23, either wholly or in part, by seeking to free it from the two vices must, therefore, fail. The next provision challenged by the petitioners as being violative of their fundamental rights is section 11 (6) which puts the maximum limit of Rs. two lakhs on compensation (called 'amount ') payable to the holder of excess vacant land irrespective of the extent of such excess vacant land. For the purpose of determining the 910 quantum of compensation s.11 (1) divides vacant land in urban agglomerations into two categories (i) vacant land from which income is derived and (ii) vacant land from which no income is derived and in regard to the former category cl, (a) of sub section (1) fixes the quantum payable at an amount equal to eight and one third times the net average annual income actually derived from such land during the period of five consecutive years immediately preceding the date of publication of the notification issued under section 10 (1) and the net average annual income is to be calculated in the manner and in accordance with the principles set out in Schedule II, while in respect of the latter category, cl. (b) of sub section (1) fixes the quantum payable at an amount calculated at a rate not exceeding (i) Rs. 10 per sq. metre in the case of vacant land situated in urban agglomerations falling with categories A and B and(ii) Rs.5 per sq. metre in the case of vacant land situated in urban agglomerations falling within categories C and D. In other words, for vacant land yielding income the method of capitalisation of the income for certain number of years is adopted while for vacant land yielding no income maximum rates of compensation for A and B categories at Rs. 10 per sq. metre and for C and D categories at Rs 5 per sq. metre have been fixed. Compensation (called 'amount ') once determined is payable to the holder under section 14 (2) in a certain manner, namely, 25 % there of will be paid in cash and the balance 75% in negotiable bonds redeemable after expiry of 20 years carrying interest at 5% per annum. Section 11 (6) which puts the maximum limit of two lakhs on the quantum payable in respect of excess vacant land acquired under the Act runs thus: "11 (6) Notwithstanding anything contained in sub section (1) or sub section (5) the amount payable under either of the said sub sections shall, in no case, exceed two lakhs of rupees. " Counsel for the petitioners contended that section 11 (6) which puts the maximum limit of Rs. two lakhs on the amount payable to a claimant irrespective of the extent of the excess vacant land acquired under the Act is not only arbitrary but also results in illusory payment and violates articles 14 and 31 (2) respectively. Counsel pointed out that a person holding excess vacant land which at the prescribed rates is of the value of Rs. two lakhs and a person holding such excess vacant land which even at the same prescribed rates 911 is of the value of Rs. two crores are treated alike, that is to say, both will get compensation (termed 'amount ') of Rs. two lakhs only and is this sense prescribing a limit of maximum of Rs. two lakhs is clearly arbitrary and violates article 14. Similarly, for a person who holds excess vacant land which even at the prescribed rates it of the value of Rs. two crores a payment of Rs. two lakhs only (i.e. 1/100th of the value at the prescribed rates) must, by any standard, be regarded as illusory and, therefore, the fixation of maximum limit at Rs. two lakhs under section 11(6) irrespective of the extent of excess vacant land held by a person violates article 31(2) of the Constitution. I find considerable force in both the submissions of counsel for the petitioners. In fact, in my view, this provision which puts the maximum limit of Rs. two lakhs on the amount payable to a holder of excess vacant land acquired under the Act irrespective of the extent of such excess vacant land held by him is not merely violative of articles 14 and 31(2) of the Constitution in the manner indicated above, but would be a piece of confiscatory legislation, because vacant land in excess of that portion which at the prescribed rates is worth Rs. two lakhs stands confiscated to the State without any payment whatsoever. I do not suggest that a provision putting a maximum limit upon compensation payable to the owner or holder irrespective of the extent of the property acquired whenever or wherever is found in any enactment has to be regarded as a confiscatory provision. I am aware that in enactments involving large schemes of social engineering like abolition of Zamindar is, agrarian reforms, nationalisation of undertakings and businesses and the like, such a provision might be justifiably made. In State of Kerala vs The Gwalior Rayon Silk Mfg. Co. Ltd., this Court upheld the validity of Kerala Private Forest (Vesting and Assignment) Act, 1971 where under private forest lands held on janman right were acquired without payment of any compensation on the ground that such acquisition was for implementing a scheme of agrarian reform by assigning lands on registry or by way of lease to poorer sections of the rural agricultural population, the enactment being protected under article 31A (1) of the Constitution. Again the whereunder the right, title and interest of the owners in relation to their coal mines specified in the schedule to the Act stood transferred to and became vested absolutely in the Central Govt. free from encumbrances in exchange of payment of fixed amounts specified in that schedule was upheld by this Court. 912 But such cases involving large schemes of social engineering where avowedly the benefit of the community or public at large is the sole consideration are distinguishable from the instant case, where 'industry ' has been expressly defined to include business, trade or profession in private sector and where power has been conferred upon the State Government to allot properties acquired under the enactment to individual businessman, trader or professional to enable him to carry on his private business, trade or profession, that is to say, where the legislation is a fraud on State 's power of eminent domain, such a provision of putting a maximum limit on compensation payable in respect of the acquired property irrespective of its extent will have to be regarded as confiscatory in nature. An instance in point is available on the record of these writ petitions. In writ petition No. 350 of 1977 the petitioner who happens to be the ex Ruler of the former Kota State has averred in paragraphs 17 and 20 of the petition that the urban vacant land owned and possessed by him in the city of Kota admeasures 918. 26 acres and that the Assistant Director, Lands and Buildings Tax, Kota in his assessment order dated 20.12. 1976 had valued the same at market rate of Rs. 15.12 per sq. metre at Rs 3,98,05021.84 (say about Rs. four crores) and inclusive of other items of properties the total value was put down at Rs. 4.12 crores and these averments are substantially admitted in the counter affidavit filed by section Mahadeva Iyer on behalf of the Union of India where in para 9 he has stated thus: "In reply to para 20 of the writ petition I submit that the total assessment of the entire property comes to Rs. 4.56 crores. " In other words, in the case of this petitioner the fact that he owns urban vacant land of the value of about Rs. four crores in the city of Kota stands admitted. Now, under section 11(6) for all this urban vacant land worth nearly Rs. four crores the petitioner will get only rupees two lakhs, it works out to a princely sum of eight annas for property worth Rs. 100, which would clearly be an illusory payment. In fact, all his vacant land, in excess of that portion which is worth Rs. two lakhs at the prescribed rates, shall stand conficated without any payment whatsoever. Such a glaring instance, available on the record of these petitions, brings out in bold relief how flagrantly section 11(6) 913 violates articles 14 and 31(2) of the Constitution; it highlights the aspect that such acquisition takes place in breach of the other condition precedent attaching to the power of eminent domain namely, payment of non illusory compensation. However, section 11(6) is clearly a severable provision, and that alone is liable to be struck down as being ultra vires and unconstitutional. The next provision challenged by the petitioners is section 27 occurring in Chapter IV to the extent to which it imposes restriction on transfer of an urban land with building or a flat therein though unconcerned or unconnected with the excess vacant land as unconstitutional being beyond the legislative authorisation as also violative of petitioners ' fundamental rights under Arts 14 and 19(1) (f). Section 27, as its marginal note indicates, deals with the subject of prohibition of transfer of urban property and sub section (1) thereof runs thus: "27. (1) Notwithstanding any thing contained in any other law for the time being in force, but subject to the provisions of sub section (3) of section 5 and sub section (4) of section 10, no person shall transfer by way of sale, mortgage, gift, lease for a period exceeding ten years, or otherwise, any urban or urbanisable land with a building (whether constructed before or after the commencement of this Act) or a portion only of such building for a period of ten years of such commencement or from the date on which the building is constructed, whichever is later, except with the previous permission in writing of the competent authority." Inter alia, the aforesaid provision is clearly applicable to a building or a portion of such building which would include a flat therein standing on any urban or urbanisable land falling within the permissible ceiling area which a holder of a vacant land is entitled to retain with himself and under this provision any transfer of such property by way of sale, mortage, gift or lease for ten years or otherwise, is prohibited for the period of ten years from the commencement of the Act except with the previous permission in writing of the competent authority. Under sub section (2) if the holder of such property falling within the permissible ceiling area is desirous of effecting a transfer of the type indicated above has to apply in writing for permission from the competent authority and under sub s.(3) the 914 competent authority has been authorised after making such inquiry as it deems fit to grant the permission or refuse the same, but a refusal has to be accompanied by written reasons, copy whereof is to be furnished to the holder. Sub section (4) provides that if within sixty days of the receipt of the application refusal is not communicated, the permission shall be deemed to have been granted by the competent authority. Counsel for the petitioners made two submissions in regard to aforesaid restriction as made applicable to transfers of built up properties that fall within the limits of ceiling area permitted to be retained by a holder. Firstly, such restriction would be outside the legislative authorisation conferred upon the Parliament as well as beyond the ambit and scope of the Act which has assiduously kept built up properties outside the pale of imposition of ceiling. Secondly, such restriction requiring permission from the competent authority is arbitrary and violative of Art.14 in as much as the power to grant the permission or to refuse it is unguided and untrammeled which is bound to produce arbitrary results. In my view both the submissions have substance in them. It cannot be disputed that though the authorisation was for imposition of ceiling on urban immovable property Parliament deliberately kept out built up properties from the purview of the Act and the Act seeks to impose ceiling only on vacant land in urban agglomerations; that being so any restriction on transfer of built up properties or parts thereof (including flats therein) standing on urban land falling within the permissible ceiling area would be outside the purview of the Act. It was urged for the respondents that such a provision would be incidental or ancillary to the ceiling contemplated by the Act and would fall within the phrase "for matters connected therewith" occurring in the Preamble and the long title of the Act. It is not possible to accept the contention, for, the words "matters connected therewith" occurring in the concerned phrase must be co related to what precedes that phrase, namely, "an Act to provide for ceiling on vacant land in urban agglomerations, for the acquisition of such land in excess of the ceiling limit, to regulate the construction of buildings on such land" (emphasis supplied) and, therefore, the words "matters connected therewith" must mean matters in relation to the ceiling imposed by the Act. A reference to objective under article 39(b) and (c) (for the achievement of which the enactment is allegedly taken in hand) in the Preamble or long title cannot enlarge 915 the ambit or scope of the Act. Any restriction imposed on built up properties falling within the permissible ceiling area left with the holder would, therefore, be outside the ambit and scope of the Act. The next question is whether the restriction which requires the holder of such property to seek permission of the competent authority before effecting any transfer thereof by way of sale, mortgage or gift, etc. is violative of article 14 of the Constitution. The contention is that the requirement in the absence of any guidelines governing the exercise of the power on the part of the competent authority in the matter of granting or refusing to grant the permission is highly arbitrary, productive of discriminatory results and, therefore, violates the equality clause of article 14. Counsel for the respondents fairly conceded that the section itself does not contain any guidelines but urged that the objectives of "preventing concentration, speculation and profiteering in urban land" recited in the Preamble would afford the requisite guidance for the exercise of the power to grant the permission sought or to refuse the same. Firstly, which of the three objectives mentioned in the Preamble should guide the exercise of power by the competent authority in any given case is not clear and in any case no standard has been laid down for achieving the objectives of preventing concentration, speculation, and profiteering in urban land or urban property and in the absence of any standard being laid down by the Legislature a purely legislative function, it will be difficult to hold that these broad objectives recited in the Preamble could effectively or adequately guide the exercise of power by the competent authority in the matter of granting or refusing to grant the permission and in the absence of guidelines the exercise of the power is bound to produce arbitrary or discriminatory results. It was also said that against the order passed by the competent authority under section 27 an appeal to the Appellate Authority has been provided for under section 33 and revision lies to the State Government under section 34 and in view of such provision for appeal and revision the exercise of the power or discretion vested in the competent authority cannot be regarded as unfettered or arbitrary. Here again I feel that in the absence of any guidelines for the exercise of the power and in the absence of any standards having been laid down by the Legislature for achieving the objectives of prevention of concentration, speculation and profiteering in urban land and urban property, the provision for appeal and revision would not be of much avail to preventing arbitrariness in the matter of granting or refusing to 916 grant the permission. Section 27 which does not adequately control the arbitrary exercise of the power to grant or refuse the permission sought, is clearly violative of article 14 of the Constitution and as such the requirement of permission contained therein will have to be struck down as being ultra vires and unconstitution. In the result, in view of the aforesaid discussion. I would like to indicate my conclusions thus: (1). The impugned Act, though purporting to do so, does not, in fact, further the directive principles in article 39 (b) and (c). Section 2(f) in relation to prescription of ceiling area, as shown above, permits unwarranted and unjustified concentration of wealth instead of preventing the same and is in teeth of the objective under article 39(c); similarly, section 23, as discussed above, produces results contrary to the objective under article 39(b). Therefore, the impugned Act is outside the pale of the protective umbrella of article 31C. (2) Section 2(f) which contains the artificial definition of 'family ' in relation to the prescription of ceiling area, section 23 which deals with disposal or distribution of excess vacant land acquired under the Act as per priorities laid down therein and section 11(6) which puts a maximum limit on the quantum of the amount payable in respect of excess vacant land acquired from a holder irrespective of the extent of area held by him these three provisions flagrantly violate those aspects of articles 14 and 31 which constitute the essential and basic features of our Constitution and hence the protective umbrella of article 31B is not available to the impugned Act inasmuch as the 40th Constitution Amendment Act 1976 to the extent to which it inserts the impugned Act in the Ninth Schedule is beyond the constituent power of the Parliament as the said Amending Act has the effect of damaging or destroying the basic structure of the Constitution. The artificial definition of 'family ' given in section 2(f) in relation to prescription of ceiling area under section 4(1) is clearly violative of article 14 and as such is ultra vires and unconstitutional. Similarly, section 23 which authories compulsory acquisition of property for private purposes is in breach of the doctrine of eminent domain and since it flagrantly violates article 31(2) is ultra vires and unconstitutional. Since section 2(f) together with adoption of double standard for fixing ceiling area runs through and forms basis of the whole Chapter III and since section 23 is a vital, Integral and non severable part 917 of the entire scheme of urban ceiling envisaged by the Chapter III, the whole of Chapter III has to fall along with those two provisions and as such that Chapter is also declared to be ultra vires and unconstitutional. Further, it cannot be disputed that Chapter III comprises the substratum of the entire scheme of urban ceiling contemplated by the enactment incorporating its main provisions while the other Chapters deal with arcillary or incidental matters which from the decorative frills of the main fabric. If the substratum is found to be diseased, invalid and bad in law the entire Act has to go and is accordingly struck down as void and unconstitutional. Section 11(6), a severable provision, being violative of petitioners ' fundamental right under article 31 is declared to be ultra vires and unconstitutional. Section 27, being severable, is also declared ultra vires and unconstitutional to the extent indicated above as being beyond the ambit of the Act and violative of article 14 of the Constitution. Before parting with the matter I would like to refer to the manner in which this important and complicated measure came to be enacted. It cannot be doubted that the 11 sponsoring State Legislatures passed their resolutions under article 252(1) with a laudable object, namely to clothe the Parliament with legislative competence to enact a law for the imposition of ceiling on urban immovable property for the country as a whole Though initially a model bill based on the recommendations made by the Working Group in its Report dated July 25, 1970 had been prepared where ceiling was proposed to be imposed on urban property on the basis of monetary value, Parliament later on realized that the implementation of that proposal was beset with several practical difficulties indicated in the Approach Paper prepared by a Study Group, and, therefore, it was though that ceiling in respect of built up properties should be brought about through some fiscal and other measures and ceiling on vacant land in urban agglomerations on the lines of the impugned Act should be undertaken. In other words, State wise deep consideration and consultation for over five years had preceded the preparation of the draft Bill and this Court in V.B. Chowdhari 's (1) 918 case has upheld the legislative competence of Parliament to enact such a measure as a first step towards eventual imposition of ceiling on immovable properties of every other description. However, after the introduction of the Bill on the floor of the house on January 28, 1976, the enactment as drafted in its present form seems to have been rushed through the attenuated Parliament during the Emergency in less than seven hours on February 2, 1976. The Lok Sabha debates clearly show: (a) that the Bill was moved and taken up for consideration at 11.17 hours on that day, (b) that a motion moved by a member that the Bill be circulated for the purpose of eliciting opinion thereon by May 15, 1976 was negatived, (c) that another motion supported by quite a few members that the Bill be referred to a Select Committee with a view to improve the same by removing defects, deficiencies and omissions therein with instructions to the Select Committee to report by April 1, 1976, was also negatived, (d) that though over 150 amendments had been moved (some of which were received by the members on the very day as speeches were in progress), an earnest request to postpone the second reading of the Bill to the following day to enable the members to consider those amendments (many of which were neither formal nor clarificatory but of substance) was also turned down, and (e) that the original time schedule of six hours fixed by the Speaker for the Bill was adhered to and the entire process (including general discussion, clause by clause reading, consideration of the several amendments and the third reading) was completed in undue haste by 18.01 hours. In Rajya Sabha also a request to refer the Bill to a Select Committee went unheeded and the entire process was completed in one day, February 5, 1976. The result is that it has, in the absence of adequate study or discussion about the implications of various provisions thereof, turned out to be an ill conceived and ill drafted measure. The measure was, undoubtedly, taken in hand with a view to achieve the unexceptional objectives underlying article 39(b) and (c), but as shown above, the enacted provisions misfire and produce the opposite results and also damage or destroy the essential features or basic structure of the Constitution and hence duty bound I am constrained to strike down this impugned piece of purported socioeconomic legislation. The legislative competence of the Parliament being still there a well drafted enactment within the constitutional limitations on the subject would be the proper remedy. I would, therefore, allow the petitions and direct issuance of the appropriate writs sought. 919 SEN J. These writ petitions under Article 32 of the Constitution seek to challenge the constitutional validity of the Urban Land (Ceiling and Regulation) Act, 1976 on various grounds. The Act has been placed as item No. 132 in the Ninth Schedule by the Constitution (Fortieth Amendment) Act, 1976. Questions involved are of far reaching importance affecting the national interest. The history of the legislation is well known. The State Legislatures of eleven States, namely, all the Houses of the Legislatures of the States of Andhra Pradesh, Gujarat, Haryana, Himachal Pradesh, Karnataka, Maharashtra, Orissa, Punjab, Tripura, Uttar Pradesh and West Bengal considered it desirable to have a uniform legislation enacted by Parliament for the imposition of a ceiling on urban property in the country as a whole and in compliance with clause (1) of Article 252 of the Constitution passed a resolution to that effect. Parliament accordingly enacted the Urban Land (Ceiling and Regulation) Act, 1976. In the first instance, the Act, came into force on the date of its introduction in the Lok Sabha that is, January 28, 1976 and covered Union Territories and the eleven States which had already passed the requisite Resolution under Article 252(1) of the Constitution. Subsequently, the Act was adopted, after passing resolutions under Article 252(1) of the Constitution by the State of Assam on March 25, 1976, and those of Bihar on April 1, 1976, Madhya Pradesh on September 9, 1976, Manipur on March 12, 1976, Meghalaya on April 7, 1976 and Rajasthan on March 9, 1976. Thus, the Act is in force in seventeen States and all the Union Territories in the country. The legislative competence of Parliament to enact the Urban Land (Ceiling and Regulation) Act, 1976 having been upheld by this Court in Union of India etc vs Valluri Basavaiah Chaudhary,(1) there remains the question of its constitutional validity. Schedule I to the Act lists out all States, irrespective of whether or not they have passed a resolution under article 252(1) authorizing the Parliament to enact a law imposing a ceiling on urban immovable property, and the urban agglomerations in them having a population of two lace or more. The ceiling limit of vacant 920 land of metropolitan areas of Delhi, Bombay, Calcutta and Madras having a population exceeding ten lacs falling under category 'A ' is 500 sq. metres, urban agglomerations with a population of ten lacs and above, excluding the four metropolitan areas falling under category 'B ' is 1000 sq. meters agglomerations with a population between three lacs and ten lacs falling under category 'C ' is 1500 sq. metres and urban agglomerations with a population between two lacs and three lacs falling under category 'D ' is 2000 sq. metres. The schedule does not mention the urban agglomerations having a population of one lac and above; but if a particular state which passed a resolution under article 252(1), or if a State which subsequently adopts the Act, wants to extend the Act to such areas, it could do so by a notification under s.2(n) (B) or s.2 (n) (A) (ii), as the case may be, after obtaining the previous approval of the Central Government. The primary object and the purpose of the Urban Land (Ceiling and Regulation) Act, 1976, 'the Act ' as the long title and the preamble show, is to provide for the imposition of a ceiling on vacant land in urban agglomerations, for the acquisition of such land in excess of the ceiling limit, to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons and speculation and profiteering therein, and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve the common good, in furtherance of the Directive Principles of State Policy under article 39(b) and (c). The Statement, of objects and Reasons accompanying the Bill reads as follows: "There has been a demand for imposing a ceiling on urban property also, especially after the imposition of a ceiling on agricultural lands by the State Governments. With the growth of population and increasing urbanisation, a need for orderly development of urban areas has also been felt. It is, therefore, considered necessary to take measures for exercising social control over the scarce resource of urban land with a view to ensuring its equitable distribution amongst the various sections of society and also avoiding speculative transactions relating to land in urban agglomerations. With a view to ensuring 921 uniformity in approach Government of India addressed the State Governments in this regard, eleven States have so far passed resolutions under article 252(1) of the Constitution empowering Parliament to undertake legislation in this behalf. " The Act consists of five Chapters. Chapter I contains the short title and the extant clause and Chapter II contains section 2, which is the definition section. Chapter III deals with 'Ceiling on vacant Land Chapter IV deals with 'Regulation of transfer and use of urban land ' and Chapter V contains miscellaneous provisions, There can be no doubt that the legislative intent and object of the impugned Act was to secure the socialisation of vacant land in urban agglomerations with a view to preventing the concentration of urban lands in the hands of a few persons, speculation and profiteering therein, and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve to common good, in furtherance of the Directive Principles of State Policy under article 39 (b) and (c). The Act mainly provides for the following: (i) imposition of a ceiling on both ownership and possession of vacant land in urban agglomerations unders. 3, the ceiling being on a graded basis according to the classification of the urban agglomerations under s.4; (ii) acquisition of the excess vacant land by the State Government under s.10(3), with powers to dispose of the vacant land with the object to subserve the common good under s.23; (iii) payment of an amount for the acquisition of the excess land in cash and in bonds under section 14(2), according to the principles laid down in s.11(I) subject to the maximum specified in s.11(6 ) (iv) granting exemptions in respect of vacant land in certain cases under ss.20 and 21; (v) regulating the transfer of vacant land within the ceiling limits under s.26; 922 (vi) regulating the transfer of urban or urbanisable land with any building (whether constructed before or after the commencement of the Act, for a period of ten years from the commencement of the Act or the construction of the building whichever is later under s.27; (vii) restricting the plinth area for the construction of future residential buildings under s.29; and (viii) other procedural and miscellaneous matters. The Act is thus intended to achieve the following objectives: (I) to prevent the concentration of urban property in the hands of a few persons and speculation and profiteering therein; (2) to bring about socialisation of urban land in urban agglomerations to subserve the common good to ensure its equitable distribution, (3) to discourage construction of luxury housing leading to conspicuous consumption of scarce building materials. and (4) to secure orderly urbanisation. Thus the dominant object and purpose of the legislation is to bring about socialisation of urban land. In order to appreciate the rival contentions, it is necessary to set out the relevant provisions: Section 3 which is all important for the purpose of these writ petitions, provides: "3. Except as otherwise provided in this Act, on and from the commencement of this Act, no person shall be entitled to hold any vacant land in excess of the ceiling limit in the territories to which this Act applies under sub section (2) of section 1. " Section 4 divides the urban agglomerations into four broad categories, categories A, B, C and D, and fixes the ceiling limits varying from five hundred sq. metres in Category A to two thousand sq. metres in Category D thereof. The word 'person ' is defined in s.2(i) as: "2(i) "person" includes an individual, a family, a firm, a company, or an association or body of individuals, whether incorporated or not. " 923 The definition of the word 'family ' in s.2(f) is in the following terms: "2(f) "family" in relation to a person, means the individual, the wife or husband, as the case may be, of such individual and their unmarried minor children. " In order that the burden of compensation, that is, the amount payable for such excess vacant lands by the Government, may not be high, the Act incorporates a specific provision, namely, sub section (1) of s.11 which fixes the amount broadly on the following basis: (1) eight and one third of the annual net income from the land during the last five years or where such annual income is not being derived, at rates not exceeding Rs. 10 per sq. metre or Rs. 5 per sq. metre in Categories A and B, and C and D urban agglomerations respectively, and classifying the area into different zones. There is also a ceiling on the maximum amount payable in any single case placed by subsection (6) of s.11. Sub section (1) s.27 provides for the freezing of all transfers of urban land with or without a building or portion of a building in all agglomerations for a period of ten years from the date of the commencement of the Act or from the date on which the building is constructed. The constitutional validity of the Act which has been placed in the Ninth Schedule by the Fortieth Amendment, is challenged principally on the ground that, firstly, it is violative of the fundamental rights guaranteed under Arts 14, (19(1)(f) and 31(2), since it seeks to alter the "basic structure" of the Constitution as formulated by this Court in His Holiness Kesavananda Bharti vs State of Kerala and; therefore, has not the protective umbrella of Art.31B, and secondly that it is a law in negation of, and in furtherance of the Directive Principles of State Policy under Art.39(b) and (c) and is, therefore, not protected under Art.31C. In Waman Rao & Ors. vs Union of India Ors. this Court by its order, in the context of the decision in Kesavananda Bharati 's case, has laid down. "Amendments to the Constitution made on or after April 24, 1973 by which the 9th schedule to the Constitution was amended from time to time by the inclusion of 924 various Acts and Regulations therein, are open to challenge on the ground that they, or any one or more of them, are beyond the constituent power of the Parliament since they damage the basic or essential features of the Constitution or its basic structure. We do not pronounce upon the validity of such subsequent amendments except to say that if any Act or Regulation included in the 9th Schedule by a constitutional amendment made after April 24, 1973 is saved by Article 31.C as it stood prior to its amendment by the 42nd Amendment, the challenge to the validity of the relevant Constitutional Amendment by which that Act or Regulation is put in the 9th Schedule, on the ground that the Amendment damages or destroys a basic or essential feature of the Constitution or its basic structure as reflected in Articles 14, 19 or 31, will become otiose. Article 31 C of the Constitution, as it stood prior to its amendment by Section 4 of the Constitution (42nd Amendment) Act, 1976, is valid to the extent to which its constitutionality was upheld in Kesavananda Bharati Article 31 C, as it stood prior to the Constitution (42nd Amendment) Act does not damage any of the basic or essential features of the Constitution or its basic structure. " The validity of the impugned Act is challenged on four grounds Namely the inclusion of an artificial definition of 'family ' in s.2 (f) results in total exclusion of a joint Hindu family from the purview of the Act and also in adoption of double standard between a family with major sons, each of whom is a separate unit by himself, and a family with minor children, which constitutes a family unit for fixing a ceiling and thus s.3 of the impugned Act offends against the equal protection clause in Art.14, as persons similarly situate are differentially treated without any rational basis; (2) the impugned Act is inconsistent with, takes away and abridges the fundamental right guaranteed under article 31 (2) inasmuch as the fixation of the maximum amount payable under sub section (6) of Sec 11, makes the Act confiscatory or at any rate, the amount payable illusory; (3) sub section (1) of section 27 of 925 he Act freezing all transfers by way of sale, mortgage, gift, lease for a period exceeding ten years or otherwise, of any urban or urbanisable land with a building (whether constructed before or after the commencement of the Act), or a portion of such building, for a period of ten years from such commencement or from the date on which the building is constructed, whichever is later, except with the previous permission in writing of the competent authority, even though such vacant land in an urban agglomeration is within the ceiling limits, is an unreasonable restriction on the fundamental right to property guaranteed under article 19 (1); and (4) the 'priorities ' laid down in s.23 of the impugned Act are not in keeping with part IV of the Constitution and, therefore, liable to be struck down. It is urged upon these grounds that the impugned Act is flagrantly violative of those aspects of the petitioners ' fundamental rights under articles 14, 19 and 31 as constitute the basic structure or framework of the Constitution, and therefore, it is not protected under article 31B or 31C. Land in urban areas is a vital physical recourse capable of generating and sustaining economic and social activities. It should be properly utilised by the community for social good. But the attraction of urban areas has led to profiteering and racketeering in land in these areas. There is also mis application of this scarce resource of urban land for undesirable purposes. Therefore, a comprehensive policy of effective control of land covering its use. distribution amongst the various sections of the society and individuals and for different social purposes, and its disposal by owners subject to their sharing the profits with the community at large, has been evolved. The Act has been designed to benefit the weaker sections of the community. It also grants exemptions in favour of public institutions and co operative housing. The imposition of ceiling on land and plinth area of future dwelling units, and regulation of transfer of urban property under the Act, seeks to achieve the objective of social control over the physical resources of land. A unique feature of the Act is that it covers seventeen States and all the Union Territories and provides for aggregation of holdings in urban agglomerations in the different States where the law is applicable for purposes of ceiling limits. In other words, persons holding vacant lands or vacant and other built up property with dwelling units therein in different urban agglomerations throughout the country will have to make a choice of retaining only one piece of vacant land within the ceiling limit and surrender excess vacant lands else where. 926 Since the Act applies to firms, companies, and undertakings, future construction of industrial or commercial premises requiring large areas cannot take place in the notified urban agglomerations without obtaining the requisite land from the Government. This enables Government to regulate and canalise the location of industries and thus serve the broad policy approach in dispersal of economic activity. Hoarding of land by industrialists based on prospects for expansion in the distant future, is thus sought to be avoided. The fundamental issue is: Whether section 23 of the impugned Act impairs the basic structure or framework of the Constitution being violative of article 39 (b) and (c) and Art, 31 (2) of the Constitution and is, therefore, not protected under articles 31 B and 31 C. The impugned Act is designed as a law for the imposition of a ceiling on vacant land in urban agglomerations, for the acquisition of such land in excess of the ceiling limit to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons, and speculation and profiteering therein, and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve the common good, in furtherance of the Directive Principles under article 39 (b) and (c). The constitutional validity of section 23 of the Act depends on whether in truth and substance these objectives have been translated into action. Section 23 of the Act reads: "23. (1) It shall be competent for the State Government to allot, by order, in excess of the ceiling limit any vacant land which is deemed to have been acquired by the State Government under this Act or is acquired by the state Government under any other law, to any person for any purpose relating to, or in connection with, any industry or for providing residential accommodation of such type as may be approved by the State Government to the employees of any industry and it shall be lawful for such person to hold such land in excess of the ceiling limit. Explanation. For the purpose of this section, 927 (a) where any land with a building has been acquired by the State Government under any other law and such building has been subsequently demolished by the State Government, then, such land shall be deemed to be vacant land acquired under such other law; (b) "industry" means any business, profession, trade, undertaking or manufacture. (2) In making an order of allotment under sub section (1), the State Government may impose such conditions as may be specified therein including a condition as to the period within which the industry shall be put in operation or, as the case may be the residential accommodation shall be provided for: Provided that if, on a representation made in this behalf by the allottee, the State Government is satisfied that the allottee could not put the industry in operation, or provide the residential accommodation, within the period specified in the order of allotment, for any good and sufficient reason, the State Government may extend such period to such further period or periods as it may deem fit. (3) Where any condition imposed in an order of allotment is not complied with by the allottee, the State Government shall, after giving an opportunity to the allottee to be heard in the matter, cancel the allotment with effect from the date of the non compliance of such condition and the land allotted shall revest in the State Government free from all encumbrances. Subject to the provisions of sub sections (1), (2) and (3), all vacant lands deemed to have been acquired by the State Government under this Act shall be disposed of by the State Government to subserve the common good on such terms and conditions as the State Government may deem fit to impose. 928 (5) Notwithstanding anything contained in sub sections (1) to (4), where the State Government is satisfied that it is necessary to retain or reserve any vacant land, deemed to have been acquired by that Government under this Act, for the benefit of the public, it shall be competent for the State Government to retain or reserve such land for the same. " The submission is that though the impugned Act is designed as a law for the imposition of a ceiling on vacant land in urban agglomerations, to subserve the common good, in furtherance of the Directive principles under article 39 (b) and (c), the dominant object of the impugned Act for the acquisition of vacant land in urban agglomerations under section 23 of the Act, was to facilitate the setting up of industries in the private sector and, therefore, the Act was not in furtherance of part IV of the Constitution and void being violative of article 31 (2). It was urged that section 23 of the impugned Act must, therefore, be struck down as unconstitutional, it being not in keeping with part IV of the Constitution was not protected under article 31C and that it cannot also have the protective umbrella of article 31B as it seeks to alter the basic structure of the Constitution. Although the impugned Act is enacted with a laudable object, to subserve the common good, in furtherance of the Directive Principles of state policy under Art, 39 (b) and (c), it appears from the terms of sub ss.(1), (2) and (3) of section 23 that it would be permissible to acquire vacant land in urban agglomerations and divert it for private purpose. The whole emphasis is on industrialisaton. The opening words in section 33 (4) "subject to the provisions of sub sections (1), (2) and (3)" make the provisions of section 23 (4) subservient to section 23 (1) which enables the Government to allot vacant land in an urban agglomeration to any person for any purpose relating to, or in connection with, any industry or for providing residential accommodation of such type as may be approved by the state Government to the employees of any industry. It further makes it lawful for the allottee that is, the industrialist, to hold such land in excess of the ceiling limit. The definition of the word 'industry ' in Explanation (b) to section 23 (1) is wide enough to include any business, profession, trade, undertaking or manufacture, and necessarily includes the private sector. The proviso to section 23 (2) fortifies that construction of mine. It is incomprehensible that vacant lands in all urban agglomerations throughout the country should be acquired for the 929 purpose of setting up industries. More so, that it should permissible to allow setting up of industries for private gain. There is no material placed before us showing that the Government has prepared any blue print for industrialisation of all the urban agglomerations in India in the public sector. In fact, faced with this difficulty, the learned Attorney General attempted to justify the provisions contained in s.23 by submitting that the opening words in section 23(4) "subject to the provisions of sub sections (1), (2) and (3)" must, in the context of the preamble and the Directive Principles under Art 39(b) and (c), be construed to mean "notwithstanding anything to the contrary contained in subsections (1), (2) and (3)" According to him, the "brooding spirit ', of the Preamble permeates through the entire section, and, therefore the provisions of s.23 of the Act should be read in the light of the preamble. The contention cannot be accepted. When the language of the section is clear and explicit, its meaning cannot be controlled by the preamble. It is not for the Court to re structure the section. The re structuring of a statute is obviously a legislative function. The matter is essentially of political expediency, and as such it is the concern of the statesmen and, therefore, the domain of the legislature and not the judiciary. It was, however, urged that s.23(1) of the Act is only an enabling provision, and the real power was under s.23(4), and if there is ambiguity in the language of s 23, it was possible to read the section in the light of the preamble and the Directive Principles under article 39(b) and (c) and as such s.23(1) is subject to s.23(4). The use of the words "subject to the provisions of sub sections (1), (2) and (3)" in s.23(4) takes away the compulsion on the State Government to adhere to the Directive Principles under article 39(b) and (c) in making allotment of the vacant lands in an urban agglomeration acquired under the Act. The words "subject to the provisions of subsections (1), (2) and (3)" in s.23(4), appearing in the context of s.23(1) means 'in addition to; if anything is left over after the allotment under s.23(1) '. I cannot, therefore, read the provisions of sub ss.(1), (2) and (3) s.23 of in the light of the preamble or the Directive Principles under article 39(b) and (c). By no rule of construction can the operation of sub s(1) of s.23 of the Act be controlled by the operation of sub s.(4). 930 A legislation built on the foundation of article 39(b) and (c) permitting acquisition of private property must be for a public purpose, that is, to subserve the common good. In my view, sub sections (1), (2) and (3) of s.23 of the Act negate that principle. Furthermore, article 31(2) consists of three pre requisites namely (i) the property shall be acquired by or under a valid law, (ii) it shall be acquired only for a public purpose, and (iii) the person whose property has been acquired shall be given an amount in lieu thereof. The definition of ' industry ' in Explanation (b) to section 23(1) is wide enough to include any business, trade or vocation carried on for private gain. There cannot be 'mixed purpose ' of public and private to sustain a legislation under article 39(b) and (c). The vice lies in section 23(1) and the Explanation (b) thereto, which on a combined reading, frustrate the very object of the legislation. One is left with the feeling that sub sections (1), (2) and (3) of section 23 of the impugned Act are meant to promote the interests of the business community and further professional interests. While setting up of an industry in the private sector may, at times, be for the public good, there cannot be acquisition of private property for private gain. Acquisition can only be for a public purpose '. That is to say, a purpose, an object or aim in which the general interest of the community as opposed to the particular interest of the individual, is directly and vitally concerned. The concept of 'public purpose ' necessarily implies that it should be a law for the acquisition or requisition of property in the interest of the general public, and the purpose of such a law directly and vitally subserves public interest. If in reality the object of the acquisition under the Act is to set up industries in the private sector as is permissible from the provisions of section 23(1) of the Act, nothing prevents the State from taking recourse to section 40 of the Land Acquisition Act, 1894, for which there must be quid pro quo, that is, payment of compensation according to the market value. Our attention was drawn to the Guidelines issued by the Government of India, Ministry of Works and Housing clarifying the intent and purpose of the provisions of the Act. It may be stated here that these Guidelines cannot supersede or alter any of the provisions of the Act or the rules made thereunder. The Guidelines issued under section 23 are in these terms: 931 "Section 23 of the Urban Land (Ceiling and Regulation) Act, 1976, governs, inter alia, disposal of vacant land acquired under the Act. In brief, this Section enables the State Government to allot any vacant land for the purpose of an industry or to subserve the common good, or to retain or reserve such land for the benefit of the public. For the purpose of the Section 'industry ' has been given a wider meaning so as to cover any business, profession, trade, undertaking or manufacture. The section also enables Government to allot land for providing residential accommodation of such type as may be approved by the State Government to the employees of any industry. Thus the excess vacant land acquired by the State Government under the Act can be dealt with in the following manner: (i) allotted for the purpose of an industry namely, any business, profession, trade, undertaking or manufacture; (ii) allotted for the purpose of construction of houses for the employees of an industry specified in item(i) above; (iii) disposed of to subserve the common good which may include allotment of vacant land for Government purpose, for institutions, etc., and (iv) retained/reserved for the benefit of the public" It appears that the Government issued the following guidelines pursuant to the recommendations made at a conference of State Ministers of Housing and Urban Development with a view to implement the policy of socialisation of urban land: "The 9th Conference of State Ministers of Housing and Urban Development held at Calcutta on the 17th, 18th and 19th December, 1976, considered the matter and 932 recommended that, in order to bring about social objectives of the Act more prominently, the utilisation of the excess vacant land should be according to the priorities set down below subject to the prescribed land uses: (i) Retain/reserve for the benefit of the public for social housing, provision of basic amenities, etc. (ii) Dispose of to subserve common good which may include allotment of vacant land for Government purposes, local authorities, institutions, etc. (iii) Allot for the purpose of construction of houses for the employees of industries specified in item (iv) below. (iv) Allot for the purpose of industry, viz., any business, profession, trade, undertaking of non polluting manufacture; cottage and small scale and wherever possible ancillary industry, manufacture. " It is significant to notice that there was an attempt made in these aforesaid Guidelines to alter the 'priorities ' laid down in section 23. The Guidelines cannot alter the 'priorities ' laid down in the section. The Guidelines are nothing but in the nature of Executive Instructions and cannot obviously control the plain meaning of the section. Where the language of the Act is clear and explicit, we must give effect to it, whatever may be the consequences, for in that case the words of the statute speak the intention of the legislature. The Court cannot be called upon to interpret the provisions of section 23 of the Act in the light of the Guidelines issued by the Government of India, Ministry of Works and Housing. I am, therefore, constrained to hold that the provisions of sub sections (1), (2) and (3) of section 23 and the opening words "subject to the provisions of sub sections (1), (2) and (3)" in section 23(4) which make the setting up of industries the dominant object for the acquisition of vacant land in urban agglomerations under the Act, are not in keeping with Part IV of the Constitution and, therefore, not protected under Article 31 C. 933 A legislation which directly runs counter to the Directive Principles of State Policy enshrined in article 39(b) and (c) cannot by the mere inclusion in the Ninth Schedule receive immunity under article 31B. The Directive Principles are not mere homilies. Though these Directives are not cognizable by the Courts and if the Government of the day fails to carry out these objects no Court can make the Government ensure them, yet these principles have been declared to be fundamental to the governance of the country. Granville Austin considers these Directives to be aimed at furthering the goals of the social revolution or to foster this revolution by establishing the conditions necessary for its achievement. He explains: "By establishing these positive obligations of the State, the members of the Constituent Assembly made if the responsibility of future Indian governments to find a middle way between individual liberty and the public good, between preserving the property and the privilege of the few and bestowing benefits on the many in order to liberate 'the powers of all men equally for contributions to the common good '." In short, the Directives emphasise, in amplification of the preamble, that the goal of the Indian polity is not laissez faire, but a welfare State, where the State has a positive duty to ensure to its citizens social and economic justice and dignity of the individual. It would serve as an 'Instrument of Instructions ' upon all future governments, irrespective of their party creeds. Article 38 requires that the State should make an effort to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life. In other words, the promise made by the Constitution to the citizens of India in its Preamble is directly included in one of the Directive Principles of State Policy. Article 39, cl. (a) requires that all citizens shall have a right to adequate means of livelihood. Article 39(b) enjoins that the State shall ensure that the ownership and control of the material resources of the community are so distributed as best to 934 subserve the common good. Article 39(c) mandates that the State shall direct its policy towards securing that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. Dr. P.B. Gajendragadkar in 'Law, Liberty and Social Justice ', observes: "These directive principles very briefly, but eloquently, lay down a policy of action for the different State Governments and the Central Government, and in a sense, they embody solemnly and recognize the validity of the charter of demands which the weaker sections of the citizens suffering from social economic injustice would present to the respective governments for immediate relief." Chandrachud J. (as he then was) in Smt. Indira Gandhi vs Raj Narain(1) after observing that the ratio of the majority in Kesevananda Bharti 's case were merely illustrative of what constitutes the basic structure and are not intended to be exhaustive, observes: I consider it beyond the pale of reasonable controversy that if there be any unamendable features of the of the Constitution, on the score that they form a part of the basic structure of the Constitution, they are that: (i) India is a Sovereign Democratic Republic; (ii) Equality of status and opportunity shall be secured to all its citizens, (iii) The State shall have no religion of its own and all persons shall be equally entitled to freedom of conscience and the right freely to profess, practise and propagate religion and that (iv) the Nation shall be governed by a Government of laws, not of men. These in my opinion, are the pillars of our constitutional philosophy, the pillars therefore of the basic structure of the Constitution." According to him, the pillars of the Constitution are Sovereign Democratic Republic, Equality of Status and Opportunity, Secularism, Citizen 's right to religious worship, and the Rule of Law. With respect, I would add that the concept of social and economic justice to build a Welfare State is equally a part of the basic structure or 935 the foundation upon which the Constitution rests. The provisions of sub sections (1), (2) and (3) of section 23 and the opening words "subject to the provisions of sub sections (1), (2) and (3)" in section 23(4) are the very antithesis of the idea of a Welfare State based on social and economic justice. Since these provisions permit acquisition of property under the Act for private purposes, they offend against the Directive Principles of State Policy of article 39(b) and (c) and are also violative of article 31(2) and therefore, not protected under article 31B. I would, therefore, declare that the provisions of sub sections (1), (2) and (3) of section 23 and the opening words "subject to the provisions of sub sections (1), (2) and (3)" in section 23(4) are ultra vires of the Parliament. With the striking down of the invalid provisions what remains, that is, the remaining provisions of the impugned Act, including section 23(4) thereof being in conformity with Part IV of the Constitution and Article 31(2), are valid and, therefore, the impugned Act has the protection of both Article 31 B and Article 31 C. I find no justification to strike down the whole Act as it would be against the national interest. Unless it becomes clear beyond reasonable doubt that the legislation in question transgresses the limits of the organic law of the Constitution it must be allowed to stand as the true expression of the national will. The provisions of sub sections (1), (2) and (3) of s 23 and the opening words "subject to the provisions of sub sections (1), (2) and (3)" in section 23(4), which are, in my view, invalid, cannot effect the validity of the Act as a whole. The test to be applied when an argument like the one addressed in this case is raised, has been summed up by the Privy Council in Attorney General for Alberta vs Attorney General for Canada in these words: "The real question is whether what remains is so inextricably bound up with the part declared invalid that what remains cannot independently survive or, as it has sometimes been put, whether on a fair review of the whole matter it can be assumed that the legislature would have enacted what survives without enacting the part that is ultra vires at all. " 936 It is quite clear that the provisions of sub sections (1), (2) and (3) of section 23 and the opening words "subject to the provisions of sub sections (1), (2) and (3)" in section 23(4) struck down by me are not inextricably bound up with the remaining provisions of the Act, and it is difficult to hold that the legislature would not have enacted the Act at all without including that part which is found to be ultra vires. The Act still remains the Act as it was passed, i.e., an Act for imposition of ceiling on urban land. In determining the effect of the law upon the individual 's right to property, the Court must take judicial notice of the fact of vast inequalities in the existing distribution of property in the country. The Court 's concern lies not merely with applying the pre existing sets of theories, concepts, principles and criteria with a view to determining what the law is on a particular point. The proper approach should be to view the principles with the realisation that the ultimate foundation of the Constitution finds its ultimate roots in the authority of the people. This demands that constitutional questions should not be determined from a doctrinaire approach, but viewed from experience derived from the life and experience or actual working of the community, which takes into account emergence of new facts of the community 's social and economic life affecting property rights of the individual, whenever, among others, the validity of a law prescribing preference or discrimination is in question under the "equal protection" guarantee. It should be remembered that the Directive Principles cannot be regarded only as idle dreams or pious wishes merely by reason of the fact that they are not enforceable by a court of law. A rule of law in facts does not cease to be such because there is no regular judicial or quasi judicial machinery to enforce its commands. An attempt to create a truly social Welfare State also carries with it the idea that in a country like India concentration of wealth in the country must be done away with and its distribution on an equitable basis effected in order to bridge the gap between the rich and the poor. The very purpose of creating such a state is to benefit the weaker and poorer sections of the community to a much greater extent than the rich persons so that the living standards of the people in general may improve. In fact, in such a State, all welfare schemes in their operation generally tend to benefit the poor people to a much greater extent than others. If an equal protection guarantee were enough to invalidate such schemes, improvement in the economic 937 and social conditions of the country would be impossible. One should not be swayed away by emotions but should be guided by the real needs of the country. Hence a paradoxical situation should be avoided by refusing to perpetuate the existing inequality among the social classes and maintain that gap to the same extent as before by intending to pay to the rich compensation at the same full rates as in the case of the poorer sections of the community. The impugned Act is meant to remove inequalities with a view to promote 'the greatest happiness of the greatest number '. During the last thirty years much has been done to implement the State 's policy of socialisation of agricultural land by imposition of a ceiling on agricultural holding. There is much that still remains to be done. There is need for prevention of concentration of wealth in a few hands in the urban areas and to provide for equitable distribution of vacant land among others. The great disparity between the rich and the poor is more visible in the urban areas particularly in the great cities. A majority of the people in the urban areas are living in abject poverty. They do not even have a roof over their heads. Concentration of wealth in a few hands is not conducive to the national well being. The challenge to the validity of the artificial definition of 'family ' in s.2(f) of the impugned Act must fail. The Court has recently upheld the validity of an identical definition of 'family ' appearing in the different State laws relating to imposition of ceiling on agricultural land. Some marginal hardship is inevitable in the working of the legislation. The ultimate object is to reduce inequalities in the larger interest. That takes us to the question whether the definition of 'family ' in s.2(f) of the Act results in the exclusion of a joint Hindu family. The definition of 'family ' contained in s.2(f) is in the following terms: "2.(f) "family" in relation to a person, means the individual, the wife or husband, as the case may be, of such individual and their unmarried minor children. " As a result of the artificial definition of 'family ' in s.2(f), there is no denying the fact that a joint Hindu family is excluded from the purview of the Act. Section 3 of the Act provides that no person, on 938 and from the commencement of the Act, shall be entitled to hold any vacant land in excess of the ceiling limit in the territories to which the Act applied. The word 'person ' is defined in s.2(i) as: "2.(i) "person" includes an individual, a family, a firm, a company, or an association or body of individuals, whether incorporated or not;" The question is whether the total exclusion of joint Hindu family renders the Act void and unconstitutional as violative of Art.14. I do not think that this is so. Parliament deliberately excluded a joint Hindu family from the purview of s.3 of the impugned Act. As already pointed out in Vasavaiah Chaudhary 's case, Parliament was beset with difficulties in imposing a ceiling on urban immovable property. While dealing with imposition of ceiling on vacant urban land it was presumably faced with another difficulty, viz., the institution of a joint Hindu family. According to the Mitakshara School of Hindu Law, there is community of interest and unity of possession. Under the Mitakshara School a copartner cannot predicate the extent of his share, while under the Dayabhaga school a member of joint Hindu family takes as a tenant in common. We, therefore, do not find anything wrong in excluding a joint Hindu family. The impugned Act applies to Hindus, Mohamedans and Christian alike. By the exclusion of a joint Hindu family the members of a joint Hindu family, whether governed by the Mitakshara School or the Dayabhaga School, were brought at par with others. The contention that the impugned Act offends against Art.14 must, therefore, fail. The contention that the amount fixed by sub s.(6) of s.11 of the impugned Act is totally arbitrary and illusory since there is no nexus between the value of the property and the amount fixed and, therefore, the maximum amount fixed under sub s.(6) makes the Act confiscatory in total abrogation of the fundamental right guaranteed under Art.31(2) cannot be accepted. The Constitution (25th Amendment) Act, 1971, which came into force on April 20, 1972, by s.2(a) substituted the word 'amount ' for the word 'compensation ' in the new Art.31(2), which reads: "31(2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for acquisition or 939 requisitioning of the property for an amount which may be fixed by such law or which may be determined in accordance with such principles and given in such manner as may be specified in such law; and no such law shall be called in question in any court on the ground that the amount so fixed or determined is not adequate or that the whole or any part of such amount is to be given otherwise than in cash. " Under the original Art.31(2), no property could be acquired for a public purpose under any law, unless it provided for compensation of, or acquired and either fixed the amount of the compensation, or specified the principles on which, and the manner in which, the compensation was to be determined and given. It will be seen that Art.31(2) provides for acquisition or requisitioning of the property for an amount which may be fixed by such law, or which may be determined in accordance with such principles and given in such manner as may be specified in such law. No such law can be called in question on the ground that the amount is not adequate, or that the whole or any part of it is to be given otherwise than in cash. Section 2(b) of the 25th Amendment Act inserted a new clause (2B) to Art.31 which provides: "31.(2B) Nothing in sub clause (f) of clause (1) of article 19 shall affect any such law as is referred to in clause (2). " The substitution of the neutral word 'amount ' for the word 'compensation ' in the new Art.31(2) still binds the legislature to give to the owner a sum of money in cash or otherwise. The legislature may either lay down the principles for the determination of the amount or may itself fix the amount. The choice open to the legislature is that the amount should be directly fixed by or under the law itself or alternatively, the law may fix principles in accordance with which the amount will be determined. Sub section (1) of s.11 reads: "11(1) Where any vacant land is deemed to have been acquired by any State Government under sub section (3) 940 of section 10, such State Government shall pay to the person or persons having any interest therein, (a) in a case where there is any income from such vacant land, an amount equal to eight and one third times the net average annual income actually derived from such land during the period of five consecutive years immediately preceding the date of publication of the notification issued under sub section (1) of section 10; or (b) in a case where no income is derived from such vacant land, an amount calculated at a rate not exceeding (i) ten rupees per square metre in the case of vacant land situated in an urban agglomeration falling within category, A or category B specified in Schedule 1; and (ii) five rupees per square metre in the case of vacant land situated in an urban agglomeration falling within category C or category D specified in that schedule." In order that the burden of compensation, that is, the amount payable under Art.31(2) for taking over vacant land in excess of the ceiling limit in sub section (3) of s.10 by the government may not be high, the Act incorporates a specific provision in sub section (6) of s.11 to fix a ceiling on the maximum amount payable in any single case. The sub section reads: "11(6) Notwithstanding anything contained in sub section (1) or sub section (5), the amount payable under either of the said sub sections shall, in no case, exceed two lakhs of rupees. " It is not suggested that sub s.(1) of section 11 does not lay down any principles for determination of the amount payable for the taking of excess vacant lands in an urban agglomeration or that the principles laid down in sub s.(1) are not relevant for the determination of the amount payable. It is also not suggested that payment of the amount at the rate of Rs. 10 per sq. metre and Rs. 5 per sq. metre, 941 for the vacant land in categories and B, and categories C and D respectively, makes the amount illusory or the Act confiscatory. The submission is that the fixation of the maximum amount payable at Rs. 2 lacs in a single case by sub s.(6) makes the amount payable under sub s (1) wholly illusory and, therefore, the Act is confiscatory. That cannot be so, because the fixation of ceiling on the maximum at Rs. 2 lacs under s.11(6) implies that it would affect only persons owning 20,000 sq. metres of vacant land in metropolitan cities like Delhi, Calcutta, Bombay and Madras or large cities like Hyderabad, Bangalore, Poona, Kanpur and Ahmedabad falling in categories A and B, or persons owning 40,000 sq. meters in big cities like Lucknow, Allahabad, Nagpur, Jaipur etc. falling in categories C and D. One is left to wonder how many own such vast tracts of vacant land in such cities. If any, very few indeed. Even if there are, the amount cannot be related to the value of the property taken. It is pure arithmetics. Twenty thousand sq. metres would make 23,920 sq. yards and forty thousand sq. metres 47,840 sq. yards. In a city like Delhi, Calcutta, Bombay and Madras the value of a square yards of vacant land would depend upon the situation of the land. If that be the criteria, then there can be no ceiling on vacant land in urban agglomerations, much less geiling on immovable property in such cities, when it comes to be imposed. The State has not the capacity to bear the burden. If the contention were to prevail, then no law for the implementation of the Directive Principles of State Policy under article 39(b) or (c) can ever be implemented. We may recall the words of Pandit Jawaharlal Nehru, who while introducing the Constitution (Fourth Amendment) Act, 1955, said in Parliament: "If we are aiming, as I hope we are aiming and verepeatedly say we are aiming, at changes in the social structure, then inevitably we cannot think in terms of giving what is called full compensation. Why ? Well, firstly because you cannot do it, secondly because it would be improper to do it, unjust to do it, and it should not be done even if you can do it for the simple reason that in all those social matters, laws etc., they are aiming to bring about a certain structure of society different from what it is at present. In that different structure among other things that will change is this, the big, difference between the have 's and the havenot 'section Now, if we are giving full 942 compensation, the have 's remain the have 's and the have not 's, have not 'section It does not change in shape or form if compensation takes place. Therefore, in any scheme of social engineering, if I may say so, you cannot give full compensation apart from the patent fact that you are not in a position nobody has the resources to give it. " There can be no scheme for nationalisation of any industry, there can be no socioeconomic measures enacted if the concept of 'just equivalent ' were to be introduced even after the 25th Amendment. To emphasise the point that the amount of Rs. 2 lacs fixed under sub s.(6) of s.11 makes the Act confiscatory, our attention was drawn to the fact that the petitioner in writ Petition No. 350 of 1977, Maharao Saheb shri Bhim Singhji, the former Maharana of Kotah owns 971.50 acres of vacant land appurtenant to and covered under his Umed Bhawan Palace in the city of Kotah, which is an urban agglomeration falling under category 'D ', and which stands requisitioned under s.23(1) of the Defence and Internal Security of India Act, 1971. There is no dispute that the property of the Maharana is valued for the purposes of the Rajasthan Lands and Buildings Tax Act, 1964, at Rs. 4,12,27,726.84. Does it mean that the amount should be geared to the value of the vacant land taken under sub section (3) of s 10? When the Court has no power to question the adequacy of the amount under Art.31(2), can it be said that the amount fixed determined according to the principles laid down in sub s.(1) of s.11, subject to the maximum fixed under sub s.(6) thereof is illusory merely because of inadequacy? Who are we to say that it should be 10 per cent or less, or 50 per cent or more. The legislature in its wisdom has laid down the principles and fixed a ceiling on the maximum amount payable. That is a legislative judgment and the Court has no power to question it. Seeravai in his book on Constitution, 2nd Ed., vol. I, p.656, while dealing with the Fourth Amendment states that in permitting 'inadequate compensation ' the 4th Amendment removed a fixed yard stick and made all discussion about 'relevant ' and 'irrelevant ' principles meaningless. The learned author says: "If the questions were asked, why has the law fixed compensation amounting to 60 per cent and not to 70 or 50 per cent of the market value, the answer would be that in the legislative judgment the amount fixed by the law was 943 a fair and just compensation for the acquisition of property under the at law, and if a law fixing compensation at amounts ranging from 90 to 50 per cent or less, of the market value of the property acquired, cannot be struck down by a Court, equally, principles of compensation cannot be struck down when they produce the same result. The consequences of the transformation brought about by the 4th Amendment is that 'principles of compensation ' do not mean the same thing before and after the 4th Amendment." As the learned author explains, 'considerations of social justice are imponderable and, therefore no fixed money value can be put on them by any principle ', and goes on to say 'The question whether the Court can go into the question whether the amount is illusory is difficult to answer '. The legislature considers a maximum amount of Rs.2 lacs to be a fair and just recompense for the acquisition of excess vacant land in an urban agglomeration. By no standard can an amount of Rs.2 lacs be considered to illusory. The 25th Amendment has placed the matter of adequacy of compensation beyond the pale of controversy by substituting the word 'amount ' for the word 'compensation ' in Art.31(2) and made the adequacy of the amount payable for acquisition or requisition of property nonjusticiable. In Kesavananda Bharti 's case, the Court upheld the constitutional validity of the 25th Amendment. The impact of the new Article 31(2) was also considered as well as the content and meaning of the word 'amount '. According to the majority, the amount fixed or determined to be paid cannot be illusory. But one thing is clear the meaning which the Court placed on the word 'compensation ' in R. C, Cooper 's case of adequacy of compensation and on relevant principles has been held to have been nullified by the 25th Amendment. The two decisions directly in point are the State of Kerala & Anr. vs The Gwalior Rayon Silk Mfg. Co. and State of Karnataka vs Ranganatha Reddy. In Gwalior Rayon 's case the Court upheld 944 the validity of the Kerala Private Forests (Vesting and Assignment) Act, 1971, which provided for the vesting of private forest lands held in Janman rights, even though there was no provision for payment of compensation. The Court held that since the Act envisaged a scheme of agrarian reform, it was protected under Art.31A and could not be challenged on the ground that it take aways, a bridges or abrogates the fundamental rights guaranteed by Arts.14, 19 and 31. In Ranganatha Reddy 's case the Court upheld a scheme for nationalisation of contract carriages in the State, since it laid down the principles for the determination of the amount payable under Art.31(2) and they were not irrelevant for the determination of the amount. Untwalia J. speaking for the majority observed: "On the interpretations aforesaid which we have put to the relevant provisions of the Act, it was difficult rather impossible to argue that the amount so fixed will be arbitrary or illusory. In some respects it may be inadequate but that cannot be a ground for challenge of the constitutionality of the law under Article 31(2)." Krishna Iyer J. in a separate but concurring judgment after deducing the discernible principles from the decision in Kesavananda Bharati 's case, held that the 25th Amendment bars the Court 's jurisdiction to investigate the adequacy of the amount. In view of these two decisions, the contention that fixation of maximum amount by sub section (6) of section 11 renders the amount payable under sub section (1) illusory or in the alternative makes the Act confiscatory cannot be accepted. There still remains the contention regarding the invalidity of sub section (1) of section 27, which reads: "27. (1) Notwithstanding anything contained in any other Law for the time being in force, but subject to the provisions of sub section (3) of section 5 and sub section (4) of section 10, no person shall transfer by way of sale, mortgage, gift, lease for a period exceeding ten years, or otherwise, any urban or urbanisable land with a building (whether constructed before or after the commencement of this Act) or a portion only of such building for a period of ten years of such commencement or from the date on which the building is constructed, whichever 945 is later, except with the previous permission in writing of the competent authority. " It is urged that sub section (1) of section 27 confers arbitrary and uncontrolled powers on the competent authority to grant or refuse permission for transfer and that the conferral of such uncontrolled and uncanalised power without any guidelines renders the provision illegal and void and unenforceable being an unreasonable restriction on the right to acquire, hold and dispose of property guaranteed under article 19(1(f). It is said that the matter is left to the whim and fancy of the competent authority, and the power so conferred is capable of misuse and thus be an instrument of great oppression. The learned Attorney General tried to meet the contention by urging that there was no reason to think that the competent authority would refuse to grant permission where the transaction is bona fide. According to him, the competent authority would be justified in refusing to grant permission where the transaction is calculated to defeat the provisions of the Act. It is said that the whole object of freezing of the transactions was to hold the price line of urban land. He drew our attention to the guidelines issued by the Government of India, Ministry of Works and Housing to the various State Governments directing that all applications for grant of permission under sub section (1) of section 27 of the Act should be dealt with expeditiously with a view to prevent any inconvenience to the members of the public and further that permission should be granted, as a matter of course, within three days of the receipt of such application. In my judgment, there is no justification at all for the freezing of transactions by way of sale mortgage, gift or lease of vacant land or building for a period exceeding ten years, or otherwise, for a period of ten years from the date of the commencement of the Act, even though such vacant land with or without building thereon falls within the ceiling limits. In Excel Wear vs Union of India & Ors. the Court held that the right to carry on a business guaranteed under article 19(1) (g) carries with it the right not to carry on business. It must logically follow, as a necessary corollary, that the right to acquire, hold and dispose of property guaranteed to a citizen under article 19(1)(f) carries with it the right not to hold any property. It is difficult to appreciate how could a citizen be compelled to own property against his will. 946 If vacant land owned by a person falls within the ceiling limits for an urban agglomeration, he is outside the purview of section 3 of the Act. That being so, such a person is not governed by any of the provisions of the Act. When this was pointed out to the learned Attorney General, he was unable to justify the imposition of the restriction imposed by sub section (1) of section 27 in case of land falling within the ceiling limits as a reasonable restriction. It must, accordingly, be held that the provision of sub section (1) of section 27 of the impugned Act is invalid insofar as it seeks to affect a citizen 's right to dispose of his urban property in an urban agglomeration within the ceiling limits. I would for the reasons stated, declare sub sections (1) (2) and (3) of section 23 and the opening words "subject to the provisions of sub sections (1), (2) and (3)" in section 23(4) of the Urban Land (Ceiling and Regulation) Act, 1976 as ultra vires of the Parliament and that these provisions are not protected under Articles 31 B and 31 C of the Constitution, and further declare that sub section (1) of section 27 of the Act is invalid insofar as it imposes a restriction on transfer of urban property for a period of ten years from the commencement of the Act, in relation to vacant land or building thereon, within the ceiling limits. Having struck down sub sections (1) (2) and (3) of section 23 and the opening words "subject to the provisions of Sub sections (1), (2) and (3)" in section 23(4) of the Act, I would declare the remaining provisions of the Urban Land (Ceiling and Regulation) Act, 1976, including sub section (4) of section 23 thereof as valid and constitutional. In the result, the writ petitions, except to the extent indicated, must fail and are dismissed. There shall be no order as to costs. S.R. Petitions dismissed.
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The Urban Land (Ceiling and Regulation) Act, 1976 (Act XXXIII of 1976) is used in 17 states and all Union Territories in India. It tries to set a limit on empty land in city areas with a population of 200,000 or more. To do this, it divides these cities into four groups and sets a land limit for each group. The main goal of this law is to limit how much empty land a person can own in city areas. It also allows the government to take extra land beyond the limit. It also controls building construction on this land. The goal is to stop a few people from owning most of the land, to prevent land speculation (buying land hoping its price will increase), and to fairly share land in cities for the common good. This is based on the principles in the Constitution that say the government should make sure wealth is shared fairly. This law was also added to the Ninth Schedule of the Constitution by the Constitution (Fortieth Amendment) Act, 1976. This means the law is protected by certain articles in the Constitution (Article 31 B and 31 C, as they were before a later change in 1976). In these petitions (formal requests to the court), the people making the requests (the petitioners) own empty land in cities in different states. They are challenging whether some parts of the Urban Land (Ceiling and Regulation) Act, 1976 are valid. They argue that some of the challenged parts are very important and cannot be separated from the rest of the law. They say that if these parts are not valid, then the whole law should be canceled because it is not constitutional (doesn't follow the rules of the Constitution). The petitioners are asking the court to cancel notices that were sent to them by the government under this law. They also want the court to order the government not to use the law against them. The court rejected the petitions and said the law is constitutional, except for one part: section 27(1). This decision was made by a majority of 4 to 1. One judge partially disagreed about the validity of certain subsections of section 23. The Court decided: 1. The Urban Land (Ceiling and Regulation) Act, 1976 is constitutional except for section 27(1). This section puts a limit on selling any city land with a building, or part of a building, that is within the land limit. 2. The Urban Land (Ceiling and Regulation) Act, 1976 is valid. Any problems with specific parts of the law do not mean that the law does not try to achieve the goals of fairly sharing wealth as described in the Constitution. 3. The definition of "family" in the law (section 2(f)) does not necessarily cause wealth to be owned by only a few people or families. The definition includes an individual, their husband or wife, and their unmarried minor (under 18) children. This definition is not intended to cause wealth to be concentrated, nor does it directly and unavoidably do so. 4. Section 11(6) of the Urban Land (Ceiling and Regulation) Act, 1976 is valid. This section says that the amount of money paid for extra land cannot be more than 200,000 rupees. This amount is not too small, and the rule is not unfair. Two hundred thousand rupees is not a small amount, even if the extra land is worth a lot. 5. Section 23 of the Urban Land (Ceiling and Regulation) Act is valid and does not violate the Constitution. Subsection (4) of section 23 is the most important rule for deciding what to do with extra land acquired under the law. Even though it is "subject to" subsections (1), (2), and (3), subsection (1) is optional, and subsections (2) and (3) relate to subsection (1). So, extra land must be used as described in subsection (4). However, the land can be given to someone for an "industry" or other purpose mentioned in subsection (1), if this benefits the community. The main test for using the land is whether it benefits society. If it doesn't, then the decision can be struck down as against the law's purpose. The introduction to the law should help resolve any confusion about section 23. Because the "common good" is most important, any use of land that doesn't serve this purpose is outside the law's scope and not allowed. Under the Constitution, private property cannot be taken or given for private purposes. However, an enabling power like the one in subsection (1) of section 23 can be used if the common good requires giving extra land to an industry, as defined in the law. 6. Subsection (I) of section 27 of the Act is invalid to the extent that it restricts the sale of any city land with a building, or part of a building, that is within the land limit. This property can be sold without the restrictions in subsection (I) of Section 27 of the Act. 7. The judges fully agree with the reasons given in the Judgment delivered by another judge. Another judge (concurring): 1. The law about limiting urban land ownership is constitutional, but section 27(1) is partially invalid. The law is meant to prevent a few people from owning most of the city land and to share the land fairly for the common good. The Constitution says that the community's resources should be used to benefit everyone, and this includes fairly distributing city land. 2. The definition of "family" in the law (section 2(f)) fits with modern city life and is not unfair or goes against the Constitution. Courts cannot say that the law is wrong to define a family as parents plus their minor children, especially now that people are planning families and adults are expected to support themselves. 3. 1 The payment of 200,000 rupees set in section 11(6) of the Act is not too small, even if the property is worth much more. 4. 2 The changes to the Constitution show that Parliament wants to make sure that private owners cannot claim full payment for their property as a basic right. 5. 3 Considering how many people in India live in poverty, anyone who gets 200,000 rupees can be considered to have received something valuable. It is not fair to call 200,000 rupees a small amount in a society where many people struggle to survive. So, section 11(6) is valid and does not violate the Constitution. The payment is reasonable and not unfairly low. 6. The history of the law, the importance of fairly sharing wealth as described in the Constitution, and the emphasis in Section 23(4) on the common good show that the law aims to benefit the public, develop the country, and promote social justice. Any violation of the Constitution is beyond the scope of Section 23(1), and using land under that section must serve the common good. This limits the wide meaning of section 23(1). Courts can and should interpret laws in a way that promotes public good and prevents misuse of power. The broad definition of "industry" or the use of general words like "any person" and "any purpose" do not remove the need for a public purpose that benefits the community and follows the Constitution. The test is whether it serves the public good and the community. If the power is used to favor a private business or for unfair reasons, the action will be struck down by the court. It is wrong to assume that there will be bribery or corruption. The law is good, and the power is valid, but if a specific action is unfair or goes beyond what the law and Constitution allow, it will be overturned in court. Courts can always review actions and strike them down if they are excessive or unfair. So, even the awkward wording of section 23(4) does not weaken the duty to distribute empty land fairly, according to the principles in the Constitution. 7. Section 27(1) of the Act is partially invalid. 8. 1 The question of violating the basic structure of the Constitution does not arise when examining a regular law, as opposed to a Constitutional change. Also, not every instance of inequality is a serious violation of the basic structure. Some inequality is unavoidable when trying to make things more equal on a large scale. What truly violates the basic structure is a shocking and unfair denial of equal justice. If a law goes that far, it threatens democracy and must be struck down. 9. 2 The right to property is not part of the basic structure of the Constitution. The goal of the Constitution is to reduce poverty, and that may involve reducing the concentration of property, possibly even taking it without full payment if the situation requires it. 10. 3 The part of the Constitution that seeks to build a fair society is basic to our constitutional order. The principles that guide state policy are very important and fundamental to how the country is governed. Fairly distributing wealth plays a key role in the progress of India as a Socialist Republic. One judge (dissenting): 1. The Urban Land (Ceiling and Regulation) Act, 1976, does not actually further the principles of fairly sharing wealth. The law was intended to achieve these goals, and state legislatures supported it. However, the law's provisions fail and produce the opposite results, and they also harm the basic structure of the Constitution. Section 2(f) allows wealth to be unfairly concentrated instead of preventing it, which goes against the Constitution. Similarly, section 23 produces results that are the opposite of the goals in the Constitution. Therefore, the law is not protected. Also, sections 2(f), 23, and 11(6) unfairly violate the Constitution, so the law is not protected. Section 23 allows property to be taken for private purposes, which violates the idea of eminent domain (the government's power to take private property for public use). Section 27 is also partially invalid because it goes beyond the law's scope and violates the Constitution. A better-written law within the constitutional limits would be the proper solution. 2. 1 The definition of "family" in section 2(f) is unfair and violates the Constitution. 3. 2 The distinction between minor and major children in a family is not logical and does not relate to the law's goal of acquiring extra land. It has not been shown that nuclear families have replaced traditional families in urban areas. 4. 3 The definition of "family" and the different standards for setting land limits lead to results that go against the principles of the Constitution. 5. 1 Section 11(6) of the Act puts a maximum limit on the amount paid for extra land, regardless of how much land is taken. This is not only a violation of the Constitution but also an unfair taking of property because land worth more than the set amount is taken without payment. 6. 2 Laws involving large social changes like abolishing landlords, reforming agriculture, and nationalizing businesses are different from this case. In those cases, the benefit of the community is the only consideration. But in this case, "industry" includes private businesses, and the government can give acquired land to individual business owners. This means the law is unfairly using the state's power of eminent domain. A provision that puts a limit on payment for acquired property, regardless of its size, is an unfair taking of property. 7. Section 11 (6) can be separated from the rest of the law and is therefore invalid and unconstitutional. 8. 1 Section 23 of the Act allows property to be taken for private purposes, which violates the Constitution and is therefore invalid and unconstitutional. This section is essential to the entire law, and without it, the law would only unfairly enrich the state. 9. 2 The Constitution protects the right to property and includes the concept of eminent domain. This means the government can take private property if it is for a public purpose and if the owner is paid. These two conditions are essential for the government to use its power of eminent domain, and any law that violates these conditions damages the basic structure of the Constitution. 10. 3 It is doubtful whether taking all the extra land in cities for an undefined objective like "industry" is a valid public purpose for using the power of eminent domain. 11. 4 The broad definition of industry makes a mockery of "public purpose" and is dangerous in the context of eminent domain. What is worse is that private purposes are given priority over the common good. This amounts to taking from one person to give to another and is an invalid use of the state's power of eminent domain. 12. 5 The broad definition of "industry" and the priorities for using extra land negatively affect the principle of fairly sharing wealth. The law cannot be said to further this principle and cannot be protected. 13. 6 The introduction to a law can only be considered if there is confusion in the text. Here, there is no confusion in section 23(1) and (4). There are express provisions indicating the priorities for using extra land, and the introduction cannot change that. 14. 7 Rules made under section 46(1) cannot override the express provisions of section 23. 15. 8 The "Compendium of Guidelines" issued by the government cannot be relied on either. The guidelines seek to improve the priorities given in section 23, but they actually reverse them. Therefore, the priorities in section 23 must prevail over the guidelines. 16. 9 Section 23 does not deal with fairly sharing wealth but only with using resources to benefit everyone. Its provisions go against that objective, and the law cannot be protected. 17. 10 The definition of "industry" in section 23 cannot be limited by the Court to only include industries in the public or cooperative sector. Parliament deliberately used a broad definition that includes private businesses, so limiting the definition would go against Parliament's intention. 18. 11 Subsection (1) of section 23 cannot be read as only an enabling provision. The subsections read together show that disposal of extra land is first done under subsection (1), and disposal under subsection (4) comes after. The words "subject to sub sections (1), (2) and (3)" cannot be ignored. It cannot be said that every disposal of extra land under subsection (1) must be for the "common good" because that is not stated in the subsection. Such interpretations require changing the entire section, which is the job of the legislature. 19. 12 Subsections (1), (2), (3), and (4) of section 23 are essential parts of the law and cannot be separated from each other. The attempt to save section 23 by freeing it from the definition of "industry" and the priorities for using extra land must fail. 20. 1 Though Parliament was authorized to limit urban property ownership, it deliberately excluded built-up properties from the law. Therefore, any restriction on selling built-up properties on land within the limit would be outside the law's scope. 21. 2 Such a provision would not relate to the law's goal of limiting land ownership. Mentioning the objectives in the introduction cannot expand the law's scope. Any restriction on built-up properties within the limit would be outside the law's scope. 22. 3 Without guidelines or standards for preventing wealth concentration, it cannot be said that the broad objectives in the introduction can effectively guide the decision to grant or refuse permission under section 27. This is likely to produce unfair results. Also, the appeal process would not be very helpful in preventing unfairness. Section 27 does not adequately control the power to grant or refuse permission and violates the Constitution. Another judge (concurring): 1. 1 Subsections (2) and (3) of Section 23 and the opening words in section 23(4) of the Urban Land (Ceiling and Regulation) Act, 1976 are invalid and are not protected under the Constitution. Subsection (1) of section 27 of the Act is invalid to the extent that it restricts the sale of urban property for ten years, in relation to land or buildings within the land limits. The remaining provisions of the Act, including subsection (4) of section 23, are valid and constitutional. The Act furthers the principles in the Constitution and is protected. 2. 2 Striking down the whole Act would be against the national interest. Unless it is very clear that the law violates the Constitution, it must be allowed to stand. Here, the invalidity of the subsections of section 23 does not affect the validity of the Act as a whole. 3. 3 In determining the effect of law on an individual’s property rights, the Court must consider the large inequalities in the existing distribution of property in the Country. The Court must also realize that the Constitution is ultimately based on the authority of the people. Constitutional questions should be determined based on experience and the community’s social and economic life, whenever the validity of a law is questioned. 4. The definition of family in section 2 (f) of the Act is valid. Excluding joint families does not make the Act invalid and unconstitutional. Parliament deliberately excluded joint families because it was difficult to set a limit for them. The Act applies to all religions equally. By excluding joint families, everyone is treated the same. Therefore, there is nothing wrong with the exclusion. 5. 1 The argument that the amount set by subsection (6) of section (1) is arbitrary because there is no link between the property's value and the amount, making the Act an unfair taking of property, cannot be accepted. 6. 2 The Constitution has made the adequacy of payment not questionable by substituting the word "amount" for the word "compensation". When the Court cannot question the amount under the Constitution, it cannot be said that the amount is too small just because of inadequacy. The legislature has set the principles and a limit on the amount and considers that 200,000 rupees is fair. That is a decision of the legislature, and the Court cannot question it. 7. 1 Subsections (1), (2), and (3) of section 23 and the opening words in subsection (4) of section 23 are invalid. 8. 2 The concept of social and economic justice to build a welfare state is part of the basic structure of the Constitution. The provisions of sections 23(1), (2), and (3) and the opening words in sections 23(4) are against the idea of a welfare state based on social and economic justice. Since these provisions allow property to be acquired for private purposes, they violate the Constitution and are not protected. 9. 3 It is doubtful whether taking all the extra land in cities for an undefined objective like 'industry' is a valid exercise of the power of eminent domain. 10. 4 Although the Act is meant to benefit the common good, it allows land to be acquired and used for private purposes, with the emphasis being on industrialization. The opening words in section 23 (4) make the provisions of section 23(4) subservient to section 23(1), which allows the allottee to hold land beyond the limit. 11. 5 The provisions of subsections (1), (2), and (5) of section 23 cannot be interpreted in light of the introduction to the Act or the principles in the Constitution. When the language of the section is clear, its meaning cannot be controlled by the introduction. It is not for the Court to restructure the section. That is a legislative function. 12. 6 The words "subject to the provisions of subsections (1), (2) and (3)" in section 23(4) remove the compulsion on the government to adhere to the principles in the Constitution when allotting vacant lands. The words mean "in addition to if anything is left over after the allotment under section 23(1)." A law built on the principles of the Constitution must be for a public purpose. Subsections (1), (2), and (3) of section 23 of the Act negate that principle. Furthermore, the Constitution states that property shall be acquired under a valid law, only for a public purpose, and with payment to the person whose property has been acquired. The definition of 'industry' includes any business carried on for private gain. There cannot be a mixed purpose of public and private to sustain the law. The problem lies in section 23(1) and its definition, which frustrate the object of the law. 13. 6 The concept of "public purpose" implies that the law should be for the acquisition of property in the interest of the general public. If the object of the acquisition is to set up industries in the private sector, the State can use the Land Acquisition Act, for which there must be payment according to the market value. 14. 7 The guidelines issued by the government cannot supersede the provisions of the Act. The guidelines cannot alter the priorities laid in the sections. They are executive instructions and cannot control the plain meaning of the section. 15. 8 The provisions of subsections (1), (2), and (3) of section 23 and the opening words in section 23(4), which make the setting up of industries the main object for the acquisition of land, are not in keeping with the Constitution and are not protected. 16. 9 A law that goes against the Constitution cannot receive immunity by being included in the Ninth Schedule. The principles in the Constitution are fundamental to the governance of the country. The goal is a welfare state where the State has a duty to ensure social and economic justice. 17. 1 The provisions of subsection (1) of section 27 of the Act are invalid to the extent that they seek to affect a citizen’s right to dispose of urban property within the land limits. 18. 2 The right to acquire, hold, and dispose of property carries with it the right not to hold any property. A citizen cannot be forced to own property against their will. 19. 3 There is no justification for freezing transactions of land or buildings for ten years, even if the property falls within the land limits. 20. 4 If land owned by a person falls within the land limits, they are not governed by the provisions of the Act.
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Under Article 32 of the Constitution of India. The disposal of excess vacant lands must therefore be made strictly in accordance with the mandate of sub section (4) of section 23, subject to this, that in a given case such land may be allotted to any person; for any purpose relating to, or in connection with, any 'industry ' or for the other purposes mentioned in sub section (1), provided that by such allotment, common good will be subserved. Private property cannot under our Constitution be acquired or allotted for private purposes though an enabling power like that contained in sub section (1) of section 23 may be exercised in cases where the common good dictates the distribution of excess vacant land to an industry, as defined in clause (b) of the Explanation to section 23. (1) It shall be competent for the State Government to allot, by order, in excess of the ceiling limit any vacant land which is deemed to have been acquired by the State Government under this Act or is acquired by the State Government under any other law to any person for any purpose relating to, or in connection with, any industry or for providing residential accommodation of such type as may be approved by the State Government to the employees of any industry and it shall be lawful for such person to hold such land in excess of the ceiling limit. The primary object and purpose of the Act, as its long title and the Preamble show, is to provide for the imposition of a ceiling on vacant land in urban agglomerations, for the acquisition of such land in excess of the ceiling limit, to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons and speculation and profiteering therein and with a view to bring about an equitable distribution of land in urban agglomerations to subserve the common good, presumably in furtherance of the Directive Principles of State policy contained in article 39 (c) and (b) respectively. It was disputed that any provision of the Act violated the petitioners ' fundamental rights under articles 14, 19 and 31 and, it was contended that even if there was any such violation, the Act and its provisions could not be 896 challenged by the petitioners on that ground because of the protective umbrella of article 31B and 31C of the Constitution and, therefore, the petitions were liable to be dismissed. Except as otherwise provided in this Act, on and from the commencement in this Act, on person shall be entitled to hold any vacant land in excess of the ceiling limit in the territories to which this Act applies under sub section (2) of section 1. " (1) It shall be competent for the State Government to allot, by order, in excess of the ceiling limit, any vacant land, which is deemed to have been acquired by the State Government under this act or is acquired by the State Government under any other law, to any person for any purpose relating to, or in connection with, any industry or for providing residential accommodation of such type as may be approved by the State Government to the employees of any industry and it shall be lawful for such person to hold such land in excess of the ceiling limit. He pointed out that no scheme for any industrial development for any urban agglomeration has been indicated in the Act, nor any such scheme seems to have been prepared by any State Government or even by the Union Government before undertaking the legislative measure in hand and no definite public purpose of industrialisation with any plan or blue print with set specifications or standards seems to have been within the contemplation of the sponsoring States or the Union Government; at any rate no material in that behalf has been placed on record before the Court and, therefore, according to counsel, compulsory acquisition of all excess vacant land in all urban agglomerations throughout the Union Territories and the 17 States of the country for achieving a bald, indefinite and unspecified objective of an 'industry ' would not be a valid exercise of the power of eminent domain. In other words, acquisition of excess vacant land in urban agglomeration would clearly be for private purposes and what is worse is that under the priorities laid down such private purposes are to be catered to first and then comes the disposal or distribution thereof to subserve common good. It was urged that the disposal of excess vacant land acquired by the State under the Act will be guided by the Preamble which says that enactment was put on the Statute Book with a view to bringing about the equitable distribution of land in urban agglomerations to subserve the common good. Further, to say that every disposal of excess vacant land under sub s.(1) must be for "common good" is to read into that sub section something which is not there; it amounts to re writing that sub section, which cannot be done, the Preamble notwithstanding. (2) Section 2(f) which contains the artificial definition of 'family ' in relation to the prescription of ceiling area, section 23 which deals with disposal or distribution of excess vacant land acquired under the Act as per priorities laid down therein and section 11(6) which puts a maximum limit on the quantum of the amount payable in respect of excess vacant land acquired from a holder irrespective of the extent of area held by him these three provisions flagrantly violate those aspects of articles 14 and 31 which constitute the essential and basic features of our Constitution and hence the protective umbrella of article 31B is not available to the impugned Act inasmuch as the 40th Constitution Amendment Act 1976 to the extent to which it inserts the impugned Act in the Ninth Schedule is beyond the constituent power of the Parliament as the said Amending Act has the effect of damaging or destroying the basic structure of the Constitution. It cannot be doubted that the 11 sponsoring State Legislatures passed their resolutions under article 252(1) with a laudable object, namely to clothe the Parliament with legislative competence to enact a law for the imposition of ceiling on urban immovable property for the country as a whole Though initially a model bill based on the recommendations made by the Working Group in its Report dated July 25, 1970 had been prepared where ceiling was proposed to be imposed on urban property on the basis of monetary value, Parliament later on realized that the implementation of that proposal was beset with several practical difficulties indicated in the Approach Paper prepared by a Study Group, and, therefore, it was though that ceiling in respect of built up properties should be brought about through some fiscal and other measures and ceiling on vacant land in urban agglomerations on the lines of the impugned Act should be undertaken. The primary object and the purpose of the Urban Land (Ceiling and Regulation) Act, 1976, 'the Act ' as the long title and the preamble show, is to provide for the imposition of a ceiling on vacant land in urban agglomerations, for the acquisition of such land in excess of the ceiling limit, to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons and speculation and profiteering therein, and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve the common good, in furtherance of the Directive Principles of State Policy under article 39(b) and (c). Chapter III deals with 'Ceiling on vacant Land Chapter IV deals with 'Regulation of transfer and use of urban land ' and Chapter V contains miscellaneous provisions, There can be no doubt that the legislative intent and object of the impugned Act was to secure the socialisation of vacant land in urban agglomerations with a view to preventing the concentration of urban lands in the hands of a few persons, speculation and profiteering therein, and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve to common good, in furtherance of the Directive Principles of State Policy under article 39 (b) and (c). 3, the ceiling being on a graded basis according to the classification of the urban agglomerations under s.4; (ii) acquisition of the excess vacant land by the State Government under s.10(3), with powers to dispose of the vacant land with the object to subserve the common good under s.23; (iii) payment of an amount for the acquisition of the excess land in cash and in bonds under section 14(2), according to the principles laid down in s.11(I) subject to the maximum specified in s.11(6 ) (iv) granting exemptions in respect of vacant land in certain cases under ss.20 and 21; (v) regulating the transfer of vacant land within the ceiling limits under s.26; 922 (vi) regulating the transfer of urban or urbanisable land with any building (whether constructed before or after the commencement of the Act, for a period of ten years from the commencement of the Act or the construction of the building whichever is later under s.27; (vii) restricting the plinth area for the construction of future residential buildings under s.29; and (viii) other procedural and miscellaneous matters. Except as otherwise provided in this Act, on and from the commencement of this Act, no person shall be entitled to hold any vacant land in excess of the ceiling limit in the territories to which this Act applies under sub section (2) of section 1. " The constitutional validity of the Act which has been placed in the Ninth Schedule by the Fortieth Amendment, is challenged principally on the ground that, firstly, it is violative of the fundamental rights guaranteed under Arts 14, (19(1)(f) and 31(2), since it seeks to alter the "basic structure" of the Constitution as formulated by this Court in His Holiness Kesavananda Bharti vs State of Kerala and; therefore, has not the protective umbrella of Art.31B, and secondly that it is a law in negation of, and in furtherance of the Directive Principles of State Policy under Art.39(b) and (c) and is, therefore, not protected under Art.31C. The validity of the impugned Act is challenged on four grounds Namely the inclusion of an artificial definition of 'family ' in s.2 (f) results in total exclusion of a joint Hindu family from the purview of the Act and also in adoption of double standard between a family with major sons, each of whom is a separate unit by himself, and a family with minor children, which constitutes a family unit for fixing a ceiling and thus s.3 of the impugned Act offends against the equal protection clause in Art.14, as persons similarly situate are differentially treated without any rational basis; (2) the impugned Act is inconsistent with, takes away and abridges the fundamental right guaranteed under article 31 (2) inasmuch as the fixation of the maximum amount payable under sub section (6) of Sec 11, makes the Act confiscatory or at any rate, the amount payable illusory; (3) sub section (1) of section 27 of 925 he Act freezing all transfers by way of sale, mortgage, gift, lease for a period exceeding ten years or otherwise, of any urban or urbanisable land with a building (whether constructed before or after the commencement of the Act), or a portion of such building, for a period of ten years from such commencement or from the date on which the building is constructed, whichever is later, except with the previous permission in writing of the competent authority, even though such vacant land in an urban agglomeration is within the ceiling limits, is an unreasonable restriction on the fundamental right to property guaranteed under article 19 (1); and (4) the 'priorities ' laid down in s.23 of the impugned Act are not in keeping with part IV of the Constitution and, therefore, liable to be struck down. The fundamental issue is: Whether section 23 of the impugned Act impairs the basic structure or framework of the Constitution being violative of article 39 (b) and (c) and Art, 31 (2) of the Constitution and is, therefore, not protected under articles 31 B and 31 C. The impugned Act is designed as a law for the imposition of a ceiling on vacant land in urban agglomerations, for the acquisition of such land in excess of the ceiling limit to regulate the construction of buildings on such land and for matters connected therewith, with a view to preventing the concentration of urban land in the hands of a few persons, and speculation and profiteering therein, and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve the common good, in furtherance of the Directive Principles under article 39 (b) and (c). (1) It shall be competent for the State Government to allot, by order, in excess of the ceiling limit any vacant land which is deemed to have been acquired by the State Government under this Act or is acquired by the state Government under any other law, to any person for any purpose relating to, or in connection with, any industry or for providing residential accommodation of such type as may be approved by the State Government to the employees of any industry and it shall be lawful for such person to hold such land in excess of the ceiling limit. The submission is that though the impugned Act is designed as a law for the imposition of a ceiling on vacant land in urban agglomerations, to subserve the common good, in furtherance of the Directive principles under article 39 (b) and (c), the dominant object of the impugned Act for the acquisition of vacant land in urban agglomerations under section 23 of the Act, was to facilitate the setting up of industries in the private sector and, therefore, the Act was not in furtherance of part IV of the Constitution and void being violative of article 31 (2). It was urged that section 23 of the impugned Act must, therefore, be struck down as unconstitutional, it being not in keeping with part IV of the Constitution was not protected under article 31C and that it cannot also have the protective umbrella of article 31B as it seeks to alter the basic structure of the Constitution. Thus the excess vacant land acquired by the State Government under the Act can be dealt with in the following manner: (i) allotted for the purpose of an industry namely, any business, profession, trade, undertaking or manufacture; (ii) allotted for the purpose of construction of houses for the employees of an industry specified in item(i) above; (iii) disposed of to subserve the common good which may include allotment of vacant land for Government purpose, for institutions, etc., and (iv) retained/reserved for the benefit of the public" It appears that the Government issued the following guidelines pursuant to the recommendations made at a conference of State Ministers of Housing and Urban Development with a view to implement the policy of socialisation of urban land: "The 9th Conference of State Ministers of Housing and Urban Development held at Calcutta on the 17th, 18th and 19th December, 1976, considered the matter and 932 recommended that, in order to bring about social objectives of the Act more prominently, the utilisation of the excess vacant land should be according to the priorities set down below subject to the prescribed land uses: (i) Retain/reserve for the benefit of the public for social housing, provision of basic amenities, etc. I am, therefore, constrained to hold that the provisions of sub sections (1), (2) and (3) of section 23 and the opening words "subject to the provisions of sub sections (1), (2) and (3)" in section 23(4) which make the setting up of industries the dominant object for the acquisition of vacant land in urban agglomerations under the Act, are not in keeping with Part IV of the Constitution and, therefore, not protected under Article 31 C. 933 A legislation which directly runs counter to the Directive Principles of State Policy enshrined in article 39(b) and (c) cannot by the mere inclusion in the Ninth Schedule receive immunity under article 31B. The Constitution (25th Amendment) Act, 1971, which came into force on April 20, 1972, by s.2(a) substituted the word 'amount ' for the word 'compensation ' in the new Art.31(2), which reads: "31(2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for acquisition or 939 requisitioning of the property for an amount which may be fixed by such law or which may be determined in accordance with such principles and given in such manner as may be specified in such law; and no such law shall be called in question in any court on the ground that the amount so fixed or determined is not adequate or that the whole or any part of such amount is to be given otherwise than in cash. " No such law can be called in question on the ground that the amount is not adequate, or that the whole or any part of it is to be given otherwise than in cash. Sub section (1) of s.11 reads: "11(1) Where any vacant land is deemed to have been acquired by any State Government under sub section (3) 940 of section 10, such State Government shall pay to the person or persons having any interest therein, (a) in a case where there is any income from such vacant land, an amount equal to eight and one third times the net average annual income actually derived from such land during the period of five consecutive years immediately preceding the date of publication of the notification issued under sub section (1) of section 10; or (b) in a case where no income is derived from such vacant land, an amount calculated at a rate not exceeding (i) ten rupees per square metre in the case of vacant land situated in an urban agglomeration falling within category, A or category B specified in Schedule 1; and (ii) five rupees per square metre in the case of vacant land situated in an urban agglomeration falling within category C or category D specified in that schedule." I would for the reasons stated, declare sub sections (1) (2) and (3) of section 23 and the opening words "subject to the provisions of sub sections (1), (2) and (3)" in section 23(4) of the Urban Land (Ceiling and Regulation) Act, 1976 as ultra vires of the Parliament and that these provisions are not protected under Articles 31 B and 31 C of the Constitution, and further declare that sub section (1) of section 27 of the Act is invalid insofar as it imposes a restriction on transfer of urban property for a period of ten years from the commencement of the Act, in relation to vacant land or building thereon, within the ceiling limits.
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Any problems with specific parts of the law do not mean that the law does not try to achieve the goals of fairly sharing wealth as described in the Constitution. The definition of "family" in the law (section 2(f)) does not necessarily cause wealth to be owned by only a few people or families. Subsection (I) of section 27 of the Act is invalid to the extent that it restricts the sale of any city land with a building, or part of a building, that is within the land limit. The history of the law, the importance of fairly sharing wealth as described in the Constitution, and the emphasis in Section 23(4) on the common good show that the law aims to benefit the public, develop the country, and promote social justice. Any violation of the Constitution is beyond the scope of Section 23(1), and using land under that section must serve the common good. The law is good, and the power is valid, but if a specific action is unfair or goes beyond what the law and Constitution allow, it will be overturned in court. Also, sections 2(f), 23, and 11(6) unfairly violate the Constitution, so the law is not protected. Section 23 allows property to be taken for private purposes, which violates the idea of eminent domain (the government's power to take private property for public use). Section 27 is also partially invalid because it goes beyond the law's scope and violates the Constitution. This is not only a violation of the Constitution but also an unfair taking of property because land worth more than the set amount is taken without payment. 1 Section 23 of the Act allows property to be taken for private purposes, which violates the Constitution and is therefore invalid and unconstitutional. This section is essential to the entire law, and without it, the law would only unfairly enrich the state. This means the government can take private property if it is for a public purpose and if the owner is paid. 3 It is doubtful whether taking all the extra land in cities for an undefined objective like "industry" is a valid public purpose for using the power of eminent domain. This amounts to taking from one person to give to another and is an invalid use of the state's power of eminent domain. The law cannot be said to further this principle and cannot be protected. 6 The introduction to a law can only be considered if there is confusion in the text. Its provisions go against that objective, and the law cannot be protected. It cannot be said that every disposal of extra land under subsection (1) must be for the "common good" because that is not stated in the subsection. 3 Without guidelines or standards for preventing wealth concentration, it cannot be said that the broad objectives in the introduction can effectively guide the decision to grant or refuse permission under section 27. 1 Subsections (2) and (3) of Section 23 and the opening words in section 23(4) of the Urban Land (Ceiling and Regulation) Act, 1976 are invalid and are not protected under the Constitution. Subsection (1) of section 27 of the Act is invalid to the extent that it restricts the sale of urban property for ten years, in relation to land or buildings within the land limits. 1 The argument that the amount set by subsection (6) of section (1) is arbitrary because there is no link between the property's value and the amount, making the Act an unfair taking of property, cannot be accepted. The legislature has set the principles and a limit on the amount and considers that 200,000 rupees is fair. 1 Subsections (1), (2), and (3) of section 23 and the opening words in subsection (4) of section 23 are invalid. 5 The provisions of subsections (1), (2), and (5) of section 23 cannot be interpreted in light of the introduction to the Act or the principles in the Constitution. A law built on the principles of the Constitution must be for a public purpose. There cannot be a mixed purpose of public and private to sustain the law. 8 The provisions of subsections (1), (2), and (3) of section 23 and the opening words in section 23(4), which make the setting up of industries the main object for the acquisition of land, are not in keeping with the Constitution and are not protected. 1 The provisions of subsection (1) of section 27 of the Act are invalid to the extent that they seek to affect a citizen’s right to dispose of urban property within the land limits. 4 If land owned by a person falls within the land limits, they are not governed by the provisions of the Act.
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ition No. 1395 of 1987. (Under Article 32 of the Constitution of India). N.A. Palkhiwala, T.R. Andhyarujina, Soli J. Sorabjee, R. Dada, section Ganesh, J.R. Gagrat, R.B. Aggarwala, P.G. Gokhale, V.B. Aggarwala, R.J. Gagrat, R.B. Hathikhanawala, R.F. Nariman, P.H. Parekh, Sanjay Bhartari, M.K. Menon, R.K. Dhillon, Ms. Rohini Chhabra, Ms. Sunita Sharma and Ms. Ayesha Misra for the Petitioners. K. Parasaran, Attorney General, B. Datta, Addl. Solici tor General, Dr. V. Gauri Shankar, S.K. Dholakia, P.S. Poti, G.A. Shah, V. Jaganatha Rao, K. Sudhakaran, Ms. A. Subha shini, B.B. Ahuja, H.K. Puri, A Subba Rao, A.S.Bhasme, K.R. Nambiar, M.N. Shroff, M. Veerappa, R. Mohan, R. Ayyamperumal and J.P. Mishra for the Respondents. The following judgments of the Court were delivered: 927 VENKATACHALIAH, J. In these writ petitions under Article 32 of the Constitution of India, petitioners who are engaged in, or associated with, the Hotel Industry in India chal lenge the constitutional validity of the Expenditure Tax Act, 1987 (Central Act 35 of 1987). The Act envisages a tax at 10 per cent ad valorem on 'chargeable expenditure ' in curred in the class of Hotels wherein "room charges" for any unit of residential accommodation are Rupees Four Hundred per day per individual. The 'Chargeable expenditure ' as defined in Section 5 of the Act include expenditure incurred in or payments made in such class of hotels in connection with the provision of any accommodation, residential or otherwise, food or drink whether at or outside the hotel; or for any accommodation in such hotel on hire or lease; or any other services envisaged in that Section. However, any expenditure incurred in or paid for in "foreign exchange" or by persons who enjoy certain diplomatic privileges and immunities are exempt. The challenge to the vires of the 'Act ' is on grounds of lack of legislative competence and of violation of the rights under Article 14 and 19(1)(g). Union of India seeks to sustain the legislative competence to enact the impugned law under Article 248 read with Entry 97 of List I of the Seventh Schedule. Writ Petition No. 1395 of 1987 is quite comprehensive as to the array of parties and may generally be regarded as representative of the contentions urged in support of the challenge. The first petitioner therein is "The Federation of Hotel & Restaurant Association of India" which is said to be a representative body of over 1,000 member petitioners in India. Petitioners 2 to 5 are said to be the Regional Associations of the Federation and Petitioners 6 and 7 are two Hotel companies which own several hotels in India. Petitioners 8 and 9 are Indian citizens who are the direc tors and shareholders of petitioners 6 and 7 respectively. Petitioner 10, is a practising chartered accountant who claims to use the services in the several Hotels in India owned by the members of the Federation. The array of peti tioners is quite comprehensive so as to include all inter ests affected so as to satisfy the requisite standing to sue from all points of view. The Expenditure Tax Bill No. 90 of 1987, preceding the impugned Act was introduced in the Union Legislature on 21.8.1987. It became an Act on 14.9.1987. It extends to the whole of India except the State of Jammu and Kashmir. The requisite notification under Section 1(3) of the Act was issued on 14.10.1987 appointing 1.11.1987 928 as the date on which the Act shall come into force. The Expenditure Tax Bill No. 90 of 1987 states the following as its objects and reasons: "The Bill seeks to impose a tax on expenditure incurred in hotels were the room charges for any Unit of residential accommodation are four hundred rupees or more per day per individual. This tax will be levied at the rate of ten per cent of the expenditure incurred in connection with provi sion of any accommodation, food, drinks, and certain other categories of services. This tax will not apply to expendi ture incurred in foreign exchange or in the case of person enjoying diplomatic privileges." (Emphasis supplied) 4. A brief survey of the provisions of the Act is perhaps necessary to apprehend and assess the grounds of challenge in their true perspective. Section 4 is the charg ing section which says: "Subject to the provisions of this Act, there shall be charged on and from the commencement of this Act, a tax at the rate of ten per cent of the chargeable expenditure. " The expression 'chargeable expenditure ' is defined in clauses (a), (b), (c) and (d) of Section 5, which read: "For the purposes of this Act, chargeable expend iture means any expenditure incurred in, or payments made to, a hotel to which this Act applies, in connection with the provision of, (a) any accommodation, residential or otherwise; or (b) food or drink by the hotel, whether at the hotel or outside, or by any other person at the hotel; or (c) any accommodation in such hotel on hire or lease; or (d) any other services at the hotel, either by the hotel or by any other person, by way of beauty parlour, health 929 club, swimming pool or other similar services." (Rest of the provisions of Section 5 are omitted as unnecessary for the present) The expression 'Assessee ', 'Hotel ', 'Room charges ' are some of the material expressions defined in the interpreta tion clause. 2(1) "assessee" means a person responsible for collecting the expenditure tax payable under the provisions of this Act. 2(6) "Hotel" includes a building or part of a building where residential accommodation is, by way of business, provided for a monetary consideration. 2(10) "room charges" means the charges for a unit of residential accommodation in a hotel and includes the charges for (a) furniture, air conditioner, refrigerator, radio, music, telephone, television, and (b) such other services as are normally included by a hotel in room rent, but does not include charges for food, drinks and any services other than those referred to in sub clauses (a) and (b). Section 3 is the crucial provision which lays down the differentia for the classification of the Hotel to which the 'Act ' applies. Section 3 is the crucial provision which lays down the differentia for the classification of the Hotel to which the 'Act ' applies. That section provides that the 'Act ' shall apply in relation to any 'chargeableexpenditure ', incurred in a hotel wherein the "room charges" for any unit of resi dential accommodation at the time of incurring of such expenditure are Rs.400 or more per day per individual. The levy of tax is confined to such class of Hotels which satis fy that statutory standard. Where, however, composite charges are payable in respect of both residential accommo dation and food, then the "room charges" for purposes of determination of the criteria attracting the Act shall have to be apportioned in the manner to be prescribed. Section 3 930 enables the assessing officer to determine the 'room charges ' on such reasonable basis as he may deem fit where: .lm60 "(i) a composite charge is payable in respect of residential accommodation, food, drinks and other services, or any of them, and the case is not covered by the provi sions of sub section (2), or (ii) it appears to the Income tax Officer that the charges for residential accommodation, food, drinks or other services are so arranged that the room charges are under stated and other charges are overstated," Sections 6 and 24 envisage and provide for the authori ties to administer Act and engrafts the machinery and proce dure of the Income tax Act. Section 6(1) says: "Every Director of Inspection, Commissioner of Incometax, Commissioner of Income tax (Appeals), Inspecting Assistant Commissioner of Income tax, Income tax Officer and Inspector of Income tax shall have the like powers and perform the like functions under this Act as he has and performs under the Income tax Act, and for the exercise of his power and the performance of his functions, his jurisdiction under this Act shall be the same as he has under the Income tax Act." Section 24 provides: "The provisions of the following sections and Schedules of the Income tax Act the Income tax (Certificate Proceedings) Rules, 1962, as in force from time to time, shall apply with necessary modifications as if the said provisions and the rules referred to expenditure tax instead of to income tax: 2(43B) and (44), 118, 125, 125A, 128 to 136 (both inclusive), 138, 140, 144A, 159 to 163 (both inclusive), 166, 167, 170, 171, 173 to 179 (both inclusive), 187, 188, 189, 220 to 227 (both inclusive), 229, 231, 232, 237 to 245 (both inclusive), 254 to 262 (both inclusive) 265, 266, 268, 269, 278B, 278C, 278D, 278E, 281, 281B, 282, 283, 284, 287, 288, 288A, 288B, 289 to 293 (both inclusive), the Second 931 Schedule and the Third Schedule: Provided that references in the said provisions and rules to the "assessee" shall be construed as references to an assessee as defined in this Act." Section 8(1) provides that every "person responsible for collecting" the tax as defined in Section 2(8) shall, before the expiry of four months from the 31st day of March in each year furnish or caused to be furnished to the Income tax Officer, in the prescribed form and varified in the pre scribed manner a return in respect of the immediately pre ceding financial year showing (a) the aggregate of the payments received in respect of "chargeable expenditure"; (b) the amount of the tax collected; (c) the amount of the tax paid to the credit of the Central Government; and (d) such other particulars as may be prescribed. The incidence of the tax is on the persons who incur the "chargeable expenditure" in the class of hotels to which the Act applies. Section 7 enjoins upon the "person responsible for collecting" the duty to collect the taxes and pay the same to the credit of the Central Government. The "room charges" of Rs.400 per day per individual stipulated in Section 3 is the differentium which keeps apart the class of hotels to which the Act applies. Petitioners say that Sec tion 3 merely defines the place, viz., the Hotel where a room carries a charge of Rs.400 per day marked on it and the rest of the incidents and consequences of the provisions of the 'Act ' envisage the levy of a tax on the 'luxuries ' provided at such a place. The legislation, it is urged, is squarely within Entry 62 of List II within the State power. The Act, it is contended, does not impose an "Expenditure Tax" but taxes 'Luxuries '. Even if the legislation has an "expenditure dampening" objective and seeks to inhibit, by creation of disincentives, ostentatious and wasteful expend iture, the classification, it is said, has no rational basis. Persons similarly situated and who incur the same extent and degree of expenditure on the same luxuries are differentiated on the sole basis that in one case the ex penditure is incurred in a Hotel where one of the rooms has a charge of Rs.400 per day per individual marked for it, while in the other though equally wasteful expenditure is incurred in a more luxurious Restaurant, the latter expendi ture is exempt. It is urged that even if more sophisticated and expensive food and drinks and other services, envisaged in clauses (a) to (d) of Section 5, are provided in a hotel or catering establishment which falls out side the class, the expenditure incurred thereon is unaffected by the law. 932 This aspect of under inclusiveness is assailed as violative of Article 14. Petitioners further contend that the several provi sions of the Act which impose certain statutory obligations of an onerous nature, the breach of which are visited with penal consequences, render the law an unreasonable restric tion on the petitioners ' fundamental rights under Article 19(1)(g). The contentions urged in support of the petitions admit of being noticed and formulated in the following terms: (a) The 'Act ', in its true nature and character, is not one imposing an 'Expenditure Tax ', as known to Law, accepted notions of Public Finance, and to legislative practice but is, in pith and substance, either a tax on Luxuries falling within Entry 62 of List II of the Seventh Schedule; or a tax on the consideration paid for the purchase of goods consti tuting an impost of the nature envisaged in entry 54 of List II, and clearly outside the legislative competence of the Union Parliament; (b) that even if the 'Act ' is held to impose a tax which is "sui generis" or a "non discript", tax with respect to which the Union Parliament is competent to make a law under Arti cle 248 and Entry 97 of List I, then, at all events, the 'Act ' is violative of Article 14 in as much as the differen tium on which the Hotels are classified is arbitrary and unintelligible has no rational nexus with the taxing policy under the 'Act '. (c) that the 'Act ' is violative of Petitioners ' fundamental right under Article 19(1)(g) as it imposes unreasonable onerous restrictions on their freedom of busi ness. Re. ' Contention (a): Sri Palkhivala, learned Senior Counsel for the petition ers, contended that the appellation of 'Expenditure Tax ' given to the impost is a misnomer as the concept of "Expend i ture Tax" as known to law and recognised by the theorists of public finance is not a tax on a few stray items of expendi ture but is a term of Art which has acquired a technical import as 'nomen juris ' and that the import envisaged by the Act, in its true nature and character, is no more and no less than a tax on Luxuries under Entry 62 list II within the State 's exclusive power. Learned Counsel urged that the delicate balance in the demarcation in 933 a federal polity of legislative powers between the Union and the States would impose on the Union, the repository of the residuary power, the sensitive task of recognising both the line of demarcation as well as the constitutional mandate and a disciplined reluctance not to cross it. The contention as to lack of legislative competence emphasises two aspects one with a negative implication and the other of a positive import. Negatively, it is urged that the impost is not, and does not satisfy the concept of an "Expenditure tax" which has a technical connotation both in law and in public finance. A tax on certain stray items of expenditure is not, it is contended, a general "expenditure tax". The nomenclature of the levy is really a mere iII fitting legal mask for what is really a tax under Entry 62 list I. The nomenclature of the tax, it is urged, is irrele vant in deciding its true nature and character. It belongs to the rudiments of the subject, says the learned counsel, that a constitutional grantee of a power cannot enlarge its own by choosing for the legislation enacted in exertion of that power, a nomenclature that corresponds to and semanti cally subsumes with the grant. Shri Palkhivala submitted that the true nature and concept of "expenditure tax", as known to the theories of public finance has a specific, well accepted legal connotation and is a tax levied on income or capital spent or "consumed" in distinguishment of income or capital "saved". It is this concept of 'expenditure tax ', as a fiscal tool, which has certain social and economic objec tives informing its policy. The present impost and its incidents, it is urged, have no rational connection with the concept of "expenditure tax" known to and accepted by the principles of public finance and recognised by established Legislative practice. Referring to the economists ' concept of "expenditure tax", learned counsel referred us to the report of the Study Group "On taxation of Expenditure" (Government of India, Ministry of Finance, April 1987) "An expenditure tax is generally taken to mean a direct tax on personal con sumption, i.e., the total annual consumption (minus an exemption, if any) of an individual tax payer or family. This implies that the tax will be payable in the year in which consump tion takes place. One can conceive of the tax base being computed by adding up all items of expenditure, which are by law defined as consumption e x p e nditure, . . . . . . . . . or, alternatively, by summing up all the receipts and substracting therefrom expenses of earning 934 income as well as outflows in the form of savings (going into different types of invest ments, including repayment of past loans). In practice, the latter method would be prefera ble." (Emphasis Supplied) "India has the distinction, shared with Sri Lanka, of having actually experimented with a direct tax on consumption expenditure though the idea itself had caught the imagination of many tax theorists in developed countries, some of whom had developed practical systems for implementation. In both India and Sri Lanka, the tax was introduced on the basis of the recommendations of Prof. Nicholas Kaldor. Prof. Kaldor had been invited to come to India by the Indian Statistical Institute to make an investigation of the Indian tax system in the light of the revenue requirements of the Second Five Year Plan. In his report, he recommended the introduction of a direct tax on personal consumption expenditure as a limb of a comprehensive and self checking system comprising the income tax, (which was already in operation in India), a tax on capital gains (which had been tried for two years in the post war period and then withdrawn), an annual tax on net wealth, a general gift tax and a tax on personal expenditure. He envisaged that these five levies would be assessed simultane ously on the basis of a single comprehensive return, . . " (Emphasis Supplied) "Under the scheme of expenditure taxation suggested by Prof. Kaldor, a taxpayer would not be required to give any detailed account of his outlays on consumption but only a statement of his total outlay as part of a comprehensive tax return showing all his receipts, investments, etc., and all the items for which he claimed exemption . " "In India too, although the expendi ture tax was tried twice and was given up, there has been a revival of interest in making expenditure the base for personal taxation. In particular, it has been maintained that India should seriously consider moving towards a progressive expenditure tax for three impor tant reasons: 935 (a) it will promote savings; (b) it would be, on the whole, more equitable than the present or any practicable form of income tax; and (c) it will significantly reduce the inducement for direct tax evasion." In Musgrave on 'Public Finance ', referring to the concept of Personal Expenditure Tax, it is stated: " . In analogy to the income tax, the taxpayer would determine his total consumption for the year, subtract whatever personal exemptions or deductions were allowed, and apply a progressive rate schedule to the remaining amount of taxable consumption". (Emphasis Supplied) Sri Palkhivala also referred to certain passages of Nicholas Kaldor "On Expenditure Tax" and the same eminent economists report on "Indian Tax Reform", to reinforce the submission that the conceptualisation of 'Expenditure Tax ', as a fiscal tool for economic regulation, has a specific and definite connotation and the "Tax" so conceptualised by experts on public finance is an entirely different idea from the one built into the present legislation. The very concept of 'Expenditure Tax ' envisaged in the impunged legislation, it is urged, is unknown to accepted principles of public fi nance and is the result of a grave misconception as to the essential nature and incidents of what in law and legisla tive practice is recognised as 'Expenditure Tax '. The whole exercise, learned counsel said, is a draft on credibility and that the Finance Minister 's speech on the Bill leaves no doubt that what the Government wanted from the law was really a tax on "Luxuries". The impost, it is urged, is not susceptible of any other legitimate understanding than that it is in substance and effect, a tax on "Luxuries" within the States ' power. Sri Palkhivala emphasised the relevance of what was implicit in the observations of this court in Azam Jha Bahadur vs Expenditure Tax Officer, ; made while upholding the legislative competence of the Union Parliament to enact the Expenditure Tax Act 1957, as referable to the residuary Entry 97 of List I. The implica tion of the observations of this Court at page 479 of the report, according to learned counsel, is that what distin guished 936 an "expenditure tax" from a levy under Entry 62 of List II, was that the scheme of taxation took into account the total ity of expenditure over a unit of time, as distinct from sums laid out on stray purchases of luxuries. Shri Palkhivala, then, submitted that the notion of expenditure tax, as recognised by legislative practice is a relevant factor. In Croft vs Dunphy, Lord Mc Millan held that when power is conferred on the legislature on a particular topic it is important, in determining the scope of the power, to have regard to what, in legislative practice, is ordinarily treated as embraced within the topic and particularly in legislative practice of the State which has conferred the power. In Wallace Brothers & Co. Ltd. vs CIT, Bombay City, [1948] L.R. 75, IA 86 Lord Uthwatt re ferred to the permissibility and, indeed, the importance to refer to the legislative practice as to what is ordinarily treated as within the topic of legislation in understanding the scope of a legislative power. The notion of expendi ture tax in the scheme of the Expenditure Tax Act, 1957, would, it is urged, detract from such legislative practice. The second limb of the argument is that the impost is clearly of the nature of a tax on luxuries within Entry 62 of List I. The simple test, according to the argument, is whether, if a State legislature had enacted a similar law it would not have been held to be within its competence under Entry 62 of List II? The answer would, according to the submission, be in emphatic affirmation, Referring to the concept of a luxury tax, learned counsel referred to the New Encyclopaedia Britanica Vol. 7 which referring to "luxury tax" says: "Luxury tax, excise levy on goods or services considered to be luxuries rather than necessities. Modern examples are taxes on jewellery and perfume. Luxury taxes may be levied with the intent of taxing the rich, as in the case of the late 18th and early 19th century British taxes on carriages and man servants; or they may be imposed in a deliber ate effort to alter consumption patterns, either for moral reasons or because of some national emergency. In modern times, the revenue production of luxury taxes has proba bly overshadowed the moral argument for them. Furthermore, the progressive nature of the early taxes began to be lost as more lower income people 's "luxuries" were taxed in the interest of generating additional revenue; an example is the amusement tax. " 937 On the analogy of the wealth tax envisaged by Entry 86 of List I it was urged that even as the concept of "wealth" for the imposition of a tax thereon is not the individual components of the assets of the assessee but a totality of all assets which the assessee owns, so is the concept of "expenditure" which does not consist of a few stray items of expenditure but a systematised reckoning of expenditure for and during a particular unit of time. It was then urged that recourse to the residuary power under Article 248 read with Entry 97 of List I should be the very last refuge and would be available if, and only if, the other entries in the State and concurrent lists do not cover the topic. Reliance was also placed on the observations of the Federal Court in Subrahmanyan Chettiar vs Muttuswami Goun dan, AIR 1941 FC 47 where it was held: "But resort to that residual power should be the very last refuge. It is only when all the categories in the three Lists are absolutely exhausted that one can think of falling back upon a nondescript." Shri Palkhivala recalled the following words of caution sounded by Chinnappa Reddy, J. in International Tourist Corporation vs State of Haryana; , " . . Before exclusive legisla tive competence can be claimed for Parliament by resort to the residuary power, the legisla tive incompetence of the State legislature must be clearly established. Entry 97 itself is specific that a matter can be brought under that entry only if it is not enumerated in List II or List III and in the case of a tax if it is not mentioned in either of those lists. In a Federal Constitution like ours where there is a division of legislative subjects but the residuary power is vested in Parliament, such residuary power cannot be so expansively interpreted as to whittle down the power of the State legislature. That might affect and jeopardise the very federal princi ple. The federal nature of the constitution demands that an interpretation which would allow the exercise of legislative power by Parliament pursuant to the residuary powers vested in it to trench upon State legislation and which would thereby destroy or belittle state autonomy must be rejected . " 938 Sri Palkhivala also sought to demonstrate how, looked at from another angle, the levy presents an anomalous situation by splitting up a transaction which would otherwise be one of sale of goods and isolating the price of the goods for separate treatment as a distinct subject matter for levy of expenditure tax, thus robbing the State power of its sub stance. Learned Advocate General for the State of Kerala who intervened made submissions which while being substantially on the lines of the petitioners ' contentions, however, sought to qualify that legislative competence to the extent of operation of the 'Act ' in the Union territories could be sustained. Learned Attorney General on the contrary, submitted that the law, in pith and substance, is not one "with re spect to" Luxuries under Entry 62 List I and the tax on expenditure, as the legislature has chosen to conceive it, is referrable to residuary power. Learned Attorney General said that the economists ' concept of such a expenditure tax is at best an idea of the manner of effectuation of fiscal programme and is no limitation on the legislative power. Indeed, if a topic is not shown to fall within the fields of legislation in Lists II or III, no further inquiry is neces sary in order to support the legislative competence of the Union to legislate on the topic. The purpose of incorporat ing a separate List for the Union, as observed in Union of India vs H.S. Dhillon, ; at 671 is: ". . there is some merit and legal effect in having included specific items of List I for when there are three lists it is easier to construe List II in the light of Lists I and II. If there had been no List 1, many items in List 11 would perhaps have been given much wider interpretation than can be given under the present scheme. Be that as it may, we have the three lists and a residuary power and therefore it seems to us that in this context ira Central Act is challenged as being beyond the legislative competence of Parliament, it is enough to enquire if it is a law with respect to matters or taxes enumerat ed in List II. If it is not, no further ques tion arises. " (Emphasis Supplied) Learned Attorney General characterised the petitioners ' contention that the impugned impost is really a tax on luxuries or that one 939 aspect of the taxable event in the sale of goods had imper missibly been isolated for the creation of an artificial idea 'expenditure ', suffers from certain basic fallacies. The legislative powers, it is urged, recognise the demarca tion of distinct aspects of the same matter as distinct topics of legislation and that the present challenge to legislative competence overlooks the dichotomy of distinct aspects of the same matter constituting distinct fields of legislation, the line of demarcation, though sometimes thin and subtle, being real. Learned Attorney General further contended that the measure adopted for the levy of the tax does not necessarily determine its essential character and that the object on which the expenditure is laid out might be an item of luxury or it might not be one; or the "expend iture" might constitute the price of the goods but, what is taxed is the "expenditure" aspect which, in itself, is susceptible of recognition, as a distinct topic of legisla tion. We have bestowed our careful consideration to these rival contentions. The principal question is whether the tax envisaged by the impugned law is within the legislative competence of the Union Parliament. In that sense, the constitutionality of the law becomes essentially a question of power which in a federal constitution, unlike a legally omnipotent legislature like the British Parliament, turns upon the construction of the entries in the legislative lists. If a legislature with limited or qualified jurisdic tion transgresses its powers, such transgression may be open, direct and overt, or disguised, indirect and covert. The latter kind of trespass is figuratively referred to as "colourable legislation", connoting that although apparently the legislature purports to act within the limits of its own powers yet, in substance and in reality. it encroaches upon a field prohibited to it, requiring an examination, with some strictness, the substance of the legislation for the purpose of determining what is that the legislature was really doing. Wherever legislative powers are distributed between the Union and the States, situations may arise where the two legislative fields might apparently overlap. It is the duty of the Courts, however difficult it may be, to ascertain to what degree and to what extent, the authority to deal with matters falling within these classes of sub jects exists in each legislature and to define, in the particular case before them, the limits of the respective powers. It could not have been the intention that a conflict should exist; and, in order to prevent such a result the two provisions must be read together, and the language of one interpreted, and, where necessary modified by that of the other. The Judicial Committee in Prafulla Kumar Mukherjee and Ors. vs Bank of Commerce, referred to with approval the 940 following observations of Sir Maurice Gwyer CJ. in Subrah manyan Chettiar 's case: "It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind observance to a strict ly verbal interpretation would result in a large number of statutes being declared in valid because the legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the Judicial Committee, whereby the im pugned statute is examined to ascertain its 'pith and substance ', or its 'true nature and character, ' for the purpose of determining whether it is legislation with respect to matters in this list or in that. " This necessitates as an "essential of federal Government the role of an impartial body, independent of general and regional Governments", to decide upon the meaning of deci sion of powers. The Court is this body. The position in the present case assumes a slightly different complexion. It is not any part of the petitioners ' case that 'expenditure tax ' is one of the taxes within the States ' power or that it is a forbidden field for the Union Parliament. On the contrary, it is not disputed that a law imposing 'expenditure tax ' is well within the legislative competence of Union Parliament under Article 248 read with Entry 97 of List I. But the specific contention is that the particular impost under the impugned law, having regard to its nature and incidents, is really not an 'expenditure tax at all as it does not accord with the economists ' notion of such a tax. That is one limb of the argument. The other is that the law is, in pith and substance, really one imposing a tax on luxuries or on the price paid for the sale of goods. The crucial questions, therefore, are whether the economists ' concept of such a tax qualifies and conditions the legislative power and, more importantly, whether "ex penditure" laid out on what may be assumed to be "luxuries" or on the purchase of goods admits of being isolated and identified as a distinct aspect susceptible of recognition as a distinct field of tax legislation. In Lefroy 's 'Canada 's Federal System ' the learned author referring to the "aspects of legislation" under Sections 91 and 92 of the 941 Canadian Constitution i.e., British North America Act 1867 observed that "one of the most interesting and important principles which have been evolved by judicial decisions in connection with the distribution of Legislative Power is that subjects which in one aspect and for one purpose fall within the power of a particular legislature may in another aspect and for another purpose fall within another legisla tive power. Learned author says: ". . that by 'aspect ' must be understood the aspect or point of view of the legislator in legislating the object, purpose, and scope of the legislation that the word is used subjectively of the legislator, rather than objectively of the matter legislated upon." In Union Colliery Co. of British Columbia vs Bryden, See. at 587, Lord Haldane said: "It is remarkable the way this Board has reconciled the provisions of section 91 and section 92, by recognizing that the subjects which fall within section 91 in one aspect, may, under another aspect, fall under section 92." Indeed, the law 'with respect to ' a subject might inci dentally 'affect ' another subject in some way; but that is not the same thing as the law being on the latter subject. There might be overlapping; but the overlapping must be in law. The same transaction may involve two or more taxable events in its different aspects But the fact that there is an overlapping does not detract from the distinctiveness of the aspects. Lord Simonds in Governor General in Council vs Province of Madras, P.C. at 193 in the con text of concepts of Duties of Excise and Tax on Sale of Goods said: " . . The two taxes the one levied on a manufacturer in respect of his goods, the other on a vendor in respect of his sales, may, as is there pointed out, in one sense overlap. But in law there is no overlapping. The taxes are separate and distinct imposts. If in fact they overlap, that may be because the taxing authority, imposing a duty of excise, finds it convenient to impose that duty at the moment when the excisable article leaves the factory or workshop for the first time on the occasion of its sale . " 15. Referring to the "aspect" doctrine Laskin 's "Canadian Constitutional Law" states: 942 "The 'aspect ' doctrine bears some resemblance to those lust noted but, unlike them, deals not with what the 'mat ter ' is but with what it 'comes within ' . . " (p. 115) " . . it applies where some of the consti tutive elements about whose combination the statute is concerned (that is, they are its 'matter '), are a kind most often met with in connection with one class of subjects and others are of a kind mostly dealt with in connection with another. As in the case of a pocket gadget compactly assembling knife blade, screwdriver, fishscaler, nailfile, etc., a description of it must mention every thing but in characterizing it the particular use proposed to be made of it determines what it is." (p.1 16) " . . I pause to comment on certain correlations of operative incompatibility and the 'aspect ' doctrine. Both grapple with the issues arising from the composite nature of a statute, one as regards the preclusory impact of federal law on provincial measures bearing on constituents of federally regulated con duct, the other to identify what parts of the whole making up a 'matter ' bring it within a class of subjects . . " (p. 117) The distinction between what is "ancil lariness" and what "incidentally affecting" the treatise says: " . There is one big difference though it is little mentioned. Ancillariness is usually associated with an explicit 'statu tory provision of a peripheral nature; talk about 'incidentally affecting ' crops up in connection with the potential of a non differ entiating statute to affect indiscriminately m its application matters assertedly immune from control and others. But it seems immaterial really whether it is its words or its works which draw the flotsam within the statute 's wake." .lmo (p.115) 16, Referring to the flexibility in the modes of effec tuating a tax in view of innate complexities in the fiscal adjustment of diverse 943 economic factors inherent in the formulation of a policy of taxation and the variety of policy options open to the State, J Rauls in "Modern Trends in Analytical and Normative Jurisprudence" (Introduction to Jurisprudence by Lord Lloyd of Hampstead & Freeman, 5th Edn.) observed: " . . In practice, we must usually choose between several unjust, or second best, arrangements; and then we look to nonideal theory to find the least unjust scheme. Some times this scheme will include measures and policies that a perfectly just system would reject. Two wrongs can make a right in the sense that the best available arrangement may contain a balance of imperfections, an adjust ment of compensating injustices. " Adverting to "Expenditure dampening" policies and the choice of measures designed to reduce the aggregate demand for goods and services, the "Dictionary of Economic Terms" by Allan Gilpin says: "Expenditure dampening Policies: Government measures designed to reduce the aggregate demand for goods and services in the communi ty. The measures may consist of raising taxes (q.v.) lowering government expenditure or curtailing hire purchase or other credit facilities. EXPENDITURE SWITCHING POLICIES. Expenditure switching Policies: Government measures designed to influence the pattern of expenditure by the community. For example, the taxing of imported goods may effect a switch of expenditure from imported to homeproduced goods; devaluation of the nation 's currency may have the same effect as imports become more expensive. See EXPENDITURE DSAMPENING POLICIES." Learned Attorney General also referred to the following observations in The British Tax System (by J.A. Kay M.A. King) to indicate that a tax on expenditure need not neces sarily be an expenditure tax in the economists ' reckoning of things: "An annual expenditure tax, which seeks to measure an individual 's spending in each separate year of assessment, poses very serious administrative problems, because 944 it requires that his assets be assessed annu ally . " " . . But there is a much easier way of reaching a more accurate answer. You simply measure how much foreign currency you took with you, add the amount of currency you bought while abroad, and substract what was left when you got back. You measure, not the expenditure itself, but the sources of the expenditure, and can thus achieve a simple and reliable measure on the basis of a small number of recorded (and readily verifiable) transactions. " It is trite that the true nature and character of the legislation must be determined with reference to a question of the power of the legislature. The consequences and effect of the legislation are not the same thing as the legislative subject matter. It is the true nature and character of the legislation and not its ultimate economic results that matters. Indeed, as an instance of different aspects of the same matter, being the topic of legislation under different legislative powers, reference may be made to the annual letting value of a property in the occupation of a person for his own residence being, in one aspect, the measure for levy of property tax under State law and in another aspect constitute the notional or presumed income for purpose of income tax. Petitioners ' reference to legislative practice as determining the scope of the present legislation does not assist them. There are two infirmities in the contention. The first is that the question of legislative practice as to what a particular legislative entry could be held to embrace is inapposite while dealing with a tax which is sui generis or non descript imposed in exercise of the residuary powers so long as such tax is not specifically enumerated in Lists II & III. Secondly, there is no conclusive material indicat ing that the appropriate legislature had limited the notion of a tax of this kind within any confines. It is relevant to recall the words of Lord Uthwatt in Walace Brothers case in ; at 402; "The point of the reference is emphatically not to seek a pattern to which a due exercise of the power must conform. The object is to ascertain the general conception involved in the words in the enabling Act. " But as observed in Navinchandra Mafatlal vs CIT, Bombay City, 945 [1955] 1 SCR 829 the meaning the word "income" is given in the Income tax Act is not determinative of its content as an entry in a legislative list. Das J. observed: " . . It is, therefore, clear that none of the authorities relied on by Mr. Kolah estab lish what may be called a legislative practice indicating the connotation of the term "in come", apart from the Income tax statute. In our view, it will be wrong to interpret the word "income" in entry 54 in the light of any supposed English legislative practice as contended for by Mr. Kolah . . " (p. 835) 17. In Union of India vs H.S. Dhillion, ; at 61 this Court dealt with the scope of the Residuary power under Entry 97 List I. Referring to following observations of Lord Loreburn in AttorneyGeneral for Ontario vs Attorney General, for Canada (See: at 581: "Now, there can be no doubt that under this organic instrument the powers distributed between the Dominion on the one hand and the provinces on the other hand, cover the whole area of self government within the whole area of Canada. It would be subver sive of the entire scheme and policy of the Act to assume that any point of internal selfgovernment was withheld from Canada." (Emphasis Supplied) It was held that the last portion of the above excerpt applied a fortiori to the Constitution of the Sovereign, Democratic Republic. Sikri CJ. proceeded to observe (See: ; at 61): " . If this is the true scope of residu ary powers of Parliament, then we are unable to see why we should not, when dealing with a Central Act, enquire whether it is legislation in respect of any matter in List II for this is the only field regarding which there is a prohibition against Parliament. If a Central Act does not enter or invade these prohibited fields there is no point in trying to decide as to under which entry or entries of List I or List III a Central Act would rightly fit in. " Then, considering the includibility of the value of agricul tural 946 property in the wealth of the assessee under the Wealth Tax Act despite the exclusionary words in Entry 86, List I the learned Chief Justice said: " . . We are definitely of the opinion, as explained a little later, that the scheme of our Constitution and the actual terms of the relevant articles, namely, article 246, article 248 and Entry 97 List I, show that any matter, including tax, which has not been allotted exclusively to the State Legislatures under List II or concurrently with Parliament under List III, falls within List I, including Entry 97 of that list read with article 248. " It was held that the subject did not fall under Entry 49 List II and that despite the exclusion in Entry 86 List I the Union, as the repository of the residuary power, had the competence to legislate as long as the topic was not allot ted to or within the State power. It was further observed: "It seems to us unthinkable that the Constitutionmakers, while creating a sovereign democratic republic, withheld certain matters or taxes beyond the legislative competency of the legislatures in this country either legis lating singly or jointly . . " " . . There is no principle that we know of which debars Parliament from relying on the powers under specified entries 1 to 96, List I, and supplement them with the powers under Entry 97 List I and article 248, and for that matter powers under entries in the Concurrent List." (p. 74) 18. The subject of a tax is different from the measure of the levy. The measure of the tax is not determinative of its essential character or of the competence of the legisla ture. In M/s. Sainik Motors vs State of Rajasthan, 17 the provisions of a State law levying a tax on passengers and goods under Entry 56 of List I were assailed on the ground that the State was, in the guise of taxing passengers and goods, in substance and reality taxing the income of the stage carriage operators or, at any rate, was taxing the "fares and freights", both outside of its powers. It was pointed out that the operators were required to pay the tax calculated at a rate related to the value of the fare and freight. Repelling the contention, Hidayatullah J. speaking for the Court said: 947 " . We do not agree that the Act, in its pith and substance, lays the tax upon income and not upon passengers and goods. Section 3, in terms, speaks of the charge of the tax "in respect of all passengers carried and goods trans ported by motor vehicles", and though the measure of the tax is furnished by the amount of fare and freight charged, it does not cease to be a tax on passengers and goods . . " Indeed, reference may be made to the following statement in Encyclopaedia Britannica (Vol. 14 page 459) on 'Luxury Tax ': "A different approach to luxury taxation, much less frequently found, seeks to single out the luxury component of spending on a given object rather than taxing specified goods and services as luxuries. One example of this is the Massachusetts 5% tax on restaurant meal of $1 or more . " (Emphasis supplied) 19. The submissions of the learned Attorney General that the tax is essentially a tax on expenditure and not on Luxuries or sale of goods falling within the State power, must, in our opinion, be accepted. As contended by the learned Attorney General, the distinct aspect namely, 'the expenditure ' aspect of the transaction falling with the Union power must be distinguished and the legislative compe tence to impose a tax thereon sustained. Contention (a) is, in our opinion, unsubstantial and, accordingly, fails. Re: Contention (b): It is urged that the application of the Act is confined to hotels where the "room charges" for any unit of residen tial accommodation are Rs.400 or more per day per individu al, while expenditure of greater magnitude and quantum incurred in other hotels is not exigible to the tax, either because such room charges are less than Rs.400 or because the establishment which, though providing food and drink and other services envisaged by Section 5, may not provide residential accommodation. This distinction, it is said, is violative of the constitutional pledge of equality. The averments in this behalf in the memorandum of writ petition are these: "There is no basis or intelligible differentia for discriminating between the levy of the tax on expenditure over food or drink provided by a hotel and the food or drink provided by 948 a restaurant or eating house not situated in a hotel (or in a hotel to which the Act does not apply) even though the cost of food or bever age is higher than that on similar items in an applicable Hotel. There is also no intelligi ble differentia for discriminating between levying of tax on expenditure on food and drinks outside the hotel which is provided by the hotel and not levying tax on expenditure on food and drinks incurred outside the hotel but which is not provided by the hotel, even though the latter expenditure may be more greater than the former . " "The arbitrariness and lack of intelligible differentia is even more apparent in respect of clause 5(d) read with Exception (c). To give an example, if a shop or office is owned by the hotel in the hotel, any expenditure incurred in such a shop or office would at tract expenditure tax but if such a shop or office is not owned or managed by the hotel even though situated in the hotel premises, such expenditure in by the hotel would not be liable to the impugned expenditure tax." "By way of illustration it may be pointed out that in the City of Bombay there are numerous restaurants like, Talk of the Town, China Garden, Gazebo and Gaylord which are similarly situated in every way to restau rants located in applicable hotels, from the point of view of their decor, furnishing, the range of the menu, the pricing of the items, the standards of service. The clientele of such restaurants are also as affluent as the class of people who patronise restaurants which are located in applicable hotels. Fur ther more, many of the said independent res taurants are far more luxurious and expensive than restaurants and/or dining rooms attached to applicable hotels in the City of Bombay which have one or more rooms charging a daily tariff of rupees 400 or more per person. " It is now well settled though taxing laws are not out side Article 14, however, having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy legislature enjoys a wide latitude in the matter of selection of persons, subject matter, events, etc., for taxation. The tests of the vice of discrimination in a taxing law are, accordingly, less rigorous. In examin ing the allegations 949 of a hostile, discriminatory treatment what is looked into is not its phraseology, but the real effect of its provi sions. A legislature does not as an old saying goes, have to tax everything in order to be able to tax something. If there is equality and uniformity within each group, the law would not be discriminatory. Decisions of this Court on the matter have permitted the legislatures to exercise an ex tremely wide discretion in classifying items for tax pur poses, so long as it refrains from clear and hostile dis crimination against particular persons or classes. But, with all this latitude certain irreducible desid erata of equality shall govern classifications for differen tial treatment in taxation laws as well. The classification must be rational and based on some qualities and character istics which are to be found in all the persons grouped together and absent in the others left out of the class. But this alone is not sufficient. Differentia must have a ra tional nexus with the object sought to be achieved by the law. The State, in the exercise of its Governmental power, has, of necessity, to make laws operating differently in relation to different groups or class of persons to attain certain ends and must, therefore, possess the power to distinguish and classify persons or things. It is also recognised that no precise or set formulae or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied. The test could only be one of palpable arbitrariness applied in the context of the felt needs of the times and societal exigencies informed by experience. Classifications based on differences in the value of articles or the economic superiority of the persons of incidence are well recognised. A reasonable classification is one which includes all who are similarly situated and none who are not. In order to ascertain whether persons are similarly placed, one must look beyond the classification and to the purposes of the law. In Jaipur Hosiery Mills Ltd. vs State of Rajasthan, a notification under the Rajasthan Sales tax Act, 1950, exempting from tax the sale of garments which did not exceed Rs.4 per piece was assailed. This court found the classification permissible. It was held: " . . It has to be borne in mind that in matters of taxation the Legislature possesses the large freedom in the matter of classifica tion. Thus wide discretion can be exercised in selecting persons or objects which will be taxed and the statute is not open to attack on the mere ground that it 950 takes some persons or objects and not others. it is only when within the range of its selec tion the law operates unequally and cannot be justified on the basis of a valid classifica tion that there would be a violation of Arti cle 14. " In Hiralal vs State of UP, ; this Court said: " . it is open to the legislature to define the nature of the goods, the sale or purchase of which should be brought to tax. Legislature was not incompetent to separate the processed or split pulses from the unsplit or unprocessed pulses and treat the two as separate and independent goods." " . . But the legislature has wide powers of classification in the case of taxing stat utes." (p. 510) " . . The classification between the processed or split pulses .and unprocessed or unsplit pulses is a reasonable classifica tion. It is based on the use to which those goods can be put. Hence, in our opinion, the impugned classification is not violative of article 14." (p. 511) In State of Gujarat vs Sri Ambika Mills Ltd., ; Mathew J. said: "Statutes are directed to less than universal situations. Law reflects distinction that exist in fact or at least appear to exist in the judgment of legislations those who have the responsibility for making law fit fact. Legislation is essentially empiric. It ad dresses itself to the more or less crude outside world and not to the neat, logical models of the mind. Classification is inherent in legislation. To recognize marked differ ences that exist in fact is living law; to disregard practical differences and concen trate on some abstract identities is lifeless logic." "In the utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative judgment. The legislature after all has the affirmative responsibility. The Courts have only the 951 power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the ex perts, and the number of times the judges have been overruled by events self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability." (p. 784) In G.K. Krishnan vs Tamil Nadu, [1975] 2 SCR 715 Mathew J. referred to the following observations of the Supreme Court of U.S.A. in San Antonio School District vs Bodrigues,: "Thus we stand on familiar ground when we continue to acknowledge that the Justices of this Court lack both the expertise and the familiarity with local problems so necessary to the making of wise decisions with respect to the raising and disposition of public revenues. Yet, we are urged to direct the States either to alter, drastically the present system or to throw out the property tax altogether in favour of some other form of taxation. No scheme of taxation, whether the tax is imposed on property, income, or pur chases of goods and services, has yet been devised which is free of all discriminatory impact. In such a complex arena in which no perfect alternatives exist, the Court does well not to impose too rigorous a standard of scrutiny lest all local fiscal schemes become subjects of criticism under the Equal Protec tion Clause." (p. 729) In I.T.O. vs N. Takim Roy Limbe, ; it was held: " . . Given legislative competence, the legislature has ample freedom to select and classify persons, districts, goods, proper ties, incomes and objects which it would tax, and which it would not tax. So long as the classification made within this wide and flexible range by a taxing statute does not transgress the fundamental principles underly ing the doctrine of equality, it is not vul nerable on the ground of discrimination merely because it taxes or exempts from tax some incomes or objects and not others. Nor the mere fact that tax falls more heavily on some in the same category, is by itself a ground to render the law invalid. It is only 952 when within the range of its selection, the law operates unequally and cannot be justified on the basis of a valid classification, that there would be a violation of Article 14." In the present case, the bases of classification cannot be said to be arbitrary or unintelligible nor as being without a rational nexus with the object of the law. A hotel where a unit of residential accommodation is priced at over Rs.400 per day per individual is, in the legislative wisdom, considered a class apart by virtue of the economic superior ity of those who might enjoy its custom, comforts and serv ices. This legislative assumption cannot be condemned as irrational. It is equally well recognised that judicial veto is to be exercised only in cases that leave no room for reasonable doubt. Constitutionally is presumed. These words of James Bradley Thayer may be recalled: "This rule recognizes that, having regard to the great, complex ever unfolding exigencies of government, much which will seem unconsti tutional to one man, or body of men, may reasonably not seem so to another; that the constitution often admits of different inter pretations; that there is often a range of choice and judgment; that in such cases the constitution does not impose upon the legisla ture any one specific opinion, but leaves open this range of choice; and that whatever choice is rational is constitutional." (Emphasis Supplied) [See: Supreme Court Statecraft; The Rule of Law and Men: Wallace Mendelson: p. 4. ] Thayer also referred to the words of a Chief Justice of Pennsylvania way back in 1811 which are also worth recall ing: "For weighty reasons, it has been assumed as a principle in constitutional construction by the Supreme Court of the United States, by this court, and every other court of reputa tion in the United States, that an Act of the legislature is not be declared void unless the violation of the constitutional is so manifest as to leave no room for reasonable doubt. " In Secretary of Agriculture vs Central Roig Refining Co., ; the Supreme Court of USA said: 953 " . . This court is not a tribunal for relief for crudities and inequities of compli cated experimental economic Legislation. " In M/s Hoechst Pharmaceuticals Ltd. vs State of Bihar, ; it was observed: " . . On questions of economic regulations and related matters, the court must defer to the legislative judgment. When the power to tax exists, the extent of burden is a matter for the discretion of the law makers. It is not the function of the Court to consider the propriety or justness of the tax or enter upon the reality of Legislative policy. If the evident intent and general operations of the tax legislation is to adjust the burden with a fair reasonable degree of equality, the con stitutional requirement is satisfied . . " 22. It is contended that the standards and measures for the computation of the "chargeable expenditure" under the Act is vague and arbitrary. It is pointed out that the expression or "other similar services" in clauses (d) of Section 5 is non specific and vague. This argument does not commend itself to us. It is true that when the statute says "other similar services" it does not contemplate that the "other services" shall, in all respects, be the same. If they were the same then words would, indeed, be unnecessary. These were intended to embrace services like but not iden tical with those described in the preceding words. The content of the expression "other similar services" following, as it does, the preceding expressions "by way of beauty parlour, health club, swimming pool or . " has a definite connotation in the interpretation of such words in such statutory contexts. The matter is one of construction whether any particular service falls within the section and not one of constitutionality. We find contention (b) also not acceptable either. Re: Contention (c): It is urged that the provisions of the Act impose an unreasonable restriction on the petitioners ' fundamental right under Article 19(1)(g). It is averred in the petition: 954 ". The various taxes to which the hotel industry is subject to are mentioned in the earlier part of this Petition. Thus in respect of food and beverages consumed in a hotel, the element of taxes representing sales tax and the present Expenditure Tax works out, for example in Maharashtra, to as much as thirty five per cent. Likewise, in respect of the room tariff, element of tax works out, for example in Gujarat, to as much as thirty seven per cent. The details of the said calculations are given in Exhibit 'D ' annexed to this Petition. The hotel industry today is subject to an extremely heavy dose of taxation in the shape of incometax and even the recent tax on works contracts. The Petitioners say that the tourism, industry is now not in a position to sustain any additional burden and the impugned tax is literally the last straw on the camel 's back . " " It is also contended: " . . Several of the hotels belonging to members of Petitioners Associations have entered into long term contracts for supply of food and beverages and for providing accommo dation. The execution of such contracts would become onerous and even impossible in view of the levy of the present Expenditure Tax. There is no provision in the Act or any separate legislation whereby hotels can pass on such a tax to persons who have contractually agreed to avail of any services at contracted rates . . " 24. A taxing statute is not, per se, a restriction of the freedom under Article 19(1)(g). The policy of a tax, in its effectuation, might, of course, bring in some hardship in some individual cases. But that is inevitable, so long as law represents a process of abstraction from the generality of cases and reflects the highest common factor. Every cause, it is said, has its martyrs. Then again, the mere excessiveness of a tax or even the circumstances that its imposition might tend towards the diminution of the earnings or profits of the persons of incidence does not, per se, and without more, constitute violation of the rights under Article 19(1)(g). Fazal Ali J., though in a different con text, in Sonia Bhatia vs State of U.P. & Ors., at 258 observed: " . . The Act seems to implement one of the most important constitutional directives contained in Part IV of 955 the Constitution of India. If in this process a few individuals suffer severe hardship that cannot be helped, for individual interests must yield to the larger interests of the community or the country as indeed every noble cause claims its martyr. " Contention (c) is also insubstantial. In the result, for the foregoings reasons, these petitions fail and are dismissed. However, in the circum stances of the case there will be no order as to costs. RANGANATHAN, J. 1. I have perused the judgment of my learned brother Venkatachaliah, J. in this batch of writ petitions as well as in the two connected batches of matters viz. CA Nos. 338 and 339 of 1981 and WP Nos. 254 261 of 1981. I respectfully agree with his conclusions in all these matters but wish to add a few words, primarily in so far as the constitutional validity of the Expenditure Act, 1987 is concerned. As my learned brother has set out, analysed and discussed in detail the provisions of the various statutes, the validity of which is in question, I shall avoid a repe tition of the same and confine myself only to the considera tion of the crucial issues for determination. The contentions of the assessees in the three batches of cases above referred to, prima facie, sought to make out a state of direct collision between a group of State enact ments on the one hand and a couple of Central enactments on the other, which cannot be averted save by declaring one set of the enactments to be invalid. The powerful, if also "diplomatic", endeavour of the learned Attorney General, appearing for the Union of India, was to show that these sets of enactments are not really on a collision course at all but, on the contrary, are proceeding on parallel lines and that each of the sets of legislations is quite safe from attack on the ground of legislative incompetence. Whether this contention is acceptable and both sets of enactments can be saved or whether one of the two has to give way to the other is the question for consideration in these batches of cases. The set of State enactments which blazed the trial (to be followed up by others) and hence are prior inpoint of time, is that comprising of various statutes passed by several States in India. The specific State legislation which are in challenge in the petitions and appeals before us (as indicated in the brackets at the end) are: 956 (a) Gujarat Tax on Luxuries (Hotels and Lodging Houses) Act (No. 24 of) 1977. (C.A. 338,339/1981; W.P. Nos. 7990, 8338, 8339, 9110of 1981) (b) Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Ordinance, 1980 followed by an act (Act No. 6 of 1981) (WP 162/82) (c) Karnataka Tax on Luxuries (Hotels and Lodging Houses) Act (No. 22 of) 1979. (WP 1271 2/82) (d) West Bengal Entertainments and Luxuries (Hotels and Restaurants) Tax Act (No. 21 of) 1972. (WP 5321/85) The States of Uttar Pradesh, Maharashtra and Kerala have also passed similar enactments, being the: (a) Uttar Pradesh Taxation and Land Revenue Laws Act, (No. 8) of 1975; (b) Maharashtra Tax on Luxuries (Hotels & Lodging Houses) Act (XLI of) 1987; and (c) Kerala Tax on Luxuries in Hotels and Lodging Houses Act (No. 32 of) 1976 repealing Kerala Ordinance No. 5 of 1976. The above statutes have apparently been enacted by the various State Legislatures in exercise of the legisla tive powers conferred on them under article 246(3) of the Constitution, read with Entry 62 of List II in the Seventh Schedule to the Constitution of India, which runs: "62. Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling." (Some aspects thereof are also sought to be related to Entry 54 of List II, but as this stands on the same footing as Entry 62 for the purposes of the present case, no separate reference is made to Entry 54 hereinafter). This is clear because the short title to each of the above 957 enactments describes it as an Act to provide for the "impo sition" or "the levy and collection" of a tax on "luxuries" or "entertainment and luxuries" in or provided in "hotels" or "hotels and restaurants" or "hotels and lodging houses". Although "luxuries and entertainments" may be provided or availed of in various ways and could all be made the subject matter of a tax by virtue of the entry above referred to, these enactments are confined only to one type of such entertainments and luxuries viz. those provided in hotels, restaurants or lodging houses as defined under the relevant enactments. Also, only certain specified classes of enter tainments or luxuries provided in such places are brought to tax. The details of the imposition, levy and collection of the taxes vary with the enactments and need not be repeated here. It is quite clear from the scheme of the legislations that they all fall within the scope of Entry 62 of List II set out earlier. My learned brother has held so and I agree. Indeed, their validity would, perhaps, have gone unchal lenged but for the enactment of Parliament of the Hotel Receipts Tax, 1980, (hereinafter referred to as 'the 1980 Act '). When, in pursuance of the 1980 Act, a tax on some of the receipts of a hotelier was sought to be charged w.e.f. 1st February, 1981, it was but natural for some of the affected hoteliers to rush to Court for relief against this two pronged taxation of their receipts. Writ petitions were filed challenging the competence of both sets of enactments and these have now come up for final hearing. It must, however, be mentioned here that the levy of the Hotel Re ceipts Tax was withdrawn after a year; nevertheless it was in operation for one assessment year and hence the challenge to its validity is not purely academic. The validity of the 1980 Act has been upheld by my learned brother as traceable to Entry 82 of List I in the Seventh Schedule to the Consti tution. Taxes on income other than agricultural income. I respectfully agree. The relief conferred by the withdrawal of the 1980 Act was, however, short lived; it was only a "lull before the storm" which descended on all hoteliers in the form of the Expenditure Tax Act, 1987 (hereinafter referred to as 'the 1987 Act '). Before referring to this enactment, the validity of which has been challenged in writ petition No. 1393 of 1987, it will be convenient to run back on the time machine by a period of three decades. Mr. Nicholas Kaldor, Reader in Economics in the University of Cambridge, was the proponent of a levy styled as "Expenditure Tax". When the Government of India requested him, sometime in the firties, 10 have a look at the system of direct taxation prevailing in this country and make his recommendations for a comprehensive scheme 958 of tax reform, he suggested, inter alia, the levy of an "expenditure tax". His opinion was that such a levy, supple menting an income tax levy at rates lower than those preva lent then, would enable the Government to more effectively harness its resources. In the course of arguments before us, copious references have been made to passages from Nicholas Kaldor 's book ( 'An Expenditure Tax ' published by George Allen & Unwin Ltd. of U.K.) and his 'Survey Report on Indian Tax Reform ' (published by the Government of India) out it will be sufficient to mention here that Prof. Kaldor 's report was implemented by Parliament by enacting the Expend iture Tax Act, 1957 (hereinafter referred to as 'the 1957 Act '). The validity of the above Act was challenged before this Court but unsuccessfully. The decision of this Court is reported as Azarnjah vs E.T.O., ; The nature and scope of the Act have been dealt with in the above decision and it is unnecessary to repeat the same here. The 1957 Act was withdrawn after a few years; to be precise, with effect from assessment year 1965 66. It was given up both because it was found to be too cumbersome and difficult to administer and also because the yield of reve nue therefrom was not substantial due to the limited number of assessees it covered. After it was given up, as already mentioned, the 1980 Act occupied the field for a very short time, the pendency of writ petitions challenging its validi ty having perhaps largely contributed to its withdrawal. After some interval, now, Parliament has come in with the 1987 Act. The ambit and scope of this Act along with, on the one hand, its distinguishing features, as contrasted with the 1957 and 1980 Acts and its similarities, when compared to the State legislations, on the other, have been brought out in the judgments of brother Venkatachaliah J. and do not need repetition here. It is in this background that we have to determine the pith and substance of the 1987 Act and decide whether Parliament had the legislative competence to enact the same or not. The short question that one has to answer in these cases is whether the levies in question by the States and the Union can both stand or whether we have to treat the levies as either tax on 'luxuries ' or as tax on 'income ' or 'expenditure ' and thus uphold one of them but not both. I do not think there can by any doubt at all that, in the context of the social and economic conditions that prevailed in India, it was a luxury for any person to stay in hotels charging high rents and providing various types of facili ties, amenities and conveniences such as telephone, televi sion, air conditioner, etc. The decision of this Court in Abdul Kadir & Sons vs State of Kerala, ; , and 959 in particular, the discussion at pages 699 to 701 places this beyond all doubt. This aspect has also been discussed by Thakkar, J. of the Gujarat High Court (as His Lordship then was) in the judgment under appeal and I am in agreement with his reasonings and conclusion that the Gujarat statute has been validly enacted in exercise of the powers available to the State legislatures under Entry 62 of List I1. This applies equally to the other impugned State enactments as well. 9. It has been argued that the monetary ceilings for the rents have been fixed at such low figures that even tempo rary stay at a not so comfortable hotel or lodging house, when a person is constrained to go outside his hometown, will become a luxury, according to these standards. Indeed some statistics have been supplied by the Gujarat petition ers in support of such a contention. But this, I think, is a matter which must be left to legislative determination. As is well known the legislature has, particularly in a taxing statute, a considerable amount of latitude and there is nO material to hold that, in fixing the standards of indication of luxury the legislature, has not applied its mind. In fact, the figures have been amended from time to time and, one has to presume that the legislature had good reason for fixing these standards. The State legislations are there fore, clearly, within the competence of the State legisla tures and are not liable to be challenged. It seems equally cleat that the pith and legislation of the 1980 Act is, as held by Venkatachaliah, J. traceable to Entry 82 of List I. In interpreting the scope of the legislative entries in the three lists, we have to keep in mind that, while on the one hand, it is desirable that each entry in each of the lists should receive the broadest interpretation, it is equally important, on the other, that the three lists should be read together and harmoniously. Our attention was drawn to some of the entries in List II which show that the legislative power in respect thereof are to be exercised subject to the powers of Parliament envis aged under List I, vide entry Nos. 2, 17, 22, 23, 24, 26, 27, 32, 33 and 50. There is no doubt that these entries have to be read subject to the entries of List I which have been mentioned or the powers of Parliament referred to therein. These, however, are instances of entries which, on their very language, are controlled by entries in List I. But even apart from these instances, the language of clause (1) and (3) of article makes it clear that the power of the State legislature to make laws with respect to any of the matters enumerated in List II is subject to the exclusive power of Parliament to make laws with respect to any of the matters enumerated in List I. Hence, if a matter is 960 covered by an entry in the Union List, no restrictions can be read into the power of Parliament to make laws in regard thereto. This is so far as the general power of legislation is concerned. As pointed out by this Court in Sundararami er 's case; , at pp. 1479 and 1490), the legislative entries are so arranged that the power to enact laws in general and the power to impose taxes are separately dealt with. The subject matters of taxation available to Parliament are. enumerated in entries 82 to 97 of List I, those available to the State legislatures in entries 45 to 63 of List II and those available to both in entry 44 of List III. Under section 246(1) Parliament has exclusive power to make laws with respect to any of the matters and this includes the power to impose taxes enumerated in List I. In this situation and in view of the fact that the 1980 Act is, in pith and substance, a tax on income, its constitutional validity can be in no doubt at all. But can the Union enactment of 1987 also be support ed for the same reasons, as imposing an expenditure tax which, as held in Azam Jha 's case; , , falls within the scope of Entry 97 of List I? Sri Palkiwala says it cannot be. His first contention is that the tax levied by the 1987 Act is not, in fact and in truth, an expenditure tax. He says that it is not sufficient for the legislature to give such a description or label to a tax proposed to be levied by it as does not fall under List II and claim that it should be upheld under Entry 97. The tax sought to be imposed should be one which has real existence and recogni tion in the world of economics. According to him, the eco nomic concept of an expenditure tax is of a tax that is levied not on isolated items of expenditure but one on the totality of the expenditure incurred by an assessable enti ty, just as income tax has gained recognition as a tax on the total income of a taxable entity. That was the concept of the expenditure tax which Nicholas Kaldor had in mind, which was embodied in the 1957 Act and which, hence, was endorsed with approval by this Court. A tax on a few items of expenditure, it is said, is not necessarily the same as an expenditure tax. Referring to the decisions of this Court upholding the levy of Wealth Tax and Gift Tax in as far as it affected agricultural lands: Gift Tax Officer vs D.H. Nazareth etc.; , and Union of India vs H.S. Dhillon; , , it is submitted that the decisions may well have been different had they been concerned with an imposition only on "lands and buildings" by reference to their capital value or only on "agricultural lands" on the occasion of a gift. It is difficult to accept the contention that the tax cannot be considered to be an expenditure tax because it is not on "expenditure" 961 generally but is restricted to specific types of expendi ture. There is, no legal, judicial, economic or other con cept of expenditure tax that would justify any such restric tive meaning. If, conceptually, the expenditure incurred by a person can be a subject matter with reference to which a tax can be levied, there is no reason why such taxation should not be restricted only to certain items or categories of expenditure and why its base should necessarily be so wide as to cover all expenditure incurred by an assessable entity. After all, even under the 1957 Act, all expenditure of all persons was not liable to tax. It substantially covered only certain types of assessees and certain types of expenditure (for several types of expenditure were exempted) and that too only when it exceeded certain limits. The analogy of the Income tax or Wealth Tax or Gift Tax Acts also does not really help us. Though they are enactments which cover a larger area of the subject matter taxed, that was because the legislature found it expedient to do so and not because they were obliged to cover the entire area of income, wealth or gift. An Act imposing a tax, for example, on hotel receipts alone or dividends alone or on capital gains alone will not be any the less a tax on income within the scope of Entry 82 of List I. Likewise even if the legis lature had confined its levy of wealth tax only to certain assets such as lands and buildings or the Gift Tax Act had levied a tax only on gifts of agricultural land, they would not have ceased to fall within the scope of the relevant entries of the Union List, so long as, in pith and sub stance, they are found respectively to be taxes on the capital value of the assets in question or on the transac tion of gift. The Central Excise Act, for example, does not levy excise duty on the manufacture and production of all goods and additional excise duty is levied only in respect of certain goods. So also, in regard to sales tax. It is indeed even possible to say that no tax levy in respect of any subject matter can or does operate universally without any exceptions or exemptions. Selection of objects and goods for taxation is the essence of any tax legislation and any limitation of the nature suggested is an unwarranted cur tailment of this selective power of taxation of Parliament. There is also no established legislative practice which would enable one to limit the concept of an expendi ture tax in the manner suggested. So far as expenditure tax is concerned, the only legislation earlier in force was the 1957 Act which was in force for a period of eight years. Such short lived legislation can hardly furnish the founda tion of an argument to limit the scope of legislative power to the manner in which it was exercised under that enact ment. If, after withdrawing this legislation, Parliament considered that it was not worthwhile or possible to impose a tax on all expenditure and that it would 962 be sufficient, expedient or necessary to impose such a levy only on lavish spending in certain directions, that cannot certainly be precluded on any theory of established legisla tive practice, as was done in State of Madras vs Gannon Dunkerley Co., ; in respect of sales tax. In that case the legislative trend prevalent over decades was relied upon in interpreting the expression "sale of goods" used in the Constitution. But there the Court was concerned with a legal term, "sale", which had acquired a definite connotation in law and in legislative instruments and that analogy cannot be availed of to interpret the scope of Entry 97. On the other hand, even a fairly long established legis lative practice under which income tax levy by the Centre was restricted to items of income stricto sensu (as con trasted with capital gains) was not considered sufficient to place that type of restriction on the interpretation of the expression "taxes on income" used in the Central Legislative List: vide, Navinchanda Mafat Lal vs CIT, [1955] 1 SCR 829. Not only that, the validity of later definitions of "income" under the Income tax Act which have a much wider ambit has been upheld as covered by the above legislative entry. See, in this context, the decisions in Naynit Lal vs AAC, ; , Bhargava vs Union, ; and Bhag wandas vs Union; , There is not even that much of legislative practice, so far as expenditure tax is concerned, which would justify our importing any limitation on the concept of a "tax on expenditure" under Entry 97 of List I. A perusal of the decision of this Court upholding the validity of the 1957 Act Azam Jha 's case; , does not also justify the reading in of any such limita tion. The wider coverage of the tax made it easier for the Court to pin point its subject matter as "expenditure" and to treat it as a matter falling under the residuary entry, but it does not justify the inference sought to be drawn that a tax cannot be said to be a tax with reference to "expenditure" because it does not tax expenditure in general but confines itself to certain types or categories of ex penditure. Once it is granted that the tax need not exhaust the entire universe of the subject matter, the extent of the subject matter that should be covered or selected for impos ing tax should be entirely left to Parliament. subject only to any criteria of discrimination or unreasonableness that may attract the provisions of Part III of the Constitution. The fact that the 1987 Act seeks to tax only the expenditure on items which can be described as luxuries is, however, used by Sri Palkiwala to support his other conten tion (which has really troubled me considerably) that the pith and substance of both sets of legislations is the same, that they both impose a tax only on luxuries or 963 entertainments and that the distinction sought to be made on behalf of the Revenue that one is a tax on 'luxuries ' while the other is a tax on the expenditure incurred by a person on luxuries is only a distinction between "Tweedledum" and "Tweedledee". The object and effect of a tax on luxuries is only to curb expenditure on luxuries and such a tax may be imposed, levied or collected either from the provider of luxuries or the person who enjoys them. The object of an expenditure tax is also similar and that can also be levied either on the person who spends the moneys directly, or through some other person, or even from the person who benefits by the incurring of such expenditure. The provision of a luxury and the payment for it are only obverse sides of the same coin and cannot, from any practical point of view, be considered as two separate and independent subject mat ters of taxation. It is a well settled proposition that the entries in the legislative lists should be given the broad est of connotation and, hence, a tax on luxuries by refer ence to the expenditure thereon will fall clearly under the entry in the State List. The pith and substance of both sets of legislation, therefore, fails only under entry No. 62 of the State List. This being so, Entry 97 of List I will have no applicability at all; that can be called in aid only to cover matters not specifically enumerated or taxes not mentioned in List II or III. It is, therefore, not possible. it is urged, to sustain the validity of the 1987 Act by reference to Entry 97 of List I. 15. The learned Attorney General sought to meet this contention in two ways. He first urged that the pith and substance of the two legislations are different. A tax on 'luxuries ' measured by reference to the amount charged or paid therefore is totally different from a tax to curb opu lent or ostentatious expenditure even though the categories of expenditure brought in for taxation by a particular statute may be restricted. The latter cannot be described as a tax on 'luxuries ' and does not fall within the scope of Entry 62 of the State List and, in the absence of any refer ability to any other entry of List II ', it is safe from attack under Article 248(2) and will also be covered, if need be, by Entry 97 of List I. The second argument is that, after the decision in Azatn Jha 's case; , holding that a "tax on expenditure" will be legislation covered by Entry 97 in List I, the constitutional position is the same as if, before item 97, a specific entry had been inserted in List I (say, Entry No. 96A) which reads "Taxes on expenditure". The result, he says, is that the Central legislation will be squarely covered by an entry in List I and so we need not embark on any investigation as to whether it falls or does not fall under any entry in List II or List III. 964 16. It seems to me that there is a fallacy in the second line of argument addressed by the learned Attorney General. I do not think that the legislative lists can be interpret ed, as suggested by him, on the assumption that there is a deemed entry, "Taxes on Expenditure". added to List I as a result of the decision in Azam Jha 's case ; One cannot add entries to the legislative lists on the basis of decisions of this Court. In Azam Jha 's case, the pith and substance of the Act considered did not fall under any of the entries in List II or III. That being so, this Court upheld it by reference to Entry No. 97 describing the tax, having regard to its pith and substance, as a tax on expend iture. Here, however, we have a legislation which covers only certain types of expenditure and the contention of the petitioners is that ,these are all items of expenditure pertaining to luxuries. The decision in Azam Jha 's case cannot help us to determine whether the legislation before us should be construed as imposing a tax on expenditure or one on luxuries. If, in spite of its dealing with only certain types of expenditure relatable to luxuries, it can be said to be, in pith and substance, not a tax on luxuries, then we may hold that parliament can legislate with refer ence to it and, for purposes of convenience, take advantage of its description as a tax on expenditure to rest it on Entry 97 of List I. In other words, Entry 97 of List I cannot come to our rescue unless we are in a position to say that the substance of the Central legislation in question is not a tax on luxuries, entertainments or amusements. This takes us to the first part of the argument of the learned Attorney General. Is there a tenable and true distinction between the tax on expenditure levied by the Act and a tax on luxuries? Are Parliament and the State Legislatures dealing with the same 'matter ' and taxing one and the same thing, though describing it differently or are they taxing two different matters or things? Sri Palkiwala says that the subject matter of taxation is 'luxury ' and that it is meaningless to consider the expenditure incurred on it as a separate and distinct subject matter. The acceptance of such an argument, he says, will lead to double taxation in respect of almost every matter on earth. For instance, A may be taxed on the salary or interest or dividend paid to him by B as his income and, at the same time, B can be asked to pay a tax on the expenditure incurred by him by way of such salary, interest or dividend payment. A can be asked to pay a wealth tax on the capital value of the assets acquired by him and also asked to pay an expenditure tax on the money spent on such acquisition. A can be asked to pay a sales tax on the goods sold by him to B and also asked to pay or collect a tax on the expenditure incurred by B to purchase the same. 965 Such instances, he says, can be multiplied and will reduce the argument to an absurdity. The Attorney General, on the other hand, submits that the question whether both legislation relate to the same matter does not bring out correctly the controversy in issue. He says that if the expression "matter", in this context, is understood in its widest sense. it will create chaos in the matter of interpretation of the lists. Accord ing to him, for applying the doctrine of pith and substance we have to understand the expression 'matter ' not in a 'gross ', but in a 'rare ' sense. He develops this contention by invoking, to his aid, what may be called the 'aspect ' rule as explained in certain text books and judicial deci sions. A.H.P. Lefroy in his 'Canadian Constitution ' observes, at p. 98: "Sec. Aspect of legislation: Subjects which in one aspect and one purpose fall within section 92 of the Federation Act and so are proper for provincial legislation may. in another aspect and for another purpose fall within section 97 and so be proper for Dominion legislation. And as the cases which illustrate the principle show, by 'aspect ' here must be understood the aspect or point of view of the legislator in legislating, the object, purpose and scope of the legislation. The word is used subjectively of the legislator, rather than objectively of the matter legislated upon." To similar effect is the passage from Laskin 's "Canadian Constitutional Law" extracted in the judgment of Venkatacha liah, J. the Federal Court in the C.P. & Berar Act case also touches upon the 'aspect ' theory at p. 49: "Here are two separate enactments, each in one aspect conferring the power to impose a tax upon goods; and it would accord with sound principles of construction to take the more general power, that which extends to the whole of India as subject to an exception created by the particular power, that which extends to the Province only." (emphasis added) A similar reference to the 'aspect ' of legislation can be seen in Kerala State Electricity Board vs Indian Aluminium Co., at p. 573 4. 966 "The argument of the learned Solicitor General appearing on behalf of the Kerala Electricity Board in support of his submission that the legislation falls under Entries 26 and 27 of List II may be summarised as follows: Those entries do not enable the State Legislatures to legislate with regard to all conceivable goods like arms, ammunition, atomic minerals etc. as was argued by Mr. Sen. A legislature while legislating with regard to matters within its competence should be deed to know its limits and its legislative authority and should not be deemed to be legislating beyond its jurisdiction. One thing that has always got to be kept clear in one 's mind is that there may be more than one aspect with regard to a particular subject matter". (emphasis added) Relying on this principle, backed by these observations, the learned Attorney General submits that, properly understood, the pith and substance of the 1987 Act is 'expenditure ', not 'luxuries '. At first blush, the argument of the learned Attorney General may sound a little subtle and somewhat artificial but, on some reflection, legislative competence will indeed be seen to vary with different aspects of a subject matter as understood in a wide sense. This can be seen from some of the decided cases. The first triumvirate of cases that arose in India under the Government of India Act, viz. In re Central provinces & Berar Act XIV of 1953, ; Province of Madras vs Boddu Paidanna & Sons, and G.G. in Council vs Province of Madras, , were concerned with the question whether the impugned tax was one on the sale of goods or an excise duty. Interpreting the word 'subject matter ' in a broad sense it could perhaps be said that both were taxes with respect to goods. But this concept alone was not sufficient to dispose of the case because the relevant legislative entries did not talk of taxes with respect to goods but referred to taxes in respect of two different activities referable to goods (conveniently described as the 'taxable event '), one the manufacture and production of goods and the other with sale thereof. In the light of these legislative entries the two different activi ties could properly regarded as two different matters for taxation and the relevant legislation was held to be one concerned with 'sale ' and not with 'manufacture '. In other words, there could be two enactments "each in one aspect conferring the power to impose a tax upon goods". The legis lation was held not to be vitiated merely because there was an element of overlapping in that both excise duty and sales tax became 967 leviable on the same assessee in respect of the same goods and by reference to the same sale price when the first sale after manufacture occurs, one by reference to the 'manufac ture ' aspect and the other by reference to the 'sales ' aspect. This bifurcation of the two different aspects per taining to goods was justified by the language of the legis lative entries themselves which referred separately to the different sets of activities and put them down in different legislative lists. Again, on the same principle, the manu facture of electricity may attract excise duty at the point of its captive consumption (under Entry 84 of List I) and also a tax on the consumption or sale of electricity (refer rable to Entry 53 of List II). The power to levy taxes with respect to 'property ' has created similar problems. All States (or corporations and municipalities therein) levy a property tax on the owner or occupier which is almost universally measured by refer ence to its annual value (viz. the rent it would fetch if let from year to year). The Income tax Act also charges a tax on the same basis. In other words, in a realistic and practical sense, the tax was levied by both legislatures on the same amount and with reference to the same matter. But both levies have been upheld under the 1935 Act, the former as a 'tax on lands and buildings, hearths and windows ' (Entry 42 of List II) and the latter as a tax on income (under Entry 84 of List I.) Ralla Ram pointed out that they were different types of levies one on the land and buildings (generally, but not necessarily, measurable by reference to the income derived or capable of being derived) and the other on the income (actually or notionally) derived from it. The pith and substance of the former, it was said, was not 'income ' (from the property) though the tax was levied on the basis thereof. Expressed differently, it could be said that, though both were taxes with respect to proper ty, they touched different aspects of the above subject matter; the first was a tax on the aspect of ownership or occupation of property; the second on the aspect of income from property. The decision of this Court in Bhagwan Dass Jain vs Union, ; is also to the same effect. The Hingir Rampur Coal Co. case ; was concerned with the validity of an Orissa Act which sought to levy a cess not exceeding 5% of the valuation of the coal stacked at pit 's mouth. The question was whether this was in pith and substance a duty of excise (Entry 84 of List I) or a fee to regulate and control the coal mining industry (Entry 66 and 23 of List II). Here again though the method adopted for recovering the impost was the same as that of an 968 excise duty, the validity of the tax was upheld as it relat ed to the aspect of control over the industry rather than to the aspect of an impost on production of coal. Sainik Motors case ; furnishes an illustration which comes nearer to the question at issue before us. In that case a Rajasthan Act purported to levy a tax on passengers and goods measuring it by reference to the fares and freights charged by operators for carriage of such passengers or goods. If it were to be treated as a tax on 'fares and freights ' it would be a tax on income which the State legislature could not levy. But, if treated as a tax on passengers and goods carried by road it was valid under Entry 56 of List II. The validity of the Act was upheld on the latter ground, the court pointing out that the tax was on goods and passengers though measured by reference to fares and freights. This dichotomy could perhaps also be justified on the basis of the language of Entry 89 of List I. That entry makes a distinction between the two types of imposts and illustrates that two different aspects of the same matter viz. taxes in respect of vehicles carrying passengers or goods can form separate matters for taxation. In the light of the above entries and decisions, I think that the learned Attorney General is right in urging that, merely because the 1987 Act as well as the State Acts levy taxes which have ultimate impact on persons who enjoy certain luxuries, the pith and substance of both cannot be considered to be the same. The object of a tax on luxury is to impose a tax on the enjoyment of certain types of bene fits, facilities and advantages on which the legislature wishes to impose a curb. The idea is to encourage society to cater better to the needs of those who cannot afford them. For instance, a luxury tax may, to cite a catchy example, encourage construction of "janata" hotels rather than five star hotels. Such a tax may be on the person offering the luxury or the person enjoying it. It may be levied on the basis of the amount received for providing, or the amount paid for or expended for enjoying, the luxury. Conceivably, it could be on different bases altogether. The object of an expenditure tax and, that, conceptually, there can be an expenditure tax is borne out by Azam Jha 's case (supra) is to discourage expenditure which the legislature considers lavish or ostentatious. The object of the first would be to discourage certain types of living or enjoyment while that of the second would be to discourage people from incurring expenditure in 'unproductive or undesirable channels. If a general Expenditure Tax Act, like that of 1957, had been enacted, no challenge to its validity could have been 969 raised because it incidentally levied the tax on expenditure incurred on luxuries. The fact that there will be some overlapping then or that here there is a good deal of such overlapping, because the States have chosen to tax only some types of luxuries and the Centre to tax, atleast for the time being, only expenditure which results in such luxuries, should not be allowed to draw a curtain over the basic difference between the two categories of imposts. For in stance, if the conflict alleged had been between the present State Acts and an Act of Parliament taxing expenditure incurred in the construction of theatres or the maintenance of race horse establishments or the like, there would have been no overlapping at all and the pith and substance of the central tax could well be described as "expenditure" and not "luxuries". This distinction is not obliterated merely because of the circumstance that both legislatures have chosen to attack the same area of vulnerability, one with a view to keep a check on 'luxuries ' and the other with a view to curb undesirable 'expenditure:. For these reasons, I agree with my learned brother Venkatachaliah, J. that the validity of the three impugned enactments has to be upheld and these writ petitions and appeals dismissed. N.P.V. Petitions dismissed.
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The Expenditure Tax Act of 1987 planned to tax 10% of what people spent at certain hotels. This applied to hotels where a room cost at least Rs.400 per day for each person. Section 5 of the Act said that "chargeable expenditure" included money spent at these hotels for rooms, food, or drinks (whether inside or outside the hotel). It also covered money spent to rent or lease space in the hotel, or for any other services listed in that section. Some people in the hotel business disagreed with this law. They argued that it was unconstitutional, meaning it went against the rules of the Constitution. They said the government didn't have the power to make this law, and that it violated certain rights. They claimed the law wasn't really about taxing spending, but about taxing luxury items. They said this kind of tax should be decided by the states, not the national government. They also argued that the law was unfair because it treated similar people differently. For example, someone spending a lot of money at a fancy restaurant wouldn't be taxed, but someone spending the same amount at a hotel with expensive rooms would be. They also said the law was unclear about how to calculate the tax, and that it unfairly limited their freedom to do business. The government argued that it *did* have the power to make this law. They said it was a tax on spending, which the national government could decide. They said that just because economists had certain ideas about how a spending tax should work didn't mean the government was limited by those ideas. They also said that the law was about taxing spending, not about the items people were spending money *on*, and that taxing spending was something the national government could do. The court disagreed with the people in the hotel business. They said the law was legal. 1.1 The court said that the national government *can* make laws about taxing spending. 1.2 The court said the Expenditure Tax Act of 1987 was about taxing spending, *not* about taxing luxury items or the sale of goods. Those things are decided by the states. The court said it's important to separate the idea of spending from the thing that's being bought, and that the national government has the power to tax spending. 2.1 If a government only has certain powers, and it tries to do something outside of those powers, it's called "colorable legislation." This means the government is pretending to do something legal, but is actually doing something it's not allowed to do. In these cases, courts need to look closely to see what the government is *really* doing. 2.2 When the national and state governments share power, there might be some overlap between what they can do. Courts need to figure out how much power each government has in these situations. The goal is to avoid conflict between the two governments, so the laws should be read together and interpreted in a way that makes sense for both. 2.3 A law about one thing might affect another thing. But that doesn't mean the law is *about* the second thing. There might be some overlap, but the law is still about the first thing. One action can have different parts that can be taxed separately. Just because there's overlap doesn't mean those parts aren't distinct. 2.4 The results of a law aren't the same as what the law is about. It's the *purpose* of the law that matters, not what happens because of it. 2.5 The court can't look at past laws to decide what this new law means. This is because this tax is new and different. It's being created using the government's leftover powers, and there's no set idea of what this kind of tax should include. 2.6 What is being taxed is different from how the tax is measured. How the tax is measured doesn't change what the tax *is* or who has the power to create it. 3.1 Tax laws *can* be unfair, but the government has a lot of freedom when deciding who, what, and when to tax. The government doesn't have to tax everything. As long as the tax is equal and fair within each group of people, it's not discriminatory. So, the rules for deciding if a tax law is unfair are less strict. 3.2 When deciding if a law is unfairly treating people differently, the court looks at what the law *does*, not just what it *says*. The way people are divided into groups needs to make sense and be based on real differences. Those differences also need to be related to what the law is trying to achieve. But there's no perfect way to do this. The court just needs to decide if it seems obviously unfair, based on what's happening in society. 3.3 It's okay to divide people into groups based on how much things cost or how rich they are. A fair group includes everyone who is similar and leaves out everyone who is different. To decide if people are similar, you need to look at what the law is trying to do. 3.4 In this case, the way people are divided into groups *isn't* unfair or confusing. It's reasonable to say that people who stay in expensive hotels are different from other people. The government can assume that people who stay in these hotels are richer and can afford to pay more taxes. Courts shouldn't question the government's decisions unless there's a very good reason to. Laws are assumed to be legal. 3.5 The phrase "other similar services" is meant to include services that are like the ones listed before it. The meaning of those words depends on how they're used in the law. It's up to the court to decide if a service fits into that section, but that doesn't mean the law is unconstitutional. 4. A tax law isn't automatically a restriction on freedom. Taxes might cause some problems for some people, but that's unavoidable. Laws are based on what's true for most people. Just because a tax is high or reduces someone's earnings doesn't automatically mean it's illegal. 5.1 One judge agreed with the decision and added that, in India, staying in expensive hotels with lots of services is a luxury. Spending money on something that's more than what's needed for basic well-being is spending on luxury, even if many people do it. 5.2 The judge said that the government has a lot of freedom when making tax laws, and it's reasonable to assume the government put thought into setting the standards for what counts as luxury. The government has changed those standards over time, so it's likely they had good reasons for setting them. 6.1 When deciding what the laws in each list mean, it's important to give each law a broad meaning. But it's also important to read all three lists together and make sure they work together. 6.2 The state government's power to make laws is limited by the national government's power. If something is covered by a law in the national list, the national government has the power to make laws about it. 6.3 The laws are arranged so that the power to make laws in general and the power to create taxes are separate. The national government has the power to make laws, including tax laws, about anything in the national list. 7. It's wrong to say that this tax can't be a spending tax just because it's only on certain types of spending. There's no set definition of a spending tax that says it has to cover *all* spending. If a person's spending can be taxed, it can be limited to certain items or categories. The government gets to choose what to tax. 8.1 There aren't many past laws that limit the idea of a tax on spending. Once it's agreed that the tax doesn't have to cover everything, the government gets to decide what to tax. The only limit is that it can't be unfair or unreasonable. 8.2 The court can't assume that there's a law about "Taxes on Expenditure" added to the national list just because of a previous court case. The court can't add laws to the lists. In that previous case, the law didn't fit into any of the state lists. But in this case, the law only covers certain types of spending. So, that previous case doesn't help decide if this law is about taxing spending or taxing luxuries. Just because both the national and state laws tax things that rich people enjoy doesn't mean they're the same. The goal of a luxury tax is to discourage people from enjoying certain things. The goal is to encourage society to help people who can't afford those things. The tax can be on the person providing the luxury or the person enjoying it. It can be based on how much money is received or spent. The goal of a spending tax is to discourage people from spending money in ways that the government thinks are wasteful. The first tax tries to discourage certain lifestyles, while the second tries to discourage unproductive spending. If there was a general spending tax, it would be hard to argue that it's illegal just because it taxes spending on luxury items. The fact that there's some overlap, or even a lot of overlap, between the national and state taxes shouldn't hide the basic difference between them. The fact that both governments are trying to target the same area doesn't mean they're doing the same thing. One is trying to limit "luxuries," while the other is trying to limit "undesirable spending."
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(Under Article 32 of the Constitution of India). The 'Chargeable expenditure ' as defined in Section 5 of the Act include expenditure incurred in or payments made in such class of hotels in connection with the provision of any accommodation, residential or otherwise, food or drink whether at or outside the hotel; or for any accommodation in such hotel on hire or lease; or any other services envisaged in that Section. The expression 'chargeable expenditure ' is defined in clauses (a), (b), (c) and (d) of Section 5, which read: "For the purposes of this Act, chargeable expend iture means any expenditure incurred in, or payments made to, a hotel to which this Act applies, in connection with the provision of, (a) any accommodation, residential or otherwise; or (b) food or drink by the hotel, whether at the hotel or outside, or by any other person at the hotel; or (c) any accommodation in such hotel on hire or lease; or (d) any other services at the hotel, either by the hotel or by any other person, by way of beauty parlour, health 929 club, swimming pool or other similar services." The legislation, it is urged, is squarely within Entry 62 of List II within the State power. The Act, it is contended, does not impose an "Expenditure Tax" but taxes 'Luxuries '. The contentions urged in support of the petitions admit of being noticed and formulated in the following terms: (a) The 'Act ', in its true nature and character, is not one imposing an 'Expenditure Tax ', as known to Law, accepted notions of Public Finance, and to legislative practice but is, in pith and substance, either a tax on Luxuries falling within Entry 62 of List II of the Seventh Schedule; or a tax on the consideration paid for the purchase of goods consti tuting an impost of the nature envisaged in entry 54 of List II, and clearly outside the legislative competence of the Union Parliament; (b) that even if the 'Act ' is held to impose a tax which is "sui generis" or a "non discript", tax with respect to which the Union Parliament is competent to make a law under Arti cle 248 and Entry 97 of List I, then, at all events, the 'Act ' is violative of Article 14 in as much as the differen tium on which the Hotels are classified is arbitrary and unintelligible has no rational nexus with the taxing policy under the 'Act '. Contention (a): Sri Palkhivala, learned Senior Counsel for the petition ers, contended that the appellation of 'Expenditure Tax ' given to the impost is a misnomer as the concept of "Expend i ture Tax" as known to law and recognised by the theorists of public finance is not a tax on a few stray items of expendi ture but is a term of Art which has acquired a technical import as 'nomen juris ' and that the import envisaged by the Act, in its true nature and character, is no more and no less than a tax on Luxuries under Entry 62 list II within the State 's exclusive power. A tax on certain stray items of expenditure is not, it is contended, a general "expenditure tax". The notion of expendi ture tax in the scheme of the Expenditure Tax Act, 1957, would, it is urged, detract from such legislative practice. The simple test, according to the argument, is whether, if a State legislature had enacted a similar law it would not have been held to be within its competence under Entry 62 of List II? 7 which referring to "luxury tax" says: "Luxury tax, excise levy on goods or services considered to be luxuries rather than necessities. 937 On the analogy of the wealth tax envisaged by Entry 86 of List I it was urged that even as the concept of "wealth" for the imposition of a tax thereon is not the individual components of the assets of the assessee but a totality of all assets which the assessee owns, so is the concept of "expenditure" which does not consist of a few stray items of expenditure but a systematised reckoning of expenditure for and during a particular unit of time. It was then urged that recourse to the residuary power under Article 248 read with Entry 97 of List I should be the very last refuge and would be available if, and only if, the other entries in the State and concurrent lists do not cover the topic. Entry 97 itself is specific that a matter can be brought under that entry only if it is not enumerated in List II or List III and in the case of a tax if it is not mentioned in either of those lists. Learned Attorney General on the contrary, submitted that the law, in pith and substance, is not one "with re spect to" Luxuries under Entry 62 List I and the tax on expenditure, as the legislature has chosen to conceive it, is referrable to residuary power. Be that as it may, we have the three lists and a residuary power and therefore it seems to us that in this context ira Central Act is challenged as being beyond the legislative competence of Parliament, it is enough to enquire if it is a law with respect to matters or taxes enumerat ed in List II. Learned Attorney General further contended that the measure adopted for the levy of the tax does not necessarily determine its essential character and that the object on which the expenditure is laid out might be an item of luxury or it might not be one; or the "expend iture" might constitute the price of the goods but, what is taxed is the "expenditure" aspect which, in itself, is susceptible of recognition, as a distinct topic of legisla tion. Hence the rule which has been evolved by the Judicial Committee, whereby the im pugned statute is examined to ascertain its 'pith and substance ', or its 'true nature and character, ' for the purpose of determining whether it is legislation with respect to matters in this list or in that. " The Court is this body. It is not any part of the petitioners ' case that 'expenditure tax ' is one of the taxes within the States ' power or that it is a forbidden field for the Union Parliament. On the contrary, it is not disputed that a law imposing 'expenditure tax ' is well within the legislative competence of Union Parliament under Article 248 read with Entry 97 of List I. But the specific contention is that the particular impost under the impugned law, having regard to its nature and incidents, is really not an 'expenditure tax at all as it does not accord with the economists ' notion of such a tax. The other is that the law is, in pith and substance, really one imposing a tax on luxuries or on the price paid for the sale of goods. In Lefroy 's 'Canada 's Federal System ' the learned author referring to the "aspects of legislation" under Sections 91 and 92 of the 941 Canadian Constitution i.e., British North America Act 1867 observed that "one of the most interesting and important principles which have been evolved by judicial decisions in connection with the distribution of Legislative Power is that subjects which in one aspect and for one purpose fall within the power of a particular legislature may in another aspect and for another purpose fall within another legisla tive power. The two taxes the one levied on a manufacturer in respect of his goods, the other on a vendor in respect of his sales, may, as is there pointed out, in one sense overlap. But in law there is no overlapping. Learned Attorney General also referred to the following observations in The British Tax System (by J.A. Indeed, as an instance of different aspects of the same matter, being the topic of legislation under different legislative powers, reference may be made to the annual letting value of a property in the occupation of a person for his own residence being, in one aspect, the measure for levy of property tax under State law and in another aspect constitute the notional or presumed income for purpose of income tax. In Union of India vs H.S. It was held that the subject did not fall under Entry 49 List II and that despite the exclusion in Entry 86 List I the Union, as the repository of the residuary power, had the competence to legislate as long as the topic was not allot ted to or within the State power. The subject of a tax is different from the measure of the levy. In M/s. Sainik Motors vs State of Rajasthan, 17 the provisions of a State law levying a tax on passengers and goods under Entry 56 of List I were assailed on the ground that the State was, in the guise of taxing passengers and goods, in substance and reality taxing the income of the stage carriage operators or, at any rate, was taxing the "fares and freights", both outside of its powers. We do not agree that the Act, in its pith and substance, lays the tax upon income and not upon passengers and goods. The submissions of the learned Attorney General that the tax is essentially a tax on expenditure and not on Luxuries or sale of goods falling within the State power, must, in our opinion, be accepted. Re: Contention (b): It is urged that the application of the Act is confined to hotels where the "room charges" for any unit of residen tial accommodation are Rs.400 or more per day per individu al, while expenditure of greater magnitude and quantum incurred in other hotels is not exigible to the tax, either because such room charges are less than Rs.400 or because the establishment which, though providing food and drink and other services envisaged by Section 5, may not provide residential accommodation. The averments in this behalf in the memorandum of writ petition are these: "There is no basis or intelligible differentia for discriminating between the levy of the tax on expenditure over food or drink provided by a hotel and the food or drink provided by 948 a restaurant or eating house not situated in a hotel (or in a hotel to which the Act does not apply) even though the cost of food or bever age is higher than that on similar items in an applicable Hotel. There is also no intelligi ble differentia for discriminating between levying of tax on expenditure on food and drinks outside the hotel which is provided by the hotel and not levying tax on expenditure on food and drinks incurred outside the hotel but which is not provided by the hotel, even though the latter expenditure may be more greater than the former . " In Hiralal vs State of UP, ; this Court said: " . (p. 729) In I.T.O. The various taxes to which the hotel industry is subject to are mentioned in the earlier part of this Petition. Our attention was drawn to some of the entries in List II which show that the legislative power in respect thereof are to be exercised subject to the powers of Parliament envis aged under List I, vide entry Nos. 2, 17, 22, 23, 24, 26, 27, 32, 33 and 50. There is no doubt that these entries have to be read subject to the entries of List I which have been mentioned or the powers of Parliament referred to therein. But even apart from these instances, the language of clause (1) and (3) of article makes it clear that the power of the State legislature to make laws with respect to any of the matters enumerated in List II is subject to the exclusive power of Parliament to make laws with respect to any of the matters enumerated in List I. This is so far as the general power of legislation is concerned. enumerated in entries 82 to 97 of List I, those available to the State legislatures in entries 45 to 63 of List II and those available to both in entry 44 of List III. In this situation and in view of the fact that the 1980 Act is, in pith and substance, a tax on income, its constitutional validity can be in no doubt at all. His first contention is that the tax levied by the 1987 Act is not, in fact and in truth, an expenditure tax. He says that it is not sufficient for the legislature to give such a description or label to a tax proposed to be levied by it as does not fall under List II and claim that it should be upheld under Entry 97. That was the concept of the expenditure tax which Nicholas Kaldor had in mind, which was embodied in the 1957 Act and which, hence, was endorsed with approval by this Court. A tax on a few items of expenditure, it is said, is not necessarily the same as an expenditure tax. ; , and Union of India vs H.S. It is difficult to accept the contention that the tax cannot be considered to be an expenditure tax because it is not on "expenditure" 961 generally but is restricted to specific types of expendi ture. If, conceptually, the expenditure incurred by a person can be a subject matter with reference to which a tax can be levied, there is no reason why such taxation should not be restricted only to certain items or categories of expenditure and why its base should necessarily be so wide as to cover all expenditure incurred by an assessable entity. After all, even under the 1957 Act, all expenditure of all persons was not liable to tax. See, in this context, the decisions in Naynit Lal vs AAC, ; , Bhargava vs Union, ; and Bhag wandas vs Union; , There is not even that much of legislative practice, so far as expenditure tax is concerned, which would justify our importing any limitation on the concept of a "tax on expenditure" under Entry 97 of List I. The wider coverage of the tax made it easier for the Court to pin point its subject matter as "expenditure" and to treat it as a matter falling under the residuary entry, but it does not justify the inference sought to be drawn that a tax cannot be said to be a tax with reference to "expenditure" because it does not tax expenditure in general but confines itself to certain types or categories of ex penditure. The fact that the 1987 Act seeks to tax only the expenditure on items which can be described as luxuries is, however, used by Sri Palkiwala to support his other conten tion (which has really troubled me considerably) that the pith and substance of both sets of legislations is the same, that they both impose a tax only on luxuries or 963 entertainments and that the distinction sought to be made on behalf of the Revenue that one is a tax on 'luxuries ' while the other is a tax on the expenditure incurred by a person on luxuries is only a distinction between "Tweedledum" and "Tweedledee". The object and effect of a tax on luxuries is only to curb expenditure on luxuries and such a tax may be imposed, levied or collected either from the provider of luxuries or the person who enjoys them. 62 of the State List. it is urged, to sustain the validity of the 1987 Act by reference to Entry 97 of List I. The latter cannot be described as a tax on 'luxuries ' and does not fall within the scope of Entry 62 of the State List and, in the absence of any refer ability to any other entry of List II ', it is safe from attack under Article 248(2) and will also be covered, if need be, by Entry 97 of List I. The second argument is that, after the decision in Azatn Jha 's case; , holding that a "tax on expenditure" will be legislation covered by Entry 97 in List I, the constitutional position is the same as if, before item 97, a specific entry had been inserted in List I (say, Entry No. The result, he says, is that the Central legislation will be squarely covered by an entry in List I and so we need not embark on any investigation as to whether it falls or does not fall under any entry in List II or List III. added to List I as a result of the decision in Azam Jha 's case ; One cannot add entries to the legislative lists on the basis of decisions of this Court. That being so, this Court upheld it by reference to Entry No. Here, however, we have a legislation which covers only certain types of expenditure and the contention of the petitioners is that ,these are all items of expenditure pertaining to luxuries. If, in spite of its dealing with only certain types of expenditure relatable to luxuries, it can be said to be, in pith and substance, not a tax on luxuries, then we may hold that parliament can legislate with refer ence to it and, for purposes of convenience, take advantage of its description as a tax on expenditure to rest it on Entry 97 of List I. In other words, Entry 97 of List I cannot come to our rescue unless we are in a position to say that the substance of the Central legislation in question is not a tax on luxuries, entertainments or amusements. Is there a tenable and true distinction between the tax on expenditure levied by the Act and a tax on luxuries? Sri Palkiwala says that the subject matter of taxation is 'luxury ' and that it is meaningless to consider the expenditure incurred on it as a separate and distinct subject matter. The legis lation was held not to be vitiated merely because there was an element of overlapping in that both excise duty and sales tax became 967 leviable on the same assessee in respect of the same goods and by reference to the same sale price when the first sale after manufacture occurs, one by reference to the 'manufac ture ' aspect and the other by reference to the 'sales ' aspect. The Income tax Act also charges a tax on the same basis. But both levies have been upheld under the 1935 Act, the former as a 'tax on lands and buildings, hearths and windows ' (Entry 42 of List II) and the latter as a tax on income (under Entry 84 of List I.) The pith and substance of the former, it was said, was not 'income ' (from the property) though the tax was levied on the basis thereof. If it were to be treated as a tax on 'fares and freights ' it would be a tax on income which the State legislature could not levy. In the light of the above entries and decisions, I think that the learned Attorney General is right in urging that, merely because the 1987 Act as well as the State Acts levy taxes which have ultimate impact on persons who enjoy certain luxuries, the pith and substance of both cannot be considered to be the same. If a general Expenditure Tax Act, like that of 1957, had been enacted, no challenge to its validity could have been 969 raised because it incidentally levied the tax on expenditure incurred on luxuries.
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The Expenditure Tax Act of 1987 planned to tax 10% of what people spent at certain hotels. It also covered money spent to rent or lease space in the hotel, or for any other services listed in that section. They said the government didn't have the power to make this law, and that it violated certain rights. They said this kind of tax should be decided by the states, not the national government. For example, someone spending a lot of money at a fancy restaurant wouldn't be taxed, but someone spending the same amount at a hotel with expensive rooms would be. They also said the law was unclear about how to calculate the tax, and that it unfairly limited their freedom to do business. They said it was a tax on spending, which the national government could decide. They said that just because economists had certain ideas about how a spending tax should work didn't mean the government was limited by those ideas. They also said that the law was about taxing spending, not about the items people were spending money *on*, and that taxing spending was something the national government could do. 1.1 The court said that the national government *can* make laws about taxing spending. 1.2 The court said the Expenditure Tax Act of 1987 was about taxing spending, *not* about taxing luxury items or the sale of goods. The court said it's important to separate the idea of spending from the thing that's being bought, and that the national government has the power to tax spending. 2.2 When the national and state governments share power, there might be some overlap between what they can do. Courts need to figure out how much power each government has in these situations. But that doesn't mean the law is *about* the second thing. There might be some overlap, but the law is still about the first thing. Just because there's overlap doesn't mean those parts aren't distinct. 2.4 The results of a law aren't the same as what the law is about. This is because this tax is new and different. How the tax is measured doesn't change what the tax *is* or who has the power to create it. 3.1 Tax laws *can* be unfair, but the government has a lot of freedom when deciding who, what, and when to tax. So, the rules for deciding if a tax law is unfair are less strict. 3.2 When deciding if a law is unfairly treating people differently, the court looks at what the law *does*, not just what it *says*. To decide if people are similar, you need to look at what the law is trying to do. It's reasonable to say that people who stay in expensive hotels are different from other people. The government can assume that people who stay in these hotels are richer and can afford to pay more taxes. It's up to the court to decide if a service fits into that section, but that doesn't mean the law is unconstitutional. 5.2 The judge said that the government has a lot of freedom when making tax laws, and it's reasonable to assume the government put thought into setting the standards for what counts as luxury. If something is covered by a law in the national list, the national government has the power to make laws about it. 6.3 The laws are arranged so that the power to make laws in general and the power to create taxes are separate. The national government has the power to make laws, including tax laws, about anything in the national list. It's wrong to say that this tax can't be a spending tax just because it's only on certain types of spending. If a person's spending can be taxed, it can be limited to certain items or categories. 8.1 There aren't many past laws that limit the idea of a tax on spending. The only limit is that it can't be unfair or unreasonable. 8.2 The court can't assume that there's a law about "Taxes on Expenditure" added to the national list just because of a previous court case. So, that previous case doesn't help decide if this law is about taxing spending or taxing luxuries. Just because both the national and state laws tax things that rich people enjoy doesn't mean they're the same. It can be based on how much money is received or spent. The goal of a spending tax is to discourage people from spending money in ways that the government thinks are wasteful. If there was a general spending tax, it would be hard to argue that it's illegal just because it taxes spending on luxury items.
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etition Nos. 90 & 312 of 1992. Under Article 32 of the Constitution of India. , D.D. Thakur, Tapash Ray, M.L. Verma, Gauray Jain, and Ms. Abha Jain for the Petitioner in W.P. No. 90 of 1992. R.P. Gupta for the Petitioner in W.P. No. 312/92. G. Ramaswamy, Attorney General, D.P. Gupta, Solicitor General, B. Parthasarthy, C.V.S. Rao, A.S. Bhasme and Chava Badri Nath Babu for the Respondent. R. K. Jain, and Rajan Mukherjee for the customs, Excise & Gold (Control) Appellate Tribunal. K.K. Venugopal, Ms. Pallav Shisodia and C.S.S. Rao for the Respondent. The Judgments of the Court were delivered by AHMADI, J. We have had the benefit of the industry, erudition and exposition of the constitutional and jurisprudential aspects of law on the various questions urged before us in the judgment of our esteemed Brother K. Ramaswamy, J. But while concurring with the hereinafter mentioned conclusions recorded by him we would like to say a few words to explain our points of view. Since the facts have been set out in detail by our learned Brother we would rest content by giving an abridged preface which we consider necessary. It all began with the receipt of a letter dated December 26, 1991, from Shri R.K. Jain, Editor, Excise Law Times, addressed to then Chief Justice of India, Shri M.H. Kania, J., complaining that as the Customs, Excise and Gold Control Appellate Tribunal (for short 'the CEGAT) was without a President for the last over six months the functioning of the Tribunal was adversely affected, in that, the Benches sit for hardly two hours or so, the sittings commence late at about 10.50 818 a.m., there is a tendency to adjourn cases on one pretext or the other so much so that even passing of interim orders, like stay orders, etc., is postponed and inordinately delayed, and the general tendency is to work for only four days in a week. The work culture is just not there and the environmental degradation that has taken place is reflected in the letter of Shri G. Sankaran dated June 3, 1991 who prematurely resigned as the President of the CEGAT. Lastly, he says that there were nearly 42,000 appeals and approximately 2000 stay petitions pending in the CEGAT involving revenue worth crores of rupees, which will remain blocked for long. Three directions were sought, namely, "(i) the immediate appointment of the President to the CEGAT, preferably a senior High Court Judge , (ii) order an enquiry into the mal functioning of the CEGAT; and (iii) issue all other directions as your Lordship may deem fit and necessary. " This letter was directed to be treated as Public Interest Litigation and notice was issued to the Union of India restricted to relief No. (i) i.e. in regard to the appointment of the President of the CEGAT. On April 29, 1992, the learned Additional Solicitor General informed the Court that the appointment of the President was made. On the next date of hearing the relevant file on which the decision regarding appointment was made was produced in a sealed envelope in Court which we directed to be kept in safe custody as apprehension was expressed that the file may be tempered with. The focus which was initially on the working of the CEGAT and in particular against the conduct and behaviour one of its Members now shifted to the legality and validity of the appointment of respondent No. 3 as its President. Serious allegations were made against respondent No. 3 and his competence to hold the post was questioned. It was contended that his appointment was made in violation of the Rules and convention found mentioned in the message of Shri Y.V. Chandrachud, the then Chief Justice of India, dated October 5, 1992 forwarded on the occasion of the inauguration of the CEGAT. The further allegation made is that even though High Court Judges were available no serious attempt was made to requisition the services of one of them for appointment as President of the CEGAT. To put a quietus to the entire matter at an early date we called the file from the Registry on May 4,1992 but when we were about to peruse the same the learned Additional Solicitor General contended 'that the Court cannot inspect it because he desired to claim privilege '. We, therefore, directed that a formal application may be made in that behalf before the next date of hearing and returned the file to enable the making of such an application. 819 Accordingly, the then Finance Secretary filed an affidavit claiming privilege under sections 123 and 124, Evidence Act, and Article 74(2) of the Constitution. The Minister of State in the Finance Department was also directed to file an affidavit in support of the claim for privilege which he did. It is in this context that the question of privilege arose in the present proceedings. Our learned Brother Ramaswamy, J. dealt with this question elaborately. After referring to the provisions of the relevant Statutes and the Constitution as well as the case law of both foreign and Indian courts, the authoritative text books. he has concluded as under: "Having perused the file and given our anxious consideration we are of the opinion that on the facts of the case. . it is not necessary to disclose the contents of the records of the petitioner or his counsel. " We are in respectful agreement with this conclusion recorded by our learned Brother though not entirely for in the reasons which have weighed with him. On the question of appointment of respondent No. 3 as the President of the CEGAT we must notice a few provisions contained in the CEGAT Members (Recruitment anti Conditions of Service). Rules, 1997 (hereinafter called 'the Rules '). Rule 2(c) defines a member, to include the President of the CEGAT also; Rule 3 prescribes the qualifications for appointment and Rule 6sets out the method of recruitment of 'a member through a Selection Committee consisting of a Judge of the Supreme Court of 'India nominated by the Chief Justice of India. Rule 10 provides for the appointment of the President. It says that the Central Government shall appoint one of the members to be the President. Sub rule (2) then provides as under "(2) Notwithstanding anything contained in rule 6. a sitting or retired judge of a High Court may also he appointed by the Central Government as a member and President simultaneously. " Sub rule (4) and the proviso thereto bear reproduction "(4) Where a serving judge of a High Court is appointed as a member and President, he shall hold office as President for a period of three years from the date of his appointment or till he attains the age of 62 years, whichever is earlier: 820 Provided that where a retired judge of a High Court above the age of 62 years is appointed its President. he shall hold office for such period not exceeding three years as may be determined by the Central Government at the time of ' appointment or re appointment. " It will thus he seen that the rules empower the Central Government to appoint any member as the President of the CEGAT. It is true that under sub rule (4), a serving judge and under the proviso thereto, a retired judge, can also be appointed a Member and President simultaneously. In the case of a serving judge his age of superannuation is fixed at 02 years but in the case of a retired judge he may be appointed for it period of three years at the most. Insofar as a serving High Court Judge is concerned, he holds office until he attains the age of 62 years, vide Article 217 of the Constitution. It therefore, heats common sense why a sitting Judge of he High Court would opt to serve as the President of tile CEGAT if lie is to retire At the same age without any benefit. On tile contrary he would lose certain perks which are attached to tile office of a High Court Judge. Even status wise lie would suffer as his decisions would he subject to the writ jurisdiction of the High Court under Articles 226/227 of tile Constitution. He may agree to accept the offer only if he had an extended tenure of at least three years. We are, therefore, in agreement with our learned Brother that sub rule (4) of Rule 10 of the Rules needs a suitable change to make it sufficiently attractive for sitting High Court Judges to accept appointment as the President of the CEGAT. We also agree with our learned brother that to instill the confidence of the litigating public in the CEGAT. the Government must make a sincere effort to appoint a sitting Judge of the High Court is a President of the CEGAT in consultation of the Chief Justice of India and it a sitting Judge is not available the choice must fall on a retired Judge as far as possible. This would he consistent with the assurance given by the Finance Department as is reflected in the letter of Shri Chandrachud, extract wherefrom is reproduced by our learned Brother in his judgment. Shri Harish Chandra was a Senior Vice President when the question of ' filling, up the vacancy of the President came up for consideration. He was fully qualified for the post under the Rules. No challenge is made on that count. Under Rule 10(1) the Central (Government is conferred the power to appoint one of the Members to be the President. Since the validity of the Rule is not questioned there can be no doubt that the Central Government was entitled to appoint respondent No. 3 as the President. But it was said that the track record of respondent No. 3 was poor and he was hardly fit to hold the post of the President of the CEGAT. It has been averred that respondent No. 3 had been in the past proposed for appointment 821 as a Judge of the Delhi High Court but his appointment did not materialise due to certain adverse reports. Assuming for the sake of argument that these allegations are factually accurate, this Court cannot sit in judgment over the choice of the person made by the Central Government for appointment as a President if the person chosen is qualified and eligible for appointment under the Rules. We, therefore, agree with our learned Brother that this Court cannot sit in judgment over the wisdom of the Central Government in the choice of the person to be appointed as a President so long as the person chosen possesses the prescribed qualification and is otherwise eligible for appointment. therefore, cannot interfere with the appointment of respondent No. 3 on the ground that his track record was poor or because of adverse reports on which account his appointment as a High Court Judge had not materialised. The allegations made by Shri R.K. Jain in regard to the working of the CEGAT are rave and the authorities can ill afford to turn a Nelson 's eve to those allegations made by a person who is fairly well conversant with the internal working of the Tribunal. Refusal to inquire into such grave allegations, some of which are capable of verification, can only betray indifference and lack of a sense of urgency to tone up the working of the tribunal. Fresh articles have appeared in the Excise Law Times which point to the sharp decline in the functioning of the CEGAT pointing to a serious management crises. It is high time that the administrative machinery which is charged with the duty to supervise the working of the CEGAT wakes up from its slumber and initiates prompt action to examine the allegations by appointing a high level team which would immediately inspect the CEGAT, identify the causes for the crises and suggest remedial measures. This cannot brook delay. Lastly, the time is ripe for taking stock of the working of ' the various Tribunals set up in the country after the insertion of Articles 323A 323B in the Constitution. A sound justice delivery system is a sine qua non for the efficient governance of a country wedded to the rule of law. An independent and impartial justice delivery system in which the litigating public has faith and confidence alone can deliver the goods. After the incorporation of these two articles,Acts have been enacted whereunder tribunals have been constituted for dispensation of justice. Sufficient time has passed and experience gained in these last few years for taking stock of the situation with a view to finding out if they have serve the purpose and objectives for which they were constituted. Complaints have been heard in regard to the functioning, of other tribunals as well and it is time that a body like the Law Commission of India has comprehensive look in with a view to 822 suggesting measures for their improved functioning. That body can also suggest changes in the different statutes and evolve a model on the basis whereof tribunals may be constituted or reconstituted with a view to ensuring greater independence. An intensive and extensive study needs to be undertaken by the Law Commission in regard to the constitution of tribunals under various statutes with a view to ensuring their independence so that the public confidence in such tribunals may increase and the quality of their performance may improve. We strongly recommend to the Law Commission of India to undertake such an exercise on priority basis. A copy of this judgment may be forwarded by the Registrar of this Court to the Member Secretary of the Commission for immediate action. We have thought it wise to clarify the extent of our concurrence with the views expressed by our learned Brother in his judgment to avoid possibility of doubts being raised in future. We accordingly agree with our learned Brother that the writ petitions should stand disposed of accordingly with no order as to costs. K.RAMASWAMY, J.: The same facts gave birth to the twin petitions for disposal. by a common judgment. On October 11, 1982, the Customs Central Excise and Gold (Control) Appellate Tribunal for short 'CEGAT ' came into existence with Justice F.S. Gill as its President. After he retired in 1985 no Judge was appointed as President. In letter dated December 26, 1991, addressed to the Chief Justice of India, the petitioner highlighted the mal functioning of the CEGAT and the imperative to appoint a sitting or retired judge of the High Court as President to revitalise its functioning and to regenerate warning and withering faith of the litigant public of the efficacy of its adjudication. Treating it as writ petition on February 25, 1992 this court issued rule nisi to the first respondent, initially to make immediate appointment of the President of the CEGAT, prefer ably a senior High Court Judge. On March 30, 1992 when the Union 's counsel stated that the matter was under active consideration of the government, having regard to the urgency, this court hoped that the decision would he taken within two weeks from that date. On April 20, 1992 the learned Addl. Solicitor General reported that the appointment of the President had been made, however. the order was not placed on record. In the meanwhile die petitioner filed writ petition No. 312 of 1992 impugning the appointment of Sri Harish Chander, as President and sought to quash the same being in violation of the direction issued by this ( 'our( on February 25, 1992 and to strike down Rules 10(1), (3) and (4) of the CEGAT Members (Recruitment and Conditions of Service) Rules 1987, for short the 'Rule ' as violative of article 43 of the Constitution. Rule nisi was also issued to the respondents in that writ petition on May 4, 1992. The tile in a sealed cover was produced. The first and the third respondents were directed to file their counters 823 within four weeks. This court also directed the first respondent "to reflect in the counter what was the actual understanding in regard to the convention referred to in the letter of the then Chief Justice of India dated October 5, 1982"; "What procedure was followed at the time of the appointment by first respondents" and "whether Chief Justice of India was consulted or whether the first respondent was free to choose a retired or a sitting Judge of the High Court as President of the Tribunal with or without consultation of the Chief Justice of India". "It should also point out what procedure it had followed since then in the appointment of the President of the Tribunal". It should also clarify whether "before the third respondent was appointed as the President, "any effort or attempt was made to ascertain if any retired or a sitting Judge of the High Court could be appointed as the President of the Tribunal" and directed to post the cases for final disposal on July 21, 1992. At request, to enable to government to file a counter, the rile was returned. The Solicitor General though brought the file on July 21, 1992. objected to our inspecting the file and desired to claim privilege. The file was directed to be kept in the custody of the Registrar General till further orders. The union was directed to file written application setting out the grounds on which the claim for privilege is founded and directed the Registry to return the sealed envelop as the Solicitor General expressed handicap to make precise claim of the privilege for want of file. Thereafter an application was filed supported by the affidavit of the Secretary, Finance and the State Minister also filed his affidavit. Counter affidavits and rejoinders were exchanged in the writ petitions. The Attorney General also appeared on behalf of the Union. The government 's claim for privilege is founded upon section 123 of the and article 74 (2) of the Constitution of India. Later on the Solicitor General modified the stand that the government have no objection for the court to peruse the file but claimed privilege to disclose the contents of the file to the petitioner. Section 123 of the postulates that "no one shall be permitted to give any evidence derived from unpublished official records relating to any affairs of State, except with the permission of the officer at the head of the department concerned, who shall give or withhold such permission as he thinks fit. Section 124 provides that no public officer shall be compelled to disclose communications made to him in official confidence, "when he considers that the public interests would suffer by the disclosure". section 162 envisages procedure on production of the documents that a witness summoned to produce a document shall, if it is in his possession or power, bring it to the court, notwith standing any objection which there may be to its production or to its admissibility. 824 "The validity of any such objection shall be decided by the court. " The court, if it deems fit, may inspect the documents, unless it refers to matters of State, or take other evidence to enable it to determine on its admissibility. The remedy under article 32 of the Constitution itself is a fundamental right to enforce the guaranteed rights in Part 111. This court shall have power to issue writ of habeas corpus, mandamus, certiorari, quowarranto or any other appropriate writ or direction or order appropriate to the situation to enforce any of the fundamental right (power of High court under article 226 is wider). Article 144 enjoins that all authorities, civil and judicial, in the territory of India shall act in aid of this Court. Article 142 (1) empowers this Court to make such orders as is necessary for doing complete justice in any cause or matter pending before it. Subject to the provisions of any law made in this behalf by the Parliament, by Clause 2 of article 142. this Court "shall have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents,or the investigation or punishment of any contempt of itself. " When this Court was moved for an appropriate writ under article 32, rule nisi would be issued and for doing complete justice in that cause or matter, it has been invested with power to issue directions or orders which includes ad interim orders appropriate to the cause. All authorities, constitutional, civil judicial, statutory or persons in the territory of India are enjoined to act in aid of this court. This court while exercising its jurisdiction, subject to any law, if any, made by Parliament consistent with the exercise of the said power, has been empowered by Cl. 2 of article 142 with all and every power to make any order to secure attendance of any person, to issue "discovery order nisi" for production of any documents, or to order investigation . Exercise of this constituent power is paramount to enforce not only the fundamental rights guaranteed in Part III but also to do complete justice in any matter or cause, presented or pending adjudication. The power to issue "discovery order nisi" is thus express as well as inherent as an integral power of Judicial review and process in the court to secure the attendance of any person or discovery or production of any document or to order investigation in that behalf. However. in an appropriate case, depending on facts on hand, court may adopt such other procedure as would be warranted. The petitioner must make strong prima facie case to order discovery order nisi, etc. and it must not be a hunting expedition to fish out some facts or an attempt to cause embarrassment to the respondents nor for publicity. But on issuance of rule nisi by this Court under article 32 or a discovery order nisi the government or any authority, constitutional, civil, judicial. statutory or otherwise or any person, must produce the record in their 825 custody and disobedience thereof would be at the pain of contempt. Section 123 of the Evidence Act gives right to the government, in other words, to the minister or in his absence head of the department, to claim privilege, in other words immunity from disclosure of the unpublished official state documents in public interest. In a democracy, governed by rule of law State is treated at par with a person by article 19(6) in commercial/industrial activities. It possessed of no special privileges. This Court in State of U.P. vs Raj Narain & Ors. at 349 held that an objection claiming immunity should be raised by an affidavit affirmed by the head of the department. The court may also require a Minister to affirm an affidavit. They must state with precision the grounds or reasons in support of the public interest immunity. It is now settled law that the initial claim for public interest immunity to produce unpublished official records for short "state documents" should be made through an affidavit generally by the Minister concerned, in his absence by the Secretary of the department or head of the Department. In the latter case the court may require an affidavit of the Minister himself to be filed. The affidavit should indicate that the documents in question have been carefully read and considered and the deponent has been satisfied, supported by reasons or grounds valid and germane, as to why it is apprehended that public interest would be injured by disclosure of the document summoned or called for. If the court finds the affidavit unsatisfactory a further opportunity may be given to file additional affidavit or be may be summoned for cross examination. If the court is satisfied from the affidavit and the reasons assigned for withholding production or disclosure, the court may pass an appropriate order in that behalf. The Court though would give utmost consideration and deference to the view of the Minister, yet it is not conclusive. The claim for immunity should never be on administrative routine nor be a garb to avoid inconvenience, embarrassment or adverse to its defence in the action, the latter themselves a ground for disclosure. If the court still desires to peruse the record for satisfying itself whether the reasons assigned in the affidavit would justify withholding disclosure, the court would, in camera, examine the record and satisfy itself whether the public interest subserves withholding production or disclosure or making the document as part of the record. On the one side there is the public interest to be protected; on the other side of the scale is the interest of the litigant who legitimately wants production of some documents, which he believes will support his own or defeat his adversary 's case. Both are matters of public interest, for it is also in the public interest that justice should be done between litigating parties by production of all relevant documents for which public interest immunity has been claimed. They must be weighed one 826 competing public interest in the balance as against another equally competing public administration of justice. The reasons are: there is public interest that harm shall not be done to the nation or the public service by disclosure of the document in question and there is public interest that the administration of justice shall not be frustrated by withholding the document which must be produced, if justice is to be done. The court also should be satisfied whether, the evidence relates to the affairs of the State under sec. 123 or not; evidence is relevant to the issue and admissible. As distinct from private interest, the principle on which protection is given is that where a conflict arise between public and private interest, private interest must yield to the public interest. In S.P. Gupta & Ors. etc vs Union of India & Ors. [1982] 2 SCR 365, this court by seven Judges ' bench held that the court would allow the objection to disclosure if it finds that the document relates to affairs of State and its disclosure would be injurious to public interest, but on the other hand, if it reaches the conclusion that the document does not relate to affairs of State or that the public interest does not compel its non disclosure or that the public interest in the administration of justice in the particular case before it overrides all other aspects of public interest, it will overrule the objection and order disclosure of the document. When an objection was raised against disclosure of a particular document that it belongs to a class which in the public interest ought not to be disclosed, whether or not it would be harmful to disclose that class document or the contents of that particular document forming part of the class would be injurious to the interest of the state or the public service, it would be difficult to decide in vacuum the claim because it would almost invariably be supported by an affidavit made either by the Minister or head of the department and if he asserts that to disclose the contents of the document would or might do to the nation or the public service a grave injury, the court out of deference will be slow to question his opinion or to allow any interest, even that of justice, to prevail over it unless there can be shown to exist some factors suggesting either lack of good faith or an error of judgment on the part of the minister or the head of the department or the claim was made in administrative routine without due consideration or to avoid inconvenience or injury to their defence. However, it is well settled law that the court is not bound by the statement made by the minister or the head of the department in the affidavit and it retains the power to balance the injury to the State or the public service against the risk of injustice. The real question which the court is required to consider is whether public interest is so strong to override the ordinary right and interest of the litigant that he shall be able to lay before a court of justice of the relevant evidence. In balancing the competing interest it is the duty of the court to see that there is the public interest that harm shall not be done to the nation or the 827 public service by disclosure of the document and there is a public interest that the administration of justice shall not be frustrated by withholding documents which must be produced if justice is to he done. It is, therefore, the paramount right and duty of the court not of the executive to decide whether a document will be produced or may he withheld. The court must decide which aspect of public interest predominates or in other words whether the public interest which requires that the document should not be produced out weighs the public interest that a court of justice in performing its functions should not be denied access to relevant evidence. In some cases, therefore, the court must weight one competing aspect of the public interest against the other, and decide where the balance lies. If the nature of the injury to the public interest is so grave a character then even private interest or any other interest cannot be allowed to prevail over it. The basic question to which the court would. therefore, have to address itself for the purpose of deciding the validity of the objection would be, whether the document relates to affairs of State or in other words, is it of such a character that its disclosure would be against the interest of the State or the public service and if so, whether the public interest in it ; non disclosure is so strong that it must prevail over the private interesting the administration of justice and on that account, it should not be allowed to be disclosed. By operation of Sec. 162 of Evidence Act the final decision in regard to the validity of an objection against disclosure raised under section 123 would always be with the court. The contention, therefore, that the claim of public interest immunity claimed in the affidavit of the State Minister for Finance and the Secretary need privacy and claim for immunity of state documents from disclosure is unsustainable. The same is the law laid down by the Commonwealth countries, see Conway vs Rimmer. ; ; D. vs National Society for the Prevention of Cruelty to Children ; ; Burmah Oil Co. Ltd. vs Governor and Company of the Bank of England, ; ; Butters Gas and Oil Co. vs Hammer ; Air Canada vs Secretary of State for Trade ; and Council of Civil Service Unions vs Minister for the Civil service, ; Pursuant to the law laid down in Conway 's, case the Administration of Justice Act, 1970 was made enabling the court to order disclosure of the documents except where the court, in exercise of the power under sections 31 to 34, considered that compliance of the order would be injurious to the public interest consistent with the above approach is the principle laid by this court in S.P. Gupta 's case. In United States of America the Primacy to the executive privilege is given only where the court is satisfied that disclosure of the evidence will expose military 828 secrecy or of the document relating to foreign relations. In other respects the Court would reject the assertion of executive privilege. hi United States vs Reynolds [1935] 1 ; , Environment Protection Agency vs Patsy T. Mink [410] U.S. ; 11; Newyork Times vs U. section ; Pentagan Papers case and U. section vs Richard M. Nixon ; = ; 1035. What is known as Watergate Tapes case, the Supreme Court of U.S.A. rejected the claim of the President not to disclose the conversation he had with the officials. The Administrative Procedure Act 5, Art 552 was made. Thereunder it was broadly conceded to permit access to official information. Only is stated hereinbefore the President is to withhold top secret documents pursuant to executive order to be classified and stamped as "highly sensitive matters vital to our national defence and foreign policies". In other respects under the Freedom of Information Act, documents are accessible to production. In the latest Commentary by McCormick on Evidence, 4th Ed. by John W. Strong in Chapter 12, surveyed the development of law on the executive privilege and stated that at p. 155, that "once we leave the restricted area of military and diplomatic secrets, a greater role for the judiciary in the determination of governmental claims of privilege becomes not only desirable but necessary. . . Where these privileges. are claimed, it is for the judge to determine whether the interest in governmental secrecy is out weighed in the particular case by the litigant 's interest in obtaining the evidence sought. A satisfactory striking of this balance will, on the one hand, require consideration of the interests giving rise to the privilege and an assessment of the extent to which disclosure will realistically impair those interests. On the other hand, factors which will affect the litigant 's need will include the significance of the evidence sought for the case. the availability of the desired information from other sources, and in some instances the nature of the right being, asserted in the litigation." In Robinson vs State of South Australia, PC, Shankey vs Whitlan [1979] 53 ALR p.1; FAI Insurances Ltd. vs The Hon. Sir, Henry Arthus Winneke and ors; , , whitlan vs Australian Consolidated Press Ltd.,[1985] 60 ALR p.7; Minister for Arts Heritage and Environment and Ors. vs Pekoi Wallsend Ltd and Ors. and Commonwealth of Australia vs Northern Land Council, and Anr. , Australian Courts consistently rejected the executive privilege and exercise the power to determine whether the documents need immunity from disclosure in the public interest. The same view was endorsed by the Supreme Court of 'Canada in R. vs Shinder and Gagnon vs Quebec, Securities Commission ; The Supreme Court of Victoria in Bruce vs Waldron. [1963] VLR p.3; The Court of Appeal of New south Wales in Re Tunstall. exhibit P. Brown, [1966] 84 W.N. (Pt. 2) 829 [N.S.W.] 13. The Court of Appeal of the New Zealand in Corbett vs Social Security Commission , Creednz Inc vs Governor General [1981] 1 N.L.R. p. 172; The Supreme Court of Ceylon in Apponhamy vs Illangaretute, [1964] 66 C.L.W. 17. The Court of Appeal of Jamaica in Allen vs By field [No.2] at page 71 and The Court of Session in Scotland in Glasqow Corporation vs Central Land Board, [1956] Scotland Law Time p.4. The learned Solicitor General contended that a Cabinet sub committee constituted under Rules of Business approved the appointment of Harish Chander as President of CEGAT. The President accordingly appointed him. By operation of article 77 (3) and 74(1), the appointment was made by the President. The file constitutes Cabinet documents forming part of the Preparation of the documents leading to the formation of the advice tendered to the President. Noting of the officials which lead to the Cabinet note and Cabinet decision and all papers brought into existence to prepare Cabinet note are also its part. Section 123 of the Evidence Act and Article 74(2) precludes this court from inquiring into the nature of the advice tendered to the President and the documents are, therefore, immuned from disclosure. The disclosure would cause public injury preventing candid and frank discussion and expression of views by the bureaucrats at higher level and by the Minister/Cabinet Sub committee causing serious injury to public service. Therefore, Cabinet papers, Minutes of discussion by heads of departments; high level documents relating to the inner working of the government machine and all papers concerned with the government policies belong to a class documents which in the public interest they or contents thereof must be protected against disclosure. The executive power of the Union vested in the President by Operation of article 53(1) shall be exercised by him either directly or through officers subordinate to him in accordance with the Constitution. By operation of article 73(1), subject to the provisions of the constitution, the executive power of the Union shall extend to the matters with respect to which Parliament has power to make laws. Article 75(1) provides that the Prime Minister shall be appointed by the President and the other Ministers shall be appointed by the President on the advice of the Prime Minister; article 75(3) posits that the Council of Ministers shall be collectively responsible to the House of the People; article 75(4) enjoins that before a Minister enters upon his office, the President shall administer to him the oaths of office and of secrecy according to the forms set out for the purpose in the Third Schedule to the Constitution. Article 74(1) as amended by section 11 of the Constitution 42nd Amendment Act, 1976 with effect from January 3, 1977 postulates that there shall be a Council of Ministers with the Prime Minister as the head to aid and advise the President who shall, in the exercise of his functions, act in accordance with such 830 advice. The proviso thereto added by section 11 of the Constitution 44th Amendment Act, 1978 which came into effect from June 20, 1979 envisages that "provided that the President may require the Council of Ministers to reconsider such advice, either generally or otherwise, and the President shall act in accordance with the advice tendered after such reconsideration. " Clause (2) declares that "the question whether any, and if so what, advice was tendered by Minister to the President shall not be inquired into in any court. " In Satwant Singh Sawhney vs D. Ramarathnam. Asstt. Passport Officer , and in Maganbhai Ishwarbhai Patel vs Union of India and anr. ; , this Court held that the Ministers are officers subordinate to the President under article 53 (1) or 'the Governor under article 154 (1),. as the case may be. The President exercises his executive power under Art: 74 (1) through the Council of Ministers with the Prime Minister as its head who shall be collectively responsible to the House of People. The exercise of the power would be as per the rules of business for convenient transaction of the Govt. administration made under article 77(3), viz., the Govt. of India (Transaction of Business) Rules, 1961 for short the 'Business Rules '. The Prime Minister shall be duty bound under article 78 to communicate to the President all decisions of the Council of Ministers relating to the administration of the affairs of the Union and proposals for legislation etc. The details whereof are not material. Article 77(1) prescribes that "all executive actions of the Govt. of India shall be expressed to be taken in the name of the President and shall be authenticated in the manner specified in the Rules made by the President. The President issued business rules and has allocated diverse functions to the Council of Ministers, its committees and the officers subordinate to them. In Shamsher Singh vs State of Punjab ; , a Bench of seven Judges, speaking through Ray, C.J., held that the executive power is generally described as the residue which does not fall within legislative or judical power but executive power also partakes of legislative or judicial, actions. All powers and functions of the President, except his legislative powers, are executive powers of the Union vested in the President under article 53(1). The President exercises his functions, except conferred on him to be exercised in his discretion, with the aid and advice of the Council of Ministers as per the business rules allocated among his Ministers or Committees. Wherever the constitution requires the satisfaction of the President, the satisfaction required of him by the Constitution is not the personal satisfaction of the President, but is of the Cabinet System of Govt. The Minister lays down the policies. The Council of Ministers settle the major policies. The civil servant does it on behalf of the Govt. as limb of the Govt. The decision of any Minister or officer under the rules is the decision of the President. 831 Cabinet is a constitutional mechanism to ensure that before important decisions are reached many sides of the question are weighed and considered which would mean that much work must be done beforehand in interdepartmental discussions and in the preparation of papers for Cabinet Committees. Political decisions of importance are in their nature complies and need sufficient time and considerate thought. Equally, the decisions relating to public service need probity and diverse consideration. The Cabinet system is extremely well adapted to making considered decisions with all due speed and expedition. The principle of ministerial responsibility has a verity of meanings precise and imprecise, authentic and vague. Parliament rarely exercises direct control over Ministers. Though the floor of the House is the forum for correcting excesses of the government but rarely a place where a Minister can be expected to keep the information secret. Therefore, the Minister is answerable for his decision to the Parliament is fanciful. Sir Ivor Jennings,in his Cabinet Government, stated that the Cabinet is the supreme directing authority. It integrates what would otherwise be a heterogeneous collection of authorities exercising a vast variety of functions. Neither the Cabinet nor the Prime Minister, as such, claims to exercise any powers conferred by law. They take the decision, but the acts which have legal effect are taken by others the Privy Council, a Minister, a statutory commission and the like. At page 81, it is stated, that the existence and activities of these coordinating ministers does not impair or diminish the responsibility to Parliament of the departmental ministers whose policies they co ordinate. The ministers are fully accountable to Parliament for any act of policy or administration within their departmental jurisdiction. It does not follow that the coordinating ministers are non responsible. Having no statutory powers as coordinating ministers, they perform in that capacity no formal acts. But they share in the collective responsibility of the Govt. as a whole, and, as Minister they are accountable to Parliament. At page 233, he stated that the Cabinet has to decide policy matters. Cabinet is policy formulating body. When it has determined on a policy, the appropriate department carries it out, either by administrative action within the law or by drafting a bill to be submitted to Parliament so as to change the law. The Cabinet is a general, controlling body. It neither desires, nor is able to deal with all the numerous details of the Govt. It expects a minister to take all decisions which are not of real political importance. Every Minister must, therefore, exercise his own discretion as to what matters arising in his department ought to receive cabinet sanction. At page 35 1, he stated that civil servants prepare memorandum for their Ministers. Ministers discuss in Cabinet. Proposals are debated in the House of Commons. At the, persons involved are peculiar people and nobody knows what the man in the back street thinks of it all, though the politician often thinks he does. On the Cabinet 832 Minister 's responsibility at page 449, he stated that when it is said that a Minister is responsible to Parliament, it is meant that the House of Commons (in our constitution Lok Sabha) may demand an explanation. If that explanation is not considered satisfactory and the responsibility is collective, the House will vote against the Govt. and so compel a resignation or a dissolution. If the responsibility is not collective, but the act or advice was due to the negligence of or to an error of judgment by a Minister and the House disapproves, the Minister will resign. In Halsbury 's Laws of England, Fourth Ed., Vol. 8, para 820, it is stated that the Cabinet control of legislative and executive functions, the "modern English system of government is the concentration of the control of both legislative and executive functions in a small body of men, presided over by the Prime Minister, who are agreed on fundamentals and decide the most important questions of policy secretly in the Cabinet. The most important check on their power is the existence of a powerful and organised parliamentary opposition, and the possibility that measures proposed or carried by the government may subject them to popular disapproval and enable the Opposition to defeat them at the next general election and supplant them in their control of the executive. In Great Britain, Cabinet system is based on conventions. Patrick Gordon Walker in his 'The Cabinet ' 1973 Revised Ed. at p. 178 stated that basically Cabinet is a constitutional mechanism to ensure that before important decisions are reached many sides of the question are weighed and considered. This means that much work must be done beforehand in interdepartmental discussions and in the preparation of papers for Cabinet Committees and the Cabinet. Cabinet that acts without briefs or over hastily ' think for themselves ' usually, in my experience, make mistaken decisions. Political decisions of importance are in their nature complex and need some time and thought. The cabinet system is extremely well adapted to making considered decisions with all due speed. Cabinet discussions as distinct from Cabinet decisions must, from their nature, be kept secret. At page 184 he maintained that the main effective change towards less secrecy would be for the Cabinet to share with Parliament and public more of the factual information on which the government makes some of their decisions. Moves in this direction have begun to be taken. In his "the British Cabinet" John P. Mackintosh, 2nd Edn. at p. 11 stated that if there is dissension between Ministers, matters may be thrashed out in private and the contestants plead in turn with the Prime Minister, but it is in the Cabinet that the conflict must be formally solved, the minority either accepting the decision and assuming joint responsibility or, if they cannot tolerate it, tender their resignations. At p.529, he stated that some decisions are taken by the Prime Minister alone, some in consultation between him and the senior Ministers, while others are left to heads of departments, to the full Cabinet, to the concerned Cabinet Committee, or to the 833 permanent officials. Of these bodies the Cabinet holds the central position because, thou oh it does not often govern in that sense, it is the place where disputes are settled, where major policies are endorsed and where the balance of the forces emerge if there is disagreement. In the end, most decisions have to be reported to the Cabinet and Cabinet Minister are the only ones who have the right to complain, if they have not been informed or consulted. Hood Phillips and Paul Jackson in their Constitutional and Administrative Law, 7th Ed. at p.301 stated that the duties of Cabinets are: "(a) the final determination of the policy to be submitted to Parliament ', (b) the supreme control of the national executive in accordance with the policy prescribed by the Parliament, and (c) the continuous coordination and delimitation in the interests of the several departments of State. " The Cabinet, giving collective . advice" to the Sovereign through the Prime Minister, was said to exercise under Parliament, supreme control over all departments of State, and to be the body which coordinate the work on the one hand of the executive and the legislature, and on the other hand of the organs of the executive among themselves. At p.307, they stated that "committee system has increased the efficiency of the Cabinet, and enables a great deal more work to be done by Ministers". The Cabinet itself is left free to discuss controversial matters and to make more important decisions, and its business is better prepared. The system also enables non Cabinet Ministers to be brought into discussions. At p.309 it is stated that "the responsibility of Ministers is both individual and collective". The individual responsibility of a Minister for the performance of his official duties is both legal and conventional: it is owed legally to the sovereign and also by convention to Parliament. Responsibility is accountability or answerability. The responsible Minister is the one under whose authority an act was, done, or "who must take the constitutional consequences of what has been done either by himself or in his department". In 'the Cabinet Walker, at page 183 stated that the feeling is widespread that the Cabinet shrouds its affairs in too much secrecy and that Parliament, Press and public should be able to participate to a greater degree in formulation of policy. With few exceptions Cabinet decisions have to be made public in order to he made effective, although a small number that do not need to be executed, do not become known, for instance talks with a foreign country or a decision not to take some action. All other cabinet decisions are necessarily disclosed and are subject to public scrutiny. Cabinet discussions as distinct from Cabinet decisions must, from their nature, be kept secret. Cabinet discussions often depend upon confidential advice from civil servants or reports from Ambassadors. If those are disclosed and thus become subject to public attack, it would be extremely difficult for the cabinet 834 to secure free and frank advice. In Rai Sahib Ram Jawaya Kapur & Ors. vs The State of Punjab at 236, this Court held that the existence of the law is not a condition precedent for the exercise of the executive power. The executive power connotes the residual government function that remain after legislative and judicial functions are taken away, subject to the provisions of the Constitution or the law. It would thus be held that the Cabinet known as Council of Ministers headed by Prime Minister under article 75(3) is the driving and steering body responsible for the Governance of the country. They enjoy the confidence of the Parliament and remain in office so long as they maintain the confidence of the majority. They are answerable to the Parliament and accountable to people. They bear collective responsibility and shall be bound to maintain secrecy. Their executive function comprises of both the determination of the policy as well as carrying it into execution, the initiation of legislation, the maintenance of order, the promotion of social and economic welfare, direction of foreign policy. In short the carrying on or supervision of the general administration of the affairs of Union of India which includes political activity and carrying on all trading activities, the acquisition, holding and disposal of property and the making of contracts for any purpose. In short the primary function of the Cabinet is to formulate the policies of the Govt. in confirmity with the directive principles of the Constitution for the Governance of the nation; place before the Parliament for acceptance and would carry on the executive function of the State as per the provisions of the Constitution and the laws. Collective responsibility under article 75(3) of the Constitution inheres maintenance of confidentiality as enjoined in oaths of office and of secrecy set forth in Schedule III of the Constitution that the Minister will not directly or indirectly communicate or reveal to any person or persons any matter which shall be brought under his/her consideration or shall become known to him/her as Minister except as may be required for the "due discharge of his/her duty as Minister". The base and basic postulate of its significance is unexceptionable. But the need for and effect of confidentiality has to be nurtured not merely from political imperatives of collective responsibility envisaged by article 75(3) but also from its pragmatism. Bagehot in his 'The English Constitution ', 1964 Edition at p. 68 stated that the most curious point about the Cabinet is that so very little is known about it. The meetings are not only secret in theory, but secret in reality. By the present practice, no official minute in all ordinary cases is kept of them. Even a private note is discouraged and disliked. . But a Cabinet, though it is a committee of the legislative assembly,is a committee with a power which no assembly would unless 835 for historical accidents, and after happy experience have been persuaded to entrust to any committee. It is a committee which can dissolve the assembly which appointed it; it is a committee with a suspensive veto a committee with a power of appeal. In Commonwealth of Australia vs Northern Land Council & Anr. [1991] 103 Australian Law Reports, p. 267, the Federal Court of Australia General Division, was to consider the scope of confidentiality of the cabinet papers, collective responsibility of the Council of Ministers and the need for discovery of the Cabinet note books and dealt with the question thus : "The conventional wisdom of contemporary constitutional practice present secrecy as a necessary incident of collective responsibility. But historically it seems to have derived from the 17th century origins of the cabinet as an inner circle of Privy Councillors, sometimes called the Cabinet Council who acted as advisors to the monarch. . However, that basis for confidentiality has to be assessed in the light of the political, imperatives of collective responsibility. " Confidentiality has been described as ' the natural correlative of collective responsibility. It is said to be difficult for Ministers to make an effective defence in public of decisions with which it is known that they have disagreed in the course of Cabinet discussions. The Cabinet as a whole is responsible for the advice and conduct of each of its members. If any member of the Cabinet seriously dissents from the opinion and policy approved ' by the majority of his colleagues it is his duty as a man of honour to resign. Cabinet secrecy is an essential part of the structure of government which centers of political experience have created. To impair it without a very strong reason would be vandalism the wanton rejection of the fruits of civilisation. By operation of article 75 (3) and oaths of office and of secrecy taken, the" individual Minister and the Council of Ministers with the Prime Minister as its head, as executive head of the State as a unit, body or committee are individually and collectively responsible to their decisions or acts or policies and they should work in unison and harmony. They individually and collectively maintain secrecy of the deliberations both of administration and of formulating executive or legislative policies. Advice tendered by the Cabinet to the President should be unanimous. The Cabinet should stand or fall together. Therefore, the Cabinet as a whole is collectively responsible for the advice tendered to the President and for the conduct of business of each of his/her department. They require to maintain secrecy and confidentiality in the performance of that duty of office entrusted by the Constitution and the laws. Political promises or aims as per manifesto of the political party are necessarily broad; in their particular applications, when voted to power, may be the subject of disagreement among the members of the Cabinet. 836 Each member of the Cabinet has personal responsibility to his conscience and also responsibility to the Government. Discussion and persuasion may diminish disagreement, reach unanimity, or leave it unaltered. Despite persistence of disagreement, it is a decision, though some members like it less than others. Both practical politics and good Government require that those who like it less must still publicly support it. If such support is too great a strain on a Minister 's conscience or incompatible to his/her perceptions of commitment and find it difficult to support the decision, it would be open to him/her to resign. So the price of the acceptance of Cabinet office is the assumption of the responsibility to support Cabinet decisions. The burden of that responsibility is shared by all. Equally every member is entitled to insist that whatever his own contribution was to the making of the decision, whether favourable or unfavourable, every other member will keep it secret. Maintenance of secrecy of an individual 's contribution to discussion, or vote in the Cabinet guarantees most favourable and conducive atmosphere to express views formally. To reveal the view, or vote, of a member of the Cabinet, expressed or given in Cabinet, is not only to disappoint an expectation on which that member was entitled to rely, but also to reduce the security of the continuing guarantee, and above all, to undermine the principle of Collective responsibility. Joint responsibility supersede individual responsibility; in accepting responsibility for joint decision, each member is entitled to an assurance that he will be held responsible not only for his own, but also as member if the whole Cabinet which made it; that he will be held responsible for maintaining secrecy of any different view which the others may have expressed. The obvious and basic fact is that as part of the machinery of the Government, Cabinet secrecy is an essential part of the structure of the government. Confidentiality and collective responsibility in that scenario are twins to effectuate the object of frank and open debate to augment efficiency of public service or effectivity of collective decision to elongate public interest. To hamper and impair them without any compelling or at least strong reasons, would be detrimental to the efficacy of public administration. It would tantamount to wanton rejection of the fruits of democratic governance, and abdication of an office of responsibility and dependability. Maintaining of top secrecy of new taxation policies is a must but leaking budget proposals a day before presentation of the budget may be an exceptional occurrence as an instance. Above compulsive constraints would give rise to an immediate question whether the minister is required to disclose in the affidavit the reasons or grounds for public interest immunity of disclosure and the oath of secrecy is thereby whether breached or whether it would be a shield for non production of unpub 837 lished state documents or an escape route to acts impugned as fondly pleaded and fervently argued by Attorney General. It is already held that on issuance of rule nisi or discovery order nisi" every or, ,an of the State or the authority or a person is enjoined to act in aid of this court and pursuant thereto shall be required to produce the summoned documents. But when a claim for public interest immunity has been laid for non disclosure of the state documents, it is the Minister 's "due discharge of duty" to state on oath in his affidavit the grounds on which and the reasons for which he has been persuaded to claim public interest immunity from disclosure of the state papers and produce them. The oath of secrecy the Minister had taken does not absolve him from filing the affidavit. It is his due discharge of constitutional duty to state in the affidavit of the grounds or reasons in support of public interest immunity from producing the state documents before the Court, In Attorney General vs Jonathan Cape Ltd. [1976] Queen 's Bench, 752, Lord Widgery, C.J., repelled the contention that publication of the diaries maintained by the Minister would be in breach of oath of secrecy. In support of the plea of secrecy reliance was placed on the debates on cabinet secrecy, that took place on December 1, 1932 in the House of Lords. An extract from the official report of House of Lords, at Column 520 Lord Hailsham 's speech emphasised the imperative to maintain secrecy and the limitation which rigidly hedged around the position of a Cabinet Minister thus: "having heard that oath read your Lordships will appreciate what a complete misconception it is. to suppose, as some people seem inclined to suppose, that the only obligation that rests upon a Cabinet Minister is not to disclose what are described as the Cabinet 's minutes. He is sworn to keep secret all matters committed and revealed unto him or that shall be treated secretrly in council". He went on to point out that: "I have stressed that because, as my noble and learned friend Lord Halsbury suggested and the noble Marquis, Lord Salisbury, confirmed, Cabinet conclusions did not exist until 16 years ago. The old practice is set out in a book which bears the name of the noble Earl 's father, Halsbury 's Laws of England, with which I have had the honour to be associated in the present edition. " Then in column 532 of the speech Lord Hailsham, stated that the oath of secrecy should be maintained. "Upon matters on which it is their shorn duty to express, their. opinions. with complete frankness and to give all information, without any haunting fear that what happens may hereafter by publication create difficulties for themselves or, what is far more grave, may create complications for the king and country that they are trying to serve. For those reasons I hope that the inflexible rule which has hitherto prevailed will be maintained in its integrity, and that if there has been any relaxation or misunderstanding, of which I say nothing, 838 the debate in this House will have done something to clarify the position and restate the old rule in all its rigour and all its inflexibility." As a Council of Minister, his duty is to maintain the sanctity of oath and to keep discussions and information he had during its course as secret. Lord Widgery after considering the evidence of a former Minister examined in that case who did not support the view of Lord Hailsham, held thus: "that degree of protection, afforded to cabinet papers and discussions cannot be determined by single rule of thumb. Some secrets require a high standard of protection for short time, other requires protection till a new political generation has taken over. In the Present action against the literary executors, "the perpetual injunction against them restraining from their publication was not proper". It was further held that the draconian remedy when public interest demands it would be relaxed. In Sankey vs Whitlan 1979 153 Australian Law Journal Reports, 11, while considering the same question, Gibbs, A.,C.J., at p.23, held that the fact that members of the Executive Council are required to take a binding oath of secrecy does not assist the argument that the production of State papers cannot be compelled. The plea of privilege was negatived and the Cabinet papers were directed to be produced. The contention that the Minister is precluded to disclose in his affidavit the grounds or the reasons as to how he dealt with the matter as a part of the claim for public interest immunity is devoid of substance. It is already held that it is the duty of the Minister to file an affidavit stating the grounds or the reasons in support of the claim from public interest immunity. He takes grave risk on insistence of oath of secrecy to avoid filing an affidavit or production of State documents and the court may be constrained to draw such inference as are available at law. Accordingly we hold that the oath of office of secrecy adumberated in Article 75(4) and Schedule III of the Constitution does not absolve the Minister either to state the reasons in support of the public interest immunity to produce the state documents or as to how the matter was dealt with or for their production when discovery order nisi or rule nisi was issued. On the other hand it is his due discharge of the duty as a Minister to obey rule nisi or discovery order nisi and act in aid of the court. The next limb of the argument is that the Cabinet Sub committee 's decision is a class document and the contents of state documents required to be kept in confidence for efficient functioning of public service including candid and objective expression of the views on the opinion by the Ministers or bureaucrats etc. The prospects of later disclosure at a at a litigation would hamper and dampen 839 candour causing serious incursion into the efficacy of public service and result in deterioration in proper functioning of the public service. This blanket shielding of disclosure was disfavoured right from Robinson vs State of South Australia [1931] Appeal Cases, (P.C.), p. 704 Lord Warrington speaking for the Board held that the privilege is a narrow, one and must sparingly be exercised. This court in Raj Narain 's case considering green book, i.e., guidelines for protecting VVIPs on tour, though held to be confidential document and be wihheld from production, though part of its contents were already revealed, yet it was held that confidentiality itself is not a head of privilege. In S.P. Gupta 's case, Bhagwati, J., speaking per majority, reviewing the case law and the privilege against disclosure of correspondence exchanged between the Chief Justice of the Delhi High Court, Chief Justice of India and the Law Minister of the Union concerning extension of term or appointment of Addl. Judges of the Delhi High Court, which was not dissented, (but explained by Fazal Ali,J.) held that in a democracy, citizens are to know what their Govt. is doing. No democratic Govt. can survive without accountability and the basic postulate of accountability is that the people should have information about the functioning of the Govt. It is only if the people know how the Govt. is functioning and that they can fulfill their own democratic rights given to them and make the democracy a really effective participatory democracy. There can be little doubt that exposure to public scrutiny is one of the surest means of running a clean and healthy administration. Disclosure of information in regard to the functioning of the Govt. must be the rule and secrecy can be exceptionally justified only where strict requirements of public information was assumed. The approach of the court must be to alleviate the area of secrecy as much as possible constantly with the requirement of public interest bearing in mind all the time that the disclosure also serves an important ' aspect of public interest. In that case the correspondence between the constitutional functionaries was inspected by this court and disclosed to the opposite parties to formulate their contentions. In Conway 's case, the speech of Lord Reid is the sole votery to support the plea of confidentiality emphasising that, "the business of Govt. is difficult enough as it is no Govt. could contemplate with equanimity the inner workings of the Govt. machine being exposed to the gazes of those ready to criticise without adequate knowledge of the background and perhaps with some axe to grind". Other Law Lords negated it. Lord Morris of Borth y Gest referred it as "being doubtful validity". Lord Hodson thought it "impossible to justify the doctrine in its widest term. Lord Pearce considered that "a general blanket protection of wide classes 840 led to a 0complete lack of common sense". Lord Upjohn found it difficult to justify the doctrine "when those in other walks of life which give rise to equally important matters of confidence in relation to security and personal matters as in the public service can claim no such privilege". In Burmah Oil Co 'section case House of Lords dealing with the cabinet discussion laid that the claim for blanket immunity "must now be treated as having little weight, if any". It was further stated that the notion that "any competent and conscientious public servant would be inhibited at all in the candour of his writings by consideration of the off chance that they might have to be produced in a litigation as grotesque". The plea of impairment of public service was also held not available stating "now a days the state in multifarious manifestations impinges closely upon the lives and activities of individual citizens. Where this was involved a citizen in litigation with the state or one of its agencies, the candour argument is an utterly insubstantial ground for denying his access to relevant document". The candour doctrine stands in a different category from that aspect of public interest which in appropriate circumstances may require that the "Sources and nature of information confidentially tendered" should be with held from disclosure. In Reg vs, Lewes Justices, Ex Parte Secretary of state for the Home Department [1973] A.C. 388 and D.V National Society ,for the Prevention of Cruelty to Children ; , are cases in point on that matter and needs no reiteration. It would, therefore, be concluded that it would be going too far to lay down that no document in any particular class or one of the categories of cabinet papers or decisions or contents thereof should never, in any circumstances, be ordered to be produced. Lord Keith in Burnnah Oil 's case considered that it would be going too far to lay down a total protection to cabinet minutes. The learned Law Lord at p. 1134 stated that "something must turn upon the subject matter, the persons who dealt with it, and the manner in which they did so. In so far as a matter of government policy is concerned, it may be relevant to know the extent to which the policy remains unfulfilled, so that its success might be prejudiced by disclosure of the considerations which led to it. In that context the time element enters into the equation. Details of an affair which is stale and no longer of topical significance might be capable of disclosure without risk of damage to the public interest. . The nature of the litigation and the apparent importance to it of the documents in question may in extreme cases demand production even of the most sensitive communications to the highest level." Lord Scarman also objected total immunity to Cabinet documents on the plea of candour. In Air Canada 's case, Lord Fraser lifted Cabinet minutes front the total immunity to disclose, although same were entitled to a hi oh degree of protection . ." 841 In Jonathan Cape Ltd. 's case, it was held that, "it seen is that the degree of protection afforded to Cabinet papers and discussions cannot be determined by a single rule of thumb. Some secrets require a high standard of protection for a short time. Others require protection until new political generation has taken over. Lord Redcliff Committee, appointed pursuant to this decision, recommended time gap of 15 years to withhold disclosure of the cabinet proceedings and the Govt. accepted the same. Shanky 's case ratio too discounted total immunity to the Cabinet document as a class and the plea of hampering, freedom and candid advice or exchange of views and opinions was also rejected. It was held that the need for protection depends on the facts in each case. The object of the protection is to ensure the proper working of the Govt. and not to shield the Ministers and servants of the crown from criticism however, intemperate and unfairly based. Pincus J. in Harbour Corp. of Queensland vs Vessey Chemicals Ply Ltd. ; Wilcox J. in Manthal Australia Pty Ltd. vs Minister for industry, Technology and commerce 11987171 ALR 109; Koowarta vs Bjelke Petersen [1988] and took the same view. In Australia, the recognised rule thus is that the blanket immunity of all Cabinet documents was given a go bye. In United States vs Richard M. Nixon ; = 41 Lawyers Ed., 2nd Ed., 1039, a grand jury of the United States District Court for the District of Columbia indicted named individuals, charging them with various offences, including conspiracy to defraud the United States and to obstruct justice; and Mr Nixon, the President of United States was also named as an unindicted coconspirator. The special prosecutor issued a third party subpoena duces tecum directing the President to produce at the trial certain tape recordings and documents relating to his conversations with aides and advisors known as Watergate rapes. The President 's executive privilege again st disclosure of confidential communications was negatived holding that the right to the production of all evidence at a criminal trial has constitutional dimensions under sixth amendment. The fifth amendment guarantees that no person shall be deprived of liberty without due process of law. It was, therefore, held that it is the manifest duty of the court to vindicate those guarantees, and to accomplish that, it is essential that all relevant and admissible evidence be produced. Though the court must weigh the importance of the general privilege of confidentiality of Presidential communications in performance of his responsibilities, it is an inroad on the fair administration of criminal justice. In balancing between the President 's generalised interest in confidentiality and the need for relevant evidence in the litigation, civil or criminal and though the interest in preserving confidentiality is weighty indeed "and entitled to great respect. " Allowing privilege to withhold evidence that is demonstrably relevant in a criminal trial would cut deeply into the guarantee of due process of law and gravely impair the basic function of the courts. A President 's acknowledged need for 842 confidentiality in the communications of his office is general in nature, whereas constitutional need for production of relevant evidence in a criminal proceeding is specific, and central to the fair adjudication of a particular criminal case in the administration of justice. Without access to specific facts a criminal prosecution may be totally frustrated. The President 's broad interest in confidentiality of communications will not be vitiated by disclosure of a limited number of conversations preliminarily shown to have some bearing on the pending criminal cases. If the privilege is based only on the generalized interest in confidentiality, it cannot prevail over the fundamental demands of due process of law in the fair administration of criminal justice. The generalized assertion of privilege must yield to the demonstrated, specific need for evidence in a pending criminal trial. Exemptions were engrafted only to the evidence relating to "the security of the State, diplomatic relations and defence". It was held that "the importance of this confidentiality is too plain to require further discussion. Human experience teaches that those who expect public dissemination of their remarks may well temper candor with a concern for appearances and for their own interest to the detriment of the decision making process. Whatever the nature of the privilege of confidentiality of Presidential communications in the exercise of article 11 powers, the privilege can be said to derive from the supremacy of each branch within its own assigned area of constitutional duties. Certain powers and privileges flow from the nature of enumerated powers, the protection of the confidentiality of Presidential communications has similar constitutional underpinnings. However, neither the doctrine of separation of powers, nor the need for confidentiality of high level communications, without more, can sustain an absolute, unqualified Presidential privilege of immunity from judicial process under all circumstances. The President 's need for complete candor and objectivity from advisers calls for great deference from the courts. However, when the privilege depends solely on the broad, undifferentiated claim of public interest in the confidentiality of such conversations, a confrontation with other values arises. Absent a claim of need to protect military, diplomatic, or sensitive national security secrets, we find it difficult to accept the argument that even the very important interest in confidentiality of Presidential communications is significantly diminished by production of such material for in camera inspection with all the protection that a district court will be obliged to provide. In a clash of public interest that harm shall be done to the nation or the public service by disclosure of certain documents and the administration of justice shall not be frustrated by withholding the document which must be produced if justice is to be done, it is the courts duty to balance the competing interests by weighing in scales, the effect of disclosure on the public interest or injury to administration 843 of justice, which would do greater harm. Some of the important considerations in the balancing act are thus: "in the interest of national security some information which is so secret that it cannot be disclosed except to a very few for instance the state or its own spies or agents just as other counters have. Their very lives may be endangered if there is the slighest hint of what they are doing. In Mark Hosenball. R. vs Home Secretary. ex parte Hosenball , in the interest of national security Lord Denning, M.R. did not permit disclosure of the information furnished by the security service to the Home Secretary holding it highly confidence The public interest in the security of the realm was held so great that the sources of the information must not be disclosed nor should the nature of the information itself be disclosed. There is a natural temptation for people in executive position to regard the interest of the department as paramount forgetting that there is yet another Greater interest to be considered, namely, the interest of justice itself. Inconvenience and justice are often not on speaking terms. No one can suppose that the executive will never be guilty of the sins common to all people. Sometimes they may do things which they on which they on ought not to do or will not do things they ought to do. The court must be alive to that possibility of the executive committing illegality in its process, exercising its powers, reaching a decision which no reasonable authority would have reached or otherwise abuse its powers, etc. If and when such wrongs are suffered or encountered injustice by an individual what would be the remedy? Just as shawl is not suitable for winning the cold, so also mere remedy of writ of mandamus, certiorari, etc. or such action as is warranted are not enough, unless necessary foundation with factual material, in support thereof, are laid. Judicial review aims to protect a citizen from such breaches of power, non exercise of power or lack of power etc. The functionary must be guided by relevant and germane considerations. If the proceeding, decision or order is influenced by extraneous considerations which ought not to have been taken into account, it cannot stand and needs correction, no matter of the nature of the statutory body or status or stature of the constitutional functionary though might have acted in good faith. Here the court in its judicial review, is not concerned with the merits of the decisions, but its legality. It is, therefore, the function of the court to see that lawful authority is not abused. Every communication that passes between different departments of the Govt. or between the members of the same department interse and every order made by a Minister or Head of the Department cannot, therefore, be deemed to relate to the affairs of the state, unless it related to a matter of vital importance, the disclosure of which is likely to prejudice the interest of the state. Confidentiality, candour and efficient public service often bear common 844 mask. Lord Keath in Burmah Oil 's case, observed that the notion that any ' competent or conscientious public servant would be inhibited in the candour of his writings by consideration of the off chance that they might have to be produced inlitigationisgrotesque. The possibility that it impairs the public service was also nailed. This court in section P. Gupta 's case also rejected the plea of hampering candid expression of views or opinion by constitutional functionaries and bureaucrats. In Whitlam vs Australian Consolidated Press [1985] 60 ALR p. 7, the Supreme Court of Australia Capital territory in a suit for damages for defamation, the plaintiff, the former Prime Minister of Australia was called upon to answer certain interrogatories to disclose discussions and words uttered at the meeting of the Cabinet or of the Executive Council at which the plaintiff had been present. The commonwealth intervened and claimed privilege prohibiting the plaintiff to disclose by answering those interrogatories. The claim was based on two grounds: (i) the oath taken by the plaintiff as a member of the Executive Council; and also immunity from disclosing of the Cabinet meetings and both were public policies. It was also contended that it would be in breach of the principle of collective Cabinet responsibility. The court held that the oath taken by the plaintiff did not in itself provide a reason for refusing to answer the interrogatories whether immunity from disclosure would be granted depends upon the balancing of two competing aspects, both of public policy, on the one hand the need to protect a public interest which might be endangered by disclosure, and on the other the need to ensure that the private rights of individual litigants are not unduly restricted. The disclosure of the meeting of the Cabinet or of the Executive Council would not be a breach of the principle of other two responsibilities. Bagehot stated, protection from disclosure is not for the purpose of shielding them from criticism, but of preventing the attribution to them of personal responsibility. It was stated that "I am not required to lay down a precise test of when an individual opinion expressed in Cabinet becomes of merely historical interest". The Cabinet minutes and minutes of discussion are a class. They might in very special circumstances be examined. Public interest in maintaining Cabinet secrecy easily outweighs the contrary public interest in ensuring that the defendant has proper facilities for conducting its case, principally because of the enormous importance of Cabinet secrecy by comparison with the private rights of an individual and also because of the relative unimportance of these answers to the defendant 's case. Answers to interrogatories 87 (vii), (viii) and (ix) were restrained to be disclosed which relates to the members of the Council who expressed doubts as to whether the borrowing was wholly for temporary purpose and to identify such purpose. In Jonathan Cape Ltd. case, Lord Widgery CJ. held that publication of the Cabinet discussion after certain lapse of time would not inhibit free discussion in the Cabinet of today, even though the individuals involved are the same, and the national problems have a distressing similarity with those of a decade ago. It is difficult to say at what point the material 845 loses its confidential character. on the ground that publication will no longer undermine the doctrine of joint Cabinet responsibility. The doctrine of ' joint Cabinet responsibility is not undermined so long as the publication would not "inhibit free discussion in the Cabinet and the court decides the issue '. In Minister for Arts Heritage and Environment and Ors. vs Peko Wallsend Ltd. and Ors. 11987175 ALR 218, Federal Court of Australia General Division, the respondent had mining lease under the existing law. In 1986 the Cabinet decided that portion of the same land covered by KNP Kakadu National Park in the Northern Territory (State 2) was earmarked for inclusion in the World Heritage List (the List) which had been established under the World Heritage Convention (the Convention) and to submit to Parliament aplan of management for the national park which differed from a previous plan "which enabled exploration and mining to take place outside pre existing leases with the approval of the Governor General". Under the Convention on listing, could be made without the "consent" of the State party concerned. The respondents laid the proceedings to restrain the appellants from taking further steps to have Stage 2 nominated for inclusion on the list on the basis that Cabinet was bound by tile rules of natural justice to afford the man opportunity to be heard and that it failed to do so. The Single Judge declared the action as void. Thereafter the National Park and Wildlife conservation Amendment Act, 1987 came into force adding sub section (IA) to section 10 of that Act which provides that "No operations for the recovery of ' minerals shall be carried on in Kakadu National Park". While allowing the appeal, the full court held that the Executive action was not immune from judicial review merely because it was carried out in pursuance of a power derived from the prerogative rather than a statutory source. The decision taken for the prerogative of the Cabinet is subject to judicial review. In Commonwealth of Australia vs Northern Land Council and Anr. [1991] 103 ALR p.267, in a suit for injunction for Northern Land Council (NLC) against the Commonwealth sought production of certain documents including 126 Cabinet notebooks. A Judge of the Federal Court ordered the Commonwealth to produce the notebooks for confidential inspection on behalf of NLC. On appeal it was held that information which may either directly or indirectly enable the party requiring them either to advance his own case or to damage the case of his advisory are necessary. The class of Cabinet papers do not afford absolute protection against disclosure and is not a basis for otherwise unqualified immunity from production. The Commonwealth cannot claim any immunity for public interest immunity from production. The court should decide at the threshold balancing of the public interest in the administration of justice. The court does not have to be satisfied that, as a matter of likelihood rather than mere speculation, the materials would contain evidence for tender at trial. 846 In a democracy it is inherently difficult to function at high governmental level without some degree of secrecy. No Minister, nor it Senior Officer would effectively discharge his official responsibilities if every document prepared to formulates sensitive policy decisions or to make assessment of character rolls of coordinate officers at that level if they were to be made public. Generally assessment of honesty and integrity is a high responsibility. At high co ordinate level it would be a delegate one which would furthered compounded when it is not backed up with material. Seldom material will be available in sensitive areas. Reputation gathered by an officer around him would form the base. If the reports are made known, or if the disclosure is routine, public interest grievously would suffer. On the other hand, confidentiality would augment honest assessment it) improve efficiency and integrity in the officers. The business of the Govt. , when transacted by bureaucrats, even in personal level, it would be difficult to have equanimity if the inner working of the Govt. machinery is needlessly exposed to the public. On such sensitive issues it would hamper the expression of frank and forthright views or opinions. Therefore, it may be that at that level the deliberations and in exceptional cases that class or category of documents get protection in particular, on policy matters. Therefore. the court would he willing to respond to the executive public interest immunity to disclose certain documents where national security or high policy, high sensitivity is involved. In Asiatic Petroleium vs Anglo Persian Oil , the court refused production of the letter concerning the Govt. plans relating to Middle Estern campaigns of the First World was. as claimed by the Board of Admiralty. Similarly, in Duncan vs Cammell Laired, ; , tile House of lords refused disclosure of the design of sub marine. The national defence as a class needs protection in the interest of security of the State. Similarly to keep good diplomatic relations the state documents or official or confidential documents between the Govt. and its agencies need immunity from production. In Council of Civil Service Union vs Minster for Civil Service the Govt. Communications headquarters (GCHQ) functions were to ensure the security of military and official communications and to provide the Govt. with signals intelligence. They have to handle secret information vital to national security. The staff of CCHQ was permitted to be members of the trade union, but litter on instructions were issued, without prior consultation, amending the Staff rules and directed them to dissociate from tile trade union activities. The Previous practice of prior consultation before amendment was not followed. Judicial review 847 was sought of the amended rules pleading that failure to consult the union before amendment amounts to unfair act and summoned the records relating to it. An affidavit of the cabinet Secretary was filed explaining the disruptive activities, the national security, and the union actions designed to damage Govt. agencies. Explaining the risk of participation by the members in further disruption, the House held that executive action was not immune from judicial review merely because it was carried out in pursuance of a power derived from a common law, or prerogative, rather than a statutory source and a minister acting under a prerogative power might, depending upon its subject matter, whether under the same duty to act fairly as in the case of action under a statutory power. But, however, certain information. on consideration of national security, was withheld and the failure of prior consultation of the trade union or its members before issue the amended instruction or amending the rules was held not infracted. In Burmah Oil Co 'section case. at an action by the Oil Company against the Bank for declaration that the sale of units in British Petroleum held by the company at 2.30 Pounds per unit was unconscionable and inequitable. The oil company sought production of the cabinet decision and 62 documents in possession and control of the bank. The state claimed privilege on the basis of the certificate issued by the Minister. House of Lords per majority directed to disclose certain documents which were necessary to dispose of the case fairly. Lord Scarman laid that they were relevant, but their significance was not such a:, to override the public interest objections to their production. Lords Wilberforce dissented and held that public interest demands protection of them. In The Australian Communist Party & Ors. vs Commonwealth & Ors. [1950 51] 83 C.L.R. p. 1, at p. 179, Dixon, J. while considering the claim of secrecy and non availability of the proclamation or declaration of the Governor General in Council based on the advice tendered by the Minister rejected the privilege and held that the court would go into the question whether the satisfaction reached by the Governor General in Council was justified. The court has ,one into the question of competence to dissolve a voluntary or corporate association i.e. Communist Party as unlawful within the meaning of Sec. 5(2) of the Constitutional Law of the Commonwealth. In The Queen vs Toohey ; , the Northern Territory (Self Government) Act, 1978 provides appointment of an Administrator to exercise and perform the functions conferred under the Act. The Town Planning Act, 1979 regulates the area of land to be treated as towns. The Commissioner exercising powers under the Act held that part of the peninsula specified in the schedule was not available for town Planning Act. When it was challenged. there was a change in the law and the Minister filed an affidavit 848 claiming the privilege of certain documents stating that with a view to preserve the land to the original, the Govt. have decided to treat that the land will continue to be held by or on behalf of the originals. Gibbs,. held that under modern conditions, a responsible Govt., Parliament could not always be relied on to check excesses of power by the Crown or its Ministers. The court could ensure that the statutory power is exercised only for the purpose it is granted. The secrecy of the counsel of the Crown is by no means complete and if evidence is available to show that the Crown acted for an ulterior purpose, it is difficult to see why it should not be acted upon. It was concluded thus: "In my opinion no convincing reason can be suggested for limiting the ordinary power of the courts to inquire whether there has been a proper exercise of a statutory power by giving to the Crown a special immunity from review. If the statutory power is granted to the Crown for one purpose, it is clear that it is not lawfully exercised if it is used for another. The courts have the power and duty to ensure that statutory powers are exercised only in accordance with law". The factors to decide the "public interest immunity would include" (a) where the contents of the documents are relied upon, the interests affected by their disclosure; (b) where the class of documents is invoked, where the public interest immunity for the class is said to protect; (c) the extent to which the interests referred to have become attenuated by the passage of time or the occurrence of intervening events since the matters contained in the documents themselves came into existence; (d) the seriousness of the issues in relation to which production is sought; (e) the likelihood that production of the documents will affect the outcome of the case; (f) the likelihood of injustice if the documents are not produced. In President Nixon 's case, the Supreme Court of the United States held that it is the court 's duty to construe and delineate claims arising under express powers, to interpret claims with respect to powers alleged to derive from enumerated powers of the Constitution. In deciding whether the matter has in any measure been committed by the Constitution to another branch of Government, or whether the action of that branch exceeds whatever authority has been committed, is itself a delicate exercise in constitutional interpretation, and is the responsibility of the court as ultimate interpreter of the Constitution. Neither the doctrine of separation of powers, nor the need for confidentiality of high level communications, without more, can sustain an absolute, unqualified Presidential privilege of immunity from judicial process under all circumstances. The separation of powers given in the Constitution were not intended to operate with absolute independence when essential criminal statute would upset the constitutional balance of "a workable government" and gravely impair the role of the courts under article III. The very integrity of the judicial system and public confidence in the system depend on full 849 disclosure of all the facts, within the framework of the rules of evidence. To ensure that justice is done, it is imperative to the function of courts that compulsory process be available for the production of needed evidence. The afore discussion lead to the following conclusions. The President while exercising the Executive power under Art.73 read with article 53, discharges such of those Powers which are exclusively conferred to his individual discretion like appointing the Prime Minister under article 75 which are not open to judicial review. The President exercises his power with the aid and advice of the Council of Ministers with the Prime Minister at the head under article 74 (1). They exercise the power not as his delegates but as officers subordinate to him by constitutional mechanism envisaged under article 77 and express in the name of President as per Rules of Business made under Art.77(3). They bear two different facets (i) the President exercise his power on the aid and advice; (ii) the individual minister or Council of Minister with the Prime Minister at the head discharge the functions without reference to the President. Undoubtedly the Prime Minister is enjoined under article 78 to communicate to the President all decisions of the Council of Minister relating to the administration of the affairs of the Union and proposals for legislation and to furnish such information relating to the administration or reconsideration by the Council of Ministers if the President so requires and submit its decisions thereafter to the President. That by itself is not conclusive and does not get blanket public interest immunity from disclosure. The Council of Ministers though shall be collectively responsible to the House of the People, their acts are subject to the Constitution, Rule of law and judicial review are parts of the scheme of the Constitution as basic structure and judicial review is entrusted to this Court (High Court under Art.226). When public interest immunity against disclosure of the state documents in the transaction of business by Council of Ministers of the affairs of State is made, in the clash of those interests, it is the right and duty of the court to weigh the balance in the scales that the harm shall not be done to the nation or the public service and equally of the administration of justice. Each case must be considered on its backdrop. The President has no implied authority under the Constitution to withhold the documents. On the other hand it is his solemn constitutional duty to act in aid of the court to effectuate judicial review. The Cabinet as a narrow centre of the national affairs must be in a possession of all relevant information which is secret or confidential. At the cost of repetition it is reiterated that information relating to national security, diplomatic relations. internal security or sensitive diplomatic correspondence per se are class documents and that public interest demands total immunity from disclosure. Even the slightest divulgence would endanger the lives of the personnel engaged in the services etc. The maxim Salus Popules Cast Supreme Lax which means that regard 850 for public welfare is the highest law, is the basic postulate for this immunity. Political decisions like declaration of emergency under article 356 are not open to judicial review but it is for the electorate at the polls to decide the executive wisdom. In other areas every communication which preceded from one officer of the State to another or the officers inter se does not necessarily per se relate, to the affairs of the State. Whether they so relate has got to be determined by reference to the nature of the consideration, the level at which it was considered, the contents of the document or class to which it relates to and their indelible impact on public administration or public service and administration of justice itself. Article 74(2) is not a total bar for production of the records. Only the actual advice tendered by the Minister or Council or Ministers to the President and the question whether any, and if so, what ad ice was tendered by the Minister or Council of ministers to the President, shall not be enquired into by the court. In other words the bar of judicial review is confined to the factum of advice, its extent, ambit and scope but not the record i.e. the material on which the advice is founded. In S.P. Gupta 's case (his court held that only the actual advice tendered to the President is immuned from enquiry and the immunity does not extend to other documents or records which form part of the advice tendered to the President. There is discernible modern trends towards more open government than was prevalent in the past. In its judicial review the court would adopt in camera procedure to inspect the record and evaluate the balancing act between the competing public interest and administration of justice. It is equally the paramount consideration that justice should not only be done but also would be publicly recognised as having been done. Under modern conditions of responsible government, Parliament should not always he relied on as a check on excess of power by the Council of Ministers or Minister. Though the court would not substitute its views to that of the executive on matters of policy, it is its undoubted power and duty to see that the executive exercises its power only for the purpose for which it is granted. Secrecy of the advice or opinion is by no means conclusive. Candour, frankness and confidentiality though are integral facets of the common genus i.e. efficient governmental functioning, per se by no means conclusive but be kept in view in weighing the balancing act. Decided cases how that power often was exercised in excess thereof or for an ulterior purpose etc. Sometimes the public service reasons will be decisive of the issue, but they should never prevent the court from weighing them against the injury which would be suffered in the administration of justice if the documents was not to be disclosed, and the likely injury to the cause of justice must also be assessed and weighed. Its weight will very according to the nature of the proceedings in which disclosure is sought, level at which the matter was considered , the subject matter of ' consideration, the 851 relevance of the documents and the degree of likelihood that the document will be of importance in the litigation. it striking the balance, the court may always, if it thinks it necessary, itself inspect the documents. It is therefore the constitutional, legitimate and lawful power and duty of this court to ensure that powers constitutional statutory or executive are exercised in accordance with the constitution and the law. This may demand though no doubt only in limited number of cases yet the inner workings of government may be exposed to public gaze. The contentions of Attorney General and Solicitor General that the inner workings of the government would be exposed to public gaze, and that some one who would regard this as an occasion without sufficient material to ill informed criticism is no longer relevant. Criticism, calculated to improve teh nature of that working as affecting the individual citizen is welcome. In so far as unpublished government policy is concerned, it may be relevant to know the extent to which the policy remains unfulfilled, so that its success might be prejudiced by disclosure of the considerations which led to it. In that context the time element becomes relevant. Details of affairs which are stale and no longer of significance might be capable of disclosure without risk of damage to the public interest .But depending on teh nature of he litigation and the apparent importance to it of the documents in question may in extreme case demand production even of the most be considered on its backdrop. President has no implied authority to withhold the document. On the other hand it is his solemn constitutional duty to act in aid of the court to effectuate judicial review. The Cabinet as a narrow centre of the national affairs must be in possession of all relevant information which is secret or confidential. Decided cases on comparable jurisdiction referred to earlier did held that executive had no blanket immunity to withhold cabinet proceedings or decisions. We therefore hold that the communication decisions or policy to teh President under article 74(1) gives only protection by article 74(2) of judicial review of the actual advice tendered to the president of India. The rest of the file and all the records forming part thereof are open to in camera inspection by this court. Each case must be considered on its own facts and surrounding scenario and decision taken thereon. In Jyoti Prokash Mitter vs Chief Justice Calcutta High Court ; the question was whether the President exercised the powers under article 217(3) of the Constitution was his discretionary one or acts with the aid and advice of Council of Ministers. The Constitution Bench held that the dispute as be decided by the President. The satisfaction on the correctness of age is that of he President. Therefore the matter has to be placed before the President. The 852 President has to give an opportunity to the judge to place his version, before teh President considers and decides the age of the judge. Accordingly it would be the personal satisfaction of the President and not that of the Council of Ministers. In the latter judgement sequential to this judgement in Union of India vs Jyoti Prakash [1971] 3SCR 4831, it was held that the mere fact that the President was assisted by teh machinery of Home Affaris Ministry in serving notices or receiving communications addressed to the learned judge cannot lead to an inference that he was guided review, this court upheld the decision of the President. In this context it was held that the orders of the president, even though made final can be set aside by court in an appropriate case though the Court will not sit in appeal over order and will not substitute its own opinion to that of the president by weighing the evidence placed before the president. The third category of case namely the decision taken at level of the minister or by the authorised Secretary at the Secretary level though expressed in the name of the President is not immured from judicial scrutiny and are to be produced and inspected by the court. If public interest immunity under article 74(2) or Sec 123 of Evidence ACt is claimed, the court would first consider it in camera and decide the issue as indicated above. Teh immunity must not be claimed on administrative route and it must be for valid, relevant and strong grounds or reasons stated in the affidavit filed in that behalf. Having perused the file and given our anxious considerations. We are of the view that on th facts of the case and in the light of the view we have taken, it is not necessary to disclose the contents of the records to the petitioner or his counsel. The first schedule of the business rules provide constitution of Cabinet Standing committees with function specified therein. Item 2 is "Cabinet Committee on appointments". Which is empowered to consider in item 1 all recommendations and to take decisions on appointments specified in the Annexure to the first Schedule. Therein under the residuary heading all other appointments item 4 provides that all other appointments which are made by the Govt. of India or which required the approval of the Govt. of India carrying a salary excluding allowances or a maximum salary excluding allowances of less than Rs. 5, 300 require the approval of the Cabinet Sub Committee. As per item 37 of the Third Schedule read with Rule 8 of the business Rules it shall be submitted to the Prime Minister for appointment. Mr. Harish Chander was appointed as judicial Member on October 29, 1982. He was later on appointed on january 15, 1991 as Senior Vice President of 853 CEGAT after the direction were issued by this Court, he was appinted as the President Mr. Jain assailed the validity of his appointment on diverse grounds. It was pleaded and Sri Thakur, his learned senior counsel, argued that as per the convention, a sitting or a retired judge of the High JCourt should have beenappointed as president of the CEGAT in consultation with the Chief Jusftice ofIndia and Harish Chander has been appointed in disregafrd of the express directions of this Court, It was, therefore, contended that it was in breach jof the judicial orderpassed by this Court. It was therefore, contended that it was in breach of the judicial orderpassed by this Court under Art, 32 Secondly it was contended that before the Actwas made a positive commitment was made time and again by the Govt. on the floor of the House that judicial independence of CEGAT is sifne qua non to sustain the confidence of the litigant public. The appointment of any person other thansitting or a retired judge of the High Court as President would be in its breach. Inits support it was cited the instance of Mr. Kalyansundaram as being the seniormost member, his claim should have been considered before Harish Chander was appointed. Sri Thakur further argued that when recommendations of HarishChander for appointment as a Judge of the Delhi High Court was turned down by the Chief Justice of India doubting his integrity, the appointment of such personof doubtful integrity as President would erode the independence of the judiciary and undermine the confidence of the litigant public in the efficacy of judicial adjudication, even though the rules may permit such an appointment. The rules are ultra vires of the basic structure, namely, independence of judiciary, Sri Thakur, to elaborate these conditions, sought permission to peruse the record. Sri Venugopal , the learned Senior Counsel for Harish Chander argued that his client being the senior Vice President was fvalidly appointed as President of the CEGET. Harish Chander has an excellent and impeccable record of service without any adverse remarks. His recommendation for appointment as a judge of the Delhi High Court, was "apparently dropped" which would not be construed to be adverse to Harish Chander. On behalf ofCentral Govt. it was admitted in thecounter affidavit that since rules do not envisage consultation with the Chidf Justice consultation was not done. It was argued that the Govt. have prerogative to appoint any member or Vice Chairman or Senior Vice President as President of CEGAT. Harish Chander being the senior Vice President, his case was considered and was recommended by the cabinet sub Committee for appointment. Accordingly he was appointed. Under section 129 of the Customs Act 52 of 1962 for short the Act. The Central Govt. shall constitute the CEGAT consisfting of as many judicial and technical members as it thinks fit to exercise the powers and discharge the functions conferred by the Act. Subject to making the statement of the case for 854 decision on any question of law arising out of orders of the CEGAT by the High Court under section 130: it) resolve conflict of decisions by this Court under section 130A, the orders of the CEGAT by operation of sub sectiton (4) of Section 129B. "shall be final". The President of CEGAT is the controlling authority as well as Presiding authority of the tribunals constituted at different places. Constitution of the CEGAT came to be made pursuant to the 5th Schedule of the Finance Act 2 of 1980 with effect from October 11, 1982. The President of India exercising the power under proviso it) article 309 of the Constitution made the Rules. Rule 2(c) defined "member" means a member of the Tribunal and unless the context otherwise requires, includes the President, the Senior Vice President, a Vice President, a judicial member and a technical member. 2(d) defines "President" means the President of the Tribunal. Rule 6 prescribes Method of Recruitment. Under Sub rule (1) thereof for the purpose of recruitment to the Post of member, there shall be a Selection Committee consisting of (i) a judge of the Supreme Court of India as nominated by the Chief Justice of India to preside over as Chairman; (ii) the Secretary to the Govt. of India in the Ministry of Finance, (Department of Revenue); (iii) the Secretary to the Govt. of India in the Ministry of Law (Department of legal Affairs); (iv) the President; (v) such other persons, not exceeding two, as the Central Govt. may nominate. Sub Rule (4) Subject to the provisions of Section 10, the Central Govt. shall, after taking into consideration the recommendations of the Selection Committee. make a list of persons selected for appointment as members. Rule 10 provides thus: (1) The Central Govt. shall appoint one of the member to be the President. (2) Notwithstanding anything contained in rule 6 a sitting, or retired judge of a High Court may also be appointed by the Central Government use member and President simultaneously. (3) Where a member (other than a sitting or retired judge of a High Court is appointed as President, he shall hold the office of the President for a period of three years or till he attains the age of 67 years, whichever is earlier. (4) Where a serving judge of a High Court is appointed as a member and President, he shall hold office as President for a period of three years from the date of his appointment or till he attains the age of 62 years. whichever is earlier. Provided that where a retired judge of a High Court above the age of 62 years is appointed as President. he shall hold office for such period not exceeding, three 855 years as may he determined by the Central Govt. At the time of appointment or reappointment. The Jha Committee in its report in para 16(22) recommended to constitute an independent Tribunal for excise or customs taking away the appellate powers from the Board. The Administrative Inquiry Committee in its report 1958 59 in para 4.15 also recommended that every effort should be made to enhance the prestige of the appellate tribunal in the eyes of the public which could be achieved by the appointment of a High Court Judge as the President. They, therefore, recommended to appoint the serving or retired High Court Judge as President of the Tribunal for a fixed tenure. In Union of India vs Pares Laminates Pvt. Ltd. Court), this Court held that GEGAT is a judicial body and functions as court within the limits of its jurisdiction. As a fact the Minister time and again during the debates when the Bill was under discussion assured both the Houses of Parliament that the CEGAT would be a judicial body presided over by a High Court Judge. In Keshwa nand Bharti vs Union of India [1973] Supp. SCR 1, Mathew and Chandrachud, JJ. held that rule of law and judicial review are basic features of the Constitution. It was reiterated in Waman Rao vs Union of India ; , As per directions therein the Constitution Bench reiterated in Sri Raghunathrao Ganpatrao vs Union of India ; In Krishna Swami vs Union of India at 649 para 66 one of us (K.R.S.J.) held that judicial review is the touchstone and repository of the supreme law of the land. Rule of law as basic feature permeates the entire constitutional structure Independence of Judiciary is sine quo non for the efficacy, of the rule of law. This court is the final arbiter of the interpretation of the constitution and the law. In S.P. Sampat Kumar vs Union of India & Ors.[1987] 1 SCR 435. this Court held that the primary duty of the judiciary is to interpret the Constitution and the laws and this would preeminently be a matter fit to be decided by the judiciary, as judiciary alone would be possessed of expertise in this field and secondly the constitutional and legal protection afforded to the citizen would become illusory, if it were left to the executive to determine the legality of its own action. The Constitution has, therefore created an independent machinery i.e. judiciary to resolve the disputes which is vested with the power of judicial review to determine the legality of the legislative and executive actions and to ensure compliance with the requirements of law on the part of the executive and other authorities. This function is discharged by the judiciary by exercising the power of judicial review which is a most potent weapon in the hands of the judiciary for maintenance of the rule of law. The power of judicial review is an integral part of our constitutional system and without it, there will be no government of laws and the rule of law would become a teasing illusion and a promise of unreality. The judicial review, therefore, is a basic and essential feature of the Constitution and it cannot be 856 abrogated without affecting the basic structure of the Constitution. The basic and essential feature of judicial review cannot be dispensed with but it would be within the competence of Parliament to amend the Constitution and to provide alternative institutional mechanism or arrangement forjudicial review, provided it is no less efficacious than the High Court. It must, therefore, be read as implicit in the constitutional scheme that the law excluding the jurisdiction of the High Court under articles 226 and 227 perrmissible under it, must not leave a void but it must set up another effective institutional mechanism or authority and vest the power of judicial review in it which must be equally effective and efficacious in exercising the power of judicial review. The Tribunal set up under the Administrative Tribunal Act, 1985 was required to interpret and apply articles 14, 15, 16 and 311 in quite an large number of cases. Therefore, the personnel manning the administra tive tribunal in their determinations not only require judicial approach but also knowledge and expertise in that particular branch of constitutional and administrative law. The efficacy of the administrative tribunal and the legal input would undeniably be more important and sacrificing the legal input and not givino it sufficient weityhtage would definitely impair the efficacy and effectiveness of the Administrative Tribunal. Therefore, it was held that the appropriate rule should be made to recruit the members; and consult the Chief Justice of India in recommending appointment of the Chairman, Vice Chairman and Members of the Tribunal and to constitute a committee presided over by judge of the Supreme Court to recruit the members for appointment. In M.B. Majiundar vs Union of lndia ; , when the members of CAT claimed parity of pay and superannuation as is available to the Judges of the High Court, this court held that they are not on par with the judges but a separate mechanism created for their appointment pursuant to article 323 A of the Constitution. Therefore, whatwas meant by this court in Sampath Kumar 's ration is that the Tribunals when exercise the power and function, the Act created institutional alternative mechanism or authority to adjudicate the service disputations. It must be effective and efficacious to exercise the power of judicial review. This court did not appear to have meant that the Tribunals are substitutes of ' the High Court under articles 226 and 227 of the Constitution. J.B. chopra vs Union of lndia , merely followed the ratio of Sampath Kumar. The Tribunals set up under articles 323A and 323B of the Constitution or under an Act of legislature are creatures of the Statute and in no case can claim the status as Judges of the High Court or parity or as substitutes. However, the personnel appointed to hold those oft7ices under the State are called upon to dischargee judicial or quasi judicial power. So they must have judicial approach and also knowledge 857 and expertise in that particular branch of constitutional, administrative and tax laws. The legal input would undeniably be more important and sacrificing the legal input and not giving it sufficient weightage and teeth would definitely impair the efficacy and effectiveness of the judicial adjudication. It is, therefore, necessary that those who adjudicate upon these matters should have legal expertise, judicial experience and modicum of legal training as on many an occasion different and complex questions of law which baffle the minds of even trained judges in the High Court and Supreme Court would arise for discussion and decision. In Union of India vs Sankal Chand Himatlal Sheth & Anr. ; at 442, this court at p. 463 laid emphasis that, "independence of the judiciary is a fighting faith of our Constitution. Fearless justice is the cardinal creed of our founding document. It is indeed a part of our ancient tradition which has produced great judges in the past. In England too, judicial independence is prized as a basic value and so natural and inevitable it has come to be reorded and so ingrained it has become in the life and thought of the people that it would be regarded an act of insanity for any one to think otherwise. " At page 471 it was further held that if the beacon of the judiciary is to remain bright, court must be above reproach, free from coercion and from political influence. At page 491 it was held that the independence of the judiciary is itself a necessitous desideratum of public interest and so interference with it is impermissible except where other considerations of public interest are so strong, and so exercised as not to militate seriously against the free flow of public justice. Such a balanced blend is the happy solution of a delicate, complex, subtle, yet challenging issue which bears on human rights and human justice. The nature of the judicial process is such that under coercive winds the flame of justice flickers, faints and fades. The true judge is one who should be beyond purchase by threat or temptation, popularity or prospects. To float with the tide is easy, to counter the counterfeit current is uneasy and yet the Judge must be ready for it. By ordinary obligation for written reasoning, by the moral fibre of his peers and elevating tradition of his profession, the judge develops a stream of tendency to function 'without fear or favour, affection or ill will ', taking care, of course, to outgrow his prejudices and weaknesses, to read the eternal verities and enduring values and to project and promote the economic, political and social philosophy of the Constitution to uphold which his oath enjoins him. In Krishnaswaini 's case in para 67 at p. 650, it was observed that "to keep the stream of justice clean and pure the judge must be endowed with sterling character, impeccable integrity and upright behaviour. Erosion thereof would undermine the efficacy of rule of law and the working of the constitution itself. In Krishna Sahai & Ors.v. State of U.P. & Ors.[1990] 2 SCC 673, this court 858 emphasised its need in constitution the U.P. Service Tribunal that it would he appropriate for the State of Uttar Pradesh to change it manning and a sufficient number of people qualified in law should he on the Tribunal to ensure adequate dispensation of justice and to maintain judicial temper in the functioning of the Tribunal". In Rajendra Singh Yadav & Ors vs State of U.P. & Ors. [1990] 2 SCC 763, it was further reiterated that the Services Tribunal mostly consist of Administrative Officers and the judicial element in the manning part of the Tribunal is very small. The disputes require judicial handling and the adjudication being, essentially judicial in character it is necessary that adequate number of judges of the appropriate level should man the Services Tribunals. This would create appropriate temper and generate the atmosphere suitable in an adjudicatory Tribunals and the institution as well would command the requisite confidence of the disputants. In Shri Kumar Padma Prasad vs Union of India & Ors. , this court emphasised that, "Needless to say that the independence, efficiency and integrity of the judiciary can only he maintained by selecting the best persons in accordance with the procedure provided under the Constitution. The objectives enshrined in the constitution cannot be achieved unless the functionaries accountable for making appointments act with meticulous care and utmost responsibility". In a democracy governed by rule of law surely the only acceptable repository of absolute discretion should be the courts. Judicial is the basic and essential feature of the Indian constitutional scheme entrusted to the judiciary. It cannot he dispensed with by creating tribunal under article 323A and 323B of the Constitution. Any institutional mechanism or authority in negation of judicial review is destructive of basic structure. So long as a the alternative institutional mechanism or authority set up by an Act is not less effective than the High court, it is consistent with constitutional scheme. The faith of the people is the bed rock on which the edifice of judicial review and efficacy of the adjudication are founded. The alternative arrangement must, therefore, be effective and efficient. For inspiring confidence and trust in the litigant public they must have an assurance that the person deciding their causes is totally and completely free from the influence or pressure from the Govt. To maintain independence and imperativity it,is necessary that the personnel should have at least modicum of legal training, learning and experience. Selection of competent and proper people instill people 's faith and trust in the office and help to build up reputation and acceptability. Judicial independence which is essential and imperative is secured and independent and impartial administration of justice is assured. Absence thereof only may get both law and procedure wronged and wrong headed views of the facts and may likely to give rise to nursing grievance of injustice. Therefore, functional fitness, 859 experience at the liar and aptitudinal approach are fundamental for efficient judicial adjudication. Then only as a repository of the confidence. as its duty, the tribunal would properly and efficiently interpret the law and apply the law to the given set of facts. Absence thereof would be repugnant or derogatory to the constitution. The daily practice in the courts not only gives training to Advocates to interrect the rules but also adopt the conventions of courts. In built experience would play vital role in the administration of justice and strengthen and develop the qualities, of intellect and character, forbearance and patience, temper and resilience which are very important in the practice of law. Practising Advocates from the Bar generally do endow with those qualities to discharge judicial functions. Specialised nature of work gives them added advantage and gives benefit to broaden the perspectives. "Judges " by David Pannick (1987 Edition), at page 50, stated that, "we would not allow a man to perform a surgical operation without a thorough training and certification of fitness. Why not require as much of a trial judge who daily operates on the lives and fortunes of others". This could be secured with the initial training given at the Bar and later experience in judicial adjudication. No one should expect expertise in such a vast range of subjects, but famliarity with the basic terminology and concept coupled with knowledge of trends is essential. A premature approach would hinder the effective performance of judicial functions. Law is a serious matter to be left exclusively to the judges, because judges necessarily have an important role to play in making and applying the law There is every reason for ensuring that their selection, training and working practice facilitate them to render their ability to decide the cases wisely on behalf of the community. If judges acts in injudicious manner, it would often lead to miscarriage of justice and a brooding sense of injustice rankles in an agrieved person. The CEGAT is a creature of the statute. yet intended to have all the flavour of judicial dispensation by independent members and President. Sri Justice Y.V. Chandrachud, Chief Justice of India, in his letter dated October 5, 1982 stated that "Govt. had Created a healthy convention of providing that the Tribunals will be headed by a President who will be a sitting or a retired judge of the High Court. Added to that is the fact that selection of the members of the Tribunal is made by a Committee headed by a judge of the Supreme Court. I am sure that the Tribunal will acquire higher reputation in the matter of its decision and that the litigants would look upon it as an independent forum to which they can turn in trust and confidence". This court to elongate the above objective directed the Govt. to show whether the convention is being followed in appointment of the President of 860 CEGAT and further directed to consider appointment of a Sr. Judge or a retired Chief Justice of the High Court as its President. Admittedly Chief justice of India was not consulted before appointing Sri harish Chander as President. Several affidavits filed on behalf of the Govt. do not also bear out whether the directions issued by this court were even brought to the notice of the Hon 'ble Prime Minister before finalising the appointment of Sri Harish Chander. The solemn assurance given to the Parliament that the Tribunal bears a judicious blend by appointment of a High Court Judge as President was given a go bye. While making statutory rules the executive appears to have made the appointment of it sitting or retired High Court Judge as President unattractive and directory frustrating the legislature animation. A sitting Judge when is entitled to continue in his office upto 62 years would he he willing to opt to serve as President, if his superannuation as President is conterminous with 62 years. He would be attracted only it he is given extended three years more tenure after his superannuation. But Rule 10(3) says that the total period of the tenure of the President by a sitting, or retired judge is "a period of three years or till he attains the age of 62 years, whichever is earlier", i.e. coterminus with superannuation as a Judge of the High Court. The proviso is only discretionary at the whim of the executive depleting independence and as an exception to the rule. Thereby practically tile spirit of the Act, the solemn assurance given by the Govt. to the Parliament kindling hope in the litigant public to have a sitting or a retired judge appointed as President has been frustrated deflecting the appointment of a judicially trained judge to exercise judicial review. We are constrained to observe that the rules, though statutory, were so made as to defeat the object of the Act. The question then is: can and if yes, whether this court would interfere with the appointment made of Flarish Chander as President following the existing, rules. Judicial review is concerned with whether the incumbent possessed of qualification for appointment and the manner in which the appointment came to be made or the procedure adopted whether fair, just and reasonable. Exercise of judicial review is to protect the citizen from the abuse of the power etc. by an appropriate Govt. or department etc. In our considered view granitic the compliance of the above power of appointment was conferred on the executive and confided to be exercised wisely. When a candidate was found qualified and eligible and was accordingly appointed by the executive to hold an office as a Member or Vice President or President of a tribunal. we cannot sit over the choice of the selection, but it be left to tile executive to select the personnel as per law or procedure in this behalf. In Sri Kumar Prasad case K.N. Srivastava, M.J.S., Legal Remembrance, Secretary to law and Justice. of Mozoram did not possess the requisite qualifications for appointment as a Judge of the High Court prescribed under Art.217 of the Constitution, namely, that he was not a District Judge for 10 years in State Higher Judicial Service, which is a mandatory 861 requirement for a valid appointment. Therefore, this Court declared that he was not qualified to be appointed as a judge of the High Court and quashed his appointment accordingly. The facts therein are clearly glaring and so the ratio is distinguishable. Sri Harish Chander, admittedly was the Sr. Vice President at the relevant time. The contention of Sri Thakur of the need to evaluate the comparative merits of Mr. Harish Chander and Mr. Kalyansundaram a senior most Member for appointment as President would not be one into in a public interest litigation. Only in a proceedings initiated by an aggrieved person it may be open to be considered. This writ petition is also not a writ of quo warranto. In service jurisprudence it is settled law that it is for the aggrieved person i.e. non appointee it) assail the legality of the offending action. Third party has no locus stand it to canvass the legality or correctness of the action. Only public law declaration would be made at the behest of the petitioner, a public spirited person. But this conclusion does not give quietus at the journey 's end. There are persistent allegations against malfunctioning of the CEGAT and against Harish Chander himself. Though we exercised self restraint to assume the role of an Investigator to charter out the ills surfaced, suffice to say that the union Govt. cannot turn a blind eye to the persistent public demands and we direct to swing into action, an indepth enquiry made expeditiously by an officer or team of officers to control the mal functioning of the institution. It is expedient that the Govt. should immediately take action in the matter and have fresh look. It is also expedient to have a sitting or retired senior Judge or retired Chief Justice of a High Court to be the President. The rules need amendment immediately. A report on the actions taken in this behalf be submitted to this court. Before parting with the case it is necessary to express our anguish over the ineffectivity of the alternative mechanism devised for judicial reviews. The Judicial review and remedy are fundamental rights of the citizens. The dispensation of justice by the tribunals is much to be desired. We are not doubting the ability of the members or Vice Chairmen (non Judges) who may be experts in their regular service. But judicial adjudication is a special process and would efficiently be administered by advocate Judges. The remedy of appeal by special leave under article 136 to this Court also proves to be costly and prohibitive and far flung distance too is working as constant constraint to litigant public who could ill afford to reach this court. An appeal to a Bench of two Judges of the respective High Courts over the orders of the tribunals within its territorial jurisdiction on questions of law would as usage a growing feeling of injustice of those who can ill effort to approach the Supreme Court. Equally the need for recruitment of members of the Bar to man 862 the Tribunals as well as the working system by the tribunals need fresh look and regular monitoring is necessary. An expert body like the Law Commission of India would make an indepth study in this behalf including the desirability to bring CEGAT under the control of Law and Justice Department in line with Income tax Appellate Tribunal and to make appropriate urgent recommendations to the Govt. of India who should take remedial steps by an appropriate legislation to overcome the handicaps and difficulties and make the tribunals effective and efficient instruments for making Judicial review efficacious, inexpensive and satisfactory. The writ petitions are disposed of with the above direction, but in the circumstances with no order as to costs. T.N.A. Petitions disposed of.
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In a letter from December 26, 1991, the petitioner, who is the editor of Excise Law Times, wrote to the Chief Justice of India. He said that since the head of the Customs, Excise and Gold Control Appellate Tribunal (CEGAT) retired in 1985, no one had been appointed to replace him. This was causing problems for the Tribunal's work. He also claimed that CEGAT was not working properly and asked for immediate action to appoint a new head. He also wanted an investigation into the problems at CEGAT. The letter was treated as a public interest lawsuit. On February 25, 1992, the Court ordered the Union of India to quickly appoint a new head of CEGAT, preferably a senior judge from a High Court. After the Court's orders, Respondent No. 3, who was first appointed as a legal member and later as Senior Vice President of the Tribunal, was made President. The petitioner then filed another lawsuit challenging the appointment of the President. He wanted the appointment canceled because: (1) It broke the Court's order from February 25, 1992. The usual practice was to appoint a current or retired High Court Judge as President, after talking with the Chief Justice of India. Even though High Court Judges were available, no real effort was made to get one for the job. (2) Before the law was made, the government repeatedly promised that CEGAT's independence was vital for the public to trust it. Appointing someone other than a High Court Judge would break that promise. (3) The Chief Justice of India had previously rejected Respondent No. 3 as a Judge of the Delhi High Court, questioning his honesty. Appointing such a person as President of CEGAT would hurt the public's faith in the fairness of legal decisions, even if the rules allowed such an appointment. The petitioner also asked that Rules 10(1)(3) and (4) of the CEGAT Members (Recruitment and Conditions of Service) Rules, 1987 be struck down as violating Article 43 of the Constitution. He said these rules went against the basic idea of the Constitution, which is the independence of the courts. On May 4, 1992, the Court issued another order. At the next hearing, the file used to make the decision about the President's appointment was brought to Court. However, the Additional Solicitor General (a government lawyer) argued that the Court could not look at the file because he wanted to claim "privilege" (the right to keep certain information secret). So, following the Court's instructions, the Finance Secretary and the Minister of State for Finance filed sworn statements. They claimed privilege under Sections 123 and 124 of the Evidence Act and Article 74 (2) of the Constitution. They said the government had no problem with the Court reviewing the file, but they claimed privilege to keep the contents of the file secret from the petitioner. The Union of India argued that a Cabinet Sub-Committee (a group of government ministers) had approved the appointment of Respondent No. 3 as President of CEGAT. They said that under Article 77(3) and 74(1), the President made the appointment. The file contained Cabinet documents that were part of the process of giving advice to the President. Section 123 of the Evidence Act and Article 74 (2) prevented the Court from asking about the advice given to the President, so the documents should not be revealed. Revealing the documents would harm the public by preventing honest and open discussions among government officials and the Cabinet Sub-Committee, seriously damaging public service. Respondent No. 3 argued that (1) he had a great record of service with no problems. The fact that he wasn't appointed as a Judge of the Delhi High Court shouldn't be held against him. (2) The government had the right to appoint any member, Vice Chairman, or Senior Vice President as President. Since Respondent No. 3 was the Senior Vice President, the Cabinet Committee considered and recommended him for the job. Therefore, his appointment as President was valid. When resolving the lawsuits, the Court stated, according to Justice Ramaswamy: 1. The government's claim to keep the documents secret is not valid. However, after reviewing the file carefully, the Court believes that it's not necessary to reveal the contents of the records to the petitioner or his lawyer. 1.1. Section 123 of the Evidence Act allows the government to claim privilege, meaning they don't have to reveal unpublished official state documents if it's in the public's interest. The initial claim for privilege should be made in a sworn statement, usually by the Minister involved, or by the department head if the Minister is unavailable. The statement should say that the documents have been carefully reviewed and that the person making the statement believes that revealing the documents would harm the public interest, with valid reasons to support this belief. The claim for privilege should not be a routine administrative matter or a way to avoid inconvenience, embarrassment, or difficulty in defending a case, as these are reasons to reveal the documents. 1.2. When claiming public interest privilege to keep state documents secret, the Minister has a duty to explain in a sworn statement why they believe the documents should not be revealed. If the Minister refuses to file a sworn statement or produce the documents, relying on their oath of secrecy, the Court may draw its own conclusions based on the law. The oath of office and secrecy in Article 75(4) and Schedule III of the Constitution does not excuse the Minister from explaining why the documents should be kept secret or from producing them when ordered by the Court. Instead, the Minister has a duty to obey the Court's orders and assist the government. If the Court is satisfied with the sworn statement and the reasons for withholding the documents, it may issue an appropriate order. If the Court still wants to review the record to determine if the reasons justify keeping the documents secret, it will examine the record privately to decide if the public interest supports withholding the documents. Under Section 162 of the Evidence Act, the Court has the final say on whether to allow an objection to revealing documents under Section 123. The Court is not bound by the statements in the Minister's or department head's sworn statement and can weigh the harm to the state or public service against the risk of injustice. The key question for the Court is whether the public interest in keeping the documents secret is strong enough to outweigh the litigant's right to present relevant evidence in court. In balancing these interests, the Court must consider both the public interest in preventing harm to the nation or public service and the public interest in ensuring that justice is not obstructed by withholding necessary documents. The Court must decide if the document relates to state affairs or the public service and, if so, whether the public interest in keeping it secret is so strong that it outweighs the interest in administering justice. 1.7. Not every communication between state officials relates to state affairs. This must be determined by considering the nature of the communication, the level at which it was considered, the contents of the document, and its impact on public administration or the administration of justice. The power to issue orders for document discovery is both explicit and inherent in the Court's power of judicial review, allowing it to secure attendance of persons, discover or produce documents, or order investigations. However, the Court may use other procedures depending on the specific facts of the case. The petitioner must present a strong initial case to justify an order for document discovery. The process should not be a fishing expedition to find facts or an attempt to embarrass the respondents or gain publicity. If the Court issues an order under Article 32 or a discovery order, the government or any authority must produce the record, or face contempt charges. The Cabinet, led by the Prime Minister under Article 75 (3), is responsible for governing the country. Collective responsibility under Article 75(3) requires maintaining confidentiality, as stated in the oaths of office and secrecy in Schedule III of the Constitution. Ministers must not reveal any matter they learn as Minister, except when required to perform their duties. This confidentiality is essential not only for political reasons related to collective responsibility under Article 75(3) but also for practical reasons. The Court will consider the executive's claim of public interest privilege to keep certain documents secret when national security or highly sensitive policy matters are involved. Information about national security, diplomatic relations, internal security, or sensitive diplomatic correspondence are considered class documents, and the public interest demands they remain completely secret. Even slight disclosure could endanger lives. The principle that "regard for public welfare is the highest law" supports this privilege. However, it would be excessive to say that no document in a particular class, such as Cabinet papers or decisions, should ever be produced. The Prime Minister must inform the President of all Cabinet decisions related to the administration of the Union and proposals for legislation, and provide any information the President requests. However, this does not automatically grant blanket public interest privilege from disclosure. While the Council of Ministers is collectively responsible to the House of the People, their actions are subject to the Constitution, the rule of law, and judicial review, which is entrusted to the Court. 3.3.1. Article 74(1), regarding communication of Cabinet decisions to the President, provides only limited protection under Article 74(2) from judicial review of the advice actually given to the President. The rest of the file is open to private inspection by the Court. Each case must be considered based on its own facts. 3.3.2. Article 74(2) does not completely prevent production of records. Only the actual advice given by the Minister or Council of Ministers to the President, and whether any advice was given, cannot be questioned by the Court. The bar of judicial review applies only to the advice itself, not the materials on which the advice is based. 4. Judicial review focuses on whether the person appointed was qualified and whether the appointment process was fair. It protects citizens from abuse of power by the government. The power to appoint officials is given to the executive branch, and it is expected to be used wisely. When a candidate is qualified and eligible, the Court cannot interfere with the executive's choice but must allow them to select the personnel according to law. In employment law, only the person who was not appointed can challenge the legality of the appointment. A third party does not have the right to question the legality of the action. A public-spirited person can only request a public law declaration. Therefore, the argument that the Court needs to evaluate the relative merits of the candidates will not be considered in a public interest lawsuit. This may only be considered in a lawsuit filed by the person who was not appointed. It is best to have a current or retired judge as the President of the Tribunal. The rules need to be changed to reflect this. The government has created a practice of having Tribunals headed by a judge. This Court directed the government to follow this practice when appointing the President of CEGAT and to consider appointing a judge as President. The Chief Justice of India was not consulted before appointing Respondent No. 3 as President of CEGAT, going against the promise made to Parliament that the Tribunal would have a judge as President. 6.1. When making the rules, the executive branch made the appointment of a judge as President less appealing, undermining the legislative intent. A current judge, who can continue in office until age 62, would not want to serve as President if their term ends at age 62. They would only be interested if they were given an extended three-year term after their retirement. However, Rule 10 (3) states that the total term of a judge as President is "a period of three years or until he reaches the age of 62, whichever is earlier," meaning it ends when they retire as a judge. The exception to the rule, allowing for an extended term, is only discretionary and depends on the executive's whim, reducing independence. This frustrates the intent of the law and the government's promise to Parliament, which was to have a judge appointed as President. The rules were made in a way that defeats the purpose of the law. 7. There are ongoing claims of problems at CEGAT and against Respondent No. 3. The Court is refraining from investigating these claims, but the government should address the public's concerns and conduct a thorough investigation into the problems at the institution. The government should take action and re-evaluate the situation. Tribunals created under the Constitution are not equal to High Courts. However, the people appointed to these positions are called upon to exercise judicial powers. They must have a judicial approach and expertise in the relevant laws. Legal knowledge is important, and not giving it enough weight would harm the effectiveness of legal decisions. Those making these decisions should have legal experience and training, as they will face complex legal questions that even experienced judges struggle with. 8.1. The recruitment of lawyers to the Tribunals and the Tribunals' operating system need to be re-evaluated. An expert body like the Law Commission of India should conduct a study, including whether CEGAT should be under the control of the Law and Justice Department, and make recommendations to the government. The government should then take steps to address the issues and make the Tribunals effective. To inspire confidence in the public, they must be assured that the decision-makers are free from government influence. To maintain independence, the personnel should have legal training and experience. Selecting competent people builds trust and ensures that justice is administered impartially. Functional fitness and experience are essential for efficient legal decisions. This allows the Tribunal to properly interpret and apply the law. Without this, the Constitution is undermined. Judicial review is a basic feature of the Constitution. It cannot be eliminated by creating Tribunals. Any system that prevents judicial review is destructive to the Constitution. The alternative system must be as effective as the High Court. Public faith is the foundation of judicial review. 9.1. The Court is concerned about the ineffectiveness of the alternative system for judicial review. Judicial review and remedy are fundamental rights. The justice provided by the Tribunals is not satisfactory. The Court is not questioning the abilities of the non-judge members, who may be experts in their fields. However, legal decision-making requires special skills that are best administered by judges. The remedy of appeal to the Supreme Court is costly and inaccessible to many. Allowing appeals to the High Courts would address the feeling of injustice among those who cannot afford to go to the Supreme Court. The executive branch may make mistakes. They may do things they shouldn't or fail to do things they should. The Court must be aware of this possibility. If a decision is influenced by improper factors, it must be corrected, regardless of the body or official involved. The Court must ensure that authority is not abused. Parliament is not always a sufficient check on the executive's power. While the Court will not substitute its views on policy matters, it has the duty to ensure that the executive uses its power only for its intended purpose. The Court has the power and duty to ensure that powers are exercised according to the Constitution and the law. This may require exposing government actions to public scrutiny. Per Justice Ahmadi: 1. The Court cannot question the government's choice of President as long as the person meets the requirements and is eligible. Respondent No. 3 was a Senior Vice President and met the requirements. The government had the power to appoint him. The Court cannot interfere with the appointment based on concerns about his past performance or reports that led to his rejection as a High Court Judge. Even if the allegations against Respondent No. 3 are true, the Court cannot overturn the government's choice if the person is qualified. However, to build public confidence in CEGAT, the government should try to appoint a judge as President, after consulting with the Chief Justice of India. If a sitting judge is not available, they should choose a retired judge if possible. Rule 10 (4) needs to be changed to make it more attractive for judges to accept the position. The rules allow the government to appoint any member as President. While a judge can be appointed as a member and President, a sitting judge's term ends at 62, while a retired judge can be appointed for three years. It doesn't make sense for a judge to accept the position if they will retire at the same age, losing certain benefits. They may only agree if they have an extended term of at least three years. The petitioner's claims about CEGAT's problems are serious, and the authorities should investigate them. Ignoring these claims suggests indifference to improving the Tribunal. The government should promptly inspect CEGAT, identify the problems, and suggest solutions. It's time to review the Tribunals created after Articles 323A and 323B were added to the Constitution. A sound justice system is essential for good governance. An independent system in which the public has faith is necessary. Since these articles were added, enough time has passed to assess if the Tribunals have met their goals. The Law Commission of India should conduct a comprehensive review and suggest improvements. They can also propose changes to the laws and develop a model for creating or reforming Tribunals to ensure greater independence. The Law Commission should undertake this study with priority. In this case, it is not necessary to disclose the records to the petitioner or his lawyer.
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Under Article 32 of the Constitution of India. No. No. (i) i.e. in regard to the appointment of the President of the CEGAT. 3 as its President. The Minister of State in the Finance Department was also directed to file an affidavit in support of the claim for privilege which he did. On the question of appointment of respondent No. Rule 2(c) defines a member, to include the President of the CEGAT also; Rule 3 prescribes the qualifications for appointment and Rule 6sets out the method of recruitment of 'a member through a Selection Committee consisting of a Judge of the Supreme Court of 'India nominated by the Chief Justice of India. Sub rule (2) then provides as under "(2) Notwithstanding anything contained in rule 6. a sitting or retired judge of a High Court may also he appointed by the Central Government as a member and President simultaneously. " Sub rule (4) and the proviso thereto bear reproduction "(4) Where a serving judge of a High Court is appointed as a member and President, he shall hold office as President for a period of three years from the date of his appointment or till he attains the age of 62 years, whichever is earlier: 820 Provided that where a retired judge of a High Court above the age of 62 years is appointed its President. the Government must make a sincere effort to appoint a sitting Judge of the High Court is a President of the CEGAT in consultation of the Chief Justice of India and it a sitting Judge is not available the choice must fall on a retired Judge as far as possible. 3 as the President. After he retired in 1985 no Judge was appointed as President. 312 of 1992 impugning the appointment of Sri Harish Chander, as President and sought to quash the same being in violation of the direction issued by this ( 'our( on February 25, 1992 and to strike down Rules 10(1), (3) and (4) of the CEGAT Members (Recruitment and Conditions of Service) Rules 1987, for short the 'Rule ' as violative of article 43 of the Constitution. This court also directed the first respondent "to reflect in the counter what was the actual understanding in regard to the convention referred to in the letter of the then Chief Justice of India dated October 5, 1982"; "What procedure was followed at the time of the appointment by first respondents" and "whether Chief Justice of India was consulted or whether the first respondent was free to choose a retired or a sitting Judge of the High Court as President of the Tribunal with or without consultation of the Chief Justice of India". It should also clarify whether "before the third respondent was appointed as the President, "any effort or attempt was made to ascertain if any retired or a sitting Judge of the High Court could be appointed as the President of the Tribunal" and directed to post the cases for final disposal on July 21, 1992. Section 123 of the Evidence Act gives right to the government, in other words, to the minister or in his absence head of the department, to claim privilege, in other words immunity from disclosure of the unpublished official state documents in public interest. This Court in State of U.P. It is now settled law that the initial claim for public interest immunity to produce unpublished official records for short "state documents" should be made through an affidavit generally by the Minister concerned, in his absence by the Secretary of the department or head of the Department. Both are matters of public interest, for it is also in the public interest that justice should be done between litigating parties by production of all relevant documents for which public interest immunity has been claimed. The reasons are: there is public interest that harm shall not be done to the nation or the public service by disclosure of the document in question and there is public interest that the administration of justice shall not be frustrated by withholding the document which must be produced, if justice is to be done. etc vs Union of India & Ors. [1982] 2 SCR 365, this court by seven Judges ' bench held that the court would allow the objection to disclosure if it finds that the document relates to affairs of State and its disclosure would be injurious to public interest, but on the other hand, if it reaches the conclusion that the document does not relate to affairs of State or that the public interest does not compel its non disclosure or that the public interest in the administration of justice in the particular case before it overrides all other aspects of public interest, it will overrule the objection and order disclosure of the document. When an objection was raised against disclosure of a particular document that it belongs to a class which in the public interest ought not to be disclosed, whether or not it would be harmful to disclose that class document or the contents of that particular document forming part of the class would be injurious to the interest of the state or the public service, it would be difficult to decide in vacuum the claim because it would almost invariably be supported by an affidavit made either by the Minister or head of the department and if he asserts that to disclose the contents of the document would or might do to the nation or the public service a grave injury, the court out of deference will be slow to question his opinion or to allow any interest, even that of justice, to prevail over it unless there can be shown to exist some factors suggesting either lack of good faith or an error of judgment on the part of the minister or the head of the department or the claim was made in administrative routine without due consideration or to avoid inconvenience or injury to their defence. However, it is well settled law that the court is not bound by the statement made by the minister or the head of the department in the affidavit and it retains the power to balance the injury to the State or the public service against the risk of injustice. In balancing the competing interest it is the duty of the court to see that there is the public interest that harm shall not be done to the nation or the 827 public service by disclosure of the document and there is a public interest that the administration of justice shall not be frustrated by withholding documents which must be produced if justice is to he done. The court must decide which aspect of public interest predominates or in other words whether the public interest which requires that the document should not be produced out weighs the public interest that a court of justice in performing its functions should not be denied access to relevant evidence. If the nature of the injury to the public interest is so grave a character then even private interest or any other interest cannot be allowed to prevail over it. therefore, have to address itself for the purpose of deciding the validity of the objection would be, whether the document relates to affairs of State or in other words, is it of such a character that its disclosure would be against the interest of the State or the public service and if so, whether the public interest in it ; non disclosure is so strong that it must prevail over the private interesting the administration of justice and on that account, it should not be allowed to be disclosed. The contention, therefore, that the claim of public interest immunity claimed in the affidavit of the State Minister for Finance and the Secretary need privacy and claim for immunity of state documents from disclosure is unsustainable. ; ; D. vs National Society for the Prevention of Cruelty to Children ; ; Burmah Oil Co. Ltd. vs Governor and Company of the Bank of England, ; ; Butters Gas and Oil Co. vs Hammer ; Air Canada vs Secretary of State for Trade ; and Council of Civil Service Unions vs Minister for the Civil service, ; Pursuant to the law laid down in Conway 's, case the Administration of Justice Act, 1970 was made enabling the court to order disclosure of the documents except where the court, in exercise of the power under sections 31 to 34, considered that compliance of the order would be injurious to the public interest consistent with the above approach is the principle laid by this court in S.P. The learned Solicitor General contended that a Cabinet sub committee constituted under Rules of Business approved the appointment of Harish Chander as President of CEGAT. By operation of article 77 (3) and 74(1), the appointment was made by the President. Article 75(1) provides that the Prime Minister shall be appointed by the President and the other Ministers shall be appointed by the President on the advice of the Prime Minister; article 75(3) posits that the Council of Ministers shall be collectively responsible to the House of the People; article 75(4) enjoins that before a Minister enters upon his office, the President shall administer to him the oaths of office and of secrecy according to the forms set out for the purpose in the Third Schedule to the Constitution. Article 74(1) as amended by section 11 of the Constitution 42nd Amendment Act, 1976 with effect from January 3, 1977 postulates that there shall be a Council of Ministers with the Prime Minister as the head to aid and advise the President who shall, in the exercise of his functions, act in accordance with such 830 advice. as the case may be. administration made under article 77(3), viz., the Govt. The President exercises his functions, except conferred on him to be exercised in his discretion, with the aid and advice of the Council of Ministers as per the business rules allocated among his Ministers or Committees. The decision of any Minister or officer under the rules is the decision of the President. At page 233, he stated that the Cabinet has to decide policy matters. On the Cabinet 832 Minister 's responsibility at page 449, he stated that when it is said that a Minister is responsible to Parliament, it is meant that the House of Commons (in our constitution Lok Sabha) may demand an explanation. At p.309 it is stated that "the responsibility of Ministers is both individual and collective". Collective responsibility under article 75(3) of the Constitution inheres maintenance of confidentiality as enjoined in oaths of office and of secrecy set forth in Schedule III of the Constitution that the Minister will not directly or indirectly communicate or reveal to any person or persons any matter which shall be brought under his/her consideration or shall become known to him/her as Minister except as may be required for the "due discharge of his/her duty as Minister". It is said to be difficult for Ministers to make an effective defence in public of decisions with which it is known that they have disagreed in the course of Cabinet discussions. 836 Each member of the Cabinet has personal responsibility to his conscience and also responsibility to the Government. Joint responsibility supersede individual responsibility; in accepting responsibility for joint decision, each member is entitled to an assurance that he will be held responsible not only for his own, but also as member if the whole Cabinet which made it; that he will be held responsible for maintaining secrecy of any different view which the others may have expressed. But when a claim for public interest immunity has been laid for non disclosure of the state documents, it is the Minister 's "due discharge of duty" to state on oath in his affidavit the grounds on which and the reasons for which he has been persuaded to claim public interest immunity from disclosure of the state papers and produce them. As a Council of Minister, his duty is to maintain the sanctity of oath and to keep discussions and information he had during its course as secret. It is already held that it is the duty of the Minister to file an affidavit stating the grounds or the reasons in support of the claim from public interest immunity. Accordingly we hold that the oath of office of secrecy adumberated in Article 75(4) and Schedule III of the Constitution does not absolve the Minister either to state the reasons in support of the public interest immunity to produce the state documents or as to how the matter was dealt with or for their production when discovery order nisi or rule nisi was issued. Disclosure of information in regard to the functioning of the Govt. It would, therefore, be concluded that it would be going too far to lay down that no document in any particular class or one of the categories of cabinet papers or decisions or contents thereof should never, in any circumstances, be ordered to be produced. It was held that the need for protection depends on the facts in each case. In a clash of public interest that harm shall be done to the nation or the public service by disclosure of certain documents and the administration of justice shall not be frustrated by withholding the document which must be produced if justice is to be done, it is the courts duty to balance the competing interests by weighing in scales, the effect of disclosure on the public interest or injury to administration 843 of justice, which would do greater harm. It was also contended that it would be in breach of the principle of collective Cabinet responsibility. The court held that the oath taken by the plaintiff did not in itself provide a reason for refusing to answer the interrogatories whether immunity from disclosure would be granted depends upon the balancing of two competing aspects, both of public policy, on the one hand the need to protect a public interest which might be endangered by disclosure, and on the other the need to ensure that the private rights of individual litigants are not unduly restricted. The Commonwealth cannot claim any immunity for public interest immunity from production. The business of the Govt. vs Commonwealth & Ors. The President while exercising the Executive power under Art.73 read with article 53, discharges such of those Powers which are exclusively conferred to his individual discretion like appointing the Prime Minister under article 75 which are not open to judicial review. Undoubtedly the Prime Minister is enjoined under article 78 to communicate to the President all decisions of the Council of Minister relating to the administration of the affairs of the Union and proposals for legislation and to furnish such information relating to the administration or reconsideration by the Council of Ministers if the President so requires and submit its decisions thereafter to the President. The Council of Ministers though shall be collectively responsible to the House of the People, their acts are subject to the Constitution, Rule of law and judicial review are parts of the scheme of the Constitution as basic structure and judicial review is entrusted to this Court (High Court under Art.226). When public interest immunity against disclosure of the state documents in the transaction of business by Council of Ministers of the affairs of State is made, in the clash of those interests, it is the right and duty of the court to weigh the balance in the scales that the harm shall not be done to the nation or the public service and equally of the administration of justice. Whether they so relate has got to be determined by reference to the nature of the consideration, the level at which it was considered, the contents of the document or class to which it relates to and their indelible impact on public administration or public service and administration of justice itself. Though the court would not substitute its views to that of the executive on matters of policy, it is its undoubted power and duty to see that the executive exercises its power only for the purpose for which it is granted. It is therefore the constitutional, legitimate and lawful power and duty of this court to ensure that powers constitutional statutory or executive are exercised in accordance with the constitution and the law. In this context it was held that the orders of the president, even though made final can be set aside by court in an appropriate case though the Court will not sit in appeal over order and will not substitute its own opinion to that of the president by weighing the evidence placed before the president. Teh immunity must not be claimed on administrative route and it must be for valid, relevant and strong grounds or reasons stated in the affidavit filed in that behalf. We are of the view that on th facts of the case and in the light of the view we have taken, it is not necessary to disclose the contents of the records to the petitioner or his counsel. It was pleaded and Sri Thakur, his learned senior counsel, argued that as per the convention, a sitting or a retired judge of the High JCourt should have beenappointed as president of the CEGAT in consultation with the Chief Jusftice ofIndia and Harish Chander has been appointed in disregafrd of the express directions of this Court, It was, therefore, contended that it was in breach jof the judicial orderpassed by this Court. The appointment of any person other thansitting or a retired judge of the High Court as President would be in its breach. Sri Thakur further argued that when recommendations of HarishChander for appointment as a Judge of the Delhi High Court was turned down by the Chief Justice of India doubting his integrity, the appointment of such personof doubtful integrity as President would erode the independence of the judiciary and undermine the confidence of the litigant public in the efficacy of judicial adjudication, even though the rules may permit such an appointment. The Central Govt. The President of India exercising the power under proviso it) article 309 of the Constitution made the Rules. (4) Where a serving judge of a High Court is appointed as a member and President, he shall hold office as President for a period of three years from the date of his appointment or till he attains the age of 62 years. It must, therefore, be read as implicit in the constitutional scheme that the law excluding the jurisdiction of the High Court under articles 226 and 227 perrmissible under it, must not leave a void but it must set up another effective institutional mechanism or authority and vest the power of judicial review in it which must be equally effective and efficacious in exercising the power of judicial review. It must be effective and efficacious to exercise the power of judicial review. At page 491 it was held that the independence of the judiciary is itself a necessitous desideratum of public interest and so interference with it is impermissible except where other considerations of public interest are so strong, and so exercised as not to militate seriously against the free flow of public justice. Service Tribunal that it would he appropriate for the State of Uttar Pradesh to change it manning and a sufficient number of people qualified in law should he on the Tribunal to ensure adequate dispensation of justice and to maintain judicial temper in the functioning of the Tribunal". had Created a healthy convention of providing that the Tribunals will be headed by a President who will be a sitting or a retired judge of the High Court. Added to that is the fact that selection of the members of the Tribunal is made by a Committee headed by a judge of the Supreme Court. to show whether the convention is being followed in appointment of the President of 860 CEGAT and further directed to consider appointment of a Sr. Judge or a retired Chief Justice of the High Court as its President. by an appropriate Govt. When a candidate was found qualified and eligible and was accordingly appointed by the executive to hold an office as a Member or Vice President or President of a tribunal. Therefore, this Court declared that he was not qualified to be appointed as a judge of the High Court and quashed his appointment accordingly.
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3, who was first appointed as a legal member and later as Senior Vice President of the Tribunal, was made President. The usual practice was to appoint a current or retired High Court Judge as President, after talking with the Chief Justice of India. (2) Before the law was made, the government repeatedly promised that CEGAT's independence was vital for the public to trust it. Appointing such a person as President of CEGAT would hurt the public's faith in the fairness of legal decisions, even if the rules allowed such an appointment. They said the government had no problem with the Court reviewing the file, but they claimed privilege to keep the contents of the file secret from the petitioner. The Union of India argued that a Cabinet Sub-Committee (a group of government ministers) had approved the appointment of Respondent No. 3 as President of CEGAT. They said that under Article 77(3) and 74(1), the President made the appointment. Therefore, his appointment as President was valid. Section 123 of the Evidence Act allows the government to claim privilege, meaning they don't have to reveal unpublished official state documents if it's in the public's interest. The initial claim for privilege should be made in a sworn statement, usually by the Minister involved, or by the department head if the Minister is unavailable. The statement should say that the documents have been carefully reviewed and that the person making the statement believes that revealing the documents would harm the public interest, with valid reasons to support this belief. When claiming public interest privilege to keep state documents secret, the Minister has a duty to explain in a sworn statement why they believe the documents should not be revealed. If the Minister refuses to file a sworn statement or produce the documents, relying on their oath of secrecy, the Court may draw its own conclusions based on the law. The oath of office and secrecy in Article 75(4) and Schedule III of the Constitution does not excuse the Minister from explaining why the documents should be kept secret or from producing them when ordered by the Court. In balancing these interests, the Court must consider both the public interest in preventing harm to the nation or public service and the public interest in ensuring that justice is not obstructed by withholding necessary documents. The Court must decide if the document relates to state affairs or the public service and, if so, whether the public interest in keeping it secret is so strong that it outweighs the interest in administering justice. If the Court issues an order under Article 32 or a discovery order, the government or any authority must produce the record, or face contempt charges. The Court will consider the executive's claim of public interest privilege to keep certain documents secret when national security or highly sensitive policy matters are involved. While the Council of Ministers is collectively responsible to the House of the People, their actions are subject to the Constitution, the rule of law, and judicial review, which is entrusted to the Court. Only the actual advice given by the Minister or Council of Ministers to the President, and whether any advice was given, cannot be questioned by the Court. Judicial review focuses on whether the person appointed was qualified and whether the appointment process was fair. In employment law, only the person who was not appointed can challenge the legality of the appointment. This may only be considered in a lawsuit filed by the person who was not appointed. It is best to have a current or retired judge as the President of the Tribunal. This Court directed the government to follow this practice when appointing the President of CEGAT and to consider appointing a judge as President. 3 as President of CEGAT, going against the promise made to Parliament that the Tribunal would have a judge as President. This frustrates the intent of the law and the government's promise to Parliament, which was to have a judge appointed as President. There are ongoing claims of problems at CEGAT and against Respondent No. An expert body like the Law Commission of India should conduct a study, including whether CEGAT should be under the control of the Law and Justice Department, and make recommendations to the government. Judicial review is a basic feature of the Constitution. Any system that prevents judicial review is destructive to the Constitution. The alternative system must be as effective as the High Court. The justice provided by the Tribunals is not satisfactory. The Court has the power and duty to ensure that powers are exercised according to the Constitution and the law. Even if the allegations against Respondent No. However, to build public confidence in CEGAT, the government should try to appoint a judge as President, after consulting with the Chief Justice of India. The rules allow the government to appoint any member as President. While a judge can be appointed as a member and President, a sitting judge's term ends at 62, while a retired judge can be appointed for three years.
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Appeal No. 647 of 1963. Appeal from the judgment and order dated September 21, 1962, of the Punjab High Court in Civil Writ No. 280 of 1962. the appellant appeared in person. S.V. Gupte, Additional Solicitor General, N.S. Bindra and R.H. Dhebar, for the respondent (Union of India). S.M. Sikri, Advocate General, Punjab, N.S. Bindra and R.H. Dhebar, for the respondent (State of Punjab). November 19, 1963. The Judgment of P.B. Gajendragadkar, K. Subba Rao, K.N. Wanchoo and J.C. Shah, JJ. was delivered by Wanchoo, J. Raghubar Dyal, J. delivered a dissenting Opinion. WANCHOO J. This is an appeal on a certificate granted by the Punjab High Court. The appellant joined the Indian Civil Service in 1939 and was governed in matters relating to discipline by the Civil Services (Classification, Control and Appeal) Rules, (hereinafter referred to as the Appeal Rules) made by 435 the Secretary of State for India in Council. He continued in service till the transfer of power under the Indian Independence Act, 1947. Under s.10 of that Act he continued to serve under the Government of India and was entitled to receive from the Government of India or of the Province which he might from time to time be serving the same conditions of service as respects remuneration, leave and pension, and the same rights as respects disciplinary matters or, as the case may be, as respects the tenure of his office, or rights as similar thereto as changed cir cumstances may permit as he was entitled to immediately before the transfer of power, which took place on August 15, 1947. The same guarantee was extended to the appellant and all members of what were the Secretary of State 's Services before August 15, 1947 by article 314 of the Constitution. As the appellant 's case is based on 'that Article we may set it out: "Except as otherwise expressly provided by this Constitution, every person who having been appointed by the Secretary. of State or Secretary of State in Council to a civil. service of the Crown in India continues on and after the commencement of this Constitution to serve under the Government of India or of a State shall be entitled to receive from the Government of India and the Government of the State, which he is from time to time serving, the same conditions of service as respects remuneration, leave and pension, and the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances may permit as that person was entitled to immediately before such commencement. " We shall hereafter refer to such a person as a member of the (former) Secretary of State 's Services. It appears that the appellant was in the Indian Civil Service cadre in the State of Madras at the time of transfer of power, though later he was transferred to the Punjab. After the transfer of power the Indian 436 Civil Service as a Secretary of State 's Service came to an end and thereafter a new Service was constituted known as the Indian Administrative Service. Formal legal shape was given to the new Service after the enactment of the All India Services Act, No. LXI of 1951, and the Indian Administrative Service (Recruitment) Rules, 1954, (hereinafter referred to as the Recruitment Rules) were framed under Act LXI of 1951. By r. 3 of these Rules, the Indian Administrative Service was to consist of (a) members of the Indian Civil Service, not permanently allotted to the judiciary; (b) members of the Indian Civil Service per manently allotted to the judiciary who have been holding executive posts from the date of the commencement of the Constitution and who may be declared by the Central Government to be members of the Service in consultation with the State Government; (c) persons who, at the commencement of these rules, are holding substantively listed posts, other than posts in the judiciary, (d) persons recruited to the Service before the commencement of these rules: and (e) persons recruited to the Service in accordance with the provisions of these rules. The appellant thus became a member of the new Indian Administrative Service by virtue of these rules and continued to serve in the Punjab. In 1955, the Central Government framed the All India Services (Discipline and Appeal) Rules, 1955 (hereinafter referred to as the Discipline Rules) which were applicable to all members of the Indian Administrative Service and the Indian Police Service. On July 18, 1959, the appellant was suspended with immediate effect by the Governor of the Punjab on the ground that a criminal case was pending against him. The order also provided that for the period of suspension the appellant shall be paid subsistence 437 allowance which shall be equal to leave salary which he would have drawn under the leave rules applicable to him if he bad been on leave on half average pay with a further provision that in case the suspension lasted for more than twelve months a further order fixing the rate of subsistence allowance shall be passed. This order appears to have been passed under r. 7(3) of the Discipline Rules and in consequence thereof the appellant remained under suspension. The appellant filed a writ petition in the Punjab High Court on February 16, 1962, challenging this order of suspension. His contention was that he was entitled to. the guarantee contained in article 314 of the Constitution and the order of suspension passed against him violated that guarantee and was therefore ineffective and invalid. He relied for this purpose on r. 49 of the Appeal Rules, which provided for suspension as a penalty. He contended that the Appeal Rules which governed him and which must be held to have continued to govern him in view of the guarantee contained in article 314 provided for suspension as a penalty only and that there was no provision anywhere in any rule or statute immediately before January 26, 1950 on which date the Constitution came into force, providing for suspension otherwise than as a penalty. Therefore it was not open to the Governor to suspend him in the manner in which he did so in the present case, though it was not denied that he could be suspended pending criminal proceedings provided the suspension was as a penalty under r. 49 of the Appeal Rules; on the other hand mere suspension pending a criminal case not inflicted as a penalty was not provided at all by the Rules or the statute governing the appellant immediately before January 26, 1950. Therefore when the Governor proceeded to suspend him under r. 7(3) of the Discipline Rules, he violated the guarantee contained in article 314. The appellant also contends that as it was not open to any authority to suspend him except as a punishment immediately before January 26, 1950, r.7 of the Discipline Rules 438 which provides for suspension during disciplinary proceedings or during the pendency of a criminal charge insofar as it applies to him was ultra vires article 314 of the Constitution. He also attacked rr.3 and 10 of the Discipline Rules as violative of article 314 of the Constitution, r.3 being concerned with penalties to be imposed on members of the Indian Administrative Service and r.10 with the right of appeal. The contention in this connection was that r.3 omitted the penalty of suspension which was to be found in r.49 of the Appeal Rules with the result that suspension under r.7 was not open to appeal under r.10 which provided for appeals against penalties mentioned in r.3. Therefore the guarantee under Art.314 was violated inasmuch as previously whenever the penalty of suspension was inflicted on a member of the Secretary of State 's Services it was open to him to appeal under r. 5 6 of the Appeal Rules. Therefore the scheme of the Discipline Rules was such as to take away the protection to a member of the Secretary of State 's Service which was available to him immediately before the Constitution came into force and in consequence rr.3 and 10 also violated the guarantee contained in article 314 and were ultra vires. The appellant therefore prayed for an appropriate writ, order or direction in the nature of mandamus striking down rr.3,7 and 10 of the Discipline Rules being violative of article 314 of the Con stitution and also for an order striking down the order of the Governor dated July 18, 1959, by which he suspended the appellant and such other appropriate relief as was just and proper. The petition was opposed by the State of Punjab and its main contention was that rr. 3,7 and 10 of the Discipline Rules were perfectly valid and did not violate the guarantee contained in Art.314. It was urged that article 314 only gave restricted protection to the members of what were formerly the Secretary of State 's Services in respect of disciplinary matters and stress was laid on the words "or rights as similar thereto as changed circumstances may permit" appear 439 ing therein. It was also urged that suspension pending departmental enquiry or pending a criminal case was not the same thing as suspension by way of punishment and that previous to January 26, 1950, there could be suspension pending departmental enquiry or pending a criminal case and that no appeal lay from such suspension even then. It was also urged that suspension pending a departmental enquiry or pending a criminal case was not a disciplinary matter at all and was therefore not included within the sweep of article 314 and in any case the rule relating to suspension even if it is connected with disciplinary matters was liable to variation as changed circumstances might demand and r.7 was framed in view of the changeed circumstances. It was also urged that removal of suspension as a penalty under r. 3 could not affect the guarantee contained in article 314, for the effect of such removal was that there could be in future no penalty of suspension. against a member of the Indian Administrative Service. Therefore as the penalty had gone r. 10 did not naturally provide for an appeal against a penalty which did not exist. Rule 7 which provides for suspension does not provide for any penalty and therefore there was no necessity of providing for any appeal against it. It was urged that a difference must be made between suspension as a penalty and suspension as an interim measure only pending a departmental enquiry or pending a criminal case and if that difference was borne in mind there was no reason for holding that rr.3 and 10 were ultra vires article 314. The respondent State finally contended that the order of the Governor passed under r. 7(3) was perfectly valid and did not violate the guarantee contained in article 314. The High Court dismissed the petition. It was of the view that it was inconceivable that under the old rules prevailing 'before January 26, 1950, a civil servant could never be suspended while an enquiry into his conduct was pending. It was further of the view that suspension during the pendency of an enquiry was a power inherent in an employer like the 440 Government and the power to suspend was always implied in the authority making the appointment. The High Court therefore rejected the contention of the appellant that under the old rules no member of the Secretary of State 's Services could have been suspended except by way of punishment. The High Court further held that even if the contention of the appellant be accepted that a member of the Secretary of State 's Services had a right of appeal even where he was suspended during a departmental enquiry there was a provision in the Discipline Rules for a memorial to the President (see r.20) and that in the opinion of the High Court gave a right as similar to the right existing before January 26, 1950, as the changed circumstances permitted. The High Court therefore dismissed the petition. The appellant then applied for a certificate which was granted; and that is how the matter has come up before us. The only question that has been debated before us is with respect to suspension whether as a punishment or otherwise of a member of one of the Secretary of State 's Services, in this case the Indian Civil Service, members of which have become members of the Indian Administrative Service under the Recruitment Rules; and it is only this question that falls to be determined in the present appeal. But the appellant has also challenged rr.3 and 10 of the Discipline Rules which do not deal with suspension at all. In these circumstances we do not propose to consider the vires of rr. 3 and IO, for that does not fall for decision as the order which is challenged has not been made under r. 3 and relates only to suspension. It is therefore unnecessary to decide whether rr. 3 and 10 can in the changed circumstances apply to those members of the Indian Administrative Service who were at one time members of the Indian Civil Service. We shall therefore express no view one way or the other on the vires of r. 3 and r. 10 and consider only r. 7 which deals with suspension. We should also like to make it clear that what we say during the course of ' this judgment 441 with respect to suspenion refers only to those members of the Indian Administrative Service who became members thereof under r. 3 (a) and (b) of the Recruitment Rules and not to other members of the Indian Administrative Service who were not members before 1947 of the Indian Civil Service, for it is only the former kind of members of the Indian Ad ministrative Service who are entitled to the protection of article 314 and the whole case of the appellant is based on that protection. Let us therefore turn to article 314 which we have already set out above. This Article came to be considered by this Court in the Accountant General Bihar vs N. Bakshi(1). In that case, however, that part of it was considered which related to "conditions of service as respects remuneration, leave and pension", and it was held that r. 3 of the All India Services (Overseas Pay, passage and leave salary) Rules, 1957, was ultra vires having regard to the guarantee contained in article 314 of the Constitution. That case is an authority for the proposition that where any rule is framed, which is inconsistent with the guarantee contained in article 314 with respect to remuneration, leave and pension, that rule would be bad. In the present case we are concerned with another part of article 314, namely, "the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances may permit as that person was entitled to immediately before such commencement". The same principle will apply to this part of article 314 also and if any rule is framed which goes against the guarantee contained in this part of article 31.4 with respect to members of what were former Secretary of State 's Services, it will be bad. What article 314 provides with respect to disciplinary matters is that the members of the former Secretary of State s Services who continue to serve under the Government of India or of a State would be entitled to the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances (1) [1962] Supp. 1. S.C.R. 505. 442 may permit. Stress has been laid on behalf of the respondent on the words "rights as similar thereto as changed circumstances may permit", and it is urged that in view of these words it was open in the " changed circumstances" to frame rules in particular with respect to suspension pending departmental enquiry or pending criminal proceedings. These words in our opinion cannot bear this interpretation. What the words "changed circumstances" mean is the change in circumstances due to transfer of power in August, 1947, and the coming into force of the Constitution in January, 1950, and no more. Therefore when article 314 speaks of "rights as similar thereto as changed circumstances may permit", it only means that a member of the former Secretary of State 's Services would have rights similar to his pre existing rights as the changed circumstances resulting from constitutional changes may allow. As an illustration take a case where a member of a Secretary of State 's Service could before August, 1947, be dismissed only by the Secretary of State; but after the transfer of power and the coming into force of the Constitution, circumstances have changed and there is no Secretary of State, therefore we have to look to the changed circumstances and find out which would be the authority to dismiss such a member in the changed circumstances. If we do so, we find that the Government of India can be the only authority which now in the changed circumstances will have the power to dismiss such a member in the absence of a specific provision of law in force before January 26 , 1950. These words do not mean that as time passes circumstances change and therefore new rules may be framed to meet the new circumstances due to passage of time. The words "changed circumstances" in article 314 only refer to the constitutional changes which occurred after the transfer of power in August, 1947, and the coming into force of the Constitution in January 1950. Further, article 314 provides that the protection is limited only to those rights as to disciplinary matters which a member of the former Secretary of State 's 443 Services was entitled to immediately before the commencement of the Constitution i.e. on January 25, 1950. It is only those rights which are protected and no more. Another argument that is urged on behalf of the respondent is that suspension pending a departmental enquiry or pending a criminal proceeding cannot be said to be a disciplinary matter at all and therefore the protection of article 314 does not extend to such suspension. We cannot accept this argu ment. The words "disciplinary matters" with which we are concerned appear in a constitutional provision and must be given their widest meaning consistent with what disciplinary matters may reasonably include. Suspension is of two kinds, namely, as a punishment, or as an interim measure pending a departmental enquiry or pending a criminal proceeding. We shall deal with these aspect 's of suspension in detail later. So far as suspension as a punishment is concerned, it is conceded that it is a disciplinary matter. The dispute is only as to suspension pending a departmental enquiry or pending a criminal proceeding. There can in our opinion be no doubt that suspension of this kind also must be comprised within the words "disciplinary matters" as used in article 314. Take the case of suspension pending a departmental enquiry. The purpose of such suspension is generally to facilitate a departmental enquiry and to ensure that while such enquiry is going on it may relate to serious lapses on the part of a public servant , he is not in a position to misuse his authority in the same way in which he might have been charged to have done so in the enquiry. In such a case suspension pending a departmental enquiry cannot be but a matter intimately related to disciplinary matters. Take again the case where suspension is pending criminal proceedings. The usual ground for suspension pending a criminal proceeding is that the charge is connected with his position as a government servant or is likely to embarass him in the discharge of his duties or involves moral turpitude. 444 In such a case a public servant may be suspended pending investigation, enquiry or trial relating to a criminal charge. Such suspension also in our opinion is clearly related to disciplinary matters. If the trial of the criminal charge results in conviction, disciplinary proceedings are bound to follow against the public servant so convicted. Even in case of acquittal proceedings may follow where the acquittal is other than honourable. The usual practice is that where a public servant is being tried on a criminal charge, the Government postpones holding a departmental enquiry and awaits the result of the criminal trial and departmental proceedings follow on the result of the criminal trial. Therefore, suspension during investigation, enquiry or trial relating to a criminal charge is also in our opinion intimately related to disciplinary matters. We cannot therefore accept the argument on behalf of the respondent that suspension pending a departmental enquiry or pending investigation, enquiry or trial relating to a criminal charge is not a disciplinary matter within the meaning of those words in article 314. Before we investigate what rights a member of the former Secretary of State 's Services had with respect to suspension, whether as a punishment or pending a departmental enquiry or pending criminal proceedings, we must consider what rights the Government has in the matter of suspension of one kind or the other. The general law on the subject of suspension has been laid down by this Court in two cases, namely, The Management of Hotel Imperial New Delhi vs Hotel Workers ' Union(", and T. Cajee vs U. Jormanik Siem(2). These two cases lay down that it is well settled that under the ordinary law of master and servant the power to suspend the servant without pay could not be implied as a term in an ordinary contract of service between the master and the servant but must arise either from an express term in the contract itself or a statutory provision governing such contract. It was further held that an order (1) ; (2) ; 445 of interim suspension could be passed against an employee while inquiry was pending into his conduct even though there was no specific provision to that effect in his terms of appointment or in the rules. But in such a case he would be entitled to his remuneration for the period of his interim suspension if there is no statute or rule existing under which it could be withheld. The general principle therefore is that an employer can suspend an employee pending an enquiry into his conduct and the only question that can arise on such suspension will relate to the payment during the period of such suspension. If there is no express term in the contract relating to suspension and payment during such suspension or if there is no statutory provision in any law or rule, the employee is entitled to his full remuneration for the period of his interim suspension; on the other hand if there is a term in this respect in the contract or there is a provision in the statute or the rules framed thereunder providing for the scale of payment during suspension, the payment would be in accordance therewith. These general principles in our opinion apply with equal force in a case where the government is the employer and a public servant is the employee with this modification that in view of the peculiar structural hierarchy of government, the employer in the case of government, must be held to be the authority which has the power to appoint a public servant. On general principles therefore the authority entitled to appoint a public servant would be entitled to suspend him pending a departmental enquiry into his conduct or pending a criminal proceeding, which may eventually result in a departmental enquiry against him. This general principle is illustrated by the provision in section 16 of the General Clauses Act, No. X of 1897, which lays down that where any Central Act or Regulation gives power of appointment that includes the power to suspend or dismiss unless a different intention appears. Though this provision does not directly apply in the present case, 446 it is in consonance with the general law of master and servant. But what amount should be paid to the public servant during such suspension will depend upon the provisions of the statute or rule in that connection. If there is such a provision the payment during suspension will be in accordance therewith. But if there is no such provision, the public servant will be entitled to his full emoluments during the period of suspension. This suspension must be distinguished from suspension as a punishment which is a different matter altogether depending upon the rules in that behalf. On general principles therefore the govern ment, like any other employer, would have a right to suspend a public servant in one of two ways. It may suspend any public servant pending departmental enquiry or pending criminal proceedings; this may be called interim suspension. Or the Government may proceed to hold a departmental enquiry and after his being found guilty order suspension as a punishment if the rules so permit. This will be suspension as a penalty. These general principles will apply to all public servants but they will naturally be subject to the provisions of article 314 and this brings us to an in vestigation of what was the right of a member of the former Secretary of State 's Services in the matter of suspension, whether as a penalty or otherwise. As article 314 only guarantees protection to those rights which were in existence immediately before the Constitution came into force, all that is necessary is to find out the position before August 14, 1947, when the transfer of power took place and on January 25, 1950, just before the Constitution came into force. Members of the Secretary of State 's Services who are protected under article 314 were appointed either by the Secretary of State or by the Secretary of State in Council. Therefore on general principles it would have been open to the Secretary of State or the Secretary of State in Council, as the case may be, to suspend a member of such Services as the appointing authority as an interim measure pending a departmental enquiry or pending a criminal proceeding if it thought fit to do so. What 447 remuneration such a public servant would get during such interim suspension would depend upon the rules if any, and if there were no rules he would be entitled to his full emoluments during such interim suspension. But it appears that as the Secretary of State or the Secretary of State in Council was in London it was thought proper for the sake of administrative convenience to provide for suspension by authorities other than the appointing authority. Reference in this connection may be made to section 247 (2) of the Government of India Act. 1935, as in force upto August 13, 1947. That subsection provided that "any order suspending any such person (meaning thereby a member of the former Secretary of State 's Services) from office shall, if he is serving in connection with the affairs of the Federation, be made by the Governor General exercising his individual judg ment and, if he is serving in connection with the affairs of a Province, be made by the Governor exercising his individual judgment". This sub section therefore made a specific provision for suspension by authorities other than the appointing authority; this was in addition to the general right of the employer (namely, the Secretary of State who was the appointing authority) to suspend an employee (namely, a member of one of the former Secretary of State 's Services). Suspension in section 247 (2) cannot in our opinion be confined only to suspension as a penalty. The words are general and must be given their full meaning and would include any kind of suspension, whether as a penalty or otherwise; and this power vested firstly in the Secretary of State or the Secretary of State in Council, as the case may be, under the general law of master and servant and also in the Governor General and the Governor, as the case may be, by virtue of this provision of the statute. Further section 247 (3) also provided for remuneration of a suspended member of one of the former Secretary of State 's Services and laid down that "if any such person as aforesaid is suspended from office, his remuneration shall not during the period of his suspension be reduced except to such extent, if any, as may be directed by the Governor General exercising his in 448 dividual judgment or, as the case may be, by the Governor exercising his individual judgment". Besides this statutory provision relating to former Secretary of State 's Services, there was a general provision as to payment to a government servant under suspension in Fundamental Rule 53. That general provision is that a suspended governmentservant is at least entitled to one fourth of his pay. This general provision was subject ,to section 247 (3) andin the case of members of the former Secretary of State 's Services, the Governor General or the Governor as the case may be, had to specify the amount which could be even more than what was provided by F.R. 53. Here again when F.R. 53 speaks of suspension, it speaks of it in general terms. It applies to all kinds of suspension whether as a penalty or otherwise. Further r. 49 of the Appeal Rules deals with penalties and provides suspension as a penalty. It also provides for appeals in r. 56 etc. where suspension is inflicted as a penalty for good and sufficient reasons. Rule 49 applied to the former Secretary of State 's Services also and thus these members were subject to the penalty of suspension. A review therefore of the general law of master and servant, the provisions of the Government of India Act, 1935, of the Appeal Rules and the Fundamental Rules discloses that the position on August 13, 1947 with respect to members of the former Secretary of State 's Services with respect to suspension whether as a punishment or otherwise was as follows. Members of the former Secretary of State 's Services were liable to suspension either as an interim measure or as a punishment. Where suspension was as an interim measure and not as a punishment, it could be imposed either by the Secretary of State or the Secretary of State in Council as the appointing authority or by the Governor General or the Governor as the case may be as the statutory authority. Suspension could also be imposed by the proper authority as a punishment under the Appeal Rules and such orders of suspension were subject to appeals as provided by the Appeal Rules. There 449 was also provision for payment during suspension in the shape of subsistence allowance which was governed generally by F.R. 53 and in the case of members of the former Secretary of State 's Services, F.R. 53 was subject to section 247 (3) of the Government of India Act, 1935. Therefore, the contention of the appellant that there could be no suspension except by way of punishment under r. 49 of the Appeal Rules before 1947 is not correct. It is equally clear that where suspension before 1947 was an interim measure and not as a punishment under r. 49, there was no question of any appeal from such an interim suspension pending a departmental enquiry or pending a criminal proceeding. If the position on January 25, 1950, stood as it was on August 13,1947, the appellant could not susbstantially challenge the order of the Governor passed on July 18, 1959, for it would have been covered by section 247(3) of the Govemment of India Act, 1935, and the appellant could not claim anything more under article 314 of the Constitution. But article 314 does not speak of the protection which members of the All India Services had on August 13, 1947; it speaks of protection which they had immediately before the commencement of the Constitution i.e. on January 25, 1950, and that brings us to a consideration of the changes that took place between 1947 and 1950 after the transfer of power on August 15, 1947. The effect of the transfer of power on the Secretary of State 's Services in particular came up for consideration be fore this Court in State of Madras vs K.M. Rajagopalan(1) and it was held that "the conferral of Independence on India brought about an automatic and legal termination of service on the date of Independence. But all persons previously holding civil posts in India are deemed to have been appointed and hence to continue in service, except those governed by 'general or special orders or arrangements ' affecting their respective cases, The guarantee about prior conditions of service and the previous statutory safeguards relating to disciplinary (1) ; 1 SCI/64 29 450 action continue to apply to those who are thus deemed to continue in service but not to others". Section 10 of the Indian Independence Act provides or the Secretary of State 's Services and lays down that every person who having been appointed by the Secretary of State, or Secretary of State in Council, to a civil service of the Crown in India continues on and after the appointed day to serve under the Government of either of the new Dominions or of any Province or part thereof, shall be entitled to receive the same conditions of service as respects remuneration, leave and pension and the same rights as respects disciplinary matters or, as the case may be, as respects the tenure of his office, or rights as similar thereto as changed circumstances may permit as that person was entitled to immediately before the appointed day, i.e. August 15, 1947 By virtue of this provision those members of the Secretary of State 's Services who continued to serve the Government of India or the Government of any Province from August 15, 1947, were entitled to the protection of section 10. What Rajagopalan 's case(" decided was that the Government of India was not bound to continue in service every member of the Secretary of State 's Services because of section 10 of the Indian independence Act; but that the protection of that section only applied to such members of the afore said services whose services the Government of India agreed to continue after August 14, 1947. In Rajagopalan 's case(" the Government of India did not agree to continue Rajagopalan 's services and therefore, he could not claim the protection of section 10 of the Indian Independence Act. In the appellant 's case his service continued after the transfer of power and therefore he was entitled to the protection of section 10 of the Indian Independence Act, which was almost in similar terms as article 314 of the Constitution so far as disciplinary matters were concerned. On August 14, 1947, however, the India Provisional Constitution) Order, 1947, was promulgated as G.G.O. 14. By that Order, section 247 of the Government of India was substituted by a new section and sub sections (2) and (3) (1) ; 451 thereof to which we have already referred were repealed. The substituted section 247 read as under: "Conditions of service of persons orginally recruited by Secretary of State The conditions of service of all persons who, having been appointed by the Secretary of State or the Secretary of State in Council to a civil service of the Crown in India, continue on and after the date of the establishment of the Dominion to serve under the Government of the Dominion or of any Province, shall (a) as respects persons serving in connection with the affairs of the Dominion, be such as may be prescribed by rules made by the Governor General; (b) as respects persons serving in connection with the affairs of a Province (i) in regard to their pay, leave, pensions, general rights as medical attendance and any other matter which immediately before the establishment of the Dominion was regulated by rules made by the Secretary of State, be such as may be prescribed by rules made by the Governor General; and (ii) in regard to any other matter, be such as may be prescribed by rules made by the Governor of Province. " It will be clear from this that sub sections (2) and (3) of section 247 disappeared on August 14, 1947. No rules framed by the Governor General under the new section with respect to what we have called interim suspension have been brought to our notice. Therefore no power was left in the Governor General or the Governor, as the case may be, to suspend a member of the former Secretary of State 's Services as an interim measure and only the appointing authority could suspend such a public servant, which in the changed circumstances would be the Government of India. The explanation for this may be that as the Secretary of State disappeared and his place was taken by the Government of India, 452 it might not have been thought necessary to continue the further powers conferred by section 247 (2) in addition to the general power of the appointing authority to suspend. Be that as it may, the fact remains that on August 14, 1947, section 247 (2) disappeared and therefore the Governor General and the Governor lost the power to suspend as an interim measure a member of the former Secretary of State 's Services and such power could only be exercised by the appointing authority which in the changed circumstances must be deemed to be the Government of India. As for suspension as a punishment that continued to be provided in the Appeal Rules and no change was made therein. It has however been urged that as the conferral of Independence on India brought about an automatic and legal termination of service on the date of Independence, there must in law have been reappointment of all members of the former Secretary of State 's Services. This reappointment in case of those serving in connection with the affairs of a Province must be deemed to have 'been made by the Governor of the Province concerned and consequently the Governor will have the power to suspend as the appointing authority. We are of opinion that there is no force in this argument. The antecedent circumstances with respect to such Services have been fully dealt with in Rajagopalan 's case (1) and those circumstances show that the question of the retention of officers serving in these Services was dealt with between the Government of India and His Majesty 's Government and it was the Government of India which decided ,that all such officers should continue except those whom the Government of India, was not prepared to invite to continue and in the case of this limited class the Government of India agreed to compensation. It was in consequence of this agreement between the Government of India and His Majesty 's Government that section 10 of the Independence Act provided that those officers who continued would have the same conditions of service etc. as they were entitled to immediately before August 14, 1947. The Governors of Provinces were nowhere in the picture in this matter and we can see (1) ; 453 no warrant for holding that the appointment must be deemed to be by the Governors of Provinces where such officers were serving in connection with the affairs of a Province. It is true that the Indian Administrative Service as an all India Service was legally and formally constituted in 1951. It is also true that under section 10 of the Indian Independence Act members of the former Secretary of State 's Services continued on and after August 14, 1947, to serve under the Government of either of the new Dominions or of any Province or part thereof It is also true that there are some passages in the correspondence between His Majesty 's Government and the Government of India which suggest that His Majesty 's Government was thinking on the lines that members of the former Secretary of State 's Services will become members of the Provincial Services. These however are not conclusive of the matter and we have to find out what actually took place after this exchange of correspondence between the Government of India and His Majesty 's Government in connection with the former Secretary of State 's Services. We have already indicated that section 10 was incorporated in the Indian Independence Act in consequence of this correspondence between the Government of India and His Majesty 's Government. Thereafter we find that the India (Provisional Constitution) Order, 1947 (i.e. G.G.O. 14) was passed on August 14,1947, under powers conferred on the GovernorGeneral by virtue of section 9 (1) (a) of the Indian Independence Act. Article 7 (1) of that Order is in these terms: "(1) Subject to any general or special orders or arrangements affecting his case, any person who immediately before the appointed day is holding any civil post under the Crown in connection with the affairs of the Governor General or Governor General in Council or of a Province other than Bengal or the Punjab shall, as from that day, be deemed to have been duly appointed to the corresponding post under the,Crownin connec 454 tion with the affairs of the Dominion of India or, as the case may be, of the Province. " Reading this provision along with the provision in section 10 of the Indian Independence Act, it would in our opinion be right to say that so far as the. members of the former Secretary of State 's Services are concerned they must be deemed to have been appointed to the posts on which they were serving at the time of conferral of Independence, by the Govemmentof India. The deemed appointment under article 7 (1) of G.G.O. 14 was "subject to any general or special orders or arrangements affecting his case", and these arrangements are clear from the correspondence which ensued between the Government of India and His Majesty 's Government. That correspondence and the special orders or arrangements contemplated by article 7 (1) of G.G.O. 14 show that so far as the members of the former Secretary of State 's Services were concerned, it was the Government of India which took the final decision whether to continue such officers or not. It is true that in so doing it consulted the various Provincial Governments and was to a large extent guided by the views of the Provincial Governments, particularly in connection with such officers who were serving in connection with the affairs of the Provinces; even so, as the facts in Rajagopalan 's case(1) show, the final decision whether to continue or not a member of the former Secretary of State 's Services was taken by the Government of India. In these circumstances it would in our opinion be reasonable to hold that in the case of the members of the former Secretary of State 's Services it was the Government of India which must be deemed to have appointed them after the conferral of Independence on India to the respective posts which they were holding whether under the Government of India or under the Governments of Provinces. This conclusion is reinfored by the fact that the system in force before 1947 was that all members of the Secretary of State 's Services were assigned to one Province or other and from them such members as were necessary used to be on deputation to the Government of India for serving it directly. It would be very anomalous (1) [1955].2 S.C.R. 541. indeed that the accident whether an officer was serving on August 13, 1947, on deputation under the Government of India directly or in the Province to which he was assigned should determine who the appointing authority must be deemed to be on the date of the transfer of power. Such an anomaly could in our opinion never have been intended and we have no doubt therefore in view of the history dealt with in Rajagopalan 's case(1) that on the conferral of Independence, even if there was legal termination of the services of members of the former Secretary of State 's Services, the reappointment must be deemed to be by the Government of India and not by the Governors of Provinces even in the case of officers who were serving in connection with the affairs of Provinces. In this connection our attention has been drawn to section 241 (1) of the Government of India Act 1935 as it then stood, which is in these terms: "(1) Except as expressly provided by this Act, appointments to the civil services of, and civil posts under, the Crown in India, shall be made (a) in the case of services of the Dominion, and posts in connection with the affairs of the Dominion, by the Governor General or such person as he may direct; (b) in the case of services of a Province, and posts in connection with the affairs of a Province, by the Governor or such person as he may direct." This provision in our opinion does not apply in the peculiar circumstances arising out of the transfer of power in August 1947. It is a general provision relating to appointments to civil services and civil posts under the Dominion or under the Provinces. It has in our opinion nothing to do with the case of members of the civil services and holders of civil posts who were deemed to have continued by virtue of article 7 of G.G.O. 14 of August 14, 1947. Clause (b) of section 241 (1) therefore cannot in our opinion lead to the inference that in the case of those members of the former Secretary of State 's (1) 456 Services who were deemed to have been appointed in connection with the affairs of a Province under article 7 (1) of G.G.O. 14, the appointments must be deemed to have been made by the Governor. Such deemed appointments in our opinion must depend for their validity on article 7 G.G.O 14 and not on section 241 of the Government of India Act which is not a deeming provision and therefore we have to look to article 7 (1) to find out by whom the appointments must be deemed to have been made in these of the members of the former Secretary of State 's Services. As article 7 opens with the words "subject to any general or special orders or arrangements affecting his case " (i.e. each individual officer 's case), it must be held in view of the history which is elaborately set out in Rajagopalan 's case( ) that so far as members of the former Secretary of State 's Services were concerned, it was the Government of India who must be deemed to have made the appointments in view of the special orders and arrangements with respect to such officers. Reliance in this connection was also placed on the amendment of section 240 (2) of the Government of India Act by the same G.G.O. Section 240 (2) as it originally stood provided that " no such person as aforesaid (meaning thereby a member of a civil service of the Crown in India or a person holding any civil post under the Crown in India) shall be dismissed from the service of His Majesty by any authority subordinate to that by which he was appointed". Amendment of this sub section became necessary as the Secretary of State for India was disappearing and some authority had to be provided which could dismiss members of the former Secretary of State 's Services. G.G.O. 14 therefore provided that no member of a Secretary of State 's Services who continued in service after August 14, 1947, shall be dismissed by any authority subordinate to the Governor General or the Governor according as that person was serving in connection with the affairs of the Dominion or of a Province. This amendment gave power to the Governor to dismiss even members of the former Secretary of State 's Services and stress has been laid on behalf of (1) 457 the respondent on this amendment and it is urged that this shows that appointments of such members who were serving in connection with the affairs of the Provinces must be deemed to have been made by the Governor concerned. It appears however that the amendment by which the Governor could dismiss a member of the former Secretary of State 's Services may have crept in by inadvertence, for it would prima facie be against the provisions of the guarantee contained in s.10 of the Indian Independence Act. In any case this sub section was further amended by G.G.O. 34 and the power of dismissal was only vested in the Governor General and was taken away from the Governor. We are therefore of opinion that no inference can be drawn from the fact that for a short time section 240 (2) provided that the Governor may dismiss a member of the former Secretary of State 's Services, that the appointments of such members who were serving in connection with the affairs of the Province was by the Governor, and not by the Government of India. Such an inference is in our opinion against the conclusion which can be plainly drawn from the history relating to the continuance and appointment of the members of the former Secretary of State 's Services at the time of conferral of Independence and the provisions of article 7 (1) of G.G.O. 14 of August 14, 1947. The final position therefore on January 25, 1950, with respect to suspension of a member of the former Secretary of State 's Services whether as a punishment or as an interim measure pending departmental enquiry or pending a criminal proceeding was this. Such member could be suspended under the general law by the appointing authority, which in the changed circumstances was, the Government of India, as an interim measure pending a departmental enquiry or pending a criminal proceeding, but there was no power in any other authority to pass such an order of interim suspension, for as we have already indicated the power under section 247 (2) was repealed by G.G.O.14 of August 14. Besides this power of interim suspension otherwise than as a punishment, the power to suspend 458 as punishment continued under r. 49 of the Appeal Rules and an order of suspension made in exercise of that power was subject to appeal under r. 56 etc. , thereof So far as payment during the period of interim suspension or during the period of suspension as a penalty is concerned, section 247 (3) had disappeared and therefore the general provision contained in F.R. 53 applied. That general provision has made some distinction between the members of the Indian Civil Service and others; but that is a matter of detail, in which it is unnecessary to go. So the position immediately before the commencement of the Constitution was that members of the former Secretary of State 's Services could be suspended either as an interim measure pending departmental enquiry or pending criminal proceeding or as a punishment. Where suspension was as an interim measure and not as a punishment such suspension could only be by the appointing authority, which in the changed circumstances should be deemed to be the Government of India. Such interim suspension was not subject to any appeal. So far as suspension as a punishment was concerned, r. 49 of the Appeal Rules applied and the authorities specified in these Rules could pass an order of suspension as a punishment and that order would be subject to appeal provided in r. 56 and other rules therein. As to the payment during the period of suspension that was governed by F.R. 53. It is this position which was protected by article 314 of the. Constitution so far as suspension of members of the former Secretary of State 's Services was concerned whether as an interim measure or as a punishment. Then we come to the Discipline Rules 1955. Rule 3 of these Rules provides for penalties and omits suspension as a penalty. Now if suspension had remained a penalty under r. 3 of the Discipline Rules, the appellant would have been entitled to the same rights as respects suspension as a punishment or rights as similar thereto as changed circumstances would permit in view of article 314. But r. 3 of the Discipline Rules has altogether done away with the penalty of suspension for members of 459 the Indian Administrative Service, which includes the members of the lndian Civil Service under r. 3 (a) and (b) of the Recruitment Rules. Further rules corresponding to the Discipline Rules was repealed by r. 23 of the Discipline Rules , so after the Discipline Rules came into force in 1955 suspension could no longer be inflicted as a penalty on a member of the Indian Administrative Service (including members of the Indian Civil Service who became members of the Indian Administrative Service). It is therefore unnecessary for us to consider whether the order of July 18, 1959, can be justified as a punishment and if so whether the memorial provided by r. 20 of the Rules is a sufficient protection for the purpose of article 314 which speaks of "rights as similar thereto as changed circumstances may permit". Nor is it the case of the respondent that the appellant was suspended by way of punishment by the order of July 18, 1959. The respondent justifies the said order under r. 7 ( 3) of the Discipline Rules and thus the case of the respondent is that the appellant was suspended not as a punishment but that the order of suspension was passed by the Governor as an interim measure which he could do either pending a departmental enquiry or pending a criminal charge. The appellant has thus been suspended by the order of July 18, 1959, not as a punishment but as an interim measure pending a criminal charge against him; and this is what practically in terms the order says, for it places the appellant immediately under suspension because a criminal case was pending against him. But as we have already pointed out the power to pass an order of interim suspension in the case of a member of the former Secretary of State 's Services on January 25, 1950, was only in the appointing authority, (namely, the Government of India). The power to suspend a member of the Indian Administrative Service which the appellant became by virtue of r. 3 of the Recruitment Rules as punishment has disappeared from r. 3 of the Discipline Rules 1955. The appellant therefore could not be suspended by the Governor as an interim measure and such suspension could only be by the Government of India. The proper procedure therefore in a case 460 where the State Government wants a member of the former Secretary of State 's Services to be suspended pending departmental enquiry or pending investigation, inquiry or trial of a criminal charge against him is to approach the Government of India and ask it as the appointing authority to suspend such officer as an interim measure. It is not open to the Government of India by framing a rule like r. 7 of the Discipline Rules to take away the guarantee as to Disciplinary matters contained in article 314. We have already said that the guarantee in the case of a member of the former Secretary of State 's Services is that in disciplinary matters his rights would be the same or as similar thereto as changed circumstances would permit as they were immediately before the commencement of the constitution. The right in the matter of interim suspension As distinct from suspension as a punishment was that a member of the former Secretary of State 's Services could not be suspended by any authority other than the Government of India. That was guaranteed by article 314 and could not be taken away by framing a, rule like r. 7 of the Discipline Rules. We have already referred to Bakshi 's case(" in which it has been held that the rights guaranteed by article 314 of the Constitu tion could not be destroyed or taken away by the Central Government in exercise of its rule making power ' In the present case the right guaranteed to a member of the former Secretary of State 's Services with respect to interim suspension (as distinct from suspension as a punishment is that such a member cannot be so suspended except by the appointing authority which in the changed circumstances is the Government of India. That right has in our opinion been violated by r. 7 of the Discipline Rules insofar as it permits any authority other than the Government of India to suspend pending a departmental enquiry or pending a criminal charge a public servant who was a member of the, former Secretary of State 's Services. Rule 7 therefore insofar as it permits this violation of the guarantee contained in article 314 with respect to interim suspension (other than suspension (1) [1962] Supp. I S.C.R. 505. 461 as a punishment) is to that extent ultra vires article 314 i.e. insofar as it applies to the members of the Indian Adminstrative Service who fall within cls. (a) and (b) of r. 3 of the Recruitment Rules. it follows therefore that the order of the Governor dated July 18, 1959, purporting to be passed under r. 7 (3) of the Discipline Rules is without authority and must be set aside. This brings us to the question of relief to be granted to the appellant. it appears that on September 11, 1963, the Governor passed an order by which he reinstated the appellant for the period from July 18, 1959, to April 4, 1963, and granted him his full emoluments for that period. The writ petition in the present case was filed in February 1962. So the appellant is apparently not entitled to any further relief in the matter of his emoluments besides what has been granted to him by the Governor. The order of reinstatement contained therein is unnecessary in view of our decision and the order granting full emoluments may be taken to be in pursuance of our judgment. We therefore allow the appeal and declare r. 7 of the Discipline Rules insofar as it applies to members of the Indian Administrative Service who are members thereof by virtue of r. 3 (a) and (b) of the Recruitment Rules to be bad to the extent to which it permits an authority other than the Government of India to suspend as an interim measure (and not as a punishment) such members of the Services. In consequence we set aside the order of the Governor dated July 18, 1959. As however the order of September, 1963, has granted all such monetary reliefs to the appellant as we could grant him on setting aside the order of July 18, 1959, no further relief can be granted to the appellant. We order the respondent the State of Punjab to pay the costs of the appellant in this Court as well as in the High Court. RAGHUBAR DAYAL J. I am of opinion that this appeal should be dismissed. The appellant a member of the Indian Civil Service, was serving under the Government of Madras immediately before the appointed day ', i.e. August 15 462 1947, as laid down in sub section (2) of section I of the Indian Independence Act, 1947 (10 & 11 Geo. 6, Ch. 30) hereinafter referred to as the Independence Act. He continued to serve under the Government of Madras on and after the appointed day. Subsequently, he was transferred to the State of Punjab where he was serving on ,,July 18, 1959, when he was suspended by the Governor of Punjab as a criminal case was pending against him. 'the appellant was a member of the Indian Administrative Service in 1959 and the order of suspension appears to have been made by the Governor in exercise of the power conferred by r. 7 of the All India Services (Discipline and Appeal) Rules, 1955, hereinafter referred to as the Discipline Rules. The appellant challenges the validity of this order on the ground that this rule violates the provisions of article 314 of the Constitution. His contention is that prior to August 15, 1947, a member of the Indian Civil Service could be suspended by way of punishment in view of r. 49 of the Civil Services (Classification, Control and Appeal) Rules, hereinafter referred to as the Classification Rules and that there was no provision for his suspension otherwise than as a penalty and that his suspension, as a disciplinary measure, though permissible, would have been then treated as suspension by way of penalty and therefore as subject to an apeal under r. 56 of the Classification Rules. No appeal is provided under the Discipline Rules against an order of suspension under r. 7 which therefore violates article 314 of the Constitution as, according to that article, he was entitled to receive from the Government the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances, permitted as he was entitled to immediately before 'the commencement of the Constitution. He further contends that sub section (2) of section 10 of the Independence Act guaranteed to him the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances permitted, as he was entitled to immediately before the appointed day. It was further contended, during the course of the submissions in Court, that though prior to the appoin 463 ted day an order of suspension during the pendency of a departmental enquiry or of a criminal charge could have been made only by the Governor General or the Governor, such an order thereafter and till January 26, 1950 could be made only by the Governor General, and that therefore such a suspension order subsequent to the commencement of the Constitution could be made by the Union Government and not by the Government of Punjab and that for this reason too, r. 7 of the Discipline Rules empowering the State Government to make an order of such suspension violates article 314. I need not discuss the various points on which I agree with my learned brother Wanchoo, J. I agree that the expression 'changed circumstances ' in article 314 only refer to the constitutional changes which occurred after the transfer of power in August, 1947, and the coming into force of the Constitution in January, 1950, that suspension during the pendency of disciplinary proceedings or of a criminal charge is related to disciplinary matters within the meaning of those words in article 314, that from the appointed day there was no express provision in the Government of India Act or in the rules framed thereunder empowering the Governor General or the Governor to suspend, otherwise as penalty, officers appointed by the Secretary of State for India and that any order of suspension pending enquiry against a person appointed by the Secretary of State on a day immediately before the coming into force of the Constitution had to be made by the Government in the exercise of the general power of suspension which an employer has with respect to his employee, that this general power an employer has to suspend an employee pending an enquiry into his conduct vests in the appropriate authority where the Government is the employer and a public servant is the employee and that such an authority in the case of Government, in view of the peculiar structure of the hierarchy of Government, be taken to be the, authority which has the power to appoint the public servant concerned. I am however. further of opinion that the appropriate authority in this connection can also include officers superior to 464 the appointing authority and that in the case of members of All India Services serving under any state includes the Governor who, as the executive head of State, has administrative control cover all officers serving under the State Government. It would be anomalous to hold that the Governor could not suspend a person, appointed by the Secretary of State, during the pendency of departmental proceedings or a criminal charge against him, though he could have imposed a penalty of suspension on such a person in view of rr. 49 and 62 of the Classification Rules which were in force between the appointed day and January 25, 1950, and continued in force subsequently, up to the coming into force of the Discipline rules. 1, however, do not rest my decision on this view as, in my view, the appellant is to lie deemed to have been appointed by the Governor of Madras, on the appointed day, to the post corresponding to ,the post he was holding immediately before the appointed day under the Madras Government. I now deal with the question of the authority which should be taken to be the appointing authority for persons who had been appointed by the Secretary of State to the Civil Services or to any post under the Crown and who continued to serve the Government after the appointed day. To determine this question it is necessary to consider the following matters: (1) Did the Service known as the Indian Civil Service, whose members were to be recruited by the Secretary of State for India in view of section 244 (1) of the Government of India Act, cease to exist on and from the appointed day and, if so, whether any other AR India Service took its place immediately after it had ceased to exist? (2) If it ceased to exist, were the services of the members of the Indian Civil Service terminated immediately before the appointed day? (3) Which members of the Service continued in service of the Government on or after the appointed day. (4 ) Whether those who so continued did so on account of their becoming servants of the new Government under the provisions of any Act, or their continuance in service was on account of their fresh appointment. (5) If it was due to fresh 465 appointment, which authority appointed them and to which post or service Before I deal with the above questions, I may set out the relevant provisions which have a bearing in this connection. The Independence Act was enacted by the British Parliament on July 18, 1947, for setting up in India two independent Dominions and to provide for necessary consequential matters. By sub section (1) of section 1, two independent Dominions known as India and Pakistan were to be set up from August 15, 1947. Subsection ( 2) of that section provided for their being referred to as the new Dominions and August 15, 1947, being referred to as the appointed day. One of the consequences of the setting up of the new Dominions was stated in sub section (1) of section 7 to be that His Majesty 's Government in the United Kingdom was to have no responsibility as respects the government of any of the territories which, immediately before the appointed day, were included in British India. Section 9 empowered the Governor General to make such provisions by order as appeared to him to be necessary or expedient for certain purposes mentioned therein. Subsections (1) and (2) of section 10 of the Act read: "(1) The provisions of this Act keeping in force provisions of the Government of India Act, 1935, shall not continue in force the provisions of that Act relating to appointments to the civil services of, and civil posts under, the Crown in India by the Secretary of State, or the provisions of that Act relating to the reservation of posts. (2) Every person who (a) having been appointed by the Secretary of State, or Secretary of State in Council, to a civil service of the Crown in India continues on and after the appointed day to serve under the Government of either of the new Dominions or of any Province or part thereof; or (b) having been appointed by His Majesty before the appointed day to be a judge of the Federal SCI/64 30 466 Court or of any court which is a High Court within the meaning of the Government of India Act, 1935, continues on and after the appointed day to serve as a judge in either of the new Dominions, shall be entitled to receive from the Governments of the Dominions and Provinces or parts which he is from time to time serving or, as the case may be, which are served by the courts in which he is from time to time a judge, the same conditions of service as respects remuneration, leave and pension, and the same rights as respects disciplinary matters or, as the case may be, as respects the tenure of his office, or rights as similar thereto as changed circumstances may permit, as that person was entitled to immediately before the appointed day The Governor General, in the exercise of the powers conferred on him by section 9 made the India (Provisional Constitution) Order, 1947 (G.G.O. 14 of 1947), hereinafter called the Provisional Constitution Order. Article 7(1) of this Order is: "Subject to any general or special orders or arrangements affecting his case, any person who immediately before the appointed day is holding any civil post under the Crown in connection with the affairs of the Governor General or GovernorGeneral in Council or of a province other than Bengal or the Punjab shall, as from that day, be deemed to have been duly appointed to the corresponding post under the Crown in connection with the affairs of the Dominion of India or, as the case may be, of the Province." Sub section (1) of section 241 of the Government of India Act, as modified by this Order, reads: "Except as expressly provided by this Act, appointments to the civil services of, and civil posts under, the Crown in India, shall be made (a) in the case of services of the Dominion, and posts in connection with the affairs of the 467 Dominion, by the Governor General or such person as he may direct; (b) in the case of services of a Province, and posts in connection with the affairs of a Province, by the Governor or such person as he may direct." Section 247 of the Government of India Act as modified reads: "The conditions of service of all persons who, having been appointed by the Secretary of State or the Secretary of State in Council to a civil service of the Crown in India, continue on and after the date of the establishment of the Dominion to serve under the Government of the Dominion or of any Province shall, (a) as respects persons serving in connection with the affairs of the Dominion be such as may be prescribed by rules made by the GovernorGeneral; (b) as respects persons serving in connection with the affairs of a Province (i) in regard to their pay, leave, pensions, general rights as to medical attendance and any other matter which immediately before the establishment of the Dominion was regulated by rules made by the Secretary of State, be such as may be prescribed by rules made by the GovernorGeneral; and (ii) in regard to any other matter be such as may be prescribed by rules made by the Governor of the Province. " Sections 244 to 246 of the Government of India Act, 1935, which dealt with Services recruited by the Secretary of State was omitted from the Act by this Order. Reference may also be made to the announcement by His Excellency the Viceroy on April 30, 1947. It purported to relate to grant of compensation for premature termination of their service in India to members of the Civil Services appointed by the Secre 468 tary of State and to regular officers and British Warrant Officers of the Indian Naval and Military Forces. Its first 7 paragraphs are set out at pp. 548 to 550 in State of Madras vs K.M. Rajagopalan(1). Its para 8 stated inter alia: "In pursuance of their wish to give all possible help to the Government of India in building up the new services, His Majesty 's Government agree 'that their obligation covers the claim to ultimate compensation of those British members of the Services who are asked to serve on in India and decide to do so. " It may also be mentioned that subsequent to June 3, 1947, the Government of India made enquiries through the Provincial Governments from the members of the Secretary of State 's Services, including the Indian Civil Service. about their desire to continue in service of the Government after the transfer of power and also made enquiries from the Provincial Governments themselves about their readiness to retain those officers in service who expressed their desire to continue in service. This Court had occasion to discuss the effect of the steps taken by the Government of India prior to the appointed day and of the provisions of the Independence Act and the Provisional Constitution Order in Rajagopalan 's case(1) Rajagopalan was a member of the Indian Civil Service and was serving in the Province of Madras till August 14, 1947, when his services were terminated, though he had expressed his willingness to continue in the service of the, Govern.ment of Madras on and after the appointed day. What this Court directly held and observed in connection with the points urged before it in that case would be mentioned at appropriate places in discussing the five points I have formulated earlier. This first two points were directly decided in that case. This Court held that the Secretary of State and his Services disappeared as from the appoin (1) ; 469 ted day and that, section 10(2) of the Independence Act and article 7(1) of the Provisional Constitution Order proceeded on a clear and unequivocal recognition of the validity of the various special orders and the individual arrangements made and amounted to an implicit statutory recognition of the principle of automatic termination of the Services brought about by the political change. It is clear therefore that the Indian Civil Service, one of the Secretary of State 's Services, ceased to exist from the appointed day and that the services of its members automatically terminated on August 14, 1947. This Court had not to consider whether any All India Service was set up to take the place of the Indian Civil Service on and from the appointed day, as the termination of Rajagopalan 's services was held to be valid. There is nothing on the record to show that any such new Service took the place of the Indian Civil Service at the changeover, though, subsequently, the Indian Administrative Service was set up as an All India Service. When it was actually set up is not known. Article 312 of the Constitution states in cl. (2) that the Services known at the commencement of the Constitution as the Indian Administrative Service and the Indian Police Service shall be deemed to be services created by Parliament under that article. The All India Services Act, 1951 (Act LXI of 1951) defined an All India Service to mean the service known as the Indian Administrative Service or the service known as the Indian Police Service. The Indian Administrative Service Recruitment Rules, 1954, came into force in 1954 and its r. 3 dealing with the constitution of the service provides inter alia that the Service shall consist of (a) members of the Indian Civil Service, not permanently allotted to the judiciary; (b) members of the Indian Civil Service permanently allotted to the judiciary who have been holding executive posts from the date of commencement of the Constitution; (d) persons recruited to the Service before the commencement of those Rules. It appears therefore that all the 470 members of the Indian Civil Service who continued to serve the Government on and after the appointed day were not made members of the Indian Administrative Service and that those who were made members of the Service became members of such Service in 1954. If the Indian Administrative Service had been set up to replace the Indian Civil Service immediately on the appointed day and the erstwhile members of the Indian Civil Service had become its members, the provisions of r. 3 (a) and (b) would have been different from what they are. This indicates that the Indian Administrative Service did not take the place of the Indian Civil Service automatically after the changeover on the appointed day and that therefore the members of the Indian Civil Service who continued in service did not continue so as members of any All India Service. The Viceroy 's announcement dated April 30, 1947, makes no mention of any All India Service replacing the Indian Civil Service immediately on the transfer of power though it specifically mentioned in para 8 about the giving of all possible help to the Government of India in building up the new Services and to the members of the Secretary of State 's Services continuing to serve under the Government in India after the transfer of power. The provisions of article 7(1) of the Provisional Constitution Order also do not refer to the persons in the Secretary of State 's Services to continue in service as members of any All India Service though it specifically deals with the appointment of such other employees of Government to the posts they had held on the day immediately preceding the appointed day. I am therefore of opinion that the service of the appellant as a member of the Indian Civil Service came to an end on August 14, 1947, and that thereafter he did not automatically or otherwise become member of any All India Service on August 15, 1947. In connection with point No. 3 formulated by me. this Court said in Rajagopalan 's case(1) at P. 552 (1) ; 471 that the continuance of service was contemplated only in respect of such of the previous servants who intimated their desire for the continuance of their services and whose offer in that respect was accepted, and at p. 563 that sub section (2) of section 10 of the Independence Act had nothing to say as to who were the persons who would continue in service and receive the benefit that being obviously left to be provided by delegated 'legislation in the shape of Orders of the Governor General and at p. 565 that in view of the provisions of article 7(1) of the Provisional Constitution Order, all persons who were previously holding civil posts were deemed to have been appointed and hence to continue in service excepting those whose case was governed by general or special orders or arrangements affecting their cases. It is clear therefore that only those members of the Secretary of State 's Services continued in service who had been holding civil posts immediately before the appointed day and were deemed to have been appointed to the corresponding post in view of the provisions of article 7 (1) of the Provisional Constitution Order. The persons who had been holding civil posts immediately before the appointed day did not automatically become servants of the new Government on the appointed day. Article 7(1) of the Provisional Constitution Order contemplates 'deemed appointment ' of such persons to their respective posts on that day. The language of this article is not consistent with any suggestion that they automatically, by the force of the Independence Act or the Provisional Constitution Order, became holders of the respective posts on the appointed day. The language is very much different from the language used in articles 374, 376, 377 and 378 of the Constitution which provide for certain persons holding office immediately before the commencement of the Constitution becoming, on such commencement, holders of corresponding posts on such commencement. The language is also different from that of article 375 of the Constitution which deals with the continuance of courts, authorities 472 and officers after the commencement of the Constitution and reads: "All courts of civil, criminal and revenue jurisdiction, all authorities and all officers, judicial, executive and ministerial, throughout the territory of India, shall continue to exercise their respective functions subject to the provisions of this Constitution. " There is no such expression in this article which would indicate that any of these officers had to be freshly appointed or would be deemed to have been appointed to their respective posts on the commencement of the Constitution. The language of article 7(1) of the Provisional Constitution Order correspond to some extent to that of section 58 of 21 & 22 Vic. Cap. CVI, 1858, an Act for the better Government of India, which was passed when the .,Government of India was transferred to Her Majesty from the East India Company. Section 58 reads: "All persons who at the time of the commence ment of this Act shall hold any offices, employments, or commissions whatever under the said Company in India shall thenceforth be deemed to hold such offices, employments, and commissions under Her Majesty as if they had been appointed under this Act. . . " The language of article 7(1) of the Provisional Constitution Order, for purposes of comparison, may be just noted, and is ". any person who immediately before the appointed day is holding any civil post under the Crown . shall, as from that day, be deemed to have been duly appointed to the corresponding post under the Crown. " The language of section 58 of the 1858 Act contemplated a fresh appointment, though deemed appointment, as is abundantly clear from the words 'shall. be deemed to hold such offices, employments, and corn 473 missions. .as if they had been appointed under this Act. ' I am therefore of opinion that the Provisional Constitution Order, by its article 7(1), provided for deemed fresh appointment of the members of the Secretary of State 's Services whose services had terminated automatically on the day immediately preceding the appointed day. I will now deal with the last point as to which authority would be deemed to have appointed the persons who had been in the Secretary of State 's Services, to their corresponding posts on the appointed day. The Government of India Act, 1935, hereinafter called the Act, as modified by the Orders of the Governor General, was in force on that day and the authorities competent to make appointments on that day would be deemed to have made the appointments of the erstwhile servants in the Secretary of State 's Services. No other authority could have made those appointments and therefore no other authorities could be deemed to have made those appointments which were deemed to be made in view of the provisions of article 7(1) of the Provisional Constitution Order. Section 241 of the Act provided that the GovernorGeneral, or such person as he may direct, would make appointments to the civil services of the Dominion and civil posts in connection with the affairs of the Dominion and that the Governor would make appointments to the services of a Province and posts in connection with the affairs of a Province. Such persons of the Secretary of State 's Services who were holding posts in connection with the affairs of a Province would therefore be appointed to the corresponding posts, on the appointed day, by the Governor of that Province, as only he could have made appointments to those posts. It is to be noticed that article 7(1) of the Provisional Constitution Order refers to appointments to posts and not to appointments to Services and that even prior to the appointed day the appoint 474 ments, to the various posts in the Provinces, of members of All India Services allotted to the cadre of the Provinces were also made by the Governor and not by the Governor General. In this respect, with regard to all appointments to posts in connection with the affairs of the Provinces there had been really no ,change. It is contended for the appellant that his deemed appointment to the post corresponding to the post he had held on August 14, 1947, was by the GovernorGeneral or the Government of India. Article 7(1) of the Provisional Constitution Order does not expressly provide so. Section 241 of the Act did not authorize the Governor General to make appointments to posts in connection with the affairs of the Provinces. The provisions of article 7(1) of the Provisional Constitution Order refer to all the persons employed in the civil services and holding civil posts under the Crown and are not restricted to those persons only who held posts and had been appointed by the Secretary of State. The mere fact that the Provisional Constitution Order was made by the Governor General would not lead to the result that the deemed appointments of all the persons serving under the Crown, whether as members of civil services or as holders of posts, had been made by the Governor General. That could not have been intended. All such employees would be deemed to be appointed by the appropriate authority on the appointed day and the appropriate authority for the appointment of a particular employee is to be found in section 241 of the Act. It is also true that the erstwhile members of the Secretary of State 's Services were not actually reappointed by the appropriate appointing authority and that they were merely deemed to be so appointed in view of the provisions of article 7(1) of the Provisional Constitution Order whose purpose was to validate the continuity of the service of such persons even though they had not been actually appointed. I see no reason why the provisions of section 241 of the Act be not applicable to the deemed appoint 475 ments of such persons who had been in the Secretary of State 's Services. Undoubtedly, it was not a special provision for the deemed appointments at the particular occasion, but was of general application to appointments on and after the appointed day. Appointments, whether actual or deemed to be made by the new Governments immediately on the changeover of the Government, must be governed by its provisions. This Court did not make any reference to section 241 of the Act in Rajagopalan 's Case.(1) This is not because that section did not govern all the erstwhile members of the Secretary of State 's Services, but because the Court was not concerned in that case with the question of such fresh deemed appointments as Rajagopalan did not continue in service as his services were held to be validly terminated on August 14, 1947. It has been urged in support of the appellant 's case that the retention of persons of the Secretary of State 's Services was dealt with between the Government of India and His Majesty 's Government as would appear from the various documents in connection with the steps taken for the setting up of the two Dominions and that only those officers continued in service whom the Government of India invited to continue and that those who were not so invited were to be paid compensation. It is not clear from the antecedent circumstances that it was the Government of India which decided about the continuance in service of such officers of the Secretary of State 's Services who had been prior to the changeover serving under the Government of a Province. Even if it was the Government of India which was to decide and invite the officers to continue, such a decision and invitation cannot amount to its appointing those officers to the various posts in connection with the affairs of a Province, in view of section 241 of the Act. of course, negotiations with respect to the services took place between the Government of India (1) ; 476 and His Majesty 's Government. A Provincial Government could not have continued such negotiations. I do not find any specific mention in any of the documents referred to in Rajagopalan 's Case ' ') to the effect that it was the Government of India which decided which officers were to continue in service. The Viceroy 's announcement dated April 30, 1947, practically sums up the result of the negotiations between the Government of India and His Majesty 's Government. It is clear from what was stated in paragraphs 3 and 6 of this announcement that the undertakings and assurances 'with respect to persons appointed by the Secretary of State and who were to continue in service were given by the Government of India with respect to those who were to continue under its service and by the Provincial Governments with respect to those who would join the Provincial Services. It is said in para 3, which dealt with the terms of pay etc., that the Government of India would then propose to Provincial Governments that they should give similar assurances to members of the Secretary of State 's Services who agreed to join Provincial Services. It was said in para 6 : "His Majesty 's Government have been reviewing the whole position. They have noted the undertaking which the Government of India have given in regard, to officers whom they desire should continue to serve under the Government of India . Many Indian members of the Secretary of State 's services will however become members of provincial services and in their cases His Majesty 's Government 's agreement that the need not be compensated is conditional upon the Provincial Governments guaranteeing the existing terms of service. If they are not prepared to do so His, Majesty 's Government reserve the right to reconsider the matter. It is therefore clear that the Provincial Governments were also concerned in the negotiations though they Were actually made by the Government (1) ; 477 of India and had to agree to guarantee the existing terms of service and safeguards in matters of discipline And had also to agree to pay compensation. It may look anomalous that some persons who had been members of the Secretary of State 's Services may be deemed to have been appointed to their respective posts, on the appointed day, by the Governor of a Province if they had been holding Posts under the Provincial Government and others be deemed to have been appointed by the Governor General if they happened to be then serving posts in connection with the affairs of the Government of India or the Dominion. Such an anomaly was bound to come into existence and had been contemplated during the negotiations between the Government of India and His Majesty 's Government. There was no other choice open to the members of the Secretary of State 's Services who were serving under the Government of a: Province when their services automatically came to an end and when they desired to continue ' in Government service. Their wishes were ascertained in the context of what was taking place. They knew of the; announcement by the Viceroy dated April 30, 1947. It was only with their consent that their services were continued after the changeover. They can therefore have no grievance for being appointed to provincial services or posts under the Provincial Governments and naturally, under its administrative control. In fact, even prior to the changeover, such persons had been under the administrative control of the Provincial Government. This Court, in Rajagopalan 's Case(1), refers at p. 551 to the Government of India asking the Provincial Govemments, by its letter dated June 18, 1947, to state, when forwarding the replies from the individual officers, about their willingness or otherwise to continue in service, whether for any reason they Would prefer such officer not to continue in service notwithstanding his desire to remain in service, and pointing out to the Provincial Government that in case it did not (1) ; 478 desire to retain the services of such persons, the Pro vincial Government would be incurring the liability to pay compensation. Such an enquiry indicates, to my mind, that the decision to continue such persons in service after the changeover rested with the Provincial Government and It was on this account that .it had to bear the liability to the compensation payable to such persons. Such a decision had to be taken by the Provincial Government because it was contemplated that officers serving under the Provincial Government would be appointed to their respective posts after the changeover by that Government itself and that the Government of India will have nothing to do with their appointments. In the circumstances, it follows that it was the Provincial Government which invited such officers to continue in service and not the Government of India. It is true that the Madras Government informed Rajagopalan of the Government 's decision not to retain him in service after August 15, 1947, and stated that a formal communication in that respect would issue from the Government of India. The Government of India in a way approved of the decision of the Madras Government not to continue Rajagopalan in service. But it does not follow that the Government of India 's approval was necessary for the Government of Madras to continue under its service officers whom it was prepared to keep in service. The ter mination of service of such officers was prior to the coming into force of the Act as modified by the Provisional Constitution Order and therefore the termination order had to be formally made by the Government of India. The order had to be passed prior to the changeover and at that time it was proper that any order about the termination of the services be with the approval of the Government of India. The fresh deemed appointment was to be made on August 15, 1947, immediately after the changeover and, in view of the practical difficulties, such a fresh appointment was not actually made but was deemed to have been made, as provided by article 7(1) of the Provisional 479 Constitution Order. When the appointment was to be made of persons serving under the Provincial Governments, there was no necessity of obtaining prior approval of the Government of India to retain such officers in service. I am therefore of opinion that such members of the Secretary of State 's Services who were holdingposts under a Provincial Government immediately before the appointed day and continued in service on and after the appointed day are to be deemed to be appointed to the corresponding posts by the Governor of the Province, in view of the provisions of section 241 of the Act. The appellant was serving under the Madras Government immediately before the appointed day. He will therefore be deemed to be appointed by the Governor of the Province of Madras to the post he was holding on the appointed day. The Governor of the Province was his appointing authority and therefore he could be suspended on the day immediately before the commencement of the Dominion by the Governor of the Province where he might have been then serving. He can at best claim protection of his right of not being suspended pending departmental enquiry or of a criminal charge by any authority of a lower rank. Rule 7 of the Discipline Rules does not provide for such suspension of a person who had been a member of the Secretary of State 's Services by an authority lower than the Governor. The appellant was suspended by the Governor of Punjab on July 18, 1959. He had no right of appeal against such an order of suspension. The Discipline Rules did not provide for an appeal against such an order of suspension and, in not so providing, cannot be said to violate the provisions of article 314 of the Constitution as the appellant had no right of appeal against such an order before the commencement of the Constitution. It follows that r. 7 of the Discipline Rules does not violate the provisions of that Article and that the impugned order of suspension was therefore valid. 480 1 would therefore dismiss the appeal. ORDER in accordance with the opinion of the majority the appeal is allowed with costs in this Court and in the ' High Court.
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The person in this case joined the Indian Civil Service in 1939. He worked in Madras. After India became independent on August 15, 1947, he was moved to Punjab. Later, he became part of the Indian Administrative Service. On July 18, 1959, the Governor of Punjab suspended him. This was done because he had a criminal case against him, according to rule 7(3) of the Indian Services rules about discipline and appeals from 1955. He disagreed with the suspension. He argued in the Punjab High Court that it violated article 314 of the Constitution. He also said it went against rule 49 of the Civil Services rules about classification, control, and appeals. Rule 49 only allowed suspension as a punishment. He argued that before January 26, 1950, there was no rule that allowed suspension unless it was a punishment. The High Court did not agree with him and dismissed his case. Decision: (according to Judges Gajendragadkar, Subba Rao, Wanchoo, and Shah) The usual rules about employers and employees, along with section 247 of the Government of India Act, rule 53 of the Fundamental Rules, and rules 49 and 56 of the Civil Services rules, all showed that people in the Secretary of State's Services could be suspended on August 14, 1947. This could be either a temporary suspension or a punishment. A temporary suspension could be ordered by the Secretary of State (who hired them), or by the Governor General or the Governor (as the legal authority). The court referred to the cases of Management of Hotel Imperial, New Delhi v Hotel Workers ' Union, and T. Cajee vs U. Jormanik Siem. So, it was wrong to say that suspension could only be a punishment under rule 49 of the Appeal Rules before 1947. But, if there was a temporary suspension before 1947, the person could not appeal it. Article 314 of the Constitution protects the rights of people in the Secretary of State's Services. It gives them the same rights they had right before the Constitution started. Suspension while a department or a criminal case is being investigated is included in "disciplinary matters" in that article. It was also wrong to say that when India became independent, the Services ended automatically. It wasn't like everyone in the Secretary of State's Services was rehired. And it wasn't like those working in a province were rehired by the Governor, giving the Governor the power to suspend them. Article 7(1) of India (Provisional Constitution) Order, 1947, along with section 10 of the Independence Act, 1947, shows that the Government of India made the final decision about whether people in the Secretary of State's Services would continue working. So, the Government of India must have hired them to jobs under the government or in the Provinces. Section 241(b) of the Government of India Act, and section 240(2) of that Act (as changed by the India Order of 1947), did not change this. The court referred to the case of State of Madras vs K.M. Rajagopalan. Right before the Constitution started on January 26, 1950, a former member of the Secretary of State's Services could be suspended under the usual laws only by the Government of India (who hired them). This could only be temporary while a department or criminal case was being investigated. No other authority could do this. He could also be suspended as a punishment under section 49 of the Civil Services rules. Rule 53 of the Fundamental Rules controlled pay during a temporary suspension or a suspension as punishment. There was no appeal for a temporary suspension, but rule 56 of the Appeal Rules allowed an appeal for a suspension as punishment. Article 314 of the Constitution was meant to protect these rights. Rule 7 of the All India Services (Discipline and Appeal) Rules, 1955, went against the promise in article 314 about temporary suspensions. So, it was invalid for members of the Indian Administrative Services who fell under rules (a) and (b) of rule 3 of the Indian Administrative Services (Recruitment) Rules, 1954. The Governor's order under rule 7(3) to temporarily suspend the person in this case must be canceled. The correct thing to do would be to ask the Government of India for the temporary suspension. The court referred to the case of The Accountant General, Bihar vs N. Bakshi. According to Judge Dayal: Because of section 241 of the Government of India Act (as changed by the India Order of 1947), members of the Secretary of State's Services who worked for a provincial Government right before August 15, 1947, and continued to work after that, must be considered to have been hired by the Governor of the Province. This is because of article 7(1) of that Order. That article applies to all appointments on and after that date. The person in this case cannot be considered to have been hired by the Governor General or the Government of India. Just because the Order was made by the Governor General, it doesn't mean that he made the appointments. It would be strange to say that the Governor, who controlled the services, could not temporarily suspend someone hired by the Secretary of State. But he could punish them with suspension under rules 49 and 52 of the Civil Services rules, which were still in place until the All India Services rules came into effect in 1955. The Indian Civil Services ended on August 15, 1947, and its members' services ended automatically on August 14, 1947. So, the person's service ended on August 14, 1947. But since he was working for the Madras Government right before August 15, 1947, and continued to do so after that, he must be considered to have been hired by the Governor of Madras for the job he had on that day. Rule 7 of the All India Services (Discipline and Appeal) Rules, 1955, does not violate article 314 of the Constitution. Also, the lack of a right to appeal a temporary suspension does not violate it, since the person didn't have that right before the Constitution. So, his suspension by the Governor of Punjab under rule 7(3) was valid. The court considered the case of State of Madras vs K.M. Rajagopalan.
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service of the Crown in India continues on and after the commencement of this Constitution to serve under the Government of India or of a State shall be entitled to receive from the Government of India and the Government of the State, which he is from time to time serving, the same conditions of service as respects remuneration, leave and pension, and the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances may permit as that person was entitled to immediately before such commencement. " He contended that the Appeal Rules which governed him and which must be held to have continued to govern him in view of the guarantee contained in article 314 provided for suspension as a penalty only and that there was no provision anywhere in any rule or statute immediately before January 26, 1950 on which date the Constitution came into force, providing for suspension otherwise than as a penalty. Therefore it was not open to the Governor to suspend him in the manner in which he did so in the present case, though it was not denied that he could be suspended pending criminal proceedings provided the suspension was as a penalty under r. 49 of the Appeal Rules; on the other hand mere suspension pending a criminal case not inflicted as a penalty was not provided at all by the Rules or the statute governing the appellant immediately before January 26, 1950. The only question that has been debated before us is with respect to suspension whether as a punishment or otherwise of a member of one of the Secretary of State 's Services, in this case the Indian Civil Service, members of which have become members of the Indian Administrative Service under the Recruitment Rules; and it is only this question that falls to be determined in the present appeal. As an illustration take a case where a member of a Secretary of State 's Service could before August, 1947, be dismissed only by the Secretary of State; but after the transfer of power and the coming into force of the Constitution, circumstances have changed and there is no Secretary of State, therefore we have to look to the changed circumstances and find out which would be the authority to dismiss such a member in the changed circumstances. The words are general and must be given their full meaning and would include any kind of suspension, whether as a penalty or otherwise; and this power vested firstly in the Secretary of State or the Secretary of State in Council, as the case may be, under the general law of master and servant and also in the Governor General and the Governor, as the case may be, by virtue of this provision of the statute. Section 10 of the Indian Independence Act provides or the Secretary of State 's Services and lays down that every person who having been appointed by the Secretary of State, or Secretary of State in Council, to a civil service of the Crown in India continues on and after the appointed day to serve under the Government of either of the new Dominions or of any Province or part thereof, shall be entitled to receive the same conditions of service as respects remuneration, leave and pension and the same rights as respects disciplinary matters or, as the case may be, as respects the tenure of his office, or rights as similar thereto as changed circumstances may permit as that person was entitled to immediately before the appointed day, i.e. August 15, 1947 By virtue of this provision those members of the Secretary of State 's Services who continued to serve the Government of India or the Government of any Province from August 15, 1947, were entitled to the protection of section 10. What Rajagopalan 's case(" decided was that the Government of India was not bound to continue in service every member of the Secretary of State 's Services because of section 10 of the Indian independence Act; but that the protection of that section only applied to such members of the afore said services whose services the Government of India agreed to continue after August 14, 1947. The substituted section 247 read as under: "Conditions of service of persons orginally recruited by Secretary of State The conditions of service of all persons who, having been appointed by the Secretary of State or the Secretary of State in Council to a civil service of the Crown in India, continue on and after the date of the establishment of the Dominion to serve under the Government of the Dominion or of any Province, shall (a) as respects persons serving in connection with the affairs of the Dominion, be such as may be prescribed by rules made by the Governor General; (b) as respects persons serving in connection with the affairs of a Province (i) in regard to their pay, leave, pensions, general rights as medical attendance and any other matter which immediately before the establishment of the Dominion was regulated by rules made by the Secretary of State, be such as may be prescribed by rules made by the Governor General; and (ii) in regard to any other matter, be such as may be prescribed by rules made by the Governor of Province. " Therefore no power was left in the Governor General or the Governor, as the case may be, to suspend a member of the former Secretary of State 's Services as an interim measure and only the appointing authority could suspend such a public servant, which in the changed circumstances would be the Government of India. Be that as it may, the fact remains that on August 14, 1947, section 247 (2) disappeared and therefore the Governor General and the Governor lost the power to suspend as an interim measure a member of the former Secretary of State 's Services and such power could only be exercised by the appointing authority which in the changed circumstances must be deemed to be the Government of India. It is also true that under section 10 of the Indian Independence Act members of the former Secretary of State 's Services continued on and after August 14, 1947, to serve under the Government of either of the new Dominions or of any Province or part thereof It is also true that there are some passages in the correspondence between His Majesty 's Government and the Government of India which suggest that His Majesty 's Government was thinking on the lines that members of the former Secretary of State 's Services will become members of the Provincial Services. Article 7 (1) of that Order is in these terms: "(1) Subject to any general or special orders or arrangements affecting his case, any person who immediately before the appointed day is holding any civil post under the Crown in connection with the affairs of the Governor General or Governor General in Council or of a Province other than Bengal or the Punjab shall, as from that day, be deemed to have been duly appointed to the corresponding post under the,Crownin connec 454 tion with the affairs of the Dominion of India or, as the case may be, of the Province. " In these circumstances it would in our opinion be reasonable to hold that in the case of the members of the former Secretary of State 's Services it was the Government of India which must be deemed to have appointed them after the conferral of Independence on India to the respective posts which they were holding whether under the Government of India or under the Governments of Provinces. Such an anomaly could in our opinion never have been intended and we have no doubt therefore in view of the history dealt with in Rajagopalan 's case(1) that on the conferral of Independence, even if there was legal termination of the services of members of the former Secretary of State 's Services, the reappointment must be deemed to be by the Government of India and not by the Governors of Provinces even in the case of officers who were serving in connection with the affairs of Provinces. Such deemed appointments in our opinion must depend for their validity on article 7 G.G.O 14 and not on section 241 of the Government of India Act which is not a deeming provision and therefore we have to look to article 7 (1) to find out by whom the appointments must be deemed to have been made in these of the members of the former Secretary of State 's Services. We are therefore of opinion that no inference can be drawn from the fact that for a short time section 240 (2) provided that the Governor may dismiss a member of the former Secretary of State 's Services, that the appointments of such members who were serving in connection with the affairs of the Province was by the Governor, and not by the Government of India. Such member could be suspended under the general law by the appointing authority, which in the changed circumstances was, the Government of India, as an interim measure pending a departmental enquiry or pending a criminal proceeding, but there was no power in any other authority to pass such an order of interim suspension, for as we have already indicated the power under section 247 (2) was repealed by G.G.O.14 of August 14. Where suspension was as an interim measure and not as a punishment such suspension could only be by the appointing authority, which in the changed circumstances should be deemed to be the Government of India. The respondent justifies the said order under r. 7 ( 3) of the Discipline Rules and thus the case of the respondent is that the appellant was suspended not as a punishment but that the order of suspension was passed by the Governor as an interim measure which he could do either pending a departmental enquiry or pending a criminal charge. We have already said that the guarantee in the case of a member of the former Secretary of State 's Services is that in disciplinary matters his rights would be the same or as similar thereto as changed circumstances would permit as they were immediately before the commencement of the constitution. The right in the matter of interim suspension As distinct from suspension as a punishment was that a member of the former Secretary of State 's Services could not be suspended by any authority other than the Government of India. We have already referred to Bakshi 's case(" in which it has been held that the rights guaranteed by article 314 of the Constitu tion could not be destroyed or taken away by the Central Government in exercise of its rule making power ' In the present case the right guaranteed to a member of the former Secretary of State 's Services with respect to interim suspension (as distinct from suspension as a punishment is that such a member cannot be so suspended except by the appointing authority which in the changed circumstances is the Government of India. 'the appellant was a member of the Indian Administrative Service in 1959 and the order of suspension appears to have been made by the Governor in exercise of the power conferred by r. 7 of the All India Services (Discipline and Appeal) Rules, 1955, hereinafter referred to as the Discipline Rules. His contention is that prior to August 15, 1947, a member of the Indian Civil Service could be suspended by way of punishment in view of r. 49 of the Civil Services (Classification, Control and Appeal) Rules, hereinafter referred to as the Classification Rules and that there was no provision for his suspension otherwise than as a penalty and that his suspension, as a disciplinary measure, though permissible, would have been then treated as suspension by way of penalty and therefore as subject to an apeal under r. 56 of the Classification Rules. It was further contended, during the course of the submissions in Court, that though prior to the appoin 463 ted day an order of suspension during the pendency of a departmental enquiry or of a criminal charge could have been made only by the Governor General or the Governor, such an order thereafter and till January 26, 1950 could be made only by the Governor General, and that therefore such a suspension order subsequent to the commencement of the Constitution could be made by the Union Government and not by the Government of Punjab and that for this reason too, r. 7 of the Discipline Rules empowering the State Government to make an order of such suspension violates article 314. I need not discuss the various points on which I agree with my learned brother Wanchoo, J. I agree that the expression 'changed circumstances ' in article 314 only refer to the constitutional changes which occurred after the transfer of power in August, 1947, and the coming into force of the Constitution in January, 1950, that suspension during the pendency of disciplinary proceedings or of a criminal charge is related to disciplinary matters within the meaning of those words in article 314, that from the appointed day there was no express provision in the Government of India Act or in the rules framed thereunder empowering the Governor General or the Governor to suspend, otherwise as penalty, officers appointed by the Secretary of State for India and that any order of suspension pending enquiry against a person appointed by the Secretary of State on a day immediately before the coming into force of the Constitution had to be made by the Government in the exercise of the general power of suspension which an employer has with respect to his employee, that this general power an employer has to suspend an employee pending an enquiry into his conduct vests in the appropriate authority where the Government is the employer and a public servant is the employee and that such an authority in the case of Government, in view of the peculiar structure of the hierarchy of Government, be taken to be the, authority which has the power to appoint the public servant concerned. It would be anomalous to hold that the Governor could not suspend a person, appointed by the Secretary of State, during the pendency of departmental proceedings or a criminal charge against him, though he could have imposed a penalty of suspension on such a person in view of rr. (2) Every person who (a) having been appointed by the Secretary of State, or Secretary of State in Council, to a civil service of the Crown in India continues on and after the appointed day to serve under the Government of either of the new Dominions or of any Province or part thereof; or (b) having been appointed by His Majesty before the appointed day to be a judge of the Federal SCI/64 30 466 Court or of any court which is a High Court within the meaning of the Government of India Act, 1935, continues on and after the appointed day to serve as a judge in either of the new Dominions, shall be entitled to receive from the Governments of the Dominions and Provinces or parts which he is from time to time serving or, as the case may be, which are served by the courts in which he is from time to time a judge, the same conditions of service as respects remuneration, leave and pension, and the same rights as respects disciplinary matters or, as the case may be, as respects the tenure of his office, or rights as similar thereto as changed circumstances may permit, as that person was entitled to immediately before the appointed day The Governor General, in the exercise of the powers conferred on him by section 9 made the India (Provisional Constitution) Order, 1947 (G.G.O. Sub section (1) of section 241 of the Government of India Act, as modified by this Order, reads: "Except as expressly provided by this Act, appointments to the civil services of, and civil posts under, the Crown in India, shall be made (a) in the case of services of the Dominion, and posts in connection with the affairs of the 467 Dominion, by the Governor General or such person as he may direct; (b) in the case of services of a Province, and posts in connection with the affairs of a Province, by the Governor or such person as he may direct." Section 247 of the Government of India Act as modified reads: "The conditions of service of all persons who, having been appointed by the Secretary of State or the Secretary of State in Council to a civil service of the Crown in India, continue on and after the date of the establishment of the Dominion to serve under the Government of the Dominion or of any Province shall, (a) as respects persons serving in connection with the affairs of the Dominion be such as may be prescribed by rules made by the GovernorGeneral; (b) as respects persons serving in connection with the affairs of a Province (i) in regard to their pay, leave, pensions, general rights as to medical attendance and any other matter which immediately before the establishment of the Dominion was regulated by rules made by the Secretary of State, be such as may be prescribed by rules made by the GovernorGeneral; and (ii) in regard to any other matter be such as may be prescribed by rules made by the Governor of the Province. " This Court had occasion to discuss the effect of the steps taken by the Government of India prior to the appointed day and of the provisions of the Independence Act and the Provisional Constitution Order in Rajagopalan 's case(1) Rajagopalan was a member of the Indian Civil Service and was serving in the Province of Madras till August 14, 1947, when his services were terminated, though he had expressed his willingness to continue in the service of the, Govern.ment of Madras on and after the appointed day. This Court had not to consider whether any All India Service was set up to take the place of the Indian Civil Service on and from the appointed day, as the termination of Rajagopalan 's services was held to be valid. The provisions of article 7(1) of the Provisional Constitution Order also do not refer to the persons in the Secretary of State 's Services to continue in service as members of any All India Service though it specifically deals with the appointment of such other employees of Government to the posts they had held on the day immediately preceding the appointed day. this Court said in Rajagopalan 's case(1) at P. 552 (1) ; 471 that the continuance of service was contemplated only in respect of such of the previous servants who intimated their desire for the continuance of their services and whose offer in that respect was accepted, and at p. 563 that sub section (2) of section 10 of the Independence Act had nothing to say as to who were the persons who would continue in service and receive the benefit that being obviously left to be provided by delegated 'legislation in the shape of Orders of the Governor General and at p. 565 that in view of the provisions of article 7(1) of the Provisional Constitution Order, all persons who were previously holding civil posts were deemed to have been appointed and hence to continue in service excepting those whose case was governed by general or special orders or arrangements affecting their cases. It is clear therefore that only those members of the Secretary of State 's Services continued in service who had been holding civil posts immediately before the appointed day and were deemed to have been appointed to the corresponding post in view of the provisions of article 7 (1) of the Provisional Constitution Order. It may look anomalous that some persons who had been members of the Secretary of State 's Services may be deemed to have been appointed to their respective posts, on the appointed day, by the Governor of a Province if they had been holding Posts under the Provincial Government and others be deemed to have been appointed by the Governor General if they happened to be then serving posts in connection with the affairs of the Government of India or the Dominion. I am therefore of opinion that such members of the Secretary of State 's Services who were holdingposts under a Provincial Government immediately before the appointed day and continued in service on and after the appointed day are to be deemed to be appointed to the corresponding posts by the Governor of the Province, in view of the provisions of section 241 of the Act. The Discipline Rules did not provide for an appeal against such an order of suspension and, in not so providing, cannot be said to violate the provisions of article 314 of the Constitution as the appellant had no right of appeal against such an order before the commencement of the Constitution.
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The person in this case joined the Indian Civil Service in 1939. He worked in Madras. After India became independent on August 15, 1947, he was moved to Punjab. This was done because he had a criminal case against him, according to rule 7(3) of the Indian Services rules about discipline and appeals from 1955. He argued in the Punjab High Court that it violated article 314 of the Constitution. He argued that before January 26, 1950, there was no rule that allowed suspension unless it was a punishment. The High Court did not agree with him and dismissed his case. Decision: (according to Judges Gajendragadkar, Subba Rao, Wanchoo, and Shah) The usual rules about employers and employees, along with section 247 of the Government of India Act, rule 53 of the Fundamental Rules, and rules 49 and 56 of the Civil Services rules, all showed that people in the Secretary of State's Services could be suspended on August 14, 1947. This could be either a temporary suspension or a punishment. A temporary suspension could be ordered by the Secretary of State (who hired them), or by the Governor General or the Governor (as the legal authority). So, it was wrong to say that suspension could only be a punishment under rule 49 of the Appeal Rules before 1947. But, if there was a temporary suspension before 1947, the person could not appeal it. Article 314 of the Constitution protects the rights of people in the Secretary of State's Services. It was also wrong to say that when India became independent, the Services ended automatically. Article 7(1) of India (Provisional Constitution) Order, 1947, along with section 10 of the Independence Act, 1947, shows that the Government of India made the final decision about whether people in the Secretary of State's Services would continue working. The court referred to the case of State of Madras vs K.M. Rajagopalan. Right before the Constitution started on January 26, 1950, a former member of the Secretary of State's Services could be suspended under the usual laws only by the Government of India (who hired them). This could only be temporary while a department or criminal case was being investigated. He could also be suspended as a punishment under section 49 of the Civil Services rules. Rule 53 of the Fundamental Rules controlled pay during a temporary suspension or a suspension as punishment. There was no appeal for a temporary suspension, but rule 56 of the Appeal Rules allowed an appeal for a suspension as punishment. Rule 7 of the All India Services (Discipline and Appeal) Rules, 1955, went against the promise in article 314 about temporary suspensions. So, it was invalid for members of the Indian Administrative Services who fell under rules (a) and (b) of rule 3 of the Indian Administrative Services (Recruitment) Rules, 1954. The Governor's order under rule 7(3) to temporarily suspend the person in this case must be canceled. According to Judge Dayal: Because of section 241 of the Government of India Act (as changed by the India Order of 1947), members of the Secretary of State's Services who worked for a provincial Government right before August 15, 1947, and continued to work after that, must be considered to have been hired by the Governor of the Province. This is because of article 7(1) of that Order. The person in this case cannot be considered to have been hired by the Governor General or the Government of India. Just because the Order was made by the Governor General, it doesn't mean that he made the appointments. It would be strange to say that the Governor, who controlled the services, could not temporarily suspend someone hired by the Secretary of State. But he could punish them with suspension under rules 49 and 52 of the Civil Services rules, which were still in place until the All India Services rules came into effect in 1955. The Indian Civil Services ended on August 15, 1947, and its members' services ended automatically on August 14, 1947. So, the person's service ended on August 14, 1947. But since he was working for the Madras Government right before August 15, 1947, and continued to do so after that, he must be considered to have been hired by the Governor of Madras for the job he had on that day. Rule 7 of the All India Services (Discipline and Appeal) Rules, 1955, does not violate article 314 of the Constitution. Also, the lack of a right to appeal a temporary suspension does not violate it, since the person didn't have that right before the Constitution. So, his suspension by the Governor of Punjab under rule 7(3) was valid. The court considered the case of State of Madras vs K.M. Rajagopalan.
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Civil Appeal Nos. 628 & 629 of 1981. Appeals by Special Leave from the Judgment and Order dated the 21st December, 1979 of the Delhi High Court in E.F.A.(O.S.) No. 5 of 1977. Shankar Ghosh, and D.N. Gupta, for the Appellant in CA. 628/81 & for Respondent in CA. No. 629/81. B. Dutta for the Respondent in CA. 628/81 and for appellants in CA. No. 629/81. The Judgment of the Court was delivered by MADON, J. These cross appeals by special leave arise out of execution proceedings adopted by Forasol, a French Company, having its principal office in Paris, France, against the Oil and Natural Gas Commission, a statutory body incorporated under the oil and Natural Gas Commission Act, 1959 (Act XLIII of 1959), hereinafter for the sake of brevity referred to as 'ONGC '. On July 30, 1962 the Government of India invited global tenders for structural drilling for exploration of oil in the Jaisalmer area of the State of Rajasthan. The tender of Forasol was accepted by the Government of India and in pursuance thereof a contract dated February 17, 1964, headed "Structural Drilling Contract", was entered into between ONGC and Forasol. Under the said contract, ONGC engaged Forasol to carry out structural drilling in relation to the exploration for oil in the Jaisalmer area of the State of Rajasthan on the terms and conditions contained in the said contract. 535 The said contract was for a period of one year commencing from the date of the start of the drilling work. The said contract also gave an option to ONGC to extend the period by one more year. Article IX 3 of the said contract dealt with the currency of payment. It provided as follows: "IX 3.1. The operational fee, standby fee and equipment charges payable to FORASOL have been specified in French Francs in Article IX 1.1.1. to IX 1.1.1. above. The amount payable to FORASOL on account of aforesaid fees and charges shall be computed in French Francs ONGC shall pay 80% of the aforesaid amount in French Francs and the remaining 20% in Indian Rupees using a fixed conversion rate of FF. 1.033=Re. 1.000." Under Article IX 3.2 the cost as well as the insurance, packing, forwarding and clearing charges in respect of the materials provided by Forasol and the freight, insurance, packing, forwarding and clearing charges for transportation from a sea port or air port in France to India and back to a sea port in France or outside France if Forasol so chose, in respect of the rig, equipment, machinery, tools and other materials provided by Forasol were to be reimbursed to Forasol by ONGC in Indian rupees, if the expenditure was initially incurred by Forasol in Indian rupees, otherwise in French Francs. Under a Credit Agreement arrived at between the Government of India and the Government of France, the Government of France had agreed to provide credit facilities to a limited extent to the Government of India for the import of plant, machinery, equipment and materials and for execution of certain projects including oil exploration. Under the said Credit Agreement, credit was to be given by the French suppliers to the Indian buyers in the form of acceptance of payments on deferred basis upon the conditions laid down in the letters dated February 5, 1962, exchanged between the Governments of India and France. Consequently, in respect of the said contract, Forasol had agreed under Article X 1.1 thereof to accept payment of its fees, costs and charges payable in French Francs on deferred basis under the overall conditions of the said letters exchanged between the two Governments and Forasol and ONGC had agreed upon the estimates of the payments to be made to Forasol in French Francs under the said contract, the invoicing rules and the mode of payment. Articles X 2, X 3 and X 4 of the 536 said contract set out such estimates, invoicing rules and the mode of payment. Under Article X 3.3, Forasol was to indicate in each of it invoices the amount payable to it in French Francs and the amount payable to it in Indian rupees under the said contract. So far as the mode of deferred payment of French Francs was concerned, Article X 4.1.1 provided for remittance by ONGC in French Francs immediately following the signing of the said contract of a sum of FF 73, 437.49, being the 19/800th part (i.e. 1.25 per cent) of the total estimated amount of Forasol 's operational and stadby fees and equipment charges, cost of the materials to be provided by Forasol and transportation charges in respect of Forasol 's rig, equipment, machinery and tools. Under Article X 4.1.2, subsequent to the above remittance ONGC was to remit to Forasol in French amount 15/800th part (i.e. 1.875 per cent) of the total estimated amount in respect of the said items mentioned above, that is FF 110,156.23 on each 5th day of August and February, the first of such payments to be made on August 5, 1962 and the last on February 5, 1965. Article X 4.2 provided for payment by ONGC to Forasol of the balance of the amount due to Forasol. Under Article X 4.2.1, on receipt of each of Forasol 's invoices in respect of operational fees, standby fees and equipment charges accepted by ONGC, Forasol was to present to ONGC a set of 14 promissory notes payable to CNEP (Paris) of equal value totalling to 87.5% of the French Franc Portion of the amount for which each of the said invoices had been accepted by ONGC and maturing on the 5th day of August and of February, the first such dates being August 5, 1965 and the last being February 5, 1972. Within fifteen days of the date of receipt of the said promissory notes, ONGC was to return the said promissory notes to Forasol (Paris) duly signed and stamped. Article X 4.2.2 provided for payment of the said promissory notes. The said Article was as follows: "X 4.2.2. ONGC binds itself, irrevocably, to pay in French Francs the promissory notes given by it to Forasol. Forasol shall present the promissory notes to CNEP (Paris) for collecting payment on the dates of maturity ONGC shall place with CNEP (Paris), at least one day before each date of maturity, adequate funds to cover the total value of the promissory notes maturing on that date. " 537 Under Article X 4.3 ONGC undertook to pay to Forasol in French Francs simple interest at the rate of 5 per cent per annum and also a credit insurance charge at the rate of 1.08 per cent per annum. The other sub articles of Article X 4.3 provided for calculation of interest and insurance charges and for submission by Forasol every six months of invoices in respect thereof. Article X 4.3.2, inter alia, provided that "ONGC shall accept each invoice for the interest and insurance charge and shall remit the invoiced amount to Forasol in French Francs as early as possible but not later than two months after receipt of the invoice. " Provision was also made by the said Article X 4.3.2 for drawing of promissory notes payable at CNEP (Paris) maturing on each 5th day of August and of February, the first of such dates being August 5, 1965 and the last being August 5, 1971. Under Article X 4.3.3 ONGC bound itself, "irrevocably, to pay in French Francs the promissory notes for interest and insurance charge given by it to Forasol." Article XI provided for payments to be made to Forasol in Indian rupees. Under Article XI.1.1. the rupee payment part of the operational and standby fees, equipment charges and transportation charges payable to Forasol under the said contract was estimated to be FF 1,495,216 and ONGC was to pay to Forasol as an advance 10 per cent of the said amount, namely, FF 149,522, in Indian rupees using a conversion rate of FF 1.033 equal to Rupee 1.000. The balance amount in respect of the aforesaid item was to be paid by ONGC to Forasol in Indian rupees using a conversion rate of FF 1.033 equal to Rupee 1.000 in the manner set out in the other sub articles of Article XI. On account of the hostilities between Pakistan and India which broke out in September 1965 the work under the said contract could not be completed and the operations to be carried out there under had to be suspended. The period of the said contract was thereupon extended by a supplementary agreement being Addendum No. 1 dated December 6, 1965, by a period of six months with effect from the date on which the drilling operations in the Jaisalmer area were resumed at the expiry of the period of suspension. By another supplementary agreement being Addendum No. 2 dated July 30, 1966, the period of the said contract was further extended by a period of five months from the moment at which all the equipment of 538 Forasol then under repair at Jodhpur arrived, after completion of the repairs at the new drill site, where ONGC might like to have drilling operations to be started under the said Addendum No. 2. Article 2.7 of the said Addendum No.2 provided as follows: "2.7. In case Forasol has to refund to ONGC an amount which cannot be adjusted or has not been adjusted against Forasol 's invoices for the last two months of the five months period of this Addendum, Forasol shall refund the amount in cash in the same currency in which ONGC had paid it earlier. " By another supplementary agreement being Addendum No. 3 dated February 23, 1967, the period of the contract was further extended till the completion of the drilling of Manhere Tibba Well No. 1 and in case ONGC should decide to test the said well till the completion of such test or till April 18.1967. whichever was earlier. Article 2.5 of the said Addendum No. 3 Provided as follows: "2.5, In case Forasol has to refund to ONGC an amount which cannot be adjusted or has not been adjusted against Forasol 's invoices for the period of extension stipulated in Article 1.2 above, Forasol shall refund the amount in cash in the same currency in which ONGC had paid it earlier. " It may be mentioned that each of the said supplementary agreements provided that all the terms and conditions of the original contract which were not repugnant to the terms and conditions agreed to for such supplementary agreements were to continue to apply until the termination of the said contract. The extended period of the said contract expired on April 13, 1967. In June 1966, during the extended period of the said contract, the Indian rupee was devalued, and consequently in the course of correspondence which took place between the parties Forasol made a claim for conversion of Indian rupees into French Francs at a rate higher than the rate specified in Article IX. 3 of the said contract. 539 It may also be mentioned that ONGC paid to the income tax authorities towards the income tax liabilities of Forasol three sums aggregating to Rs. 11,95,304 as specified below: (1) Rs. 1,25,304 on September 14, 1967, (2) Rs. 4,70,000 on February 14, 1968, and (3) Rs. 6,00,000 on March 23, 1968. During the period of extension covered by the said Addendum No. 3 and after the expiry of that period disputes and differences arose between the parties. These were referred to arbitration as provided in the said contract. The parties appointed their respective arbitrators. The time for making the award was extended from time to time with the consent of the parties but as Forasol did not consent to any further extension, the disputes were referred for arbitration to Mr. N. Rajagopala Iyyangar, a retired judge of this Court, being the Umpire appointed by the arbitrators. In the arbitration proceedings Forasol made claims against ONGC and ONGC made counter claims against Forasol. On March 8, 1972, the Umpire entered upon the Reference and on December 21, 1974, the Umpire made his award. To the said award an erratum was annexed by which a particular portion to the said award was deleted and substituted by a fresh portion to which we will revert later. For the present, suffice it to say that by the said Erratum the Umpire awarded that from November 30, 1966 the rupee portion should be converted at the rate of FF 1, 000 equal to Rs. 1,517. 80 instead of the rate of exchange of FF 1,033 equal to Re. 1,000 provided in Article IX. 3.1 of the said contract and that this enhanced rate of exchange would apply to both Forsal and ONGC. The said award was filed in the Delhi High Court and on May 7,1975, a decree in terms thereof was passed by that High Court with interest at the rate of 6 per cent per annum from the date of the decree till the date of payment of the net decretal amount. It is pertinent to note that neither party raised any objection to the said award or to the form in which the said decree was passed. After the said decree was drawn up, Forasol filed in March 1976 an application for execution of the said decree being Execution No. 77 of 1976. Under the said award certain amounts were directed by the Umpire to be paid to Forasol by ONGC in French 540 Francs and certain amounts in Indian rupees, and the amounts payable by Forasol to ONGC were to be adjusted and set off against the amounts payable by ONGC to Forasol. In the said execution application the rupee credit in favour of Forasol was converted into French Francs at the rate of Rupee 1. 5178 equal to FF 1.000 being the enhanced rate of exchange specified in the said award. After deducting the amounts payable to ONGC the balance payable to Forasol was shown as FF 5, 89, 727.51 being the equivalent of Rs. 11, 79, 455 with interest on the principal sum upto the date of payment and the costs of execution. The mode of execution specified in the said execution application was attachment and sale of the movable properties belonging to ONGC and specified in an annexure to the said execution application. In its objections to the said execution application ONGC contended that the enhanced rate of exchange specified in the said award was only with respect to the interest payable to Forasol from November 30, 1966, and that to the rest of the payments to be made under the said award the rate of exchange mentioned in Article IX 3.1, namely, FF 1.033 equal to Rupee 1.000, was applicable and that this contract rate of exchange applied both to the French Franc part as also the Indian rupee part of the said contract. ONGC also raised certain other contentions. On the basis of these contentions, it was submitted by ONGC that instead of any amount being due to Forasol a sum of Rs. 6,43,831.44 was due by Forasol to ONGC. The learned Single Judge of the Delhi High Court who heard the said execution application rejected all the contentions of ONGC. He held that the contract rate of exchange applied only to the rupee part of the payment in respect of the items specified in Article IX 3. 1 of the said contract and that in respect of such payments from November 30, 1966, the enhanced rate of exchange provided in the said award was to apply but in respect of the other payments to be made to Forasol in French Francs the rate of exchange prevailing at the date of the decree, namely, FF 1.000 equal to Rs. 1.938 would apply. The learned Single Judge directed that ONGC could satisfy the judgment debt by making payment in French Francs or, if it so preferred, by paying the equivalent of it in Indian rupees at the rate of exchange prevailing at the date of the decree and further ordered that if the decretal amount was not paid within two weeks, attachment as prayed for should issue. Against the said judgment and order of the learned Single Judge ONGC filed an intra court appeal being E.F. A. (OS) 5 of 1977. The Division Bench of the Delhi High Court, which heard the said appeal, upheld the contention of ONGC that the 541 enhanced rate of exchange specified in the said award applied only to the interest payable to Forasol and that with respect to the rupee amount due to ONGC and which was to be adjusted against French Francs payable to Forasol, the contract rate of exchange applied. It further held that as the said award was in French Francs, by reason of the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), before executing the said award the French Francs would have to be converted into Indian rupees at the rate of exchange prevailing on the date of the said award, namely, FF 1.000 equal to Rupee 1.831. The Division Bench negatived the other contentions raised by ONGC. It is against this judgment and order of the Division Bench of the Delhi High Court that the present cross appeals have been filed. So far as Forasol 's appeal is concerned, four points were urged on its behalf before us. These points were: 1. The rate of exchange specified in Article IX 3. 1 of the said contract, namely, FF 1.033 equal to Rs. 1.000, was applicable only to 20 per cent of the payment to be made in Indian rupees by ONGC to Forasol. The Umpire by the said award fixed the rate of exchange at FF 1.000 equal to Rs. 1.5178 as from November 30, 1966, in respect of such rupee payments only. The sum of Rs. 10,19,380.39, being the balance amount of the sum of Rs. 11,95,304 which remained payable to ONGC by Forasol in respect of the income tax paid by ONGC on behalf of Forasol after making adjustments against the claim of Forasol, was to be adjusted, as directed by the said award, against Forasol 's claim in French Francs on the respective dates of each payment of tax, namely, on September 14, 1967, February 14, 1968, and March 23, 1968, and as all these payments were made after November 30, 1966, and as under the said award the enhanced rate of exchange was directed to apply to 542 both parties, the said sum of Rs. 10,19,383.39 was to be adjusted against the French Franc claim of Forasol at the enhanced rate of FF 1.000 equal to Rs. 1.5178. So far as the payment to Forasol in French Francs was concerned, neither the said contract nor the said award provided for conversion of French Francs into Indian rupees and the said decree having been passed in foreign currency, in case ONGC did not or could not make payment in French Francs, the rate of conversion of French Francs, into Indian rupees could only be at the rate of exchange prevailing at the date of the said decree, that is, on May 7, 1975, which was FF 1.000 equal to Rs. 1.938. ONGC, on the other hand, submitted that the said contract provided a fixed rate of exchange of FF 1.033 equal to Re. 1.000 for all amounts payable under the said contract, whether in rupees or in French Francs, and, therefore, that rate alone should be taken as the correct conversion ratio except with respect to interest on the amount in Franch Francs payable to Forasol in respect of which the Umpire had enhanced the rate of exchange to FF 1.000 equal to Rs. 1.5178. In the alternative, it was submitted that the conversion rate should be the one prevailing at the date of the said award, that is, on December 21, 1974, namely, FF 1.000 equal to Rs. 1.831. Thus, there are four different rates of exchange which feature in this case, namely, Rate provided in the FF 1.033 = Rs. 1.000 said contract Rate fixed by the FF 1.000 = Rs. 1.5178 Umpire Rate at the date of the FF 1.000 = Rs. 1.831 said award namely on December 21, 1974 Rate at the date of FF 1.000 = Rs. 1.938 the decree, namely, on May 7, 1975 543 We shall first examine the said contract to determine whether the rate of conversion mentioned in the said Article IX 3.1 applied only to 20 per cent of the amounts in French Francs payable by ONGC to Forasol in Indian rupees in respect of Forasol 's operational fee, standby fee and equipment charges as contended by Forasol or whether it applied to all payments to be made under the said contract, whether in rupees or in French Francs, as contended by ONGC. In doing so, a cardinal fact must be borne in mind, namely, that it was a contract entered into between a foreign party and a Government of India undertaking and that under the said contract the foreign party had agreed to carry out structural drilling in relation to the exploration for oil, discovery of oil being of vital importance to the national interests of India. From the nature of things, the foreign party would not desire payment for the services to be rendered and the equipment to be supplied by it in a currency with which it had no connection and of the continuous stability of which it could not be certain. The foreign party would, therefore, naturally desire and bargain for payment in the currency of its own country, namely, in French currency. The more so, as under the Credit Agreement entered into between the Government of France and the Government of India the Government of France had agreed that credit should be given by French suppliers to Indian buyers by accepting payment on deferred basis for the import of plant, machinery, equipment and materials and execution of certain projects including oil exploration, and, accordingly, under Article X 1.1. of the said contract the French party, Forasol, had agreed to accept on deferred basis payment of the amounts due to it in French Francs. We have earlier referred to the relevant Articles of the said contract as also extracted some of them in order to emphasize that though under the said Article IX 3.1 Forasol had agreed to accept 20 per cent of its operational fee, standby fee and equipment charges in Indian Rupees, it wanted that the remaining 80 per cent of these fees and charges as also the other amounts which were payable to it under the said contract should be paid to it in French Francs only and should not be made dependent upon the stability of the Indian rupee in the international monetary market. To recapitulate, the invoicing rules provided that in each of its invoices Forasol should indicate separately the amount payable to it in French Francs and the amount payable to it in Indian rupees and that so far as the French Franc part was concerned, an initial payment was to be made immediately upon the signing of the said contract and the balance was to be paid by remittances in French Francs. Such remittances were to be made by Forasol presenting 544 to ONGC a set of promissory notes payable in Paris and under Article X 4 2.2 of the said contract ONGC irrevocably bound itself to pay in French Francs the promissory notes given by it to Forasol, Similar provisions were made in the said contract for payment of interest and insurance charges to Forasol. If Forasol were to indicate separately in its invoices the payment to be made to it in French Francs and in Indian rupees and if the payment of such French Francs was to be made in Paris in French Francs, the question of providing for a rate of exchange in the said contract for converting French Francs into Indian rupee cannot arise. Such conversion rate could only be in respect of the amounts payable to Forasol in Indian rupees. It is pertinent to note that under Article IX 3.1 the amount of fees and charges payable to Forasol were to be computed in French Francs and thereafter 80 per cent thereof was to be paid in French Francs and the remaining in Indian rupees. Even with respect to such twenty per cent Forasol did not want to be dependent upon a possible fluctuation in the exchange rate of rupee and, therefore, the 20 per cent part of the amount computed in French Francs was covenanted to be converted at a fixed rate provided in the said Article IX 3.1. This is made abundantly clear by the express terms of the said Article IX 3.1 when it states that "ONGC shall pay 80% of the aforesaid amount in French Francs and the remaining 20% in Indian Rupees using a fixed conversion rate of FF 1.033=Re. 1.000. " It is thus only the 20 per cent of the said fees and charges computed in French Francs in Forasol 's invoices but payable in Indian rupees which was to be converted at the aforesaid rate of exchange specified in the said contract. This interpretation receives further support from Article 2.2 of Addendum No. 2 and Article 2.5 of Addendum No. 3 extracted above under which amounts refundable by Forasol to ONGC were to be refunded in the same currency in which ONGC had paid them earlier. The contention of ONGC that the fixed rate of conversion provided in Article IX 3.1 applied to all payments to be made under the said contract to Forasol must, therefore, be rejected. What next falls to be considered is whether the enhanced rate of exchange specified by the Umpire in the said award applied only to the amount payable by way of interest to Forasol as contended by ONGC. This contention was rejected by the learned Single judge but found favour with the Division Bench of the Delhi High Court. It is necessary to set out some further facts in order to decide this point During the course of the hearing before the Umpire, ONGC had 545 filed a statement showing the adjustment of the amount of French Francs due to Forasol against the amount of income tax paid by ONGC on behalf of Forasol. It was, however, erroneously assumed by the Umpire that the said statement was an agreed one. After the Umpire had drafted his award he handed over a copy of it to the parties in order that they might point out to him any incorrect statements or mistakes of a clerical or similar nature so that he could correct the same before the award was made and published. Accordingly, both the parties appeared before the Umpire and agreed that there were certain errors in the draft award and requested the Umpire to correct these errors before he made and Published his award. The Umpire thereupon corrected the errors jointly pointed out to him by appending an Erratum to the said award. In the said Erratum the Umpire pointed out that the aforesaid statement was not an agreed one and he directed that certain portions of the award should be deleted and substituted by fresh paragraphs set out in the said Erratum. In the said Erratum the Umpire first pointed out certain errors of calculation and in the mentioning of figures which had been occurred. He then proceeded to state: "Incidentally it was pointed out that the statement on pages 145 6 and in the penultimate and last two paragraphs on page 149 regarding the document filed before me, as regards the adjustment of FF claims due to Forasol against the income tax paid by ONGC was not an agreed statement, but a statement prepared by O.N, G.C. on their own to which Forasl had not consented, As a result of this, the question of adjustment of the income tax paid against FF claims, as set out in the last para on page 149 and in the first two paragraphs on page 150 would be deleted and in their place the Award would state that 'the amounts of income tax paid by ONGC shall be adjusted against the FF claims due to Forasol on the date when each amount was paid in the manner set out earlier in the Award. ' "To achieve this purpose the paragraphs on pages 149 and 150 beginning with the words 'In the calculation of the interest on the several invoices ' and ending with 'I have already dealt with the conversion rate and there is no need to go into it again ' on page 150 shall be deleted and a new paragraph inserted, which will read as follows: 546 X X X X X '. as a result the aggregate figure of interest payable to Forasol by O.N.G.C. upto 30 6 1974 would be FF 12,91,290,06. From this a small adjustment has to be made. when these are adjusted the amount due for interest by O.N.G.C. to Forasol would be FF 12.88.185.35. ' 'This figure of FF 12,91,290,06 has been calculated on the basis of conversion rate of FF 1.033 to a rupee (or FF 1033 for every Rs. 1,000/ ) which was the rate of exchange agreed to between thee parties under Article XI. 1.1.1 of the Agreement. Messrs Forasol have put forward before me a claim for enhanced rate of interest and their claim is that this should be Rs. 1,5178 for every FF or Rs. 1517,80 for every FF 1,000, I find that there is considerable correspondence in the course of which they have made a claim that after devaluation of the rupee there should be a change in the rate of exchange, Though there is no specific letter in the file agreeing to the enhancement I find that in the later invoices demand has been made subject to the claim for enhanced rate of exchange. In view of this I consider that from 30,11,1966 Rupee portion should be Converted at FF 1 = Rs. 1.5178 or FF 100= Rs. 1.517.80. Of course this rate of exchange would apply to both the parties, Farasol and the O.N.G.C. ' 'As stated earlier this has been worked out only upto 30.6.1974 and in accordance with the directions contained in this award interest shall be calculated on the principal amount right upto 21.12.1974 on the entire amount of principal and the entire sum of principal and interest would thereafter carry interest at 6% per annum, as stated in the other portion of the award." (The emphasis has been supplied by us.) Article XI 1.1 of the said contract referred to in the said Erratum provided as follow: "XI 1.1.1 On the basis of the figures arrived at in Articles IX 2.1 and IX 2.2 above and in accordance with the condition laid down in Article IX 3.1 above, the total 547 of FORASOL 's operational and standby fees, equipment charges and transportation charges payable in Indian Rupees under this contract, is estimated to be FF 1,495, 216, Following signature of this contract, ONGC shall pay to FORASOL, as an advance, 10a/c of this amount i.e. FF 149,522 in Indian Rupees using a conversion rate of FF 1.033 = Rs. 1.000. " In order to reach the conclusion which it did, the Division Bench of the Delhi High Court relied upon that portion of the said Erratum where the Umpire has stated that Forasol has put forward before him a claim for "enhanced rate of interest", overlooking the other portions of the said Erratum, particularly the portion emphasized by us in the above extract as also the fact that by the said Erratum certain portions of the said award were deleted and substituted by fresh paragraphs. On a perusal of the above extract from the said Erratum, it is obvious that the claim made by Forasol was not for an enhanced rate of interest but for an enhanced rate of exchange by reason of the devaluation of the rupee. This is made clear by the rest of the very same sentence in the said Erratum in which this claim made by Forasol was referred to, namely, "and their claim is that this should be Rs. 1.5178 for every FF or Rs. 1.5178 for every FF 1,000," If the claim of Forasol was for an enhanced rate of interest, the claim would have been that interest should be payable to it not at the contract rate of five per cent per annum but at a higher rate and not that a higher rate of exchange should be provided. The very next sentence which also we have emphasized clarifies that in the correspondence which took place between the parties, Forasol had made a claim that after devaluation of the rupee there should be a change in the rate of exchange. Obviously, this change would be with respect to the rupee payment to be made to Forasol. The very direction of the Umpire in this behalf makes it clear that he was not dealing only with the rate of interest for by the said direction, which too we have emphasized in the above extract, the Umpire awarded that from November 30, 1966, "Rupee portion should be converted at FF 1 = Rs. 1.5178 or FF 1,000 = Rs. 1,5178" and he further awarded that "this rate of exchange would apply to both the parties, Forasol and the O.N.G.C." The question of the enhanced rate of exchange applying to both the parties would not arise if the enhanced rate of exchange was with respect only to the interest payable to Forasol. 548 We are fortified in the conclusion we have reached by the fact that so far as the adjustment of claim of ONGC with respect to income tax paid by it was concerned, the Umpire by the said Erratum expressly deleted from the said award the portion in which such adjustment was made at the contract rate of FF 1.033 equal to Re. 1,000 and substituted it by fresh paragraphs. Under the said Erratum these amounts were directed to be adjusted from November 30, 1966 at the enhanced rate of exchange provided in the said Erratum as all these amounts were paid by ONGC after the said date. Another fact which fortifies this conclusion is that by the last paragraph of the portion of the said Erratum extracted above, in addition to an enhanced rate of exchange, the Umpire has also awarded a higher rate of interest, namely, six per cent, on the entire sum of principal and interest from December 22, 1974. The Division Bench of the Delhi High Court was, the in error in holding that the enhanced rate of exchange specified in the said award applied only to the amount of interest payable to Forasol. For the reasons stated above we find that this enhanced rate of exchange applied to the payments in Indian rupees under Article IX 3.1 of the said contract to be made by ONGC to Forasol from and after November 30,1966. The question which now remains to be considered in Forasol 's appeal is the date to be selected by the Court for converting into Indian rupees the French Franc part of the said award in respect of which no rate of exchange has been fixed either by the said contract or the said award. In an action to recover an amount payable in a foreign currency, five dates compete for selection by the Court as the proper date for fixing the rate of exchange at which the foreign currency amount has to be converted into the currency of the country in which the action has been commenced and decided. These dates are: (1) the date when the amount become due and payable; (2) the date of the commencement of the action; 549 (3) the date of the decree; (4) the date when the court orders execution to issue; and (5) the date when the decretal amount is paid or realized. In a case where a decree has been passed by the court in terms of an award made in a foreign currency a sixth date also enters the competition, namely, the date of the award. The case before us is one in which a decree in terms of such an award has been passed by the court. The said award directed certain payments to be made in a foreign currency, namely, French Francs, and did not specify the rate of exchange at which the French Francs were to be converted into Indian rupees and the decree which was passed by the Delhi High Court was in terms of the said award simpliciter without fixing any date for conversion of the French Francs into Indian rupees. As mentioned earlier, neither party filed any objection to the said award or to the passing of the said decree in the terms in which it was passed. The question whether an arbitrator or umpire can make an award in a foreign currency is, therefore, not directly in issue before us nor the question whether a court can simpliciter pass a decree in terms of such an award without specifying the rate of exchange at which the foreign currency amount will have to be converted into Indian rupees. Though at the first blush these questions do not appear to arise for our determination, they are inextricably linked with the question which we have to decide and we will, therefore, have to address ourselves to them in due course. The question which one out of the dates mentioned above is the proper date to be selected by the court does not appear to have been decided in this country, and no authority of any Indian court on this point has been brought to our notice. The question, however, has formed the subject matter of decisions in England and both the learned Single Judge as also the Division Bench of the Delhi High Court have referred to the decision of the House of Lords in Miliangos vs George Frank (Textiles) Ltd.(1) and other English cases. They have however, reached differing conclusions, the learned Single Judge holding that the conversion of French Francs into Indian 550 rupees should be made at the rate of exchange prevailing on the date of the said decree and the Division Bench holding that such conversion should be at the rate of exchange prevailing at the date of the said award. It will be convenient, therefore, to turn now to the English decisions on the point to ascertain whether we can find some guidance from them in arriving at our conclusion. The judicial view on this point in England has undergone a radical change and it will not be out of place to ascertain the earlier view which the courts in England took and the view which now prevails with them and to take a brief survey of how this change in view came about. In Tomkinson and another vs first Pennsylvania Banking & Trust Co.(1) (better known as the Havana case) on appeal from the decision of the Court of Appeal, sub nom In re United Railways of Havana and Regla Warehouses Ltd.,(2) after reviewing the earlier authorities, the House of Lords held that an English court cannot give judgment for payment of an amount in foreign currency, and that for the purposes of litigation in England a debt expressed in a foreign currency must be converted into sterling with reference to the rate of exchange prevailing on the date when the debt was payable. Lord Denning, who was then a member of the House of Lords, delivered a concurring judgment in which he pointed out that the origin of this rule was that sterling was for a long time regarded as a stable currency, the constant unit of value by which, in the eye of the law, everything else was measured, and that so long as sterling was regarded as stable while other currencies fluctuated, justice was best done by taking the rate of exchange at the date of the breach; the creditor being entitled to be put into as good a position as if the debtor had done his duty and paid the debt on the due date and the creditor was only truly put into such a position if the debt was converted into sterling at that date. At the same time Lord Denning also posed a question whether the rule was still to be applied when sterling had lost the value which it once had by reason of the devaluation of the pound. He however, came to the conclusion that though such a rule was apt to produce an injustice to a foreign creditor who was owed money in the currency of his own country if he chose to sue in English courts instead of his own, he must put up with the consequences. The rule affirmed in the Havana case is known as the "breach date rule". 551 The next decision which requires to be noticed is that of the Court of Appeal in Jugoslavenska Oceanska Plovibdo vs Castle Investment Co. Inc.(1) As this authority was relied upon by the Division Bench of the Delhi High Court in order to arrive at its decision on this part of the case and as it formed the sheet anchor of the submission made on behalf of ONGC that the proper date of conversion should be the date of the award, it is necessary to examine what was decided in this case in some detail. In that case, the plaintiffs were awarded a sum expressed in United States dollars in an arbitration held in London. The defendants having failed to pay the sum awarded, the plaintiffs sought leave of the court under section 26 of the Arbitration Act, 1950, of England to enforce the award. In support of their application the plaintiffs filed an affidavit showing the rate of exchange prevailing at the date of the award and the amount of the award in pound sterling and claimed the amount due under the award on the said basis. The questions which fell for determination were whether an award expressed in a currency other than sterling was valid and lawful and, if so whether it was enforceable under the said section 26. The Master dismissed the application and the order of dismissal was affirmed by Kerr J. On appeal, the court of Appeal held that the award was valid and leave should be granted to enforce it, On the question whether English arbitrators have jurisdiction to make an award for payment in a foreign currency, the Court held that in a proper case they could do so and that in the case before them since the money of account and the money of payment under the charter party out of which the disputes between the parties arose were expressed in United States dollars the arbitrators were entitled to make their award in the same currency. It was further held that leave should be granted to enforce an award expressed in a foreign currency provided the applicant had filed an affidavit showing the rate of exchange prevailing at the date of the award and giving the amount of the award converted into sterling. When that case fell to be decided Lord Denning was a member of the Court of Appeal, having accepted appointment as Master of the Rolls. In the course of his judgment in that case, Lord Denning M.R. said (at pages 501 2): "The reason why some people have thought that an award by English arbitrators must be in sterling is because they have regarded it as equivalent to a judgment by an 552 English judge which must be in sterling. But there is this difference. When commercial men are in dispute and go to arbitration, they wish to have the dispute resolved. They want a decision one way or the other. Once given, they abide by it, The losing party pays up. There is rarely any need to call in the sheriff or his officer to enforce the award. So it is perfectly fair, as between them, for the arbitrator to make his award in the currency which is appropriate to their dealings. But, when a plaintiff goes to a court of law, it is, as often as not, because the defendant cannot pay or will not pay, The plaintiff wants to get judgment against him and, if need be, levy execution on his effects. This is so much in the mind of the courts that they have ruled that they will give judgment only in sterling. That is the one currency which is known to the court and to the sheriffs and their officers. I venture to suggest that this view of the courts should be open for reconsideration. If the money payable under a contract is payable in a foreign currency, it ought to be possible for an English court to order specific performance of it in that foreign currency; and then let the exchange be made into sterling when it comes to be enforced. I know that this is not yet the law. There is high authority against it: see Re United Railways of Havana and Regla Workhouses Ltd. But the House of Lords have since then held that specific performance can be, ordered of a contract to make a money payment: see Beswlck vs Beswick.(1) This may point the way to a relaxation of the old rule and enable the courts, in proper circumstances, to order payment into a foreign currency, such as is suggested by Dr. Mann in his book.(2) At any rate, there is no reason why the rule about judgments of the courts should be extended to awards by arbitrators, I think we should hold that arbitrators have jurisdiction to make an award in a foreign currency whenever that is the proper currency in which payments under the contract should be made. 553 "The next question is the manner of enforcing such an award. It would, no doubt, be possible to bring an action on the award and seek a judgment from the courts in sterling. In that case the rate of exchange would be taken at the date of the award. But another way is to seek the leave of the court under section 26 of the Arbitration Act 1950 which says: 'An award on an arbitration agreement may, by leave of the High Court or a judge thereof, be enforced in the same manner as a judgment or order to the same effect, and where leave is so given, judgment may be entered in terms of the award. "If the words 'to the same effect ' are read as meaning 'in the same terms ', there would be some difficulty in applying this section to an award in a foreign currency, But I do not think they mean 'in the same terms They only mean that the judgment or order must have 'the same effect '. If the sum awarded is converted into sterling at the rate of exchange at the date of the award, it does have the same effect. The proper course is for the applicant to file an affidavit showing the rate of exchange at the date of the award and giving also the amount of the award converted into sterling. Then leave will be given to enforce payment of that sum," (The emphasis has been supplied by us.) It may be mentioned that the defendants did not appear at any stage of the proceedings and were not represented and there was no appeal to the House of Lords from this judgment. Whether we should accept the decision in the Jugoslavenska case as laying down the correct rule to be applied so far as courts in this country are concerned is a matter which we will discuss after completing our survey of English authorities. The question again arose before the Court of Appeal in Schorsch Meier G.m.b.H. vs Hennin. That was not a case of an arbitration but it was an action by a German company against an 554 English firm in an English court for the price of goods in German deutschmarks in which currency the contract stipulated that payment of the price should be made. The action was commenced by the plaintiffs in the West London County Court for the sum of DM 3,756.03 being the amount of the price of goods sold and delivered. Under the contract, the money of account and the money of payment were both German deutschmarks. At the time when the sum had become due the rate of exchange was $ 1 equal to DM 8.30. At that rate the sterling equivalent of DM 3,756.03 was $ 452 sterling. Some time later sterling was devalued. As a result $ 1 sterling was only worth DM 5.85 and consequently the value of $ 452 had fallen to DM 2,664. If the rule in the Havana case applied the plaintiffs would have got judgment for $ 452 which would have meant only a sum of DM 2,664. whereas if they were able to claim and get judgment in deutschmarks the sterling equivalent of DM 3756.03 would be $ 641. In other words, by getting judgment in sterling, the plaintiffs would lose one third of the money due to them; whereas by getting it in deutschmarks they would recover the full amount. The plaintiffs declined to give any evidence with reference to the rate of exchange but asked for judgment only in deutschmarks as the Federal Republic of Germany was a member of the European Economic Community, They did so by relying upon article 106 of the Treaty of Rome which by section 2(1) of the European Communities Act, 1972, had been made part of the law of England. The County Court judge held that the said article 106 had no bearing on the rule of common law and that he could give judgment only in sterling and accordingly dismissed the action. The plaintiffs filed an appeal. In this case too the defendant did not appear and was not represented before the Court of Appeal. The appeal was allowed. With reference to the English law on the subject, apart from the Treaty of Rome, Lord Denning M.R., the afther referring to the rule in the Havana case, held that the reasons for the rule had ceased to exist and, therefore, the court was at liberty to discard the rule itself on the principle, "cessante ratione legis cessat ipsa lex" He further said (at pages 156 7): "Only last year we refused to apply the rule to arbitrations. We held that English arbitrators have jurisdiction to make their awards in a foreign currency, when that currency of the contract: see jugoslavenska Oceanska plovibda vs Castle Investment Co. Inc. The time has now come when we should say that when the currency of a contract is a foreign currency that is to say, when 555 the money of account and the money of payment is a foreign currency the English courts have power to give judgment in that foreign currency, they can make an order in the form: 'It is adjudged this day that the defendant do pay to the plaintiff ' so much in foreign currency (being the currency of the contract) ' or the sterling equivalent at the time of payment '. If the defendant does not honour the judgment, the plaintiff can apply for leave to enforce it. He should file an affidavit showing the rate of exchange at the date of the application and give the amount of the debt converted into sterling at that date. Then leave will be given to enforce payment of that sum. (The emphasis has been supplied by us.) So far as the Treaty of Rome was concerned, the Court held that the purpose of the said article 106 was to ensure that the creditor in one member State should receive payment for his goods in his own currency if it was the currency of the contract without any impediment or restriction by reason of changes in the rate of exchange. With respect to the form of the judgment, Lord Denning, with whom Foster J. concurred, held that he would "adjudge that the debtor do pay to the plaintiff DM 3,756.03 or the sterling equivalent at the time of payment" meaning thereby, as Lord Wilberforce pointed out in the Miliangos case (at page 468), the date when the court authorizes enforcement of the judgment in terms of sterling. Lawton L.J., the third member of the court, on the other hand, was of the opinion that the judgment should be in the from in which the plaintiffs had asked for it, namely, in deutschmarks and the plaintiffs must be left to extricate themselves from the intricacies of the law relating to execution and exchange control. There was no appeal to the House of Lords against this judgment of the Court of Appeal. We now come to the case of Miliangos vs George Frank (Textiles) Ltd. How that case reached the House of Lords makes interesting reading by itself. Prior to the judgment being delivered in the Schorsch Meier case, Miliangos, a Swiss, brought an action against George Frank (Textiles) Ltd., an English company, claiming the sum of Swiss Francs 415, 522.45 due to him for the price of polyester yarn sold and dilivered to the English company under a written contract. The claim of the Swiss plaintiff was based upon invoices sent to the English company and accepted by that company 556 and alternatively on two bills of exchange drawn in Switzerland by the plaintiff and accepted by the defendants but which had been dishonoured on presentation on their respective due dates. This alternative claim was for the amounts of the said bills of exchange, namely, Swiss Francs 273,619.45 and Swiss Francs 27,394 respectively, and the cost of protesting the bills and interest. The plaintiff apparently had been advised about the position in English law and had accordingly claimed judgment in sterling as at the breach date. The defendants claimed that the plaintiff had committed a breach of contract inasmuch as a part of the yarn dilivered to them was unifit for the purpose and filed a counter claim for damages. Thereafter, the plaintiff filed a second suit on another contract in which the claim was on the same alternative counts. Both the actions were consolidated and set down for hearing, but before they reached hearing by their letter dated November 22, 1974, the defendants abandoned their defence and counter claim and stated that they would submit to judgment. Four days later, on November 26, 1974, the Court of Appeal delivered judgment in the Schorsch Meirer case. Thereupon the plaintiff amended the statement of claim in the first action and claimed the amount due in Swiss Francs as an alternative to the claim in sterling. Bristow J. held that the Schorsch Meirer case so far as it related to countries which were not members of the European Economic Community was obiter and had been decided per incuriam in that only one party had been represented and all the relevant authorities had not been cited. He further held that the decision in that case was inconsistent with what the House of Lords had held in the Havana case and accordingly he gave judgment for the sum claimed in sterling. The plaintiff went in appeal (Miliangos vs George Frank (Textiles) Ltd. The Court of Appeal held that the Schorsch Meier case was not decided per incuriam and was binding upon the trial court and gave judgment for the plaintiff in Swiss Francs. The English company went in appeal to the House of Lords. We are not concerned with what was said in that case with respect to whether the Schorsch Meier case was decided per incuriam or not and whether an English court could depart from the rule in the Havana case. Suffice it to say that the House of Lords by a majority (Lords Simon of Glaisdale dissenting) held that it was legitimate for the House of the Lords to depart from the "breach date conversion" rule and recognize that an English court was entitled to give judgment for a sum of money expressed in a foreign 557 currency in the case of obligations of a money character to pay foreign currency under a contract, the proper law of which was that of a foreign country, and when the money of account was that of that country or possibly of some country other than the United Kingdom. The House of Lords further held that the instability which had overtaken the pound sterling and other major currencies since its earlier decision in the Havana case as well as the procedures evolved in consequence thereof by the English courts and by arbitrators in the City of London to secure payment of foreign currency debts in foreign currency, justified departure from that decision in terms of the Practice Statement (Judicial Precedent) (under which the House affirmed its power to depart from a previous decision when it appeared right to do so, recognizing that too rigid an adherence to precedent might lead to injustice in a particular case and unduly restrict the development of the law) since a new and more satisfactory rule could be stated to enable the courts to keep step with commercial needs and would not involve undue practical and procedural difficulties. We are concerned here with what was said in that case with respect to the date to be taken for converting foreign currency into English currency. Lord Wilberforce held (at pages 468 9) that the claim should be made specifically for the foreign currency and to this might be added the alternative "or the sterling equivalent at the date of. ." and that as regards the conversion date to be inserted in the claim or in the judgment of the court, though the date of judgment was a workable date, he would favour the date of payment meaning thereby the date when the court authorizes enforcement of the judgment in terms of sterling, because in some cases, particularly where there was an appeal, the date of judgment might impose upon the creditor a considerable currency risk, Lord Wilberforce further observed (at page 469): In the case of arbitration, there may be a minor discrepancy, if the practice which is apparently adopted (see the Jugoslavenska case , 305) remains as it is, but I can see no reason why, if desired, that practice should not be adjusted so as to enable conversion to be made as at the date when leave to enforce in sterling is given." (The emphasis has been supplied by us.) 558 Lord Cross of Chelsea pointed out (at pages 497 8) that it would be absurd to have one rule with regard to arbitrations on debts expressed in a foreign currency and another with regard to actions on similar debts and that in a case where the defendant failed to deliver foreign currency for the payment of which the judgment was given, the date for its conversion into sterling should be the date when the plaintiff was given leave to levy execution for a sum expressed in sterling. Lord Edmund Davies, referring to the Jugoslavenska case, said (at page 501) that being governed by section 26 and sub section (1) of section 36 (which deals with enforcement of foreign awards) of the Arbitration Act, 1950, the award of American dollars in that case of necessity had to be converted into sterling at the rate of exchange prevailing on the date when the award was made and that but for that fact, the most just rate would be that prevailing when the award was being enforced, for the plaintiff had been kept out of his money until then and there was no reason why this latter rate should not be the one adopted when judgments expressed in a foreign currency are being enforced. According to Lord Edmund Davies, Miliangos should have been given judgment mutatis mutandis in the form approved of by Lord Denning M.R. in Schorsch Meier case, namely, that "it is this day adjudged that the defendant do pay to the plaintiff 416,144.20 Swiss francs or the sterling equivalent at the time of payment", which would mean, as pointed out by Lord. Wilbeforce (at page 368), the date when the court authorizes enforcement of the judgment in terms of sterling, Lord Fracer of Tullybelton opined (at page 502) that to take the date of the commencement of the action might result in consequences as unjust as taking the breach date because between the commencement of an action a period of a year or more might easily elapse, allowing for appeals, before payment was made and that the date of judgment would be better but there seemed no reason why the latest practicable date, namely, the date when the court authorizes the enforcement of the judgment should not be taken. Lord Simon of Glaisdale held in his dissenting judgment that there was no reason for departing from the rule laid down in the Havana case and that this should only be done by Parliament on executive or expert advice. With reference to the Jugoslavenska case Lord Simon observed (at page 489): "If the sterling judgment rule and the breach date rule were to be reconsidered by a properly qualified body, no doubt the Jugoslavenska case would come within its purview. " 559 The principle laid down by the House of Lords in the Miliangos case was extended by it to include a claim based on damages for torts and for breaches of contract in its decision in Owners of M.V. Eleftherotria vs The Owners of M.V. Despina R The Despina R and Services Europe Atlantique Sud (Seas) of Paris vs Stockholms Rederiahtiebolag Svea of Stockholm, better known as The Despina R, in two appeals heard one after the other and disposed of by a common judgment. The first appeal arose out of a collision between two Greek ships, the Despina R and the Eleftherotria in which the latter was damaged. The Eleftherotria was owned by a Liberian company which had its head office in Piracus. The managing agents had their principal place of business in New York and the bank account used for moneys received and payments made on behalf of the owners was a U.S. dollar account in New York. An agreement was reached under the terms of which the owners of the Despina R were to pay to the owners of the Eleftherotria 85 per cent or the loss and damage suffered as a result of the collision. The expenses of repair had been incurred in various currencies. The question whether the damages were to be paid in sterling or some other currency was referred to the Admiralty judge. Brandon J. held that he had jurisdiction to award damages in a foreign currency, but that he was bound by authority to award them in the currency of expenditure. The Court of Appeal, dismissing an appeal by the owners of the Despina R and allowing a cross appeal, held that here was jurisdiction to award damages in tort in sterling or in a foreign currency, and that, in the circumstances of the case, the appropriate currency was the plaintiffs ' currency rather than the currency of the expenditure. The second appeal was in respect of a cargo of onions shipped to Brazil by the French charterers of a Swedish owned motor vessel, the Folias. The cargo arrived damaged, and the cargo receivers ' claim for damages was settled by the charterers in Brazilian cruzeiros, which they purchased with French Francs, their normal business currency. The hire under the charter party was payable in U.S. dollars and the proper law of the contract was English law. In arbitration proceedings the owners admitted their liability to the charterers, but contended that payment should be made in cruzeiros. By then the 560 value of the cruzeiro against the French Francs was half what it had been when the charterers had paid the cargo receivers. The arbitrators made their award in French Francs, On a special case stated Robert Goff J. held that the award should have been made in cruzeiros as being the currency of the loss. On appeal by the charterers the Court of Appeal restored the award of the arbitrators. The owners of the Despina R as also the Swedish ship owners went in appeal to the House of Lords. Both the appeals were dismissed. The House held that in a claim based on tort, it was fairer to give judgment in the currency in which the loss was sustained than in the sterling equivalent at the date of the breach or loss; that the principles to be applied in ascertaining the currency of the loss were those of restitution in integrum and reasonable foreseeability and, therefore, where a plaintiff proved that he conducted his business in a specific currency and it was reasonably foreseeable that he would the that currency to purchase the necessary currency to meet the immediate and direct expenditure caused by the defendant 's tort, then judgment should be expressed in the plaintiff 's currency and, accordingly, the Court of Appeal had properly varied the order from a judgment expressed in the currencies of expenditure to the currency of the business conducted on behalf of the owners of the Eleftherotria, namely, U.S. dollars. The following passage from the opinion of Lord Wilberforce (at pages 696 7) is instructive: "I do not think that there can now be any doubt that given the ability of an English court (and of arbitrators sitting in this country) to give judgment or make an award in a foreign currency, to give a judgment in the currency in which the loss was sustained produces a juster result than one which fixes the plaintiff with a sum in sterling taken at the date of the breach or of the loss. " It was further held that where the terms of a contract governed by English law did not expressly or by implication show that the parties had intended that payments arising from a breach of contract were to be paid in the currency of account or other named currency, the court should give judgment in the currency that best expressed the party 's loss; that, although the appeal in the second case concerned a charterparty which expressly stated that certain contractual payments should be made in U.S. dollars, the terms of the charterparty did not show that payment for damage arising out of a breach of contract 561 was to be made in that currency; that, arising from the owners, breach the charterers had used French Francs to purchase the necessary cruzeiros to settle the receivers ' claim and, in those circumstances, the Court of Appeal had correctly affirmed the arbitrators ' decision that the currency that best expressed the charterers ' loss was the currency of their business, namely, French Francs. With respect to the arbitrators jurisdiction to make an award in a foreign currency, Lord Wilberforce said (at pages 702 3); "In my opinion a decision in what currency the loss was borne or felt can be expressed as equivalent to finding which currency sum appropriately or justly reflects the recoverable loss. This is essentially a matter for arbitrators to determine. A rule that arbitrators may make their award in the currency best suited to achieve an appropriate and just result should be a flexible rule in which account must be taken of the circumstances in which the loss arose, in which the loss was converted into a money sum, and in which it was felt by the plaintiff. In some cases the 'immediate loss ' currency may be appropriate, in others the currency in which it was borne by the plaintiff. There will be still others in which the appropriate currency is the currency of the contract. Awards of arbitrators based upon their appreciation of the circumstances in which the foreign currency came to be provided should not be set aside for, as such, they involve no error of law. " It will also be useful to refer at this stage to certain Practice Directions given, following upon the Miliangos case, with respect to claims and judgments in foreign currency and enforcement of such judgments. The Miliangos case was decided on November 5,1975, and the Practice Directions in question were issued by the Senior Master of the Supreme Court of judicature (Queen 's Bench Division) on December 18,1975, with the concurrence of the Chief Chancery Master acting on the authority of the Vice Chancellor so far as they applied to the practice in the Chancery Division, and of the Senior Registrar of the Family Division. so far as they applied to the practice in that Division. As pointed out in Halsbury 's Laws of England, 4th 562 ed., vol. 37, para. 12, practice directions "provide directions as to matters of practice and procedure for the assistance and guidance of litigants in the conduct of their proceedings, and in the administration of civil justice generally, and, although they lack the force of law they are of enormous value, to the courts, to practitioners and to all who are involved in the civil judicial process". Under the Practice Directions dated December 18,1975, mentioned above, before a writ of summons is issued in which the plaintiff makes a claim for a debt or a liquidated demand expressed in a foreign currency, the writ must be endorsed with a certificate signed by or on behalf of the solicitor of the plaintiff or by the plaintiff, if he is acting in person, certifying the rate current in London for the purchase of the unit of the foreign currency claimed at the close of business on the date next or most nearly preceding the date of the issue of the writ and stating whether at that rate of exchange the debt or liquidated demand claimed in the writ amounts to "$. or exceeds $ 650 (as the case may be)", This certificate is required for the purpose of ascertaining the proper amount of the costs to be endorsed on the writ. The judgment which would be entered in respect of such a claim would show that it has been adjudged that the defendant do pay the plaintiff the sum in foreign currency for which the court has ordered judgment to be entered or its sterling equivalent at the time of payment. Where a defendant desires to pay into court a sum of money in satisfaction of the claim in foreign currency he may do so subject to the requirements of the Exchange Control Act, 1947. Where, however, a plaintiff desires to enforce a judgment expressed in a foreign currency by the issue of the writ of fieri facias, the praecipe for the issue of the writ must first be endorsed and signed by or on behalf of the solicitor of the plaintiff or by the plaintiff, if he is acting in person, with a certificate certifying the rate of exchange current in London for the purpose of the unit of the foreign currency in which the judgment is expressed, at the close of the business on the date nearest or most nearly preceding the date of the issue of the writ and mentioning what the amount in pound sterling at that rate would be. The amount so certified will then be entered in the writ of fi.fa. A similar certificate is required where the plaintiff desires to enforce a judgment debt expressed in a foreign currency by adopting garnishee proceedings or other modes of execution. The above survey shows the position in English law to be as follows: 563 (1) Until recently the rule that was firmly established was that an English court could give judgment only in English currency and that for the purposes of litigation in England to recover a debt expressed in a foreign currency, such debt had to be converted into sterling with reference to the rate of exchange prevailing on the date when the debt was payable. This rule was affirmed by the House of Lords in the Havana case. (2) The reason for this rule was that sterling was regarded as a stable currency and a constant unit of value; and that by taking the rate of exchange at the date of the breach, the creditor was being put into as good a position as if the debtor had done his duty and paid the debt on the due date. (3) After sterling ceased to be a stable currency and became subject to fluctuations in the international monetary market a new line of thinking began to emerge, particularly in commercial arbitrations where foreign currencies were involved, and the arbitrators in the City of London started making awards expressed in foreign currency. (4) This new trend found judicial recognition in the Jugoslavenska case in which the Court of Appeal held that arbitrators in England had jurisdiction to make an award in a foreign currency in a case in which the money payable under a contract is payable in a foreign currency. The Court of Appeal further held that section 26, now section 26(1), of the English Arbitration Act, 1950, should be construed having regard to section 36(1) of that Act, which deals with enforcement of foreign awards, and that the words "to the same effect" in the expression "an award. may. be enforced in the same manner as a judgment or order to the same effect" in section 26(1) did not mean a judgment or order "in the same terms" but meant a judgment or order having "the same effect" this would be achieved if the sum awarded were 564 converted into sterling at the rate of exchange prevailing on the date of the award, and that leave to enforce an award expressed in a foreign currency should be given by the court provided the applicant had filed an affidavit showing the rate of exchange as at the date of the award and giving the amount of the award converted into sterling. (5) In the Jugoslavenska case, the Court of Appeal took the date of the award as the date of conversion by reason of the interpretation placed by it upon the words "to the same effect" in section 26(1) of the Arbitration Act, 1950, because an award could for the purpose of enforcement have the same effect as a judgment in an action on the award only if the date of the award were taken as the date of conversion as, by reason of the decision in the Havana case, which was then the law, in such an action the date of conversion would have to be the due date of payment which, the debt being crystallized by the award, would be the date of the award, and the judgment, therefore, in such an action would have to be given on that basis. (6) The development in law was carried yet one step further in the Schorsch Meier case where in an action for the price of goods, the plaintiff being a member of the European Economic Community, the Court of Appeal held that the court could give judgment to the creditor in a foreign currency if that was the currency of the contract, that is to say, if the money of account and the money of payment is foreign currency. The court also held that the date of conversion should be the date of payment meaning thereby as Lord Wilberforce pointed out in the Miliangos case (at page 468), the date when the court authorizes enforcement of the judgment in terms of sterling. (7) The Schorsch Meier case was not decided purely upon Article 106 of the Treaty of Rome which by section 2(1) of the European Communities Act, 1972, had 565 been made part of the law of England, but it was also decided upon the general principle that the reasons for the rule in the Havana case having ceased to exist, the court was at liberty to discard the rule itself. Thus, what the Schorsch Meier case decided was directly contrary to the decision of the House of Lords in the Havana case. (8) Both the Jugoslavenska case and the Schorsch Meier case were decided without the other side being represented. From this it does not follow that the judgments delivered in those cases were not folly considered judgments. The leading judgment in each of these two cases was that Lord Denning M.R. who at the date when the Havana case was decided was a member of the House of Lords. In his concurring opinion in the Havana case he had already expressed a doubt and posed a query whether the "breach date" rule should continue to be applied when sterling had lost the value it once had by reason of the devaluation of the pound. (9) The question again fell for consideration by the House of Lords in the Miliangos case. In that case, the House of Lords departed from the rule in the Havana case, namely, "the breach date conversion" rule and recognized that an English court could give judgment in a foreign currency in a case where under a contract the money was to be paid in that currency if the proper law of the contract was that of a foreign country and the money of account was of that country. So far as the date of conversion was concerned, all the Law Lords, except Lord Simon of Glaisdale, were of the opinion that it should be the date when the court authorizes the enforcement of the judgment in terms of sterling. (10) Though the Jugoslavenska case was not expressly overruled in the Miliangos case, in all the opinions delivered in that case except in the opinion of Lord Frasser of Tullybelton where no reference is made to that case, it was doubted whether in the future the 566 rule in the Jugoslavenska case should or would hold the field. Lord Wilberforce opined that he saw no reason why, if desired, the practice adopted in that case should not be adjusted so as to enable coversion to be made at the date when leave to enforce the award in sterling is given. Lord Cross of Chelsea thought it absurd that there should be one rule for arbitrations with respect to debts expressed in a foreign currency and another rule with respect to actions on similar debts. Lord Edmund Davis said that in the Jugoslvenska case the rate of exchange prevailing on the date of the award had to be adopted by the court because of the provisions of sections 26 and 36(1) of the English Arbitration Act and that but for such provisions the most just rate would be that prevailing when the award was being enforced. Even Lord Simon of Glaisdale in his dissenting opinion expressed the view that if Parliament were to reconsider the sterling judgment rule and the breach date rule, the rule in the Jugoslavenska case would come within the purview of such reconsideration. (11) The principle laid down in the Millangos case was extended by the House of Lords in the case of The Despina R to actions in tort and for damages for breach of contract on the ground that it was fairer to give judgment in the currency in which the loss was sustained than in its sterling equivalent at the date of the breach or loss, the principles to be applied in ascertaining the currency of the loss being those of restitutio in integrum and reasonable foreseeability of the plaintiff using a particular foreign currency to purchase the necessary currency to meet the immediate and direct expenditure caused by the defendant 's tort or breach of contract. It was further held that in the case of arbitrations it was for the arbitrators to determine in what currency the loss was borne or felt and that the rule that arbitrators may make their award in the currency best suited to achieve an appropriate and just result should be a flexible rule in which regard should be had to the 567 circumstances in which the loss arose, in which the loss was converted into a money sum, and in which it was felt by the plaintiff. (12) So far as practice and procedure is concerned, under the Practice Directions dated December 18, 1975, for the purpose of ascertaining the proper amount of the costs to be endorsed on the writ of summons the plaintiff 's solicitor or the plaintiff, if he is acting in person, is to certify the rate of exchange current in London at the close of the business on the date next or most nearly preceding the date of the issue of the writ and to mention the sterling equivalent at the rate of the sum in foreign currency claimed in the action. The judgment is to be entered for the sum in foreign currency adjudged by the court to be payable by the defendant to the plaintiff or its sterling equivalent at the time of payment. None the less if a judgment is to be enforced by execution, the application for execution is to state the rate of exchange current in London on the date nearest or most nearly preceding the date when the application is made. We have spent some time in ascertaining the English law on the subject by reason of the absence of any authority of any Indian court on this point and because the learned Single Judge has based his decision on the Miliangos case while the Division Bench of the Delhi High Court has based its on the Jugoslavenska case. Further, the English decisions referred to by us are of courts of a country from which we have derived our jurisprudence and a large part of our laws and in which the judgments were dilivered by judges held in high repute. Undoubtedly, none of these decisions are binding upon this Court but they are authorities of high persuasive value to which we may legitimately turn for assistance. Whether the rule laid down in any of these cases can be applied by our courts must, however, be judged in the context of our own law and legal procedure and the practical realities of litigation in our country. When a foreigner has to receive a sum of money which should justly be payable to him in a foreign currency and, because of the default of the paying party, seeks to recover its payment through the court, the first question which arises is whether a court in India would have 568 jurisdiction to pass a decree for a sum expressed in a foreign currency. Though on principle there is no reason why a court should not be able to do so no court can pass a decree directing a defendant to do an impossible or an illegal act and in view of the provisions of our Foreign Exchange Regulation Act, 1973, and the restrictions contained therein on making payments in a foreign currency, if a decree were to be passed Simpliciter for a sum expressed in a foreign currency, it would be to direct the defendant to do an act which would be in violation of the Foreign Exchange Regulation Act, 1973. Such a decree can, therefore, only be passed by making the payment in foreign currency subject to the permission of the foreign exchange authorities being granted. If however, the authorities do not grant permission for payment of the judgment debt in foreign currency, it would not be possible for the defendant to make such payment, resulting in the decree becoming infructuous and the plaintiff getting nothing under it. The view of Lawton L.J. in the Schorsch Meier case that the plaintiff should be given judgment in the form in which he asked for it and must be left to extricate himself from the intricacies of the law relating to execution and exchange control does not commend itself to us for it does not appear to us to be conducive to the ends of justice. The court must, therefore, provide for the eventuality of the foreign exchange authorities not granting the requisite permission or even if such permission is given, the defendant not paying the decretal debt, or not wanting to discharge the decree by making payment in foreign currency or in Indian rupees. This can only he done by the decree providing in the alternative for payment of a sum of money in Indian rupees, which will be equivalent to the sum decreed in foreign currency. It is but just that a man, who is in law entitled to receive a sum of money in a foreign currency, should either receive it in such currency or should receive its equivalent in Indian rupees. It is here that the question of the date which the court should select for converting foreign currency into Indian rupees arises. The court must select a date which puts the plaintiff in the same position in which he would have been had the defendant discharged his obligation when he ought to have done, bearing in mind that the rate of exchange is not a constant factor but fluctuates, and very often violently fluctuates, from time to time. With these considerations in mind, we will now examine the feasibility of the several dates set out by us at the beginning of our discussion on this point. The first of the five dates listed earlier by us, namely, the date when the amount became due and payable, does not have the effect 569 of putting the plaintiff in the same position in which he would have been had the defendant discharged his obligation when he should have done because between that date and the date when the suit is decreed the rate of exchange may have fluctuated to the plaintiff 's prejudice, resulting in the amount decreed in rupees representing only a fraction of what he was entitled to receive. Equally, the possibility of the plaintiff getting more than what he had bargained for in case the rate of exchange had fluctuated in his favour cannot be ruled out. To select, as the English courts had done earlier, the date when the amount became due or the "breach date", as the English courts have termed it, is thus to expose the parties to the unforeseeable changes in the international monetary market. The selection of the "breach date" cannot, therefore, be said to be just, fair or equitable because in a case where the rate of exchange has gone against the plaintiff, the defendant escapes by paying a lesser sum than what he was bound to and thus is the gainer by his default while in the converse case where the rate of exchange has gone against the defendant, the defendant would be subjected to a much greater burden than what he should be. The second of the dates mentioned above, namely, the date of the commencement of the action or suit, is equally subject to the same criticism. This date was rejected in the Miliangos case because, according to Lord Wilberforce (at page 469), it placed "the creditor too severely at the mercy of the debtor 's obstructive defences. or the law 's delay" In that case Lord Fraser of Tullybelton pointed out (at page 502) that if the date of the commencement of the action "were to be taken for conversion, a period of a year or more might easily elapse. allowing for appeals, before payment was made. " In our country, it is the misfortune of litigants that by reason of ever increasing volume of litigation, overcrowded court dockets and undermanned courts, suits are often not disposed of for an unconscionably long time and if we take into account the time that would be spent in appeals, further appeals, and revision and review applications which may be filed, the longevity of the litigation is doubled, if not tripled, so that none can with any certainty predict even a probable date for its termination. The selection of the date of the filing of the suit would, therefore, leave the parties in as uncertain and precarious a position as the selection of the date when the amount became payable or the "breach date". 570 We will now consider the feasibility of selecting the third date, namely, the date of the decree. A decree crystallizes the amount payable by the defendant to the plaintiff and it is the decree which entitles the judgment creditor to recover the judgment debt through the processes of law. An objection which can, however, be taken to selecting this date is that the decree of the trial court is not the final decree for there may be appeals or other proceedings against it in superior courts and by the time the matter is finally determined, the rate of exchange prevailing on that date may be nowhere near that which prevailed at the date of the decree of the trial court. To select the date of the decree of the trial court as the conversion date would, therefore, be to adopt as unrealistic a standard as the 'breach date". This difficulty is, however, easily overcome by selecting the date when the action is finally disposed of, in the sense that the decree becomes final and binding between the parties after all remedies against it are exhausted. This can be achieved by the court which hears the appeal providing that the date of its decree or other proceeding in which the decree is challenged would be the date for conversion of the foreign currency sum into Indian rupees in cases where the decree has not been executed in the meantime. The real objection to selecting this date, however, is that a money decree and the payment by the judgment debtor of the judgment debt under it are two vastly different matters widely separated by successive execution applications and objections thereto unless the judgment debtor chooses to pay up the judgment debt of his own accord which is generally not the case. In the vast majority of cases a money decree is required to be enforced by execution. Would the proper date of conversion then be the date when the court orders execution to issue ? This date appears to have found favour with all the Law Lords who decided the Miliongos case, except Lord Simon of Glaisdale. We, however, find the selection of this date equally beset with difficulties. Execution of a decree is not a simple matter. In execution of a money decree, first the judgment debtor 's property has to be attached. Pending attachment a third party, at times set up by the judgment debtor, may prefer a claim to the attached property. Such claim will have to be investigated and determined by the executing court. Even where no claim is preferred the attached property cannot be brought to sale immediately. A proclamation giving the prescribed particulars has to be first made. Even after such proclamation, the property cannot be put up for sale until after the expiry of the period prescribed by O. 21 r. 68 of 571 the Code of Civil Procedure, 1908 (V of 1908), unless it is subject to speedy and natural decay or when the expense of keeping it in custody is likely to exceed its value. Even after the sale has taken place the judgment debtor may further hold up the receipt of the sale proceeds by the decree holder by raising objection to the conduct of the sale. Even otherwise, at times, a fresh auction sale may have to be held if the auction purchaser commits default in paying the balance of the purchase price. A considerable time would thus elapse between the date when the court orders execution to issue and the date of the receipt of the sale proceeds by the decree holder. This passage of time would as much expose the decree holder to the hazards of fluctuations in the rate of exchange as selection of any of the three dates we have discussed above. Yet another difficulty in selecting the date when the court orders execution to issue is that at times the judgment debt is not recovered in full when the attached property is sold in execution. This necessitates a second application in execution for attaching other properties of the judgment debtor and even the sale of these properties may not cover the deficit, thus necessitating yet another execution application. They would lead to an anomalous position for the court would have to fix the rate of exchange for the entire decretal debt at the time of granting the first application for execution and then, if the rate of exchange has varied in the meantime, to fix a different rate of exchange for the unrealized balance of the decretal amount at the time of granting the second application for execution, and equally so with respect to successive applications for execution. Thus, with respect to portions of the same decretal debt different rates of exchange would come to be fixed at different times. A further difficulty in selecting the date of granting an execution application is that execution can only issue for a sum expressed in Indian currency. What is being is executed is the decree and the sum for which execution is to issue in a money decree must, therefore, be for the particular sum specified in the decree, that is, the judgment debt. It cannot be for a sum which would be determined and fixed by the executing court at the time of granting the execution application, for under o.21 r. 11(2) (g) of the Code of Civil Procedure, 1908, an application for execution has to state "the amount with interest (if any) due upon the decree". The above difficulties would rule out the taking of the date when the court grants an application for execution as the date of 572 conversion and would make inapplicable to our courts the rule laid down in the Miliangos case. As regards the selection by the court of the date of payment as the proper date of conversion, that was the date taken in the Schorsch Meier case; but as Lord Wilberforce pointed out (at page 468) in the Miliangos case, this only means the date when the court authorizes enforcement of the judgment in terms of sterling. As we have seen, in England, according to the Practice Directions dated December 18, 1975, the form of the judgment to be entered requires the defendant to pay the sterling equivalent of the foreign currency sum adjudged at the time of payment. This would be the most logical date and one which does justice to a plaintiff who has come to court to recover a sum of money payable to him in a foreign currency. If the principle to be applied is that the plaintiff should be put in the same position in which he would have been had the defendant discharged his obligation on the due date, then that principle is best served by the court taking the date of payment as the date of conversion. In adopting this date we, however, find ourselves faced with three practical and procedural difficulties, namely, payment of court fees, the pecuniary limit of the jurisdiction of courts and execution. So far as court fees are concerned, we have a Central Act, namely, the Court fees Act, 1870 (VII of 1870), which applies, either with or without amendments, to those States and Union Territories which have not repealed and replaced it by their own legislation. The States and Union Territories which have their own legislation on the subject are Andhra Pradesh, Gujarat, Himachal Pradesh, Jammu and Kashmir, Karnataka, Kerala, Maharashtra, Pondicherry, Rajasthan, Tamil Nadu and West Bengal. Under all Court fees Acts, no plaint can be filed in any court without payment of court fees. The plaintiff, therefore, has to value his claim in the suit and pay the court fees thereon computed in the manner provided in the relevant Court fees Act. So far as money suits are concerned, the court fees payable are ad valorem court fees according to the amount claimed which may or may not be subject to a ceiling depending upon which Court fees Act applies. A suit for a sum of money expressed in a foreign currency is also a money suit and the plaintiff in such a suit will have to pay court fees according to the amount claimed. As, however, a court in India cannot, as we have pointed out above, pass a decree simpliciter for payment of a sum in a foreign currency in such a suit, the plaintiff will have to make an alternative 573 claim in his plaint for the rupee equivalent of the foreign currency sum claimed. He will, therefore, have to pay court fees on the amount of the rupee equivalent. Such rupee equivalent as at the date of the institution of the suit can only be at the rate of exchange prevailing on that date. If, therefore, a plaintiff were to make the alternative claim on the basis of the rupee equivalent at the time of payment, the value of the suit for the purposes of court fees would be incapable of computation for it would not be possible to say what the rate of exchange on that date would be. It may be argued on the analogy of a suit for accounts or for partition or for administration or for winding up and accounts of a partnership that the plaintiff can put a tentative valuation in his plaint computed according to the rate of exchange prevailing on the date of the institution of the suit and give an undertaking to pay the deficit court fees if at the time of payment of the amount decreed, the rate of exchange has fluctuated in his favour so that the amount realized in rupee equivalent is more than the amount mentioned in the plaint. There is, however, a basic difference between a money suit and a suit for accounts, a partition suit, an administration suit or a partnership suit. In these types of suits, a preliminary decree is passed to ascertain the amount due to the plaintiff and when such amount is ascertained, a final decree for the ascertained sum is passed. In a money suit, however, there can be only one decree. It is, therefore neither permissible in law nor feasible for the plaintiff in a suit in which his claim is for a sum of money in a foreign currency to give an undertaking to make good the deficiency in court fees when he receives payment. In fact, a part or even the whole of the judgment debt may not be recovered at all. Even in the other types of suits mentioned above, it is not when the ascertained amount is received by the plaintiff that the deficit court fees are to be paid by him. They are to be paid when the amount due to the plaintiff is ascertained. In the type of suits we are concerned with in these appeals, the plaintiff can at the highest give an undertaking to pay the deficit, if any, in the court fees if at the time when the judgment is given and the decree passed, the rupee equivalent is more than at the date of the suit by reason of the fluctuation in the rate of exchange, but it would not be permissible for him to give such an undertaking for any date subsequent to the date of the passing of the decree. An additional difficulty would be that it is the court in which a suit is instituted which has to ensure at the time of the institution of the suit that the proper court fees have been paid. The deficit court fees, therefore, cannot be calculated and the balance 574 thereof recovered by the executing court. These difficulties would rule out both the date when the court orders execution to issue and the date of payment of the decretal debt to be taken as the date of conversion. These difficulties do not arise in England. Under the English law, the Lord Chancellor has power, with the consent of at least three Judges of the Supreme Court of Judicature and the concurrence of the Treasury, to fix fees to be taken in the High Court and the Court of Appeal (see Halsbury 's Laws of England, 4th ed., vol. 10, para. In the exercise of this power, Supreme Court Fees Orders have been made from time to time. The order currently in force is the Supreme Court Fees Order, 1980 (section I. 1980 No. 821), under which the fee payable in the case of a writ endorsed with a claim for a liquidated sum not exceeding & 2,000 is & 35 and in any other case it is & 40, civil proceedings in England being commenced by issuing a writ. Thus, in England, a fixed court fee is payable, the amount thereof varying dependant only upon whether it is an action for a liquidated sum not exceeding & 2,000 or not. In England, therefore, as the court fees payable are not ad valorem court fees in an action to recover a sum of money expressed in a foreign currency, it would be immaterial for the purposes of court fees whether the plaintiff claims in the alternative the sterling equivalent of that amount as at the date of the judgment or as at the date when the court gives leave to enforce the judgment or as at the date of payment because in any of these cases, the court fees payable by the plaintiff will not vary except where by reason of the fluctuation in the rate of exchange the amount adjudged or the amount for which leave to enforce the judgment is given or the amount paid exceeds & 2,000 in a case where less than that has been claimed in the action. It should be noted that English practice also recognizes the difficulty which would be encountered in issuing execution for a sum in sterling to be determined at the date of payment or realization and accordingly the Practice Directions dated December 18, 1975, require that where a plaintiff desires to enforce a judgment, he must mention in the application made for that purpose the sterling equivalent of the foreign currency sum adjudged calculated at the rate of exchange prevailing on the date nearest or most nearly preceding the date of the application for execution, and the writ of execution would then issue for such sterling equivalent. So far as the limit of pecuniary jurisdiction of courts is concerned, under section 15 of the Code of Civil Procedure, 1908, every 575 suit is to be instituted in the court of the lowest grade competent to try it. We have in India a large number of courts of various grades with different pecuniary limits of jurisdiction. In money suits, it is the amount claimed in the suit which will determine the particular court in which the suit is to be instituted, This determination cannot be done with reference to a foreign currency. It can only be done with reference to Indian currency. This is an additional reason why thy plaintiff must in his plaint give the rupee equivalent of the foreign currency sum claimed by him in the suit by converting it into Indian rupees at the rate of exchange prevailing at the date of the institution of the suit. The difficulty with respect to execution which would arise if the court were to select the date of payment as the date of conversion is that execution must issue for a specific sum expressed in Indian currency "due upon the decree. " It cannot issue for a sum which would become ascertainable only when realized or paid as would be the case were execution to issue for the rupee equivalent at the time of payment in rupees of a foreign currency sum. Further, as pointed our earlier, execution can issue only with respect to the amount due upon the decree. For the above reasons, it is not possible for us to accept the date of payment or realization of the decretal debt as the proper date for the rate of conversion. This then leaves us with only there dates from which to make our selection, namely, the date when the amount became payable, the date of the filing of the suit and the date of the judgment, that is, the date of passing the decree. It would be fairer to both the parties for the court to take the latest of these dates, namely, the date of passing the decree, that is, the date of the judgment. The learned Single Judge of the Delhi High Court also reached the same conclusion. He, however, did so relying upon the Miliangos case under an erroneous belief that when in that case it was held that the proper date should be the date when the judgment becomes enforceable what was meant was the date when the judgment was given, that is, when the decree was passed. The learned Single Judge was in error in so reading the judgment of the House of Lords. when the majority in the Miliangos case spoke of the date when the court gives leave to enforce the judgment what they were 576 referring to was not the date of the judgment but the date on which the court gives leave to execute the judgment. In Halsbury 's Laws of England (4th ed, vol. 17, para 401) the word 'execution ' is defined as follow: "The word 'execution ' in its widest sense signifies the enforcement of or giving effect to the judgments or orders of courts of justice. In a narrower sense, it means the enforcement of those judgments or orders by a public officer under the writs of fieri facias, possession, delivery, sequestration, fieri facias de bonis ecclesiasticis, etc." (The emphasis has been supplied by us.) This definition also appeared in the Third Edition of Halsbury 's Laws of England and was cited with approval by Hewson J. in The Zafiro, John Carllon & Co. Ltd vs Owners of S.S. Zafiro.(1) The most usual method of enforcement of a money judgment in England is by writ of fieri facial commonly called fi.fa. (see Halsbury 's Laws of England, 4th ed., vo, 17, para. 462). In certain cases, a writ of execution to enforce a judgment or order cannot issue without leave of the court. It is unnecessary to go into the details of the procedure relating to execution in England for what we have stated above is sufficient to show that what the majority in the Miliangos case meant by the date when the court gives leave to enforce the judgment or the date when the court authorizes enforcement of the judgment was the date when the court gives leave to execute the judgment. Does the fact that the decree sought to be executed is one passed in terms of an award which directs payment of a sum of money in a foreign currency make any difference to the date of conversion to be selected by the court ? According to the Division Bench of the Delhi High Court it does because, relying upon the Jugoslavenska case, it held that in such a case the proper date for conversion of the foreign currency sum awarded would be the date of the award in as much as there was no difference between the relevant provisions of the English Arbitration Act, 1950 (14 Geo 6, c.27), and our (X of 1940), particularly section 26(1) of the English Act and section 17 of our Act. For reasons which we will presently set out, the Division Bench of the Delhi High Court erred in reaching this conclusion. 577 We have set out earlier the facts of the Jugoslavenska case and have extracted the relevant passage from the judgment of Lord Denning M.R. To recapitulate, in the Jugoslavenska case, the plaintiffs had been awarded a sum expressed in United States dollars in an arbitration held in London and had sought leave of the court under section 26, now section 26(1), of the Arbitration Act, 1950, to enforce that award. In support of this application, the plaintiffs had filed an affidavit showing the rate of exchange as at the date of the award and the equivalent in pound sterling at that rate of the amount awarded to him and had claimed to enforce the amount awarded on that basis. Two questions, therefore, fell for the court 's determination. They were thus put by Roskill L.J. in his judgment in that case (at page 504): "The first is whether an arbitrator or umpire sitting in England or Wales can lawfully make an award in a currency other then sterling. The second is whether if such an award can be so lawfully made, it is enforceable under section 26. To understand the decision of the Court of Appeal so far as concerns the first question, we must bear in mind the then prevailing state of the law in England and so far as concerns the second question the provisions of the English law relating to enforcement of awards. At that time the old rule affirmed by the House of Lords in the Havana case was the law. Under it an English court could give judgment only in English currency and in an action in England to recover a debt expressed in a forcing currency, such debt had to be converted in to sterling at the rate of exchange prevailing on the date when the debt was payable. So far as the provisions of English law relating to enforcement of an award are concerned, the mode would depend whether or not it was a foreign award as defined in section 35 of the Arbitration Act, 1950, which definition is mutatis mutandis the same as the definition of "foreign award" given in section 2 of our (VI of 1937). Sub section (1) of section 36 of the English Act provides for enforcement of foreign awards. That section is in the following terms: "36. Effect of foreign awards. (1) A foreign awards shall, subject to the provisions of this Part of this Act, be enforceable in England 578 either by action or in the same manner as the award of an arbitrator is enforceable by virtue of section twenty six of this Act. (2) Any foreign award which would be enforceable under this Part of this Act shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in England, and any references in this Part of this Act to enforcing a foreign award shall be construed as including references to relying on an award. " Though section 36 is headed 'Effect of foreign awards ', it will be seen that sub section (1) of that section deals with enforcement of foreign awards while only sub section (2) deals with the effect of foreign awards. Thus, under section 36 (1) there are two alternative modes provided for enforcing a foreign award in England, namely, (1) by action at law on the award, and (2) by leave of the court in the same manner as the award of an arbitrator made in England is enforceable under section 26. Since, according to the law then prevailing, an English court could only give judgment in sterling and required a debt expressed in a foreign currency to be converted into English currency at the rate of exchange prevailing on the date when the debt was payable in an action on a foreign award the plaintiff would have to make his claim in English currency in respect of the sum of money awarded to him in a foreign currency. In such an action the debt in respect of which the plaintiff would be seeking judgment would be the sum of money payable to him under the award which had by virtue of the award become payable to him on the date of the award. He would, therefore, have to convert the foreign currency sum awarded to him into English currency at the rate of exchange prevailing on the date of the award. Before we deal with the second mode of enforcing a foreign award provided in section 36(1), it will be convenient to reproduce here the provisions of section 26 of the English Arbitration Act which are as follows: "26. Enforcement of award. (1) An award on an arbitration agreement may by, leave of the High Court or a judge thereof, be enforced in 579 the same manner as a judgment or order to the same effect, and where leave is so given, judgment may be entered in terms of the award. (2) If (a) the amount sought to be recovered does not exceed the current limit on jurisdiction in section 40 of the County Courts Act, 1959, and (b) a county court so orders, it shall be recoverable (by execution issued from the county court or otherwise) as is payable under an order of that court and shall not be enforceable under sub section (1) above. (3) An application to the High Court under this section shall preclude an application to a county court and an application to a county court under this section shall preclude an application to the High Court. " Originally section 26 consisted only of sub section (1). Subsection (2) and (3) were inserted in section 26 and the original section renumbered as sub section (1) by section 17(2) of the Administration of Justice Act, 1977. The new sub sections (2) and (3) are immaterial for our purpose for it was the old section 26, now section 26(1). which formed the basis of the decision in the Jugoslavenska case. Kerr J., from whose judgment the appeal in the Jugoslavenska ease was carried to the Court of Appeal, had before deciding the matter made enquiries of the Central Office of the High Court as to the practice in dealing with applications under section 36(1). Roskill L.J. in his judgment in the Court of Appeal has referred to this and has thus set out (at page 507) the information which Kerr J. had received: "He was told that the practice on applications under that section is that the sum awarded in the foreign currency in question is converted into sterling at the rate prevailing at the date of the award and that, in the absence of any other objection, an order is then made giving leave to enforce the foreign award in the same manner as a judgment for that resulting sterling sum." (The emphasis has been supplied by us.) 580 The award in the Jugoslavenska case was not a foreign award within the meaning of section 35 of the English Act for it was made in England, though the sum awarded there under was expressed in a foreign currency, namely, United States dollars. In English law, an application to enforce an award under section 26(1) is only one of the modes of enforcing an award which is not a foreign award. Where such an application is granted, it is not necessary that judgment must be entered in terms of the award. Lord Denning M.R., in the course of his judgment in the Jugoslavenska case, pointed out (at page 502) that in most cases it would be unnecessary to enter judgment, for once leave was given, the award could be enforced by the ordinary means of execution, but it might be necessary to enter judgment in order to issue a bankruptcy notice and the latter words of section 26 enabled judgment to be so entered. Roskil L.J. also pointed out (at page 507) that under section 26(1) there are two different steps which must be taken. First, the obtaining of leave to enforce the award in the same manner as a judgment, and secondly and independently, when leave is so given, the entering of judgment in the terms of the award. Section 26(1) is not exhaustive of the modes in which an award, which is not a foreign award, can be enforced. Such an award can also be enforced by bringing an action on it in which case, as pointed out earlier, if the sum awarded were expressed in a foreign currency, the judgment would have to be sought in sterling for which purpose the rate of exchange would be taken as at the date of the award. In the Jugoslavenska case the court held that an arbitrator or umpire in England had jurisdiction to make an award for a sum of money expressed in a foreign currency when that particular currency was the appropriate currency in which to express it. The difficulty which faced the court was the manner of enforcing such an award by reason of the decision in the Havana case under which an English court could give judgment only in sterling. This difficulty was resolved by the court by referring to section 36(1) and holding that it would be unreasonable that an award in a foreign currency made aboard could be enforced by an application under section 26(1) while the same award, if made in England, could not be so enforced. It was for this reason that the court interpreted the words "to the same effect" occurring in section 26(1) as meaning "having the same effect" and not as meaning "in the same terms", because, as Lord Denning M.R. pointed out, if it were to be so interpreted, there would be some difficulty in applying the section to an award in a foreign currency but if the words were interpreted to mean that the judgment 581 or order must have "the same effect", it would follow that if the sum awarded were converted into sterling at the rate of exchange as at the date of the award it would have the same effect as a judgment or order in an action on the award. We may point out that Cairns L.J., however, felt some doubt whether the sum awarded must be converted into sterling before leave to enforce the award was given but he did not dissent because both Lord Denning M.R. and Roskill L.J. considered that it should be so converted. As emphasized by us earlier, in the Jugoslavenska case the date of the award was taken as the date of conversion because in an action on such an award the due date for payment of the debt would be the date of the award. We have seen that in the Miliangos case, though the Jugoslavenska case was not expressly over ruled none of the Law Lords who had occasion to refer to it were happy with what had been held there; Lord Wilberforce opining that there was no reason why, if desired, the practice should not be adjusted so as to enable conversion to be made at the date when leave to enforce the award in sterling is given; Lord Cross of Chelsea thinking it absurd that there should be one rule for arbitrations with respect to foreign currency debts and another with respect to actions on similar debts; Lord Edmund Davies expressing his view that no basic distinction could be drawn for the purposes of a conversion date between judgments and awards; and even Lord Simon of Glaisdale in his dissenting judgment stating his belief that if Parliament were to reconsider the sterling judgment rule and the breach date rule, the Jugaslavenska case would come within the purview of such reconsecration. In view of these observations and the fact that the Havana case is no longer the law in view of the decision in the Miliangos case, it is highly doubtful whether today in England if the matter were carried higher, it would be decided in the same way. In view of the Miliangos case it cannot be said today that in an action on an award the foreign currency sum directed to be paid under the award must be converted at the date of the award when it was payable. It would have to be converted at the date when the court gives leave to enforce the judgment. On principle there can be no difference between an action on an award and a case where instead of filing an action the plaintiff files an application under section 26(1) for leave to enforce the award. If in an action on the award the proper date of conversion would be the date when the court gives leave to enforce the judgment, where an application under section 26(1) is filed the proper date of conversion should also be the same, for then alone can the award, when leave is given, "be enforced in the same manner as a judgment or order to the same effect". 582 We find that the Division Bench of the Delhi High Court has not correctly appreciated the ratio of the decision in the Jugoslavenska case nor the reasoning upon which that decision was based. We also find that the Division Bench of the Delhi High Court has committed an error in equating section 26(1) of the English Arbitration Act with section 17 of our Arbitration Act. The reason for this error is that the Division Bench of the Delhi High Court has proceeded upon a wrong assumption that the procedural scheme of the English Arbitration Act is the same as that of our Arbitration Act. In this connection, the Division Bench has referred to section 22 of the English Act, under which the court has power from time to time to remit the matters referred or any of them for reconsideration of the arbitrator or umpire, and section 23(1) of the English Act, under which the court has power to remove any arbitrator or umpire for misconduct. These sections correspond to sections 16 and 11 our Act, We fail to see what relevance either of these sections had to the question in issue. Before we proceed further to discuss this aspect of the case, it will be convenient to set out section 17 of our . That section provides as follows: "17. Judgment in terms of award. Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award. " What seems to have impressed the Division Bench of the Delhi High Court is the fact that in England the court is not bound to grant leave to enforce the award but can, when such an application is made, on objection being raised by the respondent, either remit the award or set it aside, and that the same can also be done by a court in India when an award has been filed in court. We find that in adopting this line of approach the Division Bench has overlooked the basic differences between the English procedure and the procedure under our Act. The provisions for enforcing an award under the 583 English Act and under our Act are different. Under the English Act, if it is sought to enforce an award by making an application under section 26(1), such application has to be made under O. 73 r. 3 of the Rules of the Supreme Court, 1965, by an originating summons. There is no time limit provided for taking out such a summons. There is, however, a time limit provided for making an application to the court to remit an award under section 22 or to set aside an award under section 23(2), under O. 73 r. 5(1) of the Rules of the Supreme Court, 1965, the period of limitation being 21 days after the award has been made and published to the parties. An application for leave to enforce the award under section 26(1) can, however, be made even before the expiry of the time for moving to set aside the award. In such a case, however, it can be resisted upon the ground that a motion to set aside the award to be made. It is opined in Russel on Arbitration, 20th ed. page 375, that in such a case, the party resisting the application would be required to show, upon affidavit, a substantial case for contesting the validity of the award, as well as to swear to his intention of doing so. Under section 17 of our Act, an application for a judgment according to the award can only be made after the time for making an application to set aside the award has expired, or if such application has been made, only after it is refused. Under the English Act, the court is not bound to grant leave to enforce, the award. In doubtful cases, it would ordinarily leave the party to pursue his remedy by filing an action on the award. The court may also give leave to enforce the award only upon terms. An instance of this is the case of E.D. & F, Man vs Societe Annonyme Triaolitaine Des Usines De Raffinage De Sucre(1) where the applicant, who had throughout admitted that he owed a certain sum on a cross claim, which was not a subject matter of the reference, was awarded a larger sum which made no reference to the cross claim, was given leave to enforce the whole award as a judgment on an undertaking given by him to accept the difference between the two sums in satisfaction of the award and the extinction of the cross claim. Further, in answer to an application for leave under section 26(1) the respondent may set up the defence that the award is a nullity, or is wholly or in part ultra vires, or is bad on the face of it. If, however, his objection to the award is that arbitrator has misconducted himself, or that the award was improperly procured, his proper course would be to move to set the award aside, and, if necessary, to have the 584 application to enforce the award adjourned in the meantime (see Halsbury 's Laws of England, 4th ed., vol. 2, para 630). None of these contentions are available to a respondent where an application for a judgment according to the award is made under section 17 of our . They can only be raised by way of an application to set aside or remit the award after the award has been filed in court and notice thereof issued to the parties under section 14 of the . The period of limitation for such an application is prescribed by Article 119(b) of the (XXXVI of 1963). If the period of limitation expires without any such application being made, the court, on application made to it for that purpose, must proceed to "pronounce judgment according to the award" whereupon a decree has to follow. Section 17 expressly provides that in such a case "the Court shall . proceed to pronounce judgment according to the award and upon the judgment so pronounced a decree shall follow". The only ground upon which such a decree can be challenged in appeal is that "it is in excess of, or not otherwise in accordance with the award". The court before which an application for judgment in terms of the award is made, has, therefore, no discretion in the matter except possibly in a case where the award is on the face of it patently illegal or violative of a provision of the law. Under section 26(1) of the English Act, when leave is given to enforce the award, it is not necessary that judgment should be entered in terms of the award for the purpose of enforcing the award by execution. Under our , before an award can be enforced, a judgment has to be pronounced according to the award, a decree has thereupon to follow and it is that decree which alone can be enforced by an application for execution made under O. 21 r. 11 of the Code of Civil Procedure, 1908. It is pertinent to note that the judgment, which the court pronounces under section 17, is to be "according to the award". Where the award directs a certain sum of money to be paid and the court, in a case where it has not modified or corrected the award under section 15, pronounces judgment for a different sum, the judgment cannot be said to be "according to the award". In the same way, where an award directs payment of a sum of money in a foreign currency and the court while pronouncing judgment provides for its rupee equivalent at the rate of exchange prevailing on the date of the award, the court will not be pronouncing judgment "according to the award" if in the meantime the rate of exchange has varied, because at the date of the judgment the foreign currency equivalent of the 585 amount in rupees provided in the judgment would be different from the foreign currency sum directed to be paid by the award. The judgment, therefore, can only be said to be "according to the award" if it directs payment of the rupee equivalent at the rate of exchange prevailing on the date of pronouncing the judgment which date is the same as the date of the passing of the decree. For this purpose, the applicant must satisfy the court, either on affidavit or otherwise, as to the rate of exchange prevailing on the date of the judgment or on the date nearest or most nearly preceding the date of the judgment. Under section 17 of our , judgment is to be pronounced "according to the award". The marginal note to the section speaks of "judgment in terms of award". Under section 26(1) of the English Act, once leave is given, an award becomes enforceable in the same manner as a judgment or order "to the same effect". The words "to the same effect" were interpreted in the jugoslavenska case not as meaning "in the same terms" but as meaning having "the same effect", that is, as having the same effect as a judgment or order given in an action brought on the award. Granting leave under section 26(1) of the English Act and pronouncing judgment according to the award and passing a decree under section 17 of our Act, therefore, mean different things and have different results. A judgment according to the award under section 17 our Act will speak only from the date of the judgment which will not be the case under section 26(1), for while in the first case what will be enforceable by the processes of law, namely, execution, will be the decree passed in terms of the award, in the second case it will be the award itself, unless the applicant desires to have judgment entered in terms of the award which he is not required to do as pointed out above. On behalf of ONGC reliance was placed upon the decision of this Court in Satish Kumar and others vs Surinder Kumar and others.(1) On the strength of this decision it was submitted that an award was not a mere waste paper until a decree in terms of the award has been passed but an award created rights and liabilities and, therefore, since the award in the instant case provided that a certain sum should be paid in a foreign currency to Forasol, it spoke from the date when it was made and published and the rate of conversion could, therefore, only be the date of the said award. We are unable to see how the above decision in any way bears out this proposition or lends support 586 to it In that case, an award, made on a reference to arbitration by the parties without the intervention of the court, was filed in court under section 14 of the . In an application made under section 30 to set aside the award, one of the objections taken was that the award required registration as it affected immovable property worth more than Rs.100 in value and as the award was not registered, it was not admissible in evidence. This contention was upheld. It was in this context that this Court observed (at page 249) that "an award has some legal force and is not a mere waste paper. If the award in question is not a mere waste paper but has some legal effect it plainly purports to or affects property within the meaning of section 17 (1) (b) of the Registration Act". The question before the Court in that case was whether a decree in terms of an unregistered award could be passed by the court in a case where under the (XVI of 1908), the registration of the award was compulsory. This question is very different from the one which we are called upon to decide. It was also submitted on behalf of ONGC that an award, unless it is set aside by the court, is a final adjudication of the rights and liabilities of the parties in respect of the matters referred to arbitration and, therefore, Forasol could not claim to convert the French Franc part of the said award into Indian rupees at the rate of exchange prevailing on the date of the decree but can only do so at the rate of exchange prevailing on the date of the award. We find this submission wholly untenable. Undoubtedly, the said award, not having been set aside or modified by the court, is final and binding on the parties and, in respect of the matters referred to arbitration, Forasol cannot claim any amount from ONGC other than that awarded by the Umpire. Forasol is, however, not making any such claim. It is claiming only the sum in French Francs which it has become entitled to receive from ONGC under the said award. All that Forasol wants is that ONGC should pay to it the sum of FF. 5,89,727.51 due to it under the said award or its rupee equivalent as at the date when the court pronounced judgment according to the said award and passed the decree in terms thereof. This is a very different thing from making a claim de hors the said award. The claim made by Forasol is actually one under the said award for if the sum awarded to it in French Francs was not paid or could not be paid by ONGC, Forasol would be entitled to receive its rupee equivalent. On the decree being passed in terms of the said award the said award became merged in the said decree and the sum of FF,5,89,727.51 payable to Forasol under 587 the said award became a judgment debt payable to Forasol under the said decree and, as pointed out above, at the time of passing the decree the court would have to direct payment of the rupee equivalent of this foreign currency debt only at the rate of exchange prevailing on the date of the decree. For the reasons set out above, we are of the opinion that the rule in the jugoslavenska case cannot be applied to this country and the fact that a decree is in terms of an award for a sum of money expressed in a foreign currency makes no difference to the date to be taken by the court for converting into Indian currency the foreign currency sum directed to be paid under the award and that such date should also be the date of the decree. It would be convenient if we now set out the practice, which according to us, ought to be followed in suits in which a sum of money expressed in a foreign currency can legitimately be claimed by the plaintiff and decreed by the court. It is unnecessary for us to categorize the cases in which such a claim can be made and decreed. They have been sufficiently indicated in the English decisions referred to by us above. Such instances can, however, never be exhausted because the law cannot afford to be static but must constantly develop and progress as the society to which it applies, changes its complexion and old ideologies and concepts are discarded and replaced by new. Suffice it to say that the case with which we are concerned was one which fell in this category. In such a suit, the plaintiff, who has not received the amount due to him in a foreign currency and, therefore, desires to seek the assistance of the court to recover that amount, has two courses open to him. He can either claim the amount due to him in Indian currency or in the foreign currency in which it was payable. If he chooses the first alternative, he can only sue for that amount as converted into Indian rupees and his prayer in the plaint can only be for a sum in Indian currency. For this purpose, the plaintiff would have to convert the foreign currency amount due to him into Indian rupees. He can do so either at the rate of exchange prevailing on the date when the amount became payable for he was entitled to receive the amount on that date or, at his option, at the rate of exchange prevailing on the date of the filing of the suit because that is the date on which he is seeking the assistance of the court for recovering the amount due to him. In either event, the valuation of the suit for the purposes of court fees and the pecuniary limit of the jurisdiction 588 of the court will be the amount in Indian currency claimed in the suit. The plaintiff may, however, choose the second course open to him and claim in foreign currency the amount due to him. In such a suit, the proper prayer for the plaintiff to make in his plaint would be for a decree that the defendant do pay to him the foreign currency sum claimed in the plaint subject to the permission of the concerned authorities under the Foreign Exchange Regulation Act, 1973, being granted and that in the event of the foreign exchange authorities not granting the requisite permission or the defendant not wanting to make payment in foreign currency even though such permission has been granted or the defendant not making payment in foreign currency or in Indian rupees, whether such permission has been granted or not, the defendant do pay to the plaintiff the rupee equivalent of the foreign currency sum claimed at the rate of exchange prevailing on the date of the judgment. For the purposes of court fees and jurisdiction the plaintiff should, however, value his claim in the suit by converting the foreign currency sum claimed by him into Indian rupees at the rate of exchange prevailing on the date of the filing of the suit or the date nearest or most nearly preceding such date, stating in his plaint what such rate of exchange is. He should further give an undertaking in the plaint that he would make good the deficiency in the court fees, if any, if at the date of the judgment, at the rate of exchange then prevailing, the rupee equivalent of the foreign currency sum decreed is higher than that mentioned in the plaint for the purposes of court fees and jurisdiction. At the hearing of such a suit, before passing the decree, the court should call upon the plaintiff to prove the rate of exchange prevailing on the date of the judgment or on the date nearest or most nearly preceding the date of the judgment. If necessary, after delivering judgment on all other issues, the court may stand over the rest of the judgment and the passing of the decree and adjourn the matter to enable the plaintiff to prove such rate of exchange. The decree to be passed by the court should be one which orders the defendant to pay to the plaintiff the foreign currency sum adjudged by the court subject to the requisite permission of the concerned authorities under the Foreign Exchange Regulation Act, 1973, being granted, and in the event of the Foreign Exchange authorities not granting the requisite permission or the defendant not wanting to make payment in foreign currency even though such permission has been granted or the defendant not making payment in foreign currency or in Indian rupees, whether such permission has been granted or not, the equivalent of such foreign currency sum converted into 589 Indian rupees at the rate of exchange proved before the court as aforesaid. In the event of the decree being challenged in appeal or other proceedings and such appeal or other proceedings being decided in whole or in part in favour of the plaintiff, the appellate court or the court hearing the application in the other proceedings challenging the decree should follow the same procedure as the trial court for the purpose of ascertaining the rate of exchange prevailing on the date of its appellate decree or of its order on such application or on the date nearest or most nearly preceding the date of such decree or order. If such rate of exchange is different from the rate in the decree which has been challenged, the court should make the necessary modification with respect to the rate of exchange by its appellate decree or final order. In all such cases, execution can only issue for the rupee equivalent specified in the decree, appellate decree or final order, as the case may be. These questions, of course, would not arise if pending appeal or other proceedings adopted by the defendant the decree has been executed or the money thereunder received by the plaintiff. Turning now to arbitrations, on principle there can be and should be no difference between an award made by arbitrators or an umpire and a decree of a court. In the type of cases we are concerned with here just as the courts have power to make a decree for a sum of money expressed in a foreign currency subject to the limitations and conditions we have set out above, the arbitrators or umpire have the power to make an award for a sum of money expressed in a foreign currency. The arbitrators or umpire should, however, provide in the award for the rate of exchange at which the sum awarded in a foreign currency should be converted in the events mentioned above. This may be done by the arbitrators or umpire taking either the rate of exchange prevailing on the date of the award or the date nearest or most nearly preceding the date of the award or by directing that the rate of exchange at which conversion is to be made would be the date when the court pronounces judgment according to the award and passes the decree in terms thereof or the date nearest or most nearly preceding the date of the judgment as the court may determine. If the arbitrators or umpire omit to provide for the rate of conversion, this would not by itself be sufficient to invalidate the award. The court may either remit the award under section 16 of the arbitration Act, 1940, for the purpose of fixing the date of conversion or may do so itself taking the date of conversion as the date of its judgment or the date nearest or most nearly preceding it, 590 following the procedure outlined above for the purpose of proof of the rate of exchange prevailing on such date. If however, the person liable under such an award desires to make payment of the sum in foreign currency awarded by the arbitrators or umpire without the award being made a rule of the court, he would be at liberty to do so after obtaining the requisite permission of the concerned authorities under the Foreign Exchange Regulation Act, 1973. In the case of the said award which had led to these appeals before us, the party entitled to receive the money Forasol was a foreign party. Under the said contract, the currency of account was a foreign currency and so was the currency of payment except for a portion thereof. Forasol was, therefore, entitled, on payment not being made to it by ONGC, to receive in French Francs the amounts which became payable to it in that currency. The Umpire was, therefore, justified in providing that the amounts payable under the said award to Forasol in French Francs should be paid in French currency. The Umpire has, however, neither provided that such payment would be subject to the permission of the foreign exchange authorities being obtained nor specified the conversion rate to be applied in the eventualities which we have set out above. That, however, does not make any difference because neither party has objected to the said award on this ground. On the contrary, both parties have accepted the said award as binding and conclusive. As mentioned above, this omission on the part of the Umpire could have been corrected by the Delhi High Court when it came to pronounce judgment according to the said award and pass the said decree in terms thereof. The decree passed in terms of the said award, however, does not specify either the rupee equivalent of the amount in French Francs payable to Forasol or the rate of exchange at which the conversion of such amount into Indian rupees should be made. To that extent, the decree passed in terms of the said award by the Delhi High Court was not a proper decree. Both the parties have, however, accepted the said decree and have not challenged it on this ground in any proceedings. In any event, the aforesaid mistake in the said decree was one which could have been got corrected by an application for review or by an application under section 152 or, in any event under section 151, of the Code of Civil Procedure, 1908. The decree has now become final and binding upon the parties. Both the parties have accepted the said decree and the said decree cannot, therefore, be said to be invalid on the ground of the above omission to specify either the rupee equivalent of the French Franc 591 portion of the said award or the rate of exchange at which such French Franc portion was to be converted into its rupee equivalent. For the reasons set out above, we hold that the learned Single Judge rightly took the date of the decree as the date of conversion. In his order on the said execution application he has, however, given a direction that ONGC could satisfy the judgment debt by making payment in French Francs or if they so preferred, by paying the equivalent sum in rupees at the rate of exchange prevailing on the date of the decree. He was in error in not qualifying this direction by making the option given to ONGC to make payment in French Francs subject to the permission of the concerned authorities under the Foreign Exchange Regulation Act, 1973. To this extent, the order passed by the learned Single Judge requires to be modified. Turning now to the appeal filed by ONGC, it was stated in the Special Leave Petition filed by ONGC that it had two claims against Forasol, the first with respect to what was termed as "tax differential" and the second with respect to interest on the amounts payable by Forasol to ONGC. Both these claims were negatived by the learned Single Judge. It was expressly stated in paragraph 19 of the Special Leave Petition of ONGC that except for the aforesaid two claims, the judgment and order of the Division Bench of the Delhi High Court should be affirmed. ONGC 's claim for tax differential was based on Article IV 1.2 of the said contract under which Forasol was to pay income tax, surcharge on income tax and all other taxes, which might be assessed and levied by the income tax authorities in India on the income of Forasol under the said contract as well as on the income of Forasol 's personnel from the work performed by them under the said contract. Under the proviso to the said Article, if subsequent to the date of the said contract, the tax rates in India were changed so as to be higher than what they were at the date of the signing of the said contract, ONGC was to pay the difference to Forasol and if the tax rates became lower, Forasol was to pay the difference to ONGC. This proviso was not to be applicable in respect of the taxes payable by Forasol on the income of its personnel. The learned Single Judge has pointed out in his judgment that the claim in respect of tax differential did not survive in as much as by the said award the amounts paid by ONGC as tax on behalf of Forasol were adjusted and given credit for. ONGC did not challenge this finding in the appeal filed by it 592 in the Delhi High Court. None the less ONGC sought to reagitate this point in its Special Leave Petition. At the hearing of this appeal, learned Counsel for ONGC stated that he was not pressing this point. In the written submission filed on behalf of ONGC after the hearing of both these appeals was concluded, ONGC has, however, once again sought to raise this point. The point not having been urged in the intra court appeal in the Delhi High Court and also having been given up at the hearing of these appeals before this Court, ONGC cannot be permitted subsequently to agitate this point in the written submissions filed on its behalf. In any event, in our opinion, the learned Single Judge was right in rejecting this claim of ONGC. So far as ONGC 's claim for interest is concerned, it has been negatived both by the learned Single Judge and the Division Bench of the Delhi High Court. We find no substance in this claim. The relevant provision of the said award which deals with payment of interest is as follows: "Under the contract there is no right to interest to either party except on French Francs. If the amount paid by ONGC to the credit of Forasol in regard to Income Tax and the several items of allowance and disallowance under this award are worked out and it is found that there is an amount payable to ONGC in French Francs that would carry interest, but if the amount is in rupees then no interest could be allowed until the date of the award. " The amounts on which interest is claimed by ONGC were payable by Forasol in rupees and not in French Francs. Therefore, by the express terms of the said award, there is no right in ONGC to claim any interest on these amounts and this claim for interest was rightly negatived. In the result, we allow Civil Appeal No. 628 of 1981 filed by Forasol and set aside the order passed by the Division Bench of the Delhi High Court in the appeal filed by the oil and Natural Gas Commission, namely, E.F.A. (O.S.) 5 of 1977 and we restore and confirm the order passed and directions given by the learned Single Judge of the Delhi High Court in the Execution Application filed by Forasol, namely, Execution No. 77 of 1976, with this modification that if the Oil and Natural Gas Commission wants to pay in French 593 Francs the amount due by it under the said decree, it will be at liberty to do so after obtaining the requisite permission of the concerned authorities under the Foreign Exchange Regulation Act, 1973. We dismiss Civil Appeal No. 629 of 1981 filed by the Oil and Natural Gas Commission. The Oil and Natural Gas Commission will pay to Forasol the costs of both the Appeals in this Court as also of the Appeal E.F.A. (O.S.) 5 of 1977 in the Delhi High Court. H.S.K. CA No. 628/81 allowed and CA No. 629/81 dismissed.
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Forasol, a company from France with its main office in Paris, made an agreement on February 17, 1964. They agreed with Oil and Natural Gas Commission (ONGC), which is owned by the Indian government, to do drilling work to find oil in India. Article IX 3 of the agreement said that Forasol would be paid in French money (French Francs) for their work, including fees, standby costs, and equipment. ONGC would pay 80% of that amount in French Francs in Paris, France. The other 20% would be paid in Indian money (Indian rupees), using a set exchange rate of FF. 1.033 = Re. 1.000. Art IX 3.2 said that Forasol would also be paid back for some other costs, like insurance and shipping. If Forasol paid for these things in Indian rupees, ONGC would pay them back in Indian rupees. If they paid in French Francs, ONGC would pay them back in French Francs. Article X 2, X 3 and X 4 of the agreement estimated how much money would be paid to Forasol in French Francs. It also explained the rules for sending bills and how payments would be made. According to article X 3.3, Forasol had to show on each bill how much money they were owed in French Francs and how much in Indian rupees, based on the agreement. Article XI explained how payments would be made to Forasol in Indian rupees. The agreement was first made for one year, but it was extended two times. Additions to the agreement, called Addendum Nos. 1, 2 & 3, were also made. During the extended time, the Indian rupee lost value in June 1966. Because of this, Forasol asked to exchange Indian rupees into French Francs at a higher rate than the one in article IX 3. The disagreements between the two sides were sent to an arbitrator. An arbitrator is like a judge who helps settle arguments outside of court. The arbitrator decided that some payments should be made in French Francs, but did not say what exchange rate to use to change the French Francs into Indian rupees. The arbitrator also said that after November 30, 1966, the rupee part of the payment should be exchanged at a higher rate of FF. 1,000 = rupees 1,517.80. The decision was taken to the Delhi High Court. The High Court agreed with the arbitrator's decision, but did not set a date for when the French Francs should be changed into Indian rupees. They also added interest at 6% per year from the date of the decision until the payment was made. Neither side disagreed with the decision or how it was written. Forasol then asked the High Court to enforce the decision. ONGC argued that the higher exchange rate only applied to the interest that Forasol was owed after November 30, 1966. They said that the original exchange rate in the agreement should be used for all other payments in French Francs or Indian rupees. A single judge at the High Court said that the original exchange rate only applied to the rupee part of the payment mentioned in article IX .3.1. For all other payments to Forasol in French Francs, the exchange rate on the date of the court's decision should be used. ONGC appealed, and a group of judges at the High Court said that the higher exchange rate only applied to the interest owed to Forasol. They also said that the original exchange rate should be used for the rupee amount. They added that, because of the Foreign Exchange Regulation Act of 1973 (a law about money exchange), the French Francs had to be changed into Indian rupees at the exchange rate on the date of the arbitrator's decision before the decision could be enforced. This ruling by the group of judges was then challenged in appeals by both sides. The questions that needed to be answered were: (1) Did the exchange rate in the agreement apply to all payments, whether in Indian rupees or French Francs, or only to 20% of the French Francs that ONGC paid to Forasol in Indian rupees for their fees, standby costs, and equipment? (2) Did the higher exchange rate apply to all payments in Indian rupees under article IX 3.1, or only to the interest on the French Francs that ONGC owed to Forasol? (3) What was the correct date to use for changing the French Francs into Indian rupees, since neither the agreement nor the arbitrator's decision had set an exchange rate? Two more questions that were closely related to question No. (3) were: (1) Can an arbitrator make a decision in a foreign currency? (2) Can a court simply agree with the arbitrator's decision without saying what exchange rate should be used to change the foreign money into Indian rupees? The court agreed with Forasol's appeal and disagreed with ONGC's appeal. HELD: 1. According to article IX 3.1 of the agreement, Forasol agreed to accept 20% of their fees, standby costs, and equipment charges in Indian rupees. However, they wanted the other 80% of these fees and charges, as well as other amounts owed to them under the agreement, to be paid in French Francs only. If Forasol showed the amounts in French Francs and Indian rupees separately on their bills, and if the French Francs were paid in Paris, France, then there would be no need for an exchange rate in the agreement to change French Francs into Indian rupees. An exchange rate would only be needed for the amount paid to Forasol in Indian rupees. So, only the 20% of the fees and charges that were shown in French Francs on Forasol's bills but paid in Indian rupees had to be changed at the exchange rate in the agreement. This is supported by article 2.2 of Addendum No. 2 and article 2.5 of Addendum No. 3. These articles said that if Forasol had to pay money back to ONGC, they had to pay it back in the same money that ONGC had used to pay them. 2. The group of judges at the High Court was wrong to say that the higher exchange rate only applied to the interest paid to Forasol. The higher exchange rate applied to the payments in Indian rupees under article IX 3.1 of the agreement that ONGC paid to Forasol from November 30, 1966. 3. In a case where someone is trying to get money that should be paid in a foreign currency, there are five possible dates that a court could choose to set the exchange rate: (1) the date when the money was due; (2) the date when the lawsuit was started; (3) the date of the court's decision; (4) the date when the court orders the decision to be enforced; and (5) the date when the money is paid. In a case where the court agrees with an arbitrator's decision made in a foreign currency, there is a sixth possible date: the date of the arbitrator's decision. It is not clear which of these dates is the correct one to use. However, English courts have made decisions about this. English courts are from a country that has influenced our laws and legal system. Their judges are also highly respected. While these decisions are not required to be followed by our courts, they can be helpful in making our own decisions. Whether we can use the rules from these cases depends on our own laws, legal procedures, and the practical realities of lawsuits in our country. When someone from another country is owed money in a foreign currency and has to go to court to get it because the person who owes them money has not paid, the first question is whether an Indian court can make a decision about an amount in a foreign currency. While there is no reason why a court should not be able to do this, no court can order someone to do something impossible or illegal. Because of the Foreign Exchange Regulation Act of 1973, which restricts payments in foreign currencies, a simple decision for an amount in a foreign currency would be ordering the person to do something that breaks the law. So, a decision like that can only be made if it is allowed by the foreign exchange authorities (the people in charge of money exchange). If the authorities do not allow the payment to be made in foreign currency, the person who owes the money will not be able to pay, and the decision will be useless. The person who is owed the money will not get anything. The court must plan for the possibility that the foreign exchange authorities will not give permission, or that even if they do, the person who owes the money will not pay, or will not want to pay in foreign currency or Indian rupees. This can only be done if the decision also says that the person can pay an amount in Indian rupees that is equal to the amount in foreign currency. It is only fair that someone who is legally entitled to receive money in a foreign currency should either receive it in that currency or receive the same amount in Indian rupees. This is where the question of which date the court should use to change the foreign currency into Indian rupees comes up. The court must choose a date that puts the person who is owed the money in the same position they would have been in if the person who owed them money had paid them when they should have. This is important because the exchange rate changes all the time, sometimes a lot. The date when the money was due does not do this, because the exchange rate may have changed between that date and the date of the court's decision. This could mean that the amount in rupees is less than what the person was supposed to receive. It is also possible that the person could get more than they expected if the exchange rate changed in their favor. Choosing the date when the money was due is like exposing the parties to the unpredictable changes in the international money market. So, choosing the "breach date" (the date when the money was due) is not fair or reasonable. The date when the lawsuit was started is also not a good choice. Choosing this date would leave the parties in an uncertain position, just like choosing the date when the money was due. Choosing the date of the court's decision would also be unrealistic, because getting a court decision and getting the money paid are two different things. There are often many steps and problems before the money is actually paid, unless the person who owes the money pays willingly, which is rare. In most cases, a court decision has to be enforced to get the money. Choosing the date when the court orders the decision to be enforced also has problems. Choosing the date of payment as the correct date for changing the money has three practical problems: paying court fees, the amount of money that a court can handle, and enforcement. So, the court is left with only three dates to choose from: the date when the money was due, the date when the lawsuit was started, and the date of the court's decision. It would be fairer to both sides for the court to use the latest of these dates: the date of the court's decision. Under section 17 of the Arbitration Act of 1949, the court's decision must be "according to the award." This means the court's decision should match the arbitrator's decision. If the arbitrator's decision says that a certain amount of money should be paid, and the court changes the amount, then the court's decision is not "according to the award." In the same way, if an arbitrator's decision says that money should be paid in a foreign currency, and the court changes it to rupees using the exchange rate on the date of the arbitrator's decision, the court's decision is not "according to the award" if the exchange rate has changed since then. This is because the amount in rupees will no longer be equal to the amount in foreign currency in the arbitrator's decision. The court's decision can only be "according to the award" if it orders payment of the rupee amount using the exchange rate on the date of the court's decision. 6. The group of judges at the High Court made a mistake by comparing section 26 (1) of the English Arbitration Act with section 17 of our Arbitration Act. This is because they wrongly assumed that the English Arbitration Act is the same as our Arbitration Act. The rules for enforcing an arbitrator's decision are different under the English Act and our Act. "Granting leave" under section 26 of the English Act and "pronouncing judgment according to the award" and "passing a decree" under section 17 of our Act mean different things and have different results. A judgment based on the arbitrator's decision under section 17 of our Act will only be effective from the date of the judgment. This is not the case under section 26 (1) of the English Act, because in the first case, the decree (court order) passed based on the arbitrator's decision will be enforced. In the second case, it will be the arbitrator's decision itself, unless the person wants to have judgment entered based on the decision. The correct way to handle lawsuits where money is claimed in a foreign currency is as follows. In such a lawsuit, the person who is owed the money in a foreign currency has two choices. They can either claim the amount in Indian currency or in the foreign currency in which it was supposed to be paid. If they choose the first option, they can only sue for the amount changed into Indian rupees. Their request in the lawsuit can only be for an amount in Indian currency. To do this, the person must change the foreign currency amount into Indian rupees. They can do this using the exchange rate on the date when the money was due, or they can choose to use the exchange rate on the date when the lawsuit was started. In either case, the value of the lawsuit for court fees and the court's ability to handle the case will be based on the amount in Indian currency claimed in the lawsuit. However, the person can choose the second option and claim the amount in the foreign currency owed to them. In this case, the correct request for the person to make in the lawsuit would be for a decree (court order) that the person who owes the money must pay them the foreign currency amount claimed in the lawsuit. This is subject to the permission of the people in charge of money exchange under the Foreign Exchange Regulation Act of 1973. The lawsuit should also state that if the foreign exchange authorities do not give permission, or if the person who owes the money does not want to pay in foreign currency even if permission has been granted, or if the person does not pay in foreign currency or in Indian rupees, then the person who owes the money must pay the rupee amount equal to the foreign currency amount claimed, using the exchange rate on the date of the court's decision. For court fees and jurisdiction, the person should value their claim in the lawsuit by changing the foreign currency amount claimed into Indian rupees using the exchange rate on the date the lawsuit was started. They should also promise in the lawsuit that they will pay any extra court fees if the rupee amount of the foreign currency is higher on the date of the court's decision than what was stated in the lawsuit. At the court hearing, before making the decree (court order), the court should ask the person to prove the exchange rate on the date of the judgment. If needed, the court may delay the rest of the judgment and the passing of the decree to allow the person to prove the exchange rate. The decree that the court makes should order the person who owes the money to pay the foreign currency amount ordered by the court, subject to permission from the foreign exchange authorities under the Foreign Exchange Regulation Act of 1973. If the foreign exchange authorities do not give permission, or if the person who owes the money does not want to pay in foreign currency even if permission has been granted, or if the person does not pay in foreign currency or in Indian rupees, then the decree should order the person to pay the rupee amount equal to the foreign currency amount, using the exchange rate proven to the court. If the decree is challenged in an appeal or other legal process, and the appeal or other process is decided in favor of the person who is owed the money, the court hearing the appeal or other process should follow the same procedure as the trial court to find the exchange rate on the date of its decision. If the exchange rate is different from the rate in the decree that has been challenged, the court should change the exchange rate in its decision. In all these cases, enforcement can only happen for the rupee amount stated in the decree. These questions would not come up if the decree has been enforced or the money has been received by the person who is owed the money while the appeal or other process is ongoing. 8. Just as courts have the power to make a decree for an amount in a foreign currency, arbitrators also have the power to make a decision for an amount in a foreign currency. However, the arbitrators should include in their decision the exchange rate at which the foreign currency amount should be changed in the cases mentioned above. The arbitrators can do this by using either the exchange rate on the date of the decision or by saying that the exchange rate to be used will be the rate on the date when the court makes a judgment based on the decision. If the arbitrators do not include the exchange rate, this is not enough to invalidate the decision. The court can either send the decision back to the arbitrators to set the date of the exchange or do it itself. If the person who owes money under the decision wants to pay the amount in foreign currency without the decision being made a rule of the court, they can do so after getting permission from the foreign exchange authorities under the Foreign Exchange Regulation Act of 1973. 9. In this case, the person who was owed the money, Forasol, was a foreign company. Under the agreement, the money was counted in a foreign currency, and it was also paid in a foreign currency, except for a part of it. So, Forasol was entitled to receive the amounts owed to it in French Francs if ONGC did not pay. The arbitrator was right to say that the amounts owed to Forasol in French Francs should be paid in French currency. However, the arbitrator did not say that the payment was subject to permission from the foreign exchange authorities, and did not set the exchange rate to be used in the cases mentioned above. But, this does not matter because neither side objected to the decision on this ground. Both sides accepted the decision as binding. As mentioned above, the High Court could have fixed this mistake when it made a judgment based on the decision. However, the decree (court order) did not state the rupee amount of the French Francs owed to Forasol or the exchange rate to be used to change the French Francs into rupees. The decree passed by the High Court was not correct to that extent. However, both sides accepted the decree and did not challenge it on this ground in any legal process. The mistake in the decree could have been corrected by asking for a review or making a request under section 152 or section 151 of the Code of Civil Procedure of 1908 (rules for how civil cases are handled). The decree is now final and binding on the parties. Both sides accepted the decree, so it cannot be said to be invalid because it did not include the rupee amount of the French Francs or the exchange rate to be used. For these reasons, the court holds that the single judge was right to use the date of the decree as the date of conversion.
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In its objections to the said execution application ONGC contended that the enhanced rate of exchange specified in the said award was only with respect to the interest payable to Forasol from November 30, 1966, and that to the rest of the payments to be made under the said award the rate of exchange mentioned in Article IX 3.1, namely, FF 1.033 equal to Rupee 1.000, was applicable and that this contract rate of exchange applied both to the French Franc part as also the Indian rupee part of the said contract. 1 of the said contract and that in respect of such payments from November 30, 1966, the enhanced rate of exchange provided in the said award was to apply but in respect of the other payments to be made to Forasol in French Francs the rate of exchange prevailing at the date of the decree, namely, FF 1.000 equal to Rs. The Division Bench of the Delhi High Court, which heard the said appeal, upheld the contention of ONGC that the 541 enhanced rate of exchange specified in the said award applied only to the interest payable to Forasol and that with respect to the rupee amount due to ONGC and which was to be adjusted against French Francs payable to Forasol, the contract rate of exchange applied. It further held that as the said award was in French Francs, by reason of the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), before executing the said award the French Francs would have to be converted into Indian rupees at the rate of exchange prevailing on the date of the said award, namely, FF 1.000 equal to Rupee 1.831. 11,95,304 which remained payable to ONGC by Forasol in respect of the income tax paid by ONGC on behalf of Forasol after making adjustments against the claim of Forasol, was to be adjusted, as directed by the said award, against Forasol 's claim in French Francs on the respective dates of each payment of tax, namely, on September 14, 1967, February 14, 1968, and March 23, 1968, and as all these payments were made after November 30, 1966, and as under the said award the enhanced rate of exchange was directed to apply to 542 both parties, the said sum of Rs. So far as the payment to Forasol in French Francs was concerned, neither the said contract nor the said award provided for conversion of French Francs into Indian rupees and the said decree having been passed in foreign currency, in case ONGC did not or could not make payment in French Francs, the rate of conversion of French Francs, into Indian rupees could only be at the rate of exchange prevailing at the date of the said decree, that is, on May 7, 1975, which was FF 1.000 equal to Rs. on their own to which Forasl had not consented, As a result of this, the question of adjustment of the income tax paid against FF claims, as set out in the last para on page 149 and in the first two paragraphs on page 150 would be deleted and in their place the Award would state that 'the amounts of income tax paid by ONGC shall be adjusted against the FF claims due to Forasol on the date when each amount was paid in the manner set out earlier in the Award. ' For the reasons stated above we find that this enhanced rate of exchange applied to the payments in Indian rupees under Article IX 3.1 of the said contract to be made by ONGC to Forasol from and after November 30,1966. The case before us is one in which a decree in terms of such an award has been passed by the court. On appeal, the court of Appeal held that the award was valid and leave should be granted to enforce it, On the question whether English arbitrators have jurisdiction to make an award for payment in a foreign currency, the Court held that in a proper case they could do so and that in the case before them since the money of account and the money of payment under the charter party out of which the disputes between the parties arose were expressed in United States dollars the arbitrators were entitled to make their award in the same currency. In that case the rate of exchange would be taken at the date of the award. But another way is to seek the leave of the court under section 26 of the Arbitration Act 1950 which says: 'An award on an arbitration agreement may, by leave of the High Court or a judge thereof, be enforced in the same manner as a judgment or order to the same effect, and where leave is so given, judgment may be entered in terms of the award. The time has now come when we should say that when the currency of a contract is a foreign currency that is to say, when 555 the money of account and the money of payment is a foreign currency the English courts have power to give judgment in that foreign currency, they can make an order in the form: 'It is adjudged this day that the defendant do pay to the plaintiff ' so much in foreign currency (being the currency of the contract) ' or the sterling equivalent at the time of payment '. There was no appeal to the House of Lords against this judgment of the Court of Appeal. Suffice it to say that the House of Lords by a majority (Lords Simon of Glaisdale dissenting) held that it was legitimate for the House of the Lords to depart from the "breach date conversion" rule and recognize that an English court was entitled to give judgment for a sum of money expressed in a foreign 557 currency in the case of obligations of a money character to pay foreign currency under a contract, the proper law of which was that of a foreign country, and when the money of account was that of that country or possibly of some country other than the United Kingdom. and that as regards the conversion date to be inserted in the claim or in the judgment of the court, though the date of judgment was a workable date, he would favour the date of payment meaning thereby the date when the court authorizes enforcement of the judgment in terms of sterling, because in some cases, particularly where there was an appeal, the date of judgment might impose upon the creditor a considerable currency risk, Lord Wilberforce further observed (at page 469): In the case of arbitration, there may be a minor discrepancy, if the practice which is apparently adopted (see the Jugoslavenska case , 305) remains as it is, but I can see no reason why, if desired, that practice should not be adjusted so as to enable conversion to be made as at the date when leave to enforce in sterling is given." Lord Edmund Davies, referring to the Jugoslavenska case, said (at page 501) that being governed by section 26 and sub section (1) of section 36 (which deals with enforcement of foreign awards) of the Arbitration Act, 1950, the award of American dollars in that case of necessity had to be converted into sterling at the rate of exchange prevailing on the date when the award was made and that but for that fact, the most just rate would be that prevailing when the award was being enforced, for the plaintiff had been kept out of his money until then and there was no reason why this latter rate should not be the one adopted when judgments expressed in a foreign currency are being enforced. It was further held that where the terms of a contract governed by English law did not expressly or by implication show that the parties had intended that payments arising from a breach of contract were to be paid in the currency of account or other named currency, the court should give judgment in the currency that best expressed the party 's loss; that, although the appeal in the second case concerned a charterparty which expressly stated that certain contractual payments should be made in U.S. dollars, the terms of the charterparty did not show that payment for damage arising out of a breach of contract 561 was to be made in that currency; that, arising from the owners, breach the charterers had used French Francs to purchase the necessary cruzeiros to settle the receivers ' claim and, in those circumstances, the Court of Appeal had correctly affirmed the arbitrators ' decision that the currency that best expressed the charterers ' loss was the currency of their business, namely, French Francs. be enforced in the same manner as a judgment or order to the same effect" in section 26(1) did not mean a judgment or order "in the same terms" but meant a judgment or order having "the same effect" this would be achieved if the sum awarded were 564 converted into sterling at the rate of exchange prevailing on the date of the award, and that leave to enforce an award expressed in a foreign currency should be given by the court provided the applicant had filed an affidavit showing the rate of exchange as at the date of the award and giving the amount of the award converted into sterling. (5) In the Jugoslavenska case, the Court of Appeal took the date of the award as the date of conversion by reason of the interpretation placed by it upon the words "to the same effect" in section 26(1) of the Arbitration Act, 1950, because an award could for the purpose of enforcement have the same effect as a judgment in an action on the award only if the date of the award were taken as the date of conversion as, by reason of the decision in the Havana case, which was then the law, in such an action the date of conversion would have to be the due date of payment which, the debt being crystallized by the award, would be the date of the award, and the judgment, therefore, in such an action would have to be given on that basis. In that case, the House of Lords departed from the rule in the Havana case, namely, "the breach date conversion" rule and recognized that an English court could give judgment in a foreign currency in a case where under a contract the money was to be paid in that currency if the proper law of the contract was that of a foreign country and the money of account was of that country. As, however, a court in India cannot, as we have pointed out above, pass a decree simpliciter for payment of a sum in a foreign currency in such a suit, the plaintiff will have to make an alternative 573 claim in his plaint for the rupee equivalent of the foreign currency sum claimed. In England, therefore, as the court fees payable are not ad valorem court fees in an action to recover a sum of money expressed in a foreign currency, it would be immaterial for the purposes of court fees whether the plaintiff claims in the alternative the sterling equivalent of that amount as at the date of the judgment or as at the date when the court gives leave to enforce the judgment or as at the date of payment because in any of these cases, the court fees payable by the plaintiff will not vary except where by reason of the fluctuation in the rate of exchange the amount adjudged or the amount for which leave to enforce the judgment is given or the amount paid exceeds & 2,000 in a case where less than that has been claimed in the action. According to the Division Bench of the Delhi High Court it does because, relying upon the Jugoslavenska case, it held that in such a case the proper date for conversion of the foreign currency sum awarded would be the date of the award in as much as there was no difference between the relevant provisions of the English Arbitration Act, 1950 (14 Geo 6, c.27), and our (X of 1940), particularly section 26(1) of the English Act and section 17 of our Act. Since, according to the law then prevailing, an English court could only give judgment in sterling and required a debt expressed in a foreign currency to be converted into English currency at the rate of exchange prevailing on the date when the debt was payable in an action on a foreign award the plaintiff would have to make his claim in English currency in respect of the sum of money awarded to him in a foreign currency. (1) An award on an arbitration agreement may by, leave of the High Court or a judge thereof, be enforced in 579 the same manner as a judgment or order to the same effect, and where leave is so given, judgment may be entered in terms of the award. in his judgment in the Court of Appeal has referred to this and has thus set out (at page 507) the information which Kerr J. had received: "He was told that the practice on applications under that section is that the sum awarded in the foreign currency in question is converted into sterling at the rate prevailing at the date of the award and that, in the absence of any other objection, an order is then made giving leave to enforce the foreign award in the same manner as a judgment for that resulting sterling sum." In English law, an application to enforce an award under section 26(1) is only one of the modes of enforcing an award which is not a foreign award. Such an award can also be enforced by bringing an action on it in which case, as pointed out earlier, if the sum awarded were expressed in a foreign currency, the judgment would have to be sought in sterling for which purpose the rate of exchange would be taken as at the date of the award. pointed out, if it were to be so interpreted, there would be some difficulty in applying the section to an award in a foreign currency but if the words were interpreted to mean that the judgment 581 or order must have "the same effect", it would follow that if the sum awarded were converted into sterling at the rate of exchange as at the date of the award it would have the same effect as a judgment or order in an action on the award. As emphasized by us earlier, in the Jugoslavenska case the date of the award was taken as the date of conversion because in an action on such an award the due date for payment of the debt would be the date of the award. We have seen that in the Miliangos case, though the Jugoslavenska case was not expressly over ruled none of the Law Lords who had occasion to refer to it were happy with what had been held there; Lord Wilberforce opining that there was no reason why, if desired, the practice should not be adjusted so as to enable conversion to be made at the date when leave to enforce the award in sterling is given; Lord Cross of Chelsea thinking it absurd that there should be one rule for arbitrations with respect to foreign currency debts and another with respect to actions on similar debts; Lord Edmund Davies expressing his view that no basic distinction could be drawn for the purposes of a conversion date between judgments and awards; and even Lord Simon of Glaisdale in his dissenting judgment stating his belief that if Parliament were to reconsider the sterling judgment rule and the breach date rule, the Jugaslavenska case would come within the purview of such reconsecration. In view of the Miliangos case it cannot be said today that in an action on an award the foreign currency sum directed to be paid under the award must be converted at the date of the award when it was payable. What seems to have impressed the Division Bench of the Delhi High Court is the fact that in England the court is not bound to grant leave to enforce the award but can, when such an application is made, on objection being raised by the respondent, either remit the award or set it aside, and that the same can also be done by a court in India when an award has been filed in court. Under section 17 of our Act, an application for a judgment according to the award can only be made after the time for making an application to set aside the award has expired, or if such application has been made, only after it is refused. Under section 26(1) of the English Act, when leave is given to enforce the award, it is not necessary that judgment should be entered in terms of the award for the purpose of enforcing the award by execution. In the same way, where an award directs payment of a sum of money in a foreign currency and the court while pronouncing judgment provides for its rupee equivalent at the rate of exchange prevailing on the date of the award, the court will not be pronouncing judgment "according to the award" if in the meantime the rate of exchange has varied, because at the date of the judgment the foreign currency equivalent of the 585 amount in rupees provided in the judgment would be different from the foreign currency sum directed to be paid by the award. The judgment, therefore, can only be said to be "according to the award" if it directs payment of the rupee equivalent at the rate of exchange prevailing on the date of pronouncing the judgment which date is the same as the date of the passing of the decree. A judgment according to the award under section 17 our Act will speak only from the date of the judgment which will not be the case under section 26(1), for while in the first case what will be enforceable by the processes of law, namely, execution, will be the decree passed in terms of the award, in the second case it will be the award itself, unless the applicant desires to have judgment entered in terms of the award which he is not required to do as pointed out above. (1) On the strength of this decision it was submitted that an award was not a mere waste paper until a decree in terms of the award has been passed but an award created rights and liabilities and, therefore, since the award in the instant case provided that a certain sum should be paid in a foreign currency to Forasol, it spoke from the date when it was made and published and the rate of conversion could, therefore, only be the date of the said award. It was also submitted on behalf of ONGC that an award, unless it is set aside by the court, is a final adjudication of the rights and liabilities of the parties in respect of the matters referred to arbitration and, therefore, Forasol could not claim to convert the French Franc part of the said award into Indian rupees at the rate of exchange prevailing on the date of the decree but can only do so at the rate of exchange prevailing on the date of the award. On the decree being passed in terms of the said award the said award became merged in the said decree and the sum of FF,5,89,727.51 payable to Forasol under 587 the said award became a judgment debt payable to Forasol under the said decree and, as pointed out above, at the time of passing the decree the court would have to direct payment of the rupee equivalent of this foreign currency debt only at the rate of exchange prevailing on the date of the decree. For the reasons set out above, we are of the opinion that the rule in the jugoslavenska case cannot be applied to this country and the fact that a decree is in terms of an award for a sum of money expressed in a foreign currency makes no difference to the date to be taken by the court for converting into Indian currency the foreign currency sum directed to be paid under the award and that such date should also be the date of the decree.
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Because of this, Forasol asked to exchange Indian rupees into French Francs at a higher rate than the one in article IX 3. The High Court agreed with the arbitrator's decision, but did not set a date for when the French Francs should be changed into Indian rupees. They said that the original exchange rate in the agreement should be used for all other payments in French Francs or Indian rupees. For all other payments to Forasol in French Francs, the exchange rate on the date of the court's decision should be used. They added that, because of the Foreign Exchange Regulation Act of 1973 (a law about money exchange), the French Francs had to be changed into Indian rupees at the exchange rate on the date of the arbitrator's decision before the decision could be enforced. An exchange rate would only be needed for the amount paid to Forasol in Indian rupees. So, only the 20% of the fees and charges that were shown in French Francs on Forasol's bills but paid in Indian rupees had to be changed at the exchange rate in the agreement. In a case where someone is trying to get money that should be paid in a foreign currency, there are five possible dates that a court could choose to set the exchange rate: (1) the date when the money was due; (2) the date when the lawsuit was started; (3) the date of the court's decision; (4) the date when the court orders the decision to be enforced; and (5) the date when the money is paid. In a case where the court agrees with an arbitrator's decision made in a foreign currency, there is a sixth possible date: the date of the arbitrator's decision. When someone from another country is owed money in a foreign currency and has to go to court to get it because the person who owes them money has not paid, the first question is whether an Indian court can make a decision about an amount in a foreign currency. The date when the money was due does not do this, because the exchange rate may have changed between that date and the date of the court's decision. If the arbitrator's decision says that a certain amount of money should be paid, and the court changes the amount, then the court's decision is not "according to the award." In the same way, if an arbitrator's decision says that money should be paid in a foreign currency, and the court changes it to rupees using the exchange rate on the date of the arbitrator's decision, the court's decision is not "according to the award" if the exchange rate has changed since then. This is because the amount in rupees will no longer be equal to the amount in foreign currency in the arbitrator's decision. The court's decision can only be "according to the award" if it orders payment of the rupee amount using the exchange rate on the date of the court's decision. They can do this using the exchange rate on the date when the money was due, or they can choose to use the exchange rate on the date when the lawsuit was started. In this case, the correct request for the person to make in the lawsuit would be for a decree (court order) that the person who owes the money must pay them the foreign currency amount claimed in the lawsuit. The lawsuit should also state that if the foreign exchange authorities do not give permission, or if the person who owes the money does not want to pay in foreign currency even if permission has been granted, or if the person does not pay in foreign currency or in Indian rupees, then the person who owes the money must pay the rupee amount equal to the foreign currency amount claimed, using the exchange rate on the date of the court's decision. If the foreign exchange authorities do not give permission, or if the person who owes the money does not want to pay in foreign currency even if permission has been granted, or if the person does not pay in foreign currency or in Indian rupees, then the decree should order the person to pay the rupee amount equal to the foreign currency amount, using the exchange rate proven to the court. The arbitrators can do this by using either the exchange rate on the date of the decision or by saying that the exchange rate to be used will be the rate on the date when the court makes a judgment based on the decision. Both sides accepted the decree, so it cannot be said to be invalid because it did not include the rupee amount of the French Francs or the exchange rate to be used.
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ivil Appeal No. 2368 of 1986 Etc. 656 From the Judgment and Order dated 30.5.1986 of the Delhi High Court in CW No. 1295 of 1986. K.K. Venugopal, A.K. Ganguli, Yogeshwar Prasad, P.R. Seetharaman, S.K. Gupta and A.K. Srivastava for the Appel lants. Soli J. Sorabjee, Attorney General, Kapil Sibbal, Addi tional Solicitor General. G.L. Sanghi, section Ganesh, Mrs. Sushma Suri, EMS Anam, Atul Namda. Aman Vachher, S.K. Mehta, Kailash Vasdev and S.R. Srivastava for the Respondents. The Judgment of the Court was delivered by S.C. AGRAWAL, J. The common question which arises for consideration in these appeals, by special leave, and the writ petition filed under Article 32 of the Constitution is, whether a person who was inducted as a tenant in premises, which are public premises for the purpose of the (hereinafter referred to as the 'Public Premises Act '), and whose tenancy has expired or has been terminated, can be evicted from the said premises as being a person in unautho rised occupation of the premises under the provisions of the Public Premises Act and whether such a person can invoke the protection of the Delhi Rent Control Act, 1958 (hereinafter referred to as the 'Rent Control Act '). In short, the ques tion is, whether the provisions of the Public Premises Act would override the provisions of the Rent Control Act in relation to premises which fall within the ambit of both the enactments. Civil Appeals Nos. 2368 and 2369 of 1986 relate to the premises which are part of a building situated at 5 Parlia ment Street, New Delhi. The said building originally be longed to Punjab National Bank Ltd., a banking company. Ashoka Marketing Ltd. (Appellate No. 1 in Civil Appeal No. 2368 of 1986) and M/s Sahu Jain Services Ltd. (Appellant No. 1 in Civil Appeal No. 2369 of 1986) were tenants of premises located in the said building since July 1st, 1958. As a result of the enactment of the Banking Companies (Acquisi tion and Transfer of Undertakings) Act. 1970 (hereinafter referred to as the 'Banks Nationalisation Act '), the under taking of the Punjab National Bank Ltd., was transferred and vested in Punjab National Bank a body corporate constituted under the provisions of the said Act and the aforesaid appellants became the tenants of Punjab National Bank. By notices dated May 18, 1971 issued under Section 106 of the Transfer of Property Act, the tenancies of both the appel lants were terminated by 657 Punjab National Bank, with effect from, November, 30, 1971. Thereafter, the said Bank initiated proceedings under the Rent Control Act against both the appellants. In those proceedings an objection was raised by the said appellants that proceedings for eviction under the Rent Control Act were not maintainable in view of the provisions contained in the Public Premises Act. During the pendency of the said proceedings under the Rent Control Act, proceedings were initiated by the Estate Officer against the appellants under the provisions of the Public Premises Act and while the said proceedings under Public Premises Act were pending the earlier proceedings initiated under the Rent Control Act were dismissed by the Additional Rent Controller, Delhi, by orders dated August 6, 1979. In the proceedings, under the Public Premises Act, the Estate Officer passed orders for eviction against the appellants and the appeals filed by the appellants against the said orders of the Estate Officer were dismissed by the Additional District Judge. Delhi. The appellants filed writ petitions under Article 226 of the Constitution, in the Delhi High Court. The said writ peti tions were dismissed by the High Court by orders dated May 30, 1986. Aggrieved by the said orders of the High Court, the appellants have filed these appeals after obtaining special leave to appeal. Civil Appeal No. 3725 of 1986 relates to an office room in the Allahabad Bank Building situated at 17, Parliament Street, New Delhi. The said building belongs to Allahabad Bank, a body corporate constituted under the provisions of the Banks Nationalisation Act. The said premises were let out to Pt. K.B. Parsai, the appellant in this appeal, for a period of three years with effect from, February 1, 1982. After the expiry of the said period eviction proceedings under the provisions of the Public Premises Act were initi ated to evict the appellant and in those proceedings the Estate Officer passed an order dated March 29, 1986. The appellant filed a writ petition under Article 226 of the Constitution, wherein he challenged the validity of the order passed by the Estate Officer. The said writ petition was dismissed by the Delhi High Court by order dated August 7, 1986. The appellant has filed this appeal against the said decision of the Delhi High Court after obtaining Spe cial Leave to Appeal. Writ Petition No. 864 of 1985, relates to premises in the building located at 10, Darya Ganj, New Delhi. The said building originally belonged to Bharat Insurance Company Limited, as Insurance Company which was carrying on life insurance business. M/s Bennett Coleman & Co. Ltd., (peti tioner No. 1 in the writ petition) was in occupation of a part of the said property as a tenant under M/s Bharat 658 Insurance Co. Ltd. since 1948. The life insurance business was nationalised under the whereby the Life Insurance Corporation was established and the life insurance business carried on by the various insurance companies, including M/s Bharat Insurance Company Ltd., was nationalised and vested in the Life Insurance Corporation. As a result petitioner No. 1 became a tenant of the Life Insurance Corporation. The Life Insurance Corpora tion gave a notice under Section 106 of the Transfer of Property Act terminating a tenancy of petitioner No. 1 with effect from, August 31, 1953 and thereafter proceedings for eviction were initiated against petitioner No. 1 under the provisions of the Public Premises Act and notices dated December 15, 1984 were issued by the Estate Officer under Section 4(1) and Section 7(3) of the Public Premises Act. Feeling aggrieved by these notices the petitioners have filed the writ petition. Before we proceed to deal with the submissions of the learned counsel for the appellants in the appeals and for the petitioners in the writ petition (hereinafter referred to as 'the petitioners ') it would be relevant to advert to the legislative history of Public Premises Act. The Public Premises Act was preceded by two such enact ments. The first enactments was the Government Premises (Eviction) Act, 1950 (hereinafter referred to as 'the 1950 Act ') which was enacted by Parliament to provide for the eviction of certain persons from Government premises and for certain matters connected therewith. It was confined, in its application, to premises (a building or a part of a build ing) belonging to or taken on lease or requisitioned by the Central Government and it empowered the competent authority tO evict a person in unauthorised occupation of such prem ises after issuing a notice to such person. The 1950 Act did not define the expression "unauthorised occupation" and it also did not prescribe the procedure to be followed by the competent authority before passing the order of eviction. There was a provision for appeal to the Central Government against the order of the competent authority. The 1950 Act was declared as unconstitutional by the Calcutta High Court (in Jagu Singh vs M. Shaukat Ali, and by the Punjab High Court (in Satish Chander & Anr. vs Delhi Im provement Trust, Etc., AIR 1958 Punjab 1) on the ground that it imposed unreasonable restriction on the fight of the citizens to acquire, hold and dispose of property guaranteed under Article 19(1)(f) of the Constitution, and by the Allahabad High Court (in Brigade Commander, Meerut Sub Area vs Ganga Prasad, on the ground that it was violative 659 of the rights to equality guaranteed under Article 14 of the Constitution. Thereupon Parliament enacted the Public Premises (Evic tion of Unauthorised Occupants) Act, 1958 (hereinafter referred to as 'the 1958 Act '). In the 1958 Act, the defini tion of Public Premises was enlarged to include, in relation to the Union Territory of Delhi, premises belonging to Municipal Corporation of Delhi, or any municipal committee or notified area committee and premises belonging to Delhi Development Authority. In the 1958 Act, the expression "unauthorised occupation" was defined. It also laid down the procedure to be followed by the Estate Officer for evicting a person in unauthorised occupation of public premises and it made provision for filing an appeal against every order of the Estate Officer before the District Judge or such other Judicial Officer in that district of not less than ten years standing as the District Judge may designate in that behalf. In Northern India Caterers Private Limited vs The State of Punjab & Anr., ; Section 5 of the Punjab Public Premises and Land (Eviction and Rent Recovery) Act, 1959 was held to be void by this Court on the ground that the said provision conferred an additional remedy over and above the remedy by way of suit and that by providing two alternative remedies to the Government and in leaving it to the unguided discretion of the Collector to resort to one or the other and to pick and choose some of those in occupa tion of public properties and premises for the application of the more drastic procedure under Section 5, the said provision was violative of Article 14 of the Constitution. The provisions contained in the Punjab Act were similar to those contained in the 1958 Act. Keeping in view the deci sion of this Court in Northern India Caterers Private Limit ed 's case (supra), Parliament enacted Public Premises (Eviction of Unauthorised Occupants) Amendment Act, 1968 whereby the 1958 Act was amended and Section 10E was intro duced and a bar was created to the jurisdiction of civil court to entertain any suit or proceeding in respect of eviction of any person in unauthorised occupation of any public premises or the recovery of the arrears of the rent or damages payable under the provisions of the 1958 Act. The Delhi High Court (in P.L. Mehra etc. vs D.R. Khanna, etc., AIR 1971 Delhi 1)held that whole of the 1958 Act was void under Article 15(2) being violative of the provisions of Article 14 of the Constitution and the amendment of 1968 was ineffective This led to the enactment of the Public Premises Act by Parliament in 1971. It was brought into effect from 16th September, 1958, 660 the date on which the 1958 Act came into force. The provi sions of the Public Premises Act are similar to those con tained in the 1958 Act. The definition of 'public premises ' contained in Section 2(e) of the Public Premises Act has been widened so as to include premises belonging to or taken on lease by or on behalf of a company, as defined in Section 3 of the , in which not less than fifty one per cent of the paid up capital is held by the Central Government as well as premises belonging to or taken on lease by or on behalf of any corporation (not being a compa ny, as defined in Section 3 of the in 1956, or a local authority) established by or under a Central Act and owned and controlled by the Central Government. It contains certain additional provisions, providing for offences and penalties (Section 11), liability of heirs and representa tives (Section 13) recovery of rent etc. as an arrear of land revenue (Section 14) and bar of jurisdiction of Courts (Section 15). The validity of the Public Premises Act was upheld by this Court in Hari Singh & Ors. vs The Military Estate Officer & Anr., 15. The Public Premises Act was amended in 1980 by the Public Premises (Eviction of Unauthorised Occupants) Amend ment Act, 1980, whereby the definition of 'public premises ' in Section 2(e) was amended to include premises belonging to or taken on lease by or on behalf of certain autonomous and statutory organisations, viz., any University established or incorporated by any Central Act, any Institute incorporated by the , any Board of Trustees constituted under the major Port Trusts Act, 1963, and the Bhakra Management Board and as well as premises belonging to or taken on lease by any Company which is subsidiary of a Company as defined in Section 3 of the in which not less than fifty one per cent of the paid up capital is held by the Central Govern ment. By the said Amending Act of 1980, the total period taken in eviction proceedings was also sought to be cur tailed by reducing the period for showing cause against notice of eviction, the period within which an unauthorised occupant should vacate the premises after eviction order has been passed and the period for filing an appeal against the order of an Estate Officer. By the said Amending Act of 1980 provisions were also made, by inserting Sections 5A, 5B and 5C, to deal with the squatting or spreading of goods on or against or in front of any public premises and removal of unauthorised constructions or encroachments on public prem ises. The Public Premises Act was further amended in 1984 by the Public Premises (Eviction of Unauthorised Occupants) Amendment Act, 1984 whereby certain further amendments were made to provide for increased penalties and 661 making the offences under the Act cognisable and to enable the Estate Officers to exercise their powers under the Act effectively. As stated in the preamble, the Public Premises Act has been enacted to provide for the eviction of unauthorised occupants from public premises and, for certain incidental matters. In Section 2, various expressions have been de fined. The definitions of the following expressions which are of relevance are reproduced as under: "(c) "Premises" means any land or any building or part of a building and includes (i) the garden, grounds and out houses. if any, appertaining to such building or part of a building, and (ii) any fitting affixed to such building or part of a building for the more beneficial enjoyment thereof;" "(e) "Public Premises" means (1) any premises belonging to, or taken on lease or requisi tioned by, or on behalf of, the Central Government, and includes any such premises which have been placed by that Government, whether before or after the commencement of the Public Premises (Eviction of Unauthorised Occupants) Amend ment act, 1980 under the control of Secretariat of either House of Parliament for providing residential accommodation to any member of the staff of that Secretariat; (2) any premises belonging to, or taken on lease by, or on behalf of, (i) any company as defined in Section 3 of the (1 of 1956) in which not less than fifty one per cent of the paid up share capital is held by the Central Government or any Company which is a subsidiary (within the meaning of the Act) of the first mentioned company, (ii) any corporation (not being a company as defined in Section 3 of the ( 1 of 1956), or a local authority) established by or under a Central Act and owned or controlled by the Central Government, 662 (iii) any University established or incorporated by any Central Act, (iv) any Institute incorporated by the Institutes of Tech nology Act, 1961 (59 of 1961); (v) any Board of Trustees constituted under the (38 of 1963); (vi) the Bhakra Management Board constituted under Section 79 of the Punjab Recoganisation Act, 1966 (31 of 1966) and that Board as and when renamed as the Bhakra Beas Management Board under Sub section (6) of Section 80 of the Act; and (3) in relation to the Union Territory of Delhi (i) any premises belonging to the Municipal Corporation of Delhi, or any municipal committee or notified area committee and (ii) any premises belonging to the Delhi Development Author ity, whether such premises are in the possession of, or leased out by the said Authority." "(g) "Unauthorised Occupation", in relation to any public premises, means the occupation by any person of the public premises without authority for such occupation, and includes the continuance by any person of the public premises after the authority (whether by way of grant or any other mode of transfer) under which he was allowed to occupy the premises has expired or has been expired for any reason whatsoever." Section 3 makes provision for appointment by Central Govern ment of gazetted officer of Government or officers of equal rank of the statutory authority as Estate Officers. Section 4 relates to issue of show cause against order of eviction and provides as under: "(1) If the Estate Officer is of opinion that any persons are in unauthorised occupation of any public premises and that they should be evicted, the Estate Officer shall issue in the manner hereinafter provided a notice in writing calling 663 upon all persons concerned to show cause why an order of eviction should not be made. (2) The notice shall (a) specify the grounds on which the order of eviction is proposed to be made; and (b) require all persons concerned, that is to say, all persons who are, or may be, in occupation of, or claim interest in, the public premises , (i) to show cause, if any, against the proposed order on or before such date as is specified in the notice, being a date not earlier than seven days from the date of issue thereof; and (ii) to appear before the Estate Officer on the date speci fied in the notice alongwith the evidence which they intend to produce in support of the cause shown, and also for personal hearing, if such hearing is desired. (3) The Estate Officer shall cause the notice to be served by having it affixed on the outer door or some other con spicuous part of the public premises and in such other manner as may be prescribed, whereupon the notice shall be deemed to have been duly given to all persons concerned. (4) Where the Estate Officer knows or has reasons to believe that any persons are in occupation of the public premises, then, without prejudice to the provisions of subsection (3), he shall cause a copy of the notice to be served on every such person by post or by delivering or tendering it to that person or in such other manner as may be prescribed. " Section 5 relates to eviction of unauthorised occupants and provides as under ' "(1) If, after considering the cause, if any, shown by any person in pursuance of a notice under Section 4 and any evidence produced by him in support of the same and after personal hearing, if any, given under clause (b) of sub 664 section (2) of Section 4, the estate officer is satisfied that occupation of public premises is unauthorised, the estate officer may make an order of eviction, for reasons to be recorded therein, directing that the public premises shall be vacated on such date as may be specified in the order, by all persons who may be in occupation thereof or any part thereof, and cause a copy of the order to be af fixed on the outer door or some other conspicuous part of the public premises. (2) If any person refuses or fails to comply with the order of eviction on or before the date specified in the said order or within fifteen days of the date of its publication under sub section (1) whichever is later, the estate officer of any other officer duly authorised by the estate officer in this behalf may after the date so specified or after the expiry of the period aforesaid, whichever is later, evict that person from, and take possession of the public premises and may, for that purpose, use such force as may be neces sary." Section 5A provides for removal of unauthorised construc tions/structures or fixtures, cattle or other animal from public premises. Section 5B deals with demolition of unau thorised constructions. Section 5C empowers the Estate Officer to seal unauthorised constructions. Section 6 pro vides for disposal of property left on public premises by unauthorised occupants. Section 7 empowers the Estate Offi cer to require payment of rent or damages on account of use and occupation of public premises alongwith interest by the person found in unauthorised occupation. Section 8 lays down that an Estate Officer shall, for the purpose of holding any inquiry under the Act, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, when trying to suit in respect of certain matters, viz. summoning and enforcing the attendance of any person and examining him on oath, requiring discovery and production of documents; and any other matter which may be prescribed. Section 9 provides for an appeal from every order of the Estate Offi cer in respect of any public premises passed under Sections 5, 5B, 5C and 7 to an appellate officer who shall be a district judge of the district in which the public premises are situated or such other judicial officer in the district of not less than ten years ' standing as the district judge may designate in this behalf. It also prescribes the period of limitation for filing such appeals and also lays down that the appeal shall be disposed of by the appellate offi cer as expeditiously as possible. Sections 10 attaches finality to the orders 665 made by an Estate Officer or appellate officer and provides that the said orders shall not be called in questions in any original suit application or execution proceeding and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act. Section 11 provides for offences and penalties and Section 11A lays down mat the offences under Section 11 would be treated as cognizable offences under the Code of Criminal Procedure, 1973. Section 15 relates to bar of jurisdiction and it provides as under: "No court shall have jurisdiction to entertain any suit or proceeding in respect of (a) the eviction of any person who is in unauthorised occu pation of any such public premises, or (b) the removal of any building, structure of fixture or goods, cattle or other animal from any public premises under Section 5 A, or (C) the demolition of any building or other structure made, or ordered to be made, under Section 5B, or (cc) the sealing of any erection or work or of any public premises under Section 5 C, (d) the arrears of rent payable under sub section (1) of Section 7 or damages payable under sub section (2), or interest payable under sub section (2 A) of that section, (e) the recovery of (i) costs of removal of any building, structure or fixture or g.gods. cattle or other animal under Section 5 A, or (ii) expenses of demolition under Section 5 B, or (iii) costs awarded to the Central Government or statutory authority under sub section (5) of Section 9, or (iv) any portion of such rent, damages, cost of removal, expenses of demolition or costs awarded to the Central Government or the statutory authority. " 666 In exercise of the powers conferred by Section 18 of the Public Premises Act, the Central Government has made the Public Premises (Eviction of Unauthorised Occupants) Rule, 1971 (hereinafter referred to as the 'Public Premises Rules '). Rule 5 of said Rules relates to holding of in quiries and Rule 9 relates to procedure in appeals. We will first deal with the contentions urged by the learned counsel for the petitioners with regard to the scope of the definition of the expression 'Public Premises ' con tained in Section 2(e) and 'unauthorised occupation ', con tained in Section 2(g) of the Public Premises Act. As mentioned earlier, the appeals relate to premises belonging to nationalised Banks, viz. Punjab National Bank and Allahabad Bank, constituted under the provisions of the Banks Nationalisation Act. It has been urged by Shri Yogesh wer Prasad, that the premises belonging to a nationalised bank do not fall within the ambit of the definition of 'Public Premises ' contained in Section 2(e) of the Public Premises Act, for the reason that nationalised bank is not a company as defined in Section 3 of the and it is also not a corporation established by or under a Central Act. The submission of the learned counsel for the respondent banks is that the nationalised bank is a corpora tion established by a Central Act, viz. the Banks Nationali sation Act, and the premises belonging to a nationalised bank are 'public premises ' under Section 2(e)(2)(ii) of the Public Premises Act. The question which, therefore, requires to be considered is whether a nationalised bank is a corpo ration established by or under a Central Act and is owned or controlled by the Central Government. The nationalised banks have been established under the Banks Nationalisation Act, wherein the nationalised banks have been described as 'corresponding new bank '. In sub section (i) of Section 3 of the Banks Nationalisation Act, it has been provided that on the commencement of the said Act, there shall be constituted such corresponding new banks as are specified in the First Schedule. In subsection (2) of Section 3, it is laid down that the paid up capital of every corresponding new bank constituted under sub section (1) shall, until any provision is made in this behalf in any scheme made under Section 9, be equal to the paid up capital of the existing bank in relation to which it is the corre sponding new bank. Sub section(3) of Section 3 provides that the entire capital of the new bank shall stand vested in, and allotted to the Central Government. Sub section (4) of Section 3 lays down that every corresponding new bank shall be a body corpo 667 rate with perpetual succession and a common seal with power, subject to the provisions of the said Act, to acquire, hold and dispose of property, and to contract, and may sue and be sued in its name. From the aforesaid provisions contained in Section 3 of the Banks Nationalisation act it is evident that the nationalised banks have been established under the provisions of the said Act and the same are distinct juris tic persons with perpetual succession and the power to acquire, hold and dispose of property and to contract and having the right to sue and be sued in their own name and further that the entire capital of the said banks is vested in the Central Government, meaning thereby, that the said banks are owned by the Central Government. Shri Yogeshwer Prasad has pointed out that, in view of Section 3(4) of the Banks Nationalisation Act, the nationa lised bank is a body corporate and not a corporation and that there is a distinction between a body corporate and a corporation inasmuch as a body corporate includes bodies, such as companies, co operative societies, etc., which are not corporations. Reliance has been placed in this regard on the decision of Delhi High Court in Oriental Bank of Com merce and Another vs Delhi Development Authority and Anoth er, We find no substance in this contention. In English law a corporation has been defined as "a body of persons or an office which is recognised by the law has having a personality which is distinct from the separate personalities of the members of the body or the personality of the individual holder for the time being of the office in question." (See Halsbury 's Laws of England, Fourth Edition, Volume 9, Para 1201). Generally speaking, corporations are of two kinds; corporation aggregate and corporation sole. A corporation aggregate has been described as an incorporated group of co existing persons and a corporation sole as an incorporated series of successive persons, (Salmond on Jurisprudence, 12th Edition P 308. The distinctive feature of a corporation are that it has the capacity of continuous existence and succession, notwithstanding changes in its membership and it possesses the capacity of taking, holding and conveying property, entering into contracts. suing and being sued, and exercising such other powers and priviledges conferred on it by law of its creation just as a natural person may (See S.S. Dhanoa vs Municipal Corporation, Delhi & Ors. , ; Corporations aggregate may be public or private. A public corporation is a corporation formed for a public purpose e.g. local government authori ties, and it is usually incorporated by a public general Act of Parliament. A private corporation is a corporation formed for profit 668 e.g. a limited company, and it is usually incorporated under a statutory enactment. After the second world war there has been development of a new pattern of public corporations in England as an instrument of planning in the mixed economy. The general characteristics of such a public corporation is that it is normally created by a special statute; it has no shares and no shareholders either private or public, and its shareholder, in the symbolic sense, is the nation represent ed through Government and Parliament; the responsibility of the public corporation is to the Government, represented by the competent Minister and through the Minister to Parlia ment; the administration of the public corporation is en tirely in the hands of a board which is appointed by the competent Minister; and it has the legal status of a corpo rate body with independent legal personality. (See W. Fried man: The New Public Corporations and the Law [1947] 12 Mod. LR 234 236.) There is a similar growth of this type of public corporation in other countries. This trend is also evident in our country since independence and a number of such public corporations have been constituted by Acts of Parliament. The distinction between such a public corporation and a corporation generally known in law has been explained in the following observations of Denning L.J., as he then was: "The Transport Act, 1947, brings into being the British Transport Commission, which is a statutory corporation of a kind comparatively new to English law. It has many of the qualities which belong to corporations of other kinds to which we have been accustomed. It has, for instance, defined powers which it cannot exceed; and it is directed by a group of men whose duty it is to see that those powers are proper ly used. It may own property, carry on business, borrow and lend money, just as any other corporation may do, so long as it keeps within the bounds which Parliament has set. But the significant difference in this corporation is that there are no shareholders to subscribe the capital or to have any voice in its affairs. The money which the Corporation needs is not raised by the issue of shares but by borrowings and its borrowing is not served by debentures; but is guaranteed by the Treasury. If it cannot repay, the loss falls on the Consolidated Fund of the United Kingdom; that is to say, on the taxpayer. There are no shareholders to elect the direc tors or to fix their remuneration. There are no profits to be made or distributed." (Tamfin vs Hannaford, 669 Reference has already been made to the provisions of the Banks Nationalisation Act which show that the nationalised bank has been constituted as a distinct juristic person by the Act and it is owned by the Central Government. There are other provisions in the Banks Nationalisation Act which show that the general superintendence, direction and management of the affairs of the business of the bank is vested in a Board of Directors constituted by the Central Government and the Central Government has the power to remove a person from the membership of the Board of Directors (Section 7(2) & 7(3) and in the discharge of its functions the Bank is to be guided by such directions in regard to matters of policy involving public interest as the Central Government may, after consultation with the Governor of the Reserve Bank, give (Section 8). This indicates that the nationalised bank has all the attributes of the new pattern of public corpora tion. Merely because the expression 'body corporate ' has been used in relation to the nationalised banks in Section 3(4) of the Banks Nationalisation Act and the expression 'corpo ration ' has not been used, does not mean that the nationa lised bank is not a corporation. The expression 'body corpo rate ' is used in legal parlance to mean a 'public or private corporation ' (Black 's Law Dictionary p. 159). Shri Yogeshwer Prasad has urged that in order to consti tute a corporation there must exist persons, i.e. members, composing it, and that this element is missing in the natio nalised banks inasmuch as the Banks Natiolisation Act does not provide for any membership to these banks. This conten tion is without any merit because, as noticed earlier, in the new pattern of public corporations which have developed, there are no shares and no shareholders, either public or private, and its shareholder, in the symbolic sense, is the nation represented through Government and Parliament. A similar contention was raised before the High Court of Australia in the Bank of New South Wales & Ors. vs The Commonwealth, in relation to the Common wealth Bank established as a body corporate by the Common wealth Bank Act, 1945. While rejecting this contention, Latham C.J. has observed: "The Commonwealth Parliament has declared that the bank is a corporation and the Court must on this, as on many previous occasions, accept that the bank (though it has no corpora tors) exists as a new kind of juristic person." (p. 227) 670 Similarly Dixon J. has observed: "Although the Commonwealth Bank is declared to be a body corporate there are no corporators. I see no reason to doubt the constitutional power of the Federal Parliament, for a purpose within its competence, to create a juristic person without identifying an individual or a group of natural persons with it, as the living constituent or constituents of the corporation. In other legal systems an abstraction or even an inanimate physical thing has been made an artificial person as the object of rights and duties." (p. 36 1) It may also be mentioned that in R.C. Cooper vs Union of India, ; this Court, while referring to nationalised banks constituted under the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969, has treated the nationalised banks as corporations. While construing the expression 'corporation ' in Section 2(e) (2)(ii) of the Public Premises Act it cannot be ignored that the object of the legislation in enlarging the defini tion of 'public premises ' in Section 2(e) is to make avail able the machinery of the Act for evicting unauthorised occupants not only from the premises belonging to the Cen tral Government but also from premises belonging to Compa nies, Corporations and statutory bodies in which the Central Government has a substantial interest. Under Section 2(e)(2)(i) premises belonging to a company incorporated under the , in which not less than fifty one per cent of the paid up capital is held by the Central Government, are to be treated as public premises. It could not be the intention of Parliament that premises belonging to public corporations whose entire paid up capital vests in the Central Government and who are the instrumentalities of State would be excluded from the ambit of the definition of 'public premises '. In our opinion,. therefore, the expres sion 'corporation ' in Section 2(e)(2)(ii) of the Public Premises Act would include public corporations of the new pattern constituted under the Central Acts wherein the entire paid up capital vests in the Central Government. Shri Yogeshwere Prasad has placed reliance on the deci sion of this Court in S.S. Dhanoa 's case (supra) wherein this Court has considered the question whether the Co opera tive Store Ltd., a cooperative society registered under the Bombay Co operative Societies is a corporation established by or under a Cen tral, Provincial or State Act, for the purposes of clause Twelfth of Section 21 of the Indian Penal Code. This Court has observed that a corporation established by or under an Act of legislature could only mean a body corporate which owes its existence and not merely its corporate status to the Act and a distinction has been drawn between a corpora tion established by or under an Act and a body incorporated under an Act. It has been held that the Co operative Store Ltd., which is a society registered under the Bombay Co operative Societies Act, 1925, is not a statutory body because it is not created by a statute and that it is a body created by an act of a group of individuals in accordance with the provisions of a Statute. This decision does not lend any assistance to the contention of Shri Yogeshwer Prasad. In Oriental Bank of Commerce 's case (Supra) the over ruled question for consideration was, whether the Chairman of a nationalised bank is a public servant and sanction under Section 197 of Code of Criminal Procedure was neces sary to prosecute him. M.L. Jain, J. has held that the nationalised bank is a body corporate and not a corporation within the meaning of clause Twelfth of Section 21 I.P.C. and, therefore, the Chairman of the nationalised bank is not a public servant under Section 21 I.P.C. The learned Judge has further held that even if the nationalised bank is a corporation, the Chairman of the said bank is not in the service or pay of the bank and further (in the facts of the case) it could not be said that the Chairman was acting or purporting to act in the discharge of official duty. Sachar, J. did not consider it necessary to deal with the question, as to whether the nationalised bank is a corporation because he was of the view that Section 197 Cr. P.C. was not at tracted. For the reasons mentioned earlier, the judgment of Jian, J. insofar as it draws a distinction between a 'body corporate ' and a 'corporation ' and laws down that the natio nalised bank, though a 'body corporate ' is not a corpora tion, cannot be upheld. The other reason given by Jain, J. is that the nationalised bank is merely a personified insti tution having no members and is, therefore, not a corpora tion. This view also cannot be sustained. We have already pointed out that in order to constitute a corporation it is not necessary that there should be shareholders or members and that in the new pattern of public corporation that has developed there are no shareholders or members. Keeping in view the provisions of the Banks Nationalisa tion Act we are of the opinion that the nationalised bank is a corporation established by a Central Act and it is owned and controlled by the 672 Central Government. The premises belonging to a nationalised bank are public premises under Section 2(e)(2)(ii) of the Public Premises Act. We are, therefore, unable to accept the contention of Shri Yogeshwar Prasad that premises belonging to a nationalised bank do not fall within the ambit of the definition of 'public premises ' contained in Section 2(e) of the Public Premises Act. Shri Yogeshwer Prasad has also urged that 'public prem ises ' as defined in Section 2(e) of the Public Premises Act, must be confined to premises let out for residential pur poses only and should not cover premises let out for commer cial purposes and that if premises let out for commercial purposes are included, Section 2(e) would be rendered uncon stitutional as being violative of the provisions of Articles 14, 19(1)(g) and 21 read with Articles 39 and 41 of the Constitution. The submission of Shri Yogeshwer Prasad is that a construction which would sustain the constitutionali ty of the provisions of Section 2(e) should be preferred over a construction which would render them constitutional. We find no force in this contention. There is no warrant for confining the scope of the definition of 'public premises ' contained in Section 2(e) to premises used for residential purposes only and to excluded premises used for commercial purposes from its ambit. In Hari Singh vs Military Estate Officer, (Supra) a similar contention was advanced and it was argued that the expres sion 'premises ' in Public Premises Act would not apply to agricultural land. This Court rejected that contention with the observation: "The word 'premises ' is defined to mean any land. Any land will include agricultural land. There is nothing in the Act to exclude the applicability of the Act to agricultural land. " We are also unable to hold that the inclusion of prem ises used for commercial purposes within the ambit of the definition of 'public premises ', would render the Public Premises Act as violative.of the right to equality guaran teed under Article 14 of the Constitution or right to free dom to carry on any occupation, trade or business guaranteed under Article 19(1)(g) of the Constitution or the right to liberty guaranteed under Article 21 of the Constitution. It is difficult to appreciate how a person in unauthorised occupation of public premises used for commercial purposes, can invoke the Directive Principles under Article 39 and 41 of the Constitution. As indicated in the 673 statement of Objects and Reasons the Public Premises Act has been enacted to provide for a speedy machinery for the eviction of unauthorised occupants of public premises. It serves a public purpose, viz. making available, for use, public premises after eviction of persons in authorised occupation. The need to provide speedy machinery for evic tion of persons in unauthorised occupation cannot be con fined to premises used for residential purposes. There is no reason to assume that such a need will not be there in respect of premises used for commercial purposes. No dis tinction can, therefore, be made between premises used for residential purposes and premises used for commercial pur poses in the matter of eviction of unauthorised occupants of public premises and the considerations which necessitate providing a speedy machinery for eviction of persons in unauthorised occupation of public premises apply equally to both the types of public premises. We are, therefore, unable to accept the contention of Shri Yogeshwer Prasad that the definition of public premises contained in Section 2(e) of the Public Premises Act should be so construed as to exclude premises used for commercial purposes from its ambit. Shri A.K. Ganguli, has urged that a person who was put in occupation of the premises as a tenant and who was con tinued in such occupation after the expiry or the termina tion of his tenancy cannot be regarded as a person in unau thorised occupation under Section 2(g) of the Public Prem ises Act. The submission of Shri Ganguli is that, the occu pation of a person who was put in possession as a tenant is juridical possession and such an occupation cannot be re garded as unauthorised occupation. In support of this sub mission, Shri Ganguli has placed reliance on the decision of the Bombay High Court in Brigadier K.K. Verma & Anr. vs Union of India & Anr., A.I.R. 1954 Bombay 358 which has been approved by this Court in Lallu Yeshwant Singh vs Rao Jag dish Singh & Ors., ; The definition of the expression 'unauthorised occupa tion ' contained in Section 2(g) of the Public Premises Act is in two parts. In the first part the said expression has been defined to mean the occupation by any person of the Public premises without authority for such occupation. It implies occupation by a person who has entered into occupa tion of any public premises without lawful authority as well as occupation which was permissive at the inception but has ceased to be so. The second part of the definition is inclu sive in nature and it expressly covers continuance in occu pation by any person of the public premises after the au thority (whether by way of grant or any other mode of trans fer) under which he was allowed to occupy the premises has 674 expired or has been determined for any reason whatsoever. This part covers a case where a person had entered into occupation legally under valid authority but who continues in occupation after the authority under which he was put in occupation has expired or has been determined. The words "whether by way of grant or any other mode of transfer" in this part of the definition are wide in amplitude and would cover a lease because lease is a mode of transfer under the Transfer of Property Act. The definition of unauthorised occupation contained in Section 2(g) of the Public Premises Act would, therefore, cover a case where a person has en tered into occupation of the public premises legally as a tenant under a lease but whose tenancy has expired or has been determined in accordance with law. Brigadier K.K. Verma & Anr. vs Union of India & Anr. (Supra) was decided under the provisions of the Government Premises (Eviction) Act, 1950, which did not contain the definition of the expression 'unauthorised occupation '. In that case it has been held that under the Indian law, the possession of a tenant who has ceased to be a tenant is protected by law and although he may not have the right to continue in possession, after the termination of the tenan cy, his possession is juridical and that possession is protected by statute, and therefore, an erstwhile tenant can never become a trespasser and his possession cannot be regarded as unauthorised occupation. The learned Judges have also observed that unless the legislature had given indica tion of a clear intention that by the expression 'unautho rised occupation ' it meant not only person who had no title at all but also persons who are titled at the inception and whose title came to an end, it would not be proper to give an interpretation to the expression 'unauthorised occupa tion ' which would run counter to the principles of law which have been accepted in this country. After this decision the legislature intervened and introduced the definition of the expression 'unauthorised occupation ' in the , which defi nition has been reproduced in Section 2(e) of the Public Premises Act and in the said definition the legislature has taken care to make an express provision indicating that the expression 'unauthorised occupation ' includes the continu ance in occupation by any person of the public premises after the authority (whether by way of grant or any other mode of transfer) under which he was allowed to occupy the premises has expired or has been determined for any reason whatsoever. In the circumstances the petitioners cannot derive any assistance from the decision of the Bombay High Court in Brigadier K.K. Verma 's case (supra). 675 Shri Ganguli has placed reliance on the decision of A.P. Sen, J. in Express Newspapers Pvt. Ltd. & Ors. vs Union of India & Others, [1985] Suppt. 3 S.C.R. 382 and has submitted that in that case the learned Judge has held that cases involving relationship between the lessor and lessee fall outside the purview of the Public Premises Act. We have carefully perused the said decision and we are unable to agree with Shri Ganguli. In that case A.P. Sen, J. has observed that the new building had been constructed by the Express Newspapers Pvt. Ltd. after the grant of permission by the lessor, and, therefore, the Express Newspapers Pvt. Ltd. was not in unauthorised occupation of the same within the meaning of Section 2(g) of the Public Premises Act. It was also held by the learned Judge that the Express Building constructed by the Express Newspapers Ltd. with the sanction of lessor on plots Nos. 9 and 10 demised on perpetual lease can, by no process of reasoning, be regarded as public premises belonging to the Central Government under Section 2(e) of the Public Premises Act, and therefore, there was no question of the lessor applying for eviction of the Express Newspapers Pvt. Ltd. under the provisions of the Public Premises Act. The aforesaid observations indicate that the learned Judge did not proceed on the basis that cases in volving relationship of lessor and lessee fall outside the purview of the Public Premises Act. On the other hand the said observations show that the learned Judge has held that the provisions of the Public Premises Act could not be invoked in the facts of that case. Another submission that has been urged by Shri Ganguli is that the question whether a tease has been determined or not involves complicated questions of law and the estate officer, who is not required to be an officer well versed in law, cannot be expected to decide such question and, there fore, it must be held that the provisions of the Public Premises Act have no application to a case when the person sought to be evicted had obtained possession of the premises as a lessee. It is true that there is no requirement in the Public Premises Act that the estate officer must be a person well versed in law. But, that, by itself, cannot be a ground for excluding from the ambit of the said Act premises in unauthorised occupation of persons who obtained possession of the said premises under a lease. Section 4 of the Public Premises Act requires issuing of a notice to the person in unauthorised occupation of any Public Premises requiring him to show cause why an order of eviction should not be made. Section 5 makes provisions for production of evidence in support of the cause shown by the person who has been served with a notice under Section 4 and giving of a personal hearing by the estate officer. Section 8 provides that an estate 676 officer, shall, for the purpose of holding any enquiry under the said Act have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, when trying a suit in respect of the matters specified therein namely: (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring discovery and production of documents; and (c) any other matters which may be prescribed. Rule 5(2) of the Public Premises (Eviction of Unautho rised Occupants) Rules, 1971, requires the estate officer to record the summary of evidence tendered before him. Moreover Section 9 confers a right of appeal against an order of the estate officer and the said appeal has to be heard either by the district judge of the district in which the public premises are situate or such other judicial officer in that district of not less than ten years ' standing as the dis trict judge may designate in that behalf. In shows that the final order that is passed is by a judicial officer in the rank of a district judge. A similar contention was raised before this Court in Maganlal Chhagganlal (P) Ltd. vs Municipal Corporation of Greater Bombay & Others, ; wherein the validity of the provisions of Chapter VA of the Bombay Municipal Corporation Act, ' 1888 and the Bombay Government Premises (Eviction) Act, 1955 were challenged before this Court and the said contention was negatived. Aligiriswami, J. speaking for the majority, has observed as under: "Even though the officers deciding these questions would be administrative officers there is provision in these Acts for giving notice to the party affected, to inform him of the grounds on which the order of eviction is proposed to be made, for the party affected to file a written statement and produce documents and be represented by lawyers. The provi sions of the Civil Procedure Code regarding summoning and enforcing attendance of persons and examining them on oath, and requiring the discovery and production of documents are a valuable safeguard for the person affected. So is the provision for appeal to the Principal Judge of the City Civil Court in the city of Bombay, or to a District Judge in the district who has got to deal with the 677 matter as expeditiously as possible, also a sufficient safeguard as was recognised in Suraj Mail Mehta 's case. " Having dealt with the submissions of learned counsel for the petitioners on the applicability of the provisions of Public Premises Act, we may come to the main question in volved in these matters, namely, whether the provisions of the Public Premises Act override the provisions of the Rent Control Act. For appreciating the submissions of the learned counsel on this question it is necessary to examine the provisions of both the enactments. The relevant provisions of the Public Premises Act have already been set out. We may briefly refer to the provisions of the Rent Control Act. The Rent Control Act has been enacted by Parliament to provide for the control of rents and evictions and of rate of hotels and lodging houses and for the lease of vacant premises to Government, in certain areas in the Union Terri tory of Delhi. It extends to the areas included within the limits of the New Delhi Municipal Committee and the Delhi Cantonment Board and to such urban areas within the limits of the Municipal Corporation of Delhi as are specified in the First Schedule to the Act (Section 1(2). The expression 'premises is defined in Section 2(i) as under: "Premises means any building or part of a building which is or, is intended to be, let separately for use as a residence or for commercial use or for any other purpose, and in cludes: (i) the garden, grounds and outhouses, if any,, appertaining to such building or part of the building; (ii) any furniture supplied by the landlord for use in such building or part of the building; but does not include a room in a hotel or lodging house. " Section 3, which excludes the applicability of the Act to certain premises, provide as under: "Nothing in this Act shall apply: (a) to any premises belonging to the Government; (b) to any tenancy or other like relationship created by a 678 grant from the Government in respect of the premises taken on lease, or requisitioned, by the Government Provided that where any premises belonging to Government have been or are lawfully let by any person by virtue of an agreement with the Government or otherwise, then, notwith standing any judgment, decree or order of any court or other authority, the provisions 'of this Act shall apply to such tenancy. (c) to any premises, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees; or (d) to any premises constructed on or after the commencement of the Delhi Rent Control (Amendment) Act, 1988, for a period of ten years from the date of completion of such construction." Chapter II (Sections 4 to 13) contains provisions re garding rent including fixation of standard rent. Chapter III (Sections 14 to 25) contains provisions for control of eviction, of tenants. Section 14 gives protection to tenants against eviction and provides that an order for eviction of a tenant can be passed only on one or more of the grounds mentioned in clauses (a) to (1) of sub section (1). Special provisions have been made for recovery of immediate posses sion of premises in Sections 14A to 14D in respect of cer tain classes of landlords. Section 22 contains a special provision for recovery of possession of premises where the landlord is a company or a body corporate or a local author ity or a public institution if the premises are required for the use of employees of such landlord or, in the case of a public institution, for the furtherance of its activities. In Chapter IIIA (Sections 25 A to 25 C) provisions have been made for summary trial of certain applications for eviction on the ground of bona fide requirement of the landlord. Chapter IV (Sections 26 to 29) contains provisions relating to deposit of rent. Chapter V (Sections 30 to 34) contains provisions relating hotels and lodging houses. Chapter VI (Sections 35 to 43) contains provisions relating to appoint ment of controllers and their powers and functions and appeals. Section 42 makes provisions for execution of orders passed by the Controller or in appeal, as a decree of civil court. Section 43 attaches finality to the order passed by the Controller and the order passed in appeal. Chapter VII (Sections 44 to 49) contains provisions regarding special obligations of landlords and 679 penalties. Chapter VIII (Sections 50 to 57) contains miscel laneous provisions. Under Section 50 jurisdiction of civil courts is barred in respect of matters specified therein. Section 54 saves the operation of certain enactments, name ly, , the and the Delhi Tenants (Temporary Protection) Act, 1956. On a comparison of the provisions of the Public Premises Act and the Rent Control Act it will be found that: 1. By virtue of Section 1(2) of the Public Premises Act, the said Act is applicable throughout the territory of India, whereas, view of Section 1(2) of the Rent Control Act, the said Act is confined in its application to areas included within the limits of the New Delhi Municipal Com mittee and the Delhi Cantonment Board and to such urban areas within the limits of the Municipal Corporation of Delhi as are specified in the First Schedule and any other urban area included within the limits of the Municipal Corporation of Delhi to which provisions of the said Act are extended by the Central Government by notification in the Official Gazette. (2) Under Clauses (c) of Section 2 of the Public Premises Act, the expression 'premises ' has a wider connotation and it includes open land as well as building or part of a building. Under the Rent Control Act the expression 'prem ises ' as defined in clause (i) of Section 2 has a narrower connotation to mean any building or a part of building and it does not cover open land. In view of the definition of the expression 'public premises ' contained in clause (e) of Section 2 of the Public Premises Act, the said Act, in addition to the premises belonging to or taken on lease or requisitioned by, or on behalf of, the Central Government, is applicable to premises belonging to or taken on lease by or on behalf of the compa nies and statutory bodies mentioned in clauses (2) and (3) of Section 2(e). The Rent Control Act, on the other hand, is applicable to all premises except premises belonging to the Government or to any tenancy or other like relationship created by a grant from the Government in respect of the premises taken on lease, or requisitioned, by the Government (Section 3). In view of the amendment introduced in Section 3 by the Delhi Rent Con 680 trol Act is not applicable to premises, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees and premises constructed on or after the commencement of the said Amendment Act, for a period of ten years from the date of completion of such construction. The provisions of the Public Premises Act are applica ble to Public Premises in occupation of a person having no authority for such occupation, including a person who was allowed to occupy the public premises under a grant or any other mode of transfer and who has continued in occupation after the authority under which he was allowed to occupy that premises has expired or has been terminated. The provi sions of the Delhi Rent Control Act are applicable only to persons who have obtained possession of the premises as tenants and whose tenancy is continuing as well as persons who after the expiration or termination of the tenancy have continued in occupation of the premises. As a result of this comparison it can be said that certain premises, viz. building or parts of buildings lying within the limits of the New Delhi Municipal Committee and the Delhi Cantonment Board and in urban areas within the limits of the Municipal Corporation of Delhi, which belong to or are taken on lease by any of the companies or statuto ry bodies mentioned in clauses (2) and (3) of Section 2(e) of the Public Premises Act and which are in occupation of a person who obtained possession of the said premises as a tenant and whose tenancy has expired or has been terminated but who is continuing in occupation of the same, would ex facie fall within the purview of both the enactments. The question which, therefore, arises is whether the occupant of such premises can seek the protection available under the provisions of Rent Control Act and he can be evicted from the premises only in accordance with the said provisions and proceedings for eviction of such a person cannot be initiat ed under the provisions of the Public Premises Act. Shri Venugopal and other learned counsel representing the petitioners have urged that the Rent Control Act is a self contained code providing for regulating the relation ship of landlords and tenants and it makes comprehensive provisions with regard to control of rents as well as evic tion of tenants and that the provision of the Rent Control Act, being special in nature insofar as lease hold proper ties in Delhi are concerned, would prevail over the provi sions of the Public 681 Premises Act which are in the nature of general provisions relating to eviction of unauthorised occupants from Govern ment premises in the whole country. In support of this submission the learned counsel for the petitioners have placed reliance on Sections 22 and 54 and the non obstante clause contained in Section 14(1) of the rent Control Act. It has also been urged by the learned counsel for the peti tioners that the Public Premises Act does not contain any machinery for the termination of the tenancy and that in view of the decision of this Court in V. Dhanapal Chettiar vs Yesodai Ammal, ; , the jural relationship of landlord and tenant can come to an end only on the pass ing of an order of eviction by a competent court in accor ding with the provisions of the Rent Control Act and that in the absence of an order of eviction under the provisions of the Rent Control Act no proceedings can be initiated against a person who came into occupation of the premises as a tenant and who is continuing in occupation of the said premises after the contractual tenancy has expired or has been terminated. The learned Attorney General and Shri G.L. Sanghi, appearing on behalf of the respondents in the appeals, have urged that the Public Premises Act is in the nature of a special enactment making provision for speedy and expedi tious recovery of possession of public premises from persons in unauthorised occupation of the same whereas the Rent Control Act is general enactment regulating the relationship of landlord and tenant and since the Public Premises Act is a special enactment it would override the provisions of the Rent Control Act. It has also been urged that the Public Premises Act is a later enactment, having been enacted in 1971, whereas the Rent Control Act was enacted in 1958, and, therefore, the Public Premises Act would prevail over the Rent Control Act. It has been urged that Section 15 of the Public Premises Act which bars the jurisdiction of other Courts is in the nature of a non obstante clause which gives overriding effect to the provisions of the Public Premises Act. The learned Addl. Solicitor General, appearing for the respondents in the writ petitions, has adopted a different line of argument. He has contended that the Public Premises Act had been enacted by Parliament in exercise of its legis lative power under Article 246(1) read with entries 32, 95 and 97 of List I of the Seventh Schedule to the Constitution whereas the Rent Control Act has been enacted by Parliament in exercise of its legislative power under Article 246(4) read with entries 6, 7 and 13 of List III of the Seventh Schedule to the Constitution and since the Public Premises Act has been enacted in 682 exercise of the legislative power under Article 246(1) of the Constitution, it would prevail over the Rent Control Act enacted in exercise of legislative power under Article 246(4) of the Constitution. At this stage, it may be mentioned that in Jain Ink Manufacturing Company vs Life Insurance Corporation of India & Another, ; decided by a bench of three Judges, it has been held that the Public Premises Act over rides the provisions of the Delhi Rent Control Act. In that case it has been observed that the scope and object of the Public Premises Act is quite different from that of Rent Control Act and while the Public Premises Act operates in a very limited field in that it applies only to a limited nature of premises belonging only to particular sets of individuals, a particular set of juristic persons like Companies, Corporations or the Central Government, whereas the Rent Control Act is of much wider application and it applies to all private premises which do not fall within the limited exceptions indicated in Section 2 of the Public Premises Act and the object of the Rent Control Act is to afford special protection to all the tenants or private landlords or landlords who are neither a Corporation nor Government or Corporate Bodies. It was, therefore, held that the Public Premises Act is a special Act as compared to the Rent Control Act and it overrides the provisions of the Rent Control Act. The learned counsel for the petitioners have assailed the correctness of the said decision and have submitted that it needs reconsideration. As regards rent control legislation enacted by the State legislatures the position is well settled that such legisla tion fall within the ambit of entries 6, 7 and 13 List III of the Seventh Schedule to the Constitution (See: Indu Bhushan Bose vs Rama Sundari Devi & Another, ; ; V Dhanpal Chettiar 's case (supra); Jai Singh Jairam Tyagi etc. vs Mamanchand Ratilal Agarwal & Others, ; and Accountant and Secretarial Services Pvt. Ltd. & Another vs Union of India & Others, ; The Rent Control Act has been enacted by Parliament in relation to the Union Territory of Delhi in exercise of the legislative power conferred under Article 246(4) of the Constitution which empowers Parliament to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List. The Public Premises Act deals with Government property as well as property belonging to other legal entities men tioned in clauses (2) 683 and (3) of Section 2(e) of the Public Premises Act. In so far as it relates to eviction of unauthorised occupants from premises belonging to or taken on lease or requisitioned by or on behalf of the Central Government the Public Premises Act would fall within entry 32 of List I being law with respect to a property of the Union. The property belonging to the various legal entities mentioned in clauses (2) and (3) of Section 2(e) of the Public Premises Act cannot be regarded as property of the Union and the Public Premises Act cannot be held to have been enacted under entry 32 of List I in respect of the said properties. In Accountant and Secretarial Services Pvt. Ltd. and Another vs Union of India and Others, (supra) this Court has held that the Public Premises Act, in relation to properties other than the properties belonging to the Central Government has been enacted under the concurrent list. The learned Additional Solicitor General has placed reliance on the decision of this Court in Smt. Saiyada Mossarrat vs Hindustan Steel Ltd., ; wherein it has been held that with regard to the subject matter of speedy eviction of unautho rised occupants from properties belonging to a Government company, wherein the Central Government has more than fifty one per cent of the paid up capital, the source of authority can be traced to entry 97 read with entry 95 of Union List (List 1). This Court has, however, affirmed the decision of the Division Bench of Madhya Pradesh High Court in L.S. Nair vs Hindustan Steel Ltd., AIR 1980 MP 106 wherein it has been held that insofar as the Public Premises Act deals with a lessee or licence of premises belonging to a Government company, the subject matter of the Act would be covered by entries 6, 7 and 46 of List III. After quoting the observa tions of the Madhya Pradesh High Court in this regard, this Court has observed: "Learned counsel for the petitioner has not been able to show that there is any infirmity in the reasoning of the High Court." This shows that the decision of this Court is rounded on the view mentioned above. Since the Act was held to be covered by entries 6, 7 and 46 of List III, it was not necessary to invoke the residuary power of legislation under entry 97 of List I. The observations made by this Court that the source of authority in the matter of speedy eviction of unautho rised occupants from properties belonging to a Government company wherein the Central Government has more than fifty one per cent of the paid up share capital can, in any case, be traced to entry 97 read with entry 95 of List I are obiter in nature only. There is, therefore, no inconsistency between the decisions of this Court in Accoun 684 tant and Secretarial Services Pvt. Ltd. (supra) and Smt. Saiyada Mossarrat case (supra) inasmuch as in both the decisions it is held that the Public Premises Act insofar as it deals with a lessee or licencee of premises other than premises belonging to the Central Government has been enact ed in exercise of the legislative powers in respect of matters enumerated in the Concurrent List. We are in agree ment with this view. This means that both the statutes, viz. the PubLic Premises Act and the Rent Control Act, have been enacted by the same legislature, Parliament, in exercise of the legis lative powers in respect of the matters enumerated in the Concurrent List. We are, therefore, unable to accept the contention of the learned Additional Solicitor General that the Public Premises Act, having been enacted by Parliament in exercise of legislative powers in respect of matters enumerated in the Union List would ipso facto override the provisions of the Rent Control Act enacted in exercise of the legislative powers in respect of matters enumerated in the Concurrent List. In our opinion the question as to whether the provisions of the Public Premises Act override the provisions of the Rent Control Act will have to be considered in the light of the principles of statutory interpretion applicable to laws made by the same legisla ture. One such principle of statutory interpretation which is applied is contained in the latin maxim: leges posteriors priores conterarias abrogant, (later laws abrogate earlier contrary. laws). This principle is subject to the exception embodied in the maxim: generalia specialibus non derogant, (a general provision does not derogate from a special one). This means that where the literal meaning of the general enactment covers a situation for which specific provision is made by another enactment contained in an earlier Act, it is presumed that the situation was intended to continue to be dealt with by the specific provision rather than the later general one (Benion: Statutory Interpretation p. 433 34). The rationale of this rule is thus explained by this Court in the J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs The State of Uttar Pradesh & Others, ; "The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers Judges but springs from the common understanding of man and women that when the same person gives two directions 685 one covering a large number of matters in general and anoth er to only some of them his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier directions should have effect." (p. 94) In U.P. State Electricity Board & Ors. vs Hari Shankar Jain & Ors., ; this Court has observed: "In passing a special Act, Parliament devotes its entire consideration to a particular subject. When a General Act is subsequently passed, it is logical to presume that Parlia ment has not repealed or modified the former Special Act unless it appears that the Special Act again received con sideration from Parliament." (p. 366) In Life Insurance Corporation vs D.J. Bahadur; , Krishna Iyer, J. has pointed out: "In determining whether a statute is a special or a general one, the focus must be on the principal subject matter plus the particular perspective. For certain purposes, an Act may be general and for certain other purposes it may be special and we cannot blur distinctions when dealing with liner points of law." (p. 1127) The Public Premises Act is a later enactment, having been enacted on 23rd August, 1971, whereas the Rent Control Act was enacted on 31st December, 1958. It represents the later will of Parliament and should prevail over the Rent Control Act unless it can be said that the Public Premises Act is a general enactment, whereas the Rent Control Act is a special enactment and being a special enactment the Rent Control Act should prevail over the Public Premises Act. The submission of learned counsel for the petitioners is that the Rent Control Act is a special enactment dealing with premises in occupation of tenants, whereas the Public Prem ises Act is a general enactment dealing with the occupants of Public Premises and that insofar as public premises in occupation of tenants are concerned the provisions of the Rent Control Act would continue to apply and to that extent the provisions of the Public Premises Act would not be applicable. In support of this submission reliance has been placed on the non obstante clauses contained in Section 14 and 22 of the Rent Control Act as well as the provisions contained in Sections 50 and 54 of the said Act. On the 686 other hand the learned counsel for the respondents have urged that the Rent Control Act is a general enactment dealing with the relationship of landlord and tenant gener ally, whereas the Public Premises Act is a special enactment making provision for speedy recovery of possession of Public Premises in unauthorised occupation and that the provisions of the Public Premises Act, a later Special Act, will, therefore, override the provisions of the Rent Control Act in so far as they are applicable to Public Premises in occupation of persons who have continued in occupation after the lease has expired or has been determined. The learned counsel for the respondents have placed reliance on Section 15 of the Public Premises Act which bars the jurisdiction of all courts in respect of the eviction of any person who is in unauthorised occupation of any Public Premises and other matters specified herein. It has been submitted that the said provision is also in the nature of a non obstante clause which gives overriding effect to the provisions of the Public Premises Act. Thus each side claims the enactment relied upon by it is a special statute and the other enact ment is general and also invokes the non obstante clause contained in the enactment relied upon. The Rent Control Act makes a departure from the general law regulating the relationship of landlord and tenant contained in the Trnasfer of Property Act inasmuch as it makes provision for determination of standard rent, it specifies the grounds on which a landlord can seek the evic tion of a tenant, it prescribes the forum for adjudication of disputes between landlords and tenants and the procedure which has to be followed in such proceedings. The rent Control Act can, therefore, be said to be a special statute regulating the relationship of landlord and tenant in the Union Territory of Delhi. The Public premises Act makes provision for a speedy machinery to secure eviction of unau thorised occupants from public premises. As opposed to the general law which provides for filing of a regular suit for recovery of possession of property in a competent Court and for trial of such a suit in accordance with the procedure laid down in the Code of Civil procedure, the Public Prem ises Act confers the power to pass an order or eviction of an unauthorised occupant in a public premises on a designat ed officer and prescribes the procedure to be followed by the said officer before passing such an order. Therefore, the Public Premises Act is also a special statute relating to eviction of unauthorised occupants from public premises. In other words, both the enactments, namely, the Rent Con trol Act and the Public Premises Act, are special statutes in relation to the matters dealt with therein. Since, the Public premises Act is a special statute and not a general enactment the 687 exception contained in the principle that a subsequent general law cannot derogate from an earlier special law cannot be invoked and in accordance with the principle that the later laws abrogate earlier contrary laws, the Public Premises Act must prevail over the Rent Control Act. We arrive at the same conclusion by applying the princi ple which is followed for resolving a conflict between the provisions of two special enactments made by the same legis lature. We may in this context refer to some of the cases which have come before this Court where the provisions of two enactments made by the same legislature were found to be inconsistent and each enactment was claimed to be a special enactment and had a non obstante clause giving overriding effect to its provisions. In Shri Ram Narain vs The Simla Banking and Industrial Co. Ltd., ; this Court was considering the provisions contained in the Banking Companies Act, 1949 and the . Both the enactments contained provisions giving overriding effect to the provisions of the enactment over any other law. This Court has observed: "Each enactment being a Special Act, the ordinary principle that a special law overrides a general law does not afford any clear solution in this case" (p. 613) "It is, therefore, desirable to determine the overriding effect of one or the other of the relevant provisions in these two Acts, in a given case, on much broader considera tions of the purpose and policy underlying the two Acts and the clear intendment conveyed by the language of the rele vant provisions therein." (p. 615) Similarly in Kumaon Motor Owners ' Union Ltd. and Another vs The State of Uttar Pradesh, 1 there was conflict between the provisions contained in Rule 131(2)(gg) and (i) of the Defence of India Rules, 1962 and Chapter IV A of the Motor Vehicle Act, 1939. Section 68 B gave overriding effect to the provisions of Chapter IV(A) of the Motor Vehicle Act whereas Section 43 of the Defence of India Act, 1962, gave overriding effect to the provisions contained in the Defence of India Rules. This Court held that the Defence of India Act was later than the Motor Vehicles Act and, therefore, if there was anything repugnant, the provisions of the later 688 Act should prevail. This Court also looked into object behind the two statutes, namely, Defence of India Act and Motor Vehicles Act and on that basis also it was held that the provisions contained in the Defence of India Rules would have an overriding effect over the provisions of the Motor Vehicles Act. In Sarwan Singh & Another vs Kasturi Lal, ; , the question for consideration was, whether the provi sions of Section 14A and Chapter IIIA of the Rent Control Act will prevail over those contained in Sections 19 and 39 of the . Section 14A and 25A of the Rent Control Act contained non obstante clauses but in Section 54 of the Rent Control Act it was expressly provided that nothing in the said Act shall effect the provisions of the . Moreover in Section 19 of the mere was non obstante clause and Section 39 of the said Act gave overrid ing effect to the provisions of the said enactment over any other Jaw. This Court has observed: "When two or more laws operate in the same field and each contains a non obstante clause stating that its provisions will override those of any other law, stimulating and inci sive problems of interpretation arise. Since statutory interpretation has no conventional protocol, cases of such conflict have to be decided in reference to the obeject and purpose of the laws under consideration." (p. 433) After examining the special and specific purpose under lying the enactment of Section 14A and Chapter IIIA of the Rent Control act and the fact that the Rent Control Act was a later enactment this Court held that the provisions of the Rent Control Act would prevail over those contained in the . The principle which emerges from these decisions is that in the case of inconsistency between the provisions of two enactments, both of which can be regarded as Special in nature, the conflict has to be resolved by reference to the purpose and policy underlying the two enactments and the clear intendment conveyed by the language of the relevant provisions therein. We propose to consider this matter in the light of this principle. The statement of objects and reasons for the enactment of the 689 Rent Control Act, indicates that it has been enacted with a view: (a) to devise a suitable machinery for expeditious adjudica tion of proceedings between landlords and tenants; (b) to provide for the determination of the standard rent payable by tenants of the various categories of premises which should be fair to the tenants, and at the same time, provide incentive for keeping the existing houses in good repairs, and for further investment in house construction; and (c) to give tenants a larger measure of protection against eviction. This indicates that the object underlying the Rent Control Act is to make provision for expeditious adjudication of disputes between landlords and tenants, determination of standard rent payable by tenants and giving protection against eviction to tenants. The premises belonging to the Government are excluded from the ambit of the Rent Control Act which means that the Act has been enacted primarily to regulate the private relationship between landlords and tenants with a view to confer certain benefits on the ten ants and at the same time to balance the interest of the landlords by providing for expeditious adjudication of proceedings between landlords and tenant. As mentioned earlier, the Public Premises Act has been enacted with a view to provide for eviction of unauthorised occupants from public premises. In the statement of objects and reasons for this enactment reference has been made to the judicial decisions whereby by the 1958 Act was declared as unconstitutional and it has been mentioned: "The court decisions, referred to above, have created seri ous difficulties for the Government inasmuch as the proceed ings taken by the various Estate Officers appointed under the Act either for the eviction of persons who are in unau thorised occupation of public premises or for the recovery of rent or damages from such persons stand null and void. It has become impossible for Government to take expeditious action even inflagrant cases of unauthorised occupation of public premises and recovery of rent or damages for such unauthorised occupation. It is, therefore, considered imper ative to restore a speedy machinery for the eviction of persons who are in unauthorised occupation 690 of public premises keeping in view at the same time the necessity of complying with the provision of the Constitu tion and the judicial pronouncements, referred to above." This shows that the Public Premises Act has been enacted to deal with the mischief of rampant unauthorised occupation of public premises by providing a speedy machinery for the eviction of persons in unauthorised occupation. In order to secure this object the said Act prescribes the time period for the various steps which are enquired to be taken for securing eviction of the persons in unauthorised occupation. The object underlying the enactment is to safeguard public interest by making available for public use premises belonging to Central Government, Companies in which the Central Government has substantial interest, Corpora tions owned or controlled by the Central Government and certain autonomous bodies and to prevent misuse of such premises. It would thus appear that, while the Rent Control Act is intended to deal with the general relationship of landlords and tenants in respect of premises other than government premises, the Public Premises Act is intended to deal with speedy recovery of possession of premises of public nature, i.e. property belonging to the Central Government, or Compa nies in which the Central Government has substantial inter est or Corporations owned or controlled by the Central Government and certain corporations, institutions, autono mous bodies and local authorities. The effect of giving overriding effect to the provisions of the Pubic Premises Act over the Rent Control Act, would be that buildings belonging to Companies Corporations and Autonomous bodies referred to in Section 2(e) of the Public Permises Act would be excluded from the ambit of the Rent Control Act in the same manner as properties belonging to the Central Govern ment. The reason underlying the exclusion of property be longing to the Government from the ambit of the Rent Control Act, is that Government while dealing with the citizens in respect of property belonging to it would not act for its own purpose as a private landlord but would act in public interest. What can be said with regard to Government in relation to property belonging to it can also be said with regard to companies, corporations and other statutory bodies mentioned in Section 2(e) of the Public Premises Act. In our opinion, therefore, keeping in view the object and purpose underlying both the enactments viz., the Rent Control Act and the Public Premises Act, the provisions of the Public Premises Act have to be construed as overriding the provi sions contained in the Rent Control Act. 691 As regards the non obstante clauses contained in Sec tions 14 and 22 and the provisions contained in Sections 50 and 54 of the Rent Control Act, it may be stated that Par liament was aware of these provisions when it enacted the Public Premises Act contained a specific provision in Sec tion 15 barring jurisdiction of all courts (which would include the Rent Controller under the Rent Control Act). This indicates that Parliament intended that the provisions of the Public Premises Act would prevail over the provisions of the Rent Control Act inspite of the above mentioned provisions contained in the Rent Control Act. It has been urged by the learned counsel for the peti tioner that there is no conflict between the provisions of the Rent Control Act and the Public Premises Act and that both the provisions can be given effect to without one overriding the other. In this regard, it has been pointed out that since no provisions has been made in the Public Premises Act for the termination of the lease, the provi sions of the Rent Control Act can be held applicable upto the stage of termination of the lease, and thereafter, proceedings can be initiated for eviction under the provi sions of the Public Premises Act. In support of this submis sion, reliance has been placed on Dhanpal Chettiar 's case (supra), wherein it has been held that in view of the spe cial provisions contained in the State Rent Control Acts, it is no longer necessary to issue a notice under Section 106 of the Transfer of Property Act to terminate the tenancy because inspite of the said notice the tenant is entitled to continue in occupation by virtue of the provisions of the said Acts. In the said case, it has been further laid down that the relationship between the landlord and tenant con tinues till the passing of the order of eviction in accord ance with the provisions of the Rent act, and therefore, for the eviction of the tenant in accordance with the law, an order of the competent Court under the Rent Control Act is necessary. This would mean that in order to evict a person who is continuing in occupation after the expiration or termination of his contractual tenancy in accordance with law, two proceedings will have to be initiated. First, there will be proceedings under Rent Control Act before the Rent Controller followed by appeal before the Rent Control Tribu nal and revision before the High Court. After these proceed ings have ended they would be followed by proceedings under the Public Premises Act, before the Estate Officer and the Appellate Authority. In other words, persons in occupation of public premises would receive greater protection than tenants in premises owned by private persons. It could not be the intention of Parliament to confer this dual benefit on persons in occupation of public premises. 692 It has also been urged that in Section 22 of the Rent Control Act, special provision has been made for recovery of possession of premises belonging to a company or other body corporate or any local authority or any public institution and that premises belonging to companies, corporations and autonomous bodies mentioned in clauses (2) and (3) of Sec tion 2(e) of the Public Premises would be covered by the said provision and that in view of this special provision it is not necessary to have a further provision in the Public Premises Act for the recovery of possession belonging to those bodies, and therefore, the provisions of the Public Premises Act should be confined in their application to premises other than premises covered by the Rent Control Act. Section 22 of the Rent Control Act provides as under: "Where the landlord in respect of any premises is any compa ny or other body corporate of any local authority or any public institution and the premises are required for the use of employees of such landlord or in the case of a public institution for the furtherance of its activities, then, notwithstanding anything contained in Section 14 or any other law, the Controller may, on an application made to him in this behalf by such landlord, place the landlord in vacant possession of such premises by evicting the tenant and every other person who may be in occupation thereof, if the Controller is satisfied (a) that the tenant to whom such premises were let for use as a residence at a time when he was in the service or employment of the landlord, has ceased to be in such service or employment; or (b) that the tenant has acted in contravention of the terms, express or implied, under which he was authorised to occupy such premises; or (c) that any other person is in unauthorised occupation of such premises; or (d) that the premises are required bona fide by the public institution for the furtherance of its activities. Explanation For the purpose of this section, "public in stitution" includes any educational institutional, library, hospital and charitable dispensary but does not include any 693 such institution set up by any private trust. " The said special provision shows that, it enables recov ery of possession or premises of which the landlord is a company or other body corporate or any local authority or any public institution in certain circumstances viz., if the premises are required for the use of the employees or such landlord. In the case of public institutions possession can also be obtained under this provision if the premises are required for the furtherance of its activities. In other words, recovery of possession is permissible under this provision only in certain circumstances and for certain purposes. Inspite of this provision Parliament has consid ered it necessary tO extend the Public Premises Act to premises belonging to companies, corporations and statutory bodies mentioned in Clauses (2) and (3) of Section 2(e) by widening the definition of the expression "public premises" in Section 2(e) of the Public Premises Act. The scope and ambit of the aforesaid power conferred under the Public Premises Act cannot be restricted by reference to the provi sion contained in Section 22 of the Rent Control Act. It has been urged by the learned counsel for the peti tioners that many of the corporations referred to in Section 2(e)(2)(ii) of the Public Premises Act, like the nationa lised banks and the Life Insurance Corporation, are trading corporations and under the provisions of the enactments whereby they are constituted these corporations are required to carry on their business with a view to earn profit, and that there is nothing to preclude these corporations to buy property in possession of tenants at a low price and after buying such property evict the tenants after terminating the tenancy and thereafter sell the said property at a much higher value because the value of property in possession of tenants is much less as compared to vacant property. We are unable to cut down the scope of the provisions of the Public Premises Act on the basis of such an apprehension because as pointed out by this Court in M/s Dwarkadas Marfatia and Sons vs Board of Trustees of the Port of Bombay, ; "Every activity of a public authority especially in the background of the assumption on which such authority enjoys immunity from the rigour of the Rent Act, must be informed by reason and guided by the public interest. All exercise of discretion or power by public authorities as the respondent, in respect of dealing with tenants in respect of which they have been treated separately and distinctly from other landlords on the assumption that they would not act 694 as private landlords, must be judged by that standard." These observations were made in the context of the provi sions of the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947 whereby exemption from the provisions of the Act has been granted to premises belonging to the Bombay Port Trust. The consequence of giving overriding effect to the provisions of the Public Premises Act is that premises belonging to companies and statutory bodies referred to in Clauses (2) and (3) of Section 2(e) of the Public Premises Act would be exempted from the provisions of the Rent Con trol Act. The actions of the companies and statutory bodies mentioned in Clauses (2) and (3) of Section 2(e) of the Public Premises Act while dealing with their properties under the Pubic Premises Act will, therefore, have to be judged by the same standard. For the reasons aforesaid, we are unable to accept the contention of the learned counsel for the petitioners that the provisions contained in the Public Premises Act cannot be applied to premises which fall within the ambit of the Rent Control Act. In our opinion, the provisions of the Public Premises Act, to the extent they cover premises falling within the ambit of the Rent Control Act, override the provisions of the Rent Control Act and a person in unauthorised occupation of public premises under Section 2(e) of the Act cannot invoke the protection of the Rent Control Act. In Civil Appeal No. 3723 of 1966, Shri Yogeshwer Prasad sought to raise contentions relating to the particular facts of that case, namely, that the termination of the lease of the appellant is vitiated by mala fides and that the said appellant could not be held to be a person in unauthorised occupation of the premises and further that the proceedings have not been taken in accordance with the provisions of the Public Premises Act. We find that in this case the appellant filed a writ petition in the High Court directly against the order passed by the Estate Officer without filing an appeal against the said order before the Appellate Authority. The High Court has held that the question of mala fides is a disputed question of fact and the same could not be gone into in proceedings under Article 226 of the Constitution. We are in agreement of the said view of the High Court. As regards the other contentions we are of the view that the appellant cannot be permitted to agitate matters which could be agitated by him in appeal before the Appellate Authority. In Civil Appeals Nos. 2368 and 2369 of 1986 the learned counsel 695 for the respondents have raised a preliminary objection with regard to the maintainability of these appeals on the ground that the appellants, on account of their conduct, are not entitled to invoke the jurisdiction of this Court under Article 136 of the Constitution. The submission of the learned counsel is that before initiating proceedings under the provisions of the Public Premises Act the respondent Bank, viz. the Punjab National Bank, had initiated proceed ings under the Rent Control Act for the eviction of the appellants had in those proceedings the appellants had filed an objection with regard to the maintainability of the eviction proceedings under the Rent Control Act before the Additional Rent Controller and thereupon the Respondent Bank initiated proceedings for eviction of the appellants under the Public Premises Act and thereafter the proceedings initiated by the respondent Bank under the Rent Control Act were dismissed by the Additional Rent Controller by orders dated the 6th August, 1989. The learned counsel of the respondents have urged that the appellants, having raised the objection against the maintainability of the proceedings for eviction under the Rent Control Act on the ground that proceedings could only be maintained under the provisions of the Public Premises Act and having got them dismissed, cannot turn round and raise an objection that the proceed ings for eviction under the Public Premises Act are not maintainable and the proceedings can only be taken under the Rent Control Act. The learned counsel for the appellants have submitted that special leave to appeal was granted by this Court after notice to the respondents and at that stage the respondents had raised this objection but this Court granted special leave and it is not permissible for the respondents to agitate this question now. The orders dated the 6th August, 1989 which were passed by the Additional Rent Controller in the proceedings for eviction initiated by the respondent Bank under Rent Control Act against the appellants in these appeals have been placed on record by the respondents and from the said orders it appears that in the proceedings initiated under the Rent Control Act the appellants had raised a plea that the premises in question had been declared public premises under the Public Premises Act and in view of that the proceedings under the Rent Control Act were not competent. The said orders also show that the Additional Rent Controller dismissed the proceed ings for eviction under the Rent Control Act on the view that the Public Premises Act is applicable to premises in question and his jurisdiction was excluded. This would show that the proceedings which were initiated by the Respondent Bank for the eviction of the appellants under the Rent Control Act were dismissed as not maintainable on the ground that the Rent Control Act was not applicable to the premises and the premises are governed by the provisions of the 696 Public Premises Act. This finding was recorded by the Addi tional Rent Controller in view of the objection raised by the appellants with regard to the maintainability of those proceedings. In other words, the appellants succeeded in those proceedings on the basis of their plea that the prem ises were not governed by the Rent Control Act and were governed by the provisions of the Public Premises Act. Having got the proceedings under the Rent Control Act dis missed the appellants are now raising the plea that the proceedings under the Public Premises Act are not maintain able and that the only remedy available is under the Rent Control Act. This conduct of the appellants would have disentitled them from invoking the jurisdiction of this Court under Article 136 of the Constitution. Since we are of the view that the appellants cannot succeed on the merits, we do not propose to dismiss the appeals on this preliminary ground. In the result the appeals and the writ petition are dismissed. There will be no order as to costs. The appellants in Civil Appeals Nos. 2368 and 2369 of 1986 had been dispossessed from the premises in their occu pation after the dismissal of their appeals by the Addition al District Judge. During the pendency of these appeals interim orders were passed by this Court whereunder posses sion of a part of the premises was restored to the appel lants. Since these appeals have been dismissed the appel lants in both the appeals are directed to handover the possession of the portion of the premises in their occupa tion to the Respondent Bank within one month. In Civil Appeal No. 3725 of 1986 and Writ Petition No. 864 of 1985, this Court had passed interim orders staying the eviction of the petitioners in those matters. Since the appeal and the writ petition are being dismissed the said interim orders shall stand vacated. R.S.S. Petitions dismissed.
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The people appealing (appellants/petitioners) were renting property from the respondent Banks/Life Insurance Corporation of India. Their rental agreement had ended or was canceled by the owners (respondents), so eviction cases were started against them according to the rules. The appellants asked the High Court to cancel the eviction orders, but the High Court refused. So, they are now appealing to this court. The people renting moved this Court directly because they received notices that said their rental agreements were ending. The Public Premises Act of 1971 came after two earlier laws: the Government Premises (Eviction) Act 1950, and the Public Premises (eviction of unauthorized occupants) Act, 1958. Some High Courts said these earlier laws were not legal. These court cases led to the Public Premises Act in 1971. This Court said the 1971 law was valid in another case. In this case, the main questions are: (i) Does the Public Premises Act apply to property owned by a nationalized bank? and (ii) Does the Public Premises Act take priority over the Delhi Rent Control Act (a law about renting in Delhi)? About whether the Public Premises Act applies, some argued that property owned by a nationalized bank or insurance company is not "Public Premises" as defined in the law. They said a nationalized bank is not a company and was not created by a Central Act (a law made by the central government). Others argued that the banks were created by a Central Act, called the Bank Nationalization Act. So, the property owned by these banks is "public premises" under the Public Premises Act. On the second question, both sides said that their law was a "special" law and the other was a "general" law. They also pointed to specific sections in the laws that they said supported their arguments. The owners (respondents) said that the Public Premises Act was created by the national Parliament using its power under the Constitution. This power lets them make laws about things on the "Union List," so it automatically takes priority over the Rent Control Act, which was made using power about things on the "Concurrent List." The Court dismissed the appeals, saying: (1) The Public Premises Act takes priority over the Rent Control Act when it comes to properties covered by the Rent Control Act. Someone living in "unauthorized occupation" of public property cannot use the Rent Control Act for protection. (2) After World War II, a new type of public corporation (a company owned by the government) developed in England. These corporations are usually created by a special law. They don't have shares or shareholders in the usual sense. Instead, the nation is the "shareholder," represented by the government. They have the legal status of a company with its own legal identity. This type of public corporation has also grown in other countries, including India. Since India became independent, many such corporations have been created by laws passed by Parliament. (3) The word "Corporation" in the Public Premises Act includes these new types of public corporations created by Central Acts, where the entire ownership belongs to the central government. (4) A corporation doesn't need to have shareholders or members. The new type of public corporation doesn't have them. (5) The Banks Nationalisation Act shows that a nationalized bank is a separate legal entity created by the Act, and it is owned by the Central Government. It has all the features of the new type of public corporation. (6) The goal of making the definition of "public premises" broader in the Public Premises Act is to allow the government to evict unauthorized occupants from property owned by the government, companies, corporations, and other groups where the government has a significant interest. (7) Property belonging to a company where the government owns at least 51% of the shares is considered public property. Parliament didn't intend to exclude public corporations whose entire ownership belongs to the government from being considered "public premises." (8) Because of the Banks Nationalisation Act, nationalized banks are corporations created by a Central Act and controlled by the government. The property they own is "public premises" under the Public Premises Act. (9) The definition of "public premises" should not be limited to property used for residential purposes only. It also includes property used for business. (10) There is no reason to treat residential and commercial properties differently when evicting unauthorized occupants. The need for a quick process to evict people applies to both types of properties. (11) The definition of "unauthorized occupation" in the Public Premises Act has two parts. The second part includes someone who continues to live on the property after their permission to be there (whether through a lease or other agreement) has ended. The phrase "whether by way of grant or any other mode of transfer" is broad and includes a lease, because a lease is a type of transfer under the law. (12) The Public Premises Act doesn't require the Estate Officer (the person handling evictions) to be a lawyer. But this is not a reason to exclude leased properties from the Act. The law allows for an appeal to a District Judge against the Estate Officer's order, which means a judge makes the final decision. (13) State laws about rent control fall under certain categories in the Constitution's list of powers shared by the states and the central government. (14) The Rent Control Act for Delhi was created by Parliament using its power to make laws for areas not part of a state, even if the matter is usually handled by the states. (15) The Public Premises Act deals with government property, as well as property belonging to other legal groups. When it comes to evicting unauthorized occupants from property owned or leased by the central government, the Public Premises Act falls under the category of laws about Union property. But property belonging to other legal groups is not considered Union property, so the Public Premises Act is not made under that category for those properties. When it deals with leased property not owned by the central government, the Public Premises Act is made using the power to make laws about things on the concurrent list. (16) Both the Public Premises Act and the Rent Control Act were created by the same law-making body (Parliament) using the power to make laws about things on the Concurrent List. (17) The Rent Control Act changes the general rules about landlords and tenants found in the Transfer of Property Act. It sets rules for determining fair rent, lists the reasons a landlord can evict a tenant, and establishes the process for resolving disputes between landlords and tenants. So, the Rent Control Act is a "special" law about renting in Delhi. (18) The Public Premises Act is also a "special" law about evicting unauthorized occupants from public property. (19) Both the Rent Control Act and the Public Premises Act are "special" laws. So, the rule that a later general law cannot override an earlier special law does not apply. Instead, the rule that later laws override earlier conflicting laws applies, meaning the Public Premises Act takes priority over the Rent Control Act. (20) When two laws conflict, and both can be considered "special," the conflict must be resolved by looking at the purpose and policy behind the laws, and the clear meaning of the words in the laws. (21) Considering the purpose of both the Rent Control Act and the Public Premises Act, the Public Premises Act should be interpreted as overriding the Rent Control Act. Parliament knew about the sections in the Rent Control Act when it created the Public Premises Act. The Public Premises Act specifically says that courts cannot interfere (which includes the Rent Controller under the Rent Control Act). This shows that Parliament intended the Public Premises Act to take priority over the Rent Control Act, even with those sections in the Rent Control Act. (23) The Public Premises Act should not be limited just because people worry that corporations might buy property cheaply, evict tenants, and then sell the property for a higher price. Every action by a public authority must be reasonable and serve the public interest, especially since they are protected from the strict rules of the Rent Control Act.
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The common question which arises for consideration in these appeals, by special leave, and the writ petition filed under Article 32 of the Constitution is, whether a person who was inducted as a tenant in premises, which are public premises for the purpose of the (hereinafter referred to as the 'Public Premises Act '), and whose tenancy has expired or has been terminated, can be evicted from the said premises as being a person in unautho rised occupation of the premises under the provisions of the Public Premises Act and whether such a person can invoke the protection of the Delhi Rent Control Act, 1958 (hereinafter referred to as the 'Rent Control Act '). In those proceedings an objection was raised by the said appellants that proceedings for eviction under the Rent Control Act were not maintainable in view of the provisions contained in the Public Premises Act. Keeping in view the deci sion of this Court in Northern India Caterers Private Limit ed 's case (supra), Parliament enacted Public Premises (Eviction of Unauthorised Occupants) Amendment Act, 1968 whereby the 1958 Act was amended and Section 10E was intro duced and a bar was created to the jurisdiction of civil court to entertain any suit or proceeding in respect of eviction of any person in unauthorised occupation of any public premises or the recovery of the arrears of the rent or damages payable under the provisions of the 1958 Act. The definition of 'public premises ' contained in Section 2(e) of the Public Premises Act has been widened so as to include premises belonging to or taken on lease by or on behalf of a company, as defined in Section 3 of the , in which not less than fifty one per cent of the paid up capital is held by the Central Government as well as premises belonging to or taken on lease by or on behalf of any corporation (not being a compa ny, as defined in Section 3 of the in 1956, or a local authority) established by or under a Central Act and owned and controlled by the Central Government. The Public Premises Act was amended in 1980 by the Public Premises (Eviction of Unauthorised Occupants) Amend ment Act, 1980, whereby the definition of 'public premises ' in Section 2(e) was amended to include premises belonging to or taken on lease by or on behalf of certain autonomous and statutory organisations, viz., any University established or incorporated by any Central Act, any Institute incorporated by the , any Board of Trustees constituted under the major Port Trusts Act, 1963, and the Bhakra Management Board and as well as premises belonging to or taken on lease by any Company which is subsidiary of a Company as defined in Section 3 of the in which not less than fifty one per cent of the paid up capital is held by the Central Govern ment. if any, appertaining to such building or part of a building, and (ii) any fitting affixed to such building or part of a building for the more beneficial enjoyment thereof;" "(e) "Public Premises" means (1) any premises belonging to, or taken on lease or requisi tioned by, or on behalf of, the Central Government, and includes any such premises which have been placed by that Government, whether before or after the commencement of the Public Premises (Eviction of Unauthorised Occupants) Amend ment act, 1980 under the control of Secretariat of either House of Parliament for providing residential accommodation to any member of the staff of that Secretariat; (2) any premises belonging to, or taken on lease by, or on behalf of, (i) any company as defined in Section 3 of the (1 of 1956) in which not less than fifty one per cent of the paid up share capital is held by the Central Government or any Company which is a subsidiary (within the meaning of the Act) of the first mentioned company, (ii) any corporation (not being a company as defined in Section 3 of the ( 1 of 1956), or a local authority) established by or under a Central Act and owned or controlled by the Central Government, 662 (iii) any University established or incorporated by any Central Act, (iv) any Institute incorporated by the Institutes of Tech nology Act, 1961 (59 of 1961); (v) any Board of Trustees constituted under the (38 of 1963); (vi) the Bhakra Management Board constituted under Section 79 of the Punjab Recoganisation Act, 1966 (31 of 1966) and that Board as and when renamed as the Bhakra Beas Management Board under Sub section (6) of Section 80 of the Act; and (3) in relation to the Union Territory of Delhi (i) any premises belonging to the Municipal Corporation of Delhi, or any municipal committee or notified area committee and (ii) any premises belonging to the Delhi Development Author ity, whether such premises are in the possession of, or leased out by the said Authority." Section 5 relates to eviction of unauthorised occupants and provides as under ' "(1) If, after considering the cause, if any, shown by any person in pursuance of a notice under Section 4 and any evidence produced by him in support of the same and after personal hearing, if any, given under clause (b) of sub 664 section (2) of Section 4, the estate officer is satisfied that occupation of public premises is unauthorised, the estate officer may make an order of eviction, for reasons to be recorded therein, directing that the public premises shall be vacated on such date as may be specified in the order, by all persons who may be in occupation thereof or any part thereof, and cause a copy of the order to be af fixed on the outer door or some other conspicuous part of the public premises. It has been urged by Shri Yogesh wer Prasad, that the premises belonging to a nationalised bank do not fall within the ambit of the definition of 'Public Premises ' contained in Section 2(e) of the Public Premises Act, for the reason that nationalised bank is not a company as defined in Section 3 of the and it is also not a corporation established by or under a Central Act. This Court has observed that a corporation established by or under an Act of legislature could only mean a body corporate which owes its existence and not merely its corporate status to the Act and a distinction has been drawn between a corpora tion established by or under an Act and a body incorporated under an Act. The premises belonging to a nationalised bank are public premises under Section 2(e)(2)(ii) of the Public Premises Act. 9 and 10 demised on perpetual lease can, by no process of reasoning, be regarded as public premises belonging to the Central Government under Section 2(e) of the Public Premises Act, and therefore, there was no question of the lessor applying for eviction of the Express Newspapers Pvt. Ltd. under the provisions of the Public Premises Act. Another submission that has been urged by Shri Ganguli is that the question whether a tease has been determined or not involves complicated questions of law and the estate officer, who is not required to be an officer well versed in law, cannot be expected to decide such question and, there fore, it must be held that the provisions of the Public Premises Act have no application to a case when the person sought to be evicted had obtained possession of the premises as a lessee. Section 3, which excludes the applicability of the Act to certain premises, provide as under: "Nothing in this Act shall apply: (a) to any premises belonging to the Government; (b) to any tenancy or other like relationship created by a 678 grant from the Government in respect of the premises taken on lease, or requisitioned, by the Government Provided that where any premises belonging to Government have been or are lawfully let by any person by virtue of an agreement with the Government or otherwise, then, notwith standing any judgment, decree or order of any court or other authority, the provisions 'of this Act shall apply to such tenancy. In view of the definition of the expression 'public premises ' contained in clause (e) of Section 2 of the Public Premises Act, the said Act, in addition to the premises belonging to or taken on lease or requisitioned by, or on behalf of, the Central Government, is applicable to premises belonging to or taken on lease by or on behalf of the compa nies and statutory bodies mentioned in clauses (2) and (3) of Section 2(e). building or parts of buildings lying within the limits of the New Delhi Municipal Committee and the Delhi Cantonment Board and in urban areas within the limits of the Municipal Corporation of Delhi, which belong to or are taken on lease by any of the companies or statuto ry bodies mentioned in clauses (2) and (3) of Section 2(e) of the Public Premises Act and which are in occupation of a person who obtained possession of the said premises as a tenant and whose tenancy has expired or has been terminated but who is continuing in occupation of the same, would ex facie fall within the purview of both the enactments. The question which, therefore, arises is whether the occupant of such premises can seek the protection available under the provisions of Rent Control Act and he can be evicted from the premises only in accordance with the said provisions and proceedings for eviction of such a person cannot be initiat ed under the provisions of the Public Premises Act. Shri Venugopal and other learned counsel representing the petitioners have urged that the Rent Control Act is a self contained code providing for regulating the relation ship of landlords and tenants and it makes comprehensive provisions with regard to control of rents as well as evic tion of tenants and that the provision of the Rent Control Act, being special in nature insofar as lease hold proper ties in Delhi are concerned, would prevail over the provi sions of the Public 681 Premises Act which are in the nature of general provisions relating to eviction of unauthorised occupants from Govern ment premises in the whole country. It has also been urged by the learned counsel for the peti tioners that the Public Premises Act does not contain any machinery for the termination of the tenancy and that in view of the decision of this Court in V. Dhanapal Chettiar vs Yesodai Ammal, ; , the jural relationship of landlord and tenant can come to an end only on the pass ing of an order of eviction by a competent court in accor ding with the provisions of the Rent Control Act and that in the absence of an order of eviction under the provisions of the Rent Control Act no proceedings can be initiated against a person who came into occupation of the premises as a tenant and who is continuing in occupation of the said premises after the contractual tenancy has expired or has been terminated. Sanghi, appearing on behalf of the respondents in the appeals, have urged that the Public Premises Act is in the nature of a special enactment making provision for speedy and expedi tious recovery of possession of public premises from persons in unauthorised occupation of the same whereas the Rent Control Act is general enactment regulating the relationship of landlord and tenant and since the Public Premises Act is a special enactment it would override the provisions of the Rent Control Act. In that case it has been observed that the scope and object of the Public Premises Act is quite different from that of Rent Control Act and while the Public Premises Act operates in a very limited field in that it applies only to a limited nature of premises belonging only to particular sets of individuals, a particular set of juristic persons like Companies, Corporations or the Central Government, whereas the Rent Control Act is of much wider application and it applies to all private premises which do not fall within the limited exceptions indicated in Section 2 of the Public Premises Act and the object of the Rent Control Act is to afford special protection to all the tenants or private landlords or landlords who are neither a Corporation nor Government or Corporate Bodies. It was, therefore, held that the Public Premises Act is a special Act as compared to the Rent Control Act and it overrides the provisions of the Rent Control Act. In so far as it relates to eviction of unauthorised occupants from premises belonging to or taken on lease or requisitioned by or on behalf of the Central Government the Public Premises Act would fall within entry 32 of List I being law with respect to a property of the Union. The property belonging to the various legal entities mentioned in clauses (2) and (3) of Section 2(e) of the Public Premises Act cannot be regarded as property of the Union and the Public Premises Act cannot be held to have been enacted under entry 32 of List I in respect of the said properties. Ltd. and Another vs Union of India and Others, (supra) this Court has held that the Public Premises Act, in relation to properties other than the properties belonging to the Central Government has been enacted under the concurrent list. The submission of learned counsel for the petitioners is that the Rent Control Act is a special enactment dealing with premises in occupation of tenants, whereas the Public Prem ises Act is a general enactment dealing with the occupants of Public Premises and that insofar as public premises in occupation of tenants are concerned the provisions of the Rent Control Act would continue to apply and to that extent the provisions of the Public Premises Act would not be applicable. In support of this submission reliance has been placed on the non obstante clauses contained in Section 14 and 22 of the Rent Control Act as well as the provisions contained in Sections 50 and 54 of the said Act. On the 686 other hand the learned counsel for the respondents have urged that the Rent Control Act is a general enactment dealing with the relationship of landlord and tenant gener ally, whereas the Public Premises Act is a special enactment making provision for speedy recovery of possession of Public Premises in unauthorised occupation and that the provisions of the Public Premises Act, a later Special Act, will, therefore, override the provisions of the Rent Control Act in so far as they are applicable to Public Premises in occupation of persons who have continued in occupation after the lease has expired or has been determined. The learned counsel for the respondents have placed reliance on Section 15 of the Public Premises Act which bars the jurisdiction of all courts in respect of the eviction of any person who is in unauthorised occupation of any Public Premises and other matters specified herein. Since, the Public premises Act is a special statute and not a general enactment the 687 exception contained in the principle that a subsequent general law cannot derogate from an earlier special law cannot be invoked and in accordance with the principle that the later laws abrogate earlier contrary laws, the Public Premises Act must prevail over the Rent Control Act. In our opinion, therefore, keeping in view the object and purpose underlying both the enactments viz., the Rent Control Act and the Public Premises Act, the provisions of the Public Premises Act have to be construed as overriding the provi sions contained in the Rent Control Act. It has been urged by the learned counsel for the peti tioner that there is no conflict between the provisions of the Rent Control Act and the Public Premises Act and that both the provisions can be given effect to without one overriding the other. 692 It has also been urged that in Section 22 of the Rent Control Act, special provision has been made for recovery of possession of premises belonging to a company or other body corporate or any local authority or any public institution and that premises belonging to companies, corporations and autonomous bodies mentioned in clauses (2) and (3) of Sec tion 2(e) of the Public Premises would be covered by the said provision and that in view of this special provision it is not necessary to have a further provision in the Public Premises Act for the recovery of possession belonging to those bodies, and therefore, the provisions of the Public Premises Act should be confined in their application to premises other than premises covered by the Rent Control Act. Section 22 of the Rent Control Act provides as under: "Where the landlord in respect of any premises is any compa ny or other body corporate of any local authority or any public institution and the premises are required for the use of employees of such landlord or in the case of a public institution for the furtherance of its activities, then, notwithstanding anything contained in Section 14 or any other law, the Controller may, on an application made to him in this behalf by such landlord, place the landlord in vacant possession of such premises by evicting the tenant and every other person who may be in occupation thereof, if the Controller is satisfied (a) that the tenant to whom such premises were let for use as a residence at a time when he was in the service or employment of the landlord, has ceased to be in such service or employment; or (b) that the tenant has acted in contravention of the terms, express or implied, under which he was authorised to occupy such premises; or (c) that any other person is in unauthorised occupation of such premises; or (d) that the premises are required bona fide by the public institution for the furtherance of its activities. It has been urged by the learned counsel for the peti tioners that many of the corporations referred to in Section 2(e)(2)(ii) of the Public Premises Act, like the nationa lised banks and the Life Insurance Corporation, are trading corporations and under the provisions of the enactments whereby they are constituted these corporations are required to carry on their business with a view to earn profit, and that there is nothing to preclude these corporations to buy property in possession of tenants at a low price and after buying such property evict the tenants after terminating the tenancy and thereafter sell the said property at a much higher value because the value of property in possession of tenants is much less as compared to vacant property. For the reasons aforesaid, we are unable to accept the contention of the learned counsel for the petitioners that the provisions contained in the Public Premises Act cannot be applied to premises which fall within the ambit of the Rent Control Act. In our opinion, the provisions of the Public Premises Act, to the extent they cover premises falling within the ambit of the Rent Control Act, override the provisions of the Rent Control Act and a person in unauthorised occupation of public premises under Section 2(e) of the Act cannot invoke the protection of the Rent Control Act. The orders dated the 6th August, 1989 which were passed by the Additional Rent Controller in the proceedings for eviction initiated by the respondent Bank under Rent Control Act against the appellants in these appeals have been placed on record by the respondents and from the said orders it appears that in the proceedings initiated under the Rent Control Act the appellants had raised a plea that the premises in question had been declared public premises under the Public Premises Act and in view of that the proceedings under the Rent Control Act were not competent. This would show that the proceedings which were initiated by the Respondent Bank for the eviction of the appellants under the Rent Control Act were dismissed as not maintainable on the ground that the Rent Control Act was not applicable to the premises and the premises are governed by the provisions of the 696 Public Premises Act.
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So, they are now appealing to this court. The Public Premises Act of 1971 came after two earlier laws: the Government Premises (Eviction) Act 1950, and the Public Premises (eviction of unauthorized occupants) Act, 1958. Some High Courts said these earlier laws were not legal. and (ii) Does the Public Premises Act take priority over the Delhi Rent Control Act (a law about renting in Delhi)? About whether the Public Premises Act applies, some argued that property owned by a nationalized bank or insurance company is not "Public Premises" as defined in the law. They said a nationalized bank is not a company and was not created by a Central Act (a law made by the central government). So, the property owned by these banks is "public premises" under the Public Premises Act. On the second question, both sides said that their law was a "special" law and the other was a "general" law. They also pointed to specific sections in the laws that they said supported their arguments. This power lets them make laws about things on the "Union List," so it automatically takes priority over the Rent Control Act, which was made using power about things on the "Concurrent List." The Court dismissed the appeals, saying: (1) The Public Premises Act takes priority over the Rent Control Act when it comes to properties covered by the Rent Control Act. Someone living in "unauthorized occupation" of public property cannot use the Rent Control Act for protection. These corporations are usually created by a special law. This type of public corporation has also grown in other countries, including India. (3) The word "Corporation" in the Public Premises Act includes these new types of public corporations created by Central Acts, where the entire ownership belongs to the central government. The new type of public corporation doesn't have them. (5) The Banks Nationalisation Act shows that a nationalized bank is a separate legal entity created by the Act, and it is owned by the Central Government. (6) The goal of making the definition of "public premises" broader in the Public Premises Act is to allow the government to evict unauthorized occupants from property owned by the government, companies, corporations, and other groups where the government has a significant interest. (7) Property belonging to a company where the government owns at least 51% of the shares is considered public property. (8) Because of the Banks Nationalisation Act, nationalized banks are corporations created by a Central Act and controlled by the government. The property they own is "public premises" under the Public Premises Act. The need for a quick process to evict people applies to both types of properties. The phrase "whether by way of grant or any other mode of transfer" is broad and includes a lease, because a lease is a type of transfer under the law. (12) The Public Premises Act doesn't require the Estate Officer (the person handling evictions) to be a lawyer. But this is not a reason to exclude leased properties from the Act. When it comes to evicting unauthorized occupants from property owned or leased by the central government, the Public Premises Act falls under the category of laws about Union property. But property belonging to other legal groups is not considered Union property, so the Public Premises Act is not made under that category for those properties. When it deals with leased property not owned by the central government, the Public Premises Act is made using the power to make laws about things on the concurrent list. (16) Both the Public Premises Act and the Rent Control Act were created by the same law-making body (Parliament) using the power to make laws about things on the Concurrent List. (17) The Rent Control Act changes the general rules about landlords and tenants found in the Transfer of Property Act. So, the Rent Control Act is a "special" law about renting in Delhi. (18) The Public Premises Act is also a "special" law about evicting unauthorized occupants from public property. (19) Both the Rent Control Act and the Public Premises Act are "special" laws. So, the rule that a later general law cannot override an earlier special law does not apply. Instead, the rule that later laws override earlier conflicting laws applies, meaning the Public Premises Act takes priority over the Rent Control Act. (21) Considering the purpose of both the Rent Control Act and the Public Premises Act, the Public Premises Act should be interpreted as overriding the Rent Control Act. Parliament knew about the sections in the Rent Control Act when it created the Public Premises Act. This shows that Parliament intended the Public Premises Act to take priority over the Rent Control Act, even with those sections in the Rent Control Act.
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Civil Appeal Nos. 1629, 1857 & 2087 of 1979. From the Judgment and Order dated 1 5 1979 of the Delhi High Court in Civil Writ No. 408 of 1978. F. section Nariman, section D. Parekh, A. D. Mehta, Lalit Bhasin, Vinay Bhasin and Vineet Kumar for the Appellants in C.A. No. 1629 and for R. 1 in C.A. No. 2087/79. V. N. Tarkunde, section Ganesh, K. Vasudev and T.V.S.N. Chari for the Appellants in CA 1857/79. Soli J. Sorabjee, Solicitor General and Girish Chandra for Appellants in CA 2087 and for Respondent (UOI) in CA 1629/79. Soli J. Sorabjee, Solicitor General, section Ganesh Vasdev and T.V.S.N. Chari for Respondent No. 2 in CA 1629. T. V. section N. Chari for Respondent No. 4 in CA 2087 Suresh Parik and section Swarup for Respondent No. 3 in CA 2087. F. section Nariman, B. P. Maheshwari and Suresh Sethi for Respondent Swadeshi Cotton Mills Co. Ltd. in CA No. 1857 and 2087/79. C. M. Chopra for Intervenor. The Judgment of R. section Sarkaria and D. A. Desai, JJ. was delivered by Sarkaria, J. O. Chinnappa Reddy, J. gave a dissenting Opinion. 542 SARKARIA,J. These appeals arise out of a judgment, dated May 1, 1979, of the High Court of Delhi, in the following circumstances: Appellant No. 1 in Civil Appeal 1629 of 1979 is Swadeshi Cotton Mills Co. Ltd. (hereinafter referred to as the Company). It was incorporated as a private company with an authorised capital of Rs. 30 lakhs in 1921 by the Horseman family by converting their partnership business into a Private Joint Stock Company. Its capital was raised in 1923 to Rs. 32 lakhs and thereafter in 1945 to Rs. 52.50 lakhs by issue of bonus shares. In 1946, the Jaipuria family acquired substantial holding in the Company. Jaipuria family is the present management. By issue of further bonus shares in 1946, the capital of the Company was increased to Rs. 122.50 lakhs. In 1948, the paid up capital of the Company was raised to Rs. 210 lakhs by the issue of further bonus shares. The subscribed and issued capital consisting mainly of the bonus shares has since remained constant at Rs. 210 lakhs. In the year 1946, the Company had only one undertaking, a Textile Unit at Kanpur, known as "The Swadeshi Cotton Mills, Kanpur". Between 1956 and 1973, the Company set up and/or acquired five further Textile Units in Pondicherry, Naini, Udaipur, Maunath Bhanjan and Rae Bareilly. Each of these six Units or undertakings of the Company was separately registered in accordance with the provisions of Section 10 of the Industries (Development and Regulation) Act, 1951 (hereinafter called the IDR Act). In addition to these six industrial undertakings, the Company (it is claimed) had other distinct businesses and assets. It holds inter alia 97 per cent shares in the subsidiary, Swadeshi Mining and Manufacturing Company Ltd., which owns two sugar Mills. The Company claims, it has substantial income from other businesses and activities including investments in its subsidiary and in other shares and securities which include substantial holding of 10,00,000 Equity Shares of Rs. 10/ each in Swadeshi Polytex Ltd., representing 30 per cent of the total equity capital value of Swadeshi Polytex Ltd., the intrinsic value whereof exceeds Rs. 5 crores. The Company made considerable progress during the years 1957 to 1973. The reserves and surplus of the Company increased from Rs. 2.3 crores in 1957 to Rs. 4.3 crores in 1973 74, but declined to Rs. 2.8 crores in 1976 77. The fixed assets of the Company increased from 5.8 crores in 1957 to 19 crores in 1973 74, but declined to Rs. 18 crores, registering a marginal decrease of Rs. 1 crore in 1976 77. 543 The Company maintained separate books of accounts for each of its six industrial undertakings. From and after April 1973, the Company maintained separate sets of books of accounts of the businesses and assets other than of the said six industrial undertakings. Annual accounts of the six industrial undertakings were first prepared separately in seven sets which were separately audited. The consolidated annual accounts of the Company were then prepared from such annual accounts at the registered office of the Company at Kanpur, and after audit, were placed before the shareholders of the Company. The Company made over all profits up to the year 1969 and even thereafter up to 1975. The Balance Sheet showed that the Company suffered a loss of Rs. 86.23 lakhs after providing depreciation of Rs. 93.93 lakhs and gratuity of Rs. 48.79 lakhs, though the trading results showed a gross profit of Rs. 56.49 lakhs. During the year ending March 31, 1976, the Company again suffered a loss of Rs. 294.82 lakhs after providing for depreciation. The last Balance Sheet and Profit & Loss Account adopted by the shareholders and published by the Company relates to the year ending March 31, 1977. It shows that the Company suffered a loss of Rs. 200.34 Lakhs after taking into account depreciation of Rs. 73.27 lakhs which was not provided in accounts. Between 1975 and 1978, the Company created the under noted encumbrances on the fixed assets: Unit As on As on As on As on Remarks 31 3 75 31 3 76 31 3 77 31 3 78 (in lakhs) (in lakhs) 1 2 3 4 5 6 (i) Pondi 2.40 Nil Nil Nil On fixed chery assets of of Pondi cherry Unit. (ii) Maun 11.40 5.71 Nil Nil On fixed ath assets of Bhanjan Unit. (iii)Udaipur 2.76 Nil Nil Nil On fixed assets of Udaipur Unit. (iv) Kanpur 13.44 9.75 5.95 2.00 On fixed (ICICI) asset of Kanpur Unit. (v) Kanpur Nil 150.00 150.00 150.00 On fixed assets of Kanpur, Maunath Bhanjan & Pondi cherry Units for wages and Bank Dues 544 1 2 3 4 5 6 vi)Company 67.53 68.45 59.44 59.44 On diesel generating sets of Kanpur, Naini, Pondi cherry, Maunath Bhanjan and Rae Bareilly Units. (vii)Udaipur Nil 25.00 25.00 25.00 On fixed assets of Udaipur Unit for gratuity fund. (viii)Naini Nil Nil 70.00 70.00 On fixed assets of Naini for gratuity. (ix) Kanpur, 106.20 75.31 50.67 15.97 On new Rae machinery Bareilly of Kanpur, & Naini Rae Bareilly & Naini Units under de ferred payment credit. 203.73 334.22 361.06 322.41 The borrowings of the Kanpur, Pondicherry, Naini, Udaipur, Maunath Bhanjan and Rae Bareilly Units of the Company as on March 31, 1978 against current assets were Rs. 256.78, 183.92, 271.05, 70.72, 47.98 and 55.82 lakhs respectively. All the encumbrances on fixed assets (except the encumbrances of Rs. 70 lakhs on the fixed assets of Naini Unit for gratuity funding to get the benefit of Section 44A of the Income tax Act) were created prior to March 31, 1976. In the accounting year 1976 77, only one new encumbrance was created by the Company on its fixed assets. The following are statistics of production in each of the six units of the Company during the years 1975 76, 1976 77 and 1977 78: Name of the Unit 1975 76 1976 77 1977 78 (figures in lakhs) Naini 66.13 kgs. 65.76 kgs. 72.35 kgs. Udaipur 18.51 kgs. 18.50 kgs. 18.60 kgs. Maunath Bhanjan 15.59 kgs. 16.63 kgs. 18.49 kgs. Rae Bareilly 12.09 kgs. 13.58 kgs. 14.00 kgs. Pondicherry 170.52 Mtrs 178.77 Mtrs 176.54 Mtrs Kanpur 318.75 Mtrs 472.12 Mtrs 238.22 Mtrs 545 On April 13, 1978, the Government of India in exercise of its power under clause (a) of sub section (1) of Section 18AA of the IDR Act, passed an order (hereinafter referred to as the impugned order) which reads as follows: "SO 265(E)/18AA/IDRA/78 Whereas the Central Government is satisfied from the documentary and other evidence in its possession, that the persons in charge of the industrial undertakings namely, (i) M/s. Swadeshi Cotton Mills, Kanpur, (ii) M/s. Swadeshi Cotton Mills, Pondicherry, (iii)M/s. Swadeshi Cotton Mills, Naini, (iv) M/s. Swadeshi Cotton Mills, Maunath Bhanjan, (v) M/s. Udaipur Cotton Mills, Udaipur, and (vi) Rae Bareilly Textile Mills, Rae Bareilly of M/s. Swadeshi Cotton Mills Company Ltd., Kanpur (hereinafter referred to as the said industrial under takings), have, by creation of encumbrances on the assets of the said industrial undertakings, brought about a situation which has affected and is likely to further affect the production of articles manufactured or produced in the said industrial undertakings and that immediate action is necessary to prevent such a situation; Now, therefore, in exercise of power conferred by clause (a) of sub section (1) of Section 18AA of the Industries (Development and Regulation) Act, 1951 (65 of 1951), the Central Government hereby authorises the National Textile Corporation Limited (hereinafter referred to as the Authorised person) to take over the management of the whole of the said industrial undertakings, subject to the following terms and conditions, namely: (i) The authorised person shall comply with all the directions issued from time to time by the Central Government; (ii) the authorised person shall hold office for a period of five years from the date of publication of this order in the Official Gazette; (iii)the Central Government may terminate the appointment of the authorised person earlier if it considers necessary to do so. 546 This order shall have effect for a period of five years commencing from the date of its publication in the Official Gazette. Sd/ R. Ramakrishna Joint Secretary to the Govt. of India (Seal). " On April 19, 1978, three petitioners, namely, the Company through its Joint Secretary, Shri Bhim Singh Gupta, its Managing Director, Dr. Rajaram Jaipuria, and its subsidiary company, named Swadeshi Mining and Manufacturing Company, through its Directors and Shareholders filed a writ petition under Article 226 of the Constitution in the Delhi High Court against the Union of India and the National Textile Corporation to challenge the validity of the aforesaid Government Order dated April 13, 1978. The writ petition was further supplemented by subsequent affidavits and rejoinders. The Union of India and the National Textile Corporation Ltd., who has been authorised to assume management of the undertakings concerned were impleaded, as respondents. The writ petition first came up for hearing before a Division Bench who by its order dated August 11, 1978, requested the Chief Justice to refer it to a larger Bench. The case was then heard by a three Judge Bench who by their order dated October 12, 1978, requested the Hon 'ble the Chief Justice to constitute a still larger Bench to consider the question whether a prior hearing is necessary to be given to the persons affected before the order under Section 18AA is passed. Ultimately, the reference came up for consideration before a Full Bench of five Judges to consider the question, which was reframed by the Bench as under: "Whether in construing Section 18AA of the Industries (Development and Regulation) Act, 1951, as a pure question of law compliance with the principle of audi alteram partem is to be implied. If so, (a) whether such hearing is to be given to the parties who would be affected by the order to be passed under the said Section prior to the passing of the order; or (b) whether such hearing is to be given after the passing of the order; and (c) if prior hearing is to be normally given and the order passed under the said Section is vitiated by not giving of such 547 hearing whether such vice can be cured by the grant of a subsequent hearing. " The Bench by a majority (consisting of Deshpande, C.J.,R. Sacher and M. L. Jain, JJ.) answered this three fold question as follows: "(1) Section 18AA(1) (a) (b) excludes the giving of prior hearing to the party who would be affected by order thereunder. (2) Section 18F expressly provides for a post decisional hearing to the owner of the industrial undertaking, the management of which is taken over under Section 18AA to have the order made under Section 18AA cancelled on any relevant ground. (3) As the taking over of management under Section 18AA is not vitiated by the failure to grant prior hearing, the question of any such vice being cured by a grant of a subsequent hearing does not arise." H. L. Anand and N. N. Goswamy, JJ, however dissented. In the opinion of the minority, in compliance with the principles of natural justice, a prior hearing to the owner of the undertaking was required to be given before passing an order under Section 18AA, that the second question did not arise as the denial of a prior hearing would not cure the vice by the grant of subsequent hearing, but it would be open to the Court to moderate the relief in such a way that the order is kept alive to the extent necessary until the making of the fresh order to subserve public interest, and to make appropriate directions to ensure that the subsequent hearing would be a full and complete review of the circumstances of the take over and for the preservation and maintenance of the property during the interregnum. After the decision of the reference, the case was reheard on merits by a Bench of three learned Judges (consisting of Deshpande, C.J., Anand and M. L. Jain, JJ.) who by their judgment, dated May 1, 1979, disposed of the writ petition. The operative part of the judgment reads as under: "In the result, the writ petition succeeds in part, the challenge to the validity of the impugned order fails and to that extent the petition is dismissed. The petition succeeds in so far as it seeks to protect from the impugned order the corporate entity of the company, the corporate entity of the subsidiary and its assets, the holding of the company in Polytex and the assets and property of the company which are not referable to any of the industrial undertakings. The respondents are hereby restrained from in any manner interfering 548 with the corporate entity, the assets and property which are outside the impugned order. The respondents would release from its control and custody and/or deliver possession of any assets or property of the company, which are not referable to the industrial undertakings in terms of the observations made in paras 46 and 47 of the judgment, within a period of three months from today (May 1, 1979). In the peculiar circumstances the parties would bear their respective costs. " On the application of the Company, the Delhi High Court certified under Article 133 of the Constitution that the case was fit for appeal to this Court. Subsequently, on July 12,1979, a similar certificate was granted by the High Court to the Union of India and the National Textile Corporation Ltd. Consequently, the Company, the Union of India and the National Textile Corporation have filed Civil Appeals 1629, 2087 and 1857 of 1979, respectively, in this Court. All the three appeals will be disposed of by this judgment. The primary, two fold proposition posed and propounded by Shri F. section Nariman, learned counsel for the appellant Company in Civil Appeal 1629 of 1979, is as follows: (a) Whether it is necessary to observe the rules of natural justice before issuing, a notified order under Section 18AA, or enforcing a decision under Section 18AA, or (b) Whether the provisions of Section 18AA and/or Section 18F impliedly exclude rules of natural justice relating to prior hearing. There were other contentions also which were canvassed by the learned counsel for the parties at considerable length. But for reasons mentioned in the final part of this judgment, we do not think it necessary, for the disposal of these appeals to deal with the same. Thus, the first point for consideration is whether, as a matter of law, it is necessary, in accordance with the rules of natural justice, to give a hearing to the owner of an undertaking before issuing a notified order, or enforcing a decision of its take over under Section 18AA. Shri Nariman contends that there is nothing in the language, scheme or object of the provisions in Section 18AA and/or Section 18F which expressly or by inevitable implication, excludes the application of the principles of natural justice or the giving a pre decisional hearing, adapted to the situation, to the owner of the undertaking. It is submitted that mere use of the word "immediate" in sub clause (a) of Section 18AA (1) does not show a legislative intent to exclude the 549 application of audi alterm partem rule, altogether. It is maintained that according to the decision of this Court in Keshav Mills Company Ltd. vs Union of India, even after a full investigation has been made under Section of the I.D.R. Act, the Government has to observe the rules of natural justice and fairplay, which in the facts of a particular case, may include the giving of an opportunity to the affected owner to explain the adverse findings against him in the investigation report. In support of his contention, that the use of the word "immediate" in Section 18AA(1)(a) does not exclude natural justice, learned counsel has advanced these reasons: (i) The word "immediate" in clause (a) has been used in contra distinction to 'investigation '. It only means that under Section 18AA action can be taken without prior investigation under Section 15, if there is evidence in the possession of the Government, that the assets of the Company owning the undertaking are being frittered away by doing any of the three things mentioned in clause (a); or, the undertaking has remained closed for a period of not less than three months and the condition of plant and machinery is such that it is possible to restart the undertaking. This construction, that the use of the word "immediate" in Section 18AA(1)(a) only dispenses with investigation under Section 15 and not with the principle of audi alterm partem altogether, is indicated by the marginal heading of Section 18AA and para 3 of the Statement of Objects and Reasons of the Amendment Bill which inserted Section 18AA, in 1971. (ii) The word 'immediate ' occurs only in clause (a) and not in clause (b) of Section 18AA(1). It would be odd if intention to exclude this principle of natural justice is spelt out in one clause of the sub section, when its other clause does not exclude it. (iii) Section 18F does not exclude a pre decisional hearing. This section was there, when in Keshav Mills ' case, (ibid), it was held by this Court, that even at the post investigation stage, before passing an order under Section 18A, the Government must proceed fairly in accordance with the rules of natural justice. The so called post decisional hearing contemplated by Section 18F cannot be and is not intended to be a substitute for a pre decisional hearing. Section 18F, in terms, deals with the power of Central Government to cancel an order of take over under two conditions, namely: First when "the purpose of an order under Section 18A has been fulfilled, or, second when "for any other reason it is not necessary that the order should remain in force". "Any other reason" has reference to post "take 550 over" circumstances only, and does not cover a reason relatable to pre takeover circumstances. An order of cancellation under Section 18F is intended to be prospective. This is clear from the plain meaning of the expressions "remain in force", "necessary" etc. used in the Section. Section 18 incorporates only a facet, albeit qualified, of Section 21 of the General Clauses Act, (Kamla Prasad Khetan vs Union of India, referred to.) Therefore, the illusory right given by Section 18F to the aggrieved owner of the undertaking, to make an application for cancellation of the order, is not a full right of appeal on merits. The language of the Section impliedly prohibits an enquiry into circumstances that led to the passing of the order of "take over", and under it, the aggrieved person is not entitled to show that on merits, the order was void ab initio. As held by a Bench (consisting of Bhagwati and Vakil JJ.) of the Gujarat High Court, in Dosabhai Ratanshah Keravale vs State of Gujarat, a power to rescind or cancel an order, analogous to that under Section 21, General Clauses Act, has to be construed as a power of prospective cancellation, and not of retroactive obliteration. It is only the existence of a full right of appeal on the merits or the existence of a provision which unequivocally confers a power to reconsider, cancel and obliterate completely the original order, just as in appeal, which may be construed to exclude natural justice or a pre decisional hearing in an emergent situation. (Reference on this point has been made to Wade 's Administrative Law, 4th Edition, PP.464 to 468.) (iv) 'Immediacy ' does not exclude a duty to act fairly, because, even an emergent situation can co exist with the canons of natural justice. The only effect of urgency on the application of the principle of fair hearing would be that the width, form and duration of the hearing would be tailored to the situation and reduced to the reasonable minimum so that it does not delay and defeat the purpose of the contemplated action. (v) Where the civil consequences of the administrative action as in the instant case are grave and its effect is highly prejudicial to the rights and interests of the person affected and there is nothing in the language and scheme of the statute which unequivocally excludes a fair pre decisional hearing, and the post decisional hearing provided therein is not a real remedial hearing equitable to a full 551 right of appeal, the Court should be loath to infer a legislative intent to exclude even a minimal fair hearing at the pre decisional stage merely on ground of urgency. (Reference in this connection has been made to Wade 's Administrative Law, ibid, page 468 bottom.) Applying the proposition propounded by him to the facts of the instant case, Shri Nariman submits that there was ample time at the disposal of the Government to give a reasonably short notice to the Company to present its case. In this connection, it is pointed out that according to para 3 of the further affidavit filed by Shri Daulat Ram on behalf of the Union of India and other respondents, the Central Government had in its possession two documents, namely: (a) copy of the Survey Report on M/s. Swadeshi Cotton Mills Company Ltd., covering the period from May to September, 1977 prepared by the office of the Textile Commissioner, and (b) Annual Report (dated September 30, 1977) of the Company for the year ending March 31, 1971. In addition, the third circumstance mentioned in the affidavit of Shri Daulat Ram is, that by an order dated January 28, 1978, the Central Government appointed four Government Officials, including one from the office of the Textile Commissioner, to study the affairs of the Company and to make recommendation. This Official Group submitted its report on February 16, 1978. It is submitted that this evidence on the basis of which the impugned order was passed, was not disclosed to the appellant Company till May 1978, only after it had filed the writ petition in the High Court to challenge the impugned order. It is emphasised that if the Survey Report was assumed to contain something adverse to the appellants, there was time enough about six weeks between the submission of the Survey Report and the passing of the impugned order for giving a short, reasonable opportunity to the appellants to explain the adverse findings against them. It is urged that even if there was immediacy, situational modifications could be made to meet the requirement of fairness, by reducing the period of notice; that even the manner and form of such notice could be simplified to eliminate delay, that telephonic notice or short opportunity for furnishing their explanation to the Company might have satisfied the requirements of natural justice. Such an opportunity of hearing could have been given after the passing of a conditional tentative order and before its enforcement under Section 18AA. For the interregnum suitable interim action such as freezing the assets of the Company or restraining the Company from creating further encumbrances, etc. could be taken under Section 16. 552 Reference in this connection has been made to Keshav Mills case (ibid); Mohinder Singh Gill vs Election Commissioner of India; Maneka Gandhi vs Union of India Sukhdev Singh & Ors. vs Bhagatram Sardar Singh; A. K. Kraipak vs Union of India; Ridge vs Baldwin; Heatley vs Tasmanian Racing & Gaming Commission; Commissioner of Police vs Tanos; Secretary of State for Education & Science vs Metropolitan Borough of Tameside; Wiseman vs Borneman; Nawabkhan Abbaskhan vs State of Gujarat and State of Orissa vs Dr. Bina Pani Dei. As against this, Shri Soli Sorabji, learned Solicitor General appearing on behalf of respondent 1, contends that the presumption in favour of audi alteram partem rule stands impliedly displaced by the language, scheme, setting, and the purpose of the provision in Section 18AA. It is maintained that Section 18AA, on its plain terms, deals with situations where immediate preventive action is required. The paramount concern is to avoid serious problems which may be caused by fall in production. The purpose of an order under Section 18AA is not to condemn the owner but to protect the scheduled industry. The issue under Section 18AA is not solely between the Government and the management of the industrial under taking. The object of taking action under this Section is to protect other outside interests of the community at large and the workers. On these premises, it is urged, the context, the subject matter and the legislative history of Section 18AA negative the necessity of giving a prior hearing; that Section 18AA does not contemplate any interval between the making of an order thereunder and its enforcement, because it is designed to meet an emergent situation by immediate preventive action. Shri Sorabji submits that this rule of natural justice in a modified form has been incorporated in Section 18F which gives an opportunity of a post decisional hearing to the owner of the undertaking who, if he feels aggrieved, can, on his application, be heard to show that even the original order under Section 18AA was passed on invalid grounds and should be cancelled or rescinded. Thus, 553 Shri Sorabji does not go to the length of contending that the principles of natural justice have been fully displaced or completely excluded by Section 18AA. On the contrary, his stand is that on a true construction of Section 18AA read with Section 18F, the requirements of natural justice and fair play can be read into the statute only "in so far as conformance to such canons can reasonably and realistically be required of it", by the provision for a remedial hearing at a subsequent stage. Shri Sorabji further submits that since Section 18F does not specify any period of time within which the aggrieved party can seek the relief thereunder, the opportunity of full, effective and post decisional hearing has to be given within a reasonable time. It is stressed that under Section 18F, the Central Government exercises curial functions, and that Section confers on the aggrieved owner a right to apply to the Government to cancel the order of take over. On a true construction this Section casts an obligation on the Central Government to deal with and dispose of an application filed thereunder with reasonable expedition. Shri Sorabji further concedes that on the well settled principle of implied and ancillary powers, the right of hearing afforded by Section 18F carries with it the right to have inspection and copies of all the relevant books, documents, papers etc. and the Section obligates the Central Government to take all steps which are necessary for the effective hearing and disposal of an application under Section 18F. Shri Sorabji has in connection with his arguments cited these authorities: Mohinder Singh Gill vs Chief Election Commissioner (ibid); In re. K. (An Infant), Official Solicitor vs K. & Anr.; Collymore vs Attorney General; Union of India vs Col. J. N. Sinha; Judicial Review, 3rd Edn. by De Smith; Queen vs Davey; Gaiman vs National Association for Internal Revenue; John H. N. Fahey vs Paul Millionee; Schwartz 's Administrative Law '; Madhav Hayawadanrao Hoskot vs Maharashtra; Vijay Kumar Mundhra vs Union of India; Joseph Kuruvilla Vellukumel vs 554 Reserve Bank of India; Corporation of Calcutta vs Calcutta Tramways and Furnell vs Whapgarei High School. Before dealing with the contentions advanced on both sides, it will be useful to have a general idea of the concept of "natural justice" and the broad principles governing its application or exclusion in the construction or administration of statutes and the exercise of judicial or administrative powers by an authority or tribunal or constituted thereunder. Well then what is "natural justice" ? The phrase is not capable of a static and precise definition. It cannot be imprisoned in the straight jacket of a cast iron formula. Historically, "natural justice" has been used in a way "which implies the existence of moral principles of self evident and unarguable truth. In course of time, judges nurtured in the traditions of British jurisprudence, often invoked it in conjunction with a reference to "equity and good conscience". Legal experts of earlier generations did not draw any distinction between "natural justice" and "natural law". "Natural justice" was considered as "that part of natural law which relates to the administration of justice". Rules of natural justice are not embodied rules. Being means to an end and not an end in themselves, it is not possible to make an exhaustive catalogue of such rules. But two fundamental maxims of natural justice have now become deeply and indelibly ingrained in the common consciousness of man kind, as pre eminently necessary to ensure that the law is applied impartially, objectively and fairly. Described in the form of Latin tags these twin principles are :(i) audi alteram partem and (ii) nemo judex in re sua. For the purpose of the question posed above, we are primarily concerned with the first. This principle was well recognised even in the ancient world. Seneca, the philosopher, is said to have referred in Medea that it is unjust to reach a decision without a full hearing. In Maneka Gandhi 's case, Bhagwati, J. emphasised that audi alteram partem is a highly effective rule devised by the Courts to ensure that a statutory authority arrives at a just decision and it is calculated to act as a healthy check on the abuse or misuse of power. Hence its reach should not be narrowed and its applicability circumscribed. During the last two decades, the concept of natural justice has made great strides in the realm of administrative law. Before the epoch making decision of the House of Lords in Ridge vs Baldwin, it was 555 generally thought that the rules of natural justice apply only to judicial or quasi judicial proceedings; and for that purpose, whenever a breach of the rule of natural justice was alleged, Courts in England used to ascertain whether the impugned action was taken by the statutory authority or tribunal in the exercise of its administrative or quasi judicial power. In India also, this was the position before the decision, dated February 7, 1967, of this Court in Dr. Bina Pani Dei 's case (ibid); wherein it was held that even an administrative order or decision in matters involving civil consequences, has to be made consistently with the rules of natural justice. This supposed distinction between quasi judicial and administrative decisions, which was perceptibly mitigated in Bina Pani Dei 's case, was further rubbed out to a vanishing point in A. K. Kraipak vs Union of India (ibid), thus: "If the purpose of these rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative enquiries. Often times it is not easy to draw the line that demarcates administrative enquiries from quasi judicial enquiries. . . . Arriving at a just decision is the aim of both quasi judicial enquiries as well as administrative enquiries. An unjust decision in an administrative enquiry may have more far reaching effect than a decision in a quasi judicial enquiry. " In A. K. Kraipak 's case, the Court also quoted with approval the observations of Lord Parker from the Queens Bench decision in In re H. K. (An Infant) (ibid), which were to the effect, that good administration and an honest or bona fide decision require not merely impartiality or merely bringing one 's mind to bear on the problem, but acting fairly. Thus irrespective of whether the power conferred on a statutory body or tribunal is administrative or quasi judicial, a duty to act fairly, that is, in consonance with the fundamental principles of substantive justice is generally implied, because the presumption is that in a democratic polity wedded to the rule of law, the state or the Legislature does not intend that in the exercise of their statutory powers its functionaries should act unfairly or unjustly. In the language of V.R. Krishna Iyer, J. (vide Mohinder Singh Gill 's case, ibid.): "Subject to certain necessary limitations natural justice is now a brooding omnipresence although varying in its play. Its essence is good conscience in a given situation; nothing more but nothing less. " 556 The rules of natural justice can operate only in areas not covered by any law validly made. They can supplement the law but cannot supplant it (Per Hegde, J. in A. K. Kraipak, ibid). If a statutory provision either specifically or by inevitable implication excludes the application of the rules of natural justice, then the Court cannot ignore the mandate of the Legislature. Whether or not the application of the principles of natural justice in a given case has been excluded, wholly or in part, in the exercise of statutory power, depends upon the language and basic scheme of the provision conferring the power, the nature of the power, the purpose for which it is conferred and the effect of the exercise of that power. (See Union of India vs Col. J. N. Sinha, ibid.) The maxim audi alteram partem has many facets. Two of them are: (a) notice of the case to be met; and (b) opportunity to explain. This rule is universally respected and duty to afford a fair hearing in Lord Loreburn 's oft quoted language, is "a duty lying upon every one who decides something", in the exercise of legal power. The rule cannot be sacrificed at the altar of administrative convenience or celerity; for, "convenience and justice" as Lord Atkin felicitously put it "are often not on speaking terms". The next general aspect to be considered is: Are there any exceptions to the application of the principles of natural justice, particularly the audi alteram partem rule ? We have already noticed that the statute conferring the power, can by express language exclude its application. Such cases do not present any difficulty. However, difficulties arise when the statute conferring the power does not expressly exclude this rule but its exclusion is sought by implication due to the presence of certain factors: such as, urgency, where the obligation to give notice and opportunity to be heard would obstruct the taking of prompt action of a preventive or remedial nature. It is proposed to dilate a little on this aspect, because in the instant case before us, exclusion of this rule of fair hearing is sought by implication from the use of the word 'immediate ' in Section 18AA(1). Audi alteram partem rule may be disregarded in an emergent situation where immediate action brooks no delay to prevent some imminent danger or injury or hazard to paramount public interests. Thus, Section 133 of the Code of Criminal Procedure, empowers the magistrates specified therein to make an exparte conditional order in emergent cases, for removal of dangerous public nuisances. Action under Section 17, Land Acquisition Act, furnishes another such instance. Similarly, action on grounds of public safety public health may justify disregard of the rule of prior hearing. 557 Be that as it may, the fact remains that there is no consensus of judicial opinion on whether more urgency of a decision is a practical consideration which would uniformly justify non observance of even an abridged form of this principle of natural justice. In Durayappah vs Fernando. Lord Upjohn observed that "while urgency may rightly limit such opportunity timeously perhaps severely, there can never be a denial of that opportunity if the principles of natural justice are applicable. These observations of Lord Upjohn in Durayappah 's case were quoted with approval by this Court in Mohinder Singh Gill 's case. It is therefore, proposed to notice the same here. In Mohinder Singh Gill 's case, the appellant and the third respondent were candidates for election in a Parliamentary Constituency. The appellant alleged that when at the last hour of counting it appeared that he had all but won the election, at the instance of respondent, violence broke out and the Returning Officer was forced to postpone declaration of result. The Returning Officer reported the happening to the Chief Election Commissioner. An officer of the Election Commission who was an observer at the counting, reported about the incidents to the Commission. The appellant met the Chief Election Commissioner and requested him to declare the result. Eventually, the Chief Election Commissioner issued a notification which stated that taking all circumstances into consideration the Commission was satisfied that the poll had been vitiated, and therefore in exercise of the powers under Article 324 of the Constitution, the poll already held was cancelled and a repoll was being ordered in the constituency. The appellant contended that before making the impugned order, the Election Commission had not given him a full and fair hearing and all that he had was a vacuous meeting where nothing was disclosed. The Election Commission contended that a prior hearing has, in fact, been given to the appellant. In addition, on the question of application of the principles of natural justice, it was urged by the respondents that the tardy process of notice and hearing would thwart the conducting of elections with speed, that unless civil consequences ensued, hearing was not necessary and that the right accrues to a candidate only when he is declared elected. This contention, which had found favour with the High Court, was negatived by this Court. Delivering the judgment of the Court, V. R. Krishna Iyer, J., lucidly explained the meaning and scope of the concept of natural justice and its role in a case where there is a competition between the necessity of taking speedy 558 action and the duty to act fairly. It will be useful to extract those illuminating observations, in extenso: "Once we understand the soul of the rule as fairplay in action and it is so we must hold that it extends to both the fields. After all, administrative power in democratic set up is not allergic to fairness in action and discretionary, executive justice cannot degenerate into unilateral injustice. Nor is there ground to be frightened of delay, in convenience and expense, if 'natural justice gains access. For fairness itself is a flexible, pragmatic and relative concept, not a rigid, ritualistic or sophisticated abstraction. It is not a bull in a china shop, nor a bee in one 's bonnet. Its essence is good conscience in a given situation; nothing more but nothing less. The 'exceptions ' to the rules of natural justice are a misnomer or rather are but a shorthand form of expressing the idea that in those exclusionary cases nothing unfair can be inferred by not affording an opportunity to present or meet a case. " After referring to several decisions, including the observations of Lord Upjohn in Durayappah vs Fernando, the Court explained that mere invocation or existence of urgency does not exclude the duty of giving a fair hearing to the person affected: "It is untenable heresy, in our view, to lock law the victim or act behind his back by tempting invocation of urgency, unless the clearest case of public injury flowing from the least delay is self evident. Even in such cases a remedial hearing as soon as urgent action has been taken is the next best. Our objection is not to circumscription dictated by circumstances, but to annihilation as an easy escape from benignant, albeit inconvenient obligation. The procedural pre condition or fair hearing, however minimal, even post decisional, has relevance to administrative and judicial gentlemanliness." "We may not be taken to. say that situational modifications to notice and hearing are altogether impermissible. . the glory of the law is not that sweeping rules are laid down but that it tailors principles to practical needs. doctors remedies to suit the patient promotes not freezes Life 's processes, if we may mix metaphors. ". . . 559 The Court further emphasised the necessity of striking pragmatic balance between competing requirements of acting urgently and fairly, thus: "Should the cardinal principle of "hearing ' as condition for decision making be martyred for the cause of administrative, immediacy? We think not. The full panoply may not be there but a manageable minimum may make do." "In Wiseman vs Borneman there was a hint of the competitive claims of hurry and hearing. Lord Reid said: 'Even where the decision has to be reached by a body acting judicially, there must be a balance between the need for expedition and the need to give full opportunity to the defendant to see material against him (emphasis added). We agree that the elaborate and sophisticated methodology of a formalised hearing may be injurious to promptitude so essential in an election under way. Even so, natural justice is pragmatically flexible and is amenable to capsulation under the compulsive pressure of circumstances. To burke it altogether may not be a stroke of fairness except in very exceptional circumstances. " The Court further pointed out that the competing claims of hurry and hearing can be reconciled by making situational modifications in the audi alteram partem rule: "Lord Denning M.R., in Manward vs Boreman, summarised the observations of the Law Lords in this form. No doctrinaire approach is desirable but the Court must be anxious to salvage the cardinal rule to the extent permissible in a given case. After all, it is not obligatory that counsel should be allowed to appear 'nor is it compulsory that oral evidence should be adduced. Indeed, it is not even imperative that written statements should be called for disclosure of the prominent circumstances and asking for an immediate explanation orally or otherwise may, in many cases be sufficient compliance. It is even conceivable that an urgent meeting with the concerned parties summoned at an hour 's notice, or in a crisis, even a telephone call, may suffice. If all that is not possible as in the case of a fleeing person whose passport has to be impounded lest he should evade the course of justice or a dangerous nuisance needs immediate abate 560 ment, the action may be taken followed immediately by a hearing for the purpose of sustaining or setting aside the action to the extent feasible. It is quite on the cards that the Election Commission, if pressed by circumstances may give a short hearing. In any view, it is not easy to appreciate whether before further steps got under way he could have afforded an opportunity of hearing the parties, and revoke the earlier directions. All that we need emphasize is that the content of natural justice is a dependent variable, not an easy casualty." "Civil consequence ' undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and non pecuniary damages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence." (emphasis added) In Maneka Gandhi, it was laid down that where in an emergent situation, requiring immediate action, it is not practicable to give prior notice or opportunity to be heard, the preliminary action should be soon followed by a full remedial hearing. The High Court of Australia in Commissioner of Police vs Tanos, ibid, held that some urgency, or necessity of prompt action does not necessarily exclude natural justice because a true emergency situation can be properly dealt with by short measures. In Heatley vs Tasmanian Racing & Gaming Commission, ibid, the same High Court held that without the use of unmistakable language in a statute, one would not attribute to Parliament an intention to authorise the Commission to order a person not to deal in shares or attend a stock exchange without observing natural justice. In circumstances of likely immediate detriment to the public, it may be appropriate for the Commission to issue a warning off notice without notice or stated grounds but limited to a particular meeting, coupled with a notice that the Commission proposed to make a long term order on stated grounds and to give an earliest practicable opportunity to the person affected to appear before the Commission and show why the proposed long term order be not made. As pointed out in Mohinder Singh Gill vs Chief Election Commissioner and in Maneka Gandhi vs Union of India ibid, such cases where owing to the compulsion of the fact situation or the necessity of taking speedy action, no pre decisional hearing is given but the action is followed soon by a full post decisional hearing to the 561 person affected, do not, in reality, constitute an 'exception ' to the audi alteram partem rule. To call such cases an 'exception ' is a misnomer because they do not exclude 'fair play in action ', but adapt it to the urgency of the situation by balancing the competing claims of hurry and hearing. "The necessity for speed", writes Paul Jackson, "may justify immediate action, it will, however, normally allow for a hearing at a later stage. The possibility of such a hearing and the adequacy of any later remedy should the initial action prove to have been unjustified are considerations to be borne in mind when deciding whether the need for urgent action excludes a right to rely on natural justice. Moreover, however the need to act swiftly may modify or limit what natural justice requires. it must not be thought 'that because rough, swift or imperfect justice only is available that there ought to be no justice ' Pratt vs Wanganui Education Board. " Prof. de Smith the renowned author of 'Judicial Review ' (3nd Edn.) has at page 170, expressed his views on this aspect of the subject, thus: "Can the absence of a hearing before a decision is made be adequately compensated for by a hearing ex post facto ? A prior hearing may be better than a subsequent hearing, but a subsequent hearing is better than no hearing at all; and in some cases the courts have held that statutory provision for an administrative appeal or even full judicial review on the merits are sufficient to negative the existence of any implied duty to hear before the original decision is made. The approach may be acceptable where the original decision does not cause serious detriment to the person affected, or where there is also a paramount need for prompt action, or where it is impracticable to afford antecedent hearings. " In short, the general principle as distinguished from an absolute rule of uniform application seems to be that where a statute does not in terms, exclude this rule of prior hearing but contemplates a post decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre decisional stage. Conversely, if the statute conferring the power is silent with regard to the giving of a pre decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to con 562 strue such a statute as excluding the duty of affording even a minimal hearing, shown of all its formal trappings and dilatory features at the pre decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need or utmost promptitude. In short, this rule of fairplay "must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands". The court must make every effort to salvage this cardinal rule to the maximum extent possible, with situational modifications. But, to recall the words of Bhagvati, J., the core of it must, however, remain, namely, that the person affected must have reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise. Keeping the general principles stated above, let us now examine the scheme content, object and legislative history of the relevant provisions of the I.D.R. Act. The I.D.R. Act (Act 65 of 1951) came into force on May 8,1952 The Statement of Objects and Reasons published in the Gazette of India, dated March 26, 1949, says that its object is to provide the Central Government with the means of implementing their industrial policy which was announced in their Resolution, dated April 6, 1948, and approved by the Central Legislature. The Act brings under Central Control the development and regulation of a number of important industries specified in its First Schedule, the activities of which affect the country as a whole and the development of which must be governed by economic factors of all India import. The requirement with regard to registration, issue or revocation of licences of these specific industrial undertakings has been provided in Chapter II of the Act. Section 3(d) defines an 'industrial undertaking ' to mean "any undertaking pertaining to a scheduled industry carried on in one or more factories by any person or authority including Government": Clause (f) of the same section defines "owner" in relation to an undertaking. Section 15 gives power to the Central Government to cause investigation to be made into a scheduled industry or industrial undertaking. The Section reads as follows: "where the Central Government is of the opinion that (a) in respect of any scheduled industry or industrial undertaking or undertakings (i) there has been, or is likely to be a substantial fall in the volume of production in respect of any article or class 563 of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be; for which having regard to the economic conditions prevailing, there is no justification, or (ii) there has been, or is likely to be, a marked deterioration in the quality of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, which could have been or can be avoided; or (iii) there has been or is likely to be a rise in the price of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, for which there is no justification; or (iv) it is necessary to take any such action as is provided in this Chapter for the purpose of conserving any resources of national importance which are utilised in the industry or the industrial undertaking or undertakings, as the case may be; or (b) any industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest. the Central Government may make or cause to be made a full and complete investigation into the circumstances of the case by such person or body of persons as it may appoint for the purpose. " Section 16 empowers the Central Government to issue appropriate directions to the industrial undertaking concerned on completion of investigation under Section 15. Such directions may be for all or any of the following purposes: "(a) regulating the production of any article or class of articles by the industrial undertaking or undertakings and fixing the standards of production; (b) requiring the industrial undertaking or undertakings to take such steps as the Central Government may consider necessary, to stimulate the development of the industry to which the undertaking or undertakings relates or relate; 564 (c) prohibiting the industrial undertaking or undertakings from resorting to any act or practice which might reduce its or their production, capacity or economic value; (d) controlling the prices, or regulating the distribution of any article or class of articles which have been the subject matter of investigation. " Sub section (2) enables the Central Government to issue such directions to the industrial undertakings pending investigation. In the course, of the working of I.D.R. Act, certain practical difficulties came to light. One of them was that "Government cannot take over the management of any industrial undertaking, even in a situation calling for emergent action without first issuing directions to it and waiting to see whether or not they are obeyed." In order to remove such difficulties, the Amending Act 26 of 1953 inserted Chapter IIIA containing Sections 18A to 18F in the I.D.R. Act. Section 18A confers power on the Central Government to assume management or control of an industrial undertaking in certain cases. The material part of the Section reads as under: "(1) If the Central Government is of opinion that (a) an industrial undertaking to which directions have been issued in pursuance of Section 16 has failed to comply with such directions, or (b) an industrial undertaking in respect of which an investigation has been made under Section 15 (whether or not any directions have been issued to the undertaking in pursuance of Section 16), is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest; the Central Government may, by notified order, authorise any person or body of persons to take over the management of the whole or any part of the undertaking or to exercise in respect of the whole or any part of the undertaking such functions of control as may be specified in the order. (2) Any notified order issued under sub section (1) shall have effect for such period not exceeding five years as may be specified in the order. " Section 18B specifies the effect of notified order under Section 18A Sub section (1) of the section reads thus: 565 "On the issue of a notified order under Section 18A authorising the taking over of the management of an industrial undertaking (a) all persons in charge of the management including, persons holding office as managers or directors of the industrial undertaking immediately before the issue of the notified order, shall be deemed to have vacated their offices as such; (b) any contract of management between the industrial undertaking and any managing agent, or any director thereof holding office as such immediately before the issue of the notified order shall be deemed to have been terminated; (c) the managing agent, if any, appointed under Section 18A shall be deemed to have been duly appointed as the managing agent in pursuance of the Indian Companies Act, 1913 (7 of 1913), and the memorandum and articles of association of the industrial undertaking, and the provisions of the said Act and of the memorandum and articles shall, subject to the other provisions contained in this Act, apply accordingly, but no such managing agent shall be removed from office except with the previous consent of the Central Government; (d) the person or body of persons authorised under Section 18A to take over the management shall take all such steps as may be necessary to take into his or their custody or control all the property, effects and actionable claims to which the industrial undertaking is or appears to be entitled, and all the property and effects of the industrial undertaking, shall be deemed to be in the custody of the person or, as the case may be, the body of persons as from the date of the notified order; and (e) the persons, if any, authorised under Section 18A to take over the management of an industrial undertaking which is a company shall be for all purposes the directors of industrial undertaking duly constituted under the Indian Companies Act, 1913 (7 of 1913), and shall alone be entitled to exercise all the powers of the directors of the industrial undertaking, whether such powers are derived from the said Act or from the memorandum or articles of association of the industrial undertaking or from any other source." 566 Section 18D provides that a person whose office is lost under clause (a) or whose contract of management is terminated under clause (b) of Section 18B shall have no right to compensation for such loss or termination. Section 18F is material. It reads thus: "If at any time it appears to the Central Government on the application of the owner of the industrial undertaking or otherwise that the purpose of the order made under Section 18A has been fulfilled or that for any other reason it is not necessary that the order should remain in force, the Central Government may, by notified order, cancel such order and on the cancellation of any such order the management or the control, as the case may be of the industrial undertaking shall vest in the owner of the undertaking. " By the Constitution Fourth Amendment Act 1955, Chapter IIIA of the I.D.R. Act was included as Item 19 in the Ninth Schedule of the Constitution. Before we may come to Section 18AA, we may notice here the legislative policy with regard to Cotton Textile Industry, as adumbrated in the Cotton Textile Companies Management of Undertakings and Liquidation or Reconstruction Act, 1967 (Act XXIX of 1967). The Statement of Objects and Reasons for enacting this statute, inter alia, says: "The cotton textile industry provides one of the basic necessities of life and affords gainful employment to millions of people. Over the last few years, this vital industry has been passing through difficult times. Some mills have already to close down and the continuing economic operation of many others is beset with many difficulties. These difficulties have been aggravated in many cases by the heavy burden of past debts. The taking over the management of the mills for a limited time and then restoring them to original owners has not remedied the situation. Steps are therefore, necessary to bring about a degree of rationalisation of the financial and managerial structure of such units with a view to their rehabilitation, so that production and employment may not suffer. " Textile Industry is also among the industries, included in the First Schedule to the I.D.R. Act. 567 The Amendment Act 72 of 1971 inserted Section 18AA in the original I.D.R. Act. The material part of the Statement of Objects and Reasons for introducing this Bill of 1971 published in the Gazette of India Extraordinary, is as follows: "The industries included in the First Schedule . not only substantially contribute to the Gross National produce of the country, but also afford gainful employment to millions of people. For diverse reasons a number of industrial undertakings engaged in these industries have had to close down and the continuing economic operation of many others is beset with serious difficulties affecting industrial production and employment. During the period of take over Government has to invest public funds in such undertakings and it must be able to do so with a measure of confidence about the continued efficient management of the undertaking at the end of the period of take over. In order to ensure that at the end of the period of take over by Government, the industrial undertaking is not returned to the same hands which were responsible for its earlier misfortune, it has been provided in the Bill that in relation to an undertaking taken over by them, Government will have the power to move for (i) the sale of the undertaking at a reserve price or higher (Government purchasing it at the reserve price if no offer at or above the reserve price is received), action being taken simultaneously for the winding up of the company owning the industrial undertaking; or (ii) the reconstruction of the company owning the industrial undertaking with a view to giving the Government a controlling interest in it. With a view to ensuring speedy action by Government, it has been provided in the Bill that if the Government has evidence to the effect that the assets of the company owning the industrial undertaking are being frittered away or the undertaking has been closed for a period not less than three months and such closure is prejudicial to the concerned scheduled industry and that the financial condition of the company owning the industrial undertaking and the condition of the plant and machinery installed in the undertaking is such that it is possible to restart the undertaking and such restarting is in the public interest, Government may take over the management without an investigation." (emphasis added). 568 With the aforesaid Objects in view, Section 18AA was inserted by the Amendment Act No. 72 of 1971. The marginal heading of the Section is to the effect: "Power to take over industrial undertakings without investigation under certain circumstances". This marginal heading, it will be seen, accords with the Objects and Reasons extracted above. Section 18AA runs as under: "Without prejudice to any other provision of this Act, if, from the documentary or other evidence in its possession, the Central Government is satisfied, in relation to an industrial undertaking that (a) the persons incharge of such industrial undertaking have, by reckless investments or creation of encumbrances on the assets of the industrial undertaking, or by diversion of funds, brought about a situation which is likely to affect the production of articles manufactured or produced in the industrial undertaking, and that immediate action is necessary to prevent such a situation; or (b) it has been closed for a period of not less than three months (whether by reason of the voluntary winding up of the company owning the industrial undertaking or for any other reason) and such closure is prejudicial to the concerned scheduled industry and that the financial condition of the company owning the industrial undertaking and the condition of the plant and machinery of such undertaking are such that it is possible to re start the undertaking and such re starting is necessary in the interests of the general public, it may, by a notified order, authorise any person (hereinafter referred to as the 'authorised person ') to take over the management of the whole or any part of the industrial undertaking or to exercise in respect of the whole or any part of the undertaking such functions of control as may be specified in the order. (2) The provisions of sub section (2) of Section 18A shall, as far as may be, apply to a notified order made under sub section (1) as they apply to a notified order made under sub section (1) of Section 18A. (3) Nothing contained in sub section (1) and sub section (2) shall apply to an industrial undertaking owned by a company which is being wound up by or under the supervision of the Court. 569 (4) Where any notified order has been made under sub section (1), the person or body of persons having, for the time being, charge of the management or control of the industrial undertaking, whether by or under the orders of any court or any contract, instrument or otherwise, shall notwithstanding anything contained in such order, contract, instrument or other arrangement, forthwith make over the charge of management or control, as the case may be, of the industrial undertaking to the authorised person. (5) The provisions of Section 18 B to 18 E (bot inclusive) shall, as far as may be, apply to, or in relation to the industrial undertaking in respect of which a notified order has been made under sub section (1), as they apply to an industrial undertaking in relation to which a notified order has been issued under Section 18 A." A comparison of the provisions of Section 18A(1)(b) and Section 18AA(1)(a) would bring out two main points of distinction: First, action under Section 18A (1)(b) can be taken only after an investigation had been made under Section 15: while under Section 18AA(1)(a) or (b) action can be taken without such investigation. The language, scheme and setting of Section 18AA read in the light of the objects and Reasons for enacting this provision make this position clear beyond doubt. Second, before taking action under Section 18A(1) (b), the Central Government has to form an opinion on the basis of the investigation conducted under Section 15, in regard to the existence of the objective fact, namely: that the industrial undertaking is being managed in a manner highly detrimental to the Scheduled industry concerned or to public interest; while under Section 18AA(1) (a) the Government has to satisfy itself that the persons incharge of the undertaking have brought about a situation likely to cause fall in production, by committing any of the three kinds of acts specified in that provision. This shows that the preliminary objective fact attributable to the persons in charge of the management or affairs of the undertaking, on the basis of which action may be taken under Section 18A(1) (b), is of far wider amplitude than the circumstances, the existence of which is a sine qua non for taking action under Section 18AA(1). The phrase "highly detrimental to the scheduled industry or public interest" in Section 18A is capable of being construed to over a large variety of acts or things which may be considered wrong with the manner of running the industry by the management. In contrast with it, action under Section 18AA(1) (a) can be taken only if the Central Gov 570 ernment is satisfied with regard to the existence of the twin conditions specifically mentioned therein, on the basis of evidence in its possession. From an analysis of Section 18AA(1) (a), it will be clear that as a necessary preliminary to the exercise of the power thereunder, the Central Government must be satisfied "from documentary or other evidence in its possession" in regard to the co existence of two circumstances: (i) that the persons in charge of the industrial undertaking have by committing any of these acts, namely, reckless investments, or creation of incumbrances on the assets of industrial undertaking, or by diversion of funds, brought about a situation, which is likely to affect the production of the article manufactured or produced in the industrial undertaking, and (ii) that immediate action is necessary to prevent such a situation. Speaking for the High Court (majority), the learned Chief Justice (Deshpande, C.J.) has observed that only with regard to the fulfilment of condition (i) the satisfaction of the Government is required to be objectively reached on the basis of relevant evidence in its possession; while with regard to condition (ii), that is, the need for immediate action, it is purely subjective, and therefore, the satisfaction of the Government with regard to the immediacy of the situation is outside the scope of judicial review. Shri Sorabji has in his arguments, forcefully supported this opinion of the High Court. He maintains that the satisfaction of the Government with regard to the existence of the immediacy is not justiciable. Reliance has been placed on the following passage in the judgment of Channell, J. in Queen vs Davey & Ors.: "The general principle of law is that an order affecting his liberty or property cannot be made against any one without giving him an opportunity of being heard; the result is that, if general words used in a statute empowering the making of such an order as this, it must be made on notice to the party affected. There are, however, exceptions to this rule, which arise where it can be seen on the words of the statute that it was intended that the order should be made on an ex parte application, and the case in which it is easiest to see the propriety of the exception is where, looking 571 at the scope and object of the legislation, it was clearly intended that the parties putting the law in force should act promptly. Such a case is an order for the destruction of unsound meat, which clearly may be made ex parte, because it is desirable in the interest of the public health that it should be acted upon at once. The case of removing an infectious person, likely to spread abroad the infection, to an infectious hospital is obviously of the same character. " According to the learned Solicitor General, the power conferred on the Central Government is in the nature of an emergency power, that the necessity for taking immediate action is writ large in Section 18AA(1) (a) the provision being a legislative response to deal with an economically emergent situation fraught with national repercussions. The object of the exercise of this power is not to punish anyone but to take immediate preventive action in the public interest. On the other hand, Shri Nariman submits that the High Court was clearly in error in holding that the satisfaction of the Central Government with regard to the necessity of taking immediate action was not open to judicial review at all. It is emphasised that the very language of the provision shows that the necessity for taking immediate action is a question of fact, which should be apparent from the relevant evidence in the possession of the Government. We find merit in this contention. It cannot be laid down as a general proposition that whenever a statute confers a power on an administrative authority and makes the exercise of that power conditional on the formation of an opinion by that authority in regard to the existence of an immediacy, its opinion in regard to that preliminary fact is not open to judicial scrutiny at all. While it may be conceded that an element of subjectivity is always involved in the formation of such an opinion, but as was pointed out by this Court in Bariam Chemicals (ibid), the existence of circumstances from which the inferences constituting the opinion, as the sine qua non for action are to be drawn, must be demonstrable, and the existence of such "circumstances", if questioned, must be proved at least prima facie. Section 18AA(1)(a), in terms, requires that the satisfaction of the Government in regard to the existence of the circumstances or conditions precedent set out above, including the necessity of taking immediate action, must be based on evidence in the possession of the Government. If the satisfaction of the Government in regard to the existence of any of the conditions, (i) and (ii), is based on no evidence, or on irrelevant evidence or on an extraneous consideration, 572 it will vitiate the order of 'take over ', and the Court will be justified in quashing such an illegal order on judicial review in appropriate proceedings. Even where the statute conferring the discretionary power does not, in terms, regulate or hedge around the formation of the opinion by the statutory authority in regard to the existence of preliminary jurisdictional facts with express checks, the authority has to form that opinion reasonably like a reasonable person. While spelling out by a construction of Section 18AA(1)(a) the proposition that the opinion or satisfaction of the Government in regard to the necessity of taking immediate action could not be the subject of judicial review, the High Court (majority) relied on the analogy of Section 17 of the Land Acquisition Act, under which, according to them, the Government 's opinion in regard to the existence of the urgency is not justiciable. This analogy holds good only upto a point. Just as under Section 18AA of the I.D.R. Act, in case of a genuine 'immediacy ' or imperative necessity of taking immediate action to prevent fall in production and consequent risk of imminent injury paramount public interest, an order of 'take over ' can be passed without prior, time consuming investigation under Section 15 of the Act, under Section 17(1) and (4) of the Land Acquisition Act, also, the preliminary inquiry under Section 5A can be dispensed with in case of an urgency. It is true that the grounds on which the Government 's opinion as to the existence of the urgency can be challenged are not unlimited, and the power conferred on the Government under Section 17(4) of that Act has been formulated in subjective term; nevertheless, in cases, where an issue is raised, that the Government 's opinion as to urgency has been formed in a manifestly arbitrary or perverse fashion without regard to patent, actual and undeniable facts, or that such opinion has been arrived at on the basis of irrelevant considerations or no material at all, or on materials so tenuous, flimsy, slender or dubious that no reasonable man could reasonably reach that conclusion, the Court is entitled to examine the validity of the formation of that opinion by the Government in the context and to the extent of that issue. In Narayan Govind Gavate vs State of Maharashtra & Ors. this Court held that while exercising the power under Section 17(4) of the Land Acquisition Act, the mind of the officer or authority concerned has to be applied to the question whether there is an urgency of such a nature that even the summary proceedings under Section 5A of the Act should be eliminated. It is not just the existence of an 573 urgency but the need to dispense with an inquiry under Section 5A of the Act which has to be considered. If the circumstances on the basis of which the Government formed its opinion with regard to the existence of the urgency and the other conditions precedent, recited in the notification, are deficient or defective, the Court may look beyond it. At that stage, Section 106, Evidence Act can be invoked by the party assailing the notification and if the Government or the authority concerned does not disclose such facts or circumstances especially within its knowledge, without even disclosing a sufficient reason for their abstention from disclosure, they have to take the consequences which flow from the non production of the best evidence which could be produced on behalf of the State if its stand was correct. Again, in Dora Phalauli vs State of Punjab & Ors., this Court held that where the purported order does not recite the satisfaction of the Government with regard to the existence of urgency, nor the fact of the land being waste or arable land, the order was liable to be struck down and the mere direction, therein, to the Collector to take action on ground of urgency was not a legal and complete fulfilment of the requirement of the law. Recently, in State of Punjab vs Gurdial Singh, V. R. Krishna Iyer, J., speaking for the Court, made these apposite observations: "It is fundamental that compulsory taking of a man 's property is a serious matter and the smaller the man the more serious the matter. Hearing him before depriving him is both reasonable and preemptive of arbitrariness, and denial of this administrative fairness is constitutional anathema except for good reasons. Save in real urgency where public interest does not brook even the minimum time needed to give a hearing, land acquisition authorities should not, having regard to Articles 14 (and 19), burke an enquiry under Section 17 of the Act. " From these decisions, it is abundantly clear that even under Section 17 of the Land Acquisition Act, the satisfaction or opinion of Government/authority in regard to the urgency of taking action thereunder, is not altogether immune from judicial scrutiny. For the reasons already stated, it is not possible to subscribe to the proposition propounded by the High Court that the satisfaction of the Central Government in regard to condition (ii), i.e. the exis 574 tence of 'immediacy ', though subjective, is not open to judicial review at all. From a plain reading of Section 18AA, it is clear that it does not expressly in unmistakable and unequivocal terms exclude the application of the audi alteram partem rule at the pre decisional stage. The question, therefore, is narrowed down to the issue, whether the phrase "that immediate action is necessary" excludes absolutely, by inevitable implication, the application of this cardinal canon of fairplay in all cases where Section 18AA(1)(a) may be invoked. In our opinion, for reasons that follow, the, answer to this question must be in the negative. Firstly, as rightly pointed out by Shri Nariman, the expression "immediate action" in the said phrase, is to be construed in the light of the marginal heading of the Section, its context and the Objects and Reason for enacting this provision. Thus construed, the expression only means "without prior investigation" under Section 15. Dispensing with the requirement of such prior investigation does not necessarily indicate an intention to exclude the application of the fundamental principles of natural justice or the duty to act fairly by affording to the owner of the undertaking likely to be affected, at the pre decisional stage, wherever practicable, a short measure fair hearing adjusted, attuned and tailored to the exigency of the situation. At this stage, it is necessary to examine two decisions of this Court, viz., Ambalal M. Shah vs Hathi Singh Manufacturing Co Ltd.; and Keshav Mills Co. Ltd. vs Union of India (ibid), because according to the High Court (as per Deshpande, C.J., who wrote the leading opinion) these two decisions which are binding on the High Court conclusively show that: "The only prior hearing consisted of the investigation under Section 15 read with Rule 5 before action under Section 18A is taken. The very object of Section 18AA is to enable action to be taken thereunder without being preceded by the investigation under Section 15. On the authority of the two Supreme Court decisions in Ambalal M. Shah and Keshav Mills that the only hearing prior to action under Section 18A was the investigation under Section 15, it would follow that action under Section 18AA is to be taken without the investigation under Section 15 and, therefore, without a prior hearing. " 575 Shri Nariman maintains that the High Court has not correctly construed these decisions. According to the learned counsel, the corollary deduced by the High Court, viz., that exclusion of the investigation under Section 15 includes exclusion of the audi alteram partem rule at the pre takeover stage, is just the contrary of what was laid down by this Court in Keshav Mills in which Ambalal 's case was also noticed. Indeed, Shri Nariman strongly relies on this decision in support of his argument that if the application of this rule of natural justice at the pre decisional stage is not excluded even where a full investigation has been made, there is stronger reason to hold that it is to be observed in a case where there has been no investigation at all. We will first notice the case of Keshav Mills because that is a later decision in which Ambalal 's case was referred to. In that case, the validity of an order passed by the Central Government under Section 18A was challenged. By that impugned order the Gujarat State Textile Corporation Ltd. (hereinafter referred to as the Corporation) was appointed as authorised controller of the Company for a period of five years. The Company was the owner of a cotton textile mill. Till 1965, the Company made flourishing business. After the year 1964 65, the Company fell on evil days and the textile mill of the Company was one of the 12 sick textile mills in Gujarat, which had to be closed down during 1966 and 1968. On May 31, 1969, the Central Government passed an order appointing a Committee for investigation into the affairs of the Company under Section 15 of the I.D.R. Act. After completing the inquiry, the Investigating Committee submitted its report to the Government who thereafter on November 24, 1970, passed the impugned order under Section 18A authorising the Corporation to take over the management of the Company for a period of five years. The Company challenged the order of 'take over ' by a writ petition in the High Court of Delhi. The High Court dismissed the petition. The main contention of the Company before the High Court was that the Government was not competent to proceed under Section 18A against the Company without supplying before hand, a copy of the report of the Investigating Committee to the Company. It was further contended that the Government should also have given a hearing to the Company before finally deciding upon take over under Section 18A. This contention was pressed on behalf of the Company in spite of the fact that an opportunity had been given by the Investigating Committee to the management and the employees of the Company for adducing evidence and for making representation before the completion of the investigation. On the contentions raised by the Company and 576 resisted by the respondent, in that case, the Court formulated the following questions: (1) Is it necessary to observe the rules of natural justice before enforcing a decision under Section 18A of the Act? (2) What are the rules of natural justice in such a case? (3)(a) In the present case, have the rules to be observed once during the investigation under Section 15 and then again, after the investigation is completed and action on the report of the Investigating Committee taken under Section 18A? (b) Was it necessary to furnish a copy of the Investigating Committee 's Report before passing an order of take over? Mukherjea, J. speaking for the Court, answered these questions, thus: (1) "The first of these questions does not present any difficulty. It is true that the order of the Government of India that has been challenged by the appellants was a purely executive order embodying on administration decision. Even so, the question of natural justice does arise in this case. It is too late now to contend that the principles of natural justice need not apply to administrative order or proceedings; in the language of Lord Denning M.R. in Regina vs Gaming Board, exparte Beniam "that heresy was scotched in Ridge vs Baldwin" (2) "The second question, however, as to what are the principles of natural justice that should regulate an administrative act or order is a much more difficult one to answer We do not think it either feasible or even desirable to lay down any fixed or rigorous yard stick in this manner. The concept of natural justice cannot be put into a straight jacket. It is futile, therefore, to look for definitions or standards of natural justice from various decisions and then try to apply them to the facts of any given case. The only essential point that has to be kept in mind in all cases is that the person concerned should have a reasonable opportunity of presenting his case and that the administrative authority concerned should act fairly, impartially and reasonably. Where administrative officers are concerned, the duty is not so much to act judicially as to act fairly. See, for instance, the observations of Lord Parker in In re 577 H.K. (an infant). It only means that such measure of natural justice should be applied as was described by Lord Reid in Ridge vs Baldwin as insusceptible of exact definition but what a reasonable man would regard as a fair procedure in particular circumstances. However, even the application of the concept of fairplay requires real flexibility. Everything will depend on the actual facts and circumstances of a case." (3) (a) "For answering that question we shall keep in mind . and examine the nature and scope of the inquiry that had been carried out by the Investigating Committee set up by the Government, the scope and purpose of the Act and rules under which the Investigating Committee was supposed to act, the matter that was being investigated by the Committee and finally the opportunity that was afforded to the appellants for presenting their case before the Investigating Committee." (After noticing the object, purpose and content of the relevant provisions, the judgment proceeded): "In fact, it appears from a letter addressed by appellant No. 2 Navinchandra Chandulal Parikh on behalf of the Company to Shri H. K. Bansal, Deputy Secretary, Ministry of Foreign Trade and Supply on 12th September, 1970 that the appellants had come to know that the Government of India was in fact considering the question of appointing an authorised controller under Section 18A of the Act in respect of the appellants undertaking. In that letter a detailed account of the facts and circumstances under which the mill had to be closed down was given. There is also an account of the efforts made by the Company 's Directors to restore the mill. There is no attempt to minimise the financial difficulties of the Company in that letter . The letter specifically mentions the company 's application to the Gujarat State Textile Corporation Ltd., for financial help. the Corporation ultimately failed to come to the succour of the Company. Parikh requested Government not to appoint an authorised controller and further prayed that the Government of India should ask the State Government and the Gujarat State Textile Corporation Ltd., to give a financial guarantee to the Company. " "Only a few days before this letter had been addressed, Parikh, it appears, had an interview with the Minister of 578 Foreign Trade on 26th August, 1970, when the Minister gave him, as a special case, four weeks ' time with effect from 26th August, 1970 to obtain the necessary financial guarantee from the State or the Gujarat State Textile Corporation without which the Company had expressed its inability to reopen and run the mill. In a letter of 22 September, 1970, Bansal informed Parikh in clear language that if the Company failed to obtain the necessary guarantee by 26 September 1970, Government was proceeding to take action under the Act. It is obvious, therefore, that the appellants were aware all long that as a result of the report of the Investigating Committee the Company 's undertaking was going to be taken up by Government, Parikh had not only made written representations but had also seen the Minister of Foreign Trade and Supply. He had requested the Minister not to take over the undertaking and, on the contrary, to lend his good offices so that the Company could get financial support from the Gujarat State Textile Corporation or from the Gujarat State Government." (emphasis added) "All these circumstances leave in no manner of doubt that the Company had full opportunities to make all possible representations before the Government against the proposed take over of its mill under Section 18A. In this connection, it is significant that even after the writ petition had been filed before the Delhi High Court the Government of India had given the appellants at their own request one month 's time to obtain the necessary funds to commence the working of the mill. Even then, they failed to do so . ." "There are at least five features of the case which make it impossible for us to give any weight to the appellants complaint that the rules of natural justice have not been observed. First on their own showing they were perfectly aware of the grounds on which Government had passed the order under Section 18A of the Act. Secondly, they are not in a position to deny (a) that the Company has sustained such heavy losses that its mill had to be closed down indefinitely, and (b) that there was not only loss of production of textiles but at least 1200 persons had been thrown out of employment. Thirdly, it is transparently clear from the affidavits that the Company was not in a position 579 to raise the resources to recommence the working of the mill. Fourthly, the appellants were given a full hearing at the time of the investigation held by the Investigating Committee and were also given opportunities to adduce evidence. Finally, even after the Investigating Committee had submitted its report, the appellants were in constant communion with the Government and were in fact negotiating with Government for such help as might enable them to reopen the mill and to avoid a take over of their undertaking by the Government. Having regard to these features it is impossible for us to accept the contention that the appellants did not get any reasonable opportunity to make out a case against the take over of their undertaking or that the Government has not treated the appellants fairly. There is not the slightest justification in this case for the complaint that there has been any denial of natural justice." "In our opinion, since the appellants have received a fair treatment and also all reasonable opportunities to make out their own case before Government they cannot be allowed to make any grievance of the fact that they were not given a formal notice calling upon them to show cause why their undertaking should not be taken over or that they had not been furnished with a copy of the report. They had made all the representations that they could possibly have made against the proposed take over. By no stretch of imagination, can it be said that the order for take over took them by surprise. In fact, Government gave them ample opportunity to reopen and run the mill on their own if they wanted to avoid the take over. The blunt fact is that the appellants just did not have the necessary resources to do so. Insistence on formal hearing in such circumstances is nothing but insistence on empty formality." (emphasis added) (3) (b) "In our opinion it is not possible to lay down any general principle on the question as to whether the report of an investigating body or an inspector appointed by an administrative authority should be made available to the persons concerned in any given case before the authority takes a decision upon that report. The answer to this question also must always depend on the facts and circumstances of the case. It is not at all unlikely that there may be certain cases where unless the report is 580 given the party concerned cannot make any effective representation about the action that Government takes or proposes to take on the basis of that report. Whether the report should be furnished or not must therefore, depend in every individual case on the merits of that case. We have no doubt that in the instant case, non disclosure of the report of the Investigating Committee has not caused any prejudice whatsoever to the appellants. (emphasis added) It will be seen from what has been extracted above that in Keshav Mills case, this Court did not lay it down as an invariable rule that where a full investigation after 'notice to the owner of the industrial undertaking has been held under Section 15, the owner is never entitled on grounds of natural justice, to a copy of the investigation report and to an opportunity of making a representation about the action that the Government proposes to take on the basis of that report. On the contrary, it was clearly said that this rule of natural justice will apply at that stage in cases "where unless the report is given the party concerned cannot make any effective representation about the action that Government takes or proposes to take on the basis of that report. " It was held that the application or non application of this rule depends on the facts and circumstances of the particular case. In the facts of that case, it was found that the non disclosure of the investigation report had not caused any prejudice whatever because the Company were "aware all along that as a result of the report of the Investigating Committee the Company 's undertaking was going to be taken (over) by Government", and had full opportunities, to make all possible representations before the Government against the proposed take over of the Mill. Shri Sorabji submitted that the observations made by this Court in Keshav Mills case, to the effect, that in certain cases even at the post investigation stage before making an order of take over under Section 18A, it may be necessary to give another opportunity to the affected owner of the undertaking to make a representation, appear to be erroneous. The argument is that the Legislature has provided in Sections 15 and 18A of the Act and Rule 5 framed thereunder, its measure of this principle of natural justice and the stage at which it has to be observed. The High Court, therefore, was not right in engrafting any further application of the rule of natural justice at the post investigation stage. According to the learned Solicitor General for the decision of the case, it was not necessary to go beyond the 581 ratio of Shri Ambalal M. Shah & Anr. vs Hathi Singh Manufacturing Co. Ltd which was followed in Keshav Mills case. In our opinion, the observations of this Court in Keshav Mills in regard to the application of this rule of natural justice at the post investigation stage cannot be called obiter dicta. There is nothing in those observations, which can be said to be inconsistent with the ratio decidendi of Ambalal 's case. The main ground on which the order of take over under Section 18A was challenged in Ambalal 's case was that on a proper construction of Section 18A, the Central Government had the right to make the order under that Section on the ground that the Company was being managed in a manner highly detrimental to public interest, only where the investigation made under Section 15 was initiated on the basis of the opinion as mentioned in Section 15(b), whereas in the present case (i.e. Ambalal 's case), the investigation ordered by the Central Government was initiated on the formation of an opinion as mentioned in clause (a) (i) of Section 15. It was urged that in fact, the Committee appointed to investigate had not directed its investigation into the question whether the industrial undertaking was being managed in the manner mentioned above. The High Court came to the conclusion that on a correct construction of Section 18 A(1) (b) it was necessary before any order could be made thereunder that the investigation should have been initiated on the basis of the opinion mentioned in Section 15(b) of the Act. It also accepted the petitioner 's contention that no investigation had, in fact, been held into the question whether the undertaking was being managed in a manner highly detrimental to public interest. On appeal by special leave, this Court reversed the decision of the High Court, and held that the words used by the Legislature in Section 18A (1) (b) "in respect of which an investigation has been made under Section 15" could not be cut down by the restricting phrase "based on an opinion that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest"; that Section 18A (1) (b) empowers the Central Government to authorise a person to take over the management of an industrial undertaking if the one condition of an investigation made under Section 15 had been fulfilled irrespective of on what opinion that investigation was initiated and the further condition is fulfilled that the Central Government was of opinion that such undertaking was being managed in a manner highly detrimental to the scheduled industry concerned or to public interest. In this Court, it 582 was urged on behalf of the Company that absurd results would follow if the words "investigation has been made under Section 15" are held to include investigation based on any of the opinions mentioned in Section 15(a). Asked to mention what the absurd results would be, the counsel could only say that an order under Section 18A (1) (b) would be unfair and contrary to natural justice in such cases, as the owner of an industrial undertaking would have no notice that the quality of management was being investigated. The Court found no basis for this assumption because in its opinion, the management could not but be aware that investigation would be directed in regard to the quality of management, also. It is to be noted that the question of natural justice was casually and halfheartedly raised in a different context as a last resort. It was negatived because in the facts and circumstances of that case, the Company was fully aware that the quality of the management was also being inquired into and it had full opportunity to meet the allegations against it during investigation. The second reason which is more or less a facet of the first for holding that the mere use of the word "immediate" in the phrase "immediate action is necessary", does not necessarily and absolutely exclude the prior application of the audi alteram partem rule, is that immediacy or urgency requiring swift action is a situational fact having a direct nexus with the likelihood of adverse effect on fall in production. And, such likelihood and the urgency of action to prevent it, may vary greatly in degree. The words "likely to affect production" used in Section 18AA (1) (a) are flexible enough to comprehend a wide spectrum of situations ranging from the one where the likelihood of the happening of the apprehended event is imminent to that where it may be reasonably anticipated to happen sometime in the near future. Cases of extreme urgency where action under Section 18AA(1) (a) to prevent fall in production and consequent injury to public interest, brooks absolutely no delay, would be rare. In most cases, where the urgency is not so extreme, it is practicable to adjust and strike a balance between the competing claims of hurry and hearing. The audi alteram partem rule, as already pointed out, is a very flexible, malleable and adaptable concept of natural justice. To adjust and harmonise the need for speed and obligation to act fairly, it can be modified and the measure of its application cut short in reasonable proportion to the exigencies of the situation. Thus, in the ultimate analysis, the question, (as to what extent and in what measure) this rule of fair hearing will apply at the pre decisional stage will depend upon the degree of urgency, if any, evident from the facts and circumstances of the particular case. 583 In the instant case, so far as Kanpur Unit is concerned, it was lying closed for more than three months before the passing of the impugned order. There was no `immediacy ' in relation to that unit, which could absolve the Government from the obligation of complying fully with the audi alteram partem rule at the pre decisional or pre takeover stage. As regards the other five units of the Company, the question whether on the basis of the evidential matter before the Government at the time of making the impugned order, any reasonable person could reasonably form an opinion about a likelihood of fall in production and the urgency of taking immediate action, will be discussed later. For the purpose of the question under consideration we shall assume that there was a likelihood of fall in production. Even so, the undisputed facts and figures of production of 2 or 3 years preceding the take over, relating to these units, show that on the average, production in these units has remained fairly constant. Rather, in some of these units, an upward trend in production was discernible. Be that as it may, the likelihood of fall in production or adverse effect on production in these five units, could not, by any stretch of prognostication or feat of imagination, be said to be imminent, or so urgent that it could not permit the giving of even a minimal but real hearing to the Company before taking over these units. There was an interval of about six weeks between the Official Group 's Report, dated February 16, 1978 and the passing of the impugned order dated April 13, 1978. There was thus sufficient time available to the Government to serve a copy of that report on the appellant Company and to give them a short measure opportunity to submit their reply and representation regarding the findings and recommendations of the Group Officers and the proposed action under Section 18AA(1). The third reason for our forbearance to imply the exclusion of the audi alteram partem rule from the language of Section 18AA(1) (a) is, that although the power thereunder is of a drastic nature and the consequences of a take over are far reaching and its effect on the rights and interests of the owner of the undertaking is grave and deprivatory, yet the Act does not make any provision giving a full right of a remedial hearing equitable to a full right of appeal, at the post decisional stage. The High Court seems to be of the view that Section 18F gives a right of full post decisional remedial hearing to the aggrieved party. Shri Soli Sorabji also elaborately supported that view of the High Court. In the alternative, the learned counsel has committed himself on behalf of his client, to the position, that the Central Government will if required, give the Company a full and fair hearing on merits, 584 including an opportunity to show that the impugned order was not made on adequate or valid grounds. Shri Nariman on the other hand contends and we think rightly that the so called right of a post decisional hearing available to the aggrieved owner of the undertaking under Section 18F is illusory as in its operation and effect the power of review, if any, conferred thereunder, is prospective, and not retro active, being strictly restricted to and dependent upon the post takeover circumstances. By virtue of sub section (2) of Section 18AA, the reference to Section 18A in Section 18F will be construed as a reference to Section 18AA, also. The power of cancellation under Section 18F can be exercised only on any of these grounds : (i) "that the purpose of the order made under Section 18A has been fulfilled", or (ii) "that for any other reason it is not necessary that the order should remain in force". These `grounds ' and the language in which they are couched is clear enough to show that the cancellation contemplated thereunder cannot have the effect of annulling, rescinding or obliterating the order of take over with retro active force; it can have only a prospective effect. Section 18F embodies a principle analogous to that in Section 21 of the General Clauses Act. The first `ground ' in Section 18F for the exercise of the power, obviously does not cover a review of the merits or circumstances preceding and existing at the date of passing the order of `take over ' under Section 18AA(1). The words "for any other reason" if read in isolation, no doubt, appear to be of wide amplitude. But their ambit has been greatly cut down and circumscribed by the contextual phrase "no longer necessary that it should remain in force". Construed in this context, the expression "for any other reason" cannot include a ground that the very order of take over was invalid or void ab initio. Thus, the post decisional hearing available to the aggrieved owner of the undertaking is not an appropriate substitute for a fair hearing at the pre decisional stage. The Act does not provide any adequate remedial hearing or right of redress to the aggrieved party even where his under taking has been arbitrarily taken over on insufficient grounds. Rather, the plight of the aggrieved owner is accentuated by the provision in 18D which disentitles him and other persons whose officers are lost or whose contract of management is terminated as a result of the `take over ', from claiming any compensation whatever for such loss or termination. Before we conclude the discussion on this point, we may notice one more argument that has been advanced on behalf of the respondents. It is argued that this was a case where a prior hearing to the Company could only be a useless formality because the impugned action has been 585 taken on the basis of evidence, consisting of the Balance sheet, account books and other records of the Company itself, the correctness of which could not have been disputed by the Company. On these premises, it is submitted that non observance of the rule of audi altrem partem would not prejudice the Company, and thus make no difference. The contention does not appear to be well founded. Firstly, this documentary evidence, at best, shows that the Company was in debt and the assets of some of its `units ' had been hypothecated or mortgaged as security for those debts. Given an opportunity the Company might have explained that as a result of this indebtedness there was no likelihood of fall in production, which is one of the essential conditions in regard to which the Government must be satisfied before taking action under Section 18(1)(a). Secondly, what the rule of natural justice required in the circumstances of this case, was not only that the Company should have been given an opportunity to explain the evidence against it, but also an opportunity to be informed of the proposed action of take over and to represent why it be not taken. In the renowned case, Ridge vs Baldwin & Ors. (ibid), it was contended before the House of Lords that since the appellant police officer had convicted himself out of his own mouth, a prior hearing to him by the Watch Committee could not have made any difference; that on the undeniable facts of that case, no reasonable body of men could have reinstated the appellant. This contention was rejected by the House of Lords for the reason that if the Watch Committee had given the police officer a prior hearing they would not have acted wrongly or unreasonably if they had in the exercise of their discretion decided to take a more lenient course than the one they had adopted. A similar argument was advanced in section L. Kapoor vs Jagmohan & Ors to which decision two of us (Sarkaria and Chinnappa Reddy, JJ.) were parties. In negativing this argument, this Court, inter alia, quoted with approval the classic passage, reproduced below, from the judgment of Megarry, J. in John vs Rees & Ors. "As everybody who has anything to do with the law well knows, the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which, in the event, were completely answered; of inexplicable conduct which was fully explained; of fixed and unalterable determinations that, by discussion, suffered a change. Nor are those with any knowledge of human 586 nature who pause to think for a moment likely to under estimate the feelings of resentment of those who find that a decision against them has been made without their being afforded any opportunity to influence the course of events. " In General Medical Council vs Spackman, Lord Wright condemned the oft adopted attitude by tribunals to refuse relief on the ground that a fair hearing could have made no difference to the result. Wade in his Administrative Law, 4th Edn., page 454, has pointed out that "in principle it is vital that the procedure and the merits should be kept strictly apart, since otherwise the merits may be prejudged unfairly". In Maxwell vs Department of Trade & Industry, Lawton L.J. expressed in the same strain that "doing what is right may still result in unfairness if it is done in the wrong way. " This view is founded on the cordinal canon that justice must not only be done but also manifestly be seen to be done. Observance of this fundamental principle is necessary if the courts and the tribunals and the administrative bodies are to command public confidence in the settlement of disputes or in taking quasi judicial or administrative decisions affecting civil rights or legitimate interests of the citizens. The same proposition was propounded in R. V. Thames Magistrates ' Court ex p. Polemis, by Lord Widgery C.J. at page 1375; and by the American Supreme Court in Margarita Fuentes et al., vs Tobert L. Shevin. In concluding the discussion in regard to this aspect of the matter, we can do no better than reiterate what was said by one of us (Chinnappa Reddy, J.) in section L. Kapoor vs Jagmohan (ibid) : "In our view the principles of natural justice know of no exclusionary rule dependent on whether it would have made any difference if natural justice had been observed. The non observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary. It ill comes from a person who has denied justice that the person who has been denied justice is not prejudiced. " 587 We, therefore, over rule this last contention. In sum, for all the reasons aforesaid, we are of the view that it is not reasonably possible to construe Section 18AA(1) as universally excluding, either expressly or by inevitable intendment, the application of the audi alteram partem rule of natural justice at the pre takeover stage, regardless of the facts and circumstances of the particular case. In the circumstances of the instant case, in order to ensure fairplay in action it was imperative for the Government to comply substantially with this fundamental rule of prior hearing before passing the impugned order. We therefore, accept the two fold proposition posed and propounded by Shri Nariman. The further question to be considered is : What is the effect of the non observance of this fundamental principle of fairplay? Does the non observance of the audi alteram partem rule, which in the quest of justice under the rule of law, has been considered universally and most spontaneously acceptable principle, render an administrative decision having civil consequences, void or voidable ? In England, the outfall from the watershed decision, Ridge vs Baldwin brought with it a rash of conflicting opinion on this point. The majority of the House of Lords in Ridge vs Baldwin held that the non observance of this principle, had rendered the dismissal of the Chief Constable void. The rationale of the majority view is that where there is a duty to act fairly, just like the duty to act reasonably, it has to be enforced as an implied statutory requirement, so that failure to observe it means that the administrative act or decision was outside the statutory power, unjustified by law, and therefore ultra vires and void. (See Wade 's Administrative Law, ibid, page 448). In India, this Court has consistently taken the view that a quasi judicial or administrative decision rendered in violation of the audi alteram partem rule, wherever it can be read as an implied requirement of the law, is null and void. (e.g. Maneka Gandhi 's case, ibid, and section L. Kapoor vs Jagmohan, ibid). In the facts and circumstances of the instant case, there has been a non compliance with such implied requirement of the audi alteram partem rule of natural justice at the pre decisional stage. The impugned order therefore, could be struck down as invalid on that score alone. But we refrain from doing so, because the learned Solicitor General in all fairness, has both orally and in his written submissions dated August 28, 1979, committed himself to the position that under Section 18F, the Central Government in exercise of its curial functions, is bound to give the affected owner of the undertaking taken over, a "full and effective hearing on all aspects touching the validity and/or correctness of the order and/or action of take 588 over", within a reasonable time after the take over. The learned Solicitor has assured the Court that such a hearing will be afforded to the appellant Company if it approaches the Central Government for cancellation of the impugned order. It is pointed out that this was the conceded position in the High Court that the aggrieved owner of the undertaking had a right to such a hearing. In view of this commitment/or concession fairly made by the learned Solicitor General, we refrain from quashing the impugned order, and allowing Civil Appeal 1629 of 1979 send the case back to the Central Government with the direction that it shall, within a reasonable time, preferably within three months from today, give a full, fair and effective hearing to the aggrieved owner of the undertaking, i.e., the Company, on all aspects of the matter, including those touching the validity and/or correctness of the impugned order and/or action of take over and then after a review of all the relevant materials and circumstances including those obtaining on the date of the impugned order, shall take such fresh decision, and/or such remedial action as may be necessary, just, proper and in accordance with law. In view of the above decision, no separate order is necessary in Civil Appeals 1857 and 2087 of 1979. All the three appeals are disposed of accordingly with no order as to costs. Since the appeals have been disposed of on the first and foremost point canvassed before us, in the manner indicated above, it is not necessary to burden this judgment with a discussion of the other points argued by the counsel for the parties. CHINNAPPA REDDY, J. I have the misfortune to be unable to agree with the erudite opinion of my learned brother Sarkaria on the question of the applicability of the principles of natural justice. I do so with diffidence and regret. The first of the submissions of Shri F. section Nariman, learned counsel for the appellant company was that there was a violation of the principles of natural justice. He submitted that the provisions of the Industries (Development and Regulation) Act did not rule out natural justice and that there were several occasions in the march of events that led to the passing of the order under Sec. 18AA when an opportunity could have been given to the Company and the principles of natural justice observed but the Government of India refrained from doing so. He urged that the immediate action contemplated by Sec. 18AA(1) (a) was not to be construed as negat 589 ing natural justice but as intended merely to distinguish it from action under Sec. 18A which was to be taken only after investigation under Sec. 15. He drew inspiration for this argument from the marginal note to Section 18AA which is "power to take over industrial undertakings without investigation under certain circumstances". He also urged that Sec. 18F contemplated a post decisional situation necessitating cancellation of the order of take over but did not contemplate cancellation of the order of take over on the ground that such order ought never to have been made. He urged that the scope of Sec. 18F was very narrow and did not entitle the party affected to a fair hearing. In any case he argued that the remedy such as it was provided by Sec. 18F was not an answer to the claim to pre decisional natural justice. His submission was that natural justice was not to be excluded except by the clear and unmistakable language of the statute, though the "quantum" of natural justice to be afforded in an individual case might vary from case to case. Shri Soli Sorabji, learned Solicitor General, while conceding that statutory silence on the question of natural justice should ordinarily lead to an implication by presumption that natural justice was to be observed, urged that the presumption might be displaced by necessary implication, as for instance where compliance with natural justice might be inconsistent with the demands of promptitude, and delayed action might lead to disaster. The presumption of implication of natural justice was very weak where action was of a remedial or preventive nature or where such action concerned property rights only. In appropriate situations post decisional hearing might displace pre decisional natural justice. The statute itself might well provide for a post decisional hearing as a substitute for pre decisional natural justice in situations requiring immediate action. 18 F of the Industries Development and Regulation Act expressly provided for such a post decisional hearing and the urgency of the situation contemplated by Sec. 18AA necessarily excluded pre decisional natural justice. There was no reason to belittle the scope of Sec. 18F, so, to exclude a fair post decisional hearing at the instance of the party affected and consequently, to imply pre decisional natural justice. Both the learned counsel invited our attention to considerable case law. I do not propose to discuss the case law as my brother Sarkaria has referred to all the cases in great detail. Before I consider the submissions of the learned counsel as to the applicability of the principles of natural justice, a few prefatory remarks, however, require to be made. 590 Natural justice, like Ultra Vires and Public Policy, is a branch of the Public Law and is a formidable weapon which can be wielded to secure justice to the citizen. It is productive of great good as well as much mischief. While it may be used to protect certain fundamental liberties, civil and political rights, it may be used, as indeed it is used more often than not, to protect vested interests and to obstruct the path of progressive change. In the context of modern welfare legislation, the time has perhaps come to make an appropriate distinction between natural justice in its application to fundamental liberties, civil and political rights and natural justice in its application to vested interests. Our Constitution, as befits the Constitution of a Socialist Secular Democratic Republic, recognises the paramountcy of the public weal over the private interest. Natural justice, Ultra Vires, Public Policy, or any other rule of interpretation must therefore, conform, grow and be tailored to serve the public interest and respond to the demands of an evolving society. In Ridge vs Baldwin, it was thought by Lord Reid that natural justice had no easy application where questions of public interest and policy were more important than the rights of individual citizens. He observed : "If a Minister is considering whether to make a scheme for, say, an important new road, his primary concern will not be with the damage which its construction will do to the rights of individual owners of land. He will have to consider all manner of questions of public interest and, it may be, a number of alternate schemes. He cannot be prevented from attaching more importance to the fulfilment of his policy than to the fate of individual objectors, and it would be quite wrong for the Courts to say that the Minister should or could act in the same kind of way as a board of works deciding whether a house should be pulled down." And, as pointed out by a contributor in 1972 Cambridge Law Journal at page 14 : ". the safeguarding of existing rights can after all in some circumstances amount to little more than the fighting of a rear guard action by the reactionary element in society seeking only to preserve its own vested position. " The United States Supreme Court has recognised the distinction between cases where only property rights are involved and cases where other civil and political rights are involved. In cases where only 591 property rights are involved postponement of enquiry has been held not to be a denial of due process, vide : Annie G. Phillips vs Commissioner of Internal Revenue, John H. Fahey vs Paul Mallonee, Margarita Fuentes vs Robert L. Shevin, Attorney General of Florida, and Lawrence Mitchell vs W. F. Grant Co. In the first case ; , Brandeis J observed: "Where only property rights are involved, mere postponement of the judicial inquiry is not a denial of due process, if the opportunity given for the ultimate judicial determination of the liability is adequate. Delay in the judicial determination of property rights is not uncommon where it is essential that Governmental needs be immediately satisfied. For the protection of public health, a state may order the summary destruction of property by administrative authorities without antecedent notice or hearing. Because of the public necessity the property of citizens may be summarily seized in war time. And at any time, the United States may acquire property by eminent domain, without paying, or determining the amount of the compensation before the taking. " The principles of natural justice have taken deep root in the judicial conscience of our people, nurtured by Binapani, Kraipak, Mohinder Singh Gill, Maneka Gandhi etc. They are now considered so fundamental as to be "implicit in the concept of ordered liberty" and, therefore, implicit in every decision making function, call it judicial, quasi judicial or administrative. Where authority functions under a statute and the statute provides for the observance of the principles of natural justice in a particular manner, natural justice will have to be observed in that manner and in no other. No wider right than that provided by statute can be claimed nor can the right be narrowed. Where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice. The implication of natural justice being presumptive it may be excluded by express words of statute or by necessary intendment. Where the conflict is between the public interest and the private interest, the presumption must necessarily be weak and may, therefore, be readily displaced. The presumption is also weak where what are involved are mere property rights. In cases of urgency, particularly where the public interest is involved, pre emptive 592 action may be a strategic necessity. There may then be no question of observing natural justice. Even in cases of preemptive action. if the statute so provides or if the Courts so deem fit in appropriate cases, a postponed hearing may be substituted for natural justice. Where natural justice is implied, the extent of the implication and the nature of the hearing must vary with the statute, the subject and the situation. Seeming judicial ambivalence on the question of the applicability of the principles of natural justice is generally traceable to the readiness of judges to apply the principles of natural justice where no question of the public interest is involved, particularly where rights and interests other than property rights and vested interests are involved and the reluctance of judges to apply the principles of natural justice, where there is suspicion of public mischief and only property rights and vested interests are involved. In the light of these prefatory remarks, I will proceed to consider the relevant statutory provisions. The Industries (Development and Regulation) Act, 1951, was enacted pursuant to the power given to Parliament by Entry 52 of List I of the Seventh Schedule to the Constitution. As required by that Entry Section 2 of the Act declares that it is expedient in the public interest that the Union should take under its control the industries specified in the First Schedule to the Act. Item 23 of the First Schedule to the Act relates to Textiles of various categories, Sec. 3(d) defines "Industrial undertaking" to mean "any undertaking pertaining to a scheduled industry carried on in one or more factories by any person or authority including Government". The expression undertaking is not, however, defined Sec. 3(f) defines "Owner", "in relation to an industrial undertaking" as "the person who, or the authority which, has the ultimate control over the affairs of the undertaking, and, where the said affairs are entrusted to a manager, managing director or managing agents, such manager, managing director or managing agent shall be deemed to be the owner of the undertaking". Sec. 3(j) provides that words and expressions not defined in the Act but defined in the Companies Act shall have the meaning assigned to them in that Act. 10 obliges the owner of an industrial undertaking to register the undertaking in the prescribed manner. 10A authorises the revocation of registration after giving an opportunity to the owner of the undertaking in certain circumstances. 11 provides for the licensing of the new industrial undertaking and Sec. 11A provides for the licensing of the production and manufacture of the new articles. Sec. 13 provides, among other things, that, except under, and in accordance with, a licence issued in that behalf by the Central Government, no owner of an industrial undertaking shall effect any substantial expansion or 593 change the location of the whole or any part of an industrial undertaking. 14 provides for a full and complete investigation in respect of applications for the grant of licence or permission under Sections 11, 11A, 13 or 29B. Sec. 15 authorises the Central Government to make or cause to be made a full and complete investigation into the circumstances of the case if the Central Government is of the opinion that : (a) in respect of any scheduled industry or industrial undertaking or undertakings (i) there has been, or is likely to be, a substantial fall in the volume of production. for which, having regard to the economic conditions prevailing, there is no justification; or (ii) there has been, or is likely to be, a marked deterioration in the quality of any article. . . which could have been or can be avoided; or (iii) there has been or is likely to be a rise in the price of any article. . for which there is no justification; or (iv) it is necessary to take any such action for the purpose of conserving any resources of national importance; or (b) any industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest. After the investigation is made under Sec. provides, if the Central Government is satisfied that such action is desirable, it may issue appropriate directions for (a) regulating the production of any article . and fixing the standards of production; (b) requiring the industrial undertaking to take such steps as the Central Government may consider necessary, to stimulate the development of the industry; (c) prohibiting resort to any act or practice which might reduce the undertaking 's production, capacity or economic value; (d) controlling the prices, or regulating the distribution of any article. 16(2) also provides for the issue of interim directions by the Central Government pending investigation under Sec. 15. Such directions are to have effect until validly revoked by the Central Government. 594 Chapter III A consisting of Sections 18A, 18 AA. 18 B, 18 C, 18 D, 18 E and 18 F deals with "direct management or control of Industrial Undertakings by Central Government in certain cases". 18 A which is entitled "Power of Central Government to assume management or control of an industrial undertaking in certain cases" provides that the Central Government may, by notified order, authorise any person or body of persons to take over the management of the whole or any part of an industrial undertaking or to exercise in respect of the whole or any part of the undertaking such functions of control as may be specified in the order, if the Central Government is of opinion that : (a) an industrial undertaking to which directions have been issued in pursuance of Sec. 16 has failed to comply with such directions, or (b) an industrial undertaking in respect of which an investigation has been made under section 15 is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest. 18 AA refers to "Power to take over industrial undertakings without investigation under certain circumstances". It enables the Central Government by a notified order to authorise any person or body of persons to take over the management of the whole or any part of an industrial undertaking or to exercise in respect of whole or any part of the undertaking such functions of control as may be specified in the order, if, without prejudice to any other provisions of the Act, from the documentary or other evidence in its possession, the Central Government is satisfied in relation to the industrial undertaking, that "(a) the persons incharge of such industrial undertakings have, by reckless investments or creation of encumbrances on the assets of the industrial undertaking, or by diversion of funds, brought about a situation which is likely to affect the production of articles manufactured or produced in the industrial under taking, and that immediate action is necessary to prevent such a situation; or (b) it has been closed for a period of not less than three months (whether by reason of the voluntary winding up of the company owning the industrial undertaking or for any other reason) and such closure is prejudicial to the concerned scheduled industry and 595 that the financial condition of the company owning the industrial undertaking and the condition of the plant and machinery of such undertaking are such that it is possible to re start the undertaking and such re starting is necessary in the interests of the general public". 18 AA(5) stipulates that the provisions of Sections 18 B to 18 E shall be applicable to the industrial undertaking in respect of which an order has been made under section 18 AA even as they apply to an industrial undertaking taken over under Sec. 18 A. Sec. 18 B specifies the effect of a notified order under Sec. 18 A. Sec. 18C empowers the Court to cancel or vary contracts made in bad faith etc. by the management of an undertaking before such management was taken by the Central Government. 18 D provides that there shall be no right to compensation for termination of office or contract as a result of the `take over '. 18 E deprives the shareholders and the Company of certain rights under the Indian Companies Act. if the industrial undertaking whose management is taken over is a Company. 18 F empowers the Central Government on the application of the owner of the industrial undertaking or otherwise to cancel the order made under Sec. 18 A if it appears to the Central Government that the purpose of the order has been fulfilled or that for any other reason it is not necessary that the order should remain in force. 18FD(3) enables the Central Government to exercise the powers under Sec. 18 F in relation to an undertaking taken over under Sec. 18 AA. The question for consideration is whether Sec. 18 AA excludes natural justice by necessary implication. The development and regulation of certain key industries was apparently considered so basic and vital to the economy of our country that Parliament, in its wisdom, thought fit to enact the Industries Development & Regulation Act, after making the declaration required by Entry 52 of List I of the Seventh Schedule to the Constitution that it was expedient, in the public interest, that the Union should take under its control the industries specified in the schedule to the Act, as earlier mentioned by us. Apart from making provision for the establishment of a Central Advisory Council and other Development Councils, and the licensing of scheduled industries, the Act empowers the Central Government to cause a full and complete investigation to be made where there is a substantial fall in the volume of production for which there is no justification having regard to the prevailing economic conditions or there is marked deterioration in the quality of the 596 goods produced or the price of the goods produced is rising unjustifiably or where conservation of resources of national importance is necessary or the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry or to public interest (Sec. 15) and thereafter to issue necessary and appropriate directions to the industrial undertaking to mend matters suitably (Sec. 16). Where the instructions issued under Sec. 16 are not complied with or where the investigation reveals that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry or to the public interest the Central Government may take over the industry under Sec. Whether there is an investigation or not, the Central Government may also `take over ' the management of the industry under Sec. 18 AA, if consequent on certain wilfull acts of commission on the part of the management the production is likely to be effected but immediate action may prevent such a situation, or the industrial undertaking has been closed for a period of not less than three months and the closure is prejudicial to the scheduled industry. Action under Sec. 18 AA is thus preventive and remedial. Where there is an apprehension that production is likely to be affected as a result of the wilfull acts of the management or where the production has already come to a stand still because of the closure of the undertaking for a period of not less than three months the Central Government is authorised to intervene to restore production. The object clearly is to take immediate action to prevent a situation likely to affect production or to restore production. There was some argument at the Bar that the expression `immediate action ' was not to be found in Sec. 18 AA(1) (b). I do not think that the absence of the expression "immediate action in Sec. 18 AA(1)(b) makes any difference. 18 AA(1)(a) refers to a situation where immediate preventive action may avert a disaster, whereas Sec. 18 AA contemplates a situation where the disaster has occurred and action is necessary to restore normalcy. Restoration of production where production has stopped in a key industry or industrial undertaking is as important and urgent, in the public interest, as prevention of a situation where production may be affected. Immediate action is, therefore, as necessary in the situation contemplated by Sec. 18 AA(1)(b) as in the situation contemplated by Sec. 18 AA(1)(a). It is true that the marginal note refers to the power to take over without investigation but there is no sufficient reason to suppose that the word `immediate ' is used only to contra distinguish it from the investigation contemplated by Sec. 15 of the Act, though, of course a consequence of immediate action under Sec. 18 AA may be to dis 597 pense with the enquiry under Sec. 15. In fact, facts which come to light during the course of an investigation under Sec. 15 may form the basis of action under Sec. 18 AA(1)(a). Where in the course of an investigation under Sec. 15 it is discovered that the management have, by reckless investments or creation of encumbrances on the assets of the industrial undertaking or by diversion of funds brought about a situation which is likely to affect the production of the articles manufactured or produced in the industrial undertaking, if the Government is satisfied that immediate action is necessary to prevent such a situation, there is no reason why the Central Government may not straight away take action under Sec. 18 AA(1)(a) without waiting for completion of investigation under Sec. 15. Parliament apparently contemplated a situation where immediate action was necessary, and having contemplated such a situation, there is no reason to assume that Parliament did not contemplate situations which brooked not a moments delay. If Parliament also contemplated situations which did not brook a moment 's delay, it would be difficult to read natural justice into Sec. 18 AA. The submission of Shri Nariman was that the immediacy of the situation would be relevant and relatable to the quantum of natural justice and not to a total denial of natural justice. According to him the scope and extent of the opportunity to be given to the party against whom action is taken may depend upon the situation but nothing would justify a negation of a natural justice. He pointed out that in a situation of great urgency which brooked no delay, an order under Sec. 18 AA might be made, the situation could be so frozen that the persons incharge of the industrial undertaking might do no more mischief and the Government could then, without giving further effect to the order under Sec. 18 AA, give a notice to the person incharge to show cause why the order under Sec. 18 AA should not be given effect. In another given case, according to Shri Nariman, notice of, say two weeks, might be given before making an order, if the making of an order was not so very urgent. He suggested that the opportunity to be given might vary from situation to situation but opportunity there must be, either before the decision was arrived at or so shortly after the decision was arrived at and before any great mischief might result from the order. The argument of Shri Nariman would vest in the Government a power to decide from case to case the extent of opportunity to be given in each individual case and, as a corollary, a corresponding right in the aggrieved party to claim that the opportunity provided was not enough. Such a procedure may be possible, practicable and desirable in situations where there is no statutory provision enabling the decision making authority to review, or reconsider its decision. Where there is a 598 provision in the statute itself for revocation of the order by the very authority making the decision, it appears to us to be unnecessary to insist upon a pre decisional observance of natural justice. The question must be considered by regard to the terms of the statute and by an examination, on the terms of the statute, whether it is possible, practicable and desirable to observe pre decisional natural justice and whether a post decisional review or reconsideration provided by the statute itself is not a sufficient substitute. The likelihood of production being jeopardized or the stoppage of production in a key industrial undertaking is a matter of grave concern affecting the public interest. Parliament has taken so serious a view of the matter that it has authorised the Central Government to take over the management of the industrial undertaking if immediate action may prevent jeopardy to production or restore production where it has already stopped. The necessity for immediate action by the Central Government, contemplated by Parliament, is definitely indicative of the exclusion of natural justice. It is not as if the owner of the industrial undertaking is left with no remedy. He may move the Central Government under Sec. 18 F to cancel the order made under Sec. 18 AA. True some mischief affecting the management and top executives may have already been done. On the other hand, greater mischief affecting the public economy and the lives of many a thousand worker may have been averted. While on the one hand mere property rights are involved, on the other vital public interest is affected. This . again, in the light of the need for immediate action contemplated by Parliament, is a clear pointer to the exclusion of natural justice. It was submitted by the learned counsel that Sec. 18 F did not provide any remedy but merely provided for cancellation of an order of take over on the fulfilment of the purpose of the order of take over or for any other reason which rendered further continuance in force of the order unnecessary because of the happening of subsequent events. According to the learned counsel the basic assumption of Sec. 18 F was the validity of the order under Sec. 18 A or Sec. 18 AA. All that Sec. 18 F did was to prescribe conditions for the exercise of the general power which every authority had under Sec. 21 of the General Clauses Act to cancel its own earlier order. It was said that if Sec. 18 F could be said to impliedly exclude natural justice there is then no reason not to hold that Sec. 21 of the General Clauses Act similarly excluded natural justice in every case. I am unable to agree with these submissions of the learned counsel. Neither Sec. 18 F of the Industries (Development and Regulation) Act nor Sec. 21 of the General Clauses Act, by itself, excludes natural justice. The exclusion of natural justice, where such exclusion is not express, has to be implied by reference 599 to the subject, the statute and the statutory situation. Where an express provision in the statute itself provides for a post decisional hearing the other provisions of the statute will have to be read in the light of such provision and the provision for post decisional hearing may then clinch the issue where pre decisional natural justice appears to be excluded on the other terms of the statute. That a post decisional hearing may also be had by the terms of Sec. 21 of the General Clauses Act may not necessarily help in the interpretation of the provisions of the statute concerned. On the other hand even the general provision contained in Sec. 21 of the General Clauses Act may be sufficient to so interpret the terms of a given statute as to exclude natural justice. As I said it depends on the subject, statute and the statutory situation. I am, therefore, satisfied that the principles of natural justice are not attracted to the situations contemplated by Sec. 18 AA of the Industries (Development and Regulation) Act. In view of the order proposed by my learned brothers Sarkaria and Desai JJ. I do not propose to consider the other questions. ORDER As per majority decision, the appeals are allowed. N. K. A. Appeals allowed.
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The Industries (Development and Regulation) Act, 1951 says that the Indian government can control certain industries listed in the Act's First Schedule, if it's for the good of the public. Item 23 in that list is about different kinds of textiles. Section 15 says the government can investigate if they think that: (a) a scheduled industry isn't making enough stuff, or the quality of its products is getting worse, or the prices are going up unfairly; or (b) a company is being run badly and hurting the industry or the public. If the government investigates and thinks something should be done, Section 16(1) lets them give directions to fix the problem. Section 16(2) lets them give temporary directions while they're still investigating. Chapter III A (Sections 18A to 18F) talks about the government directly managing or controlling companies in certain situations. Section 18A says the government can put someone in charge of a company if: (a) the company didn't follow the directions given to it under Section 16; or (b) the company is being run so poorly that it's hurting the industry or the public. Section 18AA(5) says that Sections 18B to 18E also apply to companies taken over under Section 18AA, just like they apply to companies taken over under Section 18A. Section 18F lets the government cancel the takeover order made under Section 18A if it seems like the order has done its job, or if the order isn't needed anymore. The company M/s. Swadeshi Cotton Mills was taken over by the Indian government on April 13, 1978. The government used its power under Section 18AA of the Industries Act, saying the company had created problems with its assets that were hurting production. They said quick action was needed to stop the situation from getting worse. The government told the National Textile Corporation Limited to take over the company's management. The Corporation had to follow the government's directions and would be in charge for five years. The company challenged this order in court. The case was heard by a group of five judges to decide if the company should have been given a chance to be heard before the government took over. They had to decide if the company should have been able to present their side of the story before the order was made, or if it was okay to give them a hearing afterward. The majority of the judges said: (a) Section 18AA doesn't require the government to give the company a hearing before taking over. (b) Section 18F lets the company ask for the order to be canceled later. (c) Because there's no need for a hearing before the takeover, there's no problem that needs to be fixed by giving a hearing afterward. But some of the judges disagreed. They said the company should have been given a chance to be heard before the takeover. They also said that giving a hearing afterward wouldn't fix the problem of not giving one beforehand. But, they said the court could keep the order in place temporarily to protect the public interest, until a fresh decision can be made. After this decision, a different group of three judges heard the case again and agreed with the company in part. They said the takeover order was valid, but the government couldn't take over the company's entire business, including its subsidiaries and assets that weren't directly related to the textile factories. The government was told to release those parts of the company. Both the company and the government appealed to a higher court. The company argued that: (a) They should have been allowed to present their side of the story before the takeover order was issued. (1) The word "immediate" in Section 18AA doesn't mean the government can ignore the rules of fairness. (2) "Immediate" just means the government doesn't have to investigate the situation before taking action. (3) The word "immediate" only appears in one part of Section 18AA, so it doesn't make sense to apply it to the whole section. (4) Section 18F doesn't replace the need for a hearing beforehand. (5) Section 18F is just a limited version of another law. (6) Even in urgent situations, the government still has to be fair. (7) If the government's actions have a serious impact on someone's rights, and there's nothing in the law that clearly says they don't have to give a hearing, the court should be hesitant to say that a hearing isn't needed, even if the situation is urgent. (8) The government had officials investigate the company and make recommendations. The company didn't see this report until after they filed the lawsuit. There was enough time between the report and the takeover order to give the company a chance to explain its side of the story. The government argued that: (1) The rules of fairness don't apply in this situation because Section 18AA is meant for urgent situations. (2) The goal of Section 18AA is to prevent problems caused by falling production, not to punish the company. (3) The company can still get a hearing later under Section 18F. (4) The rules of fairness only apply to the extent that they're realistic and reasonable, given that the company can get a hearing later. (5) The government is acting like a court under Section 18F, and the company can ask them to cancel the takeover order. The higher court agreed with the company. They said that the government should have given the company a chance to be heard before taking over. Because the company will now be given a hearing, the case was sent back to the government to give them a full and fair chance to present their side of the story. 1. "Natural justice" is a general idea about fairness. 2. The rules of natural justice only apply if there isn't already a law covering the situation. 3. One part of natural justice is giving people a chance to be heard. This rule is important and shouldn't be ignored just for convenience. 4. Sometimes, urgent situations might require the government to act quickly without giving a hearing beforehand. 5. If the government takes action quickly but gives a full hearing afterward, that's not really an exception to the rule of fairness. 6. If a law doesn't say whether or not a hearing is needed, but it allows for a full review of the decision later, then it might be okay to skip the hearing beforehand. 7. If a law doesn't say whether or not a hearing is needed, and the government's decision has a big impact on someone's rights, the courts will usually want the government to give at least a basic hearing beforehand, unless that would make it impossible to act quickly. 7(i). There are two main differences between Section 18A(1)(b) and Section 18AA(1)(c): First, Section 18A(1)(b) requires an investigation before action can be taken, while Section 18AA(1)(a) or (b) doesn't. Second, Section 18A(1)(b) requires the government to have evidence that the company is being run poorly, while Section 18A(1)(a) only requires the government to believe that the company has done something that's likely to hurt production. 7(ii). To take action under Section 18AA(1)(a), the government must have evidence that the company has done something that's likely to hurt production, and that quick action is needed to prevent the situation from getting worse. 8. If a law says the government can take action based on its opinion about how urgent the situation is, the courts can still review that opinion. 9. Section 18AA doesn't clearly say that the government can skip giving a hearing before taking action. In this case, one of the company's factories had been closed for months before the government took over. There was no real urgency that would excuse the government from giving a hearing beforehand. (Dissenting opinion) The rules of natural justice don't apply to the situations covered by Section 18AA of the Industries Act. Natural justice is a tool that can be used to protect people's rights, but it can also be used to protect special interests and block progress. 2. The law should favor the public good over private interests. 3(i). The rules of natural justice are very important. If a law tells the government how to follow those rules, the government has to follow those instructions. If a law doesn't say anything about natural justice, it's assumed that the government still has to follow those rules. But, if the public interest is in conflict with private interests, the government might not have to follow those rules as strictly. 3(ii). The exact requirements of natural justice depend on the specific law, situation, and subject matter. 4. It doesn't matter that Section 18AA(1)(b) doesn't use the phrase "immediate action." Sometimes it is necessary to take action to restore production where it has already stopped. 5. The fact that Section 18AA lets the government take over a company without an investigation doesn't mean that the word "immediate" is only meant to refer to skipping the investigation. 6. If a law lets the government revoke its own decision, it might not be as important to insist on a hearing beforehand. 7. A key factory stopping production is a serious problem that affects the public interest. The government is allowed to take over the factory to prevent or restore production. This shows that the government needs to be able to act quickly, which means they might not have to give a hearing beforehand. But the company can still ask the government to cancel the takeover order later. 8. Neither Section 18F of the Industries Act nor another law called the General Clauses Act automatically prevents the government from following the rules of natural justice. If a law says that a hearing can be held after the government takes action, that might mean that the government doesn't have to give a hearing beforehand.
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1629 and for R. 1 in C.A. Swadeshi Cotton Mills Company Ltd., Kanpur (hereinafter referred to as the said industrial under takings), have, by creation of encumbrances on the assets of the said industrial undertakings, brought about a situation which has affected and is likely to further affect the production of articles manufactured or produced in the said industrial undertakings and that immediate action is necessary to prevent such a situation; Now, therefore, in exercise of power conferred by clause (a) of sub section (1) of Section 18AA of the Industries (Development and Regulation) Act, 1951 (65 of 1951), the Central Government hereby authorises the National Textile Corporation Limited (hereinafter referred to as the Authorised person) to take over the management of the whole of the said industrial undertakings, subject to the following terms and conditions, namely: (i) The authorised person shall comply with all the directions issued from time to time by the Central Government; (ii) the authorised person shall hold office for a period of five years from the date of publication of this order in the Official Gazette; (iii)the Central Government may terminate the appointment of the authorised person earlier if it considers necessary to do so. If so, (a) whether such hearing is to be given to the parties who would be affected by the order to be passed under the said Section prior to the passing of the order; or (b) whether such hearing is to be given after the passing of the order; and (c) if prior hearing is to be normally given and the order passed under the said Section is vitiated by not giving of such 547 hearing whether such vice can be cured by the grant of a subsequent hearing. " (2) Section 18F expressly provides for a post decisional hearing to the owner of the industrial undertaking, the management of which is taken over under Section 18AA to have the order made under Section 18AA cancelled on any relevant ground. In the opinion of the minority, in compliance with the principles of natural justice, a prior hearing to the owner of the undertaking was required to be given before passing an order under Section 18AA, that the second question did not arise as the denial of a prior hearing would not cure the vice by the grant of subsequent hearing, but it would be open to the Court to moderate the relief in such a way that the order is kept alive to the extent necessary until the making of the fresh order to subserve public interest, and to make appropriate directions to ensure that the subsequent hearing would be a full and complete review of the circumstances of the take over and for the preservation and maintenance of the property during the interregnum. The primary, two fold proposition posed and propounded by Shri F. section Nariman, learned counsel for the appellant Company in Civil Appeal 1629 of 1979, is as follows: (a) Whether it is necessary to observe the rules of natural justice before issuing, a notified order under Section 18AA, or enforcing a decision under Section 18AA, or (b) Whether the provisions of Section 18AA and/or Section 18F impliedly exclude rules of natural justice relating to prior hearing. Thus, the first point for consideration is whether, as a matter of law, it is necessary, in accordance with the rules of natural justice, to give a hearing to the owner of an undertaking before issuing a notified order, or enforcing a decision of its take over under Section 18AA. Shri Nariman contends that there is nothing in the language, scheme or object of the provisions in Section 18AA and/or Section 18F which expressly or by inevitable implication, excludes the application of the principles of natural justice or the giving a pre decisional hearing, adapted to the situation, to the owner of the undertaking. This section was there, when in Keshav Mills ' case, (ibid), it was held by this Court, that even at the post investigation stage, before passing an order under Section 18A, the Government must proceed fairly in accordance with the rules of natural justice. (v) Where the civil consequences of the administrative action as in the instant case are grave and its effect is highly prejudicial to the rights and interests of the person affected and there is nothing in the language and scheme of the statute which unequivocally excludes a fair pre decisional hearing, and the post decisional hearing provided therein is not a real remedial hearing equitable to a full 551 right of appeal, the Court should be loath to infer a legislative intent to exclude even a minimal fair hearing at the pre decisional stage merely on ground of urgency. vs Bhagatram Sardar Singh; A. K. Kraipak vs Union of India; Ridge vs Baldwin; Heatley vs Tasmanian Racing & Gaming Commission; Commissioner of Police vs Tanos; Secretary of State for Education & Science vs Metropolitan Borough of Tameside; Wiseman vs Borneman; Nawabkhan Abbaskhan vs State of Gujarat and State of Orissa vs Dr. Bina Pani Dei. Shri Sorabji submits that this rule of natural justice in a modified form has been incorporated in Section 18F which gives an opportunity of a post decisional hearing to the owner of the undertaking who, if he feels aggrieved, can, on his application, be heard to show that even the original order under Section 18AA was passed on invalid grounds and should be cancelled or rescinded. As pointed out in Mohinder Singh Gill vs Chief Election Commissioner and in Maneka Gandhi vs Union of India ibid, such cases where owing to the compulsion of the fact situation or the necessity of taking speedy action, no pre decisional hearing is given but the action is followed soon by a full post decisional hearing to the 561 person affected, do not, in reality, constitute an 'exception ' to the audi alteram partem rule. The Section reads as follows: "where the Central Government is of the opinion that (a) in respect of any scheduled industry or industrial undertaking or undertakings (i) there has been, or is likely to be a substantial fall in the volume of production in respect of any article or class 563 of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be; for which having regard to the economic conditions prevailing, there is no justification, or (ii) there has been, or is likely to be, a marked deterioration in the quality of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, which could have been or can be avoided; or (iii) there has been or is likely to be a rise in the price of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, for which there is no justification; or (iv) it is necessary to take any such action as is provided in this Chapter for the purpose of conserving any resources of national importance which are utilised in the industry or the industrial undertaking or undertakings, as the case may be; or (b) any industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest. The material part of the Section reads as under: "(1) If the Central Government is of opinion that (a) an industrial undertaking to which directions have been issued in pursuance of Section 16 has failed to comply with such directions, or (b) an industrial undertaking in respect of which an investigation has been made under Section 15 (whether or not any directions have been issued to the undertaking in pursuance of Section 16), is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest; the Central Government may, by notified order, authorise any person or body of persons to take over the management of the whole or any part of the undertaking or to exercise in respect of the whole or any part of the undertaking such functions of control as may be specified in the order. Section 18B specifies the effect of notified order under Section 18A Sub section (1) of the section reads thus: 565 "On the issue of a notified order under Section 18A authorising the taking over of the management of an industrial undertaking (a) all persons in charge of the management including, persons holding office as managers or directors of the industrial undertaking immediately before the issue of the notified order, shall be deemed to have vacated their offices as such; (b) any contract of management between the industrial undertaking and any managing agent, or any director thereof holding office as such immediately before the issue of the notified order shall be deemed to have been terminated; (c) the managing agent, if any, appointed under Section 18A shall be deemed to have been duly appointed as the managing agent in pursuance of the Indian Companies Act, 1913 (7 of 1913), and the memorandum and articles of association of the industrial undertaking, and the provisions of the said Act and of the memorandum and articles shall, subject to the other provisions contained in this Act, apply accordingly, but no such managing agent shall be removed from office except with the previous consent of the Central Government; (d) the person or body of persons authorised under Section 18A to take over the management shall take all such steps as may be necessary to take into his or their custody or control all the property, effects and actionable claims to which the industrial undertaking is or appears to be entitled, and all the property and effects of the industrial undertaking, shall be deemed to be in the custody of the person or, as the case may be, the body of persons as from the date of the notified order; and (e) the persons, if any, authorised under Section 18A to take over the management of an industrial undertaking which is a company shall be for all purposes the directors of industrial undertaking duly constituted under the Indian Companies Act, 1913 (7 of 1913), and shall alone be entitled to exercise all the powers of the directors of the industrial undertaking, whether such powers are derived from the said Act or from the memorandum or articles of association of the industrial undertaking or from any other source." It reads thus: "If at any time it appears to the Central Government on the application of the owner of the industrial undertaking or otherwise that the purpose of the order made under Section 18A has been fulfilled or that for any other reason it is not necessary that the order should remain in force, the Central Government may, by notified order, cancel such order and on the cancellation of any such order the management or the control, as the case may be of the industrial undertaking shall vest in the owner of the undertaking. " With a view to ensuring speedy action by Government, it has been provided in the Bill that if the Government has evidence to the effect that the assets of the company owning the industrial undertaking are being frittered away or the undertaking has been closed for a period not less than three months and such closure is prejudicial to the concerned scheduled industry and that the financial condition of the company owning the industrial undertaking and the condition of the plant and machinery installed in the undertaking is such that it is possible to restart the undertaking and such restarting is in the public interest, Government may take over the management without an investigation." Section 18AA runs as under: "Without prejudice to any other provision of this Act, if, from the documentary or other evidence in its possession, the Central Government is satisfied, in relation to an industrial undertaking that (a) the persons incharge of such industrial undertaking have, by reckless investments or creation of encumbrances on the assets of the industrial undertaking, or by diversion of funds, brought about a situation which is likely to affect the production of articles manufactured or produced in the industrial undertaking, and that immediate action is necessary to prevent such a situation; or (b) it has been closed for a period of not less than three months (whether by reason of the voluntary winding up of the company owning the industrial undertaking or for any other reason) and such closure is prejudicial to the concerned scheduled industry and that the financial condition of the company owning the industrial undertaking and the condition of the plant and machinery of such undertaking are such that it is possible to re start the undertaking and such re starting is necessary in the interests of the general public, it may, by a notified order, authorise any person (hereinafter referred to as the 'authorised person ') to take over the management of the whole or any part of the industrial undertaking or to exercise in respect of the whole or any part of the undertaking such functions of control as may be specified in the order. From an analysis of Section 18AA(1) (a), it will be clear that as a necessary preliminary to the exercise of the power thereunder, the Central Government must be satisfied "from documentary or other evidence in its possession" in regard to the co existence of two circumstances: (i) that the persons in charge of the industrial undertaking have by committing any of these acts, namely, reckless investments, or creation of incumbrances on the assets of industrial undertaking, or by diversion of funds, brought about a situation, which is likely to affect the production of the article manufactured or produced in the industrial undertaking, and (ii) that immediate action is necessary to prevent such a situation. : "The general principle of law is that an order affecting his liberty or property cannot be made against any one without giving him an opportunity of being heard; the result is that, if general words used in a statute empowering the making of such an order as this, it must be made on notice to the party affected. Indeed, Shri Nariman strongly relies on this decision in support of his argument that if the application of this rule of natural justice at the pre decisional stage is not excluded even where a full investigation has been made, there is stronger reason to hold that it is to be observed in a case where there has been no investigation at all. (emphasis added) It will be seen from what has been extracted above that in Keshav Mills case, this Court did not lay it down as an invariable rule that where a full investigation after 'notice to the owner of the industrial undertaking has been held under Section 15, the owner is never entitled on grounds of natural justice, to a copy of the investigation report and to an opportunity of making a representation about the action that the Government proposes to take on the basis of that report. Shri Sorabji submitted that the observations made by this Court in Keshav Mills case, to the effect, that in certain cases even at the post investigation stage before making an order of take over under Section 18A, it may be necessary to give another opportunity to the affected owner of the undertaking to make a representation, appear to be erroneous. The main ground on which the order of take over under Section 18A was challenged in Ambalal 's case was that on a proper construction of Section 18A, the Central Government had the right to make the order under that Section on the ground that the Company was being managed in a manner highly detrimental to public interest, only where the investigation made under Section 15 was initiated on the basis of the opinion as mentioned in Section 15(b), whereas in the present case (i.e. Ambalal 's case), the investigation ordered by the Central Government was initiated on the formation of an opinion as mentioned in clause (a) (i) of Section 15. On appeal by special leave, this Court reversed the decision of the High Court, and held that the words used by the Legislature in Section 18A (1) (b) "in respect of which an investigation has been made under Section 15" could not be cut down by the restricting phrase "based on an opinion that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest"; that Section 18A (1) (b) empowers the Central Government to authorise a person to take over the management of an industrial undertaking if the one condition of an investigation made under Section 15 had been fulfilled irrespective of on what opinion that investigation was initiated and the further condition is fulfilled that the Central Government was of opinion that such undertaking was being managed in a manner highly detrimental to the scheduled industry concerned or to public interest. Secondly, what the rule of natural justice required in the circumstances of this case, was not only that the Company should have been given an opportunity to explain the evidence against it, but also an opportunity to be informed of the proposed action of take over and to represent why it be not taken. Where authority functions under a statute and the statute provides for the observance of the principles of natural justice in a particular manner, natural justice will have to be observed in that manner and in no other. 18 A which is entitled "Power of Central Government to assume management or control of an industrial undertaking in certain cases" provides that the Central Government may, by notified order, authorise any person or body of persons to take over the management of the whole or any part of an industrial undertaking or to exercise in respect of the whole or any part of the undertaking such functions of control as may be specified in the order, if the Central Government is of opinion that : (a) an industrial undertaking to which directions have been issued in pursuance of Sec. It enables the Central Government by a notified order to authorise any person or body of persons to take over the management of the whole or any part of an industrial undertaking or to exercise in respect of whole or any part of the undertaking such functions of control as may be specified in the order, if, without prejudice to any other provisions of the Act, from the documentary or other evidence in its possession, the Central Government is satisfied in relation to the industrial undertaking, that "(a) the persons incharge of such industrial undertakings have, by reckless investments or creation of encumbrances on the assets of the industrial undertaking, or by diversion of funds, brought about a situation which is likely to affect the production of articles manufactured or produced in the industrial under taking, and that immediate action is necessary to prevent such a situation; or (b) it has been closed for a period of not less than three months (whether by reason of the voluntary winding up of the company owning the industrial undertaking or for any other reason) and such closure is prejudicial to the concerned scheduled industry and 595 that the financial condition of the company owning the industrial undertaking and the condition of the plant and machinery of such undertaking are such that it is possible to re start the undertaking and such re starting is necessary in the interests of the general public". 18 AA(5) stipulates that the provisions of Sections 18 B to 18 E shall be applicable to the industrial undertaking in respect of which an order has been made under section 18 AA even as they apply to an industrial undertaking taken over under Sec. Whether there is an investigation or not, the Central Government may also `take over ' the management of the industry under Sec.
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Section 18A says the government can put someone in charge of a company if: (a) the company didn't follow the directions given to it under Section 16; or (b) the company is being run so poorly that it's hurting the industry or the public. Section 18AA(5) says that Sections 18B to 18E also apply to companies taken over under Section 18AA, just like they apply to companies taken over under Section 18A. Section 18F lets the government cancel the takeover order made under Section 18A if it seems like the order has done its job, or if the order isn't needed anymore. The company M/s. The government used its power under Section 18AA of the Industries Act, saying the company had created problems with its assets that were hurting production. The company challenged this order in court. The case was heard by a group of five judges to decide if the company should have been given a chance to be heard before the government took over. They had to decide if the company should have been able to present their side of the story before the order was made, or if it was okay to give them a hearing afterward. The majority of the judges said: (a) Section 18AA doesn't require the government to give the company a hearing before taking over. (b) Section 18F lets the company ask for the order to be canceled later. They said the company should have been given a chance to be heard before the takeover. After this decision, a different group of three judges heard the case again and agreed with the company in part. (2) "Immediate" just means the government doesn't have to investigate the situation before taking action. (3) The word "immediate" only appears in one part of Section 18AA, so it doesn't make sense to apply it to the whole section. (7) If the government's actions have a serious impact on someone's rights, and there's nothing in the law that clearly says they don't have to give a hearing, the court should be hesitant to say that a hearing isn't needed, even if the situation is urgent. There was enough time between the report and the takeover order to give the company a chance to explain its side of the story. (3) The company can still get a hearing later under Section 18F. (4) The rules of fairness only apply to the extent that they're realistic and reasonable, given that the company can get a hearing later. (5) The government is acting like a court under Section 18F, and the company can ask them to cancel the takeover order. They said that the government should have given the company a chance to be heard before taking over. "Natural justice" is a general idea about fairness. The rules of natural justice only apply if there isn't already a law covering the situation. One part of natural justice is giving people a chance to be heard. Sometimes, urgent situations might require the government to act quickly without giving a hearing beforehand. If a law doesn't say whether or not a hearing is needed, but it allows for a full review of the decision later, then it might be okay to skip the hearing beforehand. If a law doesn't say whether or not a hearing is needed, and the government's decision has a big impact on someone's rights, the courts will usually want the government to give at least a basic hearing beforehand, unless that would make it impossible to act quickly. To take action under Section 18AA(1)(a), the government must have evidence that the company has done something that's likely to hurt production, and that quick action is needed to prevent the situation from getting worse. If a law says the government can take action based on its opinion about how urgent the situation is, the courts can still review that opinion. Section 18AA doesn't clearly say that the government can skip giving a hearing before taking action. (Dissenting opinion) The rules of natural justice don't apply to the situations covered by Section 18AA of the Industries Act. If a law doesn't say anything about natural justice, it's assumed that the government still has to follow those rules. But, if the public interest is in conflict with private interests, the government might not have to follow those rules as strictly. The fact that Section 18AA lets the government take over a company without an investigation doesn't mean that the word "immediate" is only meant to refer to skipping the investigation. But the company can still ask the government to cancel the takeover order later. If a law says that a hearing can be held after the government takes action, that might mean that the government doesn't have to give a hearing beforehand.
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minal Appeal No. 20 of 1954. Appeal from the Judgment and Order dated the 26th August, 1953, of the Bombay High Court in Criminal Revision Application No. 51 8 of 1953 arising out of the Judgment and Order dated the 9th December, 1952, of the Court of Presidency Magistrate, Bombay, in Case No. 3442/P of 1952. section P. Verma, for the appellant. M. C. Setalvad, Attorney General for India (Porus A. Mehta and P. G. Gokhale, with him), for the respondent. 97 1955. March 25. The following Judgments were delivered. DAS J. The appellant before us was on the 9th December, 1952 convicted by the Presidency Magistrate, 13th Court, Bombay, of an offence under section 66(b) of the Bombay Prohibition Act (Act XXV of 1949) and sentenced to undergo imprisonment till the rising of the Court and to pay a fine of Rs. 250 or to undergo rigorous imprisonment for one month. The appellant preferred an appeal to the High Court of Judicature at Bombay but his appeal was summarily dismissed by a Bench of that Court on the 19th January 1953. After the dismissal of that appeal the State of Bombay made a Criminal Revision application to the High Court for enhancement of the sentence. Notice having been issued to the appellant under section 439(2) of the Code of Criminal Procedure, learned counsel for the appellant claimed the appellant 's right under section 439(6) to show cause against his conviction. This the High Court did not permit him to do. The High Court, however, did not think fit to make any order for enhancement of sentence. On an application made on behalf of the appellant the High Court of Bombay has given leave to the appellant to appeal to this Court and granted a certificate of fitness under article 134(1) (c) of the Constitution of India. The question for our consideration in this appeal is whether the summary dismissal of the appeal preferred by the appellant precluded him from taking advantage of the provisions of section 439(6) of the Code of Criminal Procedure when he was subsequently called upon to show cause why the sentence imposed upon him should not be enhanced. The question depends for its answer upon a true construction of section 439. That section, so far as it is material for our present purpose, reads as follows: "439. (1) In the case of any proceeding the record of which has been called for by itself or which has been reported for orders, or which otherwise comes to its knowledge, the High Court may, in its discre 13 98 tion, exercise any of the powers conferred on a Court of Appeal by sections 423, 426) 427 and 428 or on a Court by section 338, and may enhance the sentence; and when the Judges composing the Court of Revision are equally divided in opinion, the case shall be disposed of in the manner provided by section 429. (2) No order under this section shall be made to the prejudice of the accused unless he has had an opportunity of being heard either personally or by pleader in his own defence. (3). . . . . . . . . . . . . (4). . . . . . . . . . . . . (5) Where under this Code an appeal lies and no appeal is brought, no proceedings by way of revision shall be entertained at the instance of the party who could have appealed. (6)Notwithstanding anything contained in this section,any convicted person to whom an opportunity has been given under sub section (2) of showing cause why his sentence should not be enhanced shall, in showing cause, be entitled also to show cause against his conviction". For a correct appreciation of the real meaning, import and scope of the provisions of sub section (6) of section 439 it will be necessary to bear in mind its historical background. In England there is no provision for an appeal by the Crown either against an order of acquittal or for the enhancement of sentence. There the person convicted has a right of appeal both against his conviction and the sentence imposed upon him. Under the English criminal procedure, therefore, the question of enhancement of sentence only comes before the Court of Criminal Appeal when there is an appeal by the convicted accused. In this country the provisions relating to the Court 's power of enhancement of sentence have undergone radical changes from time to time. Section 407 of the Code of Criminal Procedure, 1861 prohibited any appeal from acquittal. Express power was given to the appellate Court to reduce the sentence (sections 425 and 426) and like power was given to the Sudder Court as a Court of revision (sections 405 and 406). I find no provision 99 in that Code authorising the Sudder Court to enhance the sentence. The Code of Criminal Procedure of 1872, however, by section 272 permitted the Government to file an appeal from acquittal. This was repeated in section 417 of the Code of 1882 which corresponds to section 417 of the present Code. Section 280 of the Code of 1872 expressly authorised all appellate Courts to enhance the sentence. This power of enhancement, however, was taken away from the appellate Courts by section 423 of the Code of 1882 now reproduced in section 423 of the present Code and was vested in the High Court under section 439 of the Code of 1882 to be applied in exercise of its revisional power. This has been continued in our present section 439. This shows that the Legislature thought that this extraordinary power should be exercised only by the High Court and no other Court. A practice, how ever, appears to have grown up that in cases coming up before it for enhancement of sentence the High Court accepted the conviction as conclusive and proceeded to consider the question of enhancement of sentence on that basis. (See Emperor vs Chinto Bhairava (1)). Then came Act XVIII of 1923 which, by section 119, amended section 439 by adding the present sub section (6) and also amended section 369 by substituting the words "save as otherwise provided by this Code or by any other law for the time being in force, or, in the case of a High Court established by Royal Charter, by the Letters Patent of such High Court, no Court" for the words "No Court other than a High Court" with which the section formerly opened. The results of these amendments were (i) to make the judgment or order of the High Court passed in exercise of its original criminal jurisdiction final which it was not under section 369 as it originally stood and to make this finality subject to the other provisions of the Code or of the Letters Patent of the High Court and (ii) to nullify the practice referred to above and to give a statutory right to an accused person who was threatened with the risk of having the sentence imposed on him by the trial Court or the lower appel (1) Bom. 100 late Court enhanced by the High Court in exercise of its revisional jurisdiction suo motu or at the instance of the State or in exceptional cases even of any other interested person. Sub section (6), therefore, confers a new and a very valuable right on the subject which is designed to be a safeguard against the State or other interested person making frivolous revision application for enhancement of sentence. The State or the person interested must, if they ask for an enhancement of sentence, be prepared to face the risk of the accused being altogether acquitted. It is the price or quid pro quo which the State or other interested person must be prepared to pay for the right or privilege of making an application for enhancement of sentence. The language used in sub section (6) does not, in terms, place any fetter on the right conferred by it on the accused. This new right is not expressed to be conditioned or controlled by anything that may have happened prior to the revision application under sub section (1) for enhancement of sentence. The section quite clearly says that whenever there is an application for enhancement of sentence a notice must issue under sub section (2) to the accused person to show cause and whenever such notice is issued the accused person must, under sub section (6), be given an opportunity, in showing cause against enhancement, also to show cause against his conviction. The sub section does not say that he will have this right to show cause against his conviction only if he has not already done so. If the accused person appealed against his conviction and sentence to an appellate Court not being a High Court and lost that appeal after a full hearing in the presence of his opponent it must be conceded that he has had an opportunity to show cause against his conviction but nobody will contend that that circumstance will prevent him from having another opportunity of showing cause against his conviction and sentence either by a substantive application initiated by himself under sub section (1) or by way of defending himself when the State or other interested person applies to the High Court in revision under section 439(1) for enhancement of 101 sentence and a notice is issued on him under section 439(2). (See Kala vs Emperor(1)). Enhancement of sentence is undoubtedly an encroachment upon the liberty of the subject and a very serious matter for an accused person and the Legislature may quite properly have thought that whenever an accused person is sought to be laid open to the risk of having his sentence enhanced, the question of the legality and propriety of his conviction should be reexamined by the High Court in the context of this new jeopardy, irrespective of anything that might have happened prior to the application for enhancement of sentence and the issuing of the notice on the accused to show cause. Indeed, there is, in sub section (6) itself, an indication in that behalf. This sub section is to operate "notwithstanding anything contained in this section". In some of the decisions (e.g. Emperor vs Jorabhai(2), Crown vs Dhanna Lal(3), Emperor vs Inderchand(4) and King vs Nga Ba Saing(5)) it has been said that the non obstante clause refers only to sub section (5). I find it difficult to accept this limited construction as correct. Sub section (5) only says that where an appeal lies and no appeal is brought, no proceedings by way of revision shall be entertained at the instance of the party who could have appealed. The idea is that if a person has a right of appeal he must first pursue that remedy. In other words, sub section (5) is a disabling provision. By providing that no proceedings by way of revision shall be entertained at the instance of a person who, having a right of appeal, does not avail himself of it, the sub section precludes such a person from initiating proceedings by way of revision. When the accused person under sub section (6) shows cause against his conviction he himself initiates no proceedings but only exercises the right to show cause against his conviction which is given to him because somebody else has taken proceedings against him for enhance ment and a notice has been issued on him under subsection (2). In such a situation the accused person (1) A.I.R. 1929 Lah. 584. (2) Bom. (3) Lah. (4) A.I.R. 1934 Bom. (5) A.I.R. 1939 Rang. 392, 102 is on the defensive and the act of showing cause against proceedings initiated against him cannot properly be said to be, proceedings "at his instance" which the High Court, by sub section (5), is enjoined not to entertain. Strictly speaking sub section (6) needs no exemption from sub section (5). In any event and assuming that the act of showing cause against his conviction under sub section (6) is tanta mount to an application in revision initiated by him and such application is saved from the operation of sub section (5) by the non obstante clause of sub section (6) 1 do not see any reason for holding that the non obstante clause of sub section (6) is concerned only with sub section (5). Although in showing cause against his conviction under sub section (6) the accused person can urge all that he could do in an appeal, if not more, this act of showing cause is, nevertheless, in form at least, a continuation and indeed an integral part of the proceedings in revision initiated by the Court suo motu or by the State or any other interested party. The general rule is that the exercise of revisional power is entirely a matter of discretion which is to be exercised by the High Court not capriciously but on sound judicial principles. Indeed, sub section (1) itself lays stress on this aspect of the matter by the use therein of the words "in its discretion". The non obstante clause may well have been designed to emphasise that the new right conferred by sub section (6) is a matter of right and does not rest entirely on mere discretion of the Court. Further the non obstante clause has a special significance even in a case where the accused person has already had an opportunity, by means of an appeal or revision filed by him in the High Court, to show cause against his conviction. Under sub section (1) there can be a revision only of the judgment or order of Criminal Courts inferior to the High Court and it does not sanction any revision of the judgment or order of the High Court itself. Therefore, where the accused person has unsuccessfully challenged the legality or propriety of his conviction in an appeal or revision application made by him before the High 103 Court he cannot again initiate a substantive application before the High Court under section 439(1) of the Code to re examine his conviction or sentence, for that will be to ask the Court to revise its own previous judgment or order, which the High Court cannot do under section 439(1). But suppose that the dismissal of the appeal or revision application made by the accused takes place in such circumstances that it still leaves it open to the State or other interested person to apply in revision for enhancement of the sentence and proceedings are initiated by the Court or the State for enhancement of sentence under section 439(1) and notice is issued on the accused under section 439(2), there is nothing in subsection (6) which, in terms, prevents the accused, in that situation, to again show cause against his conviction and sentence. The only argument that may, in those circumstances, be advanced with some semblance of plausibility is that to let the accused person to again challenge his conviction or sentence under sub section (6) is to cut across the provisions of sub section (1) and in effect to permit the accused to ask the High Court to revise its previous order, although no substantive application could be initiated by him under sub section (I). It may well be that the non obstante clause in sub section (6) was also designed to negative such an argument. Although ordinarily no substantive application can be initiated by an accused person, whose appeal or revision application has once been dismissed by the High Court. for revision or review of that order of dismissal, I can find no difficulty in construing and reading section 439(6) as giving to the accused person, who is faced with the risk of having his sentence enhanced, a second opportunity to do what he had previously failed to do. In other words, I see no incongruity in the Legislature giving a new right of revision to the accused person as a weapon of defence in the context of a new offensive taken by the State against him. Even if the act of showing cause under sub section (6) is to be regarded as a revision, there was nothing to prevent the Legislature, in the interest of the liberty of the 104 subject, to provide for a limited right of revision of the judgment or decision or order of the High Court itself. In my judgment that is what the Legislature has done by adding sub section (6) to section 439 and the non obstante clause is intended to meet and repel the objection that may possibly have been taken on the score that, under sub section (1), there can be no revision by the High Court of its own order. In my opinion, so long as proceedings may be taken against the accused person for enhancement of his sentence and so long as notice may be issued on him to show cause against enhancement, so long must he have, in showing cause against enhancement of sentence, the right, under sub section (6), to show cause against his conviction, irrespective of anything that may have happened previously. That is how I read the sub section. Indeed, in Emperor vs Mangal Naran(1) McLeod, C. J., went further and expressed the view that if, after an appeal had been heard on its merits and dismissed, a notice to enhance sentence was issued, the accused would still have the right to show cause against his conviction although any attempt to set aside his conviction would not have much chance of success. For reasons to be stated hereafter I would rather say that in such a situation no application for enhancement would lie at all and that consequently no question would arise of the accused person exercising his right under sub section (6). This aspect of the matter that I am trying to indicate and emphasise does not appear to have been sufficiently adverted to in the subsequent decisions of the different High Courts in India except in one decision of a Full Bench of the Lahore High Court. It will be convenient at this stage to refer to those decisions. In Emperor vs Jorabhai (supra) the accused person was convicted by the Sessions Judge. He preferred an appeal to the High Court and a Bench of the High Court dismissed the appeal on merits after full hearing of both sides after notice of appeal had been served on the State. After the delivery of the judgment an oral application was made to the Bench by (1) Bom. 105 the Government pleader for the enhancement of the sentence. Notice was issued to the accused under section 439(2) of the Code. The accused claimed the right, under sub section (6) to challenge his conviction. It was held by Fawcett and Madgavkar, JJ., that section 439(6) did not justify what would be tantamount to a rehearing of the appeal on merits. In the case of Ramlakhan Chaudhury vs Emperor(1) the accused 's appeal had been previously dismissed after a full hearing and following the decision in Emperor vs Jorabhai (supra) it was held that the accused could not, under section 439(6), challenge the correctness of his conviction for the second time while showing cause against enhancement of sentence. The same principle has been extended to cases where the appeal of the accused person had been previously dismissed by the High Court summarily but after hearing the accused or his advocate. (See Emperor vs Batubai(2), Emperor vs Haji Khanhamoo(3), King vs Nga Ba Saing (supra), Emperor vs Naubat(4) ), to cases where the jail appeal of the accused had previously been dismissed summarily without hearing the accused or his advocate (see Emperor vs Koya Partab(5), Emperor vs Abdul Qayum(6), Ramchand vs Hiralal(7) and State vs Bhavani Shankar(8)) and to cases of dismissal of revision petition filed by the accused after hearing the advocate (see In re Saiyed Anif Sahib(1), Emperor vs Sher Singh("), Crown vs Dhanna Lal (supra) ) and also to the case of an accused whose revision petition has been summarily dismissed (see Emperor vs Inderchand (supra)). It has been held that for the purposes of section 439(6) it makes no difference whether the judgment or order of dismissal was made by the High Court in appeal or in revision, or whether the appeal or revision was dismissed summarily or after a full hearing on notice to the State or other interested party and that any dismissal of the appeal or (1) Pat. 872.(6) A.I.R. 1933 All. 485. (2) A.I.R. 1927 Bom. 666.(7) A.I.R. 1942 All. 339. (3) A.I.R. 1936 Sind 233.(8) I.L.R. (4) I.L.R [1945] All. 527. (9) A.I.A. (5) Bom. 822.(10) Lah. 521, 14 106 revision prevents the accused person from availing himself of the benefit of section 439(6). In two cases Emperor vs Lukman(1) and Emperor vs Shidoo(2) the Sind Court took up an intermediate position that the accused person whose appeal had been dismissed summarily or after full hearing could not challenge his conviction for the second time except to the extent that the conviction was not founded on legal evidence or was manifestly erroneous. In other words, lie could only go up to what was ordinarily permitted in a revision. These two decisions appear to me, with respect,to be illogical and I need say no more about them. In the other cases noted above it has been quite definitely held that the accused person whose appeal or revision application has been previously dismissed, summarily or after a full hearing, is not entitled, when called upon to show cause why the sentence should not be enhanced, to question the correctness of his conviction for the second time. In other words, the previous dismissal, according to these decisions. , is an adjudication by the High Court of the correctness of his conviction and on the principle of finality of judgment embodied in sections 369 and 430 of the Code of Criminal Procedure that adjudication cannot be called in question under section 439(6). It has been pointed out in several cases (Crown vs Dhanna Lal (supra), Emperor vs Inderchand (supra) and King vs Nga Ba Saing (supra)) that subsection (6) opens with the words "notwithstanding anything contained in this section" and not with the words "notwithstanding anything contained in this Code" and from this the inference has been drawn that while the sub section is to operate notwithstanding the provisions of sub section (5) it cannot override the other provisions of the Code, and, therefore, the operation of sub section (6) is conditioned or control led by the principle of finality of judgment embodied in section 369 and section 430. Some learned Judges have expressed the view (see In re Saiyed Anif Sahib (supra), Crown vs Dhanna Lal (supra)) that the words ( 'unless he has already done so" are to be read in sec (1) A.I.R. 1927 Sind 39. (2) A.I.R. 1929 Sind 26. 107 tion 439(6), for this is to be implied from the presumption of finality. In some cases (see Emperor vs Sher Singh (supra) and Ram Lakhan vs Emperor (supra)) the decision has been placed also oil the ground of the inherent incapacity of one Judge of the High Court to reconsider the decision of another Judge of that Court. It is necessary to examine these grounds a little closely to ascertain their validity. In order to appreciate the true meaning and exact scope of sections 369 and 430 on which the argument of finality of judgment is founded it is necessary to keep in view the general scheme of the Code. Part VI of the Code deals with "Proceedings in Prosecutions". Chapter XV lays down the jurisdiction of the Criminal Courts in Inquiries and Trials. I pass over Chapters XVI to XVIII. Chapter XIX prescribes rules for the framing and joinder of charges. Chapters XX to XXIII deal with different kinds of trials, e.g., trial of summons cases, warrant cases, summary trials and trials before High Courts and Courts of Session. Chapter XXIV contains general provisions as to Inquiries and Trials. Mode of taking and recording evidence is prescribed by the sections grouped together in Chapter XXV. then comes Chapter XXVI which is headed "Of the Judgment". Section 369 is one of the sections included in this chapter. Chapter XXVII provides for the submission of death sentences for the confirmation of the High Court. Rules relating to the execution, suspension, remission and commutations of the sentences are to be found in Chapters XXVIII and XXIX. Part VI ends with Chapter XXX which is not material for our present purpose. Part VII deals with "Appeal, Reference and Revision". Chapter XXXI is concerned with Appeals and we find section 430 in this chapter. Chapter XXXII provides for reference and revision, section 439 being one of the sections included in this chapter. In view of the scheme summarised above there can be no manner of doubt that the provisions of the sections collected in Chapter XXVI are concerned with judgments pronounced by the trial Court. This conclusion is certainly reinforced by the language of some 108 of these sections. Thus section 366 which is the very first section in this chapter refers to "The judgment in every trial in any Criminal Court of original jurisdiction". Section 367 provides what must be contained in "every such judgment", that is to say judgment in an original trial. Section 369 runs as follows: "369. Court not to alter Judgment. Save as otherwise provided by this Code or by any other law for the time being in force or, "in the case of a High Court by the Letters Patent or other instrument constituting such High Court", no Court, when it has signed its judgment, shall alter or review the same, except to correct a clerical error". The opening words "save as otherwise provided by this Code. . constituting such High Court" were added by section 119 of the Amending Act XVIII of 1923 and were further adapted by Adaptation of Laws Order, 1950. There can be no question that the finality embodied in this section is only in relation to the Court which pronounces the judgment, for it forbids the Court, after it has signed its judgment, to alter or review the same. In other words, after pronouncing the judgment the Court that pronounces it becomes functus officio. There is indication in the Code itself that the purpose of section 369 is not to prescribe a general rule of finality of all judgments of all Criminal Courts but is only to prescribe finality for the judgment of the trial Court so far as the trial Court is concerned. That this section does not,. by itself, apply to the judgment of an appellate Court is quite obvious, because if it did, there would have been no necessity for enacting section 424 specifically making the rules contained in Chapter XXVI, which includes section 369, applicable to the judgment of any appellate Court other than High Court, nor for again prescribing by section 430 a rule of finality for judgments and orders passed by an appellate Court. It, therefore, follows that while, subject to the other provi sions of the Code or any other law and of the Letters Patent, the finality of section 369 attaches to the judgments pronounced by all trial Courts including the High Court in the exercise of its original criminal 109 jurisdiction it certainly has no bearing on the question of finality of appellate judgments which is specifically provided by section 430 of the Code. Again, the rule of finality embodied in section 369 cannot, in terms, apply to the orders made by the High Court in exercise of its revisional jurisdiction, for section 442 of the Code which requires the result of the revision proceedings to be certified to the Court by which the finding, sentence or order revised was recorded or passed refers to it as its "decision or order" and not "judgment". It is significant that section 425 which requires the result of appeal to be certified to the lower Court refers to it as its "judgment or order". All these considerations herein alluded to quite clearly establish that section 369 cannot in any manner con trol section 439(6). In any case, section 369 is "subject to the other provisions of the Code" and I see no reason why section 439(6) should not be regarded as one of such other provisions. It cannot be overlooked that the words "subject to the other provisions of the Code, etc." were introduced into section 369 at the same time as sub section (6) was added to section 439. As I read the new sub section, it is a substantive statutory right conferred on the subject and full effect should be given to it unless there is any in superable difficulty in the way of doing so. If section 369 were susceptible of as wide a meaning as is read into it,, namely, that it applies to all judgments of all Courts, original, appellate or revisional, I would, in that case, bold that that meaning must be taken as cut down, by reason of the words "subject to the other provisions of the Code, etc. " by the mandatory provision& of section 439(6). In other words, section 439(6) must be read as controlling section 369 rather than the other way about. Finally, section 369 being subject to the other provisions of the Code must be read as subject to section 430 and as the finality enshrined in the latter section does not attach to decisions or orders made in revision by reason of Chapter XXXII being expressly excepted from its operation, the rule of finality embodied in section 369, even if it be as wide as it is contended to be, 110 cannot affect cases provided for in Chapter XXXII. I now pass on to section 430 which is also relied on as furnishing a principle of finality which is supposed to control the operation of section 439 6). Section 430, in terms, applies to "judgments and orders" passed by an appellate Court. It has no application to "decisions or orders" made by the High Court in revision. It has been contended that the exception made in section 430 in respect of cases provided for in Chapter XXXII only exempts the judgments or orders of an appellate Court other than a High Court from the rule of finality embodied in section 430, because they are made revisable by the High Court under section 439(1). Section 439(1) does not contemplate or permit judgments or orders made by the High Court in exercise of its original or appellate criminal jurisdiction to be revised by the High Court. As, therefore, the appellate judgments or orders of the High Court cannot, under section 439(1), be made the subject matter of any revision application, such appellate judgments or orders did not fall within the exception made in section 430 and were accordingly left subject to the rule of finality embodied therein. Two answers occur to me. If the effect of the new subsection (6), as I have already explained, is to confer a new right on an accused person notwithstanding anything contained in section 439(1), that is to say, if sub section (6) is read, as I think it should be, as a statutory provision expressly making the judgment or decision or order of the High Court passed in exercise of its appellate or revisional jurisdiction subject, for the purpose of the protection of an accused person whose appeal or revision had been previously dismissed, to re examination by the High Court only as and when he is subsequently faced with an application for enhancement of sentence, then such judgment, decision or order of the High Court does, as a result of section 439(6), become the subject matter of a case provided for in Chapter XXXII of the Code. In other words, the scope of Chapter XXXII having been enlarged by the addition of sub section (6) to section 439, the scope of the exception to sec 111 tion 430 must also stand enlarged so as to include within the exception whatever, after the amendment of section 439, may come within Chapter XXXII and, therefore, cases now coming within that Chapter must stand free from the rule finality embodied in section 430. The other answer is to be found in two of the decisions of the Allahabad High Court, namely Emperor vs Abdul Qayum (supra) and Ram Chand Hiralal(1) where it has been field that section 430 by V. its own terms saves the revisional power of the High Court to enhance the sentence. In each of these cases the jail appeal filed by the accused had been dismissed by the High Court summarily. If the rule of finality of appellate judgments does not attach to the summary dismissal of the jail appeal by the High Court so as to prevent the State from invoking its revisional power to enhance the sentence, surely the accused 's right to show cause against his conviction under section 439 (6), which is consequential and arises only upon a rule for enhancement being issued under section 439(2) and is, therefore, a part of the revisional proceedings for enhancement of sentence, must, on a parity of reasoning be also free from the same principle of finality. It, therefore, follows that section 434(6) is not, in terms, controlled by section 369 or section 430. Whether the sub section is controlled by the general principle of finality of judgments and if so to what extent are different questions which will be discussed later. The second ground on which some of the decisions rest, namely, the inherent incapacity of one Judge of the High Court to reconsider the decision of another Judge of the High Court may easily be disposed of The theory of inherent incapacity must give way to the statutory capacity conferred by section 439(6). If on a true construction a statute states, expressly or by necessary intendment, that one Judge or one Bench shall have jurisdiction and power to decide something, the theory of inherent incapacity of such Judge or Bench cannot be invoked to prevent the exercise of such jurisdiction and power merely on (1) A.I.R. 1942 All. 112 the ground that the decision which may be arrived at in exercise of this new jurisdiction or power may run counter to the previous decision arrived at by another Judge or Bench in exercise of another jurisdiction or power. I see no reason why section 439(6) may not be read as a provision which, by necessary implication, enables the High Court to re examine its own previous order on the happening of certain contingencies, namely, upon the accused person, whose appeal or revision has been dismissed, being faced with the risk of having his sentence enhanced and a notice being issued to him for enhancement. To reinforce the argument that section 439(6) is controlled by sections 369 and 430 reference has been made to section 423(2) and it has been contended, on the authority of various decisions, that the right given by section 439(6) is not absolute but is controlled by the provisions of section 423(2) which lay down some limitations in the matter of appeal from convictions in a jury trial. Even on that topic some learned Judges have taken divergent views. It is not necessary, on this occasion, to express any opinion on that question and I reserve my right to examine the position as and when an occasion may arise in future. Even if section 439(6) is controlled by section 423(2), that circumstance certainly does not indicate when and under what circumstances the right under section 439(6) may be availed of. In any case, that consideration has no bearing on the argument of finality of judgments sought to be founded on sections 369 and 430. It will be convenient at this stage to refer to the decision of a Full Bench of the Lahore High Court in Emperor vs Atta Mohammad(1) and to deal with the argument founded on and developed from some of the reasonings adopted by the learned Judges constituting that Full Bench. In that case the revision application of the accused had been dismissed in limine by the High Court. Subsequently the Crown applied for enhancement of sentence. Notice having been issued under sub section (2) of section 439 the accused (1) Lah. 113 person claimed the right, under sub section(6), to show cause against his conviction in spite of the fact that his revision application had been dismissed. The Advocate for the Crown relied on the cases referred to above and contended that the order of dismissal of the revision application by the High Court was final as regards the correctness of the conviction, that that order could not again be revised by the High Court, that the accused was no longer entitled to challenge his conviction and that it made no difference that his revision petition had been dismissed in limine. The Full Bench overruled the earlier decision of the Court in Crown vs Dhanna Lal (supra) and held that the accused was, in the circumstances of the case, entitled to show cause against his conviction, notwithstanding the fact that his application for revision had been dismissed in limine. The reasoning adopted by Blacker, J., was shortly as follows: That an order dismissing a revision petition in limine is an order made under section 435 and not under section 439; that such an order is not a judgment and, therefore, the principle of finality embodied in section 369 does not apply to such an order, because such a dismissal only meant that the Judge saw no adequate grounds disclosed in the petition or on the face of the judgment for proceeding any further; that, in the picturesque language of the learned Judge, in such a dismissal "there is no finding or decision unless it can be called a decision to decide to come to no decision"; that the jurisdiction exercised by the Court under section 439(6) was appellate jurisdiction and that an order of acquittal thereunder did not amount to a review of an order of dismissal under section 435; and finally that if the order under section 435 was a judgment or if an order of acquittal under section 439(6) was a review of such judgment, such review was not barred by section 369, because of the saving provisions with which the section begins. Mahajan, J., as he then was, put in the forefront of his judgment the view that section 439(6) which was introduced by amendment in 1923 gave a new and unlimited right 15 114 to the subject; that the Judge hearing the application for enhancement was bound to go into the facts to satisfy himself as to the correctness of the conviction; that the exercise of revisional jurisdiction was a mere matter of favour and a dismissal in limine of such application amounted only to a refusal to look into the record and was in no sense a judgment. Ram Lall, J., did not deliver any separate judgment but concurred generally with the other learned Judges. It will be noticed that this decision of the Lahore High Court rests mainly on two grounds, namely, (1) that in a dismissal of a revision application in limine there is no finding or decision at all and that it is nothing more than a refusal to send for the records or to look into the matter and is, therefore, not a judgment. , and (2) that, in any case, section 439(6) gives a new statutory right to the accused person to challenge the legality or propriety of his conviction, although his previous application for revision of the order of the lower Court had been dismissed in limine and that such a review of that dismissal order is not barred by section 369 because of the saving provision at the beginning of that section. The Full Bench expressly declined to express any opinion as to the effect of dismissal of an appeal on the right given by sub section (6). The principle of the first ground of the Lahore Full Bench decision has, however, been extended by the Rajasthan High Court in ' The State vs Bhawani Shankar (supra) to a case where the respondent 's jail appeal had been summarily dismissed. According to Wanchoo, C.J., the accused, whose jail appeal had been dismissed summarily, was in the same position as the accused, whose revision petition had been dismissed in limine, for he too could not be said to have had an opportunity of showing cause against his conviction. The learned Chief Justice, however, did not desire to go further and expressed the view that if an appeal were dismissed summarily but after hearing the party or his pleader the accused could not claim to have a second opportunity to challenge his conviction under section 439(6), because in that case he had been heard and, therefore, had had an oppor 115 tunity to show cause against his conviction when his appeal had been summarily dismissed. It will be recalled that in Emperor vs Jorabhai supra) and the other cases which followed it it was said that for the purposes of determining the applicability of section 439(6) it made no difference in principle whether the proceeding filed by the accused which had been dismissed was an appeal or a revision or whether the dismissal was summary or after a full hearing and that in none of such cases could the accused person claim a second opportunity to question the legality or propriety of his Conviction when he was subsequently called upon to show cause why the sentence passed on him should not be enhanced. In the Lahore Full Bench case and the Rajasthan case referred to above a distinction has, however, been made between a summary dismissal and a dismissal after a full hearing of the appeal or revision filed by the accused. In my judgment there is a substantial distinction between these two kinds of dis missals as regards their effect on the rights of accused persons as I shall presently indicate. I am, however, unable to accept the argument adopted by the Lahore Full Bench that a summary dismissal of a revision application filed by the accused must be regarded as an order made under section 435 and not one under section 439, that such a summary dismissal is nothing more than a refusal on the part of the High Court to go further or to look into the application and that in such a dismissal there is no finding or decision at all. Far less am I able to accede to the proposition that a summary dismissal of a jail appeal also stands on the same footing. Sections 421, 435 and 439 undoubtedly vest a very wide discretion in the Court. Discretion, as Lord Halsbury, L.C., said, in Sharp vs Wakefield(1), means sound discretion guided by law. It must be governed by rules of reason and justice and not according to private opinion; according to law and not by humour or caprice. It must not be arbitrary, vague and fanciful but must be legal and regular. This discretion is given to the (1) at p. 179. 116 High Court for the purpose of dealing with and disposing of the proceeding brought before it and not for not deciding it. The primary and paramount duty of the Court is to decide the appeal or revision and it is to exercise its discretion in so deciding it. In deciding the appeal or revision the High Court may choose which of its powers it will exercise if the circumstances of the case call for such exercise. In a clear case, apparent on the grounds of appeal or revision or on the face of the judgment appealed from or sought to be revised it may come to the conclusion that the case has no merit and does not call for the exercise of any of its powers in which case it may dismiss it summarily. If, however, it has any doubt, it may call for the record or may admit it and issue notice to the respondent and decide it after a full hearing in the presence of all parties. But decide it must at one stage or the other. The discretion conferred on the High Court does not authorise it to say that it will not look at the appeal or the revision. The court 's bounden duty is to look into the appeal or revision and decide it, although in the process of arriving at its decision it has very wide discretion. When the Court summarily dismisses an appeal whether without hearing the accused or his pleader as in the case of a jail appeal or after hearing the accused or his pleader but before issuing any notice to the respondent as in an appeal presented by the accused or his pleader, the Court does decide the appeal. It is indeed a very serious thing to say that sections 421, 435 or 439 give the Court a discretion not to decide the appeal or revision brought before it and I, for one, am not prepared to countenance and much less encourage such an idea. In my judgment a summary dismissal of an appeal or revision does involve an ad judication by the High Court just as a dismissal after a full hearing does. The only difference, as we shall presently see, is as to the respective, nature, scope and effect of the two adjudications. It has been said that when an appeal or revision is dismissed after a full hearing by the High Court the judgment of the lower Court merges in the High Court 117 judgment and the High Court judgment replaces the judgment of the lower Court and becomes the only operative judgment but that when the appeal or revision is summarily dismissed by the High Court there is, in such a dismissal, no finding or decision which can replace the judgment of the lower Court. it is, therefore, said that there can be no showing cause against his conviction under sub section (6) in the first case, for it will involve a revision of the High Court 's decision but the position will be otherwise in the second case where the dismissal was summary. This argument appears to me to be untenable and fallacious. Section 425 of the Code requires that whenever a case is decided on appeal by the High Court under Chapter XXXI it must certify its judgment or order to the Court by which the finding, sentence or order appealed against was recorded or passed and that that Court shall thereupon make such orders as are conformable to the judgment or order of the High Court and that,, if necessary, the record shall be amended in accordance therewith. Likewise, section 442 requires that when a case is revised under Chapter XXXII by the High Court, it shall, in the manner provided by section 425, certify its decision or order to the Court by which the finding, sentence or order revised was recorded or passed and that that Court shall thereupon make such orders as are conformable to the decision so certified and that, if necessary, the record shall be amended in accordance therewith. This certificate is sent in every case, whether the appeal or revision is disposed of summarily or after a full hearing. Where an appeal or revision is disposed of after a full hearing on notice to the respondent and allowed wholly or in part it becomes ex facie obvious that the judgment appealed against or sought to be revised has been altered by the judgment or decision of the High Court on appeal or revision and a note is made in the record of this alteration. But when an appeal or revision is dismissed after full hearing and the sentence is maintained there is outwardly no change in the record when the certificate is sent by the High Court but nevertheless there is an adjudica 118 tion by the High Court. In the first case it is judgment of acquittal or reduction of sentence and in the second case it is a judgment of conviction. Likewise, when an appeal or revision is summarily dismissed, such dismissal maintains the judgment or order of the lower Court and a note is made of such dismissal in the record and in the eye of the law it is the judgment of the High Court that prevails. To the uninstructed mind the change may be more easily noticeable in the first case than in the other two cases but on principle there is no difference. I can see no reason for holding that there is a merger or replacement of judgment only in the first two cases and not in the last one. In my opinion, it makes no difference whether the dismissal is summary or otherwise, and there is a judgment of the High Court in all the three cases. It is, at once urged that if the summary dismissal of an appeal or revision is also a judgment then the rule of finality prescribed by sections 369 and 430 will at once apply to it and a cunning accused may by putting up an obviously untenable appeal or revision and procuring an order of summary dismissal of it, prevent the State or any other interested party from making an application for enhancement of the sentence. The apprehension, to my mind, is unfounded for reasons more than one. When an appeal or revision is filed by an accused person he sets out his grounds in detail, challenging both his conviction and sentence. From the very nature of things he does not raise any question of enhancement of the sentence. At that stage no notice or rule having been issued the respondent is not before the Court to raise the issue of enhancement. So the summary dismissal only confirms the conviction and decides that the Court sees no ground for reducing the sentence. It is in no sense a decision that the sentence should not be enhanced for that issue was not before the Court at all and so it has been said, I think rightly, in several cases, [e.g. In re Syed Anif Sahib (supra)], Emperor vs Jorabhai (supra) and Emperor vs Inderchand (supra)]. The fact the High Court simply dismisses the appeal or revision summarily without issuing the notice on 119 the accused under section 439(2) for showing cause against enhancement is a clear indication that the High Court has not considered the question of enhancement. It is true that the rule of finality prescribed by section 430 applies to the appellate judgment of the High Court, subject to the exception regarding cases falling within Chapter XXXII. It is also true that although the revisional power is not expressly or in terms controlled either by section 369 or section 430, the general principle of finality of judgments attaches to the decision or order of the High Court passed in exercise of its revisional powers. But this finality, statutory or general, extends only to what is actually decided by the High Court and no further. When an appeal or revision by the accused is allowed after a full hearing on notice to the respondent the conviction and sentence must be regarded as having been put in issue and finally decided. When the accused person in the presence of the State claims an acquittal or reduction of his sentence, the State ought then and there to apply for enhancement of sentence and its failure to do so cannot but be regarded as abandonment of the claim. The acceptance by the High Court of the appeal or revision on notice to the respondent and after a full hearing is, therefore, nothing less than a judgment of acquittal or a judgment for reduction of sentence. On the other hand, the dismissal by the High Court of an appeal or revision after such a full hearing amounts to a judgment of conviction. In both cases the judgment is final as regards both the accused and the respondent as regards the conviction as well as the sentence in all its aspects, namely, reduction or enhancement. In that situation no further question of revision can arise at the instance of either party. There can be no further application by the accused challenging his conviction or sentence. Nor can there be any further application by the State for enhancement of the sentence, for that question could have been and should have been raised when the accused person in the presence of the respondent prayed for acquittal or reduction of sentence and not having then been raised it cannot be raised 120 subsequently and consequently no question can arise for the exercise of right by the accused under section 439(6). This result is brought about not by any technical doctrine of constructive res judicata which has no application to criminal cases but on the general principle of finality of judgments. The summary dismissal of an appeal or revision by the accused, with or without bearing him or his pleader but without issuing notice to the respondent is, so far as the accused is concerned, a judgment of conviction and confirmation of his sentence and he can no longer initiate revision petition against his conviction or sentence. The judgment or decision is a final judgment qua the accused person, for otherwise he could go on making successive appeals or revision applications which obviously he cannot be permitted to do. But the State or other interested person who has not been served with any notice of the appeal or revision cannot be precluded, by the summary dismissal of the accused 's appeal or revision, from asking for enhancement, for in that situation the State or the complainant not being present the question of enhancement was not in issue before the Court and the summary dismissal cannot be regarded as an adjudication on the question of enhancement. That question not having been put in issue and not having been decided by the High Court, the finality attaching to the summary dismissal as against the accused does not affect the position. This, I apprehend, is the true distinction between a summary dismissal of an appeal or revision and a dismissal of it after a full bearing. The cases of Emperor vs Jorabhai (supra) and the other cases following it overlooked this vital distinction as also its effect on the new statutory right conferred on the accused person by section 439(6) and they cannot be accepted as correct decisions. In those cases where the appeal or revision filed by the accused had been dismissed after a full hearing in the presence of the State and where there was no application by the State or other interested party for enhancement of sentence during the pendency of that appeal or revision it should have 121 been held that the dismissal must be regarded as a judgment which was final as against both parties on both points, conviction and sentence and there could be no further application for the enhancement of sentence and consequently no question of the accused having a further opportunity of showing cause against his conviction could arise. In the cases where the appeal or revision filed by the accused had been summarily dismissed without notice to the respondent, it should have been held that although such dismissal was final as against the accused it did not preclude the State or the complainant, who was not a party to the dismissal, from applying for enhancement of sentence and that as soon as an application for enhancement was made subsequently and a notice was issued to the accused, the latter, faced with the risk of having his sentence enhanced, at once became entitled, under section 439(6), in showing cause against the enhancement of sentence, also to show cause against his conviction. The Lahore Full Bench case has decided, inter alia that while the dismissal of the accused 's revision application in limine does not prevent the State from subsequently applying for enhancement of the sentence, section 439(6) gives the accused a fresh right to challenge his conviction when a notice for enhancement is issued to him. That part of the decision may well be sustained on this ground as explained above but, with great respect, I do not agree with their view that the accused in that case had the second right because the summary dismissal of his revision was not a judgment at all or was not final even as regards him. The Rajasthan High Court 's decision in so far as it extended the principle to the dismissal of a jail appeal without hearing the accused or his pleader under section 421 may also be supported on the ground I have mentioned. A Bench of the Lahore High Court in The Crown vs Ghulam Muhammad(1) has held that where the accused 's revision application bad been dismissed on notice to the respondent and after a full hearing and the State sub. (1) Pak. 16 122 sequently applied for enhancement of sentence, the accused person could again show cause against his conviction. With great respect I think that the better reasoning would have been to say that such a dismissal of the revision after a full hearing, was a judgment final against both parties on both points of conviction and sentence and that as the State did not, during the pendency of that revision, apply for revision it had. , after that dismissal which became a final judgment, no right subsequently to apply for enhancement of sentence and consequently no notice under section 439(2) could issue and no question could arise for the accused person asserting his right under section 439(6). For reasons discussed above I have to hold that the summary dismissal of the appeal filed by the appellant in the High Court was a judgment of conviction by the High Court and was final so far as the appellant was concerned and he could not initiate any further revision application either against his conviction or for reduction of sentence after that dismissal but that it was not final so far as the State was concerned and the State was entitled to apply in revision for enhancement of sentence. For reasons already stated I must further hold that as soon as the State applied for enhancement and a notice was issued on the appellant he became entitled under section 439(6) to again challenge his conviction. As I have said this sub section gives a new and valuable weapon of defence to an accused person who is placed in fresh jeopardy by reason of an enhancement application having been filed against him and a notice to show cause having been issued to him. I find nothing in sections 369 and 430 to cut down that right. The previous dismissal of his appeal had no bearing on the new situation created by the enhancement application which the Legislature, in enacting section 439(6), may well and properly have thought to be sufficiently serious to deserve and require a thorough re examination by the High Court of the conviction itself in this new context. There is nothing in principle that I can see which should prevent that sub sec 123 tion from giving a fresh right to the accused whose appeal or revision has been summarily dismissed to defend himself by challenging his conviction when a notice for enhancement is issued to him. In my judgment, for the reasons stated above, this appeal should be allowed and the matter should go back to the High Court so that the State 's application for enhancement may be dealt with according to law after giving the appellant an opportunity to show cause against his conviction. BHAGWATI J. delivered the Judgment of Bhagwati and Imam, JJ. This appeal on certificate under article 134(1)(c) of the Constitution raises an important question as to the right of a convicted person to show cause against his conviction while showing cause why his sentence should not be enhanced under section 439(6) of the Criminal Procedure Code. The appellant was charged before the Presidency Magistrate, 13th Court, Bombay with having committed an offence punishable under section 66(b) of the Bombay Act XXV of 1949 inasmuch as he was found in possession of one bottle of Mac Naughtons Canadian Whisky (Foreign) containing 8 drams valued at Rs. 20. He was convicted by the learned Presidency Magistrate and was sentenced to imprisonment till the rising of the Court and a fine of Rs. 250 in default rigorous imprisonment for one month. He presented his petition of appeal to the High Court of Judicature at Bombay through his advocate. This petition of appeal was however summarily dismissed by the High Court after hearing the advocate on the 19th January 1953. On the 18th May 1953 a criminal revision application for enhancement of sentence was filed by the State and a rule was granted by the Vaca tion Judge on the 12th June 1953. This rule came for hearing and final disposal before a Division Bench of the High Court on the 26th August 1953. After hearing the Government Pleader in support of the rule the Court was not satisfied that there was a case for enhancement of sentence. The learned counsel for the Appellant then wanted to argue for an acquittal 124 relying upon the provisions of section 439(6) of the Criminal Procedure Code. Relying however upon the decisions of the Bombay High Court in Emperor vs Jorabhai(1), and Emperor vs Koya Partab (2) , as also Emperor vs Inderchand(3), the Court did not allow the learned counsel to argue that the order of conviction itself could not be sustained. The application for enhancement of sentence was thereupon dismissed and the rule was discharged. The appellant applied for leave to appeal to this Court on the 15th October 1953. The Division Bench of the High Court, hearing the application stated the point which arose for determination as under: "Whether a summary dismissal of an appeal preferred by an accused person precludes him from taking advantage of the provisions of section 439(6) of the Criminal Procedure Code, when he is subsequently called upon to show cause why the sentence imposed upon him should not be enhanced". It pointed out that the consistent view taken by the Bombay High Court in this matter had been accepted by the Allahabad and the Patna High Courts in Emperor vs Naubat(4) and Ramlakhan Chaudhury vs Emperor(1) but the view taken by the Lahore High Court in Emperor vs Atta Muhammad(1), though not directly in point prima facie lent support to the contention urged by the learned counsel for the Appellant. A certificate was therefore granted to the Appellant that it was a fit case for appeal to this Court. It will be convenient at this stage to briefly indicate the relevant sections of the Criminal Procedure Code which will fall to be considered. Section 417 provides for an appeal on behalf of the State Government to the High Court from an original or appellate order of acquittal passed by any Court other than a High Court. Sections 419, 420, 421, 422 and 423 prescribe the procedure in cases of appeals. Section 419 deals with petitions of appeal presented by the appellant or his pleader and section 420 with petitions of appeal (1) Bom. (2) (3) (4) I.L.R. 1945 Allahabad 527. (5) Patna 872. (6) Lahore 391 (F.B 125 presented when the appellant is in jail. Section 421 provides for summary dismissal of these appeals if the Appellate Court considers that there is no sufficient ground for interfering, save that no appeal presented by the appellant or his pleader is to be dismissed unless the appellant or his pleader has had a reasonable opportunity of being heard in support of the same, and the Court might also before dismissing an appeal summarily call for the record of the case though not bound to do so. If the Appellate Court does not dismiss the appeal summarily, notice of appeal is to be given to the appellant or his pleader or to such officer as the State Government may appoint in this behalf, under section 422 and the powers of the Appellate Court in dismissing the appeal are laid down in section 423, the only relevant provision for the present purpose being that in an appeal from a conviction the Appellate Court might with or without the reduction in sentence and with or without altering the finding alter the nature of the sentence but. . . . . not so as to enhance the same. Section 430 incorporates the rule as to the finality of the Judgments and orders passed by an Appellate Court upon appeal except in cases provided for in section 417 which relates to appeals on behalf of the Government in cases of acquittal and Chapter XXXII which relates to reference and revision. Section 435 deals with the exercise of the revisional powers inter alia by the High Court to call for the records of the inferior criminal courts for the purpose of satisfying itself as to the correctness, legality or propriety of any finding, sentence or order recorded or passed and as to the regularity of any proceedings of such inferior Courts. Section 438 provides for a reference by the lower Appellate Court to the High Court recommending that a sentence which has been imposed on a convicted person be reversed or altered. Section 439 with which we are immediately concerned is couched in the following terms: (1)In the case of any proceeding the record of which has been called for by itself or which has been reported for orders, or which otherwise comes to its 126 knowledge the High Court may, in its discretion, exercise any of the powers conferred on a Court of Appeal by sections 423, 426, 427 and 428 or on a Court by section 338, and may enhance the sentence; and when the Judges composing the Court of Revision are equally divided in opinion, the case shall be disposed of in manner provided by section 429. (2)No order under this section shall be made to the prejudice of the accused unless he has had an opportunity of being heard either personally or by pleader in his own defence. (5)Where under this Code an appeal lies and no appeal is brought, no proceedings by way of revision shall be entertained at the instance of the party who could have appealed. (6)Notwithstanding anything contained in this section, any convicted person to whom an opportunity has been given under sub section (2) of showing cause why his sentence should not be enhanced shall, in showing cause, be entitled also to show cause against his conviction. Section 440 lays down that no party has any right to be heard either personally or by pleader before any Court when exercising its powers of revision provided however that the Court may if it thinks fit, when exercising such powers hear any party either personally or by pleader and nothing in that section shall be deemed to affect section 439(2) above. A person convicted of an offence may file in the High Court a petition of appeal or an application for revision challenging his conviction and the sentence passed upon him. The petition of appeal may be presented by him from jail or may be presented by him to the High Court in person or through his pleader. An application for revision also may be similarly presented by him to the High Court. A petition of appeal presented by him from jail or presented by him in person or through his pleader as aforesaid may be summarily dismissed by the High Court after perusing the same if it considers that there is no sufficient ground for interfering, the latter after giving him or 127 his pleader a reasonable opportunity of being heard in support of the same and in appropriate cases after calling for the record of the case. A notice of appeal may issue only if the High Court does not dismiss the appeal summarily and in that event only there would be a full hearing of the appeal in the presence of both the parties. In the case of an application for revision also the same may be dismissed summarily and without even hearing the party personally or by pleader. If however the Court deems fit to issue notice to the opposite party there would be a full hearing in the presence of both the parties. These proceedings would normally be concerned with the question whether the conviction can be sustained and the sentence passed upon the convicted person be set aside or reduced. There would be no question here of the enhancement of the sentence. The question of enhancement of the sentence would only arise when the High Court in exercise of its revisional jurisdiction. under section 439(1) thought it necessary to issue a notice for enhancement of sentence to the convicted person. Even though the Court exercising its powers of revision would not be bound to bear any party personally or by pleader no order under section 439(1) enhancing the sentence could be made to the prejudice of the accused unless he has had an opportunity of being heard either personally or by pleader in his own defence. In that event simultaneously with the opportunity given to him under sub section (2) of showing cause why his sentence should not be enhanced he would be entitled in showing cause also to show cause against his conviction by virtue of the provision of section 439(6). The exercise of this right of also showing cause against his conviction may arise in 4 different types of cases: (1) Where his petition of appeal has been summarily dismissed either without hearing him or after hearing him or his pleader as the case may be; (2) When his appeal has been dismissed after a full hearing following upon the notice of appeal being issued to the opposite party; 128 (3)When his application for revision has been summarily dismissed either without hearing, him or after hearing him or his pleader as the case may be; and (4)Where his application for revision has been dismissed after a full beating following upon a notice issued to the opposite party. When the High Court issues a notice for enhancement of sentence it is exercising its revisional jurisdiction and the question that arises for consideration is whether in one or more of the cases above referred to the High Court has jurisdiction to issue the notice of enhancement of sentence and the convicted person is entitled while showing cause why his sentence should not be enhanced also to show cause against his conviction. The view taken by the Bombay High Court in the cases noted above has been that in all the four cases mentioned above the accused has had an opportunity of showing cause against his conviction and that he is not entitled to a further or second opportunity of doing so while showing cause why his sentence should not be enhanced. It has not made any dis tinction between the exercise of appellate or revisional jurisdiction by the High Court nor between appeals or revision applications dismissed summarily or in limine and appeals or revision applications dismissed after a full hearing in the presence of both the parties. It has also extended the same principle to a reference made under section 438 and an order passed by the High Court thereupon "No order on reference", without even issuing notice to the applicant at whose instance the Sessions Judge made the reference. (Vide Emperor vs Nandlal Chunilal Bodiwala(1)). The Allahabad and the Patna High Courts have followed this view of the Bombay High Court in the decisions above referred to and the Lahore High Court in Emperor vs Dhanalal(2) also followed the same. But this decision of the Lahore High Court was overruled by a Special Bench of that Court in Emperor vs Atta (1) [1945] 48 Bombay L.R. 41 (F.B.). (2) Lahore 241. 129 Mohammad(1). The Special Bench held that the exercise of revisional jurisdiction by the High Court is entirely discretionary, that an application for revision is entertained as a matter of favour, that no party is entitled to be beard either himself or by pleader when the Court in, Exercising its revisional jurisdiction and that therefore a dismissal of an application for revision in limine tantamounts to a refusal by the Court to exercise its revisional jurisdiction and the convicted person under those circumstances is at all events entitled while showing cause why his sentence should not be enhanced also to show cause against his conviction. It went to the length of holding that section 439(6) confers upon the convicted person an unfettered and unlimited right of showing cause against his conviction, which right cannot be taken away unless there is a judgment in rem which only would operate as a bar to the decision of the same matter when it arises in the exercise of what is in effect the exercise of the ordinary appellate jurisdiction. The Rajasthan High Court in State vs Bhawani Shankar(2) has drawn a distinction between cases where the accused has not been heard at all and given no opportunity to show cause against his conviction his jail appeal having been dismissed under section 421 or his revision application having been dismissed without hearing him and cases where he has already been heard and given an opportunity to show cause against his conviction whether it be in appeal or in revision and whether his dismissal is summary or on the merits and held that in the former cases he is entitled to ask the Court to hear him and thus allow him to show cause against his conviction under section 439(6) if a notice of enhancement is issued to him. The principle as to the finality of criminal judgments has also been invoked while considering this question. This principle has been recognised by this Court in Janardan Reddy & Others vs The State of (1) Lah. 391 (F.B.). (2) I.L.R. 17 130 Hyderabad & Others(1) at page 367 where Fazl Ali, J. observed: "It is true that there is no such thing as the principle of constructive res judicata in a criminal case, but there is such a principle as finality of judgments, which applies to criminal as well as civil cases and is implicit in every system, wherein provisions are to be found for correcting errors in appeal or in revision. Section 430, Criminal Procedure Code. . . . . . . has given express recognition to this principle of finality by providing that "Judgments and orders passed by an Appellate Court upon appeal shall be final, except in cases provided for in section 417 and Chapter XXXII" Section 417 relates to appeals on behalf of Government in cases of acquittal by any Court other than a High Court and Chapter XXXII relates to reference and revision which also are powers exercised by the High Court over the judgments or orders of inferior Courts, thus excluding from the purview of this exception all judgments and orders passed by the High Court as an Appellate Court. Section 430 does not in terms give finality to the judgments of the High Court passed in exercise of its revisional jurisdiction, but the same principle would apply whether the High Court is exercising its appellate jurisdiction or its revisional jurisdiction, because in either case the High Court which is the highest Court of Appeal in the State would have pronounced its judgment,which judgment would replace the judgment of the lower Court and would be final. Even while exercising its revisional powers under section 439 the High Court exercises any of the powers conferred on a Court of Appeal by sections 423, 426, 427 and 428 and it is in effect an exercise of the appellate jurisdiction though exercised in the manner indicated therein. This principle of finality of criminal judgments therefore would equally apply when the High Court is exercising its revisional jurisdiction. Once such a judgment has been pronounced by the High Court either in the exercise of its appellate or its revisional jurisdiction no review or (1) ; 131 revision can be entertained against that judgment and there is no provision in the Criminal Procedure Code which would enable even the High Court to review the same or to exercise revisional jurisdiction over the same. The judgment of the High Court would replace that of the lower Court which would no longer be subsisting but would be replaced by the High Court judgment and thus it is only the High Court judgment which would be final and would have to be executed in accordance with law by the Courts below. Section 425 requires that whenever a case is decided on appeal by the High Court it should certify its judgment or order to the Court by which the finding, sentence or order appealed against was recorded or passed and the Court to which the High Court certifies its judgment or order shall thereupon make such orders as are conformable to the judgment or order of the High Court and, if necessary, the record shall be amended in accordance therewith. Section 442 similarly pro vides that when a case is revised under Chapter XXXII by the High Court it shall in the same manner certify its decision or order to the Court by which the finding, sentence or order revised was recorded or passed and the Court to which the decision or order is so certified shall thereupon make such orders as are conformable to the decision so certified and, if necessary, the record shall be amended in accordance therewith. These provisions are enacted because the High Court itself does not execute or carry into effect the sentences or orders passed against the convicted persons but the work of such execution has necessarily to be done in conformity with the sentences or orders passed by the High Court by the Courts which originally passed the same. Nevertheless the latter Courts execute or carry into effect the sentences or orders which are ultimately passed by the High Court and are invested with finality. In these cases there is no occasion at all for the exercise of the revisional powers by the High Court under section 439(1) of the Criminal Procedure Code. That jurisdiction can only be exercised by the High Court when the record of the proceedings of Subordinate Courts has been called for 132 by itself or the case has been reported to it for orders or has otherwise come to its knowledge and the High Court suo Motu on the application of the party interested thinks it fit to issue a notice for enhancement of sentence. This is a clear exercise of the revisional jurisdiction of the High Court and can be exercised by it only qua the judgments of the lower Courts and certainly not qua its own judgments which have replaced those of the lower Courts. The Criminal Procedure Code unlike the Civil Procedure Code does not define "judgment" but there are observations to be found in a Full Bench decision of the Madras High Court in Emperor vs Chinna Kaliappa Gounden and another(1), discussing the provisions of section 366 and section 367 of the Criminal Procedure Code and laying down that an order of dismissal under section 203 is not a judgment within the meaning of section 369. The principle of autrefois acquit also was held not to apply as there was no trial when the complaint was dismissed under section 203 with the result that the dismissal of a complaint under section 203 was held not to operate as a bar to the rehearing of the complaint by the same Magistrate even when such order of dismissal had not been set aside by a competent authority. Section 366 lays down what the language and contents of a judgment are to be and section 367 provides that the judgment is to contain the decision and the reasons for the decision and unless and until the judgment pronounced by the Court complied with these requirements it would not amount to a judgment and such a judgment when signed would not be liable to be altered or reviewed except to correct a clerical error by virtue of the provisions of section 369 save as therein provided. These observations of the Madras High Court were quoted with approval by Sulaiman, J. in Dr. Hori Ram Singh vs Emperor("). He observed that the Criminal Procedure Code did not define a judgment but various sections of the Code suggested what it meant. He then discussed those sections and concluded that "judgment" in the Code meant a judg (1) Mad. (2) A.I.R. 1939 Federal Court 43. 133 ment of conviction or acquittal. Reference was then made to the observations of Sri Arnold White, C. J. in Emperor vs Chinna Kaliappa Gounden & another(1) which were followed by another Division Bench of the Madras High Court in Emperor vs Maheshwara Kondaya (2) and it was held that an order of discharge was not a judgment as "a judgment is intended to indicate the final order in a trial terminating in either the conviction or acquittal of the accused". A Full Bench of the Bombay High Court in Emperor vs Nandlal Chunilal Bodiwala(3) pronounced that a judgment is the expression of the opinion of the Court arrived at after dueconsideration of the evidence and all the arguments. It was pointed out that sections 366 and 367 applied to the judgments of the trial Court and section 424 dealing with the judgments of the Appellate Courts provided that the rules relating to the judgments of a Trial Court shall apply so far as may " be practicable to the judgment of any Appellate Court other than a High Court. It followed therefore that there was no definite rule as to what the judgment of a High Court acting in its appellate as well as its revisional jurisdiction should contain. It was quite natural because the judgment of the High Court in its criminal jurisdiction was ordinarily final and did not therefore require the statement of any reasons whether the High Court was exercising its appellate or revisional jurisdiction. The judgment howsoever pronounced was however the expression of the opinion of the Court arrived at after due consideration of the evidence and all the arguments and would therefore either be a judgment of conviction or acquittal and where it would not be possible to predicate of the pronouncement that it was such an expression of opinion the pronouncement could certainly not be taken as the judgment of the High Court. A judgment pronounced by the High Court in the exercise of its appellate or revisional jurisdiction after issue of a notice and a full hearing in the presence of both the parties would certainly be arrived at after (1) Mad. (2) Madras 543. (3) 134 due consideration of the evidence and all the arguments and would therefore be a judgment and such judgment when pronounced would replace the judgment of the lower Court, thus constituting the judgment of the High Court the only final judgment to be executed in accordance with law by the Court below. When however a petition of appeal presented by a convicted person from jail is summarily dismissed under section 421 or a revision application made by him is dismissed summarily or in liming without hearing him or his pleader what the High Court does is to refuse to entertain the petition of appeal or the criminal revision and the order passed by the High Court "dismissed or rejected" cannot be said to be the expression of the opinion of the Court arrived at after due consideration of the evidence and all the arguments. It is a refusal to admit the appeal or the criminal revision so that notice be issued to the opposite party and the matter be decided after a full hearing in the presence of both the parties. It would be only after the appeal or the criminal revision was admitted that such a notice would issue and the mere refusal by the High Court to entertain the appeal or the criminal revision would certainly not amount to a judgment. The same would be the position when a reference was made by the lower Court to the High Court under section 438 and the High Court on perusing the reference made an order "no order on the reference" as the High Court on a consideration of the terms of the reference must have come to the conclusion that no prima facie case has been made out to warrant an interference on its part. If the High Court thought that it was a prima facie case for its interference it would certainly entertain the reference and issue a notice to the parties concerned to show cause why the judgment and order passed by the lower Court should not be revised. When a petition of appeal is presented to the High Court by the convicted person or his pleader section 421 provides that no such appeal should be dismissed unless the appellant or his pleader has had a reasonable opportunity of being heard in support of 135 the same and the High Court might before dismissing an appeal under that section, call for the record of the case but would not be bound to do so. Even in such a case the hearing accorded to the appellant or his pleader would be with a view to determine whether there was a prima ' facie case made out to warrant its interference in appeal. The appellant or his pleader would be heard in support of that position and if he satisfied the High Court that there was a prima facie case for its interference the High Court would admit the appeal and order a notice to issue to the opposite party in which event the appeal would be. decided after a full hearing in the presence of both the parties. The calling for the records of the case also though not compulsory but discretionary with the Court would be for this very purpose, viz., to determine whether a prima facie case for its interference was made out. The whole purpose of the hearing accorded to the appellant or his pleader even after calling for the records of the case would be to determine whether a prima facie case for its interference was made out and it would not be within the province of the Court at that stage to fully consider the evidence on the record and hear arguments from the appellant or his pleader with a view to determine whether the conviction could be sustained or the sentence passed upon the accused could be reduced. The setting aside of the conviction and the reduction, if any, in the sentence could only be determined by the Court after notice was issued to the opposite party and a full hearing took place in the presence of both the parties. Even in the case of a summary dismissal of a petition of appeal under these circumstances the position would certainly not be any different from that which obtains in the. case of a summary dismissal of the petition of appeal presented by the convicted person from jail or the summary dismissal of an application for criminal revision made by him or on his behalf to the High Court. In all these cases there will be no judgment of the High Court replacing the judgment of the lower Court and the action of the High Court would only amount to a refusal by the High Court to admit the 136 petition of appeal or the criminal revision and issue notice to the opposite party with a view to the final determination of the questions &rising in the appeal or the revision. The order dismissing the appeal or criminal revision summarily or in liming would no doubt be a final order of the High Court not subject to review or revision even by the High Court itself but would not tantamount to a judgment replacing that of the lower Court. The convicted person would be bound by that order and would not be able to present another petition of appeal or application for criminal revision challenging the conviction or the sentence passed upon him by the lower Court. But such order would not have the effect of replacing the judgment or order of the lower Court which would in that event be subject to the exercise of revisional jurisdiction by the High Court under section 439 of the Criminal Procedure Code at the instance of the State or an interested party. In the cases (1) & (3) noted above therefore there being no judgment of the High Court replacing the judgment of the lower Court section 439 (1) would operate and the High Court in exercise of its revisional jurisdiction either Suo motu or on the application of the interested party would be in a position to issue the notice of enhancement of sentence which would require to be served on the accused under section 439(2) so that he would have an opportunity of being heard either personally or by pleader in his own defence. In that event the convicted person in showing cause why his sentence should not be enhanced would also be entitled to show cause against his conviction. It follows therefore that in the case of a summary dismissal or a dismissal in limine of petitions of appeal or applications for criminal revision even if the convicted person or his pleader has been heard by the High Court with a view to determine if there is a prima facie case for its interference, the convicted person to whom an opportunity has been given under section 439(2) of showing cause why his sentence should not be enhanced would in showing cause be entitled also to show cause against his conviction. The 137 same would also be the position when a reference made by the lower Court to the High Court under section 438 of the Criminal Procedure Code is rejected by the High Court without issuing notice to the parties concerned by merely ordering "no order on the reference". In cases where the petition of appeal or the application for criminal revision is admitted by the High Court and a notice is issued to the opposite party and the High Court maintains the conviction with or without reducing the sentence passed upon the accused the judgment of the High Court in the exercise of its appellate or revisional jurisdiction would replace the judgment of the lower Court and there would be no occasion at all for the exercise by the High Court of its revisional powers under section 439(1) which can only be exercised qua the judgments of the lower Courts and certainly not qua its own judgments. The cases (2) & (4) noted above would therefore be outside the purview of section 439(1). If that is so there would be no question accused an opportunity of being heart sonally or by pleader in his defence 439(2) act the provisions of section 439(6) would certainly not come into operation at all. If no notice of enhancement of sentence could issue under these circumstances no question at all could arise of the convicted person showing cause why his sentence should not be enhanced and being entitled in showing cause also to show cause against his conviction. It follows by way of a necessary corollary that no notice for enhancement of sentence can be issued by the High Court when a judgment is pronounced by it after a full hearing in the presence of both the parties either in exercise of its appellate or its revisional jurisdiction. Such notice for enhancement of sentence can be issued by it either suo motu or at the instance of an interested party when the judgment of the lower Court subsists and is not replaced by its own judgment in the exercise of its appellate or its revisional jurisdiction. When the judgment of the lower Court has been under its scrutiny on notice being issued to 18 18 138 the opposite party and on a full hearing accorded to both the parties notice for enhancement of sentence can only be issued by it before it pronounces its judgment replacing that of the lower Court. When such hearing is in progress it is incumbent upon the High Court or the opposite party to make up its mind before such judgment is pronounced whether a notice for enhancement of sentence should issue to the accused. There would be ample time for the opposite party to make up its mind whether it should apply for a notice of enhancement of the sentence. The High Court also on a perusal of the record and after hearing the arguments addressed to it by both the parties would be in a position to make up its mind whether it should issue such notice to the accused. But if neither the opposite party nor the High Court does so before the hearing is concluded and the judg ment is pronounced it will certainly not be open to either of them to issue such notice for enhancement of sentence to the accused, because then the judgment of the High Court in the exercise of its appellate or revisional jurisdiction would replace that of the lower Court and section 439(1) would have no operation at all. Even in the case of a reference by the lower Court under section 438 of the Criminal Procedure Code the High Court if it did not summarily reject such a reference would issue notice to the parties concerned and then there would be occasion for it either suo motu or on the application of an interested party to issue a notice of enhancement of sentence before the hearing was concluded and a judgment was pronounced by it. The procedure obtaining in the several High Courts to the effect that notice for enhancement of sentence can issue even after the appeal or the application for criminal revision is disposed of by the High Court and judgment pronounced thereupon is not correct and is contrary to the true position laid down above. It was contended that the non obstante clause in section 439(6), viz. "notwithstanding anything contained in this section" was meant to confer upon the convicted person a right to show cause against his 139 conviction in those cases where a notice to show cause why his sentence should not be enhanced was issued against him, whatever be the circumstances under which it might have been issued. Once you had a notice for enhancement of sentence issued against the convicted person this right of showing cause against his conviction also accrued to him and that right could be exercised by him even though he had on an earlier occasion unsuccessfully agitated the maintainability of his conviction either on appeal or in revision. This non obstante clause could not in our opinion, override the requirements of section 439(1) which provides for the exercise of revisional powers by the High Court only qua the judgments of the lower Courts. Section 439(6) would not come into operation unless a notice for enhancement was issued under section 439(2) and a notice for enhancement of sentence under section 439(2) could not be issued unless and until the High Court thought it fit to exercise its revisional powers under section 439(1) qua the judgments of the lower Courts. The High Court has no jurisdiction to exercise any revisional powers qua its own judgments or orders, the same being invested with finality and otherwise being outside the purview of the exercise of its revisional jurisdiction, and the only purpose of the non obstante clause in section 439(6) can be to allow the convicted person also to show cause against his conviction when he is showing cause why his sentence should not be enhanced in spite of the prohibition contained in section 439(5). Where an appeal lies under the Code and no appeal is brought no proceedings by way of revision can be entertained at the instance of the party who could have appealed. If the convicted person could have 'filed an appeal but had failed to do so he could certainly not approach the High Court in revision and ask the High Court to set aside his conviction. If he could not file any application in revision he could not show cause against his conviction under section 439 (1) of the Criminal Procedure Code and it was in order to remove this disability that the non obstante clause in section 439(6) was enacted so that when the High 140 Court was exercising its revisional jurisdiction the convicted person could show cause against his conviction in spite of the fact that otherwise he could not have been able to do so, be not having appealed when an appeal lay and therefore not being entitled to file an application in criminal revision and challenge the validity or maintainability of his conviction. Section 439(6) therefore confers on the convicted person a right which he can exercise in the event of a notice for enhancement of sentence being issued against him in the exercise of the revisional jurisdiction by the High Court in spite of the fact that he was not entitled to question the validity or maintainability of his conviction in a substantive applica tion for criminal revision filed by him for the purpose and this right is available to him only if the High Court exercising its revisional jurisdiction under section 439(1) thinks it fit to issue a notice of enhancement of sentence against him under section 439(2) and in that event he has the right also to show cause against his conviction when showing cause why his sentence should not be enhanced. We shall now review the decisions of the various High Courts to which our attention has been drawn by the learned counsel appearing before us. Turning first to the decisions of the Bombay High Court we were referred to Emperor vs Chinto Bhairava (1), a decision given in the year 1908 which recognised the invariable practice of that Court for over 25 years according to which the accused in showing cause why the sentence should not be enhanced was not allowed to dis cuss the evidence and satisfy the Court that he had been wrongly convicted. The practice of the Court in such cases was to accept the conviction as conclusive and to consider the question of enhancement of sentence on that basis. It was open to the accused to apply for revision of the conviction, but having failed to avail himself of that, he could not be permitted to assail the conviction in a proceeding where the sole question was whether the sentence passed by the lower Court was adequate or not. It may be (1) Bom. 141 noted that this decision was in the year 1908 long before the amendment of section 439 of the Criminal Procedure Code by Act XVIII of 1923 by adding subsection (6) thereto. The next decision to which we were referred was Emperor vs Mangal Naran(1). In that case simultaneously with the admission of an appeal filed by the accused the Court issued a notice for enhancement of sentence. When the appeal and the notice came for hearing together before the Division Bench the Court observed that such a practice was not desirable. It was likely to produce an impression on the mind of an illiterate accused in jail that it was proposed to enhance the sentence because he had appealed. MacLeod, C.J. there expressed an opinion that if after an appeal had been heard on its merits and dismissed a notice to enhance the sentence was issued, the accused had still the right to show cause against his conviction, though any attempt to set aside the conviction would not have much chance of success. He however expressed his preference in favour of the old practice, viz. first to deal with the appeal and then to consider whether a notice to enhance should issue. No ques tion had arisen for consideration of the Court in that case as to the true construction of the provision of section 439(6) of the Criminal Procedure Code and the only question considered by the Court there was what should be the proper procedure to be adopted when issuing a notice for enhancement of sentence, whether it should be issued simultaneously with the admission of the appeal or after the appeal was finally heard and disposed of. This opinion expressed by MacLeod, C.J. was therefore treated as obiter in Emperor vs Jorabhai Kisanbhai(2). The question that arose for consideration of the Court in that case was whether after an appeal of an accused person against his conviction and sentence had been dismissed by a Division Bench of the High Court and a notice to enhance the sentence was issued on an application on behalf of the Government the application for enhancement of sentence could be (1) (2) Bom. 142 heard on its merits by another Division Bench of the High Court treating the conviction as correct or the accused was under such circumstances not entitled under section 439(6) to be re heard on the merits of his conviction. The appeal filed by the accused against his conviction and sentence had been dismissed on the 7th April, 1926. After judgment was delivered by the Court, the Government Pleader applied orally for issue of a notice for enhancement and that application was granted. The application was heard on the 17th June 1926 and it was urged on behalf of the accused that the only proper procedure was to issue a notice for enhancement of sentence before the appeal had been actually disposed of and that once the appeal was disposed of by the Court there was no legal power to enhance the sentence under section 439 of the Criminal Procedure Code. That contention was negatived the Court observing that so far as the point of procedure was concerned there was no hard and fast rule as to the appropriate time for the issue of notice of enhancement of sentence by the High Court and resorting, to the principle of the finality of judgments as regards the accused being concluded by the judgment of the High Court dismissing his appeal and confirming the sentence passed upon him. The judgment there was interpreted as confirming the conviction and rejecting the appeal as to the sentence in the sense that it saw no reason to reduce it and that was not treated as a decision that the sentence should not be enhanced if a proper procedure was taken such as the Code allowed for the purpose and therefore so far as the judgment went there was nothing which in any way tied the hands of the Court. Sections 369 and 430 of the Criminal Procedure Code were referred to and the Court held that the observations of MacLeod, C.J. in Emperor vs Mangal Naran(1) above referred to were obiter dicta not binding upon them and the application must be heard on the merits treating the conviction as correct in view of the dismissal of the appeal. It is no doubt true as observed by Madgavkar, J. (1) 143 in regard to the practice as to the proper time for issuing of the notice of enhancement that the question of adequacy of punishment is, in the first instance, a matter for the Government and for the District Magistrate. From the time when the sentence is passed, and at all events up to the time when anappeal is admitted and notice is received, it is open to Government to consider the sufficiency of a sentence and before hearing of the appeal, to apply to the High Court for enhancement of the sentence if they are so advised. In that event the appeal as well as the notice of enhancement would be heard together and the Court hearing the appeal would apply its mind not only to the question whether the conviction should be confirmed but also to the question whether the sentence should be reduced or enhanced as the case may be ' It is only in rare instances that the High Court considers for itself the question of enhancement of sentence and only if no action has been taken by the Government and if the High Court thinks that the interests of justice imperatively demand it. In such a case it would be a matter for consideration by the High Court whether it should issue notice at the very time of the admission or whether it should do so while disposing of the appeal on the merits as to the conviction. The observations of the learned Judge however in so far as they seem to suggest that the appeal should be disposed of first and the question of enhancement of sentence should be considered by the same Bench immediately afterwards or that the notice for enhancement could be issued by the Court after the disposal of the appeal on the merits as to conviction do not take into account the fact that after the judgment is pronounced and the conviction is confirmed involving as a necessary corollary thereof the confirming of the sentence passed upon the accused also if the same is not reduced, the judgment of the High Court replaces that of the lower Court and the exercise of any revisional powers by the High Court by way of enhancement of the sentence is necessarily eschewed. These revisional powers could only be exercised by the High Court qua the judg 144 ment of the lower Court and once that judgment is replaced by the judgment of the High Court, the High Court has no further powers to review or revise its own judgment and enhance the sentence which is thus passed by it upon the accused. The principle as to the finality of judgments applied by the Court by virtue of the provisions of section 369 and section 430 of the Criminal Procedure Code should not have been confined merely to the question of confirming the conviction but also should have been extended to the confirming of the sentence in so far as the High Court did not see any reason to reduce the sentence already passed by the lower Court upon the accused. When the High Court hears the appeal on its merits it does not apply its mind only to the question whether the conviction should be confirmed but also applies its mind to the adequacy of the sentence passed upon the accused by the lower Court. In thus applying its mind to the question of sentence it also considers whether the sentence passed upon the accused by the lower Court is adequate in the sense that it is either such as should be reduced or is such as should be enhanced. The questions of the reduction of the sentence or enhancement of the sentence are not to be viewed as if they fall into water tight compartments and the mind of the Court hearing the appeal on merits is directed to the consideration of the matter in all its aspects including the confirming of the conviction and the reduction or enhancement of the sentence as the case may be. The principle of finality of judgments should therefore be extended not only to the question of the confirming of the conviction but also to the question as to the adequacy of the sentence, whether the sentence which is passed upon the accused by the lower Court should be reduced, confirmed or enhanced. Once therefore the judgment of the High Court replaces that of the lower Court there is no question which can ever arise of the exercise by the High Court of its revisional powers under section 469(1) of the Criminal Procedure Code and the proper procedure therefore if the High Court thought it fit either suo motu or on the application of the interested party 145 to issue the notice of enhancement of sentence, is to issue the said notice before the hearing of the appeal is concluded and the judgment of the High Court in appeal is pronounced. We are therefore of the opinion that the decision reached by the High Court of Bombay in Emperor vs Jorabhai(1) was not correct in so far as it held that the notice of enhancement could be issued by the High Court at the instance of the Government after the dismissal of the appeal on merits. The notice for enhancement issued in that case was not competent and should not have been issued at all by the High Court. The decision in Emperor vs Jorabhai(1) was followed in Emperor vs Koya Partab(2) which extended the same principle to an appeal which had been presented from jail and was summarily dismissed under section 421 of the Criminal Procedure Code. While dismissing the same the Court issued a notice for enhancement. When the notice came for hearing the accused contended that he was entitled to be heard on the merits as to whether he should have been convicted or not relying upon the provisions of section 439(6). Beau mont, C.J. relied upon the provisions of section 430 and observed that the accused was not at liberty to be heard on the merits. The judgment of the Court of Appeal dismissing the appeal on the 9th June 1930 was a final order which the Court was not at liberty to differ from and the non obstante clause in section 439(6) did not entitle the accused to go behind section 430 and to show cause against his conviction after his appeal had been dismissed. The learned Chief Justice followed the decision in Emperor vs Jorabhai (1) and observed that the only distinction between that case and the one before him was that case had been heard on the merits and not summarily dismissed. But in his view that distinction was not one of principle. We are of the opinion that the order which had been pronounced by the Court of Appeal on the 9th June 1930 was not a judgment of the High Court which replaced that of the lower Court and (1) Bom. (2) 19 146 even though it might come within the description of an order within the meaning of section 430 it was not a judgment within the meaning of the term set out above and not being a judgment was no bar to the accused showing cause also against his conviction when showing cause against the notice for enhancement. The matter was one falling within the category of case No. I noted above and it was open to the accused even though his petition of appeal from jail was summarily dismissed under section 421 to urge while showing cause against the notice of enhancement of sentence also to show cause against his conviction. This decision was therefore in our opinion incorrect and the accused ought to have been heard on the merits as to whether he should have been convicted or not. Emperor vs Ramchandra Shankarshet Uravane(1) was a case where the High Court admitted the appeal and at the same time issued a notice to the accused for enhancement of sentence. The observations of MacLeod, J. in Emperor vs Mangal Naran(2) were followed in spite of the fact that they bad been held obiter by the Division Bench of the Court in Emperor vs Jorabhai (3). Emperor vs Jorabhai (3) was also referred to and it was held that it was neither necessary nor desirable for the High Court to issue a notice, for enhancement of sentence at the time of admission of the appeal. It was however observed that it was open to consider the question of enhancement of sentence after the appeal had been heard. If those observations were meant to convey that the question of enhancement of sentence could be considered after the appeal had been disposed of and judgment was pronounced by the High Court we do not agree with the same. But if they were meant to convey that the High Court could hear the accused on the question of enhancement of the sentence at the same time when his appeal was heard, before pronouncement of the judgment on the question of the conviction and the (1) (2) (3) Bom. 147 sentence passed upon him, they were perfectly in order. The decision in Emperor vs Inderchand(1) extended the principle enunciated in Emperor vs Jorabhai further by applying it to a case where an application for revision by the accused against his conviction and sentence had been dismissed by the High Court. In that case the accused had filed an application for revision which was summarily dismissed by the Vacation Judge on the 30th April, 1954. After such summary dismissal of the application the Government filed the criminal revision application for enhancement of sentence. The Division Bench held that the criminal revision application of the accused having been fully disposed of by the learned Vacation Judge there was a valid order of dismissal, that section 430 debarred the accused from having that order of dismissal reviewed by the High Court that the right conferred by section 439(6) could not give an accused person a right to be heard against his conviction if such a right was in conflict with the other provisions of the Code, that under section 369 the Court had no power to alter the decision of the learned Vacation Judge dismissing the revision petition filed by the accused and that if the accused bad already unsuccessfully exercised his right of appeal or revision to the High Court he was not entitled in a subsequent application by the Government for enhancement of sentence to ask the High Court to go once more into the merits of the case and to set aside the conviction which the same Court had previously confirmed either in appeal or on a revision application. Divatia, J. was conscious of the somewhat anomalous position so far as the accused was concerned and referred to the observations of the Court in Emperor vs Babu Pandurang Mhaske(3) where it was stated and rightly that where the High Court itself wanted to enhance the sentence, in order that the accused might have the right to challenge his conviction before the same bench which was hearing either the appeal or the (1) (2) (1926] I.L.R. (3) 148 application for enhancement, it was proper that the application for enhancement should be heard before the appeal was finally decided, so that the accused might be heard at the very time when the question of enhancement was before the Court. While approving of these observations the learned Judge however observed that it was possible only in a case where the High Court itself wanted to enhance the sentence and gave notice to the accused and not so in a case where Government approached the High Court by way of a revisional application as it was entitled to do under section 439(1). Government might approach the High Court in revision under section 439(1) at any time within six months after the decision of the lower Court and in the meanwhile the accused might have come to the High Court and his application might have been rejected. That might result in this that the conviction might be confirmed by one Bench or a single Judge as might happen in a particular case and the application for enhancement might be heard by another Bench. But, so far as the provisions of the section were concerned, whatever might be the anomaly in this procedure, the learned Judge did not think that the inconvenience or hardship to the accused should lead the Court to construe section 439 of the Criminal Procedure Code in a manner which, according to the view of the learned Judge, was not intended by the Legislature. These observations however did not take count of the fact that if a petition of appeal or a criminal revision application filed by the accused was dismissed summarily or in limine there was no question of a judgment of the High Court replacing that of the lower Court and the order of the High Court merely amounted to a refusal by it to interfere either in the exercise of its appellate or revisional jurisdiction which order though final and not being susceptible of review or revision by the High Court itself, did not amount to a judgment of the High Court barring the application of section 439(1) of the Criminal Procedure Code. In that event the judgment of the lower Court not being replaced by a 149 judgment of the High Court it could be the subjectmatter of criminal revision at the instance of the Government in the matter of the enhancement of the sentence and all the provisions of section 439 would then come into operation. The High Court would be bound then under section 439(2) to give an opportunity to the accused to be heard in his defence before the sentence passed upon him by the lower Court was enhanced and the accused would under section 439(6) be entitled in showing cause against the notice of enhancement also to show cause against his conviction. This decision of the High Court therefore was incorrect and the accused ought to have been allowed in spite of the summary dismissal of his application in revision to show cause against his conviction while showing cause against the notice for enhancement. One more decision of the Bombay High Court may be referred to and that is Emperor vs Nandlal Chunilal Bodiwala(1). That was a case where the Sessions Judge of Ahmedabad had at the instance of the petitioner made a reference to the High Court recommending that the Additional Magistrate had no jurisdiction, power or authority to pass the order complained against and that the High Court should quash the same. On the reference coming before the High Court the following order was passed without issuing notice: "no order on this reference". The petitioner thereupon filed a criminal revision application to the High Court praying that the order of the Additional District Magistrate be quashed. This revision application came for hearing before a Division Bench and the Court requested the Chief Justice to constitute a Full Bench to consider the following point: "When on a reference made by the Sessions Judge under section 438 of the Criminal Procedure Code, a Division Bench of this Court passes an order without issuing notice, viz., 'No order on this reference ', whether the applicant at whose instance the Sessions Judge made the reference is entitled to make an application in revision to this Court in the same (1) 150 matter, in view of the provisions of section 369 of the Criminal Procedure Code?" The application was heard by a Full Bench and it was contended on behalf of the petitioner that when the High Court without issuing notice to the applicant disposed of the reference made by the Sessions Judge by stating "no order on the reference" there was no judgment given on the merits. The order of the Court only meant that the Court would not allow the matter to be brought before it on the recommendation of the Sessions Judge and merely disposed of it on that view. If a mere order of disposal of a reference or revision application amounted to a judgment the party in whose favour a reference was made by the Sessions Judge would be deprived of the right he had of approaching the High Court in revision against the order, if the Court disposed of the matter in the manner it had done in that case. This argument was repelled by the Full Bench. It held that section 369 of the Criminal Procedure Code debarred the petitioner from making the criminal revision application, that the order of the High Court passed upon the reference amounted to a judgment within the meaning of that term in section 369 of the Criminal Procedure Code and after it was signed it could not be altered or reviewed in a subsequent application for revision and that even though the Division Bench of the High Court passed the order "no order on this reference" without issuing notice to the applicant, the applicant whose favour the Sessions Judge made a reference was not entitled to make an application in revision to the High Court in the same matter. Even though this conclusion was reached by the Full Bench they observed that they were not unaware that the applicant had a grievance that his position had been worsened and not improved by the Sessions Judge being in his favour, because if the recommendation of the Sessions Judge was turned down without hearing the petitioner, as had happened in that case he was worse off, while if the Sessions Judge would have been against him he could have still applied to the High Court in revision 151 and got an opportunity to put his case before the High Court. This was recognised no doubt as an anomaly but it was caused by the provision of rule 26 of the Appellate Side Rules of the Bombay High Court which compelled a party to apply to a lower revisional Court before applying in revision to the High Court. This disability which the petitioner suffered from was emphasised in that if the Sessions Judge had dismissed his application he could then have applied to and argued his case before the High Court, but because the Sessions Judge was in his favour and had therefore got to make a reference to the High Court recommending it to set aside the order and because the High Court was not satisfied with the reasons for the recommendation, and disposed of it without issuing a rule, the petitioner was debarred from urging his arguments before the High Court. It might be that the reasons given by the Sessions Judge for the recommendation might be weak or might be insufficient, whereas the petitioner, if he appeared might be able to urge cogent and sufficient reasons for setting aside the original order. In spite of pointing out this disability the only recommendation which was made by the Full Bench was that the Rule 26 of the Appellate Side Rules should be properly amended so as to issue notice to all the parties concerned when a reference was made by a Sessions Judge recommending the setting aside of an order of the Trial Court. We are of the opinion that the Full Bench should not have stopped short at pointing out this disability which the applicant suffered from but should have gone further and held that the order passed by the High Court on the reference, though final under section 430 of the Criminal Procedure Code was not a judgment within the meaning of that term and therefore did not debar the applicant from making the criminal revision application which he did under section 439(1) of the Criminal Procedure Code. Such an order did not amount to a judgment within the definition thereof given by the Full Bench itself which was: "a judgment is the expression of the opinion of the Court arrived at after due consideration of the 152 evidence and of the arguments" as pointed out earlier in the course of this judgment. We are of the opinion that this decision of the Bombay High Court was also incorrect. Emperor vs Jorabhai (1) was followed by the Lahore High Court in Emperor vs Dhanalal(2). In that case a revision petition filed on a behalf of the convicted person was dismissed after hearing counsel. Subsequently a report of the Sessions Judge was received and the learned Judge who had dismissed the revision petition issued a notice for enhancement of sentence and the Court held that section 439(6) was meant to give an accused person to whom a notice for enhancement was issued and who had not appealed or if no appeal lay had not applied for revision of his conviction an opportunity to question the correctness of his conviction if it was proposed to enhance his sentence. But if a petition for revision against his conviction by a convict had been rejected by a Judge of the High Court and a notice had subsequently been issued to him to show cause why his sentence should not be enhanced the convict was barred from showing cause against his conviction and the fact that the previous order dismissing the revision was passed without issuing notice to the opposite party made no difference to the position. The Court also invoked the principle of the finality of judgments and further held that the words "unless he had already done so" though not occurring at the end of the sub section were to be presumed to be implied from the ordinary presumption as to the finality of orders in criminal revision proceedings. In arriving at this conclusion Addison, J. observed: "In the present case there has been a judgment of this Court on the very full revision application brought by the convict. By that judgment the petition was dismissed and the conviction confirmed. Under section 369, Criminal Procedure Code that judgment cannot be reviewed. It is a final judgment of this Court, and in my opinion the provisions of sub (1) Bom. (2) Lah. 153 section (6), section 439, do not give the convict another opportunity in these circumstances to be heard as regards his conviction". There was no justification whatsoever for reading the words "unless he had already done so" in the section and the reasoning adopted by the learned Judge in our opinion wrongly invested the order passed by the High Court in the exercise of its revisional jurisdiction dismissing the application without issuing a notice to the opposite party with the character of a judgment which could only be enjoyed by it if it had been pronounced after a full hearing in the presence of both the parties after notice issued to the opposite party. Then the pronouncement of the High Court would have been a judgment replacing the judgment of the lower Court and not subject to the exercise of any revisional jurisdiction under section 439(1) of the Criminal Procedure Code. Where the petition for revision against his conviction presented by the convict had been rejected by the High Court in limine the order passed by the High Court did not tantamount to a judgment which would debar the convict from showing cause against the conviction when showing cause against a subsequent notice for enhancement of sentence issued by the High Court. The learned Judge further observed: "There appears to be no distinction between dismissing a revision petition in limine or after notice. The judgment is in either case an effective and final judgment of the Court. In this respect there is no difference between a revision petition and a memorandum of appeal. . . . In these circumstances I can see no force in the argument that an, order dismissing a revision petition without issuing notice is different from an order after the issue of notice, or that there is any distinction between a judgment of this Court passed on the revision side and one on the appellate side". While agreeing with the observations of the learned Judge that for the purposes of section 439(1) there was no distinction between a judgment of 20 154 the High Court passed on the revision side and one on the appellate side we are of the opinion that there is a real distinction between orders dismissing a revision petition or a petition of appeal in limine without issuing notice to the opposite party and judgments pronounced by the High Court in the exercise of its appellate or revisional jurisdiction after a full hearing in the presence of both the parties after the issue of notice. The latter are judgments in the true sense of the term which debar the exercise of revisional jurisdiction by the High Court under section 439 (1) of the Criminal Procedure Code. This decision of the Lahore High Court was however overruled by a Special Bench of that Court in Emperor vs Atta Mohammad(1). A criminal revision application had been dismissed in limine and thereafter a notice for enhancement of sentence was issued by the High Court. The decision of that Court in Emperor vs Dhanalal(1) following Emperor vs Jorabhai(3) was cited as debarring the accused from showing cause against his conviction and Blacker, J. before whom the matter was argued in the first instance recommended a reference to a larger Bench and the reference came up for hearing and final disposal before a Special Bench of the Court. It was held that the accused was entitled to show cause against his conviction notwithstanding the fact that his petition for revision of the order by which he was convicted had already been dismissed in limine under section 435 of the Criminal Procedure Code. The question whether an order under section 435 was a judgment was discussed by Blacker, J. while pronouncing the judgment of the Special Bench. He referred to the case of Dr. Hori Ram Singh vs Emperor(1) above referred to and quoted with approval the observations of Sulaiman, J. that every order in a criminal matter was not a judgment and that 'judgment ' in the Crimi nal Procedure Code meant a judgment of conviction or acquittal. Applying this definition the learned Judge observed: (1) Lah. 391 (F.B.). (2) Lahore 241. (3) Bom. (4) A.I.R. 1939 F.C. 43. 155 "It will be seen that an order under section 435 can with difficulty be called a judgment. All that a Judge does at this preliminary stage is either to send for the records of the lower Court with a view to examining them under section 439(1) or to refuse to do so. It is difficult to see how the latter can possibly be called a judgment of conviction. When such an order consists of the one word 'Dismissed ' can it necessarily be taken as a judicial pronouncement that in the opinion of the Judge the respondent was rightly convicted upon the evidence? It seems to me that all that it means is that the Judge sees no adequate ground disclosed in the petition or on the face of the judgment for proceeding further". This reasoning in our opinion was quite sound. But the learned Judge proceeded further to make a distinction between the summary dismissal of a petition of appeal under section 421 and the summary dismissal of a criminal revision application under section 435 stating that the reasons for which the High Court would summarily dismiss an appeal were very different from those for which it would refuse to interfere in revision, and in the case of appeal it would only do so when the material before it was sufficient to satisfy it beyond any doubt of the accused 's guilt, whereas, on revision the High Court would not interfere merely because it did not agree on every point with the Court below,, as long as the Courts below have come to a reasonable decision on the evidence. This distinction in our opinion does not affect the position that the order pronounced by the High Court dismissing the petition of appeal or a criminal revision application in limine without issuing notice to the opposite party is merely an order dismissing the same on the ground that there is no prima facie case for interference of the High Court and does not amount to a judgment pronounced by the High Court after full hearing in the presence of both the parties which only can debar the High Court from exercising its revisional jurisdiction under section 439(1). Mr. Justice Mahajan as he then was delivered a concurring judgment but went a step further and observed that 156 the true interpretation of section 439(6) was that it gave an unlimited right to the accused to whom a notice of enhancement was issued under section 439(2) to show cause against his conviction and the Judge was bound to go into the evidence with a view to find for himself whether the conviction could be sustained. This right accrued to the convict on service of notice of enhancement of sentence and could not be negatived by anything that had preceded the issue of that notice. It was the Judge hearing the en hancement petition who had to give an opportunity to the convict to challenge his conviction before him and to satisfy him that the conviction was unsustainable. That Judge could not substitute for his satisfaction the satisfaction of some other Judge in the matter. It was a condition precedent to the passing of a prejudicial order against an accused person that he had another opportunity of establishing his innocence, even if he had failed to do so before. The learned Judge rightly observed that an order made in the exercise of an extraordinary discretionary jurisdiction, unless it be a judgment in rem, could not in any way operate as a bar to the decision of the same matter when it arose in the exercise of ordinary appellate jurisdiction, and that therefore an order dismissing a criminal revision application in limine could not amount to a judgment of the High Court. The learned Judge then invoked the principle of the finality of judgments and observed: "On the other band if the view be correct that all orders passed in exercise of revisional jurisdiction whether they be of dismissal of the petition in limine, or otherwise take away the right of the convict to challenge his conviction in view of section 369, Criminal Procedure Code as in such cases a decision given already cannot be altered or reviewed, then I do not see how for purposes of enhancement of the sentence, the previous decision can be altered. Any Judge deciding a petition for revision under section 439(1) must consider the propriety of the sentence as well as the propriety and legality of the conviction, and in my opinion he must be presumed to 157 have done so. If a previous decision on the question of conviction bars the applicability of section 439(6), it also bars the power to enhance the sentence. Once it has been held that the sentence was proper, it cannot be enhanced. I have not been able to see the ratio decidendi of the decisions which take the view, that the question of enhancement of the sentence is something distinct and separate from that of conviction, and that the question of the adequacy and propriety of sentence which comes before the court on a petition for revision presented by the accused is a matter different from the matter of enhancement. , The Judge has to see if a proper sentence has been passed before he decides the case, and the question whether a sentence passed is adequate or inadequate cannot be split up in two different compartments. The question is only one of the quantum of punishment and such a question can only be decided but once. Therefore in my view either there is no power of re revision in the High Court, in that case there is no power to enhance the sentence on a separate petition made for the purpose; or there is such a power in that case it is available to the Crown as well as to the accused". This reasoning again was in our opinion sound but led only to the conclusion that there was no power of re revision in the High, Court and in that case there was no power to enhance the sentence on a separate petition made for the purpose. The learned Judge therefore ought to have held that if the order dismissing the criminal revision petition in limine tantamount to a judgment pronounced by the High Court it was not open to the High Court to issue a notice for enhancement of sentence subsequently under section 439(1) of the Criminal Procedure Code. 'Having held however that the order dismissing the criminal revision application in limine was merely an order and not a judgment pronounced by the High Court and also having held that the High Court was entitled to issue a notice for enhancement of sentence under section 439(1), under those circumstances the only logical conclusion to which the Court could come 158 was that under section 439 (6) the accused while showing cause against the enhancement of sentence was entitled also to show cause against his conviction. Mr. Justice Mahajan confined his decision only to the case of a dismissal of a criminal revision application in limine and left open the question whether a decision on the Appellate Side of the High Court would bar the exercise of the right under section 439 (6) inasmuch as no arguments were heard on the point. The principle of this judgment in our opinion is not con fined merely to cases where a criminal revision application has been dismissed in limine but also extends to cases where a petition of appeal whether presented from jail or presented to the Court by the appellant or his pleader has been similarly dismissed summarily or in limine without issuing notice to the opposite party and also to cases of references made by the lower Courts to the High Court where the High Court has merely passed an order without issuing notices, to any of the parties concerned "no order on this reference". The Patna High Court in Ramlakhan Chaudhry vs The King Emperor(1) followed both these decisions Emperor vs Jorabhai(2) and Empeeror vs Dhanalal(3) in holding that the dismissal of an appeal by the High Court did not debar it from subsequently enhancing the sentence in the exercise of revisional jurisdiction after issuing notice to the accused. In that case an appeal had. been dismissed after full hearing by the High Court. At the hearing of the appeal however the Court asked the counsel for the accused to show cause why the sentence passed upon them should not be directed to run consecutively thus in effect issuing a notice for enhancement of the sentence. When the matter came on for hearing it was contended on behalf of the accused that with the disposal of the appeal the Bench and indeed the High Court was functus officio and had no jurisdiction to hear the matter at all. This contention was repelled by observing that the appellate judgment was not concerned with the (1) Patna 872. (2) Bom. (3) Lahore 241. 159 question of enhancement of the sentence which only arose in the exercise of the revisional jurisdiction and the sentence to be revised and enhanced was the sentence passed not by the High Court but by the Court of Sessions. These observations run counter to the observations of Mr. Justice Mahajan which we have quoted above and ignores the fact that once the High Court pronounced its judgment in the appeal after full hearing in the presence of both the parties the judgment of the High Court replaced that of the lower Court and the High Court had thereafter no power to issue a notice of enhancement of sentence purporting to exercise the revisional powers vested in it under section 439 (1) of the Criminal Procedure Code which could be exercised only qua the judgments of the lower Courts and not its own judgments. The Allahabad High Court also in Emperor vs Naubat(1) followed the decisions of that Court which had approved of and followed Emperor vs Jorabhai(2) and repelled the contention which had been urged on behalf of the accused that the application in revision filed by the Government for enhancement of their sentence was incompetent, because their appeal from their convictions had been dismissed by the Court and it was not open to them again to show cause against their convictions. The decisions above referred to were held by the Court to be an authority for the proposi tion that the Court could under the circumstances proceed to consider whether the sentence imposed upon the accused should be enhanced, even though it was not open to the accused to show cause against their conviction. This decision was in our opinion not correct for the simple reason that once the judgment of the Appellate Court replaced that of the lower Court it was not competent to the High Court to issue a notice for enhancement of sentence in the exercise of its revisional jurisdiction under section 439(1) and no question could therefore arise of the accused being called upon to show cause why their sentence should not be enhanced. (1) I.L.R. 1945 Allahabad, 527. (2) Bom. 160 The High Court of Rajasthan in The Stafe, vs Bhawani Shankar(1) tried to reconcile the various points of view above noted by laying stress on the aspect of the accused having had an opportunity to show cause against his conviction and it observed that where an accused person had already been beard and thus given an opportunity to show cause against his conviction, whether it be in appeal or in revision and whether the dismissal was summary or on the merits, he could not be heard against his conviction a second time under section 439(6) as the principle of finality of orders in criminal proceedings would apply. But if the accused had not been heard at all and given no opportunity to show cause against his conviction and his jail appeal had been dismissed under section 421 of the Criminal Procedure Code, or his revision had been dismissed without hearing, he was entitled to ask the Court to hear him and thus allow him to show cause against his conviction under section 439(6), if a notice of enhancement was issued to him. The real question however in our opinion is not whether an opportunity has been given to the accused to show cause against his conviction at any time but whether the High Court is entitled to exercise its revisional powers under section 439(1) and issue a notice of enhancement of sentence upon the accused. If the accused had an opportunity of showing cause against his conviction either in an appeal or a criminal revision application filed by him or on his behalf and the conviction was confirmed on a full hearing in the presence of both the parties after the issue of the reqiuisite notice by the Court to the opposite party the judgment of the High Court would replace that of the lower Court which judgment could not be reviewed or revised by the High Court at all in exercise of its revisional powers under section 439(1). If however an order dismissing the petition of appeal or criminal revision application or even a reference made by the lower Court was made dismissing the same summarily or in limine without issuing notice to the opposite party or the parties concerned it would tanta (1) I.L.R. 161 mount to the High Court not entertaining any of these proceedings on the ground that no prima facie case had been made out for the interference of the Court. If such a prima facie case had been made out the High Court would admit the appeal or the revision application or entertain the reference and hear the matter fully in the presence of both the parties, ultimately pronouncing its judgment which would take the place of the judgment of the lower Court which would certainly not be subject to the exercise of revisional jurisdiction under section 439 (1) of the Criminal Procedure Code. We are of the opinion that the conclusion reached by the High Court of Rajasthan was correct and the accused in that case was rightly allowed by it to show cause against his conviction in spite of his petition of appeal from jail having been dismissed by it summarily, though we differ from the reasoning adopted by the Court in reaching that con clusion. Section 439(6) gives the accused a right to show cause against his conviction. It does not merely give him an opportunity to show cause against the same. The opportunity is given to him to show cause against the enhancement of sentence under section 439(2) of the Criminal Procedure Code and once be has got that opportunity, while showing cause against the enhancement of his sentence he has a right to show cause against his conviction which right he can ,exercise whether he had on an earlier occasion an opportunity of doing so or not; The real test is not whether the accused has had an opportunity of showing 'cause against his conviction but whether a judgment of the High Court pronounced after a full hearing in the presence of both the parties after notice issued in that behalf has replaced the judgment of the lower Court. If the judgment of the lower Court is so replaced there is no occasion at all for the exercise of the revisional powers under section 439(1) of the Criminal Procedure Code. If however no such judgment has replaced that of the lower Court the High Court has got the power to issue a notice for enhancement of the sentence and the accused has, in 21 162 spite of whatever has happened in the past, while showing cause against the notice of enhancement also the right to show cause against his conviction. The right which is thus conferred upon the accused under section 439(6) cannot be taken away by having resort to the principle of finality of judgments incorporated in section 369 of the Criminal Procedure Code. As we have observed above that principle comes into operation when once a judgment of the High Court has replaced that of the lower Court and in those cases the High Court would not be compe tent to review or revise its own judgment. The High Court would also not be then entitled to issue any notice for enhancement of sentence in the exercise of its revisional powers under section 439 (1) of the Criminal Procedure Code. Where however the High Court in exercise of its revisional power over the judgments of the lower Courts under section 439(1) issues a notice for enhancement of sentence and gives an opportunity to the accused of being heard either personally or by pleader in his own defence under section 439(2) the right which is given by section 439(6) to him also to show cause against his conviction comes into exist ence and this right of his cannot be ' negatived by having resort to the provisions of either section 369 or section 430 of the Criminal Procedure Code. Section 369 in terms provides, "save as otherwise provided in this Code" and section 439(6) would be an otherwise provision which is saved by this non obstante clause appearing in section 369. It is significant to note that both these amendments, the one in section 369 and the other in section 439 were enacted by section 119 of Act XVIII of 1923 and the very purpose of these simultaneous amendments would appear to be to effectuate the right given to the accused to show cause against his conviction as enacted in section 439(6) of the Criminal Procedure Code. It may also be noted that the right which is thus conferred on the accused under section 439(6) is not ,an unlimited or unfettered right as observed by Mr. Justice Mahajan in Emperor vs Atta Mohammad(1). (1) Lah. 391 (F.B.). 163 In the case of trials by jury where an accused person has been convicted on the verdict of a jury and is called upon under section 439(2) of the Criminal Procedure Code to show cause why his sentence should not be enhanced he is entitled under section 439(6) to show cause against his conviction, but only so far as section 423(2) of the Code allows and has not an unlimited right of impugning the conviction on the evidence. It has been held by the Allahabad High Court in Emperor vs Bhishwanath (1) that the combined effect of sections 439 (6) and 423 (2) is to entitle the accused to question the conviction by showing only that the Judge misdirected the jury or that the jury misunderstood the law laid down by the Judge in his charge. A similar conclusion was reached by the majority of the Judges in The Superintendent and Remembrancer of Legal Affairs, Bengal vs Jnanendra Nath Ghose & Another(1), where it was held that a person who had been convicted on his own plea of "guilty" under section 271(2) of the Criminal Procedure Code, in showing cause against a notice for enhancement of sentence, could only while showing cause against his conviction attack the propriety or legality of sentence but could not withdraw the plea of 'guilty ' or go behind such a plea as a confession of the facts charged. There are no doubt two other judgments, one of the Bombay High Court in Emperor vs Ramchandra Shankarshet Uravane (3) and the other of the Rangoon High Court in Nga Ywa and another vs King Emperor which appear to run counter to the ratio decidendi of these decisions of the Allahabad and the Calcutta High Courts respectively but we are not called upon to resolve that conflict, if any. Suffice it so say that the right which is conferred on the accused of showing cause against his conviction under section 439(6) of the Criminal Procedure Code is a right which accrues to him on a notice for enhancement of sentence being served upon him and he is entitled to exercise the same irrespective of what has happened in the past unless and until there is a judgment of the (1) I.L.R. 1937 Allahabad 308. (2) (3) (4) Rangoon 616. 164 High Court already pronounced against his conviction after a full hearing in the presence of both the parties on notice being issued by the High Court in that behalf. This right of his is not curtailed by anything contained in the earlier provisions of section 439 nor by anything contained in either section 369 or section 430 of the Criminal Procedure Code. We are therefore of the opinion that the decision reached by the High Court of Bombay in the case under appeal was wrong and must be reversed. We accordingly allow the appeal and remand the matter back to the High Court of Judicature at Bombay with a direction that it shall allow the Appellant to show cause against his conviction and dispose of the same according to law. BY THE COURT. The appeal is allowed and the order of the High Court of Bombay is set aside, and the matter is sent back to the High Court with a direction that it shall allow the appellant an opportunity to show cause ' against his conviction and dispose of the matter according to law.
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The person appealing this case was found guilty by a judge in Bombay. They broke a rule in the Bombay Prohibition Act (Act XXV of 1949), specifically section 66(b). They were sentenced to jail until the court closed that day and had to pay a fine of 250 Rupees. If they didn't pay the fine, they would have to do one month of hard labor in jail. They asked the High Court in Bombay to review the case, but the High Court quickly rejected their appeal. After the appeal was rejected, the government of Bombay asked the High Court to increase the person's sentence. The court told the person that they had to explain why their sentence should not be increased, as required by section 439(2) of the Code of Criminal Procedure. The court decided that even though the person's appeal was quickly rejected, they could still use section 439(6) of the Code of Criminal Procedure. This means they could explain why they shouldn't have been found guilty in the first place, even though they were now being asked to explain why their sentence shouldn't be increased. Judge Das said that section 439(6) of the Code of Criminal Procedure gives the accused a new and important right. The wording of section 439(6) doesn't limit this right in any way. This new right isn't affected by anything that happened before the government asked for the sentence to be increased under section 439(1). So, whenever someone asks for a sentence to be increased, the accused person must be notified under section 439(2). And whenever that happens, the accused person must be given a chance to argue against both the increased sentence and their original conviction, according to section 439(6). It's wrong to say that sections 421, 435, and 439 of the Code allow a court to choose not to decide an appeal or review that's brought before it. The High Court has the power to make decisions, but it can't just ignore an appeal or review. The Court has a duty to look at the appeal or review and make a decision, even though it has a lot of freedom in how it makes that decision. There's no reason to say that the trial court's decision is merged into or replaced by the High Court's decision only when the appeal or review is fully heard with both sides present, and either fully or partially approved or dismissed. It doesn't matter if the dismissal is quick or not; the High Court makes a decision in all three cases. The main difference is that in the first two cases, the decision is final for both sides. But in the third case, when an appeal or review by the accused is quickly dismissed without notifying the government, the decision is only final for the accused. This is based on the idea that a decision should be final, not on the legal concept of res judicata (which doesn't apply in criminal cases). In the first two cases, the government can't ask for the sentence to be increased after the decision is made, so section 439(6) doesn't apply. But in the last case, when the dismissal is quick, the decision isn't final for the government. So, the government can ask for the sentence to be increased, and the accused person can then argue against their conviction again because of section 439(6). Judges Bhagwati and Imam said that: A decision made by the High Court after a full hearing with both sides present is considered final because it's based on careful review of the evidence and arguments. This decision replaces the lower court's decision and is the only decision that should be carried out. But when a convicted person sends an appeal from jail that's quickly dismissed under section 421, or when a review application is quickly dismissed without hearing from the person or their lawyer, the High Court is simply refusing to consider the appeal or review. The order of "dismissed or rejected" doesn't mean the court has carefully reviewed the evidence and arguments. The High Court can't increase a sentence after it has made a decision based on a full hearing with both sides present. The High Court can only increase a sentence on its own or if someone asks it to, when the lower court's decision is still in effect and hasn't been replaced by the High Court's decision. If the High Court has reviewed the lower court's decision after notifying the other side and giving both sides a full hearing, it can only increase the sentence before it makes its own decision that replaces the lower court's decision. When such a hearing is happening, the High Court or the other side must decide before the decision is made whether to increase the sentence. (The court discussed other relevant cases.)
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After the dismissal of that appeal the State of Bombay made a Criminal Revision application to the High Court for enhancement of the sentence. The results of these amendments were (i) to make the judgment or order of the High Court passed in exercise of its original criminal jurisdiction final which it was not under section 369 as it originally stood and to make this finality subject to the other provisions of the Code or of the Letters Patent of the High Court and (ii) to nullify the practice referred to above and to give a statutory right to an accused person who was threatened with the risk of having the sentence imposed on him by the trial Court or the lower appel (1) Bom. If the accused person appealed against his conviction and sentence to an appellate Court not being a High Court and lost that appeal after a full hearing in the presence of his opponent it must be conceded that he has had an opportunity to show cause against his conviction but nobody will contend that that circumstance will prevent him from having another opportunity of showing cause against his conviction and sentence either by a substantive application initiated by himself under sub section (1) or by way of defending himself when the State or other interested person applies to the High Court in revision under section 439(1) for enhancement of 101 sentence and a notice is issued on him under section 439(2). But suppose that the dismissal of the appeal or revision application made by the accused takes place in such circumstances that it still leaves it open to the State or other interested person to apply in revision for enhancement of the sentence and proceedings are initiated by the Court or the State for enhancement of sentence under section 439(1) and notice is issued on the accused under section 439(2), there is nothing in subsection (6) which, in terms, prevents the accused, in that situation, to again show cause against his conviction and sentence. It has been held that for the purposes of section 439(6) it makes no difference whether the judgment or order of dismissal was made by the High Court in appeal or in revision, or whether the appeal or revision was dismissed summarily or after a full hearing on notice to the State or other interested party and that any dismissal of the appeal or (1) Pat. If the effect of the new subsection (6), as I have already explained, is to confer a new right on an accused person notwithstanding anything contained in section 439(1), that is to say, if sub section (6) is read, as I think it should be, as a statutory provision expressly making the judgment or decision or order of the High Court passed in exercise of its appellate or revisional jurisdiction subject, for the purpose of the protection of an accused person whose appeal or revision had been previously dismissed, to re examination by the High Court only as and when he is subsequently faced with an application for enhancement of sentence, then such judgment, decision or order of the High Court does, as a result of section 439(6), become the subject matter of a case provided for in Chapter XXXII of the Code. If the rule of finality of appellate judgments does not attach to the summary dismissal of the jail appeal by the High Court so as to prevent the State from invoking its revisional power to enhance the sentence, surely the accused 's right to show cause against his conviction under section 439 (6), which is consequential and arises only upon a rule for enhancement being issued under section 439(2) and is, therefore, a part of the revisional proceedings for enhancement of sentence, must, on a parity of reasoning be also free from the same principle of finality. The reasoning adopted by Blacker, J., was shortly as follows: That an order dismissing a revision petition in limine is an order made under section 435 and not under section 439; that such an order is not a judgment and, therefore, the principle of finality embodied in section 369 does not apply to such an order, because such a dismissal only meant that the Judge saw no adequate grounds disclosed in the petition or on the face of the judgment for proceeding any further; that, in the picturesque language of the learned Judge, in such a dismissal "there is no finding or decision unless it can be called a decision to decide to come to no decision"; that the jurisdiction exercised by the Court under section 439(6) was appellate jurisdiction and that an order of acquittal thereunder did not amount to a review of an order of dismissal under section 435; and finally that if the order under section 435 was a judgment or if an order of acquittal under section 439(6) was a review of such judgment, such review was not barred by section 369, because of the saving provisions with which the section begins. It will be recalled that in Emperor vs Jorabhai supra) and the other cases which followed it it was said that for the purposes of determining the applicability of section 439(6) it made no difference in principle whether the proceeding filed by the accused which had been dismissed was an appeal or a revision or whether the dismissal was summary or after a full hearing and that in none of such cases could the accused person claim a second opportunity to question the legality or propriety of his Conviction when he was subsequently called upon to show cause why the sentence passed on him should not be enhanced. I am, however, unable to accept the argument adopted by the Lahore Full Bench that a summary dismissal of a revision application filed by the accused must be regarded as an order made under section 435 and not one under section 439, that such a summary dismissal is nothing more than a refusal on the part of the High Court to go further or to look into the application and that in such a dismissal there is no finding or decision at all. It has been said that when an appeal or revision is dismissed after a full hearing by the High Court the judgment of the lower Court merges in the High Court 117 judgment and the High Court judgment replaces the judgment of the lower Court and becomes the only operative judgment but that when the appeal or revision is summarily dismissed by the High Court there is, in such a dismissal, no finding or decision which can replace the judgment of the lower Court. In those cases where the appeal or revision filed by the accused had been dismissed after a full hearing in the presence of the State and where there was no application by the State or other interested party for enhancement of sentence during the pendency of that appeal or revision it should have 121 been held that the dismissal must be regarded as a judgment which was final as against both parties on both points, conviction and sentence and there could be no further application for the enhancement of sentence and consequently no question of the accused having a further opportunity of showing cause against his conviction could arise. In the cases where the appeal or revision filed by the accused had been summarily dismissed without notice to the respondent, it should have been held that although such dismissal was final as against the accused it did not preclude the State or the complainant, who was not a party to the dismissal, from applying for enhancement of sentence and that as soon as an application for enhancement was made subsequently and a notice was issued to the accused, the latter, faced with the risk of having his sentence enhanced, at once became entitled, under section 439(6), in showing cause against the enhancement of sentence, also to show cause against his conviction. For reasons discussed above I have to hold that the summary dismissal of the appeal filed by the appellant in the High Court was a judgment of conviction by the High Court and was final so far as the appellant was concerned and he could not initiate any further revision application either against his conviction or for reduction of sentence after that dismissal but that it was not final so far as the State was concerned and the State was entitled to apply in revision for enhancement of sentence. If the Appellate Court does not dismiss the appeal summarily, notice of appeal is to be given to the appellant or his pleader or to such officer as the State Government may appoint in this behalf, under section 422 and the powers of the Appellate Court in dismissing the appeal are laid down in section 423, the only relevant provision for the present purpose being that in an appeal from a conviction the Appellate Court might with or without the reduction in sentence and with or without altering the finding alter the nature of the sentence but. Section 439 with which we are immediately concerned is couched in the following terms: (1)In the case of any proceeding the record of which has been called for by itself or which has been reported for orders, or which otherwise comes to its 126 knowledge the High Court may, in its discretion, exercise any of the powers conferred on a Court of Appeal by sections 423, 426, 427 and 428 or on a Court by section 338, and may enhance the sentence; and when the Judges composing the Court of Revision are equally divided in opinion, the case shall be disposed of in manner provided by section 429. When the High Court issues a notice for enhancement of sentence it is exercising its revisional jurisdiction and the question that arises for consideration is whether in one or more of the cases above referred to the High Court has jurisdiction to issue the notice of enhancement of sentence and the convicted person is entitled while showing cause why his sentence should not be enhanced also to show cause against his conviction. When a petition of appeal is presented to the High Court by the convicted person or his pleader section 421 provides that no such appeal should be dismissed unless the appellant or his pleader has had a reasonable opportunity of being heard in support of 135 the same and the High Court might before dismissing an appeal under that section, call for the record of the case but would not be bound to do so. It follows therefore that in the case of a summary dismissal or a dismissal in limine of petitions of appeal or applications for criminal revision even if the convicted person or his pleader has been heard by the High Court with a view to determine if there is a prima facie case for its interference, the convicted person to whom an opportunity has been given under section 439(2) of showing cause why his sentence should not be enhanced would in showing cause be entitled also to show cause against his conviction. In cases where the petition of appeal or the application for criminal revision is admitted by the High Court and a notice is issued to the opposite party and the High Court maintains the conviction with or without reducing the sentence passed upon the accused the judgment of the High Court in the exercise of its appellate or revisional jurisdiction would replace the judgment of the lower Court and there would be no occasion at all for the exercise by the High Court of its revisional powers under section 439(1) which can only be exercised qua the judgments of the lower Courts and certainly not qua its own judgments. Even in the case of a reference by the lower Court under section 438 of the Criminal Procedure Code the High Court if it did not summarily reject such a reference would issue notice to the parties concerned and then there would be occasion for it either suo motu or on the application of an interested party to issue a notice of enhancement of sentence before the hearing was concluded and a judgment was pronounced by it. Section 439(6) therefore confers on the convicted person a right which he can exercise in the event of a notice for enhancement of sentence being issued against him in the exercise of the revisional jurisdiction by the High Court in spite of the fact that he was not entitled to question the validity or maintainability of his conviction in a substantive applica tion for criminal revision filed by him for the purpose and this right is available to him only if the High Court exercising its revisional jurisdiction under section 439(1) thinks it fit to issue a notice of enhancement of sentence against him under section 439(2) and in that event he has the right also to show cause against his conviction when showing cause why his sentence should not be enhanced. The question that arose for consideration of the Court in that case was whether after an appeal of an accused person against his conviction and sentence had been dismissed by a Division Bench of the High Court and a notice to enhance the sentence was issued on an application on behalf of the Government the application for enhancement of sentence could be (1) (2) Bom. The observations of the learned Judge however in so far as they seem to suggest that the appeal should be disposed of first and the question of enhancement of sentence should be considered by the same Bench immediately afterwards or that the notice for enhancement could be issued by the Court after the disposal of the appeal on the merits as to conviction do not take into account the fact that after the judgment is pronounced and the conviction is confirmed involving as a necessary corollary thereof the confirming of the sentence passed upon the accused also if the same is not reduced, the judgment of the High Court replaces that of the lower Court and the exercise of any revisional powers by the High Court by way of enhancement of the sentence is necessarily eschewed. Once therefore the judgment of the High Court replaces that of the lower Court there is no question which can ever arise of the exercise by the High Court of its revisional powers under section 469(1) of the Criminal Procedure Code and the proper procedure therefore if the High Court thought it fit either suo motu or on the application of the interested party 145 to issue the notice of enhancement of sentence, is to issue the said notice before the hearing of the appeal is concluded and the judgment of the High Court in appeal is pronounced. We are therefore of the opinion that the decision reached by the High Court of Bombay in Emperor vs Jorabhai(1) was not correct in so far as it held that the notice of enhancement could be issued by the High Court at the instance of the Government after the dismissal of the appeal on merits. The Division Bench held that the criminal revision application of the accused having been fully disposed of by the learned Vacation Judge there was a valid order of dismissal, that section 430 debarred the accused from having that order of dismissal reviewed by the High Court that the right conferred by section 439(6) could not give an accused person a right to be heard against his conviction if such a right was in conflict with the other provisions of the Code, that under section 369 the Court had no power to alter the decision of the learned Vacation Judge dismissing the revision petition filed by the accused and that if the accused bad already unsuccessfully exercised his right of appeal or revision to the High Court he was not entitled in a subsequent application by the Government for enhancement of sentence to ask the High Court to go once more into the merits of the case and to set aside the conviction which the same Court had previously confirmed either in appeal or on a revision application. These observations however did not take count of the fact that if a petition of appeal or a criminal revision application filed by the accused was dismissed summarily or in limine there was no question of a judgment of the High Court replacing that of the lower Court and the order of the High Court merely amounted to a refusal by it to interfere either in the exercise of its appellate or revisional jurisdiction which order though final and not being susceptible of review or revision by the High Court itself, did not amount to a judgment of the High Court barring the application of section 439(1) of the Criminal Procedure Code. It held that section 369 of the Criminal Procedure Code debarred the petitioner from making the criminal revision application, that the order of the High Court passed upon the reference amounted to a judgment within the meaning of that term in section 369 of the Criminal Procedure Code and after it was signed it could not be altered or reviewed in a subsequent application for revision and that even though the Division Bench of the High Court passed the order "no order on this reference" without issuing notice to the applicant, the applicant whose favour the Sessions Judge made a reference was not entitled to make an application in revision to the High Court in the same matter. This distinction in our opinion does not affect the position that the order pronounced by the High Court dismissing the petition of appeal or a criminal revision application in limine without issuing notice to the opposite party is merely an order dismissing the same on the ground that there is no prima facie case for interference of the High Court and does not amount to a judgment pronounced by the High Court after full hearing in the presence of both the parties which only can debar the High Court from exercising its revisional jurisdiction under section 439(1). 'Having held however that the order dismissing the criminal revision application in limine was merely an order and not a judgment pronounced by the High Court and also having held that the High Court was entitled to issue a notice for enhancement of sentence under section 439(1), under those circumstances the only logical conclusion to which the Court could come 158 was that under section 439 (6) the accused while showing cause against the enhancement of sentence was entitled also to show cause against his conviction. This decision was in our opinion not correct for the simple reason that once the judgment of the Appellate Court replaced that of the lower Court it was not competent to the High Court to issue a notice for enhancement of sentence in the exercise of its revisional jurisdiction under section 439(1) and no question could therefore arise of the accused being called upon to show cause why their sentence should not be enhanced. The real question however in our opinion is not whether an opportunity has been given to the accused to show cause against his conviction at any time but whether the High Court is entitled to exercise its revisional powers under section 439(1) and issue a notice of enhancement of sentence upon the accused. If the accused had an opportunity of showing cause against his conviction either in an appeal or a criminal revision application filed by him or on his behalf and the conviction was confirmed on a full hearing in the presence of both the parties after the issue of the reqiuisite notice by the Court to the opposite party the judgment of the High Court would replace that of the lower Court which judgment could not be reviewed or revised by the High Court at all in exercise of its revisional powers under section 439(1). The opportunity is given to him to show cause against the enhancement of sentence under section 439(2) of the Criminal Procedure Code and once be has got that opportunity, while showing cause against the enhancement of his sentence he has a right to show cause against his conviction which right he can ,exercise whether he had on an earlier occasion an opportunity of doing so or not; The real test is not whether the accused has had an opportunity of showing 'cause against his conviction but whether a judgment of the High Court pronounced after a full hearing in the presence of both the parties after notice issued in that behalf has replaced the judgment of the lower Court. Where however the High Court in exercise of its revisional power over the judgments of the lower Courts under section 439(1) issues a notice for enhancement of sentence and gives an opportunity to the accused of being heard either personally or by pleader in his own defence under section 439(2) the right which is given by section 439(6) to him also to show cause against his conviction comes into exist ence and this right of his cannot be ' negatived by having resort to the provisions of either section 369 or section 430 of the Criminal Procedure Code.
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The person appealing this case was found guilty by a judge in Bombay. They broke a rule in the Bombay Prohibition Act (Act XXV of 1949), specifically section 66(b). They were sentenced to jail until the court closed that day and had to pay a fine of 250 Rupees. If they didn't pay the fine, they would have to do one month of hard labor in jail. They asked the High Court in Bombay to review the case, but the High Court quickly rejected their appeal. After the appeal was rejected, the government of Bombay asked the High Court to increase the person's sentence. The court told the person that they had to explain why their sentence should not be increased, as required by section 439(2) of the Code of Criminal Procedure. The court decided that even though the person's appeal was quickly rejected, they could still use section 439(6) of the Code of Criminal Procedure. This means they could explain why they shouldn't have been found guilty in the first place, even though they were now being asked to explain why their sentence shouldn't be increased. Judge Das said that section 439(6) of the Code of Criminal Procedure gives the accused a new and important right. The wording of section 439(6) doesn't limit this right in any way. This new right isn't affected by anything that happened before the government asked for the sentence to be increased under section 439(1). So, whenever someone asks for a sentence to be increased, the accused person must be notified under section 439(2). It's wrong to say that sections 421, 435, and 439 of the Code allow a court to choose not to decide an appeal or review that's brought before it. The High Court has the power to make decisions, but it can't just ignore an appeal or review. The Court has a duty to look at the appeal or review and make a decision, even though it has a lot of freedom in how it makes that decision. There's no reason to say that the trial court's decision is merged into or replaced by the High Court's decision only when the appeal or review is fully heard with both sides present, and either fully or partially approved or dismissed. It doesn't matter if the dismissal is quick or not; the High Court makes a decision in all three cases. The main difference is that in the first two cases, the decision is final for both sides. But in the third case, when an appeal or review by the accused is quickly dismissed without notifying the government, the decision is only final for the accused. This is based on the idea that a decision should be final, not on the legal concept of res judicata (which doesn't apply in criminal cases). In the first two cases, the government can't ask for the sentence to be increased after the decision is made, so section 439(6) doesn't apply. But in the last case, when the dismissal is quick, the decision isn't final for the government. So, the government can ask for the sentence to be increased, and the accused person can then argue against their conviction again because of section 439(6). Judges Bhagwati and Imam said that: A decision made by the High Court after a full hearing with both sides present is considered final because it's based on careful review of the evidence and arguments. This decision replaces the lower court's decision and is the only decision that should be carried out. But when a convicted person sends an appeal from jail that's quickly dismissed under section 421, or when a review application is quickly dismissed without hearing from the person or their lawyer, the High Court is simply refusing to consider the appeal or review. The order of "dismissed or rejected" doesn't mean the court has carefully reviewed the evidence and arguments. The High Court can't increase a sentence after it has made a decision based on a full hearing with both sides present. The High Court can only increase a sentence on its own or if someone asks it to, when the lower court's decision is still in effect and hasn't been replaced by the High Court's decision. If the High Court has reviewed the lower court's decision after notifying the other side and giving both sides a full hearing, it can only increase the sentence before it makes its own decision that replaces the lower court's decision. When such a hearing is happening, the High Court or the other side must decide before the decision is made whether to increase the sentence. (The court discussed other relevant cases.)
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P. (C) Nos. 1189798/92 etc. From the Judgment and Order dated 28.8.1992 of the Delhi High Court in Civil Writ Petition Nos. 1152 & 1157 of 1992. V.R. Reddy, Addl. Solicitor General,, Kapil Sibbal, P.P. Rao, Rama Jois, A. Temton, Dr. Shankar Ghosh K. K. Venugopal, Harish Salve, F.S. Nariman, A.N. Haksar, Shanti Bhushan, K.N Bhat, T.R. Andhyarujina, C.V Subba Rao, P.P. Singh, Mrs. B. Sunita Rao, Sudhir Kulshreshtha, Rohit Tandon, Parijat Sinha, Ms. Sunanda Roy, Ms. section Bhattacharya, B.D. Ahmed, Man Mohan Singh, Gopal Subramanium, D.N. Mishra, A.M. Dittia, P.K. Ganguli, Manoj K. Das. Amit Prabhat, Tripurary Roy. K.L. Mehta, section Ganesh, Pratap Venugopal, K.J. John, Pramod Dayal, Ajay K. Jain and D.N Nanjunda Reddy for the appearing parties. The judgment of the Court was delivered by 137 K. JAYACHANDRA REDDY, J. By our order dated 14th January, 1993 while disposing of these special leave petitions we gave our conclusions and we proposed to deliver the detailed judgment at a later stage giving all the reasons in support of those conclusions. We hereby deliver the detailed judgment In our earlier order we stated the relevant facts and the issues involved in a concised form. However, we think it appropriate and necessary to refer to some of them for a better appreciation of the reasons in their proper perspective. Every year the Railway Board enters into contracts with the manufacturers for the supply of cast steel bogies which are used in turn for building the wagons. Cast steel bogies come under a specialised item procured by the Railways from the established sources of proven ability. There are 12 suppliers in the field who have been regularly supplying these items. Two new firms Simplex and Beekay also entered the field. Among them admittedly M/s H.D.C., Mukand and Bharatiya are bigger manufacturers having capacity to manufacture larger quantities. On 25.10.91 a Iimited tender notice for procurement of 19000 cast steel bogies was issued to the regular suppliers as well is the above two new entrants for the year namely from 1.4.92 to 31.3.93. The last date for submission of offers to the Ministry of Railways was 27.11.91 by 2.30 P.M. and the tenders were to be opened on the same day at 3 P.M. It was also stated therein that the price was subject to the price variation clause and the base date for the purpose of escalation was 1.9.91 and that the Railways reserved the right to order additional quantity upto 30% of the ordered quantity during the currency of the contract on the same price and terms and conditions with suitable extensions in delivery period. The offers were to remain open for a period of 90 days. On that day the tenders were opened in the presence of all parties. The price quoted by the three manufacturers i.e. M/s H.D.C., Mukand and Bharatiya was an identical price of Rs. 77,666 per bogie while other tenders quoted between 83,000 and 84.500 per bogies After the tenders were opened and before the same could be finalised, the Government of India announced two major concessions namely reduction of custom duty on the import of steel scrap and dispensation of freight equalisation fund for steel. The tenders were put up and placed before the Tender Committee of the Railways which considered all the aspects. The Committee concluded 138 that three of the tenderers namely M/s H.D.C., Mukand and Bharatiya who had quoted identical rates without any cushion for escalation between 1.7.91 and 1.9.91, have apparently formed a cartel. The Tender Committee also noted that the rates quoted by them were the lowest. Taking into consideration the reduction of Rs. 1500 as result of the concessions in respect of the reduction of customs duty on the import of steel scrap and dispensation of the freight equalisation fund for steel. The Tender Committee concluded that the reasonable rate would be Rs. 76,000 per bogie. On the question of distribution of quantities to the various manufacturers the Tender Committee decided to follow the existing procedure. The Tender Committee signed these recommendations on 4.2.92 but on the same day the Member (Mechanical) of the Committee received letters from M/s H.D.C. and Mukand. M/s H.D.C. in its letter stated that in view of the concessions and also on the basis that per Kg. rate of casting per bogie could be reduced from Rs. 37.50 to Rs. 29 the cost of casting can also be reduced and therefore they would be in a position to supply the bogies at a lesser rate, in case a negotiation meeting is called. M/s Mukand in its letter also offered to substantially reduce (he prices and they would like to co operate with the Railways and the Government and brings down the prices as low is possible and asked for negotiations. Though this was post tender correspondence the Department felt that the offers made by M/s H.D.C. and Mukand could be considered. The whole matter was examined by the Advisor (Finance) in the first instance and by an collaborate note lie observed that the need for encouraging open competition to improve quality and brings down costs his been recommended by the government and if it is intended to continue the existing policy of fixing a rate and distributing the order among all the manufacturers, then negotiations may not he useful as uniform prices offered to all manufacturers have to be sufficient even for the smaller and less economical units and that as any review of the existing policy would take time, the present tender can be decided on the basis of the existing policy. With this noting the file was immediately sent to the Member (Mechanical), the net higher authority, The, with some observations however recommended the acceptance of the Tender Committee 's recommendations. The file was then put up to Financial Commissioner. He noted that the Tender Committee was convinced that the three manufacturers who quoted identical price of Rs. 77,666 had formed a cartel. He also considered the offers made by M/s H.D.C. and Mukand and observed that these three manufacturers who quoted 139 a cartel price intended to get a larger order on the basis of such negotiated price which would eventually nullify the competition from the other manufacturers and lead to their industrial sickness and subsequently to monopolistic price situation. He, however, approved the Tender Committee 's recommendations that a counter offer of Rs. 76,000 may he accepted but in the case of M/s H.D.C. a price lower by Rs. 11,000 may be offered as per their letter dated 4.2.92. He also recommended that the two manufacturers M/s Cimmco and Texmaco may be given orders to the extent of their capacity or quantity offered by them whichever is lower in view of the fact that they are wagon builders and the present formula regarding the distribution of quantities may be applied to all manufacturers except the three who have formed a cartel. The also recommended some recoveries from these three manufacturers who are alleged to have formed a cartel on the basis of their letters wherein they have quoted prices which were much less than the updated price as on 1.9.91 of Rs. 79,305. He also made certain other recommendations and finally concluded that the post tender letters may be ignored and that for short term gains the Department can not sacrifice long term healthy competition. After these recommendations of the Financial Commissioner the file was put up to the approving authority i.e. the Minister for Railways, who in general agreed with the recommendations of the Financial Advisor. He also noted that these three manufacturers have formed a cartel. lie also noted that subsequent to the Financial Commissioner 's note, besides M/s 1 1. D. C. and Mukand has also offered to reduce the price by 10% or more vide their letter dated 19.2.92 if called for negotiations. Taking these circumstances into consideration the Minister ordered that all these three firms may he offered a price lower by Rs. 11,000 with reference to the counter offer recommended by the Tender Committee and the quantities also be suitably adjusted so that the cartel is broken, The Minister also noted that as a result of this a saving of about Rs. 11 crores would be effected. In his note, the Minister also ordered redistribution of the quantities. The also ordered that 30% option should straightaway be exercised. After the approving authority took these decisions, the file went to the Chairman. Railway Board for implementing the decisions. The noted that action will be taken as decided by the Minister but added that it results in dual pricing namely one to the three manufacturers and the higher one to the others and therefore the Minister may consider whether they could counter offer the lower price to all the manufacturers as that would result in saving much more. 140 The file was then again sent to and was considered by the Financial Commissioner who noticed this endorsement made by the Chairman, Railway Board. The however noted that so far all the other firms are concerned it is Rs. 3305 less than the present contract price but it would not be equitable to offer the lower price put forward by the three manufacturers as it Would make the other units unviable and that incidentally the price of Rs. 76,000 now proposed to be counteroffered to the other firms is also in line with the recommendations of the Tender Committee. The, however, noted that some of the units were sick units and owe a lot of money to the nationalised banks and it would therefore be in the national interest to accept dual pricing Therefore the file was again put up to the approving authority who agreed with the recommendations of the Financial Commissioner and the Tender Committee and directed that the same may be implemented. In view of this final decision taken by the approving authority a telegram was issued to the three manufacturers giving them a Counter offer of Rs. 65,000 per bogie. The counter offer was also made to the other nine manufacturers at the rate of Rs 76,000 per bogie namely the price worked out by the Tender Committee. Soon after the receipt of this telegram dated 18.3.92 M/s H.D.C. and Mukand filed writ petitions in the Delhi high Court challenging the so called discriminatory counteroffer. M/s Bharatiya also filed a similar petition in Calcutta High Court but the same was withdrawn but another writ petition was filed later in the Delhi High Court. In the writ petitions filed by M/s H.D.C. and Mukund the High Court stayed the operation of the telegram dated 18.3.92 and issued notice to the Union of India and to the Executive Director and Director of the Railways (Stores) who figured as respondents in those writ petitions. M/s M. D.C. and Mukand also wrote to the Minister of Railways in reply to the telegram that they were not prepared to accept the counter offer at the rate of ' Rs. 65,000 and instead they offered lo supply the bogies at the rate of Rs. 67,000 per bogie. The Railways accepted this offer and intimated M/s H.D.C. and Mukand accordingly. The High Court. at an interlocutory stage pending the writ petitions. passed an order on 2.4.92. directing the Ministry to accept the allocation of bogies recommended by the Tender Committee and to pay a price at the rate of Rs. 67,000 only per bogie and that would be subject to the final decision of the writ petitions. Being aggrieved by this order, the Railways filed a petition for special leave to appeal No. 5512/92 and this Court while refusing to interfere at that interlocutory stage made the following observations 141 on 28.4.92: "However, we may observe and so direct that during the pendency of the writ petition if any of the suppliers in terms of the package of distribution indicated by the High Court (including the petitioners in the High Court in the writ petition) seek an "on account" payment representing the difference between the sum of Rs. 67,000 indicated as price by the High Court and the sum of Rs. 76,000 contemplated by the Railways; the order of the High Court shall not prohibit the government making such on account payment to such suppliers on each wagon on the condition that the said on account payment of Rs. 9.0000) per bogie should he covered by a bank guarantee for its prompt repayment together with interest at 20% per annum in the event the on account payment cannon( be observed in the price structure that may ultimately come to be determined pursuant to the final decision in the writ petitions. The special leave petitions are disposed of accordingly. " Thereafter the High Court took up the writ petitions for final hearings any by the impugned judgment allowed the writ petitions filed by M/s H.D.C. and Mukand and directed that all the suppliers should make the supplies at the rate of Rs. 67,000 per bogie and also set aside the quantity allocation and directed that the same should he considered afresh on a reasonable basis and pending such fresh consideration future supplies should be made on the basis of the recommendations of the Tender Committee. In the course of the judgment, the High Court also made certain observations to the effect that the decision of the approving authority is arbitrary and that the Government has no justification to offer a higher price than the market price to any supplier to rehabilitate it. It was further observed that the stand of the Railways that those three manufacturers formed a cartel is based on extraneous considerations. The learned judges of the High Court also observed that they failed to understand as to why the Railway authorities could 142 not initiate negotiations with those manufacturers who had offered to reduce their offer which could result in saving crores of 'rupees to the Railways. Aggrieved by this judgment of the High Court the Union of India filed S.L.P. (Civil) Nos. 11897 98/02. Before the High Court in the two writ petitions filed by M/s H.D.C and Mukand the other manufacturers figured as respondents Nos. 4 to 12 and M/s Bharatiya otherwise known as Besco figured as respondent No. 13. The other S.L.Ps. are filed by those nine manufacturers. M/s Bharatiya, respondent No. 13, has not questioned the judgment of the High Court. As mentioned above M/s Bharatiya filed a separate writ petition No. 1753/ 92 in the Delhi High Court after withdrawing an earlier writ petition filed in the Calcutta High Court. The same also was disposed of in terms of the judgment in the other two writ petitions Nos. 1152 and 1157/92. But they have not questioned the same. Consequently M/s Bharatiya figures as a respondent before us in the SLP filed by the Union of India. In our earlier order we have already referred to the various Submissions made by the learned counsel on behalf of Union of India and on behalf of the respondents particularly M/s H.D.C. Mukand and Bharatiya and other smaller manufacturers. After considering the various submissions and issues involved we have given our conclusions in our earlier order which briefly stated are as follows: 1)There is no enough of material to conclude that M/s. H.D.C., Mukand and Bhartiya formed a cartel. However. there was scope for enter training suspicion by the Tender Committee that they formed a cartel since all the three of them quoted identical price and the opinion entertained by the concerned authorities including the Minister that these three big manufacturers formed a cartel was not per se malicious or was actuated by any extraneous considerations and the authorities acted in a bonafide manner in taking the stand that the three big manufacturers formed a cartel. 2)The direction of the High Court that the supply of bogie should be at Rs.67000 by every manufacturer can not he sustained and that a fresh consideration of a reasonable price is called for. The Tender Committee shall reconsider the question of fixation of reasonable price. While doing so it shall consider the offer of Rs. 67,000 made by 143 M/s H.D.C. and Mukand alongwith the data that would given by them in support of their offer and the percentage of profits available to all the manufacturers and other relevant aspects and then fix a reasonable price at which the manufacturers would be able to supply. 3) Dual pricing under certain circumstances may be reasonable and the stand of the railways to adopt dual pricing under the circumstances is bonafide and not malafide. M/s H.D.C., Mukand and Bharatiya must be deemed to be in a position to supply at the rate of Rs. 67,000 per bogie and thus they form a distinct category. The smaller manufacturers belong to a different category and if a different price is fixed for them it is not discriminatory. 4) If the price that to be fixed by the Tender Committee as directed by us happens to be more than Rs. 67,000 than that would be applicable to the smaller manufacturers only and not to M/s H.D.C., Mukand and Bharatiya who on their own commitment have to supply at the rate of Rs. 67,000. (5) The price thus fixed by the Tender Committee which applies only to the smaller manufacturers shall he deemed to be final and the respective contracts shall be deemed to be concluded so for the price is concerned. (6) Coming to the allotment of quota of bogies the Tender Committee made recommendations on the basis of the existing practice. The Minister of Railways in his ultimate decision has made some variations taking into consideration the recommendations of the Financial Commissioner and other authorities. In making these variations, the Minister accepting the suggestion that a cartel was formed by the three manufacturers reduced the allotment of quota to them by way of reprisal. Since we are of the view that formation of a cartel is not established, such a reduction of quota can not be justified. The Minister of Railways as the final authority as be justified in takings a particular decision in the matter of allotment of quota but such decision must be taken on objective basis. In allotting these quotas the Government is expected to be just and fair to one and all. 7)The three big manufacturers M/s H.D.C.,Mukandand Bharatiya 144 should be allotted the quantities as per the recommendations of the Tender Committee. However, the quantities finally allotted by the competent authority to the smaller manufacturers need not be disturbed and the railway authorities may make necessary adjustments next year in the matter of allocation of quantities to them takings into consideration the allotments given to them this year; (8)It will be open to the Railways to exercise 30% option, if not already exercised. (9)Taking all the circumstances and the time factor into consideration the time to complete the supply is extended upto 31.3.1993. Before we proceed to consider each of these issues and give our reasons, we shall deal with few general submissions regarding the tender system and the economic policy of the Government in the matter of stopping monopolistic tendencies. Shri K.K. Venugopal, learned counsel appearing for M/s H.D.C. at the outset submitted that in a case of this nature the Government must either by way of public auction or by way of inviting tenders work out (he lowest price and award the contract accordingly, as that would safeguard the interests of the public exchequer. The further submission in this regard is that the Railways having invited tenders and having further entertained post tender correspondence offering the lower price, should have accepted the price quoted by the three big manufacturers. Shri Sibal, learned counsel appearing for the Union of India, however, contended that it is a matter of policy decision by the Government and that where the Government realises that the lowest ,)rice offered is not reasonable and realistic, it may for a variety of good and sufficient reasons reject the same. It is true, as it is today, that the Government in a welfare State has the wide powers in regulating and dispensing of special services like leases, licences. and contracts etc. The magnitude and range of such Governmental function is great. The Government while entering into contracts or issuing quotas is expected not to act like private individual but should act in conformity with certain healthy standards and norms. Such actions should not be arbitrary, irrational or irrelevant. In the 145 matter of awarding contracts inviting tenders is considered to be one of the fair ways. If there are any reservations or restrictions then they should not be arbitrary and must be justifiable on the basis of some policy or valid principles which by themselves are reasonable and not discriminatory. In the instant case the Railways every year used to enter into contracts with the established manufacturers for the supply of cast steel bogies and there are 12 such suppliers. On 25.10.91 a limited tender notice for the procurement of steel bogies was issued to these suppliers. Under Clause 5 of the Tender notice the Railways reserved the right to order additional quantity of 30% of the ordered quantity during the currency of the contract on the same price and term: with suitable extension in delivery period. Clause 7 is to the effect that the tender will be governed by the IRS conditions of the contract. In the instructions appended to the Tender notice it is again reiterated that the contracts made under the tender would be governed by the IRS conditions of contract and also the instructions in the invitation of tender. Clause 9.3 of the instructions lays down that the price is subject to price variation clause and the base date for the purpose of escalation is 1.9.91. Under Clause 23 it is made clear that the Department does not pledge itself to accept the lowest or any tender and reserves to itself the right of acceptance of the whole or any part of the tender. Pursuant to this notice and subject to (lie conditions mentioned therein, 12 manufacturers in the field a well as two new manufacturers M/s Simplex and Beekay submitted their offers and they are as follows: NAME OF THE FIRMS PRICE QUOTED FOR 20.3.T AXLE LOAD 1. Himmat 84,510 2. Texmaco 83,950 3. Titaoarh 84,100 4. BECO Ltd. 83,350 5, Anup 84,980 6. Sri Ranga 84,600 ,750 146 8. Bum Standard 83,000 9. CIMMCO 84,800 10. Mukand 77,666 II. Bharatiya 77,666 12. HDC 77,666 13. Simplex 78,100 14. BEEKAY 75,000" These offers were got technically evaluated by the Research, Development and Standard Organisation (RDSO ' for short). Thereafter a three men Tender Committee comprising the officers of the rank of Joint Secretary designated as Executive Directors in the Railways Board considered the offers. Since the three big suppliers namely M/s H.D.C., Mukand and Bharatiya quoted an identical price of Rs. 77,666 which was lower than the updated price of the previous contract, the base date of which was 1.9,91, the Tender Committee formed an opinion that they have formed law carte 1. The offers made by the two new firms, however, were not accepted. The Tender Committee made their own recommendations and fixed Rs. 76,000 as a reasonable price at which counter offer could be made. Then as already mentioned there was post tender correspondence and ultimately a dual price was fixed. In this regard the submission is that having entertained post tender correspondence, the Government either should have accepted the same or rejected the same and in any event the lowest offer should have been accepted. From a perusal of the proceedings of the Tender Committee as well as the opinion expressed by the Financial Commissioner and the other members of the Board, it is clear that Rs. 76,000 per bogie can be the reasonable price and Rs. 67,000 was not a reasonable price. It is also clear that the post tender offer at a lower price was made with the hope that they would get the entire or larger quantity allotted. The stand taken by the Railways is that the three big manufacturers originally formed a cartel and the post tender offers at least by two of them confirmed the same and if these three big manufacturers are allotted entire or larger quantity that would result in monopoly extinguishing the smaller manufacturers. The question is whether such a stand taken by the Government as a policy, is unfair and arbitrary as to warrant interference by the courts. 147 It must be mentioned at this stage that the validity of the conditions in the tender as such are not questioned. Consequently the Government had the right to either accept or reject the lowest offer but that of course, if done on a policy, should he on some rational and reasonable grounds. In Eurasian Equipment and Chemicals Ltd. vs State of West Bengal ; , this court observed as under: "When the Government is trading with the public, " the democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions. The activities of the government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with anyone, hut if it does so, it must so fairly without discrimination and without unfair procedure. Approving these principles, a Bench of this Court in Ramana Dayaram Shetty vs The International Air port Authority of India and Ors[1979] 3 SCR 10 14, held thus: "This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege. It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving job so entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion or the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc. must be con fined and structured by rational, relevant and nondiscriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government 148 would be liable to be struck down, unless it can he shown by the Government that the departure %%,as not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory." ln Kasturi Lal Lakshmi Reddy vs State of Jammu and Kashmir and Anr. ; an order awarding contract by the Government to a party was questioned on the ground that it was arbitrary, malafide and not in public interest and the same created monopoly in favour of that party and that the contract was awarded without affording an opportunity to others to compete and the same is not based on any rational or relevant principle and therefore was violative of Article 14 of the Constitution and also the rule of administrative law which inhibits the arbitrary action by the State. A Bench of this Court while approving the principles laid down in the above cases further observed thus: "Though ordinarily a private individual would be guided by economic considerations of self gain any action taken by him, it is always open to under the law to act contrary to his self interest or to oblige another in entering into a contract or dealing with his property. But the Government is not free to act is it likes in granting largess such as awarding a contractor selling or leasing out its property. Whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society. The constitutional power conferred on the Government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner; it has to be exercised for the public good. Every activity of the Government has a public element in it and it must therefore, be informed with reason and guided by public interest. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. If the Government awards a contract of leases out or 149 otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touch stone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid." Now coming to the test of reasonableness which pervades the constitutional scheme, this Court in several cases particularly with reference to Articles 14, 19 and 21 has considered this concept of reasonableness and has held that the same finds its positive manifestation and expression in the lofty ideal of social and economic justice which inspires and animates the Directive Principles and that Article 14 strikes at arbitrariness in State action. (vide Maneka Gandhi vs Union of India, [1978] 2 SCR 621 and E.P. Royappa vs State of Tamil Nadu & Anr. f After referring to these decisions it was further held in Kasturi Lal Lakshmi Reddy 's case (supra) as under: "Any action taken by the Government with a view to giving effect to any one or more of the Directive Principles would ordinarily, subject to any constitutional or legal inhibitions or other over riding consid erations qualify for being regarded as reasonable, while an action which is inconsistent with or runs counter to a Directive Principle would incur the reproach of being unreasonable. So also the concept of public interest must as far as possible receive its orientation from the Directive Principles. What according to the founding fathers constitutes the plainest requirement of public interest is set out in the Directive Principles and they embody par excellence the constitutional concept of public interest. If, therefore, any governmental action is calculated to implement or give effect to a Directive Principle, it would ordinarily, subject to any other overriding considerations be informed with public interest. Where any government action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be 150 struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The Government therefore, cannot, for example give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest t o do so. Such considerations many that some Directive Principle is sought to be advanced or implemented or that the contract or the property is given not with a view to earning revenue but for the purpose of carrying out a welfare scheme for the benefit of a particular group or secretion of people deserving it or that the person who has offered a higher consideration is not otherwise fit to be given the contract or the property. We have referred to these considerations only illustratively, for there may be an infinite variety of considerations which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the Court would have to decide whether the action of the Government is reasonable and in public interest." (emphasis supplied) On the question of courts interference in an action taken by the Government, it was further observed as under: "But one basic principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the Governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has 151 to be discharged to the satisfaction of the Court by proper and adequate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore the Court would not strike down government action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied, it would be the plainest duty of the Court under the Constitution to invalidate the governmental action. 'I his is one of the most important functions of the Court and also one of the most essential for preservation of the rule of law." (emphasis supplied) On the question of the power of the Government in granting largess, it was also observed that: "The second limitation on the discretion of the Government in grant of largess is in regard to the persons to whom such largess may be granted. It is now well settled as a result of the decision of this Court in Ramanad Shetty vs International Airport Authority of India & Ors. (supra) that the Government is not free like an ordinary individual, in selecting the recipients for its largess and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The law is now well established that the Government need not deal with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure. where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with some standard or norm which is not arbitrary, irrational or 152 irrelevant. The governmental action must not be arbitrary or capricious, but must be based on some principle which meets the test of reason and relevance. This rule was enunciated by the Court as a rule of administrative law and it was also validated by the Court as an emanation flowing directly from the doctrine of equality embodied in article 14." (emphasis supplied) In State of Uttar Pradesh and others vs Vijay Bahadur Singh and others this Court considered the circumstances under which the Government is not always bound to accept the highest bid offered in a public auction under which a contract was to be awarded to fell trees and exploit forest produce and held as under: "It appears to us that the High Court had clearly misdirected itself. The Conditions of Auction made it perfectly clear that (lie Government was under no obligation to accept the highest bid and that no rights accrued to the bidder merely because his bid happened to he the highest. Under condition 10 it was expressly provided that the acceptance of bid at the time of auction was entirely provisional and was subject to ratification by the competent authority, namely, the State Government. Therefore, the Government had the right, for good and sufficient reason, we may say, not to accept the highest bid but even to prefer a tenderer other than the highest bidder. The High Court was clearly in error in holding that the Government could not refuse to accept the highest bid except on the ground of inadequacy of the bid. Condition 10 does not so restrict the power of the Government not to accept the bid. There is no reason why the, power vested in the Government to refuse to accept the highest bid should be confined to inadequacy of bid only. There may be a variety of good and sufficient reasons, apart from inadequacy of bids, which may impel the Government not to accept the highest bid. In fact, to give an antithetic illustration, the very enormity of a bid may make 153 it suspect. It may lead the Government to realise that no bonafide bidder could possibly offer such a bid if he meant to do honest business. Again the Government may change or refuse its policy from time to time and we see no reason why change of policy by the Govern ment, subsequent to the auction but before its confirmation, may not be a sufficient justification for the refusal to accept the highest bid. It cannot be dispute that the Government has the right to change its policy from time to time, according to the demands of the time and situation and in the public interest. If the government has the power to accept or not to accept the highest hid and if the Government has also the power to change its policy from time to time. it must follow that a change or revision of policy subsequent to the provisional acceptance of the bid but before its final acceptance is a sound enough reason for the Government 's refusal to accept the highest bid at an auction. that is precisely what has happened here." (emphasis supplied) In State of Orissa and Ors. vs Harinarayan Jaiswal and Ors. ; it was observed as under: "It is for the Government to decide whether the pi ice offered in an auction sale is adequate. While accepting or rejecting a bid, it is merely performed and executive function. The correctness of its conclusion is not open 'to judicial review. We fail to see how the plea of contravention of article 19 (1) (g) or article 14 can arise in these cases. The Government 's power to sell the exclusive privileges set out in section 22 was not denied. It was also not disputed that those privileges could be sold by public auction. Public auctions are held to get the best possible price. Once these aspects are recognised, there appears to be no basis for contending that the owner of the privileges in question who had offered to sell then cannot decline to accept the highest bid if he thinks that the price offered is inadequate. There is no 154 concluded contract till the bid is accepted. Before there was a concluded contract, it was open to the bidders to withdraw their bids see Union of India and ors. vs M/s Bhimsen Walaiti Rani ; By merely giving bids, the bidders had not acquired any vested rights. The fact that the Government was the seller does not change the legal position once its exclusive right to deal with those privileges is conceded. If the Government is the exclusive owner of those privileges, reliance on article 19 (1) (g) or article 14 becomes irrelevant. Citizens cannot have any funda mental right to trade or carry on business in the properties or rights belonging to the Government, nor can there he any infringement of article 14, if the Government tries to get the best available price for its valuable rights. " emphasis supplied) In G.B. Mahajan and others vs Jalgaon Municipal Council and others ; it was observed thus: " The reasonableness ' in administrative law must, therefore, distinguish between proper use and improper abuse of power. Nor is the test the court 's own standard of 'reasonableness ' as it might conceive it in a given situation. " In State of Madhay Pradesh & ors vs Nandlal Jaiswal & ors. ; it was observed thus: " We must not forget that in complex economic matters every decision is necessarily empiric and it is based on experimentation or what one may call 'trial and error method ' and, therefore, its validity cannot be tested on any rigid a priori ' considerations or on the application of any straight jacket formula. The court must while adjudging the constitutional validity of an executive decision relating to economic matters grant a certain measure of freedom or play in the 155 'joints ' to the executive. xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx The Court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide. It is against the back round of these observations and keeping the mind that we must now proceed to deal with the contention of the petitioners based on article 14 of the Constitution. " In India Cement Ltd. and others vs Union of India and others[1990] 4SCC 356 a question arose whether the fixation of Rs. 100 per tonne of cement as the uniform retention price for the entire industry with the exception of M/s Travancore Cement Ltd. was rational and reasonable. This Court held as under: "It is. therefore, clear that fixation of Rs. 100 per tonne as die uniform retention price for the entire industry with the solitary exception of M/s. Travancore Cement Ltd. Kottayam for which justification has been shown. was on a rational basis taking into account all relevant data and factors including the cement industry 's acceptance of the principle of a uniform retention price for the entire industry. the only difference being in die price actually fixed it Rs. 100 per tonne instead of Rs. 104 per tonne claimed by the cement industry. It is obvious that the fixation of Rs. 100 per tonne being shown to be made on a principle which has not been faulted. the actual fixation of Rs. 100 instead of Rs. 104 to be received by the industry is not within the domain of permissible judicial review, if the principle of a Uniform retention price for the entire industry cannot be faulted. (emphasis supplied) The Bench in die above case, after referring to die decision of the Constitution 156 Bench in Shri Sitaram Sugar Co. Lid. vs Union of India ; , observed thus: " It was pointed out that what is best for the industry and in what manner the policy should be formulated and implemented. hearing in mind the object of supply and equitable distribution of the commodity at a fair price in the best interest of the general public, is a matter for decision exclusively within the province of the Central Government and such matters do not ordinarily attract the power of judicial review. It was also held (hit even if some persons are at a disadvantage and have suffered losses on account of the formulation and implementation of the government policy. that is not by itself ' sufficient ground for interference with the governmental action. Rejection of the principle of fixation of price unit wise on actual cost basis of ' each unit was reiterated and it was pointed out that such a policy promotes efficiency and provides and incentive to cut down the cost introducing an element of healthy competition among the units. xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx It is. therefore. clear that the principle of fixation of uniform price for the industry is an accepted principle and this has to be done by fixing a uniform price on the basis of the cost of a reasonably efficient and economic representative cross section of manufacturing units and not with reference to the cost in relation to each unit. Obviously, such a practice is in larger public interest and also promotes efficiency in the industry providing an incentive to the uneconomic units to achieve efficiency and to reduce their cost. " Regarding the differential treatment given to M/s Travancore Cement Ltd. this Court held that: 157 The only surviving question for consideration is the argument in Civil Appeal No. 2193 of 1972 for a differential treatment to the appellant, M/s Chettinad cement Limited, on the anology of M/s Travancore Cement Ltd., Kottayam. In the counter affidavit of Shri G. Ramanathan Under Secretary to the Government of India, the reason for treating. Travancore Cement Limited differently has been clearly stated. It has been stated that it is a sub standard unit with a capacity of 50,000 tonnes `per annum only without any scope for expansion while the standard capacity for a unit is two lakh tonnes per annum; so that this unit is not capable of expanding the capacity and it is on the whole an uneconomic unit deserving a special consideration. No material has been produced by the appellant. M/s Chettinad Cement Corporation Limited. to show that it is a similar substandard uni t without any capacity for expansion. so that it too must continue to be an uneconomic unit like M/s Travancore Cement Limited, Kottayam deserving, a similar treatment. The counter affidavit. therefore. shows a rational basis for classifying M/s Travancore Cement Limited, Kottayam differently as a sub standard and an uneconomic unit without any scope for improvement in comparison to other units. This argument also is untenable. " In R.K. Garg vs Union of India, [1981]4 SCC 675, a Constitution Bench of this Court observed as under: " Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude. than laws touching the civil rights such as freedom of speech religion etc. It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait .jacket formula and this is particularly true in case of legisla 158 (ion dealing with economic matters, where having regard to the nature of the problems required to be dealt with. greater play in the joints has to he allowed to tile legislature. The Court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation then in other areas where fundamental human rights are involved. Nowhere has this admonition been more felicitously expressed than in Morey vs Doud ; where Frankfurter, J said in his inimitable style: In the utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative judgment. The legislature after all has the affirmative responsibility the courts have only the power to destroy not to reconstruct. When these are added to the complesity of economic regulation, the uncertainty, the liability to error. the bewildering conflict of the experts, and the number of times the judges have been overruled by events self limitation can be seen to be the path of judicial wisdom and institutional prestige and stability." (emphasis supplied) In Peerless General Finance and Investment Co. Limited and Another vs Reserve Bank of India etc. ; the accent of power of the Courts interfering. in such economic policy matters was considered and it was held as under: "The function of the Court is to see that lawful authority is not abused but not to appropriate to itself ' the task entrusted to that authority. It is well settled that a public body invested with statutory powers must take care not exceed or abuse its power. It must keep within the limits of the authority committed to it. It must act in good faith and it must act reasonably. Courts are not to interfere with economic policy which is the function of experts. It is not the function 159 of the courts to sit in judgment over matters of economic policy and it must necessarily be left to the expert bodies. In such matters even expert can seriously and doubtlessly differ. Courts cannot be expected to decide them without even the aid of experts. " It was further observed thus: " The function of the Court is not to advise in matters relating to financial and economic policies for which bodies like Reserve Bank are fully competent. The Court can only strike some or entire directions issued by the Reserve Bank in case the Court is satisfied that the directions were wholly unreasonable or violative of any Provisions of the Constitution or any statute. It would be hazardous and risky for the courts to tread an unknown path and should leave such task to the expert bodies. This Court has repeatedly said that matters of economic policy ought to be left to the government." At this juncture it is also necessary to consider whether the policy of the Government in the matter of fixation of price and in allotment of the largess from the point of ' view of prohibiting monopolistic tendencies and encouraging healthy competition among the units, is in any manner unreasonable or arbitrary. As submitted by the learned counsel, the policy of the Government is to promote efficiency in the administration and to provide an incentive to the uneconomic units to achieve efficiency. The object underlying the C 'MRTP Act ' for short ) is to prevent the concentration of economic power and to provide for a control on monopolies prohibition of monopolistic trade practices and restrictive trade practices. The Monopolies Inquiry Commission in its report stated that: "There are different manifestations of economic power in different fields of economic activity. One such manifestation is the achievement by one or more units in an industry of such a dominant position that they are able to control the market by regulating prices 160 or output or eliminating competition. Another is the adoption by some producers and distributors, even though they do not enjoy such a dominant position. of practices which restrain competition and thereby deprive the community of the beneficent effects of the rivalry between producers and producers, and distributors and distributors to give the best service. It is needless to say that such practices must inevitably impede the best utilisation of the nation 's means of production economic power may also manifest itself ' in obtaining control of large areas of economic activity by a few industrialists by diverse means. Apart from affecting the economy of the country, this often results in the creation of industrial empires, tending to cast their shadows over political democracy and social values." In U.S.A. under the Sherman Act of 1890. every contract or combination in the form of trust or otherwise or conspiracy in restraint of trade or commerce is declared to be illegal. By that at every person who monopolised or attempted to monopolise or combined or conspired with any other person or persons to monopolise any part of the trade or commerce was guilty of mis demeanour. Regarding the constitutionality of the said Act. a passage in American jurisprudence 2d, vol. 54 pages 668 669 reads thus: 2. Constitutionality. The Sherman Act (15 USCSS 1 7) is a constitutional exercise of the commerce power. Its general language does not render it invalid as an unconstitutional delegation of legislative power to the courts or as an unconstitutionally vague criminal statue. Its application to a monopolistic association of newspaper publisher does not abridge freedom of the press: nor does its application to the continuance, after its enactment, of a contract made previously subject it to attack as ex post facto legislation. " 161 In England, the Competition Act, 1980 controls anti competitive practices and if a person in the course of his business pursues a course of conduct which has or is intended to have or it likely to have the effect of restricting, distorting or preventing competition in connection with the production, supply or acquisition of goods is deemed to engage in anti competition practices, which is illegal. Therefore, the avowed policy of the Government particularly from the point of view of public interest is to prohibit concentration of economic power and to control monopolies so that the ownership and control of the material resources of the Community are so distributed as best to subserve the common good and to ensure that while promoting industrial growth there is reduction in concentration of wealth and that the economic power is brought about to secure social and economic justice. Bearing the above principles in mind, we shall now proceed to examine the action taken by the Railways in the matter of fixation of the price and distribution of quantities and see whether the same has been done pursuant to a policy and thus reasonable or whether there has been an arbitrary exercise of power. We have already noted that it is a case of limited tender meant for the 12 manufacturers who have been supplying the railway bogies. The offers made by the tenders were got technically evaluated by the RDSO and thereafter they were examined by the render Committee as well as by the Railways Board and finally by competent authority. The assessed capacity of each manufacturer is the one assessed by the RDSO, a wing of the Railways and the same is based on the molten capacity of the manufacturers and other relevant factors. After fixing the reasonable price, the quantity distribution can be determined based on the assessed actual capacity of the manufacturers, best performance, outstanding orders to be executed and on the average of previous four years ' performance. It is not in dispute that this formula was evolved in 1983. Later, to avoid certain inequalities and better utilisation of the installed capacity by larger units and uneconomic ordered quantity and under utilisation of capacity by smaller units, it was felt that in the interest of the economy, an equitable distribution has to he effected. A perusal of the Tender Committee 's recommendations, the enclorsements made by the members of the Railway Board and the views expressed by the competent authority 162 could show that for the year in question they want to bring about some changes in the policy of distribution pending a permanent policy being evolved. The 'render Committee in the first instance examined the prices quoted by the tenderers. The Committee decided that while placing orders, only the RDSO permitted deviations will be allowed and the suppliers have to adhere to rest of the specifications as was being done in the earlier years. Then coming to the prices, the Tender committee noted that the three big manufacturers quoted identical price in terms by forming a cartel among themselves. Having applied the price variation formula, the updated price was fixed at Rs. 79,305 as on 1. 9.91. However, taking into consideration the two concessions is respect of import duty and (fie freight equalisation the Committee ultimately recommended the price of Rs. 76.000. The Tender Committee also noted that this price is very near to the lowest among the updated price. Regarding the distribution of quantities the Tender committee recommended that the same may be distributed among the various manufacturers as shown in (he annexure to their recommenda tions. In recommending such distribution to various manufacturers the Tender committee has taken into consideration the fact that the four wagon builders namely M/s H.D.C. Texmaco, Cimmco and Burn should be given weightage. The Tender Committee ultimately recommended that a counter offer at the price of Rs. 76,000 for 20.3 T bogies can be made and the quantities can be distributed as indicated in the be annexure. This was done on 4. 2. 92 and then the post tender correspondence was there %%,hereby two of the three big manufacturers offered to reduce their price if negotiations be held. Then the file went to the Railway Board. Advisor (Finance) particularly indicated that a view has to be taken whether a large number of manufacturers should be continued manufacturing these bogies in small quantities as at present or to permit a small number of manufacturers to expand their production at the cost of other prices and that the policy which has been followed by the Railways so far is to encourage a large number of parties to manufacture the bogies, with the idea of generation competition as also by way of encouraging small scale industries. fie, however, pointed out that since the review of policy would take time, the tender could be decided on the basis of the existing policy. The Member (Mechanical) agreed with this recommendation. Then the file went to Financial Commissioner. He noted that the three big manufacturers have formed a cartel and they have given offer to reduce their price if negotiations are held and their intention apparently is to get a 163 larger share on the basis of such negotiated price which would eventually nullify the competion from the other manufacturers and Subsequently to monopolistic price situation. Having stated so he recommended that the wagon builders and other smaller manufacturers must he given larger quantities and that the three big manufacturers should be given the balance. In the last paragraph. the Financial Commissioner noted thus: " Now, due to the new economic policy, the structural changes are in a flux and as a monopoly buyer it is incumbent on the part of the Railway not to precipitate any crisis by resorting to negotiation on the basis of II DC 's letter at SN 26 but treat carefully and protect smaller firms from being gobbled up. In other words, for short term gains, we may be sacrificing, long term healthy competition. 1, therefore, advocate that this post tender letter may be ignored as the prices quoted by firms are in the close range or prices updated by Tender Committee for counter offer. " With these nothings, the file went to the Railway Minister and in his order, he noted that the three big manufacturers have formed a cartel and that under the circumstances all the three of them may be offered a price lower by Rs. 11.000 and the quantities also should be suitably adjusted so that the cartel is broken and he ordered 1795, 2376 and 2500 number of bogies to M/s H. D.C., Mukandand Bharativa respectively. The Minister further observed that since the present formula suffers from serious blemishes as pointed out by the Financial Commissioner, a judicious distribution of order is called for between the other suppliers and that some of them are sick units and owe a lot of money to the nationalised banks and their cases are pending before BIFR. and that it would be in the national interest to give them sufficient order so that they are able to rehabilitate themselves and repay the loans. In this view of the matter, he ordered redistribution of the balance quantities as follows: Bum 500 Cimmco 1200 Texmaco 1200 164 Sri Ranga 1560 Anup TSL 1400 Himmat 1150 BECO 1600" The Minister also ordered that straight away 30% option should be exercised. The further noted that as a result of this policy, the Railways would be effecting a saving of about Rs. 11 crores. Then the file with this order went back to the Member (Mechanical) and others for being implemented. he, however. noted that the Minister for Railways may consider whether the lower price could be counter offered to all the companies. The Financial Commissioner again noted that dual pricing would be in the national interest and finally the Minister having noted these endorsements of the Member (Mechanical) as well as the Financial Commissioner made an endorsement that if some are allowed to hold monopoly instead of giving protection to smaller units, who have formed a cartel, they may gang up and fight and fritter the smaller ones and that Railways should always demonstrate of its own vision of long term Railway interest and not short terms gains and finally agreed with the recommendations of the Financial commis sioners and also the recommendation of the 'Fender Committee and directed the implementation of the same without further delay. The above documents would show that a particular policy has been adopted by the Government, though it resulted in a change as compared to the previous one. As held by the courts, change of policy by it self does not affect the pursuant action provided it is rational and reasonable However, the submission is that the decision taken pursuant to this policy in the matter of fixation of price and distribution of quantities is based on wrong grounds and suffers from the vice of unreasonableness. S/Shri Nariman, Venugopal and Shanti Bhushan, learned counsel appearing for M/s Mukand, H.D.C. and Bharatiya respectively submitted in this context that the grounds namely that the three big manufacturers formed a cartel and that the post tender price offered by them was predatory are unfounded and that dual pricing and the ultimate allotment of the quantities in a punitive manner are based 165 on a wrong premise and the final decision arrived at is consequently unreasonable and arbitrary. The further submission is that these manufacturers have a legitimate expectation of being treated in certain ways by the administrative authorities on the basis of practice and policy of the previous years and such a decision, which is punitive and which defeats such legitimate expectation and which is taken without affording an opportunity to these manufacturers to explain, is violative of principles of natural justice. First we shall consider the submissions regarding the formation of cartel by these big manufacturers, The word "Cartel" has a particular meaning with reference to monopolistic control of the market. In collins English Dictionary, the meaning of the word "Cartel" is given as under: " cartel I also called: trust, a collusive international association of independent enterprises formed to monopolize production and distribution of a product or service, control prices etc. " In Webster Comprehensive Dictionary, International Edition, the meaning of the word "Cartel" is given thus: "cartel xx 3. An international combination of independent enterprises in the same branch of production, aiming at a monopolistic control of the market by means of weaking or eliminating competition. xx In Chambers ' English Dictionary the word "Cartel" is defined thus: "Cartel A combination of firms for certain purposes especially to keep up prices and kill competition XX In Black 's Law Dictionary, fifth edition the meaning of the word "Cartel" is given thus: 166 "Cartel A combination of producers of any product joined together to control its production, sale, and price, and to obtain a monopoly in any particular industry or commodity. Also, an association by agreement of companies or sections of companies having common interests, designed,, to prevent extreme or unfair competition and allocate markets, and to promote the interchange of knowledge resulting from scientific and technical research, exchange of patent rights, and standardization of products. " In American Jurisprudence 2d Vol. 54 page 677 it is mentioned thus: "A cartel is an association by agreement of companies or sections of companies having common interests, designed to prevent extreme or unfair competition and to allocate markets, and perhaps also to exchange scientific or technical knowledge or patent rights and to standardize products, with competition regulated but not eliminated by substituting computational in quality, efficiency, and service for price cutting. An international cartel arrangement providing for a worldwide division of a market has been held a per se violation of 15 USC S 1. An American corporation violates the Sherman Act by entering into agreements with English and French companies to (1) allocate world trade territories among themselves; (2) fix prices on products of one sold in the territory of the others; (3) co operate to protect each other 's markets and eliminate outside competition; and (4) participate in cartels to restrict imports to and exports from the United States. ' In a Dictionary of Modern Legal Usage by Bryian A.Gemer,it is noted thus: "cartlize=to organize into a cartel. See IZE. Yet cartel has three quite different meanings; (1) " an 167 agreement between hostile nations" ' (2) "an anticompetitive combination usu. that fixes commercial prices"; and (3) "a combination of political groups that work toward common goals. " Modern usage favours sense (2). " The cartel therefore is an association of producers who by agreement among themselves attempt to control production, sale and prices of the product to obtain a monopoly in any particular industry or commodity. Analysing the object of formation of a cartel in other words, it amounts to an unfair trade practice which is not in the public interest. The intention to acquire monopoly power can be spelt out from formation of such a cartel by some of the producers. However, the determination whether such agreement unreasonably restrains the trade depends on the nature of the agreement and on the surrounding circumstances that give rise to an inference that the parties intended to restrain the trade and monopolise the same. Dealing with the provi sions of Sherman Anti Trust Act, in National Electrical Contractors Associations, Inc. etal. vs National Contractors Association etal Federal Reporter 2d Series, 678 page 492 it was observed as under: "We know of no better statement of the rule than that of this court in United States vs Society, of Ind. Gasoline Marketers, 624 F. 2d 461, 465 (4th Cir. 1979) cert. 101 S.Ct. 859, , , where stated: "Since in a price fixing conspiracy the conduct is illegal per se further inquiry on the issues of intent or the anti competitive effect is not required. The mere existence of a price fixing agreement establishes the defendants ' illegal purpose since the aim and result of every price fixing agreement, if effective, is the elimination of one form of competition. " It was also observed that: "The critical analysis in determining whether a particular activity constitutes a per se violation is whether the activity on its face seems to be such that it would always or almost always restrict competition and 168 decrease output instead of being designed to increase economic efficiency and make the market more rather than less competitive. " Matsushita Electric Industrial Co., Ltd. et al vs Zenith Radio Corporation et al ; is a case where American manufacturers of consumer electronic products brought suit against a group of their Japanese competitors in the United States District Court alleging that these competitors had violated Sections 1 and 2 of the Sherman Act and other federal statutes. It was alleged that the Japanese companies had conspired since 1950 to drive domestic firms from the American Market, by maintaining artificially high prices for these products in Japan while selling them at a loss in the United States. The District Court after excluding bulk of evidence, finally granted the Japanese companies ' motion for summary judgment dismissing the claims. The United States Court of Appeal reversed and remanded for further proceeding. On a certiorari, the United States Supreme Court while considering the standards supplied by the Court of Appeals in evaluating the summary judgment, observed thus: "To survive petitioners motion for summary judgment respondents must establish that there is a genuine issue of material fact as to whether petitioners entered into an illegal conspiracy that caused respondents to. suffer a cognizable injury. " It was further observed that: A predatory pricing conspiracy by nature speculative. Any agreement to price below the competitive level requires the conspirators to forgo profits that free competition would offer them. The forgone profits may be considered an investment in the future. For the investment to be rational the conspirators must have a reasonable expectations of recovering, in the form of later monopoly profits, more than the losses suffered. 169 xxxxxxxx xxxxxxxx xxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx The alleged conspiracy 's failure to achieve its ends in the two decades of its asserted operation is strong evidence that the conspiracy does not in fact exist. Since the losses in such a conspiracy accrue before the gains, they must be "repaid" with interest. And because the alleged losses have accrued over the course of two decades, the conspirators could well require a correspondingly long time to recoup. Maintaining supra competitive prices turn depends on the continued cooperation of the conspirators, an the inability of other would be competitors to enter the market, and not incidentally on the conspirator; ability to escape antitrustliability for their minimum price fixing cartel. Each of these factors weighs more heavily as the time needed to recoup losses grows. If the losses have been substantial as would likely be necessary in order to drive out the competition petitioners would most likely have to sustain their cartel for years simply to break even." (emphasis supplied) In this context, one of the submissions is that the price of Rs. 67,000 offered by these manufacturers during the post tender stage was not predatory and that the view taken by the authorities that such an offer of lower price was predatory one confirming the formation of a cartel, is also unwarranted. In Matsushita 's case (supra) it was observed that predatory pricing conspiracies are by nature speculative and that the agreement to price below the competition level requires the conspirators to forgo profits that free competition would offer them. It was also held therein as under: "To survive a motion for a summary judgment, a plaintiff seeking damages for a violation of S 1 of the Sherman Act must present evidence "that tends to 170 exclude the possibility" that the alleged conspirators acted independently. Thus, respondents here must show that the inference of a conspiracy is reasonable in light of the competing inferences of independent action or collusive action that could not have harmed respondents. (emphasis supplied) Therefore mere offering of a lower price by itself, though appears to be predatory, can not be a factor for inferring formation of a cartel unless an agreement amounting to conspiracy is also proved. In webster Comprehensive Dictionary International Edition. The meaning of the word "Predatory" is given as under: "predatory 1. characterized by or under taken for plun dering. Addicted to pillaging: 3. Constituted for living by preying upon others, as a beast or bird; raptorial. " In A Dictionary of Modern Legal Usage by Bryan A. Garner, "predatory" is defined thus: "Predatory preying on other animals. The word is applied figuratively in the phrase from antitrust law, predatory pricing. The forms predaceous, predatorial, and predative are needless variants. The spelling predacious has undergone differentiation and means" devouring; rapacious." In collins English Dictionary, "Predatory" is defined thus: "predatory 1. another word for predacious (sense 12. of, involving, or characterized by plundering, robbing, etc. . . xxxx. . . . In Black 's Law Dictionary, "Predatory intent" is defined asunder: "Predatory intent. "predatory intent," in purview of Robinson patmen Act, means that alleged price dis 171 criminator must have at least sacrificed present revenues for purpose of driving competitor out of market. with hope of recouping losses through subsequent higher prices. International Air Industries, Inc. vs American Excelsior Co., C.A. Tex. ; , 723. " In The oxford English Dictionary Vol. VIII, "predatory" is defined thus" "Predatory 1. Of, pertaining to, characterized by, or consisting in plundering, pillaging, or robbery xx 2. Addicted to, or living by, plunder; plundering, marauding, thieving, in modern use sometimes applied to the criminal classes of great cities. xx 3. Destructive, consuming, wasteful, deleterious, xx 4. Of an animal; That preys upon other animals; that is a beast, bird, or other creature of prey; carnivorous. Also, of its organs of capture, xx We have noticed that monopoly is the power to control prices or exclude competition from any part of the trade or commerce among the producers. The price fixation is one of the essential factors. In American jurisprudence. 2d Volume 54, a passage at page 695 reads thus: "The Sherman Act does not out law price uniformity. An accidental or incidental price uniformity or even pure conscious price parallelism, is not itself unlawful. Moreover, a competitor 's sole decision to follow price leadership is not a violation of 15 USC S 1. On the other hand, a price fixing conspiracy does not necessarily involve an express agreement, oral or written. It is sufficient that a concert of action is contemplated and that the defendants conform to the arrangement. The fixing of prices by one member of 172 a group pursuant to express delegation,acquiescence, or under standing is just as illegal as the fixing of prices by direct joint action. A price fixing combination is illegal even though the prices are fixed only by one member and without consultation with the others." (emphasisd supplied) A mere offer of a lower price by itself does not manifest the requisite intent to gain monopoly and in the absence of a specific agreement by way of a concerted action suggesting conspiracy, the formation of a cartel among the producers who offered such lower price can not readily be inferred. In the instant case, the fact that two of the three big manufacturers entered into post tender correspondence and also offered a lower price of Rs. 67,000 is not dispute. Though they did not place the necessary material in support of their offer as to how it is viable and workable, they, however, sought to contend before us that the price offered by them is not predatory and is only a reasonable price. By our earlier order dated 14th January, 1993 we directed the Tender Committee to examine the matter afresh regarding the reasonable price on the basis of the data that may be placed by these big manufacturers in support of their offer of Rs. 67,000. Therefore no conclusion can be reached definitely that offer of the price of Rs. 67,000 by itself was predatory and the manufacturers who offered such a price consequently formed a cartel. Therefore, whether in a given case, there was formation of a cartel by some of the manufacturers which amounts to an unfair trade practice, depends upon the available evidence and the surrounding circumstances. In the instant case, initially the Tender Committee formed the opinion that the three big manufacturers formed a cartel on the ground that the price initially quoted by them was identical and was only a cartel price. This, in our view, was only a suspicion which of course got strengthened by post tender attitude of the said manufacturers who quoted a much lesser price. As noticed above it can not positively be concluded on the basis of these two circumstances alone. In the past these three big manufacturers also offered their own quotations and they were allotted quantities on the basis of the existing practice. However a mere quotation of identical price and an offer of further reduction by themselves would not entitle them automatically 173 to comer the entire market by way of monopoly since the final allotment of quantities vested in the authorities who in their discretion can distribute the same to all the manufacturers including these three big manufacturers on certain basis. No doubt there was an apprehension that if such predatory price has to be accepted the smaller manufacturers will not be in a position to compete and may result in elimination of free competition. But there again the authorities reserved a right to reject such lower price. Under these circumstances though the attitude of these three big manufacturers gave rise to a suspicion that they formed a cartel but there is not enough of material to conclude that in fact there was such formation of a cartel. However, such an opinion entertained by the concerned authorities including the Minister was not malicious nor was actuated by any extraneous considerations. They entertained a reasonable suspicion based on the record and other surrounding circumstances and only acted in a bonafide manner in taking the stand that the three big manufacturers formed a cartel. S/Shri Nariman, Venugopal and Shanti Bhushan, learned counsel appearing for M/s Mukand, H.D.C. and Bharatiya respectively. contended that the Railways were bound to follow the rules and standards pertaining to the tender system and on the basis of these provisions and the course of conduct followed by the Railways in the matter of fixation of price and allotment of quota in the past let the manufacturers believe that the same course of conduct would be followed and the manufacturers legitimately expected that they would be treated equally and in a non arbitrary manner and such legitimate expectation is a right guaranteed under Article 14. In Food Corporation of India vs M/s Kamdhenu Cattle Feed Industries JT Justice J.S. Verma Speaking for the Bench observed as under: "In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non arbitrari ness is a significant facet. There is no unfettered discretion in public law. A public authority possesses powers only to use them for public good. This imposes 174 the duty to act fairly and to adopt a procedure which is fairplay in action '. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the state and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of non arbitrariness in a State action, it is therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bonafides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review. The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by it self be a distinct enforceable right; but failure to consider and give due weight to it may render the decision arbitrary and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision making process. Whether the expectation of the claimant is reasonable or Legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant 's perception but in larger public interest wherein other more important considerations, may outweigh what would otherwise have been the legitimate expectation of the claimant. A bonafide decision of the public authority reached in this manner would 175 satisfy the requirement of non arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in. our legal system in this manner and to this extent." (emphasis supplied) In Navjoti coo Group Housing Society etc. vs Union of India & Others ; ,justice G.N. Ray speaking for the Bench observed as under: "In the aforesaid facts, the Group Housing Societies were entitled to legitimate expectation of following consistent past practice in the matter of allotment, even though they may not have any legal right in private law to receive such treatment. The existence of legitimate expectation ' may have a number of different consequences and one of such consequences is that the authority ought not to act to defeat the 'legitimate expectation without some overriding reason of public policy to justify its doing so. In a case of 'legitimate expectation ' if the authority proposes to defeat a person 's 'legitimate expectation ' it should afford him an opportunity to make representations in the matter. In this connection reference may be made to the discussions on 'legitimate expectation ' it page 151 of volume 1(1) of Halsbury 's Laws of England Fourth Edition (Re issue). We may also refer to a decision of the House of Lords in Council of civil Service Union and others versus Minister for Civil Service reported in [1985] 3 All England Reporter page 935. It has been held in the said decision that an aggrieved person was entitled to judicial review if he could show that a decision of the public authority affected him of some benefit or advantage which in the past he had been permitted to enjoy and which he legitimately expected to be permitted to continue to enjoy either until he was given reasons for withdrawal and the opportunity to comment on such reasons. 176 It may be indicated here that the doctrine of 'legitimate expectation imposes in essence a dun, on public authority to act fairly, by taking into consideration all relevant factors relating to such 'legitimate expectation '. Within the conspectus of fair dealing in case of 'legitimate expectation ', the reasonable opportunities to make representation by the parties likely to be affected by any change of consistent passed policy, come in. We have not been shown any compelling reasons taken into consideration by the Central Government to make a departure from the existing policy of allotment with reference to seniority in Registration by introducing a new guideline." (emphasis supplied) Relying on these decisions, it was contended that the decision of the Railways in fixing the price and in allotment of the quantities is arbitrary and unreasonable affecting the right to such legitimate expectation. To appreciate these contentions, it becomes necessary to refer to some of the rules governing these contracts and followed by the Railways, before we examine the impact of the doctrine of 'legitimate expectation '. The Rules prescribed by the Minister for Railways for entering into contracts lay down certain norms and contains guidelines. The rules provide for constitution of Tender Committee and the Procedure to be followed in the matter of inviting tenders. They also provide for negotiations but lays down that selection of contracts by negotiations is an exception rather than a rule and can be resorted to only under certain circumstances. Regarding splitting of tendered quantity in more than one form, we find some guidelines in Annexure 50 which reads as under: "3.0. Where warranted, the tendered quantity may be split and tender decided in favour of one or more firms on merits of each case, in consultation with Associate Finance and with the approval of the authority competent to accept the tender having due regard to the following factors: (i) Vital/Critical nature of the items; (ii)Quantity to be procured; (iii)Delivery requirements; (iv)Capacity of the firms in the zone of consideration; (v) Past performance of firms. xxxxxxx xxxxxxxx xxxxxxxxx 5.0 Splitting should not be done merely with a view to utilising developed capacity of the different sources but should be for valid reasons to be recorded in writing for splitting the tendered quantity. " Annexure 213 contains the Railway Board letter dated 19.4.90 addressed to General Managers, All Indian Railways and others dealing with the subject of Non acceptance of late/delayed/post/ Tender offers. The relevant portion reads thus: "2. Instances have come to notice of the Board where on a strict application of the above instructions even late Tenders submitted by Public Sector firms for highly specialised equipments have been rejected. 3.The matter, has therefore been reconsidered by the Board and it has been decided that where late Tenders from established/reliable suppliers and conferring a substantial financial advantage is to be considered, notwithstanding the general ban, it will be open to the Railways to seek the Board 's approval for the consideration of such Tenders, since this should be a very exceptional situation, such cases should be recommended for consideration of the Board with the personal approval of the General Manager, duty concuffed in by the F.A. & C.A.O. 4.The Railways should not enter into any dialogue with the agency submitting a delayed Tender without obtaining Board 's prior clearance". 178 Now coming to the notice inviting tender in the instant case, we have already noted that the price quoted is subject to price variation clause and the Railways reserved a right to accept the lowest price or accept the whole or any part of the tender of portion of the quantity offered. The notice however, mentioned that the tenderer is at liberty to tender for the whole or any portion or to state in the tender that the rate quoted shall apply only if the entire quantity is taken from him. From these provisions it becomes clear that the tenderer can not expect that his entire tender should be accepted in respect of the quantity and that the Railways have a night to accept the tender as a whole or a part of it or portion of the quantity offered. It is not in dispute that in the past also there were many instances where the Railways as per the procedure followed, arrived at decisions in respect of both price and quantity for good and justifiable reasons. In the year 1991 the quantities of M/s H.D.C. and Bharatiya were in fact reduce from the allocations made by the Tender Committee which made its recommendations on the basis of certain data. It has to be noted that the Tender Committee is not a statutory authority and its proposals are recommendatory in nature and have to be considered in the distribution procedure culminating in the decision of the approving authority who as a matter of fact, also can take decisions in respect of price and allotment of quantities taking into consideration various other aspects from the point of view of public interest. Therefore it is evident that there is no legally fixed procedure regarding fixation of price and particularly regarding allotment giving scope to a legitimate expectation. However, with this facture background, we shall consider the contention regarding 'legitimate expectation '. In Halsbury 's Laws of England, Fourth Edition, Volume 1(1) 151 a passage explaining the scope of "legitimate expectations" runs thus: "81. Legitimate expectations. A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority, including an implied representation, or from consistent past prac tice. 179 The existence of a legitimate expectation may have a number of different consequences '; it may give locus standi to seek leave to apply for `judicial review; it may mean that the authority ought not to act so as to defeat the expectation without some overriding reason of public policy to justify its doing so; or it may mean that, if the authority proposes to defeat a person 's legitimate expectations, it must afford him an opportunity to make representation on the matter. The courts also distinguish, for example in licensing cases, between original applications, to renew and revocations; a party who has been granted a licence may have legitimate expectation that it will be renewed unless there is some good reason not to do so, and may therefore be entitled to greater procedural protection than a mere applicant for a grant." (emphasis supplied) We find that the concept of legitimate expectation first stepped into the English Law in Schmidt vs Secretary, of State for Home Affairs wherein it was observed that an alien who had been given leave ' to enter the United Kingdom for a limited period had a legitimate expectation of being allowed to stay for the permitted time and if that permission was revoked before the time expires, that alien ought to be given an opportunity of making representations. Thereafter the concept has been Considered in a number of cases. In A.G. of Hong Kong vs Ng Yeun shiu, [1983] 2 A.C. 629 Lord Fraser said that "the principle that public authority is bound by its undertakings as to the procedure it will follow, provided they do not conflict with its duty, is applicable to the undertaking given by the government of Hong Kong to the respondent. . that each case would be considered on its merits. " In Council of Civil Service Unions and others vs Minister for the Civil Service (1984) Vol. 3 All E.R. 359, a question arose whether the decision of the Minister withdrawing the right to trade union member 180 ship without consulting the staff which according to the appellant was his legitimate expectation arising from the existence of a regular practice of consultation was valid. It was contended that the Minister had a duty to consult the staff as per the existing practice and that though the employee did not have a legal right, he had a legitimate expectation that the existing practice would be followed. On behalf of the Minister on the basis of the evidence produced, it was contended that the decision not to consult was taken for reasons of national security. The Court held as under: "An aggrieved person was entitled to invoke judicial review if he showed that a decision of a public authority affected him by depriving him of some benefit or advantage which in the past he had been permitted to enjoy and which he could legitimately expect to be permitted to continue to enjoy either until he was given reasons for its withdrawal and the opportunity to comment on those reasons or because he had received an assurance that it would not be withdrawn before he had been given the opportunity of making representations against the withdrawal. The appellants legitimate expectation arising from the existence of a regular practice of consultation appellants could reasonably expect to continue gave rise to an implied limitation on the Minister 's exercise of the power contained in article 4 of the 1982 order, namely an obligation to act fairly by consulting the GCHQ staff before withdrawing the benefit of trade union membership. xxxxxxxx xxxxxxx xxxxxxxx Once the Minister produced evidence that her decision not to consult the staff before withdrawing the right to trade union membership was taken for reasons, of national security, that overrode any right to judicial review which the appellants had arising out of the denial of their legitimate expectation of consultation. The appeal would therefore be dismissed. xxxxxxxx xxxxxxxx xxxxxxxx 181 Administrative action is subject to control by judicial review under three heads: (1) illegality where the decision making authority has been guilty of an error of law, e g by purporting to exercise a power it does not possess; (2) irrationality where the decision making authority has acted so unreasonably that no reasonable authority, would have made the decision, (3) procedural impropriety, where the decision making authority has failed in its duty to act fairly. (emphasis supplied) Therefore the claim based on the principle of legitimate expectation can be sustained and the decision resulting in denial of such expectation can be questioned provided the same is found to be unfair, unreasonable, arbitrary and violative of principles of natural justice. (vide Food Corporation of India 's case and Navjyoti Coo Group Housing Society 's case (supra). The learned counsel for these three big manufacturers, however, relied on various decision in Amarjit Singh Ahluwalia vs The State of Punjab & Ors. ; , Ramana Dayaram Shetty 's case and Peerless General Finance and Investment Co. Limited 's case (supra) and contended that failure to follow the existing procedure resulting in denial of a right directly arising out of legitimate expectation is per se arbitrary and unreasonable and therefore illegal and consequently violative of Article 14 of the constitution. Of late the doctrine of legitimate expectation is being pressed into service in many cases particularly in contractual sphere while canvassing the implications underlying the administrative law. Since we have not come across any pronouncement. of this court on this subject explaining the meaning and scope of the doctrine of legitimate expectation, we would like to examine the same a little more elaborately at this stage. Who is the expectant and what is the nature of the expectation? When does such an expectation become a legitimate one and what is the foundation for the same? What are the duties of the administrative authorities while taking a decision in cases attracting the doctrine of legitimate expectation. Time is a three fold present: the present as we experience it, the 182 past as a present memory and future as a present expectation. For legal purposes, the expectation can not be the same as anticipation. It is different from a wish, a desire or a hope nor can it amount to a claim or demand on the ground of a right. However earnest and sincere a wish, a desire or a hope may be and however confidently one may look to them to be fulfilled, they by themselves can not amount to an assertable expectation and a mere disappointment does not attract legal consequences. A pious hope even leading to a moral obligation can not amount to a legitimate expectation. The legitimacy of an expectation can be inferred only if it is founded on the sanction of law or custom or an established procedure followed in regular and natural sequence. Again it is distinguishable from a genuine expectation. Such expectation should be justifiably legitimate and protectable. Every such legitimate expectation does not by itself fructify into a right and therefore it does not amount to a right in the conventional sense. It has to be noticed that the concept of legitimate expectation in administrative law has now, undoubtedly, gained sufficient importance. It is stated that "Legitimate expectation" is the latest recruit to a long list of concepts fashioned by the courts for the review of administrative action and this creation takes its place beside such principles as the rules of natural justice, unreasonableness, the fiduciary duty of local authorities and "in future, perhaps, the principle of proportionality. " A passage in Administrative Law, Sixth edition by H.W.R. Wade page 424 reads thus: "These are revealing decisions. They show that the courts now expect government departments to honour their published statements or else to treat the citizen with the fullest personal consideration. Unfairness in the form of unreasonableness here comes close to unfairness in the form of violation of natural justice, and the doctrine of legitimate expectation can operate in both contexts. It is obvious, furthermore, that this principle of substantive, as opposed to procedural, fairness may undermine some of the established rules about estoppel and misleading advice, which tend to operate unfairly. Lord Scarman has stated emphatically that unfairness in the purported exercise of a power can amount to an abuse or excess of power, and this seems likely to develop into an important general doctrine. " Another passage at page 522 in the above book reads thus: "It was in fact for the purpose of restricting the right to be heard that legitimate expectation was introduced into the law. It made its first appearance in a case where alien students of 'scientology were refused extension of their entry permits as an act of policy by the Home Secretary, who had announced that no discretionary benefits would be granted to this Sect, The Court of Appeal held that they had no legitimate expectation of extension beyond the permitted time, and so no right to a hearing, though revocation of their permits within that time would have been contrary to legitimate expectation. Official statements of policy, therefore, may cancel legitimate expectation, just as they may create it, as seen above. In a different context, where car hire drivers had habitually offended against airport bye laws, with many convictions and unpaid fines, it was held that they had no legitimate expectation of being heard before being banned by the airport authority. There is some ambiguity in the dicta about legitimate expectation, which may mean either expectation of a fair hearing or expectation of the licence or other benefit which is being sought. But the result is the same in either case; absence of legitimate expectation will absolve the public authority from affording a hearing. (emphasis supplied) In some cases a question arose whether the concept of legitimate expectation is an impact only on the procedure or whether it also can have a substantive impact and if so to what extent. For New South Wales vs Quin (1990) Vol. 64 Australian Law Journal Reports 327 is a case from Australia in which this aspect is dealt with. In that case the Local Courts Act abolished Courts of Petty Sessions and 184 replaced them by Local Courts. Section 12 of the Act empowered the Governor to appoint any qualified person to be a magistrate in the new Courts System, Mr. Quin, who had been a Stipendiary Magistrate in charge of a Court of petty Sessions under the old system, applied for, but was refused, an appointment under the new system. That was challenged. The challenge was upheld by the appellate court on the ground that the selection committee had taken into account an adverse report on him without giving a notice to him of the contents of the same. In the appeal by the Attorney General against that order before the High Court it was argued on behalf of Mr. Quin that he had a legitimate expectation that he would be treated in the same way as his former colleagues considering his application on its own merits. Coming to the nature of the substantive impact of the doctrine, Brennan, J. observed that the doctrine of legitimate expectations ought not to " unlock the gate which shuts the court out of review on the merits," and that the Courts should not trespass "into the forbidden field of the merits" by striking down administrative acts or decisions which failed to fulfill the expectations. In the same case Mason, C.J. was of the view that if substantive protection is to be accorded to legitimate expectations that would encounter the objection of entailing "curial interference with administrative decisions on the merits by precluding the decision maker from ultimately making the decision which he or she considers most appropriate in the circumstances. " In R vs Secretary of State for the Home Department. ex parte Ruddock and others , Taylor, J. after referring to the ratio laid down in some of the above cases held thus: "On these authorities I conclude that the doctrine of legitimate expectation in essence imposes a duty to act fairly. Whilst most of the cases are concerned, as Lord Roskill said, with a right to be heard, I do not think the doctrine is so confined. Indeed, in a case where ex hypothesis there is no right to be heard, it may be thought the more important to fair dealing that a promise or undertaking given by a minister as to how he will proceed should be kept. Of course such promise or undertaking must not conflict with his statutory duty, or her duty as here, in the exercise of a preroga 185 tive power. I accept the submission of counsel for the Secretary of State that the respondent cannot fetter his discretion. By declaring a policy he does not preclude any possible need to change it. But then if the practice has been to publish the current policy, it would be incumbent on him in dealing fairly to publish the new policy, unless again that would conflict with his duties. Had the criteria here needed changing for national security reasons, no doubt the respondent could have changed them. Had those reasons prevented him also from publishing the new criteria, no doubt he could have refrained from doing so. Had he even decided to keep the criteria but depart from them in this single case for national security reasons, no doubt those reasons would have afforded him a defence to judicial review as in the GCHQ case." (emphasis supplied) In Breen vs Amalgamated Engineering Union and Others [1971] 2 Law Reports Queen Bench Division 175, Lord Denning observed as under: "if a man seeks a privilege to which he has no particular claim such as an appointment to some post or other then he can be turned away without a word. He need not be heard. No explanation need be given; see the cases cited in Schmidt vs Secretary of State for Home Affairs , 170 171. But if he is a man whose property is at stake, or who is being deprived of his livelihood, then reasons should be given why he is being turned down, and he should be given a chance to be heard. I go further If he is a man who has some right or interest, or some legitimate expectation, of which it would not be fair to deprive him without a hearing, or reasons given, then these should he afforded hint, according as the case may demand". (emphasis supplied) At this stage it is necessary to consider the scope of judicial review when a challenge is made on the basis of the doctrine of legitimate 186 expectation. In Findlay vs Secretary of State for the Home Department, 19841 3 All E R 801 it was observed as under: "The doctrine of legitimate expectation has an important place in the developing law of judicial review. It is, however, not necessary to explore the doctrine in this case, it is enough merely to note that a legitimate expectation can provide a sufficient interest to enable one who cannot point to the existence of a substantive right to obtain the leave of the court to apply for judicial review. These two applicants obtained leave. But their submission goes further. It is said that the refusal to accept them from the new policy was an unlawful act on the part of the Secretary of State in that his decision frustrated their expectation. But what was their legitimate expectation? Given the substance and purpose of the legislative provisions governing parole, the most that a convicted prisoner can legitimately expect is that his case will he examined individually in the light of whatever policy the State sees fit to adopt, provided always that the adopted policy is a lawful exercise of the discretion conferred on him by the statute. Any other view would entail the conclusion that the unfettered discretion conferred by the Statute on the minister can in some cases be restricted so as to hamper, or even prevent. changes of policy. Bearing in mind the complexity of the issues which the Secretary of State has to consider and th e importance of the public interest in the administration of parole, I cannot think that Parliament intended the desecration to be restricted in this way. " In Council of Civil Service Unions case Lord Diplock observed thus: "To qualify as a subject for judicial review the decision must have consequences which affect some person (or body of persons ) other than the decisions, although it may affect him too. It must affect such other person either (a) by altering rights or 187 obligations of that person which are enforceable by or against him in private law or (b) by depriving him of some benefit or advantage which either (i) he has in the past been permitted by the decision maker to enjoy and which he can legitimately expect to be permitted to continue to do until there has been communicated to him some rational ground for withdrawing it on which he has been given an opportunity to comment or (ii) lie has received assurance from the decision maker will not be withdrawn without giving him first an opportunity of advancing reasons for contending that they should not be withdrawn. (1) prefer to continue to call the kind of expectation that qualifies a decision for inclusion in class (b) a 'legitimate expectation ' rather than a 'reasonable expectation in order thereby to indicate that it has consequences to which effect will be given in public law, whereas an expectation or hope that some benefit or advantage would continue to he enjoyed, although it might well be entertained by a 'reasonable ' man, would not necessarily have such consequences. " In Attorney General for New South Wales case it is observed as under: "Some advocates of judicial intervention would encourage the courts to expand the scope and purpose of judicial review, especially to provide some check on the Executive Government which nowadays exercises enormous powers beyond the capacity of the parliament to supervise effectively. Such advocacy is misplaced. If the courts were to assume a jurisdiction to review administrative acts or decisions which are "unfair" in the opinion of the court not to product of procedural fairness, but unfair on the merits the courts would be assuming a jurisdiction to do the very thing which is to be done by the repository of an administrative power, namely, choosing among the courses of action upon which reasonable minds might differ. 188 xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx If judicial review were to trespass on the merits of the exercise of administrative power, it would put its own legitimacy at risk. The risk must be acknowledged for a reason which Frankfurter J. stated in Trop vs Dulles [ ; at 119: All power is .in Madison 's phrase of an encroaching nature. . Judicial power is not immune against this human weakness. It also must he on guard against encroaching beyond its proper bounds and not he less so since the only restraint upon it is sell restraint. If the courts were to postulate rules ostensibly related to limitations on administrative power but in reality calculated to open to the gate into the forbidden field of the merits of its exercise, the function of the courts would be exceeded of R vs Nat Bell Liquors Ltd. at 156. If the courts were to define the destine of legitimate expectations as something less than a legal right and were to protect what would be thus defined by striking down administrative acts or decisions which failed to fulfil the expectations, the courts would be truncating the power which are naturally apt to affect those expectations. 7o strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adript on a featureless sea of pragmatism. Moreover the notion of a legitimate expectation (falling short o a legal right) is too nebulous to form a basis for invalidating the exercise of a power when its exercise otherwise accords with law. The authority of the courts and their salutary capacity judicially to review the exercise of ' administrative power depend in the last analysis on their fidelity to the rule of law, exhibited by the articulation of general principles. 189 To lie within the limits of judicial power the nation of "legitimate expectation " must be restricted to the illumination of what is the legal limitation on the exercise of administrative power tit a particular case. of course, if a legitimate expectation were to amount to a legal right, the court would define the respective limits of the right and any power which might be exercised to infringe it so as to accommodate in part both the right and the power or so as to accord to one priority over the other (That is a common place of cruial declarations.) but a power which might be so exercised as to affect a legitimate expectation falling short of a legal right cannot be truncated to accommodate the expectation. So long as the notion of legitimate expectation is seen merely as indicating "the factors and kinds of factors which are relevant to any consideration of what are the things which must be done or afforded" to accord procedural fairness to an applicant for the exercise of an administrative power (see per Mahoney IA in Macrae, at 285), the notion can, with one important proviso, be useful. but only if, the power is so created that the according of natural justice conditions its exercise, the notion of legitimate expec tation may useful focus attention on the content of natural justice in a particular case; that is, on what must be done to give procedural fairness to a person whose interests might he affected by an exercise of the power. But if the according of natural justice does not condition the exercise of the power, the notion of legitimate expectation can have no role to play. If it were otherwise, the notion would become a stalking horse for excesses of judicial review." (emphasis supplied) In this very case, Brennan J. after referring to Schmidt 's case (supra) observed thus: 190 "Again, when a court is decidsing what must be done in order to accord procedural fairness in a particular case it has regard to precisely the same circumstances as those to which the court might refer in considering whether the applicant entertains a legitimate expectation, but the inquiry whether the, applicant entertains a legitimate expectation is superfluous. Again if an express promise be given or a regular practice be adopted by a public authority, and the promise or practice is the source of a legitimate expectation, the repository is bound to have regard to the promise or practice in exercising the power, and it is unnecessary to inquire whether those factors give rise to a legitimate expectation. But the Court must stop short of compelling fulfillment of the promise or practice unless the statute so requires or the statute permits the repostitory of the power to hind itself as to the manner of the future exercise of the power. It follows that the notion of legitimate expectation is not the key which unlocks the treasury of natural justice and it ought not unlock the gate which shuts the court out of review on the merits. The notion of legitimate expectation wits introduced at a time when the courts were developing the common law to suit modern conditions and were sweeping away the unnecessary archaisms of the prerogative writs, but it should not be used to subvert the principled justification I or curial intervention in the exercise of administrative power." (emphasis supplied) In the same case, Dawsom. J. observed thus: "It also follows that the required procedure may very according to the dictates of fairness in the particular case. Thus, in order to succeed. the respondent must be able to point to something in the circumstances of the case which would make it unfair not to extend to him 191 the procedure which he seeks. There is no doubt that the respondent had a legitimate expectation of continuing in his position as a stipendiary magistrate such that it should, apart from statute, have been unfair to remove him from that position without according him a hearing. If the principle of judicial independence expended to a stipendiary magistrate, then, no doubt, that would have strengthened his expectation. But the respondent was not removed from his position of stipendiary magistrate by administrative decision. He was removed by a statute which abolished the position of stipendiary magistrate and established the new position of magistrate. Not only that, the statute, the Local Courts Act. clearly contemplated that not all the former stipendiary magistrates would be appointed as magistrates pursuant to its terms. Accordingly it made provision for those who where not so appointed. It may be possible to deprecate the manner in which the statute removed the respondent from office, but it is not possible to deny its effect. Any unfairness was the product of the legislation which conferred no right upon the respondent to a procedure other than that which it laid down." (emphasis supplied) On examination of some of these important decisions it is generally agreed that legitimate expectation gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation is to be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken. The doctrine does not give scope to claim relief straightaway from the administrative authorities as no crystallised right as such is involved. The protection of such legitimate expectation does not require the fulfillment of the expectation where an overriding public interest requires otherwise. In other words where a person 's legitimate expectation is not fulfilled by taking a particular then decision maker should justify the denial of such expectation by showing some overriding public interest. Therefore even if substantive protection of such expectation is contemplated that does not grant 192 an absolute right to a particular person. It simply ensures the circumstances in which that expectation may be denied or restricted. A case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfill. The protection is limited to that extent and a judicial review can be within those limits. But as discussed above a person who bases his claim on the doctrine of legitimate expectation, in the first instance, must satisfy that there is a foundation and thus has locus standi to make such a claim. In considering the same several factors which give rise to such legitimate expectation must be present. The decision taken by the authority must be found to be arbitrary, unreasonable and not taken in public interest. If it is a question of policy, even by way of change of old policy, the courts cannot interfere with a decision. In a given case whether there are such facts and circumstances giving rise to a legitimate expectation, it would primarily be a question of fact. If these tests are satisfied and if the court is satisfied that a case of legitimate expectation is made out then the next question Would be whether failure to give an opportunity of hearing before the decision affect such legitimate expectation is taken has resulted in failure of ' justice and whether on that ground the decision should he quashed. If that be so then what should be the relief is again a matter which depends on several factors. We find in Attorney General for New South wales ' case that the entire case law on the doctrine of legitimate expectation has been considered. We also find that on an elaborate an erudite discussion it is held that the courts ' jurisdiction to interfere is very much limited and much less in granting any relief in a claim based purely on the ground of 'legitimate expectation '. In Public Law and Politics edited by Carol Harlow, we find an article by Gabriele Ganz in which the learned author after examining the views expressed in the cases decided by eminent judges to whom we have referred to above, concluded thus: "The confusion and uncertainty at the heart of the concept stems from its origin. It has grown from two separate roots, natural justice or fairness and estoppel. , but the stems have become entwined to such an extent that it is impossible to disentangle them. This makes it that it is very difficult to predict how the hybrid will 193 develop in future. This could be regarded as giving the concept a healthy flexibility, for the intention behind it is being it has been fashioned to protect the individual against administrative action which is against his interest. On the other hand, the uncertainty of the concept has led to conflicting decisions and conflicting interpretations in the same decision." However, it is generally accepted and also clear that legitimate expectation beings less than right operate in the field of public and not private law and that to some extent such legitimate expectation ought to be protected though not guaranteed. Legitimate expectations may come in various forms and owe their existence to different kind of circumstances and it is not possible to give an exhaustive list in the context of vast and fast expansion of the governmental activities. They shift and change so fast that the start of our list would be obsolete before we reached the middle. By and large they arise in cases of promotions which are in normal course expected, though not guaranteed by way of a statutory right, in cases of contracts, distribution of largest by the Government and in somewhat similar situations. For instance in cases of discretionary grant of licences, permits or the like, carries with it a reasonable expectation, though not a legal right to renewal or non revocation, but to summarily disappoint that expectation may be seen as unfair without the expectant person being heard. But there again the court has to see whether it was done as a policy or in the public interest either by way of G.O., rule or by way of a legislation. If that be so. a decision denying a legitimate expectation based on such (,rounds does not qualify for interference unless in a given case, the decision or action taken amounts to an abuse of power. Therefore the limitation is extremely confined and if the according of natural justice does not condition the exercise of the power, the concept of legitimate expectation can have no role to play and the court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the court is expected to apply and objective standard which leaves to the decising authority the full range of choice which the legislature is presumed to have intended. Even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is 194 . taken fairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected. For instance if an authority who has full discretion to grant a licence and if he prefers an existing licence holder to a new applicant, the decision can not be interfered with on the ground of legitimate expectation entertained by the new applicant applying the principles of natural justice. It can therefore be seen that legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited. It would thus appear that there are stronger reasons as to why the legitimate expectation should not be substantively protected than the reasons as to why it should be protected. In other words such a legal obligation exists whenever the case supporting the same in terms of legal principles of different sorts, is stronger than the case against it. As observed in Attornry General for New South Wales ' case "To strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adrift on a featureless sea of pragmatism. Moreover, the notion of a legitimate expectation (falling short of a legal right) is too nebulous to form a basis for invalidating the exercise of power when its exercise otherwise accords with law. " If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory unfair or based, gross abuse of power or violation of principles of natural justice, the same can be questioned on the well known grounds attracting Article 14 but a claim biased on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles. It can be one of the ground to consider but the court must lift the veil and see whether the decision is violative of these principles warranting interference. It depends very much on the facts and the recognised general principles of administrative law applicable to such facts and the concept of legitimate expectation which is the latest recruit to a long list of concepts fashioned by the courts for the review of administrative action, must be restricted to the general legal limitations applicable and binding the manner of the future exercise of administrative power in a particular case. It follows that the concept of legitimate expectation is "not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits," particularly when the element of speculation and uncertainty is inherent in that very concept. As cautioned in Attorney General for 195 New South Wales ' case the courts should restrain themselves and restrict such claims duty to the legal limitations. It is a well meant caution. Otherwise a resourceful litigant having vested interests in contracts. licences etc,. can successfully indulge in getting welfare activities mandated by directive principles thwarted to further his own interests. The caution, particularly in the changing scenario, becomes all the more important. In view of our conclusions in respect of the quantities allotted and the price fixed it may not be necessary for us to enter into further discussion on this aspect. We have already directed 0that the Tender Committee should consider afresh as to what should be the reasonable price and to that extent the price of Rs. 67,000 fixed in respect of smaller manufacturers is set aside and directed to be revised. So far these three big manufacturers are concerned, we held that on their own commitment they are bound to supply at the rate of Rs. 67,000 per bogie. So far the quantities are concerned, we held that these three big manufacturers should be allotted the quantities as per the recommendations of the Tender Committee. However, we considered this aspect to some extent only to show that the decision in respect of price fixation as well as allotment of quantities even though to some extent at variation with the procedure followed during the previous years, was not based on any irrelevant consideration. The Railways particularly the Financial Commissioner as well as the Minister and initially the Tender Committee formed an opinion that these three big manufacturers formed a cartel and also quoted and unworkable predatory price at the post tender stage. Therefore from the point of view of preventing monopoly in the public interest the decision in question was taken in a bonafide manner. However, on a factual basis we held that the alleged formation of cartel was only in the realm of suspicion and in that view the decision was modified, as already indicated. However, we make it clear that the said modifications by way of judicial review is not on the ground of legitimate expectation and violative of principles of natural justice but on the other ground namely the decision of the authorities was based on wrong assumption of formation of a cartel. The next submission is that the decision taken by the Railways resulting in reduction of the quantities and making a counter offer of Rs. 65,000 to these three big manufacturers is punitive in nature 196 visiting with civil consequences and such a decision taken without giving an opportunity to these manufacturers is violative of principles of natural justice. In view of our above mentioned conclusions resulting in modification of the decision of the authorities both in respect of price fixation and in allotment of quantities, there is no necessity to consider this aspect again in detail. It was next contended that the consideration that some manufacturers are small and others are BIFR companies taken into account by the approving authority for deviating from the age old practice in allocation of quantities is irrelevant and discriminatory and therefore the decision is bad. It may be mentioned that status of a manufacturers being a BIFR company or a small manufacturers was not taken into account so far as the fixation of the price is concerned and these considerations were deemed relevant only for the purpose of allocation of quantities. The stand taken by the Railways is that smaller manufacturers should survive from the point of view of arresting monopolistic tendencies and from the point of view of public interest. The Tender Committee proceedings would indicate that on the basis of certain formulae namely the past performance, capacity etc. the allotment was being made. Therefore these can not be said to be irrelevant considerations and as a matter of fact they had been duly given effect to and weightage was given accordingly in respect of allotment of quantities to various manufacturers within the four corners of the limited tender. The learned counsel, however, contended that the allotment of the quantities to the smaller manufacturers also is not based on any acceptable principle and that some of them are given larger quantities without any justification rendering the decision bad because of arbitrariness. The proceedings mentioned above particularly the nothings of the Financial commissioner as well as the competent authority would show that some of the smaller manufacturers namely M/s Himmat, Texmaco and Sri Ranga were BIFR companies. As no price preferential treatment was given to any one of them. the approving authority considered that enhancement in allocation of quantities was necessary. Likewise M/s. Cimmco and Texmaco who are wagon builders and whose business in entirely with the Railways were also given some weightage. We can not say that these are irrelevant considerations for 197 the purpose of arriving at a decision. In the past also there were such variations based on these circumstances. In any event for different reasons we have varied this decision and directed that the three big manufacturers should be given allotment as per the recommendations of the Tender Committee. In our earlier order we have noticed that there has been some departure in respect of one or two smaller manufacturers in allotting the quantities. We have already indicated that the Railways authorities should in future make a proper consideration of the relevant factors in respect of each tenderer in an objective manner in allotting the quantities. Now coming to the question of dual pricing, the submission is that in respect of same set of manufacturers, some of them can not be made to supply at a lower price and the others namely smaller manufacturers can not be given advantage to supply at a higher price and such dual pricing is unreasonable and arbitrary. As already noted, the Tender Committee worked out an upgraded price and taking into other relevant factors like cost of the material etc. into consideration and applying the formula as was being done in the past and particularly taking into consideration the two concessions in respect of custom and freight fixed Rs. 76,000 as the reasonable price. This was very close to the price quoted by the three big manufacturers. But at a post tender stage, they entered into correspondence offering a lower price and ultimately the three big manufacturers committed themselves to supply at the rate of Rs. 67,000 per bogie. In our earlier order we indicated that these big manufacturers formed a different category namely that they may be in a position to supply at that rate as is evident from their own commitment but to apply the same price which is much lower than the reasonable and workable price fixed by the Tender Committee to other smaller manufacturers would again result in ending the competition between the big and the small which ultimately would result in monopoly of the market by the three big manufacturers. That is a very important consideration from the point of view of public interest. However, as already mentioned we directed the 'render Committee to consider the matter afresh an even if it results in dual pricing, it would not be had in the circumstances mentioned above. 198 These are all the reasons in support of our conclusions given in our order dated 14th January, 1993.
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These special requests were decided by the Court's order on January 14, 1993. In that order, the Court shared its final thoughts and gave some instructions, saying that the reasons for these would be given later. Now, giving the reasons for those conclusions, the Court decided the following: 1.1 The government, in a country that cares for its people, has a lot of power to control special services like leases, licenses, and contracts. When the government makes contracts or gives out quotas, it should not act like a regular person. Instead, it should follow certain good standards and rules. These actions should not be random, not make sense, or not be related to the situation. When giving out contracts, asking for bids is seen as a fair way to do it. If there are any rules or limits, they should not be unfair and must be justified by some policy or good reasons that are reasonable and don't treat anyone unfairly. 1.2 The idea of being reasonable is seen in the goal of social and economic justice, which inspires the rules for government policy. Also, Article 14 of the Constitution says the government can't act unfairly. 1.3 The government's plan is to make the administration work well, encourage businesses that aren't doing well to improve, stop the concentration of economic power, and control monopolies. This is so the community's resources are shared in a way that helps everyone and to make sure that as industry grows, wealth isn't concentrated and economic power is used to achieve social and economic justice. 1.4 Because of the rules in the tender notice (which no one questioned), the government could accept or reject the lowest offer. Looking at the Tender Committee's notes and the opinions of the Financial Commissioner and other members of the Railway Board, it's clear that 76,000 rupees per bogie (rail car) could be a fair price. The lower price offered later was made in the hope that the three big manufacturers would get all or most of the order. If that happened, it would create a monopoly and put the smaller manufacturers out of business. 2.1 A cartel is a group of producers who agree to control the production, sale, and prices of their product to get a monopoly in a certain industry or product. This is an unfair business practice that is not good for the public. The intention to get monopoly power can be seen when producers form a cartel. 2.2 However, deciding if an agreement unfairly limits trade depends on the type of agreement and the situation around it. This helps to show if the parties wanted to limit trade and create a monopoly. 2.3 A monopoly is the power to control prices or stop competition in any part of the trade or business among producers. Setting prices is a key part of this. 2.4 Just offering a lower price, even if it seems aggressive, doesn't necessarily mean someone wants to create a monopoly. Without a specific agreement or plan to work together, you can't easily assume that producers who offer a lower price are forming a cartel. 2.5 The Tender Committee thought that the identical price quoted by the three big manufacturers was a cartel price. This was just a suspicion that got stronger when those manufacturers offered a much lower price later. But you can't be sure there was a cartel based only on these two things. There's not enough evidence to say for sure that a cartel was formed. 2.6 Just quoting the same price and offering to lower it further doesn't automatically give those manufacturers the right to take over the whole market by creating a monopoly. The authorities still had the power to decide how much each manufacturer would get, including the big three. Also, the authorities could reject a lower price. 2.7 However, the authorities, including the Minister, weren't acting unfairly or for the wrong reasons when they suspected a cartel. They had a reasonable suspicion based on the records and other things. They were acting in good faith when they thought the three big manufacturers had formed a cartel. 3.1 You can only expect something if it's based on the law, custom, or a regular process. This is different from just hoping for something. The expectation should be fair and protected. But just because you expect something doesn't mean you have a right to it. You have a legitimate expectation when someone leads you to believe something will happen, either by what they say or what they've done in the past, and they have the power to make it happen. A claim based on legitimate expectation can be supported, and a decision that denies that expectation can be overturned if it's found to be unfair, unreasonable, random, or against the rules of natural justice (fairness). 3.2 Legitimate expectation gives someone the right to ask a court to review a decision. This idea mostly applies to the right to a fair hearing before a decision is made that goes against a promise or takes back an agreement. It doesn't give someone the right to demand something directly from the government, because there's no clear right involved. 3.3 Legitimate expectation is less than a right. It applies to public law, not private law, and should be protected to some extent, but not guaranteed. 3.4 Legitimate expectations can come in different forms and from different situations. They often arise in cases of promotions that are normally expected, but not guaranteed by law, in cases of contracts, when the government gives out benefits, and in similar situations. 3.5 You can't protect a legitimate expectation if it goes against the public interest. The protection is limited to that extent, and a court review can only go so far. 3.6 Someone who makes a claim based on legitimate expectation must first show that there's a reason for the claim and that they have the right to make it. The authority's decision must be found to be random, unreasonable, and not in the public interest. If that's the case, then the relief (what the court orders) depends on several things. 3.7 The courts have very limited power to interfere and even less power to grant relief based only on the ground of legitimate expectation. A decision that denies a legitimate expectation based on a policy, a change of policy, or the public interest, whether through a government order, rule, or law, doesn't qualify for interference unless the decision or action is an abuse of power. 3.8 So, the limit is very small. If the rules of natural justice (fairness) don't affect how the power is used, then the concept of legitimate expectation doesn't matter. The Court must not take over the power of the public authority that is allowed to make decisions under the law. The Court should use an objective standard that gives the authority the full range of choices that the legislature (law-making body) intended. Even if the decision is entirely up to the authority and there are no legal limits, the court won't interfere based on procedural fairness to someone whose interest based on legitimate expectation might be affected, as long as the decision is made fairly and objectively. 3.9 If denying a legitimate expectation in a certain case means denying a guaranteed right, or if it's random, unfair, or based on a serious abuse of power or violation of the rules of natural justice, it can be questioned on the grounds that violate Article 14. But a claim based only on legitimate expectation, without anything else, doesn't automatically give the right to use these principles. It can be one reason to consider, but the court must look closely to see if the decision violates these principles and requires interference. 3.10 The concept of legitimate expectation "is not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits," especially when there's uncertainty involved. The courts will limit themselves and restrict these claims to the legal limits. This is a warning. Otherwise, someone with resources and a vested interest in contracts, licenses, etc., could stop welfare activities that are supposed to be done, just to help themselves. This caution is even more important now. 3.11 In this case, the rules for making contracts have certain standards and guidelines. They say how to form a Tender Committee and how to ask for bids. They also allow for negotiations, but say that choosing contracts through negotiations is rare and should only be done in certain situations. The tender notice says that the price quoted can change and the Railways can accept the lowest price or any part of the tender or quantity offered. The person making the tender can't expect that their entire tender will be accepted for the full quantity. In the past, the Railways have made decisions about price and quantity for good reasons, following the procedure. 3.12 There's no legally required procedure for setting the price or giving room for a legitimate expectation. The Tender Committee isn't a legal authority, and its suggestions are just recommendations. They have to be considered in the decision-making process, which ends with the decision of the approving authority. That authority can also make decisions about price and quantity, considering other things that are in the public interest. 4. The changes in the Railways' decision made by the court aren't based on legitimate expectation or violation of the rules of natural justice. They're based on the fact that the authorities were wrong to assume a Cartel was formed. 5. Whether a manufacturer was a BIFR company (financially troubled) or a small manufacturer wasn't considered when setting the price. These things were only considered when deciding how much of the order each manufacturer would get. The Railways said that smaller manufacturers should survive to prevent monopolies and in the public interest. The Tender Committee's notes show that the allotment was being made based on certain things, like past performance and capacity. So, these weren't irrelevant things, and they were given due consideration when deciding how much to give to each manufacturer within the limits of the tender.
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The price quoted by the three manufacturers i.e. M/s H.D.C., Mukand and Bharatiya was an identical price of Rs. The Tender Committee concluded that the reasonable rate would be Rs. The whole matter was examined by the Advisor (Finance) in the first instance and by an collaborate note lie observed that the need for encouraging open competition to improve quality and brings down costs his been recommended by the government and if it is intended to continue the existing policy of fixing a rate and distributing the order among all the manufacturers, then negotiations may not he useful as uniform prices offered to all manufacturers have to be sufficient even for the smaller and less economical units and that as any review of the existing policy would take time, the present tender can be decided on the basis of the existing policy. He also recommended that the two manufacturers M/s Cimmco and Texmaco may be given orders to the extent of their capacity or quantity offered by them whichever is lower in view of the fact that they are wagon builders and the present formula regarding the distribution of quantities may be applied to all manufacturers except the three who have formed a cartel. The also recommended some recoveries from these three manufacturers who are alleged to have formed a cartel on the basis of their letters wherein they have quoted prices which were much less than the updated price as on 1.9.91 of Rs. He also noted that these three manufacturers have formed a cartel. Taking these circumstances into consideration the Minister ordered that all these three firms may he offered a price lower by Rs. The noted that action will be taken as decided by the Minister but added that it results in dual pricing namely one to the three manufacturers and the higher one to the others and therefore the Minister may consider whether they could counter offer the lower price to all the manufacturers as that would result in saving much more. The counter offer was also made to the other nine manufacturers at the rate of Rs 76,000 per bogie namely the price worked out by the Tender Committee. 67,000 per bogie and also set aside the quantity allocation and directed that the same should he considered afresh on a reasonable basis and pending such fresh consideration future supplies should be made on the basis of the recommendations of the Tender Committee. The other S.L.Ps. 1152 and 1157/92. 7)The three big manufacturers M/s H.D.C.,Mukandand Bharatiya 144 should be allotted the quantities as per the recommendations of the Tender Committee. Shri Sibal, learned counsel appearing for the Union of India, however, contended that it is a matter of policy decision by the Government and that where the Government realises that the lowest ,)rice offered is not reasonable and realistic, it may for a variety of good and sufficient reasons reject the same. The Tender Committee made their own recommendations and fixed Rs. 67,000 was not a reasonable price. It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving job so entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. ; an order awarding contract by the Government to a party was questioned on the ground that it was arbitrary, malafide and not in public interest and the same created monopoly in favour of that party and that the contract was awarded without affording an opportunity to others to compete and the same is not based on any rational or relevant principle and therefore was violative of Article 14 of the Constitution and also the rule of administrative law which inhibits the arbitrary action by the State. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. The Government therefore, cannot, for example give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest t o do so. We have referred to these considerations only illustratively, for there may be an infinite variety of considerations which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the Court would have to decide whether the action of the Government is reasonable and in public interest." (emphasis supplied) On the question of courts interference in an action taken by the Government, it was further observed as under: "But one basic principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the Governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore the Court would not strike down government action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with some standard or norm which is not arbitrary, irrational or 152 irrelevant. It cannot be dispute that the Government has the right to change its policy from time to time, according to the demands of the time and situation and in the public interest. If the government has the power to accept or not to accept the highest hid and if the Government has also the power to change its policy from time to time. In India Cement Ltd. and others vs Union of India and others[1990] 4SCC 356 a question arose whether the fixation of Rs. This Court held as under: "It is. in such economic policy matters was considered and it was held as under: "The function of the Court is to see that lawful authority is not abused but not to appropriate to itself ' the task entrusted to that authority. Bearing the above principles in mind, we shall now proceed to examine the action taken by the Railways in the matter of fixation of the price and distribution of quantities and see whether the same has been done pursuant to a policy and thus reasonable or whether there has been an arbitrary exercise of power. We have already noted that it is a case of limited tender meant for the 12 manufacturers who have been supplying the railway bogies. 79,305 as on 1. He noted that the three big manufacturers have formed a cartel and they have given offer to reduce their price if negotiations are held and their intention apparently is to get a 163 larger share on the basis of such negotiated price which would eventually nullify the competion from the other manufacturers and Subsequently to monopolistic price situation. With these nothings, the file went to the Railway Minister and in his order, he noted that the three big manufacturers have formed a cartel and that under the circumstances all the three of them may be offered a price lower by Rs. In this view of the matter, he ordered redistribution of the balance quantities as follows: Bum 500 Cimmco 1200 Texmaco 1200 164 Sri Ranga 1560 Anup TSL 1400 Himmat 1150 BECO 1600" The Minister also ordered that straight away 30% option should be exercised. As held by the courts, change of policy by it self does not affect the pursuant action provided it is rational and reasonable However, the submission is that the decision taken pursuant to this policy in the matter of fixation of price and distribution of quantities is based on wrong grounds and suffers from the vice of unreasonableness. S/Shri Nariman, Venugopal and Shanti Bhushan, learned counsel appearing for M/s Mukand, H.D.C. and Bharatiya respectively submitted in this context that the grounds namely that the three big manufacturers formed a cartel and that the post tender price offered by them was predatory are unfounded and that dual pricing and the ultimate allotment of the quantities in a punitive manner are based 165 on a wrong premise and the final decision arrived at is consequently unreasonable and arbitrary. The further submission is that these manufacturers have a legitimate expectation of being treated in certain ways by the administrative authorities on the basis of practice and policy of the previous years and such a decision, which is punitive and which defeats such legitimate expectation and which is taken without affording an opportunity to these manufacturers to explain, is violative of principles of natural justice. xx In Chambers ' English Dictionary the word "Cartel" is defined thus: "Cartel A combination of firms for certain purposes especially to keep up prices and kill competition XX In Black 's Law Dictionary, fifth edition the meaning of the word "Cartel" is given thus: 166 "Cartel A combination of producers of any product joined together to control its production, sale, and price, and to obtain a monopoly in any particular industry or commodity. 67,000 offered by these manufacturers during the post tender stage was not predatory and that the view taken by the authorities that such an offer of lower price was predatory one confirming the formation of a cartel, is also unwarranted. 67,000 by itself was predatory and the manufacturers who offered such a price consequently formed a cartel. Under these circumstances though the attitude of these three big manufacturers gave rise to a suspicion that they formed a cartel but there is not enough of material to conclude that in fact there was such formation of a cartel. S/Shri Nariman, Venugopal and Shanti Bhushan, learned counsel appearing for M/s Mukand, H.D.C. contended that the Railways were bound to follow the rules and standards pertaining to the tender system and on the basis of these provisions and the course of conduct followed by the Railways in the matter of fixation of price and allotment of quota in the past let the manufacturers believe that the same course of conduct would be followed and the manufacturers legitimately expected that they would be treated equally and in a non arbitrary manner and such legitimate expectation is a right guaranteed under Article 14. To satisfy this requirement of non arbitrariness in a State action, it is therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bonafides of the decision in a given case. vs Union of India & Others ; ,justice G.N. It has been held in the said decision that an aggrieved person was entitled to judicial review if he could show that a decision of the public authority affected him of some benefit or advantage which in the past he had been permitted to enjoy and which he legitimately expected to be permitted to continue to enjoy either until he was given reasons for withdrawal and the opportunity to comment on such reasons. (emphasis supplied) Relying on these decisions, it was contended that the decision of the Railways in fixing the price and in allotment of the quantities is arbitrary and unreasonable affecting the right to such legitimate expectation. It has to be noted that the Tender Committee is not a statutory authority and its proposals are recommendatory in nature and have to be considered in the distribution procedure culminating in the decision of the approving authority who as a matter of fact, also can take decisions in respect of price and allotment of quantities taking into consideration various other aspects from the point of view of public interest. A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. 179 The existence of a legitimate expectation may have a number of different consequences '; it may give locus standi to seek leave to apply for `judicial review; it may mean that the authority ought not to act so as to defeat the expectation without some overriding reason of public policy to justify its doing so; or it may mean that, if the authority proposes to defeat a person 's legitimate expectations, it must afford him an opportunity to make representation on the matter. that each case would be considered on its merits. " The Court held as under: "An aggrieved person was entitled to invoke judicial review if he showed that a decision of a public authority affected him by depriving him of some benefit or advantage which in the past he had been permitted to enjoy and which he could legitimately expect to be permitted to continue to enjoy either until he was given reasons for its withdrawal and the opportunity to comment on those reasons or because he had received an assurance that it would not be withdrawn before he had been given the opportunity of making representations against the withdrawal. (emphasis supplied) Therefore the claim based on the principle of legitimate expectation can be sustained and the decision resulting in denial of such expectation can be questioned provided the same is found to be unfair, unreasonable, arbitrary and violative of principles of natural justice. In the appeal by the Attorney General against that order before the High Court it was argued on behalf of Mr. Quin that he had a legitimate expectation that he would be treated in the same way as his former colleagues considering his application on its own merits. I go further If he is a man who has some right or interest, or some legitimate expectation, of which it would not be fair to deprive him without a hearing, or reasons given, then these should he afforded hint, according as the case may demand". (emphasis supplied) At this stage it is necessary to consider the scope of judicial review when a challenge is made on the basis of the doctrine of legitimate 186 expectation. It is, however, not necessary to explore the doctrine in this case, it is enough merely to note that a legitimate expectation can provide a sufficient interest to enable one who cannot point to the existence of a substantive right to obtain the leave of the court to apply for judicial review. It must affect such other person either (a) by altering rights or 187 obligations of that person which are enforceable by or against him in private law or (b) by depriving him of some benefit or advantage which either (i) he has in the past been permitted by the decision maker to enjoy and which he can legitimately expect to be permitted to continue to do until there has been communicated to him some rational ground for withdrawing it on which he has been given an opportunity to comment or (ii) lie has received assurance from the decision maker will not be withdrawn without giving him first an opportunity of advancing reasons for contending that they should not be withdrawn. 189 To lie within the limits of judicial power the nation of "legitimate expectation " must be restricted to the illumination of what is the legal limitation on the exercise of administrative power tit a particular case. (emphasis supplied) In this very case, Brennan J. after referring to Schmidt 's case (supra) observed thus: 190 "Again, when a court is decidsing what must be done in order to accord procedural fairness in a particular case it has regard to precisely the same circumstances as those to which the court might refer in considering whether the applicant entertains a legitimate expectation, but the inquiry whether the, applicant entertains a legitimate expectation is superfluous. (emphasis supplied) On examination of some of these important decisions it is generally agreed that legitimate expectation gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation is to be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken. If it is a question of policy, even by way of change of old policy, the courts cannot interfere with a decision. If these tests are satisfied and if the court is satisfied that a case of legitimate expectation is made out then the next question Would be whether failure to give an opportunity of hearing before the decision affect such legitimate expectation is taken has resulted in failure of ' justice and whether on that ground the decision should he quashed. However, it is generally accepted and also clear that legitimate expectation beings less than right operate in the field of public and not private law and that to some extent such legitimate expectation ought to be protected though not guaranteed. But there again the court has to see whether it was done as a policy or in the public interest either by way of G.O., rule or by way of a legislation. It can therefore be seen that legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited. If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory unfair or based, gross abuse of power or violation of principles of natural justice, the same can be questioned on the well known grounds attracting Article 14 but a claim biased on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles. We have already directed 0that the Tender Committee should consider afresh as to what should be the reasonable price and to that extent the price of Rs. So far the quantities are concerned, we held that these three big manufacturers should be allotted the quantities as per the recommendations of the Tender Committee. However, we considered this aspect to some extent only to show that the decision in respect of price fixation as well as allotment of quantities even though to some extent at variation with the procedure followed during the previous years, was not based on any irrelevant consideration. The Railways particularly the Financial Commissioner as well as the Minister and initially the Tender Committee formed an opinion that these three big manufacturers formed a cartel and also quoted and unworkable predatory price at the post tender stage. However, we make it clear that the said modifications by way of judicial review is not on the ground of legitimate expectation and violative of principles of natural justice but on the other ground namely the decision of the authorities was based on wrong assumption of formation of a cartel. The proceedings mentioned above particularly the nothings of the Financial commissioner as well as the competent authority would show that some of the smaller manufacturers namely M/s Himmat, Texmaco and Sri Ranga were BIFR companies. In any event for different reasons we have varied this decision and directed that the three big manufacturers should be given allotment as per the recommendations of the Tender Committee. Now coming to the question of dual pricing, the submission is that in respect of same set of manufacturers, some of them can not be made to supply at a lower price and the others namely smaller manufacturers can not be given advantage to supply at a higher price and such dual pricing is unreasonable and arbitrary. In our earlier order we indicated that these big manufacturers formed a different category namely that they may be in a position to supply at that rate as is evident from their own commitment but to apply the same price which is much lower than the reasonable and workable price fixed by the Tender Committee to other smaller manufacturers would again result in ending the competition between the big and the small which ultimately would result in monopoly of the market by the three big manufacturers.
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If there are any rules or limits, they should not be unfair and must be justified by some policy or good reasons that are reasonable and don't treat anyone unfairly. This is so the community's resources are shared in a way that helps everyone and to make sure that as industry grows, wealth isn't concentrated and economic power is used to achieve social and economic justice. The lower price offered later was made in the hope that the three big manufacturers would get all or most of the order. This is an unfair business practice that is not good for the public. This helps to show if the parties wanted to limit trade and create a monopoly. 2.3 A monopoly is the power to control prices or stop competition in any part of the trade or business among producers. Setting prices is a key part of this. Without a specific agreement or plan to work together, you can't easily assume that producers who offer a lower price are forming a cartel. 2.5 The Tender Committee thought that the identical price quoted by the three big manufacturers was a cartel price. But you can't be sure there was a cartel based only on these two things. Also, the authorities could reject a lower price. 3.1 You can only expect something if it's based on the law, custom, or a regular process. This is different from just hoping for something. The expectation should be fair and protected. You have a legitimate expectation when someone leads you to believe something will happen, either by what they say or what they've done in the past, and they have the power to make it happen. A claim based on legitimate expectation can be supported, and a decision that denies that expectation can be overturned if it's found to be unfair, unreasonable, random, or against the rules of natural justice (fairness). 3.2 Legitimate expectation gives someone the right to ask a court to review a decision. It doesn't give someone the right to demand something directly from the government, because there's no clear right involved. It applies to public law, not private law, and should be protected to some extent, but not guaranteed. 3.5 You can't protect a legitimate expectation if it goes against the public interest. 3.6 Someone who makes a claim based on legitimate expectation must first show that there's a reason for the claim and that they have the right to make it. The authority's decision must be found to be random, unreasonable, and not in the public interest. 3.7 The courts have very limited power to interfere and even less power to grant relief based only on the ground of legitimate expectation. A decision that denies a legitimate expectation based on a policy, a change of policy, or the public interest, whether through a government order, rule, or law, doesn't qualify for interference unless the decision or action is an abuse of power. The Court must not take over the power of the public authority that is allowed to make decisions under the law. Even if the decision is entirely up to the authority and there are no legal limits, the court won't interfere based on procedural fairness to someone whose interest based on legitimate expectation might be affected, as long as the decision is made fairly and objectively. 3.9 If denying a legitimate expectation in a certain case means denying a guaranteed right, or if it's random, unfair, or based on a serious abuse of power or violation of the rules of natural justice, it can be questioned on the grounds that violate Article 14. But a claim based only on legitimate expectation, without anything else, doesn't automatically give the right to use these principles. 3.10 The concept of legitimate expectation "is not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits," especially when there's uncertainty involved. This is a warning. They say how to form a Tender Committee and how to ask for bids. The tender notice says that the price quoted can change and the Railways can accept the lowest price or any part of the tender or quantity offered. In the past, the Railways have made decisions about price and quantity for good reasons, following the procedure. The changes in the Railways' decision made by the court aren't based on legitimate expectation or violation of the rules of natural justice. They're based on the fact that the authorities were wrong to assume a Cartel was formed. Whether a manufacturer was a BIFR company (financially troubled) or a small manufacturer wasn't considered when setting the price. These things were only considered when deciding how much of the order each manufacturer would get. So, these weren't irrelevant things, and they were given due consideration when deciding how much to give to each manufacturer within the limits of the tender.
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Appeals Nos. 380 to 389, 391 to 399, 401, 429 and 431 to 434 of 1958. Appeals from the judgment and decree dated December 19, 1956, of the Allahabad High Court in Civil Misc. Writs Nos. 1574, 1575, 1576, 1577, 1578, 1579,1444,1584,1586,1589, 1631, 1632, 1634, 1635, 1636,1694, 1695, 1697, 1704, 1707, 3726, 1647, 1948 and 1949 and 1956. M. K. Nambiyar, Shyam Nath Kacker, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellants (in C. As. 380 385, 387 389, 391 399 and 401 of 1958). S.N.Kacker and J. B. Dadachanji, for the appellant (in C. A. No. 386/58). Naunit Lal, for the appellants (in C. As. 429 & 431 434/58). K. B. Asthana & G. N. Dikshit, for the respondents. January 15. The judgment of Das, C. J., and Sinha, J., was delivered by Das, C. J. The judgment of Bhagwati, Subba Rao and Wanchoo, JJ., was delivered by Subba Rao, J. DAS, C. J. We have had the advantage of perusing the judgment prepared by our learned Brother Subba Rao and 'we agree with the order proposed by him, namely, that all the above appeals should be dismissed with costs, although we do not subscribe to all the reasons advanced by him. The relevant facts and the several points raised by learned counsel for the appellants and the petitioners in support of the appeals have been fully set out in the judgment which our learned Brother will presently deliver and it is not necessary for us to set out the 12 same here. Without committing ourselves to all the reasons adopted by our learned Brother, we agree with his following conclusions, namely, (1) that the Uttar Pradesh Transport Service (Development) Act, 1955 (Act IX of 1955), hereinafter referred to as the U. P. Act, did not, on the passing of the Motor Vehicles (Amendment) Act, 1956 (100 of 1956), hereinafter referred to as the Central Act, become wholly void under article 254(1) of the Constitution but continued to be a valid and subsisting law supporting the scheme already framed under the U. P. Act; (2) that, even if the Central Act be construed as amounting, under article 254(2), to a repeal of the U. P. Act, such repeal did not destroy or efface the scheme already framed under the U. P. Act, for the provisions of section 6 of the General Clauses Act saved the same; (3) that the U. P. Act did not offend the provisions of article 31 of the Constitution, as it stood before the Constitution (4th Amendment) Act, 1955, for. the U. P. Act and in particular section 11(5) thereof provided for the payment of adequate compensation. These findings are quite sufficient to dispose of the points urged by Mr. Nambiyar and Mr. Naunit Lal in support of the claims and contentions of their respective clients. In view of the aforesaid finding that the U. P. Act did not infringe the fundamental rights guaranteed by article 31, it is wholly unnecessary to discuss the following questions, namely, (a) whether the provisions of 'Part III of the Constitution enshrining the fundamental rights are mere checks or limitations on the legislative competency conferred on Parliament and the State Legislatures by articles 245 and 246 read with the relevant entries in the Lists in the Seventh Schedule to the Constitution or are an integral part of the provisions defining, prescribing and conferring the legislative competency itself and (b) whether the doc trine of eclipse is applicable only to pre Constitution laws or can apply also to any post Constitution law which falls under article 13(2) of the Constitution. As, however, our learned Brother has thought fit to embark upon a discussion of these questions, we desire to guard ourselves against being understood as 13 accepting or acquiescing in the conclusion that the doctrine of eclipse cannot apply to any post Constitution law. A post Constitution law may infringe either a fundamental right conferred on citizens only or a fundamental right conferred on any person, citizen or non citizen. In the first case the law will not stand in the way of the exercise by the citizens of that fundamental right and, therefore, will not have any operation on the rights of the citizens, but it will be quite effective as regards non ,citizens. In such a case the fundamental right will, qua the citizens, throw a shadow on the law which will nevertheless be on the Statute Book as a valid law binding on non citizens and if the shadow is removed by a constitutional ,amendment, the law will immediately be applicable even to the citizens without being re enacted. The decision in John M. Wilkerson vs Charles A. Rahrer (1) cited by our learned Brother is squarely in point. In other words the doctrine of eclipse as explained by this Court in Bhikaji Narain Dhakras vs The State of Madhya Pradesh (2) also applies to a post Constitution law of this kind. Whether a post Constitution law of the other kind, namely, which infringes a fundamental right guaranteed to all persons, irrespective of whether they are citizens or not, and which, therefore, can have no operation at all when it is enacted, is to be regarded as a still born law as if it had not been enacted at all and, therefore, not subject to the doctrine of eclipse is a matter which may be open to discussion. On the findings arrived at in this case, however, a discussion of these aspects of the matter do not call for a considered opinion and we reserve our right to deal with the same if and when it becomes actually necessary to do so. SUBBA RAO, J. These twenty five appeals are by certificate under articles 132 and 133 of the Constitution granted by the High Court of Judicature at Allahabad and raise the question of the validity of the scheme of nationalization of State Transport Service formulated by the State Government and the consequential orders made by it. (1) ; ; , (2) [1955] 2 S.C.R. 589. 14 The said appeals arise out Writ Petitions filed by he appellants in the Allahabad High Court challenging the validity of the U. P. Transport Services (Development) Act of 1955, being U. P. Act No. IX of 1955 (hereinafter referred to as the U. P. Act), and the notifications issued thereunder. All the appeals were consolidated by order of the High Court. The appellants have been carrying on business as stage carriage operators for a considerable number of years on different routes in Uttar Pradesh under valid, permits issued under the , along with buses owned by Government. The U. P. Legislature, after obtaining the assent of the President on April 23, 1955, passed the U. P. Act and duly published it on April 24, 1955. Under section 3 of the U. P. Act, the Government issued a notification dated May 17, 1955, whereunder it was directed that the aforesaid routes along with others should be exclucively served by the stage carriages of the Government and the private stage carriages should be excluded from those routes. On November 12, 1955, the State Government published the notification under section 4 of the U. P. Act formulating the scheme for the aforesaid routes among others. The appellants received notices under section 5 of the U. P. Act requiring them to file objections, if any, to the said scheme; and after the objections were received, they were informed that they would be heard by a Board on January 2, 1956. On that date, the objections filed by the operators other than those of the Agra region were heard and the inquiry in regard to the Agra region was adjourned to January 7, 1956. It appears that the operators of the Agra region did not appear on the 7th. The notification issued under section 8 of the U. P. Act was pub lished in the U. P. Gazette on June 23, 1956, and on June 25, 1956, the Secretary to the Regional Transport Authority, Agra, sent an order purported to have been issued by the Transport Commissioner to the operators, of the Agra region prohibiting them from plying their stage carriages on the routes and also informing them that their permits would be transferred to other routes. On July 7, 1956, a notice was sent to 15 filed Writ Petitions in the Allahabad High Court challenging the validity of the U. P. Act and the notifications issued thereunder. The facts in Civil Appeal No. 429 of 1958 are slightly different from those in other appeals and they may be stated: The appellant 's application for renewal of his permanent permit was rejected in 1953; but, on appeal, the State Transport Authority Tribunal allowed his appeal on September 6,1956, and directed his permit to be renewed for three years beginning from November 1, 1953. Pursuant to the order of the Tribunal, the appellant 's pert nit was renewed with effect from November 1, 1953, and it was made valid up to October 31, 1956. The scheme of nationalisation was initiated and finally approved between the date of the rejection of the appellant 's application for renewal and the date when his appeal was allowed. The appellant applied on October 11, 1956, for the renewal of his permit and he was informed by the Road Transport Authority, Allahabad, that no action on his application, under reference was possible. The appellant 's contention, among others, was that the entire proceedings were taken behind his back and therefore the scheme was not binding on him. The appellants in thirteen appeals, namely, Civil Appeals Nos. 387 to 389, 391 to 394, 396 to 399 and 401 and 429 were offered alternative routes. Though they tentatively accepted the offer, presumably on the ground that it was the lesser of the two evils, in fact they obtained stay as an interim arrangement and continued to operate on the old routes. The appellants filed applications for permission to urge new grounds in the appeals, which were not taken before the High Court. The said grounds read : (i) That by reason of the coming into operation of the Motor Vehicles (Amendment) Act, No. 100 of 1956, passed by Parliament and published in the Gazette of India Extraordinary dated 31st December, 1956, the impugned U. P. Act No. IX of 1955 has become void. (ii) That by reason of Article 254 of the Constitution of India, the said impugned Act No. IX of 1955, 16 being repugnant and inconsistent with the Central Act No. 100 of 1956, has become void since the coming into operation of the aforesaid Act No. 100 of 1956 ". The judgment of the Allahabad High Court, which is the subject matter of these appeals, was delivered on December 19, 1956. The Amending Act of 1956 was published on December 31, 1956. It is therefore manifest that the appellants could not have raised the aforesaid grounds before the High Court. Further, the grounds raise only a pure question of law not dependent upon the elucidation of any further facts. In the circumstances, we thought it to be a fit case for allowing the appellants to raise the new grounds and we accordingly gave them the permission. Mr. M. K. Nambiar, appearing for some of the appellants, raised before us the following points: (i) The Motor Vehicles (Amendment) Act (100 of 1956) passed by, the Parliament is wholly repugnant to the provisions of the U. P Act and therefore the latter became void under the provisions of Article 254(1) of the Constitution ; with the result that, at the present time, there is no valid law whereunder the Government can prohibit the appellants from exercising their fundamental right under the Constitution, namely, to carry on their business of motor transport; (ii) the scheme framed under the Act, being one made to operate in future and from day to day, is an instrument within the meaning of section 68B of the Amending Act, and therefore the provisions of the Amending Act would prevail over those of the scheme, and after the Amending Act came into force, it would have no operative force; and (iii) even if the U. P. Act was valid and continued to be in force in regard to the scheme framed thereunder, it would offend the provisions of article 31 of the Constitution, as it was before the Constitution (Fourth Amendment) Act, 1955, as, though the State had acquired the appellant 's interest in a commercial undertaking, no compensation for the said interest was given, as it should be under the said Article. The other learned Counsel, who followed Mr. Nambiar, except Mr. Naunit Lal, adopted his argument. Mr. Naunit Lal, in addition to the argument 17 advanced by Mr. Nambiar in regard to the first point, based his contention on the proviso to article 254(2) of the Constitution rather than on article 254(1). He contended that by reason of the Amending Act,,, the U. P. Act was repealed in toto and, because of section 68B of the Amending Act, the operation of the provisions of the General Clauses Act was excluded. In addition, he contended that in Appeal No. 429 of 1958, the scheme, in so far as it affected the appellant 's route was bad inasmuch as no notice was given to him before the scheme was approved. We shall proceed to consider the argument advanced by Mr. Nambiar in the order adopted by him; but before doing so, it would be convenient to dispose of the point raised by the learned Advocate General, for it goes to the root of the matter, and if it is decided in his favour, other questions do not fall for consideration. The question raised by the learned Advocate General may be posed thus: whether the amendment of the Constitution removing a constitutional limitation on a legislature to make a particular law has the effect of validating the Act made by it when its power was subject to that limitation. The present case illustrates the problem presented by the said question. The U. P. Legislature passed the U. P. Act on April 24, 1955, whereunder the State Government was authorized to frame a scheme of nationalization of motor transport. After following the procedure prescribed therein, the State Government finally published the scheme on June 23, 1956. The Constitution (Fourth Amendment) Act, 1955, received the assent of the President on April 27, 1955. The State Government framed the scheme under the U. P. Act after the passing of the Constitution (Fourth Amendment) Act, 1955. Under the said Amendment Act, el. (2) of article 31 has been amended and cl. (2A) has been inserted. The effect of the amendment is that unless the law provides for the transfer of ownership or right to possession of any property to the State or to a Corporation owned or controlled by the State, it shall not be deemed to provide for the compulsory acquisition or 3 18 requisition of property within the meaning of cl. (2) of that Article and therefore where there is no such transfer, the condition imposed by cl. (2), viz., that the law Should fix the amount of compensation or specify the principles on which and the manner in which the compensation is to be determined and given is not attracted. If the amendment applies to the U. P. Act, as there is no transfer of property to the State, no question of compensation arises. On the other hand, if the unamended Article governs the U. P. Act, the question of compensation will be an important factor in deciding its validity. The answer to the problem so presented depends upon the legal effect of a consti tutional limitation of the legislative power on the law made in derogation of that limitation. A distinction is sought to be made by the learned Advocate General between the law made in excess of the power conferred on a legislature under the relevant List in the Seventh Schedule and that made in violation of the provisions of Part III of the Constitution. The former, it is suggested, goes to the root of the legislative power, whereas the latter, it is said, operates as a check on that power, with the result that the law so made is unenforceable, and as soon as the check is removed, the law is resuscitated and becomes operative from the date the check is removed by the constitutional amendment. Mr. Nambiar puts before us the following two propositions in support of his contention that the law so made in either contingency is void ab initio: (i) the paramountcy of fundamental rights over all legislative powers in respect of all the Lists in the Seventh Schedule to the Constitution is secured by the double process of the prohibition laid by article 13(2) and the restrictions imposed by article 245, unlike the mere implied prohibition implicit in the division of power under article 246; and (ii) where the provisions of an enactment passed by a legislature after January 26, 1950, in whole or in part subject to the doctrine of severability are in conflict with the provisions of Part III, the statute, in whole or in part, is void ab initio. This question was subjected to judicial scrutiny by this 19 Court, but before we consider the relevant authorities, it would be convenient to test its validity on first principles. The relevant Articles of the Constitution read as follows: Article 245: "(1)Subject to the provision of this Constitution, Parliament may make laws for the whole or any part of the territory Of India, and the Legislature of a State may make laws for the whole or any part of the State. " Article 246: " (1) Notwithstanding anything in clauses (2) and (3) Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the" Union List "). (2) Notwithstanding anything in clause (3), Parliament and, subject to clause (1), the Legislature of any State also, have power to make. laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the " Concurrent List"). (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the " State List "). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List. " Article 13: " (1) All laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void. (2) The State shall Dot make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention be void." 20 Article 31 (Before the Constitution (Fourth Amendment) Act, 1955): " (1) No person shall be deprived of his property save by authority of law. (2) No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given The combined effect of the said provisions may be stated thus: Parliament and the Legislatures of States have power to make laws in respect of any of the matters enumerated in the relevant lists in the Seventh Schedule and that power to make laws is subject to the provisions of the Constitution including article 13, i.e., the power is made subject to the limitations imposed by Part III of the Constitution. The general power to that extent is limited. A Legislature, therefore, has no power to make any law in derogation of the injunction contained in article 13. Article 13(1) deals with laws.in force in the territory of India before the commencement of the Constitution and such laws in so far as they are inconsistent with the provisions of Part III shall, to the extent of such inconsistency be void. The clause, therefore, recognizes the validity of, the pre Constitution laws and only declares that the said laws would be void thereafter to the extent of their inconsistency with Part III; whereas cl. (2) of that article imposes a prohibition on the State making laws taking away or abridging the rights conferred by Part III and declares that laws made in contravention of this clause shall, to the extent of the contravention, be void. There is a clear distinction between the two clauses. Under el. (1), a pre Constitution law subsists except to the extent of its inconsistency with the provisions of Part III; whereas, no post Constitution law 21 can be made contravening the provisions of Part III, and therefore the law, to that extent, though made, is a nullity from its inception. If this clear distinction is borne in mind, much of the cloud raised is dispelled. When cl. (2) of article 13 says in clear and unambiguous terms that no State shall make any law which takes away or abridges the rights conferred by Part III, it will not avail the State to contend either that the clause does not embody a curtailment of the power to legislate or that it imposes only a check but not a prohibition. A constitutional prohibition against a State making certain laws cannot be whittled down by analogy or by drawing inspiration from decisions on the provisions of other Constitutions; nor can we appreciate the argument that the words " any law " in the second line of article 13(2) posits the survival of the law made in the teeth of such prohibition. It is said that a law can come into existence only when it is made and therefore any law made in contravention of that clause presupposes that the law made is not a nullity. This argument may be subtle but is not sound. The words " any law " in that clause can only mean an Act passed or made factually, notwithstanding the prohibition. The result of such contravention is stated in that clause. A plain reading of the clause indicates, without any reasonable doubt, that the prohibition goes to the root of the matter and limits the State 's power to make law; the law made in spite of the prohibition is a still born law. Cooley in his book " Constitutional Limitations" (Eighth Edition, Volume I), states at page 379: " From what examination has been given to this subject, it appears that whether a statute is constitutional or not is always a question of power; that is, a question whether the legislature in the particular case, in respect to the subject matter of the act, the manner in which its object is to be accomplished, and the mode of enacting it, has kept within the constitutional limits and observed the constitutional conditions." The Judicial Committee in The Queen. vs Burah (1) observed at page 193 as under (1) (1878) L.R. 5 I. A. 178. 22 The established courts of Justice, when a question arises whether the prescribed limits have been exceeded, must of necessity determine that question ; and ,the only way in which they can properly do so, is by ;looking to the terms of the instrument by which, affirmatively, the legislative powers were created, and by which, negatively, they are restricted. " The Judicial Committee again in Attorney General for Ontario vs Attorney General for Canada (1) crisply stated the legal position at page 583 as follows: ". . . if the text is explicit the text is con clusive, alike in what it directs and what it forbids." The same idea is lucidly expressed by Mukherjea, J., as he then was, in K. C. Gajapati Narayan Deo vs The State of Orissa (2). It is stated at page 11 as follows: " If the Constitution of a State distributes the legislative powers amongst different bodies, which have to act within their respective spheres marked out by specific legislative entries, or if there are limitations on the legislative authority in the shape of fundamental rights, questions do arise as to whether the legislature in a particular case has or has not, in respect to the subject_matter of the statute or in the method of enacting it, transgressed the limits of its constitutional powers. " The learned Judge in the aforesaid passage clearly accepts the doctrine that both the transgression of the ambit of the entry or of the limitation provided by the fundamental rights are equally transgressions of the limits of the State 's constitutional powers. It is, therefore, manifest that in the construction of the constitutional provisions dealing with the powers of the legislature, a distinction cannot be made between an affirmative provision I and a negative provision; for, both are limitations on the power. The Constitution affirmatively confers a power on the legislature to make laws within the ambit of the relevant entries in the lists and negatively prohibits it from making laws infringing the fundamental rights. It (1) (2) ; 23 goes further and makes the legislative power subject to the prohibition under article 13(2). Apparent wide power is, therefore, reduced to the extent of the prohibition. If articles 245 and 13(2) define the ambit of the power to legislate, what is the effect of a law made in excess of that power ? The American Law gives a direct and definite answer to this question. Cooley in his " Constitutional Limitations " (Eighth Edition, Volume I) at page 382 under the heading " Consequences if a statute is void " says : " When a statute is adjudged to be unconstitutional, it is as if it had never been. . . . And what is true of an act void in toto is true also as to any part of an act which is found to be unconstitutional, and which, consequently, is to be regarded as having never, at any time, been possessed of any legal force. " In Rottschaefer on Constitutional Law, much to the same effect is stated at page 34: " The legal status of a legislative provision in so far as its application involves violation of constitutional provisions, must however be determined in the light of the theory on which Courts ignore it as law in the decision of cases in which its application produces unconstitutional results. That theory implies that the legislative provisions never had legal force as applied to cases within that clause. " In " Willis on Constitutional Law ", at page 89: " A judicial declaration of the unconstitutionality of a statute neither annuls nor repeals the statute but has the effect of ignoring or disregarding it so far as the determination of the rights of private parties is concerned. The Courts generally say that the effect of an unconstitutional statute is nothing. It is as though it had never been passed. . . . . " Willoughby on Constitution of the United States Second Edition, Volume I, page 10: " The Court does not annul or repeal the statute if it finds it in conflict with the Constitution. It simply refuses to recognize it, and determines the rights of 24 the parties just as if such statute had no application. . . . The validity of a statute is to be tested by the constitutional power of a legislature at the time of its enactment by that legislature, and, if thus tested, it is beyond the legislative power, it is not rendered valid, without re enactment, if later, by constitutional amendment, the necessary legislative power is granted. I An after acquired power cannot, ex proprio vigore, validate a statute void 'When enacted '. " However, it has been held that where an act is within the general legislative power of the enacting body, but is rendered unconstitutional by reason of some adventitious circumstance, as, for example, when a State legislature is prevented from regulating a matter by reason of the fact that the Federal Congress has already legislated upon that matter, or by reason of its silence is to be construed as indicating that there should be no regulation, the act does not need to be re enacted in order to be enforced, if this cause of its unconstitutionality is removed. " For the former proposition, the decision in Newberry vs United States (1) and for the latter proposition the decision in John M. Wilkerson vs Charles A. Rahrer (2) are cited. In Newberry 's Case the validity of the Federal Corrupt Practices Act of 1910, as amended by the Act of 1911, fixing the maximum sum which a candidate might spend to procure his nomination at a primary election or convention was challenged. At the time of the enactment, the Congress had no power to make that law, but subsequently, by adoption of the 17th Amendment, it acquired the said power. The question was whether an after acquired power could validate a statute which was void when enacted. Mr. justice McReynolds delivering the opinion of the court states the principle at page 920 : " Moreover, the criminal statute now relied upon ante dates the 17th Amendment, and must be tested by powers possessed at time of its enactment. An (1) ; ; (2) ; ; 25 after acquired power cannot, ex proprio vigore, validate a statute void when enacted. " In Wilkerson 's Case (1) the facts were that in June 1890, the petitioner, a citizen of the United States and an agent of Maynard, Hopkins & Co., received from his principal intoxicating liquor in packages. The packages were shipped from the State of Missouri to various points in the State of Kansas and other States. On August 9, 1890, the petitioner offered for sale and sold two packages in the State of Kansas. The packages sold were a portion of the liquor shipped by Maynard, Hopkins & Co. It was sold in the same packages in which it was received. The petitioner was prosecuted for violating the Prohibitory Liquor Law of the State of Kansas; for, under the said law, "any person or persons who shall manufacture, sell or barter any in toxicating liquors, shall be guilty of a misdemeanor ". On August 8, 1890, an Act of Congress was passed to the effect that intoxicating liquors transported into any State should upon arrival in such State be subject to the operation and effect of the laws of such State. It will be seen from the aforesaid facts that at the time the State Laws were made, they were valid, but they did not operate upon packages of liquors imported into the Kansas State in the course of interstate commerce, for the regulation of inter State commerce was within the powers of the Congress; and that be fore the two sales in the Kansas State, the Congress made an Act making intoxicating liquors transported into a State subject to the laws of that State, with the result that from that date the State Laws operated on the liquors so transported. Under those circumstances, the Supreme Court of the United States held : " It was not necessary, after the passage of the Act of Congress of August 8, 1890, to re enact the Law of Kansas of 1899, forbidding the sale of intoxicating liquors in that State, in order to make such State Law operative on the sale of imported liquors." The reason for the decision is found at page 578: (1) ; ; 4 26 This is not the case of a law enacted in the unauthorized exercise of a power exclusively confided to Congress, but of a law which it was competent for the State to pass, but which could not operate upon articles occupying a certain situation until the passage of the Act of Congress. That Act in terms removed the obstacle, and we perceive no adequate ground for adjudging that a re enactment of the State Law was required before it could have the effect upon imported which it had always had upon domestic property. A reference to these decisions brings out in bold relief the distinction between the two classes of cases referred to therein. It will be seen from the two decisions that in the former the Act was Void from its inception and in the latter it was valid when made but it could not operate on certain articles imported in the course of inter State trade. On that distinction is based the principle that an after acquired power cannot, ex proprio vigore, validate a statute in one case, and in the other, a law validly made would take effect when the obstruction is removed. The same principle is enunciated in Carter vs Egg and Egg Pulp Marketing Board (1). Under section 109 of the Australian Constitution " when a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid. " Commenting on that section, Latham, C. J., observed at page 573: " This section applies only in cases Where, apart from the operation of the section, both the Commonwealth and the State Laws which are in question would be valid. If either is invalid ab initio by reason of lack of power, no question can arise under the section. The word " invalid " in this section cannot be interpreted as meaning that a State law which is affected by the section becomes ultra vires in whole or in part. If the Commonwealth law were repealed the State law would again become operative. " We shall now proceed to consider the decisions of this Court to ascertain whether the said principles are (1) ; 27 accepted or departed from. The earliest case is Keshavan Madhava Menon vs The State of Bombay (1). There the question was whether a prosecution launched under the Indian Press (Emergency Powers) Act, 1931, before the Constitution could be continued after the Constitution was passed. The objection taken was that the said law was inconsistent with fundamental rights and therefore was void. In the context of the question raised, it became necessary for the Court to consider the impact of article 13(1) on the laws made before the Constitution. The Court, by a majority, held that article 13(1) of the Indian Constitution did not make existing laws which were inconsistent with fundamental rights void ab initio, but only rendered such laws ineffectual and void with respect to the exercise of the fundamental rights on and after the date of the commencement of the Constitution and that it had no retrospective effect. Das, J., as he then was, observed at page 233: " It will be noticed that all that this clause declares is that all existing laws, in so far as they are inconsistent with the provisions of Part III shall, to the extent of such inconsistency, be void. Every statute is prima facie prospective unless it is expressly or by necessary implications made to have retrospective operation. " At page 234, the learned Judge proceeded to state: " They are not void for all purposes but they are void only to the extent they come into conflict with the fundamental rights. In other words, on and after the commencement of the Constitution no existing law will be permitted to stand in the way of the exercise of any of the fundamental rights. Therefore, the voidness of the existing law is limited to the future exercise of the fundamental rights. . . Such laws exist for all past transactions and for enforcing all rights and liabilities accrued before the date of the Constitution. " At page 235, the same idea is put in different words thus : ". . . . .Article 13(1) only has the effect of (1) ; 28 nullifying or rendering all inconsistent existing laws ineffectual or nugatory and devoid of any legal force or binding effect only with respect to the exercise Of fundamental rights on and after the date of the commencement of the Constitution. " At page 236, the learned Judge concludes: " So far as the past acts are concerned the law exists, notwithstanding that it does not exist with respect to the future exercise of fundamental rights." Mahajan, J., as he then was, who delivered a separate judgment, put the same view in different phraseology at page 251 : " The effect of Article 13(1) is only prospective and it operates in respect to the freedoms which are infringed by the State subsequent to the coming into force of the Constitution but the past acts of a person which came within the mischief of the law then in force are Dot affected by Part III of the Constitution." The learned Judge, when American law was pressed on him in support of the contention that even the pre Constitution law was void, observed thus, at page 256 : " It is obvious that if a statute has been enacted and is repugnant to the Constitution, the statute is void since its very birth and anything done under it is also void and illegal. The courts in America have followed the logical result of this rule and even convictions made under such an unconstitutional statute have been set aside by issuing appropriate writs. If a statute is void from its very birth then anything done under it, whether closed, completed, or inchoate, will be wholly illegal and relief in one shape or another has to be given to the person affected by such an unconstitutional law. This rule, however, is not applicable in regard to laws which were existing and were constitutional according to the Government of India Act, 1935. Of course, if any law is made after the 25th January, 1950, which is repugnant to the Constitution, then the same rule will have to be followed by courts in India as is followed in America and even convictions made under such an unconstitutional law 29 will have to be set aside by resort to exercise of powers given to this court by the Constitution. " Mukherjea J., as he then was, in Behram Khurshed Pesikaka vs The State of Bombay (1) says at page 652 much to the same effect: " We think that it is not a correct proposition that constitutional provisions in Part 11I of our Constitution merely operate as a check on the exercise of legislative power. It is axiomatic that when the lawmaking power of a State is restricted by a written, fundamental law, then any law enacted and opposed to the fundamental law is in excess of the legislative authority and is thus a nullity. Both these declarations of unconstitutionality go to the root of the power itself and there is no real distinction between them. They represent but two aspects of want of legislative power. The legislative power of Parliament and the State Legislatures as conferred by articles 245 and 246 of the Constitution stands curtailed by the fundamental rights chapter of Constitution. A mere reference to the provisions of article 13(2) and articles 245 and 246 is sufficient to indicate that there is no competency in Parliament or a State Legislature to make a law which comes into clash with Part 111 of the Constitution after the coming into force of the Constitution. " The effect of the decision may be stated thus: The learned judges did not finally decide the effect of article 13(2) of the Constitution on post Constitution laws for the simple reason that the impugned law was a pre Constitution one. article 13(1) was held to be prospective in operation and therefore did not affect the preexisting laws in respect of things done prior to the Constitution. As regards the post Constitution period, article 13(1) nullified or rendered all inconsistent existing laws ineffectual, nugatory or devoid of any legal force or binding effect with respect to the exercise of the fundamental rights. So far as the past acts were concerned, the law existed, notwithstanding that it did not exist with respect to the future exercise of the said rights. As regards the pre Constitution laws, (1) 30 this decision contains the seed of the doctrine of eclipse developed by my Lord the Chief Justice in Bhikaji Narain Dhakras vs The State of Madhya Pradesh (1) where it was held that as the pre Constitution law was validly made, it existed for certain purposes even during the post Constitution period. This principle has no application to post Constitution laws infringing the fundamental rights as they would be ab initio void in toto or to the extent of their contravention of the fundamental rights. The observations of the learned judges made in the decision cited above bring out the distinction between pre and post Constitution laws which are repugnant to the Constitution and the impact of article 13 on the said laws. In Behram Khurshed Pesikaka 's Case(2), this Court considered the legal effect of the declaration made ' in the case of The State of Bombay vs F. N. Balsara (3) that clause (b) of section 13 of the Bombay Prohibition Act (Bom. XXV of 1949) is void under article 13(1) of the Constitution in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol and held that it was to render part of section 13(b) of the Bombay Prohibition Act inoperative, ineffective and ineffectual and thus unenforceable. Bhagwati, J., at page 620, cited all the relevant passages from textbooks on Constitutional Law and, presumably, accepted the view laid down therein to the effect that an unconstitutional Act in legal contemplation is as though it had never been passed. Jagannadhadas, J., at page 629, noticed the distinction between the scope of cls. (1) and (2) of article 13 of the Constitution. After citing a passage from " Willoughby on Constitution of the United States ", the learned Judge observed : " This and other similar passages from other treatises 'relate, however, to cases where the entire legislation is unconstitutional from the very commencement of the Act, a situation which falls within the scope of article 13(2) of our Constitution. They do not directly cover a situation which falls within (1) ; (2) (3)[1951] S.C. R. 682. 31 article 13(1). . . The question is what is the effect of article 13(1) on a pre existing valid statute, which in respect of a severable part thereof violates fundamental rights. Under article 13(1) such part is, " void " from the date of the commencement of the Constitution, while the other part continues to be valid. Two views of the result brought about by this voidness are possible, viz., (1) the said severable part becomes unenforceable, while it remains part of the Act, or (2) the said part goes out of the Act and the Act stands appropriately amended pro tanto. The first is the view which appears to have been adopted by my learned brother, Justice Venkatarama Aiyar, on the basis of certain American decisions. I feel inclined to agree with it. This aspect, however, was not fully presented by either side and was only suggested from the Bench in the course of arguments. We have not had the benefit of all the relevant material being placed before us by the learned advocates on either side. The second view was the basis of the arguments before us. It is, therefore, necessary and desirable to deal with this case on that assumption." This passage shows that his opinion though a tentative one was that the severable part became unenforceable while it remained part of the Act. But the learned Judge made an incidental observation that the American view applied to cases that fall within the scope of article 13(2) of the Constitution, i.e., the entire legislation would be unconstitutional from the very commencement of the Act. Venkatarama Aiyar, J., founded his decision on a broader basis. At page 639, the learned Judge observed: " Another point of distinction noticed by American jurists between unconstitutionality arising by reason of lack of legislative competence and that arising by reason of a check imposed on a competent Legislature may also be mentioned. While a statute passed by a Legislature which had no competence cannot acquire validity when the Legislature subsequently acquires competence, a statute which was within the competence of the Legislature at the time of its enactment but which infringes a, constitutional 32 prohibition could 'be enforced 'Proprio vigore when once the prohibition is removed. " On the basis of this distinction, the learned Judge held that article 13(1) of the Constitution only placed a check on a competent legislature and therefore the word " void " in that article meant " relatively void ", i.e., the law only condemned the Act as wrong to individuals and refused to enforce it against them. In support of the said conclusion the learned Judge cited a passage from " Willoughby on the Constitution of the United States ". A comparison of the passage cited with that in the text book discloses that one important sentence which makes all the difference to the legal position is omitted by mistake and that sentence is " An after acquired power cannot ex proprio vigore validate a statute void when enacted ". The second paragraph in the extract on which the learned Judge placed reliance and also the decision relied upon, by him did not support his conclusion. As already stated, the decision and the passage dealt not with a case where the State had no power to make the law, but with a case where the law lay dormant till a law of the Federal Congress removed the conflict between the State Law and the Federal Law. That case may by analogy be applied to article 13(1) in respect of laws validly made before the Constitution but cannot be invoked in the case of a statute which was void when enacted. By a subsequent order, this Court granted the review and reopened the case to enable the :Bench to obtain the opinion of a larger Bench on the Constitutional points raised in the judgment delivered by the learned Judges. That matter came up before a Con stitutional Bench, and Mahajan, C. J., who was a party to the decision in Keshavan Madhava Menon 's Case (1) explained the majority view therein on the meaning of the word " void " in article 13(1) thus, at page 651: " The majority however held that the word "void" in article 13(1), so far as existing laws Were concerned, could not be held to obliterate them from the statute book, and could not make such laws void altogether, because in its opinion article 13 had not been given any (1) ; 33 retrospective effect. The majority however held that after the coming into force of the Constitution the effect of article 13(1) on such repugnant laws was that it nullified them, and made them ineffectual and nugatory and devoid of any legal force or binding effect. It was further pointed out in one of the judgments representing the majority view, that the American rule that if a statute is repugnant to the Constitution the statute is void from its birth, has no application to cases concerning obligations incurred or rights accrued in accordance with an existing law that was constitutional in its inception, but that if any law was made after the 26th January, 1950, which was repugnant to the Constitution, then the same rule shall have to be followed in India as followed in America. The result therefore of this pronouncement is that the part of the section of an existing law which is unconstitutional is not law, and is null and void. For determining the rights and obligations of citizens the part declared void should be notionally taken to be obliterated from the section for all intents and purposes, though it may remain written on the statute book and be a good law when a question arises for determination of rights and obligations incurred prior to 26th January, 1950, and also for the determination of rights of persons who have not been given fundamental rights by the Constitution. Thus, in this situation, there is no scope for introducing terms like " relatively void " coined by American Judges in construing a Constitution which is not drawn up in similar language and the implications of which are not quite familiar in this country. " The learned Judge, as we have already pointed out, rejected the distinction made by Venkatarama Aiyar, J., between lack of legislative power and the abridgment of the fundamental rights. Though that question did not directly arise, the learned Judge expressed his view on the scope of article 13(2) at page 653 thus: " The authority thus conferred by Articles 245 and 246 to make laws subjectwise in the different Legislatures is qualified by the declaration made in 5 34 article 13(2). That power can only be exercised subject to the prohibition contained in article 13(2). On the construction of article 13(2) there was no divergence of opinion between the majority and the minority in Keshava Madhava Menon vs The State of Bombay (supra). It was only on the construction of article 13(1) that the difference arose because it was felt that that article could not retrospectively invalidate laws which when made were constitutional according to the Constitution then in force. " Das, J., as he then was, in his dissenting judgment differed from the majority on other points but does not appear to have differed from the aforesaid views expressed by Mahajan, C. J., as regards the scope of Keshava Madhava Menon 's Case on the meaning of the word " void " in article 13(1). This judgment is therefore an authority on two points and contains a weighty observation on the third : (i) when the law making power of a State is restricted by written fundamental law, then any law opposed to the fundamental law is in excess of the legislative authority and is thus a nullity; (ii) even in the case of a statute to which article 13(1) applies, though the law is on the statute book and be a good law, when a question arises for determination of rights and obligations incurred prior to January 26, 1950, the part declared void should be nationally taken to be obliterated from the section for all intents and purposes ; and (iii) on the construction of article 13(2), the law made in contravention of that clause is a nullity from its inception. The next case is a direct one on the point and that is Sag hir Ahmad vs The State. of U. P. (1). There, the U.P.Road Transport Act (11 of 1951) was passed enabling the State to run stage carriage service on a route or routes to the exclusion of others. Under that Act, the State Government made a declaration extending the Act to a particular area and issued a notification setting out what purported to be a scheme for the operation of the stage carriage service on certain routes. At the time the said Act was passed, the State had no such power to deprive a citizen of his (1) ; 35 right to carry on his transport service. But after the Act, article 19(1) was amended by the Constitution (First Amendment)Act, 1951, enabling the State to carry on any trade or business either by itself or through, corporations owned or controlled by the State to the. exclusion of private citizens wholly or in part. One of the questions raised was whether the amendment of the Constitution could be invoked to validate the earlier legislation. The Court held that the Act when passed was unconstitutional and therefore it was still born and could not be vitalised by the subsequent amendment of the Constitution removing the constitutional objections but must be re enacted. At page 728, Mukherjea, J., as he then was, who delivered the judgment of the Court, has given the reasons for the said view : " As Professor Cooley has stated in his work on Constitutional Limitations (Vol. 1, page 304 note.) " a statute void for unconstitutionality is dead and cannot be vitalised by a subsequent amendment of the Constitution removing the constitutional objection but must be re enacted ". We think that this is sound law and our conclusion is that the legislation in question which violates the fundamental right of the appellants under article 19(1) (g) of the Constitution and is not shown to be protected by clause (6) of the article, as it stood at the time of the enactment, must be held to be void under article 13(2) of the Constitution. " This is a direct authority on the point, without a dis senting voice, and we are bound by it. The decision given in Bhikaji Narain 's Case, (1) is strongly relied upon by the learned Advocate General in support of his contention. Shortly stated, the facts in that case were: Before the Constitution, the C. P. & Berar Motor Vehicles (Amendment) Act, 1947 (C. P. III of 1948) amended the (Central Act IV of 1939) and conferred extensive powers on the Provincial Government including the power to create a monopoly of the motor transport business in its favour to the exclusion of all motor transport operators. It was contended by the affected parties that by reason of article 13(1) of the Constitution, (1) ; 36 the Act became void. On behalf of the State, it was argued that the Constitution (First Amendment) Act, 1951, and the Constitution (Fourth Amendment) Act, 1955, had the effect of removing the inconsistency and the Amendment Act III of 1948 became operative again. This Court unanimously accepted the contention of the State. This decision is one given on a construction of article 13(1) of the Constitution and it is no authority on the construction and scope of article 13(2) of the Constitution. The reason for the decision is found in the following passages in the judgment, at page 598: " . . . . on and after the commencement of the Constitution the existing law, as a result of its becoming inconsistent with the provisions of article 19(1)(g) read with clause (6) as it then stood, could not be permitted to stand in the way of the exercise of that fundamental right. Article 13(1) by reason of its language cannot be read as having obliterated the entire operation of the inconsistent law or having wiped it out altogether from the statute book . . . In short, article 13(1) had the effect of nullifying or rendering the existing law which had become inconsistent with article 19(1) (g) read with clause (6) as it then stood ineffectual, nugatory and devoid of any legal force or binding effect only with respect to the exercise of the fundamental right on and after the date of the commencement of the Constitution. Therefore, between the 26th January, 1950, and 18th June, 1951, the impugned Act could not stand in the way of the exercise of the fundamental right of a citizen under Article 19(1)(g). The true position is that the impugned law became, as it were, eclipsed, for the time being, by the fundamental right The American authorities refer only to post Constitution laws which were inconsistent with the provisions of the Constitution. Such laws never came to life but were still born as it were Such laws were not dead for all purposes. They existed for the purposes of pre Constitution rights and liabilities and they remained operative, even after the Constitution, as against non citizens. It is only as 37 against the citizens that they remained in a dormant or moribund condition." The aforesaid passages are only the restatement of the law as enunciated in Keshavan Madhava Menon 's a Case(1) reaffirmed in Pesikaka 's Case (2) and an extension of the same to meet a different situation. A pre Constitution law, stating in the words of Das, J., as he then was, exists notwithstanding that it does not exist with respect to the future exercise of the fundamental rights. That principle has been extended in this decision, by invoking the doctrine of eclipse. As the law existed on the statute book to support pre Constitution acts, the Court held that the said law was eclipsed for the time being by one or other of the fundamental rights and when the shadow was removed by the amendment of the Constitution, the impugned Act became free from all blemish or infirmity. The Legislature was competent to make the law with which Pesikaka 's Case (2) was concerned at the time it was made. It was not a case of want of legislative power at the time the Act was passed, but one where in the case of a valid law supervening circumstances cast a cloud. To the other class of cases to which article 13 (2) will apply, the views expressed by the American authorities, by Mahajan, J., as he then was, in Pesikaka 's Case, and by Mukherjea, J., as he then was, in Saghir Ahmad 's Case (3 ) directly apply. To the facts in Bhikaji Narain 's Case, (4) the principle laid down in Keshavan Madhava Menon 's Case is attracted. But it is said that the observations of the learned Judges are wide enough to cover the case falling under article 13 (2) of the Constitution and further that a logical extension of the principle laid down would take in also a case falling under article 13(2). The first contention is based upon the following passage: But apart from this distinction between pre Constitution and post Constitution laws, on which however we need not rest our decision, it must be held that these American authorities could have no application to our Constitution. All laws existing or future (1) ; (2) , (3) ; (4) ; 38 which are inconsistent with the provisions of Part III of our Constitution, are by express provisions of article 13 rendered void to the extent of such inconsistency. Such laws were not dead for all purposes. They existed for the purposes of pre Constitution rights and liabilities and they remained operative, even after the Constitution, as against non citizens. It is only as against the citizens that they remained in a dormant or moribund condition. " The first part of the said observation states nothing more than the plain import of the provisions of article 13(1) and (2), namely, that they render laws void only I to the extent ' of such inconsistency. The second part of the observation directly applies only to a case covered by article 13(1), for the learned Judges say that the laws exist for the purposes of pre Constitution rights and liabilities and they remain operative even after the Constitution as against non citizens. The said observation could not obviously apply to post Constitution laws. Even so, it is said that by a parity of reasoning the post Constitution laws are also void to the extent of their repugnancy and therefore the law in respect of non citizens will be oil the statute book and by the application of the doctrine of eclipse, the same result should flow in its case also. There is some plausibility in this argument, but it ignores one vital principle, viz., the existence or the non existence of legislative power or competency at the time the law is made governs the situation. There is no scope for applying the doctrine of eclipse to a case where the law is void ab initio in whole or in part. That apart, in the present case we do not base our decision on that article 31(1) infringed by the Act, applies to all persons irrespective of whether they are citizens or non citizens, and. therefore the entire law was void ab initio. That judgment, therefore, does not support the respondent as it has bearing only on the construction of article 13(1) of the Constitution. In Ram Chandra Palai vs State of Orissa (1), this Court followed the decision in Bhikaji Narain 's Case (2) in the case of a pre Constitution Act. In Pannalal (1) (2) ; 39 Binjraj vs Union of India (1), Bhagwati, J., quoted, with approval the extract from Keshavan Madhava Menon 's Case (2), wherein it was held that article 13(1) has only the effect of nullifying or rendering all inconsistent existing laws ineffectual or nugatory or devoid of any legal force or binding effect only with respect to the fundamental rights on or after the commencement of the Constitution. The learned Advocate General relied upon certain decisions in support of his contention that the word " void " in articles 13(1) and 13 (2) means only " unenforceable " against persons claiming fundamental rights, and the law continues to be in the statute book irrespective of the fact that it was made in infringement of the fundamental rights. The observations of Mukherjea, J., as he then was, in Chiranjit Lal Chowdhuri vs The Union of India (3) are relied on and they are: " Article 32, as its provisions show, is not directly concerned with the determination of constitutional validity of particular legislative enactments. What it aims at is the enforcing of fundamental rights guaranteed by the Constitution, no matter whether the necessity for such enforcement arises out of an action of the executive or of the legislature. . . . . The rights that could be enforced under article 32 must ordinarily be the rights of the petitioner himself who complains of infraction of such rights and approaches the court for relief. " He also relies upon the, decision of Das, J., as he then was, in The, State of Madras vs Srimathi ChamPakam Dorairajan (4), wherein the learned Judge states thus, at page 531 : " The directive principles of the State Policy, which by article 37 are expressly made unenforceable by a Court, cannot override the provisions found in Part III which, notwithstanding other provisions, are expressly made enforceable by appropriate Writs, Orders or directions under article 32." Basing his argument on the aforesaid two observations, (1) ; (2) ; (3) ; , 899. (4) ; , 40 it is contended that in the case 'of both the directive principles and the fundamental rights, it must be held that the infringement of either does not invalidate the law, but only makes the law unenforceable. This argument, if we may say so, mixes up the Constitutional invalidity of a statute with the procedure to be followed to enforce the fundamental rights of an individual. The Constitutional validity of a statute depends upon the existence of legislative power in the State and the right of a person to approach the Supreme Court depends upon his possessing the fundamental right, i.e., he cannot apply for the enforcement of his right unless it is infringed by any law. The cases already considered supra clearly establish that a law, whether pre Constitution or post Constitution, would be void and nugatory in so far as it infringed the fundamental rights. We do not see any relevancy in the reference to the directive principles; for, the legislative power of a State is only guided by the directive principles of State Policy. The directions, even if disobeyed by the State, cannot affect the legislative power of the State, as they are only directory in scope and operation. The result of the aforesaid discussion may be summarized in the following propositions: (i) whether the Constitution affirmatively confers power on the legislature to make laws subject wise or negatively prohibits it from infringing any fundamental right, they represent only two aspects of want of legislative power; (ii) the Constitution in express terms makes the power of a legislature to make laws in regard to the entries in the Lists of the Seventh Schedule subject to the other provisions of the Constitution and thereby circum cribes or reduces the said power by the limitations laid down in Part III of the Constitution; (iii) it follows from the premises that a law made in derogation or in excess of that power would be ab initio void wholly or to the extent of the contravention as the case may be ; and (iv) the doctrine of eclipse can be invoked only in the case of a law valid when made, but a shadow is cast on it by supervening constitutional inconsistency or,supervening existing statutory 41 inconsistency; when the shadow is removed, the impugned Act is freed from all blemish or infirmity. Applying the aforesaid principles to the present case, we hold that the validity of the Act could not be tested on the basis of the Constitution (Fourth Amendment) Act, 1955, but only on the terms of the relevant Articles as they existed prior to the Amendment. We shall now proceed to consider the first contention of Mr. Nambiar. He contends that the Motor Vehicles (Amendment) Act (100 of 1956) passed by Parliament was wholly repugnant to the provisions of the U. P. Act and therefore the law became void under the provisions of article 254(1) of the Constitution, with the result that at the present time there is no valid law whereunder the State can prohibit the appellants exercising their fundamental right under the Constitution, namely, carrying on the business of motor transport. Mr. Naunit Lal bases his case on the proviso to article 254(2) of the Constitution rather than on cl. (1) thereof. He contends that by reason of the Amending Act, the U. P. Act was repealed in toto; and because of Section 68B, the operation of the provisions of the General Clauses Act saving things done under the repealed Act was excluded. The learned Advocate General attempted to meet the double attack by pressing on us to hold that there was no repugnancy at all between the provisions of the Central Act and the U. P. Act and therefore the U. P. Act had neither become void nor was repealed by necessary implication by the Central Act. We shall now examine the provisions of article 254(1) and 254(2). Article 254: "(1) If any provisions of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of 6 42 such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. (2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his as sent, prevail, in that State. Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State. " Article 254(1) lays down a general rule. Clause (2) is an exception to that Article and the proviso qualifies the exception. If there is repugnancy between the law made by the State and that made by Parliament with respect to one of the matters enumerated in the Concurrent List, the law made by Parliament shall prevail to the extent of the repugnancy and the law made by the State shall, to the extent of such repugnancy, be void. Under cl. (2), if the Legislature of a State makes a provision repugnant to the provisions. of the law made by Parliament, it would prevail if the legislation of the State received the assent of the President. Even in such a case, Parliament may subsequently either amend, vary or repeal the law made by the Legislature of a State. In the present case, the Uttar Pradesh Legislative Assembly, after obtaining the assent of the President on April 23, 1955, passed the U. P. Act. Parliament subsequently passed the Motor Vehicles (Amendment) Act (100 of 1956). Therefore, both the clauses of article 254 would apply to the situation. The first question is whether the provisions of the Union law, i.e., the Motor Vehicles (Amendment) Act (100 of 1956), are repugnant to the provisions of the U. P. Act and if so to 43 what extent. Before we proceed to examine the provisions of the two Acts, it may be convenient to notice the law pertaining to the rule of repugnancy. Nicholas in his Australian Constitution, 2nd Edition, page 303, refers to three tests of inconsistency or repugnancy : "(1) There may be inconsistency in the actual terms of the competing statutes; (2) Though there may be no direct conflict, a State law may be inoperative because the Commonwealth law, or the award of the Commonwealth Court is intended to be a complete exhaustive code; and (3) Even in the absence of intention, a conflict may arise when both State and Commonwealth seek to exercise their powers over the same subject matter. " This Court in Ch. Tika Ramji vs The State of Uttar Pradesh (1) accepted the said three rules, among others, as useful guides to test the question of repugnancy. In Zaverbhai Amaidas vs The State of Bombay (2), this Court laid down a similar test. At page 807, it is stated: " The principle embodied in section 107(2) and Article 254(2) is that when there is legislation covering the same ground both by the centre and by the Province, both of them being competent to enact the same, the law of the Centre should prevail over that of the State. " Repugnancy between two statutes may thus be ascertained on the basis of the following three principles: (1) Whether there is direct conflict between the two provisions ; (2) Whether Parliament intended to lay down an exhaustive code in respect of the subject matter replacing the Act of the State Legislature; and (3) Whether the law made by Parliament and the law made by the State Legislature occupy the same field. We shall now examine the provisions of both the Acts in some detail in order to ascertain the extent of the repugnancy between them. The Scheme of (1) ; (2) [1955] 1 S.C.R. 799. 44 the U. P. Act may be summarized thus: Under the U. P. Act " State Road Transport Service " is defined to mean transport service by a public service vehicle owned by the State Government. Under section 3: " Where the State Government is of the opinion that it is necessary in the interests of the general public and for subserving the common good, or for maintaining and developing efficient road transport system so to direct, it may, by notification in the official Gazette declare that the road transport services in general, or any particular class of such service on any route or portion thereof as may be specified, shall be run and operated exclusively by the State Government, or by he state Government in conjunction with railways or be run and operated partly by the State Government and partly by others under and in accordance with the provisions of the Act". After the publication of the notification under section 3, the State Government or, if the State Government so directs, the Transport Commissioner publishes in such manner as may be specified a scheme as to the State Road Transport Service providing for all or any of the matters enumerated in cl (2) of section 4. Clause (2), of section 4 directs that, among others, the scheme should 'provide the particulars of the routes or portions thereof over which and the date on which the State Transport Service will commence to operate, the roads in regard to which private persons may be allowed to operate upon, the routes that will be 'served by the State Government in conjunction with railways , the curtailment of the routes covered by the existing permits or transfer of the permits to other route or routes. Section 5 enjoins the Transport Commissioner to give notice to the permit holder requiring him to lodge a statement in writing whether he agrees to the transfer of the permit and in cl. (2) thereof, it is prescribed that in case he accepts the transfer, he is nit entitled to any compensation, but if he does not agree to the transfer,his permit will be cancelled subject to his right to get compensation under the Act. Under section 6 any person whose interests are affected may within 30 days from the publication of the scheme, file objections 45 on it before the Transport 'Commissioner who shall forward them to the Board constituted under section 7, consisting of the Commissioner of a Division, Secretary to Government in the Transport Department and the Transport Commissioner. The Board shall consider the objections, if any, forwarded under section 6 and may either confirm, modify or alter the scheme. The Scheme so confirmed or modified or altered under section 7 shall be published in the Official Gazette. Any scheme published under section 8 may at any time be cancelled or modified or altered by the State Government. Section 10 gives the consequences of the publication under section 8. Section 11 provides compensation for premature cancellation of permits or curtailment of route or routes, as may be determined in accordance with the principles specified in Schedule 1. In Schedule 1, compensation is payable as follows: " (1) For every complete month or Rupees one part of a month exceeding fifteen days of hundred. the unexpired period of the permit. (2) For part of a month not exceed Rupees ing fifteen days of the unexpired fifty. period of a permit. Provided always that the amount of compensation shall in no case be less than rupees two hundred. " Section 12 authorises the State Government, in a case where the permit has been cancelled, to purchase the motor vehicle covered by it if the holder of the permit offers to sell, upon terms and conditions laid down in Schedule 11 provided the vehicle is of the type of manufacture and model notified by the State Government and provided secondly that the vehicle is mechanically in a sound condition or otherwise declared fit by the Transport Commissioner or his nominee. Sections 13 to 18 provide for a State Machinery for the development of motor transport industry. Sections 19 to 22 are provisions which are consequential in nature. Shortly stated, under the U. P. Act the State Government initiate a scheme providing for the nationalization of the road transport in whole or in part; the objections filed by the persons affected by the scheme are heard by a 46 Board of three officers appointed by the State Government; the Board after hearing the objections may confirm, modify or alter the scheme; the scheme so confirmed may be cancelled, modified or altered by ,the State Government by following the same procedure adopted for framing the original scheme; and the holders of permits cancelled may be given new ' permits if they choose to accept and if not they will be paid such compensation as prescribed under the Act. Under the Amendment Act 100 of 1956, whereby a new chapter was inserted in the of 1939, the procedure prescribed is different. Under section 68 A of that Act, 'State Transport Undertaking ' is defined to mean any undertaking providing road transport service, where such undertaking is carried on by, (i) the Central Government or a State Government; (ii) any Road Transport Corporation established under section 3 of the Road Transport Corporation Act, 1950; (iii) the Delhi Transport Authority established under section 3 of the Delhi Road Transport Authority Act, 1950; and (iv) any municipality or any corporation or company owned or controlled by the State Government. Under section 68C, the State Transport Undertaking initiates a scheme if it is of opinion that for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service, it is necessary in the public interest that road transport service in general, or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State Transport Undertaking, whether to the exclusion complete or partial, of other persons or otherwise. Section 68D says that any person affected by the Scheme may file objections to the said Scheme before the State Government; the State Government may, after considering the objections and after giving an opportunity to the objectors or their representatives and the representatives of the State Transport Undertaking to be heard in the matter, approve or modify the Scheme. Any Scheme published may at any time be cancelled or modified by the State Transport Undertaking following the same procedure; for the purpose of giving effect 47 to the Scheme, the Regional Transport Authority, inter alia, may cancel the existing permits or modify the terms of the existing permits. Section 68G lays down the principles and method of determination of compensation. Under that section compensation is, payable for every completed month or part of a month exceeding fifteen days of the unexpired period of the permits at Rs. 200 and for part of a month not exceeding fifteen days of the unexpired period of the permit at Rs. 100. Under the Amending Act, the gist of the provisions is that the Scheme is initiated by the State Transport Undertaking carried on by any of the four institutions mentioned in section 68A, including the State Government; objections are filed by the affected parties to the Scheme, the affected parties and the Undertaking are heard by the State Government, which, after hearing the objections, approves or modifies the Scheme. There is no provision for transfer of permits to some other routes, or for the purchase of the buses by the State Government. Compensation payable is twice that fixed under the U. P. Act. One important thing to be noticed is that the U. P. Act is prospective, i. e., comes into force only from the date of the passing of the Amending Act and the procedure prescribed applies only to schemes that are initiated under the provisions of the U. P. Act. A comparison of the aforesaid provisions of the U. P. Act and the Amending Act indicates that both the Acts are intended to operate, in respect of the same subject matter in the same field. The unamended of 1939 did not make any provision for the nationalization of transport services, but the States introduced amendments to implement the scheme of nationalization of road transport. Presumably, Parliament with a view to introduce a uniform law throughout the country avoiding defects found in practice passed the Amending Act inserting Chapter IV A in the . This object would be frustrated if the argument that both the U. P. Act and the Amending Act should co exist in respect of schemes to be framed after the Amending Act, is accepted. Further the authority to initiate 48 the scheme, the manner of doing it, the authority to hear the objections, the principles regarding payment of compensation under the two Acts differ in import ant details from one another. While in the U. P. Act the scheme is initiated by the State Government, in the Amendment Act, it is proposed by the State Transport Undertaking. The fact that a particular undertaking may be carried on by the State Government also cannot be a reason to equate the undertaking with the State Government; for under section 68A the undertaking may be carried on not only by the State Government but by five other different institutions. The undertaking is made a statutory authority under the Amending Act with a right to initiate the scheme and to be heard by the State Government in regard to objections filed by the persons affected by the scheme. While in the U. P. Act a Board hears the objections, under the Amending Act the State Government decides the disputes. The provisions of the scheme, the principles of compensation and the manner of its payment also differ in the two Acts. It is therefore manifest that the Amending Act occupies the same field in respect of the schemes initiated after the Amending Act and therefore to that extent the State Act must yield its place to the Central Act. But the same cannot be said of the schemes framed under the U. P. Act before the Amending Act came into force. Under article 254(1) " the law made by Parliament, whether passed before or after the law made by the Legislature of such State. . shall prevail and the law made by the legislature of the State shall, to the extent of the repugnancy, be void." Mr. Nambiar contends that, as the U. P. Act and the Amending Act operate in the same field in respect of the same subject matter, i. e., the nationalization of bus transport, the U. P. Act becomes void under article 254(1) of the Constitution. This argument ignores the crucial words " to the extent of the repugnancy " in the said clause. What is void is not the entire Act but only to the extent of its repugnancy with the law made by Parliament. The identity of the field may relate to the pith and substance of the subject matter 49 and also the period of its. operation. When both coincide, the repugnancy is complete and the whole of the State Act becomes void. The operation of the Union Law may be entirely prospective leaving the State Law to be effective in regard to thing already, done. Sections 68C, 68D and 68E, inserted by the Amending Act, clearly show that those sections are concerned only with a scheme initiated after the Amending Act came into force. None of the sections, either expressly or by necessary implication, indicates that the schemes already finalised should be reopened and fresh schemes be framed pursuant to the procedure prescribed thereunder. Therefore, under article 254(1), the law under the U. P. Act subsists to support the schemes framed thereunder and it becomes void only in respect of schemes framed under the Central Act. A similar question arose in the context of the application of article 13(1) to a pre Constitution law which infringed the fundamental rights given under the Constitution. In Keshavan Madhava Menon 's Case (1), which we have referred to in a different context the question was whether Indian Press (Emergency Powers) Act, 1931, was void as infringing the provisions of article 13(1) of the Constitution;, and the Court held that the said Act was valid and would continue to be in force to sustain a prosecution launched for an act done be fore the Constitution. In the words of Das, J., as he then was: " Such laws exist for all past transactions and for enforcing all rights and liabilities accrued before the date of the Constitution." (p. 234). " So far as the past acts are concerned the law exists, notwithstanding that it does not exist with respect to the future exercise of fundamental rights.", (pp. 235 236). Article 13(1), so far as it is relevant to the present in quiry, is pari materia with the provisions of article 254(1) of the Constitution. While under article 13(1) all the pre Constitution laws, to the extent of their inconsistency with the provisions of Part III, are void, under (1) ; 7 50 article 254(1) the State Law to the extent of its repugnancy to the law made by,Parliament is void. If the pre Constitution law exists for the post Constitution period for all the past transactions, by the same parity of reasoning, the State law subsists after the making of the law by Parliament, for past transactions. In this view, both the laws can co exist to operate during different periods. The same decision also affords a solution to the question mooted, namely, whether if the law was void all the completed transactions fall with it. Mahajan, J., as he then was, draws a distinction between a void Act and a repealed Act vis a vis their impact on past transactions. At page 251, the learned Judge says: The expression is void " has no larger effect on the statute so declared than the word " repeal ". The expression " repeal " according to common law rule obliterates a statute completely as if it had never been passed and thus operates retrospectively on past transactions in the absence of a saving clause or in the absence of provisions such as are contained in the Interpretation Act , 1889, or in the , while a provision in a statute that with effect from a particular date an existing law would be void to the extent of the repugnancy has no such retrospective operation and cannot affect pending pro secutions or actions taken under such laws. There is in such a situation no necessity of introducing a saving clause and it does not need the aid of a legislative provision of the nature contained in the Interpretation Act or the . To hold that a prospective declaration that a statute is void affects pending oases is to give it indirectly retrospective operation and that result is repugnant to the clear phraseology employed, in the various articles in of the Constitution. " The said observation directly applies to a situation created by Art.254(1). As the U. P. Act was void from the date of the Amending Act, actions taken before that date cannot be affected. In whichever way it is looked at, we are satisfied that in the present case, the scheme already framed subsists and the 51 State law exists to sustain it even after the Parliament made the law. In this view we reject the contention of Mr. Nambiar based on Art 254(1)of the Constitution. The alternative argument advanced by Mr. Naunit Lal may now be considered. It is not disputed that under the proviso to article 254(2), the Parliament can repeal the law made by the Legislature of a State and that Parliament can repeal the repugnant State law whether directly or by necessary implication. Assuming that Parliament in the present case by enacting the Amending Act repugnant to the State law with respect to the same subject matter i. e., nationalization of road transport, impliedly repealed the State law, would it have the effect of effacing the scheme already made ? If there was a repeal, the provisions of section 6 of the of 1897 are directly attracted. The relevant part of section 6 of the reads: " Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder. " The express words used in clause (b)certainly take in the scheme framed under the repealed Act. It was a thing duly done under the repealed Act. But it is said that a comparison of the provisions of section 6 with those of section 24 would indicate that anything duly done excludes the scheme. Section 24 deals with the continuation of orders, schemes, rules, forms or bye laws. made or issued under the repealed Act. But that section applies only to the repeal of a Central Act but not a State Act. But the exclusion of the scheme is sought to be supported on the basis of the argument that in the case of a repeal of a Central Act, both the sections apply and, in that context, a reasonable 52 interpretation would be to exclude what is specifically provided for from the general words used in section 6. Whatever justification there may be in that context, there is none when we are concerned with the repeal of a State Act to which section 24 does not apply. In that situation, we have to look to the plain words of section 6 and ascertain whether those words are comprehensive enough to take in a scheme already framed. We have no doubt that a scheme framed is a thing done under the repealed Act. A further contention is raised on the basis of the provisions of section 68B to achieve the same result, namely, that the said section indicates a different intention within the meaning of section 6 of the . Section 68B reads: " The provisions of this Chapter and rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in Chapter IV of this Act or in any other law for the time being in force or in any instrument having effect by virtue of any such law. " This section embodies nothing more than the bare statement that the provisions of this Act should prevail notwithstanding the fact that they are inconsistent with any other law. We have expressed our view that the provisions of this Act are prospective in. operation and, therefore, nothing in those sections, which we have already analysed, is inconsistent with the provisions of the State law in regard to its operation with respect to. transactions completed thereunder. Assuming without deciding that the word 'instrument ' in section 68B includes a scheme, we do not see any provisions in the Act which are inconsistent with the scheme framed under the State Act. The provisions starting from section 68C only contemplate a scheme initiated after the Amending Act came into force and therefore they cannot obviously be inconsistent with a scheme already framed under the State Act before the Amending Act came into force. We, therefore, hold that section 6 of the saves the scheme framed under the U. P. Act. The next contention of the learned Counsel Mr. 53 Nambiar, namely, that the scheme being a prescription for the future, it has a continuous operation even after the Amending Act became law, with the result that after the Amending Act, there was no valid law to sustain it, need not detain us; for, we have held that the State law subsists even after the Amending Act to sustain the things done under the former Act. This leads us to the contention of the learned Advocate General that even if the Constitution (Fourth Amendment) Act, 1955, could not be relied on to sustain the validity of the U. P. Act, there was no deprivation of property of the appellants within the meaning of the decisions of this Court in The State of West Bengal vs Subodh Gopal Bose (1); Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning & Weaving Co. Ltd. (2) and Saghir Ahmad 's Case (3). Those cases have held that cls. (1) and (2) of article 31 relate to the same subject matter and that, though there is no actual transfer of property to the State, if by the Act of the State, an individual has been substantially dispossessed or where his right to use and enjoy his property has been seriously impaired or the value of the property has been materially reduced, it would be acquisition or taking possession within the meaning of el. (2) of the said Article. After a faint attempt to raise this question, the learned Advocate General conceded that in view of the decision in Saghir Ahmad 's Case he could not support his argument to the effect that the State did not deprive the petitioners of their interest in a commercial undertaking. In the said case, this Court held in express terms that U. P. Transport Act, 1951, which, in effect prohibited the petitioners therein from doing their motor transport business deprived them of their property or interest in a commercial undertaking within the meaning of article 31(2) of the Constitution. Mukherjea J., as he then was, observed at page 728 : " It is not seriously disputed on behalf of the respondents that the appellants ' right to ply motor vehicles for gain is, in any event, an interest in a (1) ; (2) ; (3) ; 54 commercial undertaking. There is no doubt also that the appellants have been deprived of this interest." The learned Judge proceeded to state at page 729 : " In view of that majority decision it must be taken to be settled now that clauses (1) and (2) of article 31 are not mutually exclusive in scope but should be, read together as dealing with the same subject, namely, the protection of the right to property by means of limitations on the State 's.powers, the deprivation contemplated in clause (1) being no other than acquisition or taking possession of the property referred to in clause (2). The learned Advocate General conceded this to be the true legal position after the. pronouncements of this Court referred to above. The fact that the buses belonging to the appellants have not been acquired by the Government is also not material. The property of a business may be both tangible and intangible. Under the statute the Government may not deprive the appellants of their buses or any other tangible property but they are depriving them of the business of running buses on hire on public roads. We think therefore that in these circumstances the legislation does conflict with the provisions of article 31(2) of the Constitution and as the requirements of that clause have not been complied with, it should be held to be invalid on that ground. The above observations are clear and unambiguous and they do not give scope for further argument on the subject. It follows that if the Act does not provide for compensation, the Act would be invalid being in conflict with the provisions of article 31(2) of the Constitution. The next question is whether in fact the provisions of article 31(2) of the Constitution, before the Constitution (Fourth Amendment) Act, 1955, were complied with. Under article 31(2) no property shall be taken possession of or acquired save for a public purpose and save by authority of law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and 55 given. In The State of West Bengal vs Mrs. Bela Banerjee (1), Patanjali Sastri, C. J., has defined the meaning of the word I compensation ' at page 563, as under " While it is true that the legislature is given the discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner for the property appropriated, such principles must ensure that what is determined as payable must be compensation, that is, a just equivalent of what the owner has been deprived of. Within the limits of this basic requirement of full indemnification of the expropriated owner, the Constitution allows free play to the legislative judgment as to what principles should guide the determination of the amount payable. Whether such principles take into account all the elements which make up the true value of the property appropriated and, exclude matters which are to be neglected, is a justiciable issue to be adjudicated by the Court. , This, indeed, was not disputed. " On the basis of the aforesaid principle, Mr. Nambiar contends that the U. P. Act does not provide for com pensation in the sense of giving the operator deprived of his interest a just equivalent of what he has been deprived of, or fix any principles to guide the determination of the amount payable. The U.P. Act, the argument proceeds, does not provide at all for compensation payable in respect of the interest of the operator in a commercial undertaking, but only gives compensation for the unexpired period of the permit. On the other hand, the learned Advocate General contends that the appellants would be entitled only to just equivalent of the interest that they are deprived of, namely, the interest in a commercial undertaking and that the cumulative effect of the provisions of the U. P. Act is that just equivalent of the said interest is given. As it is common case that what the Act should give is just compensation for the interest of the operator in a commercial undertaking, we Shall now examine the provisions of the U. P. Act to ascertain whether it (1) ; 56 provides a quid pro quo for the interest the operator is deprived of The provisions of the U. P. Act relating to compensation pay usefully be read at this stage: Section 5 : " (1) Where the scheme published under section 4 provides for cancellation of any existing permit granted under Chapter IV of the , or for the transfer of such permit to any other route or routes the Transport Commissioner shall cause notice thereof to be served on the permit holder concerned and on any other persons to whom in his opinion special notice should be given. The notice shall also require the permit holder to lodge a statement in writing within the period to be specified. therein whether he agrees to the transfer of the permit. (2) If the permit holder agrees to the transfer of his permit, he shall, provided the permit is actually so transferred ultimately, be not entitled to claim com pensation under section 11 but the transference of the permit shall be deemed to be in lieu of compensation and complete discharge therefor of the State Government. Where, however, the permit holder does not agree to the transfer, the permit shall, without prejudice to the right of the permit holder to get compensation under the said section be liable to be cancelled. " Section 11 :" (1) Where in pursuance of the Scheme published under section 8 any existing permit granted under Chapter IV of the , is or is deemed to have been cancelled or the route or routes covered by it are curtailed or are deemed to have been curtailed, the permit holder shall, except in cases where transfer of the permit has been agreed to under sub section (2) of section 5; be entitled to receive and be paid such compensation by the State Government for and in respect of the premature cancellation of the permit or, as the case may be, for curtailment of the route or routes covered by the permit as may be determined in accordance with the principles speci fied in Schedule I. (2) The compensation payable under this section shall be due as from the date of order of cancellation 57 of the permit or curtailment of the route covered by the permit. (3) There shall be paid by the State Government on the amount of compensation determined under subsection (1) interest at the rate of two and one half per cent. from the date of order of cancellation or curtailment of route to the date of determination of compensation as aforesaid. (4)The compensation payable under this section shall be given in cash. (5) The amount of compensation to be given in accordance with the provisions of sub section (1) shall be determined by the Transport Commissioner and shall be offered to the permit holder in full satisfaction of the compensation payable under this Act and if the amount so offered is not acceptable to the permit holder, the Transport Commissioner may within such time and in such manner as may be prescribed refer the matter to the District Judge whose decision in the matter shall be final and shall not be called in question in any Court. " Section 12: " Where a permit granted under Chapter IV of the , has been cancelled or the route to which the permit relates has been curtailed in pursuance of the scheme published under section 8, the State Government may if the holder of the permit offers to sell, choose to purchase the motor vehicles covered by the permit upon terms and conditions laid down in Schedule II: Provided, firstly, that the vehicle is of a type, manufacture and model notified by the State Government; and Provided, secondly, that the vehicle is in a mechanically sound condition and is otherwise declared fit by the Transport Commissioner or his nominee. SCHEDULE I. "Paragraph 1: The compensation payable under section 11 of the Act for cancellation of a contract carriage or stage carriage or public carrier 's permit under clause (e) of sub section (1) of section 10 of the 8 58 Act shall be computed for every ' vehicle covered by the permit as follows, namely: (1) For every complete month or part Rupees One Rupees of a month exceeding fifteen hundred days of one the unexpired period of the permit. (2) For part of a month not exceeding Rupees fifteen days of the unexpired period fifty of a permit. Provided always that the amount of compensation shall in no case be less than rupees two hundred. Paragraph 2: The compensation payable under section 1 1 for curtailment of the route or routes covered by a stage carriage or public carrier permit under clause (d) of sub section (1) of section 10 of the Act shall be an amount computed in accordance with the following formula: Y x A R In this formula Y means the length in mile by which the route is curtailed. A means the amount computed in accordance with Paragraph 1 above. R means the total length in miles of the route covered by the permit. " The aforesaid provisions constitute an integrated scheme for paying compensation to the person whose permit is cancelled. The gist of the provisions may be stated thus: The scheme made by the State Government may provide for the cancellation of a permit, for curtailment of the route or routes or for transfer of the permit to other routes. Where a transfer of the permit is accepted by the operator, he will not be entitled to any compensation; if he does not accept, compensation will be paid to him with interest in respect of the premature cancellation of the permit, or as the case may be for the curtailment of the route or routes covered by the permit. The amount of compensation to be ' given shall be deter mined by the Transport Commissioner in accordance with the provisions of the Act, and if the amount so 59 offered is not acceptable to the permit holder, the Transport Commissioner may, within such time and in such manner as may be prescribed, refer the matter to the District Judge whose decision in the matter shall he final. There is also a provision enabling the Government to purchase the motor vehicles covered by the permit, if the holder of the permit offers to sell and if the vehicles satisfy the specifications laid down in the Act. The question is whether these provisions offer a quid pro quo for the interest of the petitioners in the commercial undertaking i.e., business in motor transport. Let us examine the question from the standpoint of a business deal. If the transport business is sold, the seller gets his value for the assets minus the liabilities and for his good will. In the case of a scheme framed under the Act, the assets are left with the holder of the permit and under certain con ditions the State purchases them. As the scheme is a phased one, it cannot be said, though there will be difficulties, that the assets cannot be sold to other operators. If a permit is not cancelled but only transferred to another route, it may be assumed that if the transfer is voluntarily accepted by the permit holder, he is satisfied that the route given to him is as good as that on which he was doing his business. On the other hand, if he chooses to reject the transfer of his permit to another route and takes compensation, the question is whether the compensation provided by section 11 is anything like an equivalent or quid pro quo for the interest in the commercial undertaking acquired by the State. If cl. (5) of section 11 had not been there, we would have had no hesitation to hold that a flat rate of Rs. 100 or less irrespective of the real loss to the holder would not be compensation within the meaning of article 31(2). But, in our view, section 11(5) gives a different complexion to the entire question of compensation. Under that clause., a permit holder aggrieved by the amount of compensation given by the Transport Commissioner may ask for referring the matter to the District Judge for his decision in regard to the adequacy of the compensation. This clause is susceptible of both a strict as well as a 60 liberal interpretation. If it is strictly construed, it may be held that what the District Judge can give as compensation is only that which the Transport Commissioner can, under the provisions of section 11(1) i. e., at the rates mentioned in the Schedule. But a liberal interpretation, as contended by the learned Advocate General, can be given to that clause without doing violence to the language used therein and that interpretation will carry out the intention of the legislature. If the jurisdiction of the District Judge relates only to the calculation of figures, the said clause becomes meaningless in the present context. Section 11 read with the Schedule gives the rate of compensation, the rate of interest, the dates from which and up to which the said compensation is to be paid with interest. The duty of calculating the said amount is entrusted to the Transport Commissioner who will be a fairly senior officer of the Government. If he made any mistake in mere calculations, he would certainly correct it if the permit holder pointed out the mistake to him. In the circumstances, is it reasonable to assume that the legislature gave a remedy for the permit holder to approach the District Judge for the mere correction of the calculated figures ? It is more reasonable to assume that the intention of the legislature was to provide prima facie for, compensation at flat rate and realising the inadequacy of the rule of thumb to meet varying situations, it entrusted the duty of the final determination of compensation to a judicial officer of the rank of a District Judge. The provisions of section 11(5), in our view, are certainly susceptible of such. an inter pretation as to carry out the intention of the legislature indicated by the general scheme of the provisions. The crucial words are " if the amount so offered is not acceptable to the permit holder ". The amount offered is no doubt the amount calculated in accordance with s.11(1). But a duty is cast on the Transport Commissioner to refer the matter to the District Judge if the amount offered is not acceptable to the permit holder. The word" acceptable" is of very wide connotation and it does not limit the objection only to the wrong calculation under section 11(1). The permit holder may 61 not accept the amount on the ground that compensation offered is inadequate and is not a quid pro quo for the interest of which he is deprived. It is therefore for the District Judge, on the evidence adduced by both the parties, to decide the proper compensation to be paid to him in respect of the right of which he is deprived by the cancellation of the permit. The language of section 11(5) not only bears the aforesaid construction but also carries out the intention of the legislature, for it cannot be imputed to the legislature that it intended to deprive a valuable interest by giving a nominal amount to the permit holder. Section 11(5) speaks of the time limit within which such reference may be made to the District Judge, but no such rule has been brought to our notice. We hope and trust that, without standing on any such technicality, the Transport Commissioner, if so required, will refer the matter of compensation to the District Judge. Having regard to the entire scheme of compensation provided by the Act, we hold that the Act provided for adequate compensation for the interest acquired within the meaning of article 31(1) of the Constitution. It is said that out of the twenty five appeals appellants in thirteen appeals had accepted to take a transfer of the permits to different routes; but on behalf of the appellants it is denied that the acceptance was unequivocal and final. They say that it was conditional and that, as a matter of fact, they have not been plying the buses on the transferred routes and indeed have been operating them only on the old routes. In these circumstances, we cannot hold that the said appellants accepted the alternative routes. If they or some of them choose to accept any alternative routes, they are at liberty to do so, in which event they will not be entitled to any compensation. Lastly, the learned Counsel for the appellants contends that el. (2) of section 3 of the U. P. Act infringes their fundamental rights under article 31(2) inasmuch as it prevents them from questioning the validity of the scheme on the ground that it is not for public purpose. Section 3 reads: 62 (1) Where the State Government is of the opinion that it is necessary in the interest of the general public and for subserving the common good, or for maintaining and developing efficient road transport system so to direct, it may, by notification in the official Gazette declare that the road transport services in general, or any particular class of such service on any route or portion thereof as may be specified, shall be run and operated exclusively by the State Government, or by the State Government in conjunction with railways or be run and operated partly by the State Government and partly by others under and in accordance with the provisions of this Act. (2) The notification under sub section (1) shall be conclusive evidence of the facts stated therein. " The argument of the learned Counsel on the interpretation of this section appears to be an after thought; for the records do not disclose that the appellants attempted to question the said fact before the Government and they were precluded from doing so on the basis of cl. (2) of section (3). We are not, therefore, prepared to allow the appellants to raise the contention for the first time before us. The last contention, which is special to Civil Appeal No. 429 of 1958, is that during the crucial period when the scheme of nationalization was put through, the appellant had no permit, it having been cancelled by the order of the appropriate tribunal; but subsequently, after the scheme was finalised, the said order was set aside by the Appellate Tribunal retrospectively and therefore the order of the State Government made behind the back of the appellant does not bind him. The appellant 's permit was not renewed by the Regional Transport Authority. Against the said order, he preferred an appeal to the State Transport Tribunal, which by an order dated September 6, 1956, allowed the appeal and directed that the appellant 's permit be renewed for three years beginning from November 1, 1953. In disposing of the appear the State Transport Tribunal observed: " We are told that in the meantime this route has been notified and the Government buses are plying 63 on it. The effect of this order will be that the appellant shall be deemed to be in possession of a valid permit and he shall have to be displaced after following the usual procedure prescribed by the U. P. Road Transport Services (Development) Act. " Pursuant to their order, it appears that the Regional Transport Authority renewed his permit on October 11, 1956 with effect from November 1, 1953 to October 31, 1956. In the circumstances, as the petitioner was not a permit holder when the Government made the order, no relief can be given to him in this appeal. This order will not preclude the appellant in Civil Appeal No. 429 of 1958, if he has any right, to take appropriate proceedings against the State Government. In the result, all the appeals are dismissed with one set of costs to the State of Uttar Pradesh. Appeals dismissed.
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These court cases questioned if the Uttar Pradesh Transport Service (Development) Act, 1955, was constitutional. This law was passed by the state government after the President approved it. The cases also questioned if the state's plan to take over bus routes was valid, along with the government's announcements about it. The people appealing the law had permits to run buses on routes in Uttar Pradesh. The state government also ran its own buses on these routes. The state government announced that certain routes would only be for state-owned buses. They made these announcements under the Uttar Pradesh Act. The people with permits asked the High Court to check if the law and announcements were valid, arguing they were not. They used Article 226 of the Constitution. The High Court said no to their requests. Later, the Motor Vehicles (Amendment) Act of 1956 became law. This new law added a chapter that allowed the government to take over transport services. The appellants argued that: (1) the new law made the Uttar Pradesh law completely invalid under Article 254(1) of the Constitution, (2) the plan created under the Uttar Pradesh law should be considered under Section 68B of the new law and should no longer be in effect, and (3) even if the Uttar Pradesh law was valid, it violated Article 31 as it was written before the Constitution was changed in 1955. They also argued that the Uttar Pradesh law was completely cancelled by the new law, because Section 68B of the new law overruled the General Clauses Act. The state argued that the Constitution was changed in 1955. This change removed limits on what the government could do when it passed the Uttar Pradesh law. Because of this change, the Uttar Pradesh law should now be considered valid, even though it was originally subject to those limits. The court decided that the Uttar Pradesh Transport Service (Development) Act, 1955, did not become completely invalid when the Motor Vehicles (Amendment) Act, 1956, was passed. It was still a valid law that supported the existing plan under the Uttar Pradesh Act. Even if the new law cancelled the state law, it would not cancel the existing plan under that law. The General Clauses Act would protect the plan. Also, the Uttar Pradesh law did not violate Article 31 of the Constitution as it was written before the 1955 change, because it did provide for adequate compensation. According to Chief Justice Das and Justice Sinha, the idea that a law could be "eclipsed" (temporarily blocked) could also apply to laws passed after the Constitution that violated the rights of citizens. Such a law would be ineffective for citizens but still effective for non-citizens. Once the "shadow" was removed by changing the Constitution, the law would apply to citizens again without needing to be rewritten. They referred to previous cases to support this idea. The court did not decide if this idea applied to laws that violated the rights of everyone, citizens or not. Justices Bhagwati, Subba Rao, and Wanchoo believed that Articles 254, 246, and 13 of the Constitution showed that the power of the Parliament and state governments to make laws was subject to the Constitution, including Article 13. There was a clear difference between the two parts of Article 13. The first part said that laws before the Constitution were still valid unless they conflicted with Part III of the Constitution (which protects fundamental rights). The second part said that any law passed after the Constitution that violated those rights was invalid from the beginning. The words "any law" in the second part of Article 13 meant a law that was actually passed, even though it was prohibited. The prohibition limited the government's power to make laws, and any law made despite that was invalid from the start. When interpreting the Constitution about the powers of the government, there should be no difference between a rule that says "you can't do this" and a rule that says "you must do this." Both are limits on the government's power. However, there is a difference between a law that was invalid from the beginning and one that became unconstitutional later on. This difference is important when judging the effect of a law that goes beyond the limits set by Articles 245 and 13(2). This idea supports the principle that a power gained later cannot make a law valid, and a valid law can take effect when the obstacle is removed. After reviewing previous cases, the court concluded that: (1) the power to make laws and the prohibition against violating fundamental rights are both aspects of a lack of legislative power, (2) the power to legislate is subject to the limits in Part III of the Constitution, (3) a law that goes against this power would be invalid from the start, and (4) the idea of "eclipse" only applies to a law that was valid when made but became invalid due to a later constitutional issue. The court referred to and discussed several previous cases to support these points. The tests for whether two laws conflict (one from Parliament and one from the state government) are: (1) is there a direct conflict between them? (2) did Parliament intend to create a complete set of rules that replace the state law? and (3) do both laws cover the same topic? Comparing the two laws showed that both were meant to cover the same topic, but only for plans started after the new law came into effect. The new law did not apply to past plans. Therefore, the state law must give way to the new federal law to that extent and only becomes invalid for plans created under the new federal law. The court applied a previous case to support this conclusion.
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Without committing ourselves to all the reasons adopted by our learned Brother, we agree with his following conclusions, namely, (1) that the Uttar Pradesh Transport Service (Development) Act, 1955 (Act IX of 1955), hereinafter referred to as the U. P. Act, did not, on the passing of the Motor Vehicles (Amendment) Act, 1956 (100 of 1956), hereinafter referred to as the Central Act, become wholly void under article 254(1) of the Constitution but continued to be a valid and subsisting law supporting the scheme already framed under the U. P. Act; (2) that, even if the Central Act be construed as amounting, under article 254(2), to a repeal of the U. P. Act, such repeal did not destroy or efface the scheme already framed under the U. P. Act, for the provisions of section 6 of the General Clauses Act saved the same; (3) that the U. P. Act did not offend the provisions of article 31 of the Constitution, as it stood before the Constitution (4th Amendment) Act, 1955, for. In view of the aforesaid finding that the U. P. Act did not infringe the fundamental rights guaranteed by article 31, it is wholly unnecessary to discuss the following questions, namely, (a) whether the provisions of 'Part III of the Constitution enshrining the fundamental rights are mere checks or limitations on the legislative competency conferred on Parliament and the State Legislatures by articles 245 and 246 read with the relevant entries in the Lists in the Seventh Schedule to the Constitution or are an integral part of the provisions defining, prescribing and conferring the legislative competency itself and (b) whether the doc trine of eclipse is applicable only to pre Constitution laws or can apply also to any post Constitution law which falls under article 13(2) of the Constitution. Whether a post Constitution law of the other kind, namely, which infringes a fundamental right guaranteed to all persons, irrespective of whether they are citizens or not, and which, therefore, can have no operation at all when it is enacted, is to be regarded as a still born law as if it had not been enacted at all and, therefore, not subject to the doctrine of eclipse is a matter which may be open to discussion. Mr. M. K. Nambiar, appearing for some of the appellants, raised before us the following points: (i) The Motor Vehicles (Amendment) Act (100 of 1956) passed by, the Parliament is wholly repugnant to the provisions of the U. P Act and therefore the latter became void under the provisions of Article 254(1) of the Constitution ; with the result that, at the present time, there is no valid law whereunder the Government can prohibit the appellants from exercising their fundamental right under the Constitution, namely, to carry on their business of motor transport; (ii) the scheme framed under the Act, being one made to operate in future and from day to day, is an instrument within the meaning of section 68B of the Amending Act, and therefore the provisions of the Amending Act would prevail over those of the scheme, and after the Amending Act came into force, it would have no operative force; and (iii) even if the U. P. Act was valid and continued to be in force in regard to the scheme framed thereunder, it would offend the provisions of article 31 of the Constitution, as it was before the Constitution (Fourth Amendment) Act, 1955, as, though the State had acquired the appellant 's interest in a commercial undertaking, no compensation for the said interest was given, as it should be under the said Article. A distinction is sought to be made by the learned Advocate General between the law made in excess of the power conferred on a legislature under the relevant List in the Seventh Schedule and that made in violation of the provisions of Part III of the Constitution. Mr. Nambiar puts before us the following two propositions in support of his contention that the law so made in either contingency is void ab initio: (i) the paramountcy of fundamental rights over all legislative powers in respect of all the Lists in the Seventh Schedule to the Constitution is secured by the double process of the prohibition laid by article 13(2) and the restrictions imposed by article 245, unlike the mere implied prohibition implicit in the division of power under article 246; and (ii) where the provisions of an enactment passed by a legislature after January 26, 1950, in whole or in part subject to the doctrine of severability are in conflict with the provisions of Part III, the statute, in whole or in part, is void ab initio. The relevant Articles of the Constitution read as follows: Article 245: "(1)Subject to the provision of this Constitution, Parliament may make laws for the whole or any part of the territory Of India, and the Legislature of a State may make laws for the whole or any part of the State. " (2) No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given The combined effect of the said provisions may be stated thus: Parliament and the Legislatures of States have power to make laws in respect of any of the matters enumerated in the relevant lists in the Seventh Schedule and that power to make laws is subject to the provisions of the Constitution including article 13, i.e., the power is made subject to the limitations imposed by Part III of the Constitution. Cooley in his book " Constitutional Limitations" (Eighth Edition, Volume I), states at page 379: " From what examination has been given to this subject, it appears that whether a statute is constitutional or not is always a question of power; that is, a question whether the legislature in the particular case, in respect to the subject matter of the act, the manner in which its object is to be accomplished, and the mode of enacting it, has kept within the constitutional limits and observed the constitutional conditions." The Court, by a majority, held that article 13(1) of the Indian Constitution did not make existing laws which were inconsistent with fundamental rights void ab initio, but only rendered such laws ineffectual and void with respect to the exercise of the fundamental rights on and after the date of the commencement of the Constitution and that it had no retrospective effect. Das, J., as he then was, observed at page 233: " It will be noticed that all that this clause declares is that all existing laws, in so far as they are inconsistent with the provisions of Part III shall, to the extent of such inconsistency, be void. Mahajan, J., as he then was, who delivered a separate judgment, put the same view in different phraseology at page 251 : " The effect of Article 13(1) is only prospective and it operates in respect to the freedoms which are infringed by the State subsequent to the coming into force of the Constitution but the past acts of a person which came within the mischief of the law then in force are Dot affected by Part III of the Constitution." The learned Judge, when American law was pressed on him in support of the contention that even the pre Constitution law was void, observed thus, at page 256 : " It is obvious that if a statute has been enacted and is repugnant to the Constitution, the statute is void since its very birth and anything done under it is also void and illegal. (1) and (2) of article 13 of the Constitution. That case may by analogy be applied to article 13(1) in respect of laws validly made before the Constitution but cannot be invoked in the case of a statute which was void when enacted. That matter came up before a Con stitutional Bench, and Mahajan, C. J., who was a party to the decision in Keshavan Madhava Menon 's Case (1) explained the majority view therein on the meaning of the word " void " in article 13(1) thus, at page 651: " The majority however held that the word "void" in article 13(1), so far as existing laws Were concerned, could not be held to obliterate them from the statute book, and could not make such laws void altogether, because in its opinion article 13 had not been given any (1) ; 33 retrospective effect. It was further pointed out in one of the judgments representing the majority view, that the American rule that if a statute is repugnant to the Constitution the statute is void from its birth, has no application to cases concerning obligations incurred or rights accrued in accordance with an existing law that was constitutional in its inception, but that if any law was made after the 26th January, 1950, which was repugnant to the Constitution, then the same rule shall have to be followed in India as followed in America. This judgment is therefore an authority on two points and contains a weighty observation on the third : (i) when the law making power of a State is restricted by written fundamental law, then any law opposed to the fundamental law is in excess of the legislative authority and is thus a nullity; (ii) even in the case of a statute to which article 13(1) applies, though the law is on the statute book and be a good law, when a question arises for determination of rights and obligations incurred prior to January 26, 1950, the part declared void should be nationally taken to be obliterated from the section for all intents and purposes ; and (iii) on the construction of article 13(2), the law made in contravention of that clause is a nullity from its inception. We think that this is sound law and our conclusion is that the legislation in question which violates the fundamental right of the appellants under article 19(1) (g) of the Constitution and is not shown to be protected by clause (6) of the article, as it stood at the time of the enactment, must be held to be void under article 13(2) of the Constitution. " The result of the aforesaid discussion may be summarized in the following propositions: (i) whether the Constitution affirmatively confers power on the legislature to make laws subject wise or negatively prohibits it from infringing any fundamental right, they represent only two aspects of want of legislative power; (ii) the Constitution in express terms makes the power of a legislature to make laws in regard to the entries in the Lists of the Seventh Schedule subject to the other provisions of the Constitution and thereby circum cribes or reduces the said power by the limitations laid down in Part III of the Constitution; (iii) it follows from the premises that a law made in derogation or in excess of that power would be ab initio void wholly or to the extent of the contravention as the case may be ; and (iv) the doctrine of eclipse can be invoked only in the case of a law valid when made, but a shadow is cast on it by supervening constitutional inconsistency or,supervening existing statutory 41 inconsistency; when the shadow is removed, the impugned Act is freed from all blemish or infirmity. He contends that the Motor Vehicles (Amendment) Act (100 of 1956) passed by Parliament was wholly repugnant to the provisions of the U. P. Act and therefore the law became void under the provisions of article 254(1) of the Constitution, with the result that at the present time there is no valid law whereunder the State can prohibit the appellants exercising their fundamental right under the Constitution, namely, carrying on the business of motor transport. Article 254: "(1) If any provisions of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of 6 42 such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. (2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his as sent, prevail, in that State. The first question is whether the provisions of the Union law, i.e., the Motor Vehicles (Amendment) Act (100 of 1956), are repugnant to the provisions of the U. P. Act and if so to 43 what extent. Under section 3: " Where the State Government is of the opinion that it is necessary in the interests of the general public and for subserving the common good, or for maintaining and developing efficient road transport system so to direct, it may, by notification in the official Gazette declare that the road transport services in general, or any particular class of such service on any route or portion thereof as may be specified, shall be run and operated exclusively by the State Government, or by he state Government in conjunction with railways or be run and operated partly by the State Government and partly by others under and in accordance with the provisions of the Act". After the publication of the notification under section 3, the State Government or, if the State Government so directs, the Transport Commissioner publishes in such manner as may be specified a scheme as to the State Road Transport Service providing for all or any of the matters enumerated in cl (2) of section 4. Under article 254(1) " the law made by Parliament, whether passed before or after the law made by the Legislature of such State. In Keshavan Madhava Menon 's Case (1), which we have referred to in a different context the question was whether Indian Press (Emergency Powers) Act, 1931, was void as infringing the provisions of article 13(1) of the Constitution;, and the Court held that the said Act was valid and would continue to be in force to sustain a prosecution launched for an act done be fore the Constitution. While under article 13(1) all the pre Constitution laws, to the extent of their inconsistency with the provisions of Part III, are void, under (1) ; 7 50 article 254(1) the State Law to the extent of its repugnancy to the law made by,Parliament is void. The expression " repeal " according to common law rule obliterates a statute completely as if it had never been passed and thus operates retrospectively on past transactions in the absence of a saving clause or in the absence of provisions such as are contained in the Interpretation Act , 1889, or in the , while a provision in a statute that with effect from a particular date an existing law would be void to the extent of the repugnancy has no such retrospective operation and cannot affect pending pro secutions or actions taken under such laws. It is not disputed that under the proviso to article 254(2), the Parliament can repeal the law made by the Legislature of a State and that Parliament can repeal the repugnant State law whether directly or by necessary implication. The next contention of the learned Counsel Mr. 53 Nambiar, namely, that the scheme being a prescription for the future, it has a continuous operation even after the Amending Act became law, with the result that after the Amending Act, there was no valid law to sustain it, need not detain us; for, we have held that the State law subsists even after the Amending Act to sustain the things done under the former Act. (2) of the said Article. As it is common case that what the Act should give is just compensation for the interest of the operator in a commercial undertaking, we Shall now examine the provisions of the U. P. Act to ascertain whether it (1) ; 56 provides a quid pro quo for the interest the operator is deprived of The provisions of the U. P. Act relating to compensation pay usefully be read at this stage: Section 5 : " (1) Where the scheme published under section 4 provides for cancellation of any existing permit granted under Chapter IV of the , or for the transfer of such permit to any other route or routes the Transport Commissioner shall cause notice thereof to be served on the permit holder concerned and on any other persons to whom in his opinion special notice should be given. Section 11 :" (1) Where in pursuance of the Scheme published under section 8 any existing permit granted under Chapter IV of the , is or is deemed to have been cancelled or the route or routes covered by it are curtailed or are deemed to have been curtailed, the permit holder shall, except in cases where transfer of the permit has been agreed to under sub section (2) of section 5; be entitled to receive and be paid such compensation by the State Government for and in respect of the premature cancellation of the permit or, as the case may be, for curtailment of the route or routes covered by the permit as may be determined in accordance with the principles speci fied in Schedule I. (5) The amount of compensation to be given in accordance with the provisions of sub section (1) shall be determined by the Transport Commissioner and shall be offered to the permit holder in full satisfaction of the compensation payable under this Act and if the amount so offered is not acceptable to the permit holder, the Transport Commissioner may within such time and in such manner as may be prescribed refer the matter to the District Judge whose decision in the matter shall be final and shall not be called in question in any Court. " Where a transfer of the permit is accepted by the operator, he will not be entitled to any compensation; if he does not accept, compensation will be paid to him with interest in respect of the premature cancellation of the permit, or as the case may be for the curtailment of the route or routes covered by the permit. The amount of compensation to be ' given shall be deter mined by the Transport Commissioner in accordance with the provisions of the Act, and if the amount so 59 offered is not acceptable to the permit holder, the Transport Commissioner may, within such time and in such manner as may be prescribed, refer the matter to the District Judge whose decision in the matter shall he final. In the circumstances, as the petitioner was not a permit holder when the Government made the order, no relief can be given to him in this appeal.
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These court cases questioned if the Uttar Pradesh Transport Service (Development) Act, 1955, was constitutional. The cases also questioned if the state's plan to take over bus routes was valid, along with the government's announcements about it. The people appealing the law had permits to run buses on routes in Uttar Pradesh. The state government also ran its own buses on these routes. The state government announced that certain routes would only be for state-owned buses. They made these announcements under the Uttar Pradesh Act. The people with permits asked the High Court to check if the law and announcements were valid, arguing they were not. They used Article 226 of the Constitution. The appellants argued that: (1) the new law made the Uttar Pradesh law completely invalid under Article 254(1) of the Constitution, (2) the plan created under the Uttar Pradesh law should be considered under Section 68B of the new law and should no longer be in effect, and (3) even if the Uttar Pradesh law was valid, it violated Article 31 as it was written before the Constitution was changed in 1955. They also argued that the Uttar Pradesh law was completely cancelled by the new law, because Section 68B of the new law overruled the General Clauses Act. This change removed limits on what the government could do when it passed the Uttar Pradesh law. Because of this change, the Uttar Pradesh law should now be considered valid, even though it was originally subject to those limits. The court decided that the Uttar Pradesh Transport Service (Development) Act, 1955, did not become completely invalid when the Motor Vehicles (Amendment) Act, 1956, was passed. It was still a valid law that supported the existing plan under the Uttar Pradesh Act. Even if the new law cancelled the state law, it would not cancel the existing plan under that law. Also, the Uttar Pradesh law did not violate Article 31 of the Constitution as it was written before the 1955 change, because it did provide for adequate compensation. According to Chief Justice Das and Justice Sinha, the idea that a law could be "eclipsed" (temporarily blocked) could also apply to laws passed after the Constitution that violated the rights of citizens. Such a law would be ineffective for citizens but still effective for non-citizens. Once the "shadow" was removed by changing the Constitution, the law would apply to citizens again without needing to be rewritten. They referred to previous cases to support this idea. The court did not decide if this idea applied to laws that violated the rights of everyone, citizens or not. Justices Bhagwati, Subba Rao, and Wanchoo believed that Articles 254, 246, and 13 of the Constitution showed that the power of the Parliament and state governments to make laws was subject to the Constitution, including Article 13. There was a clear difference between the two parts of Article 13. The second part said that any law passed after the Constitution that violated those rights was invalid from the beginning. The words "any law" in the second part of Article 13 meant a law that was actually passed, even though it was prohibited. The prohibition limited the government's power to make laws, and any law made despite that was invalid from the start. When interpreting the Constitution about the powers of the government, there should be no difference between a rule that says "you can't do this" and a rule that says "you must do this." Both are limits on the government's power. However, there is a difference between a law that was invalid from the beginning and one that became unconstitutional later on. This difference is important when judging the effect of a law that goes beyond the limits set by Articles 245 and 13(2). This idea supports the principle that a power gained later cannot make a law valid, and a valid law can take effect when the obstacle is removed. After reviewing previous cases, the court concluded that: (1) the power to make laws and the prohibition against violating fundamental rights are both aspects of a lack of legislative power, (2) the power to legislate is subject to the limits in Part III of the Constitution, (3) a law that goes against this power would be invalid from the start, and (4) the idea of "eclipse" only applies to a law that was valid when made but became invalid due to a later constitutional issue. The court referred to and discussed several previous cases to support these points. The tests for whether two laws conflict (one from Parliament and one from the state government) are: (1) is there a direct conflict between them? Comparing the two laws showed that both were meant to cover the same topic, but only for plans started after the new law came into effect. The new law did not apply to past plans.
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Writ Petition NOS. 2656 60. 2935 40, 2941 46, 2947 52, 3402, 3467, 3595, 3600 03, 3608, 3632, 3653, 3661, 3821, 3890 93, 4590 93,. 4613 15, 5222, 5576, 5600 02, 5726 27, 7410. 8459 62, 8825, 8944 of 1981, 1325 of 1982, 470 72 of 1984. T C. Nos. 23 of 1983 and 23 of 1984. AND Writ Petitions Nos. 3114 17 of 1981 WITH Writ Petitions Nos. 3393 93 of 1981 WITH Writ Petitions No. 3853 of 1981 WITH Writ Petitions Nos. 6446 47 of 1181 (Under Article 32 of the Constitutions of India) A.K. Sen, A.B. Divan, F.S. Nariman, K.K. Venugopal, B.R. Agarwala, Miss Vijay Lakshmi Menon, A.K Ganguli P.H. Parekh, C.S. Vaidyanalingam, D.N. Mishra, Pravin Kumar, KR. Nambiar, M.C. Dhingra, Miss Sieta Vaidyalingam, P.C. Kapur, Pramod Dayal, CM 300 Nayar, S.S, Munjral, KK .Jain, S.K. Gupta, A.l). Sangar, Ranjan Mukherjee, Sudip Sarkar, P.K. Ganguli, Miss Indu Malhotra, PR. Seetharaman and V. Shekhar for the petitioners. K. Parasaran, Attorney General of India, Krishna Iyer, P.A. Francis, A. Subba Rao, Dalveer Bhandari and R.N. Poddar for the respondents. F.S. Nariman, section Dholakia, Soli J. Sorabjee, Anil B. Divan J.B. Dadachandji section Sukumaran, D.N. Mishra, KP. Dhanda pani, R.C. Bhatia, P.C. Kapur, A.N. Haksar, O.C. Mathur, Miss Meera Mathur, Dr. Roxna Swamy, Arun Jetley, P.H. Parekh, Miss Divya Bhalla and Pinaki Misra for the intervener The Judgment of the Court was delivered by VENKATARAMIAH, J. I Pleadings The majority of Petitioners in these petitions filed under Article 32 of the Constitution are certain companies, their share holders and their employees engaged in the business of editing, printing and publishing newspapers, periodicals, magazines etc Some of them are trusts or other kinds of establishments carrying on the same kind of business. They consume in the course of their 5 activity large quantities of newsprint and it is stated that 60% of the expenditure involved in. the production of a newspaper is utilised for buying newsprint, a substantial part of which is import ed from abroad. They challenge in these petitions the validity of the imposition of import duty on newsprint imported from abroad under section 12 of the (Act 52 of 1962) read with section 2 and Heading No. 48/01/21 Sub heading No. (2) in the First Schedule to the (Act 51 of 1975) and the levy of auxiliary duty under the Finance Act, 1981 on newsprint as modified by notifications issued under section 25 of the with effect from March 1, 1981. The first set of writ petitions challenging the above levy was filed in May, 1981. At that time under the read with the , customs duty of 40 '% ad valorem was payable on newsprint. Under the Finance Act, 1981 an auxiliary duty of 30% ad valorem was payable in addition to the customs duty. But by notifications issued under section 25 of the , the customs duty had been reduced to 10% 301 ad valorem and auxiliary duty had been reduced to 5% ad valorem in the case of newsprint used for printing newspapers, books and A periodicals. During the pendency of these petitions while the was amended levying 40% ad valorem plus Rs. 1,000 per MT as customs duty on newsprint, the auxiliary duty payable on all goods subject to customs duty was increased to 50% ad valorem. But by reason of notifications issued under section 25 of the customs duty at a flat rate of Rs. 550 per MT and auxiliary duty of Rs. 275 per MT are now being levied on newsprint i.e. in all Rs. 825 per MT is now being levied. The petitioners inter alia contend that the imposition of the import duty has the direct effect of crippling the freedom of speech and expression guaranteed by the Constitution as it has led to the increase in the price of newspapers and the inevitable consequence of reduction of their circulation. It is urged by them that with the growth of population and literacy in the country every newspaper is expected to register an automatic growth of at least 5% in its circulation every year but this growth is directly impeded by the increase in the price of newspapers. It is further urged that the method adopted by the and the in determining the rate of import duty has exposed the newspaper publishers to the Executive interference. The petitioners contend that there was no need to impose customs duty on news print which had enjoyed total exemption from its payment till March 1, 1981, as the foreign exchange position was quite comfortable. Under the scheme in force, the State Trading Corporation of India sells newsprint to small newspapers with a circulation of less than 15,000 at a price which does not include any import duty, to medium newspapers with a circulation between 15,000 and 50,000 at a price which includes 5% ad valorem duty (now Rs. 275 per MT) and to big newspapers having a circulation of over 50,000 at a price which includes the levy of 15% ad valorem duty (now Rs. 825 per MT). It is stated that the classification of newspapers into big, medium and small newspapers is irrational as the purchases on high seas are sometimes effected by a publisher owning many newspapers which may belong to different classes. The petitioners state that the enormous increase in the price of newsprint subsequent to March 1, 1981 and the inflationary economic conditions which have led to higher cost of production have made it impossible for the industry to bear the duty any longer. Since the capacity to bear the duty is an essential element in determining the reasonableness 302 Of the levy, it is urged, that the continuance of the levy is violative of Article 19(1)(a) and Article 19(1)(g) of the Constitution. It is suggested that the imposition of the levy on large newspapers by the Executive is done with a view to stifling circulation of news. papers which are highly critical of the performance of the administration. Incidentally the petitioners have contended that the classification of newspapers into small, medium and big for purposes of levy of import duty is violative of Article 14 of the Constitution. The petitioners have appended to their petitions a number of annexures in support of their pleas. On behalf of the Union Government a counter affidavit is filed. The deponent of the counter affidavit is R. section Sidhu, Under Secretary to the Government of India, Ministry of Finance, Department of Revenue. In paragraph 5 of the counter affidavit it is claimed that the Government had levied the duty in the public interest to augment the revenue of the Government. It is stated that when exemption is given from the customs duty, the Executive has to satisfy itself that there is some other corresponding public interest justifying such exemption and that in the absence of any such public interest, the Executive has Do power to exempt and that it has to carry out the mandate of Parliament which has fixed the rate of duty by the . It is also claimed that the classification of newspapers for purposes of granting exemption is done in the public interest having regard to the relevant considerations. It is denied that the levy suffers from any malafides. It is pleaded that since every section of the society has to bear its due share of the economic burden of the State, levy of customs duty on newsprint cannot be considered to be violative of Article 19 (1) (a) of the Constitution. But regarding the plea of P the petitioners that the burden of taxation is excessive, the counter affidavit states that the said fact is irrelevant to the levy of import duty on newsprint. In reply to the allegation of the petitioners that there was no valid reason for imposing the duty as the foreign exchange position was quite comfortable, the Union Government has stated that the fact that the foreign exchange position was quite comfortable was no bar to the imposition of import duty. It is further pleaded that since the duty imposed is an indirect tax which would be borne by the purchaser of newspaper, the petitioners cannot feel aggrieved by it. II A Brief History of the levy of Customs Duty on Newsprint In order to appreciate the various contentions of the parties 303 it is necessary to set out briefly the history of the levy of customs A duty on newsprint in India. Even though originally under the Indian Tariff Act, 1934, there was a levy of customs duty on imported paper, exemption had been granted for import of white, grey or unglazed newsprint from the levy of any kind of customs duty in excess of 1.57 per cent ad valorem but subsequently a specific import duty of Rs. 50 per MT used to be levied on newsprint imports upto 1966. The question of levy of customs duty on newsprint was examined by the Inquiry Committee on Small Newspapers. In its Report submitted in 1965 that Committee recommended total exemption of newsprint from customs duty because in 90x/Q of the countries in the world no such levy was being imposed because newspapers played a vital role in a democracy. On the basis of the said recommendation, the Government of India abolished customs duty on newsprint altogether in the year 1966 in exercise of its power under section 25 of the . The price of newsprint was Rs. 725 per MT during the year 1965 66 but there was a sudden spurt in its price in 1966 67 when it rose to Rs. 1155 per MT. During the period 1966 71 although almost all imported goods suffered basic regulatory and auxiliary customs duty, there was no such levy on newsprint in spite of severe foreign exchange crisis which arose on the devaluation of the Indian Rupee in 1966. But on account of the financial difficulties which the country had to face as a consequence of the Bangladesh war in 1971, a regulatory duty of 2 1.2% was levied on newsprint imports to meet the difficult situation by the Finance Act of 1972. The price of newsprint in the year 1971 72 was Rs. 1134 per MT. The above 2 1/2% ad valorem regulatory duty was abolished by the Finance Act of 1973 P and was converted into 5% auxiliary duty by the said Act. This levy of 5% was on all goods including newsprint imported into India. On April 1, 1974 under the Import Control order issued under section 3 of the Imports and Exports Control Act, 1947, import of newsprint by private parties was banned and its import was canalised through the State Trading Corporation of India. In 1975, the came into force. By this Act the Indian Tariff Act, 1934 was repealed. Under section 2 read with Heading No. 48.01/ 21 of the First Schedule to the , a levy of basic customs duty of 40% ad valorem was imposed on newsprint. But in view of the exemption granted in the year 1966 which remained in force, the imposition made by 304 the did not come into force. Only 5% auxiliary duty which was levied from April 1, 1973 continued to be in operation. In the budget proposals of July, 1977, the 5% auxiliary duty was reduced to 2 1/2% but it was totally abolished by a notification issued under section 25 of the on July 15, 1977. The notification dated July IS, 1977 read as follows: "NOTIFICATION CUSTOMS GSR No. In exercise of the powers conferred by sub section (1) of section 25 of the (52 of 1962) and in supersession of the notification of the Government of lndia in the Department of Revenue and Banking No. 72 Customs dated the 18th June 1977, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts newsprint, falling under sub heading (2) of Heading No. 48.01 21 of the First Schedule to the (51 of 1975), when imported into India, from the whole of that portion of the duty of customs leviable thereon, which is specified in the said First Schedule. sd/ (Joseph Dominic) Under. Secretary to the Government of India. " The price of newsprint during the year 1975 76 was Rs. 3676 per MT. The total exemption from customs duty imposed on newsprint was in force till March 1, 1981. In the meanwhile the Central Government notified increased salaries and wages to k employees of newspaper establishments in December, 1980 on the recommendations contained in the Palekar Award. On March 1, 1981, the notification dated July 15, 1977 issued under section 25 (1) of the granting total exemption from customs duty was superseded by the issue of a fresh notification which stated that the Central Government had in the public interest exempted newsprint imported into India for printing of newspapers, books and periodicals from so much of that portion of the duty of customs leviable thereon as was in excess of 10 per cent ad valorem. The effect of the said notification was that publishers of newspapers had to pay ten per cent ad valorem customs duty on imported newsprint. By another notification issued at about the same time auxiliary 305 duty imposed by the Finance Act of 1981 above 5 per cent ad valorem was exempted in the case of newsprint. The net result . was that a total duty of IS per cent ad valorem came to be imposed on newsprint for the year 1981 82. The explanation given by the Government in support of the above notification was as follows: "Customs duty on newsprint: Originally, import of newsprint did not attract any customs duty. The Government of India abolished the . customs duty on newsprint after the devaluation of the rupee on the recommendation of the Inquiry Committee on Small Newspapers (1965). The Committee had mentioned in its report that 80% of the newsprint in international trade was free from customs duty and had recommended complete abolition of customs duty on newsprint. However, during the Bangladesh crisis in 1971, a2.1/2% ad valorem regulatory duty was imposed on newsprint imports. Subsequently, this was abolished on April 1,1973 and in its place a 5% auxiliary customs duty on newsprint imports was proposed in the Union Budget Proposals for 1973 74. While no customs duty was levied on newsprint because of the exemption granted by Customs Notification No. 235/F.No.527/1/76 CUS (TU) dated August 2,1976 of the Department of Revenue and Banking, 5% auxiliary duty was continued to be levied on imported newsprint till July 15,1977 when the Ministry of Finance, Department of Revenue by its Notification No. 148/F.No. Bud (2) Cus/77 dated July l5,1977 exempted newsprint from the whole of duty of customs. Prior to this the Ministry of Finance, Department of Revenue vide its Customs Notification No. 72/F. No. Bud. (2) Cus/77 dated June 18,1977 had reduced the auxiliary duty to 2 1/2%. In the Budget proposals for the current year, the Minister of Finance has proposed a customs duty of 15% on newsprint imports which has become effective from March 1,1981 because of the Customs Notification No. 24/F. No. Bud (Cus)/81 dated March 1,1981. This 15% customs duty constitutes 10% basic duty and 5% auxiliary duty. " 306 The price of imported newsprint in March 1,1981 was A Rs. 4,560 per MT. The extract from the speech of the Finance Minister in support of the imposition of a total 15% of duty (10% basic duty and 5% auxiliary duty) on newsprint is given below; "The levy of 15 per cent customs duty on newsprint has understandably attracted a good deal of comment both within the House and outside. As it has been explained in the Budget speech, this levy is intended to promote a measure of restraint in the consumption of imported newsprint and thus help in conserving foreign exchange. In the light of the observations made by the Hon. Members in the course of the General Debate on the Budget I had assured the House that I would try to work out a scheme of providing relief to small and medium newspapers about which Members had voiced their special concern. We have now worked out the modalities of a scheme for affording relief to small and medium newspapers. Under this Scheme, the State Trading Corporation would sell imported newsprint to small newspapers at a price which would not ! include any amount relatable to import duty. Medium newspapers will get their newsprint at a price which, would include an amount relatable to import duty 'of S per cent ad valorem. Big newspapers would, however, pay a price which will reflect the full duty burden of 15 per cent ad valorem. There is a definition of small, medium and big newspapers in the Press Council. At the moment the present definition is that these which have a circulation of 15,000 or less are classified as small, those with a circulation of more than 15,000 but less than 50,000 are classified as medium and those with a circulation of over 50,000 are called big newspapers. Therefore, the small newspapers with a circulation of 15,000 and less will not pay any customs duty those with a circulation between 15,000 and 50,000 will pay customs duty of 5 per cent and with a circulation of over 50,000 will pay 15 per cent. Suitable financial arrangements will be worked out as between ' Government and the State Trading Corporation to enable the STC to give effect to these concessions. As Hon. Members are aware, the categorisation of newspapers as small, medium and big in 307 terms of circulation is already well understood in the A industry and is being followed by the Ministry of Information and Broadcasting for purposes of determining initial allocation of newsprint and for setting the rates of growth of consumption of newsprint by various newspapers from year to year. The State Trading Corporation will, for purposes of the present scheme, follow, the same categorisation of newspapers into small, medium and big. These arrangements will. in effect, provide a relief of about Rs. 5.86 crores to small and medium newspapers. " The relevant provisions of the laws imposing customs duty and auxiliary duty on newsprint which arise for consideration are these: Section 12 of the reads: "12. Dutiable goods. (1) Except as otherwise provided n in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the (5l of 1975), or any other law for the time being in force, on goods imported into or exported from India. (2). . , Section 2 of the reads: "2. Duties specified in the Schedules to levied. The rates at which duties of customs shall be levied under the , are specified in the First and Second Schedules. " The relevant part of Chapter 48 of the First Schedule to the which deals with import tariff read in 1981 thus: "Heading Sub heading No. Rate of duty Duration No. and description Standard Preferential when of article Areas rates of duty are protective 308 (1) (2) (3) (4) (5) 48.01/21. . . . . . . . . (2) Newsprint containing mechanical wood pulp amounting to not less than 70 per cent of the fibre content 40% (excluding chrome, marble, flint, poster, stereo and art paper) . . . . . . . . . " Newsprint used by the petitioners falls under Sub heading (2) of Heading No. 48.O1/21 by Which 40% ad valorem customs duty is levied on it. By the Finance Act of 1982 in sub heading No. (2) of Heading No. 48.O1/21, for the entry in column (3), the entry "40% plus Rs. 1,000 per tonne was substituted. The relevant part of section 44 of the Finance Act, 1982 which levied an auxiliary duty of customs read thus: "44. (1) In the case of goods mentioned in the First Schedule to the , or in that Schedule, as amended from time to time, there shall be levied and collected as an auxiliary duty of customs an amount equal] to thirty per cent of the value of the goods as determined in accordance with the provisions of section 14 of the (hereinafter referred to as the ). . . . . . . . . . " The above rate of auxiliary duty was to be in force during the financial year 1982 83 and it was open to the Government to grant exemption from the whole or any part of it under section 25 of the . Section 45 of the Finance Act, 1983 imposed fifty per cent of the value of the goods as auxiliary duty in the place of thirty per cent imposed by the Finance Act, 1982. 309 But by notifications issued on February 28,1982 under section A 25 (2) of the , which were issued in supersession of the notification dated March 1, 1981, Rs. 550 per tonne was imposed as customs duty on newsprint and auxiliary duty was fixed at Rs. 275 per tonne. In all Rs. 825 per tonne of newspaper has to be paid as duty. The high sale price of newsprint had by that time gone up above Rs. 5,600 per tonne. What is of significance is that when the Government was of the view that the total customs duty on newsprint in the public interest should be not more than 15 per cent and when these writ petitions questioning even that 15 per cent levy were pending in a this Court, Parliament was moved by the Government specifically to increase the basic customs duty on newsprint by Rs. 1,000 per tonne by the Finance Act, 1982. Hence today if the Executive Government withdraws the notifications issued under section 25 of the , a total duty of 90 per cent plus Rs. 1000 per tonne would get clamped on imported newsprint. D The effect of the imposition of 15 per cent duty may to some extent have led to the increase in the price of newspapers in 1981 and it resulted in the fall in circulation of newspapers. On this point the Second Press Commission has made the following observations in its Report (Vol. 1 page 18): E "Fall in circulation during 1981. To examine recent trends in, circulation and their relationship to recent trends in the economic environment, the Commission 's office undertook an analysis of the Audit Bureau of Circulations (ABC) certificates for the period July 1980 to June 1981. It was found that there was a decline in circulation in the period January June 1981 compared to the previous six month period in the case of dailies and periodicals. " The two important events which had taken place during the period between July, 1980 to June, 1981 were the enforcement of the Palekar Award regarding the wages and salaries payable in the newspaper industry and the imposition of the customs duty of 15% on the imported newsprint. Under the newsprint policy of the Government there are three sources of supply of newsprint (i) high 310 seas sales, (ii) sales from the buffer stock built up by the State A Trading Corporation which includes imported newsprint and (iii) newsprint manufactured in India. Imported newsprint is an important component of the total quantity of newsprint utilised by any newspaper establishment. III The Importance of Freedom of Press in a Democratic society and the Role of Courts. Our Constitution does not use the expression 'freedom of press ' in Article 19 but it is declared by this Court that it is included in Article 19(1)(a) which guarantees freedom of speech and expression. (See Brij Bhushan & Anr. vs The State of Delhi(l) and Bennett coleman & Co. & Ors. vs Union of lndia & ors.(2) . The material part of Article 19 of the Constitution reads: "19. (1) All citizens shall have the right (a) to freedom of speech and expression; . . . . . . . . . . (g) to practise any profession, or to carry on any occupation, trade or business, (2) Nothing in sub clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence. . . . . . . (6) Nothing in sub clause (g)of the said said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law impos (1) ; (2) ; 311 ing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub clause. . . " The freedom of press, as one of the members of the Constituent Assembly said, is one of the items around which the greatest and the bitterest of constitutional struggles have been waged in all countries where liberal constitutions prevail. The said freedom is attained at considerable sacrifice and suffering and ultimately it has come to be incorporated in the various written constitutions. James Madison when he offered the Bill of Rights to the Congress in 1789 is reported as having said: 'The right of freedom of speech is secured, the liberty of the press is expressly declared to be beyond the reach of this Government '. '(See 1 Annals of Congress (1789 96) p. 141). Even where there are no written constitutions, there are well established constitutional conventions or judicial pronouncements securing the said freedom for the people The basic documents of the United Nations and of some other international bodies to which reference will be made hereafter give prominence to the said right. The leaders of the Indian independence movement attached special significance to the freedom of speech and expression which included freedom of press apart from other freedoms. During their struggle for freedom they were moved by the American Bill of Rights containing the First Amendment to the Constitution of the United States of America which guarnteed the freedom of the press. Pandit Jawaharlal Nehru in his historic resolution containing the aims and objects of the Constitution to be enacted by the Constituent Assembly said that the Constitutions should guarantee and secure to all the people of India among others freedom of thought and expression. He also stated elsewhere that "I would rather have a completely free press with all the dangers involved in the wrong use of that freedom than a suppressed or regulated press" (See D.R. Mankekar: The Press under Pressure (1973) p. 25). The Constituent Assembly and its various committees and sub committees considered freedom of speech and expression which included freedom of press also as a precious right. The Preamble to the Constitution says that it is intended to secure to all citizens among others liberty of thought, expression, and belief. It is significant that in the kinds of restrictions that may be imposed on the freedom of speech and expression any reasonable restriction impossible in the public interest is not one enumerated in clause (2) 312 of Article 19. In Romesh Thappar vs The State of Madras and Brij Bhushan 's case (supra) this Court firmly expressed its view that there could not be any kind of restriction on the freedom of speech and expression other than those mentioned in Article 19(2) and thereby made it clear that there could not be any interference with that freedom in the name of public interest. Even when clause (2) of Article 19 was subsequently substituted under the Constitution (First Amendment) Act, 1951 by a new clause which permitted the imposition of reasonable restrictions on the freedom of speech and expression in the interests of sovereignty and integrity of India, the security of the State, friendly relations with foreign states, public order, decency or morality in relation to contempt of court, defamation or incitement to an offence, Parliament did not choose to include a clause enabling the imposition of reasonable restrictions in the public interest. Article 19 of the Universal Declaration of Human Rights, 1948 declares very one has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers '. Article 19 of the International Covenant on Civil and Political Rights, 1966 reads: "Article 19 1. Everyone shall have the right to hold opinions without interference. Everyone shall have the right to freedom of expression; this right shall include freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, through any other media of his choice. The exercise of the rights provided for in Paragraph 2 of this Article carries with it special duties and responsibilities. It may therefore be subject to certain restrictions, but these shall only be such as are provided by law and are necessary: 313 (a) For respect of the rights or reputations of others; (b) For the protection of national security or of public order (order public), or of public health or morals. " Article 10 of the European Convention on Human Rights reads: "Article 10 1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This Article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalities as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary. " The First Amendment to the Constitution of the United States of America declares: "Amendment I Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech or of the press, or the right of the people peaceably to assemble, and to petition the government for a redress of grievances." Frank C. Newman and Karel Vasak in their article on 'Civil 314 and Political Rights ' in the International Dimensions of Human Rights (Edited by Karel Vasak) Vol. I state at pages 155 156 thus: "(ii) Freedom of opinion, expression, information and communication. A pre eminent human right, insofar as it allows everyone to have both an intellectual and political activity, freedom of expression in the broad sense actually includes several specific rights, all linked together in a "continuum" made increasingly perceptible by modern technological advance. What is primarily involved is the classic notion of freedom of opinion, that is to say, the right to say what one thinks and not to be harassed for one 's opinions. This is followed by freedom of expression, in the limited sense of the term, which includes the right to seek, receive and impart information and ideas, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media of one 's choice When freedom of expression is put to use by the mass media, it acquires an additional dimension and becomes freedom of information. A new freedom is being recognised which is such as to encompass the multiform requirements of these various elements, while incorporating their at once individual and collective character, their implications in terms of both "rights" and "responsibilities": this is the right to communication, in connection with which Unesco has recently undertaken considerable work with a view to its further elaboration and implementation." "Many Voices, One World" a publication of UNESCO which contains the Final Report of the International Commission for the study of Communication Problems, presided over by Sean Mac Bride, in part V thereof dealing with 'Communication Tomorrow ' at page 265 emphasizes the importance of freedom of speech and press in the preservation of human rights in the following terms: "IV. Democratization of Communication. Human Rights Freedom of speech, of the press, of information and of assembly are vital for the realization of human rights 315 Extension of these communication freedoms to a broader individual and collective right to communicate is an evolving principle in, the democratization process. Among the human rights to be emphasized are those of equality for women and between races. Defence of all human rights is one of the media 's most vital tasks. We recommend: 52. All those working in the mass media should contribute to the fulfilment of human rights, both individual and collective, in the spirit of the Unesco Declaration on the mass media and the Helsinki Final Act, and the International Bill of human Rights. The contribution of the media in this regard is not Only to foster these principles but also to expose all infringements, wherever they occur, and to support those whose rights have been neglected or violated. Professional associations and public opinion should support journalists subjected to pressure or who suffer adverse consequences from their dedication to the defence of human rights. The media should contribute to promoting the just cause of peoples struggling for freedom and independence and their right to live in peace and equality without foreign interference. This is especially important for all oppressed peoples who, while struggling against colonialism, religious and racial discrimination, are deprived of opportunity to make their voices heard within their own countries. Communication needs in a democratic society should be met by the extension of specific rights such as the right to be informed, the right to infrom, the right to privacy, the right to practicipate in public communication all elements of a new concept, the right to communicate. In developing what might be called a new era of social rights we suggest all the implications of the right to communicate to further explored. Removal of Obstacles Communication, with its immense possibilities for influencing the minds and behaviour of people, can be a powerful means of promoting democratization of society and of widening public participation in the decision making 316 process. This depends on the structures and practices of the media and their management and to what extent they facilitate broader access and open the communication process to a free interchange of ideas, information and experience among equals, without dominance of discrimination. " In today 's free world freedom of press is the heart of social and political intercourse. The press has now assumed the role of the public educator making formal and non formal education possible in a large scale particularly in the developing world, where television and other kinds of modern communication are not still available for all sections of society. The purpose of the press is to advance the public interest by publishing facts and opinions without which a democratic electorate cannot make responsible judgments. Newspaper being surveyors of news and views having a bearing on public administration very often carry material which would not be palatable to governments and other authorities. The authors of the articles which are published in newspapers have to be critical of the action of government in order to expose its weaknesses. Such articles tend to become an irritant or even a threat to power. Governments naturally take recourse to suppress newspapers publishing such articles in different ways. Over the years, the governments in different parts of the world have used diverse methods to keep press under control. They have followed carrotstick methods. Secret payments of money, open monetary grants and subventions, grants of lands, postal concessions, Government advertisements, conferment of titles on editors and proprietors of newspapers, inclusion of press barons in cabinet and inner political councils etc. constitute one method of influencing the press. The other kind of pressure is one of using force against the press. Enactment of laws providing for precensorship, seizures, interference with the transit of newspapers and demanding security deposit, imposition of restriction on the price of newspapers, on the number of pages of newspapers and the area that can be devoted for advertisements, withholding of Government advertisements, increase of postal rates, imposition of taxes on newsprint, canalisation of import of newsprint with the object of making it unjustly costlier etc. are some of the ways in which Governments have tried to interfere with freedom of press. It is with a view to checking such malpractices which interfere with free flow of information, democratic constitutions all over the world have made provisions guaran 317 teeing the freedom of speech and expression laying down the limits of interference with it. lt is, therefore, the primary duty Of all the national courts to uphold the said freedom and invalidate all laws or administrative actions which interfere with it, contrary to the constitutional mandate. Thomas 1. Emerson in his article entitled 'Toward a General Theory of the First Amendment ' (The Yale Law Journal, Vol. 72,877 at p. 906) while dealing with the role of the Judicial institutions in a democratic society and in particular of the apex court of U.S.A. in upholding the freedom of speech and expression writes: "The objection that our judicial institutions lack the political power and prestige to perform an active role in protecting freedom of expression against the will of the majority raises more difficult questions. Certainly judicial institutions must reflect the traditions, ideals and assumptions, and in the end must respond to the needs, claims and expectiations, of the social order in which they operate. They must not, and ultimately can not, move too far ahead or lag too far behind. The problem for the Supreme Court is one of finding the proper degree of responsiveness and leadership, or perhaps better, of short term and long term responsiveness. Yet in seeking out this position the Court should not under estimate the authority and prestige it has achieved over the years. Representing the "con science of the community" it has come to possess a very real power to keep alive and vital the higher values and goals towards which our society imperfectly strives Given its prestige, it would appear that the power of the Court to protect freedom of expression is unlikely to be substantially curtailed unless the whole structure of our democratic institutions is threatened. " What is stated above applies to the Indian courts with equal force . In Romesh Thappar 's case (supra) Brij Bhushan 's case (supra), Express Newspapers (Private) Ltd. & Anr. vs The Union of India & Ors. ,(l) Sakal Papers (P) Ltd. &. Ors. vs The Union of India(2) and Bennett Coleman 's case (supra) this Court has very strongly pronoun (1) (2) ; 318 ced in favour of the freedom of press. Of these, we shall refer to some observations made by this Court in some of them. In Romesh Thappar 's case (supra) this Court said at page 602: "(The freedom). lay at the foundation of all democratic organisations, for without free political discussion on no public education, so essential for the proper functioning of the processes of popular government, is possible. A freedom of such amplitude might involve risks of abuse . . . C '(nut) it is better to leave a few of its noxious branches to their luxuriant growth, than, by pruning them away, to injure the vigour of those yielding the proper fruits". " In Bennett Coleman 's case (supra) A.N. Ray, C.J. On behalf of the majority said at page 796 thus: "The faith of citizen is that political wisdom and virtue will sustain themselves in the free market of ideas, so long as the channels of communication are left open. The faith in the popular government rests on the old dictum 'let the people have the truth and the freedom to discuss it and all will go well '. The liberty of the press remains an 'Ask of the Covenant ' in very democracy . The newspapers give ideas. , The newspaper `give the people the freedom to find out what ideas are correct. " In the very same case, Methew, J, observed at page 818: "The constitutional guarantee of the freedom of speech is not so much for the benefit of the press as it is for the benefit of the public. The freedom of speech includes within its compass the right of all citizens to read and be informed. In Time vs Hill ; the U.S. Supreme Court said: "The constitutional guarantee of freedom of speech and press are not for the benefit of the press so much as for the benefit of all the people." In Griswold vs Connecticut ; , 482) the U.S. Supreme Court was of the opinion that the right of freedom of speech and press includes not only the right to utter or to print, but the right to read." 319 Justice Mathew proceeded to observe (at pp. 819 820): "Under article 41 of the Constitution the State has a duty to A take effective steps to educate the people within limits of its available economic resources. That includes political education also. Public discussion of public issues together with the spreading of information and any opinion on these issues is supposed to be the main function of newspaper. The highest and lowest in the scale of intelligence resort to its columns for information. Newspapers is the most potent means for educating the people as it is read by those who read nothing else and, in politics, the common man gets his education mostly from newspaper. The affirmative obligation of the Government to permit the import of newsprint by expanding foreign exchange in that behalf is not only because press has a fundamental right to express itself, but also because the 1 community has a right to be supplied with information and the Government a duty to educate the people within the limits of its resources. The Government may, under cl. 3 of the Imports (Control) Order, 1955 totally prohibit the import of newsprint and thus disable any person from carrying on a business in newsprint, if it is in the general interest of the public not to expend any foreign exchange on that score. If the affirmative obligation to expend foreign exchange and permit the import of newsprint stems from the need of the community for information and the fundamental duty of Government of educate the people as also to satisfy the individual need for self exression, it is not for the proprietor of a newspaper alone to say that he will reduce the circulation of the newspaper and increase its page level, as the community has an interest in maintaining or increasing circulation of the newspapers. It is said that a proprietor of a newspaper has the freedom to cator to the needs of intellectual highbrows who may choose to browse in rich pastures and for that he would require more pages for a newspaper and that it would be a denial of his fundamental right if he were told that he cannot curtail the circulation and increase the pages. A claim to enlarge the volume of speech by diminishing the circulation 320 raises the problem of reconciling the citizens ' right to unfettered exercise of speech in volume with the community 's right to undiminished circulation. Both rights fall within the ambit of the concept of freedom of speech as explained above. " The Second Press Commission has explained the concept of freedom of press in its Report (Vol. 34 35) thus: "The expression 'freedom of the press ' carries different meanings to different people. Individuals, whether professional Journalists or not, assert their right to address the public through the medium of the press. Some people stress the freedom of the editor to decide what shall be published in his paper. Some others emphasize the right of the owners to market their publication. To Justice Holmes, the main purpose of the freedom was to prevent all prior restraint on publication. The theory is that in a democracy freedom of expression is indispensable as all men are entitled to participate in the process of formulation of common decisions. Indeed, freedom of expression is the first condition of liberty. It occupies a preferred position in the hierarchy of liberties giving succour and protection to other liberties. It has been truly said that it is the mother of all other liberties. The press as a medium of communication is a modern phenomenon. It has immense power to advance or thwart the progress of civilization. Its freedom can be used to create a brave new world or to bring about universal catastrophe. Freedom of speech presupposes that right conclusions are more likely to be gathered out of a multitude of tongues than through any kind of authoritative selection. It rests on the assumption that the widest possible dissemination of information from as many diverse and antagonistic sources as possible is essential to the welfare of the public. It is the function of the Press to disseminate news from as many different sources and with as many different facts and colours as possible. A citizen is entirely dependent on the Press for the quality, proportion and 321 extent of his news supply. In such a situation, the exclusive and continuous advocacy of one point of view through the medium of a newspaper which holds monopolistic position is not conducive to the formation of healthy public opinion. If the newspaper industry is concentrated in a few hands, the chance of an idea antagonistic to the idea of the owners getting access to the market becomes very remote. But our constitutional law has been in different to the reality and implication of non governmental restraint on exercise of freedom of speech by citizens. The indifference becomes critical when comparatively a few persons are in a position to determine not only the content of information but also its very availability. The assumption in a democratic set up is that the freedom of the press will produce a sufficiently diverse Press not only to satisfy the public interest by throwing up a broad spectrum of views but also to fulfill the individual interest by enabling virtually everyone with a distinctive opinion to find some place to express it. " D The petitioners have heavily relied upon the decision of this Court in sakal 's case (supra) in which the constitutionality of the and the Daily Newspaper (Price and Page) Order, 1960 arose for consideration. The petitioner in that petition was a private limited company engaged in the business inter alia of publishing daily and weekly newspapers in Marathi named 'Sakal ' from Poona. The newspaper 'Sakal" had a net circulation of 52,000 copies on week days and 56,000 copies on Sundays. The daily edition contained six pages a day for five days in a week and four pages on one day. This edition was priced at 7 paise. The Sunday edition consisted of ten pages and was priced at 12 paise. About 40% of the space in the newspaper was taken up by the advertisements and the rest by news, views and other usual features. The newspaper (price and page) Act, 1956 regulated the number of pages according to the price charged, prescribed the number of supplements to be published and prohibited the publication and sale of newspapers in contravention of the Act. It also provided for the regulation of the size and area of advertising matter contained in a newspaper. Penalties were prescribed for contravention of that Act or the Order made thereunder. As a result of the enforcement of that Act, in order to publish 34 pages on six days in a week as it was doing 322 then, the petitioner had to raise the price from 7 paise to 8 paise per day and if it did not wish to increase the price, it had to reduce the total number of pages to 24 The petitioner which could publish any number of supplements as and when it desire to do so before the Order impugned in that case was passed could do so thereafter only with permission of the Government. The contention of the petitioner in that case was that the impugned Act and the impugned Order were pieces of legislation designed to curtail the circulation of the newspaper as the increase in the price of the paper would adversely affect its circulation and they directly interfered with the freedom of the press. The validity of these pieces of legislation was challenged on the ground that they violated Article 19 (1) (a) of the Constitution. The Union Government contested the petition. It pleaded that the impugned Act and the Order had been passed with a view to preventing unfair competition among newspapers and also with a view to preventing the rise of monopolistic combines so that newspapers might have fair opportunities of free discussion. It was also con tended that the impugned Act and the impugned Order had been passed in the public interest and the petitioner 's business being a trading activity falling under Article 19 (1) (g) of the Constitution any restriction imposed by the said Act and the Order was protected by Article 19 (6) of the Constitution. This Court negativing the contention of the Union Government observed at page 866 thus: "Its object thus is to regulate something which, as already stated, is directly related to the circulation of a newspaper. Since circulation of a newspaper is a part of the right of freedom of speech the Act must be regarded as one directed against the freedom of speech. It has selected the fact or thing which is an essential and basic attribute of the conception of the freedom of speech viz. the right to circulate one 's views to all whom one can reach or care to reach for the imposition of a restriction. It seeks to achieve its object of enabling what are termed the smaller newspapers to secure larger circulation by pro visions which without disguise are aimed at restricting the circulation of what are termed the larger papers with better financial strength The impugned law for from being one, which merely interferes with the right of freedom speech incidentally, does so directly though it 323 seeks to achieve the end by purporting to regulate the business aspect of a newspaper. Such a course is not permissible and the courts must be ever vigilant in guarding perhaps the most precious of all the freedoms guaranteed by our Constitution. The reason for this is obvious. The freedom of speech and expression of opinion is of paramount importance under a democratic Constitution which envisages changes in the composition of legislatures and governments and must be preserved. No doubt, the law in question was made upon the recommendation of the Press Commission but since its object is to affect directly the right of circulation of news papers which would necessarily undermine their power to influence public opinion it cannot stat be regarded as a dangerous weapon which is capable of being used against democracy itself. " Continuing further the Court observed at pages 867 and 868 thus: "It was argued that the object of the Act was to prevent monopolies and that monopolies are obnoxious. We will assume that monopolies are always against public interest and deserve to be suppressed. Even so, upon the view we have taken that the intendment of the Act and the direct. and immediate effect of the Act taken along with the impugned order was to interfere with the freedom of circulation of newspapers the circumstance that its object was to suppress monopolies and prevent unfair practices is of no assistance. The legitimacy of the result intended to be achieved does not necessarily imply that every means to achieve it is permissible for even if the end is desirable and permissible, the means employed must not transgress the limits laid down by the Constitution, if they directly impinge on any of the fundamental rights guaranteed by the Constitution it is no answer when the constitutionality of the measure is challenged that apart from the fundamental right infringed the provision is otherwise legal. " 324 We have so far seen the importance of the freedom of speech and expression which includes the freedom of press. We shall now proceed to consider whether it is open to the Government to levy any tax on any of the aspects of the press industry. IV Do newspapers have immunity from taxation ? Leaving aside small newspaper establishments whose circulation may be less than about 10,000 copies a day, all other bigger newspaper establishments have the characteristics of a large industry. Such bigger newspaper concerns are mostly situated in urban areas occupying large buildings which have to be provided with all the services rendered by municipal authorities. They employ hundreds of employees. Capital investment in many of them is in the order of millions of rupees. Large quantities of printing machinery are utilised by them, a large part of which is imported from abroad. They have to be provided with telephones, teleprinters, postal and telegraphic services, wireless communication systems etc. Their newspapers have to be transported by roads, railways and air services. Arrangements for security of their property have to be made. The Government has to provide many other services to them. All these result in a big drain on the financial resources of the State as many of these services are heavily subsidized. Naturally such big newspaper organisations have to contribute their due share to the public exchequer. They have to bear the common fiscal burden like all others. While examining the constitutionality of a law which is alleged to contravene Article 19 (1) (a) of the Constitution, we cannot, no doubt, be solely guided by the decisions of the Supreme Court of the United States of America. But in order to understand the basic principles of freedom of speech and expression and the need for that freedom in a democratic country, we may take them into consideration. The pattern of Article 19 (1) (a) and of Article 19 (1) (g) of our constitution is different from the pattern of the First Amendment to the American Constitution which is almost absolute in its terms. The rights guaranteed under Article 19 (1) (a) and Article 19 (1) (g) of the Constitution are to be read along with clauses (2) and (6) of Article 19 325 which carve out areas in respect of which valid legislation can be A made. It may be noticed that the newspaper industry has not been granted exemption from taxation in express terms. On the other hand Entry 92 of List I of the Seventh Schedule to the Constitution empowers Parliament to make laws levying taxes on sale or purchase of newspapers and on advertisements published therein. It is relevant to refer here to a few extracts from the speech of Shri Deshbandhu Gupta on the floor of the Constituent Assembly opposing the provisions in the Draft Constitution which authorised the State Legislatures to levy sales tax on sale of newspapers and tax on advertisements in newspapers. He said: C ". No one would be happier than myself and my friends belonging to the press, if the House were to decide today that newspapers will be free from all such taxes. Of course that is what it should be because in no free country with a democratic Government we have any such taxes as the sales tax or the advertisement tax . . . . . I claim that newspapers do deserve a distinctive treatment. They are not an industry in the sense that other industries are. This has been recognised all over the world. They have a mission to perform. And I am glad to say that the newspapers in India have performed that mission of public service very creditably and we have reason to feel proud of it. I would, there. fore, expect this House and my friend Mr. Sidhva to bear it in mind at the time when God forbid any proposal comes before the Parliament for taxation. That would be the time for them to oppose it. Sit, after all, this is an enabling clause. It does not say that there shall be sales and advertisement tax imposed on newspapers. It does not commit the House today to the imposition of a tax on the sales of or a tax on advertisements published in newspapers, All that we have emphasised is that newspapers as such should be taken away from the purview of the provincial Governments and brought to the Central List so that if at all at any time a tax is to be imposed on newspapers it should be done by the representatives of whole country realising the full 326 implications of their action. It should not be an isolated A act on the part of some Ministry of some province. That was the fundamental basis of our amendment . . . . . . . . . If today all news papers including those published from Delhi are opposing the imposition of these taxes with one voice and demanding their inclusion in the Central List, they do so, not because it is a question of saving some money, but be cause the fundamental question of the liberty of the press is involved. By advocating their transfer to the Central List we are prepared to run the risk of having these takes imposed in Delhi, and in other provinces which have not sought to impose such taxes so far. But we do not want to leave it to the Provinces so that the liberty of the press remains unimpaired. We have faith in the Parliament: we have faith in the collective wisdom of the country and we have no doubt that when this matter is viewed in the correct perspective, there will be no such taxes imposed on the newspapers, but we have not got that much faith in the Provincial Ministries. It is in that hope and having a full realisation of the situation that we have agreed, as a matter of compromise, or should I say as a lesser evil, to have these two taxes transferred from the Provincial to the Central List." (Vide Constituent Assembly Debates .Vol. IX, pp. 1175 1180 dated September 9, 1949). Ultimately the power to levy taxes on the sale or purchase of newspapers and on advertisement published therein was conferred on Parliament by Entry 92 of List I of the Seventh Schedule to the Constitution. This shows the anxiety on the part of the framers of our Constitution to protect the newspapers against local pressures. But they, however, did not agree to provide any constitutional immunity against such taxation. The power to levy customs duties on goods imported into the country is also entrusted to Parliament by Entry 83 in List I of the Seventh Schedule to the Constitution. On the power of t e Government in the United States of America to levy taxes on and to provide for the licensing of news papers, Corpus Juris Sequndum (Vol. 16) says at page 1132 as follows: 327 "213. (13), Taxing and Licensing "The Constitutional guaranties of freedom of speech and of the press are subject to the proper exercise of the government s power of taxation, and reasonable license fees may be imposed on trades or occupations concerned with the dissemination of literature or ideas. As a general rule, the constitutional guaranties of freedom of speech and of the press are subject to the proper exercise of the government 's power of taxation, so that the imposition of uniform and non discriminatory taxes is not invalid as applied to persons or organisations engaged in the dissemination of ideas through the publication or distribution of writing. The guaranty of freedom of the press does not forbid the taxation of money or property employed in the publishing business, or the imposition of reasonable licenses and license fees on trades or occupations concerned with the dissemination of literature or ideas. A license or license tax to permit the enjoyment of freedom of speech and freedom of press may not, however, be required as a form of censorship, and where the purpose of the tax or license is not for revenue, or for reasonable regulation, but is a deliberate and calculated device to prevent, or to curtail the opportunity for, the acquisition of knowledge by the people in respect of their governmental affairs, the statute or ordinance violates the constitutional guaranties, and particularly the Fourteenth Amendment to the federal Constitution. While an ordinance imposing a tax on, and requiring a license for, the privilege of advertising by distributing books, circulars, or pamphlets has been held valid, an ordinance requiring the payment of a license tax by street vendors or peddlers is invalid as applied to members of a religious group distributing religious literature as part of their activities, at least where the fee is not merely a nominal one imposed to defray the cost of regulation, notwithstanding the ordinance is non discriminatory. A governmental regulation requiring a license to solicit, for compensation, memberships in organizations requiring the payment of dues is invalid, 328 where it fixes indefinite standards for the granting of a license to an applicant. A provision of a retail sales tax act providing that a retailer shall not advertise as to the non collection of sales tax from purchasers does not deprive retailers of the constitutional right of free speech. " The above subject is summarised in American Jurisprudence 2d (Vol. 16) at page 662 thus: "Speech can be effectively limited by the exercise of that taxing power. Where the constitutional right to speak is sought to be deterred by a state 's general taxing program; due process demands that the speech be unencumbered until the state comes forward with sufficient proof to justify its inhibition. But constitutional guaranties are not violated by a statute the controlling purpose of which is to raise revenue to help defray the current expenses of state government and state obligations, and which shows no hostility to the press nor exhibits any purpose or design to restrain the press. " It may be mentioned here that the First Amendment to the Constitution of the United States of America is almost in absolute terms. It says that the Congress shall make no law abridging the freedom of the press. Yet the American Courts have recognised the power of the State to levy taxes on newspaper establishments, of course, subject to judicial review by courts by the application of the due process of law principle. "Due process of law does not forbid all social control; but it protects personal liberty against social control, unless such social control is reasonable either because of a constitutional exercise of the police power, or of the power of taxation or of the power of eminent domain". If any legislation delimiting personal liberty is held to be outside of all three of these categories, it is taking away of personal liberty without due process of law and is unconstitutional. The police power, taxation and eminent. domain are all forms of social control which are essential for peace and good government. 'The police power is the legal capacity of the severeignty or one of its governmental agents, to delimit the personal liberty of persons by means which bear a substantial relation to the end to be accomplished for the protection of social interests which reasonably need protection. Taxation is the legal capacity of sovereignty or one of its govern 329 mental agents to exact or impose a charge upon persons or their property for the support of the government and for the payment for any other Public purposes which it may constitutionally carry out. Eminent domain is the legal capacity of sovereignty or one of its governmental agents, to take private property for public use upon the payment of just compensation. ' It is under the above said sovereign power of taxation the government is able to levy taxes on the publishers of newspapers too, subject to judicial review by courts notwithstanding the language of the First Amendment which is absolute in terms. In India too the power to levy tax even on persons carrying on the business of publishing newspapers has got to be recongnised as it is inherent in the very concept of government. But the exercise of such power should, however, be subject to scrutiny by courts. Entry 92 of List I of the Seventh Schedule to the Constitution expressly suggests the existence of such power. Thomas I. Emerson in his article on the First Amendment (The Yale Law Journal, Vol. 72 at p. 941, has made certain relevant observations on the power of the State to impose taxes and economic regulations on newspaper industry. He says: "(a) Taxation and Economic Regulation. Regular tax measures, economic regulations, social welfare legislation and similar provisions may, of course, have some effect upon freedom of expression when applied to persons or organisations engaged in various forms of communication. But where the burden is the same as that borne by others engaged in different forms of activity, the similar impact on expression seems clearly insufficient to constitute an "abridging" of freedom of expression. Hence a general corporate tax, wage and hour or collective bargaining legislation, factory laws and the like are as applicable to a corporation engaged in newspaper publishing as to other business organisations. On the other hand, the use of such measures as a sanction to diminish the volume Of expression or control its content would clearly be as impermissible an "abridgment" as direct criminal prohibitions. The line may sometimes be difficult to draw, the more so as the scope of the regulation is narrowed. Two principles for delineating the bounds of "abridg 330 ing" may be stated. First, as a general proposition the validity of the measure may be tested by the rule that it must be equally applicable to a substantially larger group than that engaged in expression. Thus a special tax on the press alone, or a tax exemption available only to those with particular political views or associations, would not be permitted. second, neither the substantive nor procedural provisions of the measure, even though framed in general terms, may place any substantial burden on expression because of their peculiar impact in that area. Thus the enforcement of a tax or corporate registration statute by requiring disclosure of membership in an association, where such disclosure would substantially impair freedom of expression, should be found to violate first amendment protection. (Underlining by us). This view appears to have been accepted by our Second Press Commission in its Report (Vol. I) at page 35. The Commission observes: "21. Economic and tax measures, legislation relating to social welfare and wages, factory laws, etc., may have some effect upon freedom of the Press when applied to persons or institutions engaged in various forms of communication. But where the burden placed on them is the same as that borne by other engaged in different forms of activity, it does not constitute abridgment of freedom of the Press. The use of such measures, however, to control the content ' of expression would be clearly impermissible. " In Alice Lee Grosjean, Supervisor of Public Accounts for the State of Louisiana vs American Press Company(l) in which the appellants had questioned the constitutional validity of an Act of Louisiana which required every person engaged in the business of selling or making any charge for, advertising or for advertisements, printed or published in any newspaper, periodical etc. having a circulation of more than 20,000 copies per week to pay, in addition to all other taxes, a license tax for privilege of engaging in such business in the State of Louisiana of two per cent (2%) of the gross receipts of such business, the Supreme Court of the United States observed at pages 668 669: (1) ; 80 L. ed. 331 "In the light of all that has now been said, it is evident that the restricted rules of the English law in respect of the A freedom of the press in force when the Constitution was adopted were never accepted by the American colonists, and that by the First Amendment it was meant to preclude the national government, and by the Fourteenth Amendment to preclude the states, from adopting any form of previous restraint upon printed publications, or their circulation, including that which had theretofore been effected by these two well known and odious methods It is not intended by anything we have said to suggest that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the government. But this is not an ordinary form of tax, but one single in kind, with a long history of hostile misuse against the freedom of the press. The predominant purpose of the grant of immunity here invoked was to preserve an untrammelled press as a vital source of public information. The newspapers, magazines and other journals of the country, it is safe to say, have shed and continue to shed, more light on the public and business. affairs of the nation than any other instrumentality of publicity; and since informed public opinion is the most potent of all restraints upon misgovernment, the suppression or abridgment of the publicity afforded by a free press cannot be regarded otherwise than with grave concern. The tax here involved is bad not because it takes money from the pockets of the appellees. If that were all, a wholly different question would be presented. It is bad because, in the light of its history and of its present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the constitutional guaranties. A free press stands as one of the great interpreters between the government and the people. To allow it to be fettered is to fetter ourselves." (Underlining by us) The levy imposed by Louisiana was quashed by the Supreme 332 Court of the United States of America in the above case on the ground that it violated the First Amendment to the Constitution of the United States of America since it was of the view that the tax levied in this case was a device to limit the circulation of information. The Court, however, did not say that no tax could be levied on the press in any event. In Robert Murdock, Jr. vs Commonwealth of Pennsylvania (City of Jeannette)(1) the Supreme Court of the United States of America declared as unconstitutional and violative of the First Amendment to the Constitution of the United States of America which guaranteed freedom of speech and expression, an ordinance which imposed a licence tax on persons canvassing for and soliciting within the city of Jeannette orders for goods, paintings, pictures, wares or merchandise of any kind or persons delivering such articles under orders so obtained or solicited. The petitioners in that case were 'Jehovah 's witnesses ' who went about from door to door in the city of Jeannette distributing literature and soliciting people to purchase certain religious books and pamphlets. None of them obtained a licence by paying the prescribed fee and they were convicted for violating the Ordinance by the Superior Court of Pennsylvania. The Supreme Court of the United States of America quashed the conviction holding that the Ordinance violated the First Amendment. Douglas, J. who wrote the majority opinion observed at pages 1299 and 1300 thus: "In all of these cases the issuance of the permit or license is dependent on the payment of a license tax. And the license tax is fixed in amount and unrelated to the scope of the activities of petitioners or to their realized revenues. It is not a nominal fee imposed as a regulatory measure to defray the expenses of policing the activities in question. It is in no way apportioned. It is a flat license tax levied and collected as a condition to the pursuit of activities whose enjoyment is guaranteed by the first Amendment. Accordingly, it restrains in advance those constitutional liberties of press and religion and inevitably tends to suppress their exercise. That is almost uniformly recognised as the inherent vice and evil of this flat license tax. . . (1) ; 87 Law. 333 The fact that the ordinance is ' 'nondiscriminatory ' ' A is immaterial. The protection afforded by the First Amendment is not so restricted. A license tax certainly does not acquire constitutional validity because it classifies the privileges protected by the First Amendment along with the wares and merchandise of hucksters and peddlers and treats them all alike. Such equality in treatment does not save the ordinance. Freedom of press, freedom of speech, freedom of religion are in a preferred position." (Underlining by us). Justice Reed who dissented from the majority observed at page 1306 thus: "It will be observed that there is no suggestion of freedom from taxation, and this statement is equally true of the other State constitutional provisions. It may be concluded that neither in the state or the federal constitutions was general taxation of church or press interdicted. Is there anything in the decisions of this Court which indicates that church or press is free from the financial burdens of government ? We find nothing. Religious societies depend for their exemptions from taxation upon state constitutions or general statutes, not upon the Federal Constitution. Gibbons vs District of Columbia, ; , 29 L ed 680; , This Court has held that the chief purpose of the free press guarantee was to prevent previous restraints upon publication. Near vs Minuesota ; , 713, 75 L ed 1357; , In Grosjean vs American Press Co.; , , 250, 80 L ed 660, 668; , , it was. , said that the predominant purpose was to preserve "an untrammelled press as a vital source of public information." In that case, a gross receipts tax Oil advertisements in papers with a circulation of more than twenty thousand copies per week was held invalid because a deliberate and calculated device in the guise of a tax to limit the circulation. .". There was this further comment: "It is not intended by anything we have said to suggest 334 that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the government. But this is not an ordinary form of tax, but one single in kind, with a long history of hostile misuse against the freedom of the press. " Id. 297 Us 250, 80 L ed 668. ; It may be said, however, that ours is a too narrow, technical and legalistic approach to the problem of state taxation of the activities of church and press; that we should look not to the expressed or historical meaning of the First Amendment but to the broad principles of free speech and free exercise of religion which pervade our national way of life. It may be that the Fourteenth Amendment guarantees these principles rather than the more definite concept expressed in the First Amendment. This would mean that as a Court, we should determine what sort of liberty it is that the due process clause of the Fourteenth Amendment guarantees against state restrictions on speech and church. Nor do we understand that the Court now maintains that the Federal Constitution frees press or religion of any tax except such occupational taxes as those here levied. Income taxes, ad valorem taxes, even occupational taxes are presumably valid, save only a license tax on sales of religious books. Can it be that the Constitution permits a tax on the printing presses and the gross income of a metropolitan newspaper but denies the right to lay an occupational tax on the distributors of the same papers ? Does the exemption apply to book sellers or distributors of magazines or only to religious publications ? And, if the latter, to what distributors ? Or to what books ? Or is this Court saying that a religious practice of book distribution is free from taxation because a state cannot prohibit the "free exercise thereof" and a newspaper is subject to the same tax even though the same Constitutional Amendment says the state cannot abridge the freedom of the press ? It has never been thought before that freedom from taxation was a perquisite attaching to the privileges of the First Amendment." Justice Reed added at pages 1307 and 1308 thus: 335 "It is urged that such a tax as this may be used readily to restrict the dissemination of ideas, This must be conceded but the possibility of misuse does not make a tax unconstitutional. No abuse is claimed here. The ordinances in some of these cases are the general occupation license type covering many businesses. In the Jeannette prosecutions, the ordinance involved lays the usual tax on canvassing or soliciting sales of goods, wares and merchandise. It was passed in 1898. Every power of taxation or regulation is capable of abuse. Each one, to some extent, prohibits the free exercise of religion and abridges the freedom of the press, but that is hardly a reason for denying the power. If the tax is used oppressively the law will protect the victims of` such action." (Underlining by us.) Justice Frankfurter who also dissented from the majority observed at pages 1310 and 1311 thus: "It cannot be said that the petitioners are constitutionally exempt from taxation merely because they may be engaged in religious activities or because such activities may constitute an exercise of a constitutional right. . Nor can a tax be invalidated merely because it falls upon activities which constitute an exercise of a constitutional right. The First Amendment of course protects the right to publish a newspaper or a magazine or a book. But the crucial question is how much protection does the Amendment give, and against what is the right protected ? It is certainly true that the protection afforded the freedom of the press by the First Amendment does not include exemption from all taxation. A tax upon newspaper publishing is not invalid simply because it falls upon the exeacise of a constitutional right. Such a tax might be invalid if it invidiously singled out newspapers publishing, for bearing the burdens of taxation or imposed upon them in such ways as to encroach on the essential scope of a free press. If the Court could justifiably hold that the tax measures in these cases were Vulnerable on that ground, I would unreservedly agree. But the 336 Court has not done so, and indeed could not." (Under lining by us) In the above case it may be noticed that Douglas, J. who gave the majority opinion did not say that no tax could be levied at all on a press, but he did not approve of a uniform license tax unrelated to the scope of the activities of the persons who had to beat it. The dissenting opinions have clearly stated that the press does not enjoy any immunity from taxation. They, however, say that the taxation should not encroach upon the essential scope of a free press. We may usefully refer here to a passage in the foot note given below the Essay No 84 by Alexander Hemilton in 'The Federalist '. it reads: "It cannot certainly be pretended that any degree of duties, however low, would be an abridgment of the liberty of the press. We know that newspapers are taxed in Great Britain, and yet it is notorious that the press nowhere enjoys greater liberty than in that country. And if duties of any kind may be laid without a violation of that liberty, it is evident that the extent must depend on legislative discretion, regulated by public opinion ;" At this stage we find it useful to refer to a decision of the Privy Council in Attorney General & Anr. vs Antigua Times Ltd.( Where the Judicial Committee of the Privy Council was called upon to decide about the validity of the imposition of a licence fee of p S 600 annually on the publisher of a newspaper under the News papers Registration (Amendment) Act, 1971. Section 10 of the Constitution of Antigua read as follows: "10. (1) Except with his own consent, no person shall be hindered in the enjoyment of his freedom of expression, and for the purposes of this section the said freedom includes the freedom to hold opinions and to receive and impart ideas and information without interference, and freedom from interference with his correspondence and other means of communication (1). 337 (2) Nothing contained in or done under the authority of any law shall be held to be inconsistent with or in contravention of this section to the extent that the law in question makes provision (a) that is reasonably required (i) in the interests of defence, public safety, public order, public morality or public health; or (ii) for the purpose of protecting the reputations, rights and freedoms of other persons, or the private lives of persons concerned in legal proceedings, preventing the disclosure of information received in confidence, maintaining the authority and independence of the courts, or regulating telephony, telegraphy, posts, wireless, broadcasting, television or other means of communication, public exhibitions or public entertainments; or (b) that imposes restrictions upon public officers." Lord Fraser who delivered the judgment of the Privy Council upheld the levy of the licence fee as being reasonably required in the interests of defence and for securing public safety etc. referred to in section 10 (2) (a) (i) of the Constitution of Antigua, The learned Lord observed in that connection thus: Revenue requires to be raised in the interests of defence and for securing public safety, public order, public morality and public health and if this tax was reasonably required to raise revenue for these purposes or for any of them, then section IB is not to be treated as contravening the Constitution. In some cases it may be possible for a court to decide from a mere perusal of an Act whether it was or was not reasonably required. In other cases the Act will not provide the answer to that question. In such cases has evidence to be brought before the court of the reasons for the Act and to show that it was reasonably required ? Their Lordships think that the proper approach to the question is to presume, until the contrary appears or is shown, that all Acts passed by the Parliament of Antigua were reasonably required. This presumption will be rebutted if the statutory provisions in question are, to use the words of Louisy J, 'so arbitrary as to compel the conclusion that it does not involve an exertion of the 338 taxing power but constitutes in substance and effect the direct execution of a different and forbidden power. ' y the amount of the licence fee was so manifestly excessive its to lead to the conclusion that the real reason for its imposition was not the raising of revenue but the preventing of the publication of newspapers, then that would justify the conclusion that the law was not reasonably required the raising of revenue. In there Lordships ' opinion the presumption that the newspapers Registration (Amendment) Act, 1971 was reasonably required has not been reputed and they do not regard the amount of the licence fee as manifestly excessive and of such a character as to lead to the conclusion that section IB was not enacted to raise revenue but for some other Purpose." (Underlining by us) Here again it is seen that the Privy council was of the view that the law did not forbid the levy of fee on the publisher of a newspaper but it would be open to challenge if the real reason for its imposition was not the raising of revenue but the preventing of the publication of newspaper. At this stage it is necessary to refer to a forceful argument addressed before us. It was urged on behalf of the petitioners that the recognition of the power of the Government to levy taxes of any kind on the newspaper establishments would ring in the death knell of the freedom of press and would be totally against the spirit of the Constitution. It is contended that the Government is likely to use it to make the press subservient to the Government. It is argued that when once this power is conceded, newspapermen will have to run after the Government and hence it ought not to be done. This raises a philosophical question Pressversus Government We do not think it is necessary for the press to be subservient to the Government. As long as 'this Court sits ' newspapermen need not have the fear of their freedom being curtailed by unconstitutional means. It is, however, good to remember some statements made in the past by some wise men connected with newspapers in order to develop the culture of an independent press. Hazlitt advised editors to stay in their garrets and avoid exposing themselves to the sub leties of power. Walter Lippman in his address to the International Press Institute some 339 years ago said that the danger to the independence and integrity of journalists did not come from the pressures that might A be put on them; it was that they might be captured and capitivated by the company they keep. Arthur Krock after 60 years of experience said that it 'is true that in most cases, the price of friendship with a politician is so great for any newspaperman to pay '. A. P. Wadsworth of the Manchester Guardian said "that no editor should ever be on personal terms with our leaders for fear of creating a false sense of relation of confidence." James Margach says that 'when leading media figures see too much rather than too little of Prime Minister that the freedom of press is endangered. ' Lord Salisbury told Buckle a famous editor in England "you are the first person who has not come to see me in the last few days who is not wanting something at my handsplace or decoration or peerage. You only want information." Charles Mitchell wrote in 'Newspaper Directory '. The Press has row so great and so extensive an influence on public opinion. that. its conductors should be GENTLEMAN in the true sense of the word. They should be equally above corruption and intimidation incapable of being warped by personal considerations from the broad path of truth and honour, superior to all attempts at misrepresenting or mystifying public events '. If the press ceases to be independent the healthy influence of the press and public opinion will soon be substituted by the traditional influences of landlordism and feudalism. The press lords should endeavour to see that their interest do not come into conflict with their duties. All this is said only to show that Government alone may not always be the culprit in destroying the independence of the press. Be that as it may, it is difficult to grant that merely because the Government has the power to levy taxes the freedom of press would be totally lost. As stated earlier, the court is always there to hold the balance even and to strike down any unconstitutional invasion of that freedom. Newspaper industry enjoys two of the fundamental rights, namely the freedom of speech and expression guaranteed under Article 19 (l) (a) and the freedom to engage in any profession, occupation, trade, industry or business guaranteed under Article 19 (1) (g) of the Constitution, the first because it is concerned with the field of expression and communication and the second because communication has become an occupation or profession and because there is on invasion of trade, business and industry 340 into that field where freedom of expression is being exercised. While there can be no tax on the right to exercise freedom of expression, tax is leviable on profession, occupations trade, business and industry. Hence tax is leviable on newspaper industry. But when such tax transgresses into the field of freedom of expression and stifles that freedom, it becomes unconstitutional. As long as it is within reasonable limits and does not impede freedom of expression it will not be contravening the limitations of Article 19 (2). The delicate task of determining when it crosses from the area of profession, occupation, trade, business or industry into the area of freedom of expression and interferes with that freedom is entrusted to the courts. The petitioners, however, have placed strong reliance on the Sakal 's case (supra) and the Bennett Coleman 's case (supra) in support of their case that any tax on newsprint which is the most important component of a newspaper is unconstitutional. They have drawn our attention to the following passage in the decision in Sakal 's case (supra) which is at page 863: " It may well be within the power of the state to place, in the interest of the general public, restrictions upon the right of a citizen to carry on business but it is not open to the State to achieve this object by directly and immediately curtailing any other freedom of that citizen guaranteed by the Constitution and which is not susceptible of abridgement on the same grounds as are set out in cl. (6) of article 19. Therefore, the right of freedom of speech cannot be taken away with the object of placing restrictions on the business activities of a citizen. Freedom of speech can be restricted only in the interests of the security of the State, friendly relations with foreign State, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence. It cannot, like the freedom to carry on business, be curtailed in the interest of the general public. If a law directly affecting it is challenged it is no answer that the restrictions enacted by it are justifiable under cls. (3) to (6). For, the scheme of article 19 is to enumerate different freedoms separately and then to specify the extent of restrictions to which they may be subjects and the object for securing which this could be done. A citizen 341 is entitled to enjoy each and every one of the freedoms together and cl. (1) does not prefer one freedom to A another. That is the plain meaning of this clause. It follows from this that the State cannot make a law which directly restricts one freedom even for securing the better enjoyment of another freedom. All the greater reason, therefore, for holding that the State cannot directly restrict one freedom by placing an otherwise permissible restriction another freedom. " In Bennett Coleman 's case (supra) the question which arose for consideration related to the validity of a restriction imposed under the newsprint policy which had certain objectionable features such as (i) that no newspaper or new edition could be started by a common owner ship unit even within the authorised quota of newsprint (ii) that there was a limitation on the maximum number of pages, no adjustment being permitted between circulation and pages so as to increase pages, (iii) that a big newspaper was prohibited and prevented from increasing the number of pages, page area, and periodicity by reducing circulation to meet the requirement even within its admissible quota etc. The majority held that the fixation of page limit had not only deprived the petitioners of their economic vitality but also restricted their freedom of expression. It also held that such restriction of pages resulted in reduction of advertisement, revenue and thus adversely affected the capacity of a newspaper to carry on its activity which is protected by Article 19(1)(a) of the Constitution. We have carefully considered the above two decisions. In the first case the Court was concerned with the newspaper price page policy and in the second the newsprint policy imposed by the Government had been challenged. Neither of them was concerned with the power of Parliament to levy tax on any goods used by the newspaper industry As we have observed earlier taxes have to be levied for the support of the Government and newspapers which derive benefit from the public expenditure cannot disclaim their liability to contribute a fair and reasonable amount to the public exchequer. What may, however, have to be observed in levying a tax on newspaper industry is that it should not be a over burden on newspapers which constitute the Fourth Estate of the country. Nor should it single out newspaper industry for harsh treatment. A wise administrator should realise that the imposition of a tax like the customs duty on 342 new newsprint is an imposition on knowledge and would virtually amount to a burden imposed on a man for being literate and for being conscious of his duty as a citizen to inform himself about the world around him. 'The public interest in freedom of discussion (of which the freedom of the press is one aspect) stems from the requirement t that members of a democratic society should be sufficiently informed that they may influence intelligently the decisions which may affect themselves '. (Per Lord Simon of Glaisdale in Attorney General vs Times Newspapers(l). Freedom of expression, as learned writers have observed, has four broad social purposes to serve: (i) it helps an individual to attain self fulfilment, (ii) it assists in the discovery of truth, (iii) it strengthens the capacity of an individual in participating in decision making and (iv) it provides a mechanism by which it would be possible to establish a reasonable balance between stability and social change. All members of society should be able to form their own beliefs and communicate them freely to others. In sum, the fundamental principle involved here is the people 's right to know. Freedom of speech and expression should, therefore, receive a generous support from all those who believe in the participation of people in the administration. It is on account of this special interest which society has in the freedom of speech and expression that the approach of the Government should be more cautious while levying taxes on other matters concerning newspapers industry than while levying taxes on matters. It is true that this Court has adopted a liberal approach while dealing with fiscal measures and has upheld different kinds of taxes levied on property, business, trade and industry as they were found to be in the public interest. But in the cases before us the Court is called upon to reconcile the social interest involved in the freedom of speech and expression with the public interest involved in the fiscal levies imposed by the Government specially because newsprint constitutes the body, if expression happens to be the soul. In view of the intimate connection of newsprint with the freedom of the press, the tests for determining the vires of a statute taxing newsprint have, therefore, to be different from the tests usually adopted for testing the vires of other taxing statutes. In the case of ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand, in the case of a tax on newsprint, (1) 343 it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax. A While we, therefore, cannot agree with the contention that no tax can be levied on newspaper industry, we hold that any such levy is subject to review by courts in the light of the provisions of the V Are the impugned notifications issued under section 25 of the beyond the reach of the Administrative Law. It is argued on behalf of the Government that a notification issued under section 25(1) of the granting, modifying or withdrawing an exemption from duty being in the nature of a piece of subordinate legislation, its validity cannot be tested by the Court by applying the standards applicable to an administrative action. Reliance is placed on the decision of this Court in Narinder Chand Hem Raj & Ors. vs Lt. Governor, Administrator. Union Territory, Himachal Pradesh & Ors. (1) in support of the above contention. In that case the appellants were wine merchants carrying on business in Simla. At the auction held for the purpose of granting the privileges to sell the Indian made foreign liquor the appellants were the highest bidders. It appears that before the auction was held the Collector of Excise and Taxation had announced that no sales tax would be liable to be paid on the sale of liquor and despite this assurance the Government had levied and collected from the appellants a certain amount by way of sales tax. The appellants prayed for the issue of a writ to the Governments restraining them from levying any sales tax and to refund what had been recovered from them by way of sales tax already. It was contended on behalf of the Government of Himachal Pradesh that non collection of sales Tax possible only on the issue of a notification by the Government pursuant to its statutory power under the Punjab General Sales Tax Act, which was in force in the area in question shifting 'liquor ' which was in Schedule 'A ' to Schedule 'B ' to the Punjab General Sales Tax Act, and that such a notification could not be issued because the Central Government had not given its requisite approval. Hence it was urged by the Government that since sales tax had been imposed by law on all items in Schedule 'A ' it could not disobey the mandate of law. It further contended that the Court could not issue a mandamus to the Government to issue a notification to amend the Schedules to the statute as the act of issuing such a notification was a legislative act and no writ could be issued to a 344 legislative body or a subordinate Legislative body to a make a law or to issue a notification, as the case may be, which would have the effect of amending a law in force. This Court upheld the contention of the Government. The Court said: "Our attention has not been drawn to any provision in that, Act empowering the Government to exempt any assessee from payment of tax. Therefore it is clear that appellant was liable to pay the tax imposed under the law. What the appellant really wants is a mandate from the court to the competent authority to delete the concerned entry from Schedule A and include the same in Schedule B. We shall not go into the question whether the Government of Himachal Pradesh on its own authority was competent to make the alteration in question or not. We shall assume for our present purpose that it had such a power. The power to impose a tax is undoubtedly a legislative power. That power can be exercised by the legislature directly or subject to certain conditions, the legislature may delegate the power to some other authority. But the exercise of that power whether by the legislature or by its delegate is an exercise of a legislative power. The fact that the power was delegated to the executive does not convert that power into an executive or administrative power. No Court can issue a mandate to a legislature to enact a particular law. Similarly no court can direct a subordinate legislative body to enact or not to enact a law which it may be competent to enact. The relief as framed by the appellant in his writ petition does not bring out the real issue calling for determination. In reality he wants this Court to direct the Government to delete the entry in question from Schedule A and include the same in Schedule B. article 265 of the Constitution lays down that no tax can be levied and collected except by authority of law. Hence the levy of a tax can only be done by the authority of law and not by any executive order. Unless the executive is specially empowered by law to give any exemption it cannot say that it will not enforce the law as against a particular person . No court can give a direction to a Government to refrain from enforcing a provision of law. Under these circumstances, we must held that the relief asked for by the appellant cannot be granted." (Underlining by us) 345 The above decision does not in fact support the contention of the Government in the cases before us. It is noteworthy that the Court in the passage extracted above has made a distinction between the amendment of the Schedule to the Punjab General Sales Tax Act by the issue of a notification by the Government of Himachal Pradesh in exercise of its power delegation by the legislature and the power of that Government to grant exemption under a power to grant K exemption. In the present cases we are concerned with a power to grant exemption conferred on Government by section 25 of the and not with a power to amend the Act by means of a notification. Moreover this was just a case relating to business in liquor. We shall assume for purposes of these cases that the power to grant exemption under section 25 of the is a legislative power and a notification issued by the Government thereunder amounts to a piece of subordinate legislation. Even then the notification is liable to be questioned On the ground that it is an unreasonable one. The decision of this Court in Municipal Corporation of Delhi vs Birla Cotton, Spinning and Weaving Mills, Delhi & Anr.(l) has laid down the above principle. In that case Wanchoo, C.J. while upholding certain taxes levied by the Corporation of Delhi under section 150 of the Delhi Municipal Corporation Act, 1957 observed thus: "Finally there is another check on the power of the Corporation which is inherent in the matter of exercise of power by subordinate public representative bodies such as municipal boards. In such cases if the act of such a body in the exercise of the power conferred on it by the law is unreasonable, the courts can hold that such exercise is void for the unreasonableness. This principle was laid down as far back as 1898 in Kruse vs Johnson But it appears that the principle enunciated in Kruse vs Johnson (2) is not being applied so stringently in England now. A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a com (1) ; (2) 346 petent legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. In England, the judges would say "Parliament never intended authority to make such rules. They are unreasonable and ultra vires". The present position of law bearing on the above point is stated by Diplock, L.J. in Mixnam Properties Ltd. vs Chertsey U.D.C.(1) thus: 'The various grounds upon which subordinate legislation has sometimes been said to be void . can, I think, today be properly regarded as being particular applications of the general rule that subordinate legislation, to be valid must be shown to be within the powers conferred by the statute. Thus the kind of unreasonableness which invalid dates a by law is not the antonym of 'reasonableness ' in the sense of which that expression is used in the common law, but such mainfest arbitrariness, injustice or partiality that a court would say: 'Parliament never intended to give authority to make such rules: they are unreasonable and ultra vires. ' If the courts can declare subordinate legislation to be invalid for 'uncertainty, ' as distinct from unenforceable this must be because Parliament is to be presumed not to have intended to authorise the subordinate legislative authority to make changes in the existing law which are uncertain. " Prof. Alan Wharam in his Article entitled 'Judicial Control of Delegated Legislation: The Test of Resonableness ' in 36 modern Law Review 611 at pages 622 23 has summarised the present position in England as follows: "(i) It is possible that the courts might invalidate statutory instrument on the grounds of unreasonableness or uncertainty, vagueness or aribitrariness; but the writer 's (1) 347 view is that for all practical purposes such instruments must be read as forming part of the parent statute, subject only to the ultra vires test. (ii) The courts are prepared to invalidate by laws, or any other form of legislation, emanating from an elected, representative authority, on the grounds of unreasonableness uncertainty or repugnance to the ordinary law; but they are reluctant to do so and will exercise their power only in clear cases. (iii) The courts may be readier to invalidate by laws passed by commercial undertakings under statutory power, although cases reported during the present century suggest that the distinction between elected authorities and commercial undertakings, as explained in Kruse vs Johnson, might not now be applied so stringently. (iv) As far as subordinate legislation of non statutory origin is concerned, this is virtually obsolete, but it is clear from In re French Protestant Hospital [1951] ch. 567 that it would be subject to strict control." (See also H.W.R. Wade: Administrative Law (5th Edn.) pp. 747 748). In India arbitrariness is not a separate ground since it will come within the embargo of Article 14 of the Constitution. In India any enquiry into the vires of delegated legislation must be confined to the grounds on which plenary legislation may be questioned, to the ground that it is contrary to the statute under which it is made, to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity with the statute or that it offends Article 14 of the Constitution. That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned has been held by this Court in The Tulsipur Sugar Co. Ltd. vs The Notified Area Committee, Tulsipur(l), Rameshchandra Kachardas Porwal & Ors. vs State of (1) [1980] 2 S.C.R 1111. 348 Maharashtra & Ors. etc(1). and in Bates vs Lord Hailsham of St Marylebone & Ors(2). A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary powers. In the latter case the question may be considered on all grounds on which administrative action may be questioned, such as, nonapplication of mind, taking irrelevant matters into consideration, failure to take relevant matters into consideration, etc. On the facts and circumstances of a case, a subordinate legislation be may struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statute or, say, the Constitution. This can only be done on the ground that it doe not conform to the statutory or constitutional requirements or that it offends Article 14 or Article 19 (1) (a) of the Constitution. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken n into account relevant circumstances which the Court considers relevant. We do not, therefore, find much substance in the contention that the courts cannot at all exercise judicial control over the impugned notifications. In cases where the power vested in the Government is a power which has got to be exercised in the public interest, as it happens to be here, the Court may require the Government to exercise that power in a reasonable way in accordance with the spirit of the Constitution. The fact that a notification issued under section 25 (1) of the is required to be laid before Parliament under section 159 thereof does not make any substantial difference as regards the jurisdiction of the court to pronounce on its validity. The power to grant exemption should, however, be exercised in a reasonable way. Lord Greene M.R. has explained in Associated Provincial Picture Houses Ltd. vs Wednesbury Corporation(U) what a 'reasonable way ' means as follows: "It is true that discretion must be exercised reason ably. Now what does that mean ? Lawyers familiar with (1) ; (2) (3) ; 349 the phraseology used in relation to exercise of statutory A discretions often use the word 'unreasonable ' in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said to be acting 'unreasonably '. Similarly, there may be some thing so absurd that no sensible person could ever dream that it lay within the powers of the authority. Warrlngton L.J. in short Y, Poole Corporation gave the example of the red haired teacher, dismissed because she had red hair. This is unreasonable in one sense. In another it is so unreasonable that it might almost be described as being done in bad faith; and, in fact, all these things run into one another. " Hence the claim made on behalf of the Government that the impugned notifications are beyond the reach of the administrative law cannot be accepted without qualification even though all the grounds that may be urged against an administrative order may not be available against them. Now, the notifications issued on March 1, 1981 and February 28, 1982 under section 25 of the which grant exemptions from payment of certain duty beyond what is mentioned in them are issued by the executive Government. They were issued in substitution of earlier notifications which had granted total exemption. Such notifications have to be issued by the Government after taking into consideration all relevant factors which bear on the reasonableness of the levy on the news print. The Government should strike a just and reasonable balance between the need for ensuring the right of people to freedom of speech and expression on the one hand and the need to impose social control on the business of publication of a newspaper on the other. In other words, the Government must at all material times be conscious of the fact that it is dealing with an activity protected by Article 19 (1) (a) of the Constitution 350 which is vital to our democratic existence. In deciding the reasonableness of restrictions imposed on any fundamental right the court should take into consideration the nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the disproportion of the imposition and the prevailing conditions at the relevant time including the social values whose needs are sought to be satisfied by means of the restrictions. (See the State of Madras vs V.G. Rao(l)). The restriction in question is the burden of import duty imposed on newsprint. Section 25 of the under which the notifications are issued confers a power on the Central Government coupled with a duty to examine the whole issue in the light of the public interest. It provides that if the Central Government is satisfied that it is necessary in the public interest so to do it may exempt generally either absolutely or subject to such conditions goods of any description from the whole or any part of the customs duty leviable thereon. The Central Government may if it is satisfied that in the public interest so to do exempt from the payment of duty by a special order in each case under circumstances of an exceptional nature to be stated in such order any goods on which duty is leviable. The power exercisable under section 25 of the is no doubt discretionary but it is not unrestricted, It is useful to refer here to the observations of Lord Denning M.R, in Breen vs Amalgamated Engineering Union(2) at page 190 read thus: "The discretion of a statutory body is never unfet tered. It is a discretion which is to be exercised according to law. That means at least this: the statutory body must be guided by relevant considerations and not by irrelevant. If its decision is influenced by extraneous considerations which it ought not to have taken into account then the decision cannot stand. No matter that the statutory body may have acted in good faith nevertheless the decision will be set aside. That is established by Pad field vs Minister of Agriculture Fisheries and Food [1968] A.C. 997 which is a landmark in modern administrative law. " In any event any notification issued under a statute also (1) ; (2) 351 being a 'law ' as defined under Article 13 (3) (a) of the Constitution is liable to) be struck down if it is contrary to any of the fundamental rights guaranteed under Part III of the Constitution. VI Has there been proper exercise of power under section 25 (1) of the, ? Freedom of press as the petitioners rightly assert means freedom from interference from authority which would have the effect of interference with the content and circulation of newspapers. The most important raw material in the production of a newspaper is the newsprint. The cost and availability of newsprint determine the price, size and volume of the publication and also the quantum of news, views and advertisements appearing therein. It is not disputed that the cost of newsprint works out to nearly 60% of the cost of production of newspaper. In the case of a big newspaper the realisation by the sale of newspaper is just about 40% of its total cost of production. The remaining cost is met by advertisements revenue which is about 40%, by revenue from waste sales and job work which comes to about 5% and revenue from other sources such as the income from properties and other investments of the newspaper establishment. These figures have been derived from the statement furnished by one of the big newspapers. The case of all other big newspapers may be more or less the same. The financial and other difficulties felt by the newspaper press in securing newsprint in recent years which have become an international phenomenon are set out in the Final Report of the International Commission for the Study of Communication Problems referred to above at page 141 thus: "Extremely serious on an international scale has been the effect of high costs of important materials or facilities. . . . . Paper is a material consumed in vast quantities whose price in recent years has spiralled out of proportion to the general world wide inflation. . As for newsprint, its price on world markets rose from a datum figure of 100 in 1970 to 329 in May 1977, and has continued to rise since. A sad by product of this situation has been the intro 352 duction of a covert form of censorship, as some Governments limit the import of newsprint, distribute it by official allocation schemes, and use these schemes to discriminate against the opposition newspapers. " In Chapter 4 of the same Report at page 100 the Inter national Commission has observed thus: "While newspapers which are commercial enterprises expect to sustain themselves by sales and advertising, they are not always viable on this traditional basis. Capital and profits from other media and from business in general are often injected into the newspaper industry. In many cases, the financing, or at least the deficits are covered by governments or political bodies. Assistance from the State has taken various forms, including tax concessions not enjoyed by other industries, reduced postal and telephone rates, guaranteed Government advertising, and subsidies to the price of newsprint. Although the press is suspicious of Government involvement in its affairs, a desire to preserve variety by keeping the weaker papers alive has led to consideration of various schemes. Direct grants to papers in need are made in seven European nations. Smaller newspapers and some parts of the "quality" or "specialized" press have experienced difficulties from a contraction of operations and size, which has led to limitations on the variety of information sources. This has induced many governments to examine the possibility of subsidies to help keep newspapers alive or to establish new ones, in monopoly circulation areas and to promote plurality and variety in general. If any duty is levied on newsprint by Government, It necessarily has to be passed on to the purchasers of newspapers" unless the industry is able to absorb it. In order to pass on the duty to the consumer the price of newspapers has to be increased. Such increase naturally affects the circulation of newspapers adversely. In Sakal 's case (supra), this Court has observed thus; 353 "The effect of raising the selling price of newspaper A has been considered by the Press Commission. In Paragraph 164 of the Report it is observed: "The selling price of a paper would naturally have an important effect on its circulation. In this connection we have examined the effect of price cuts adopted by two English papers at Bombay on the circulation of those two papers as well as of the leading paper which did not reduce its price. Prior to 27th October 1952, Times of India which had the highest circulation at Bombay was being sold at Re. 0 2 6 while Free Press Journal and National Standard which rank next in circulation were being sold for Re. 0 2 0. On 27th October, 1952, Free Press Journal reduced its price to Rs. 0 1.0 and within a year had claimed to have doubled its circulation. On 1st July, 1953, the National Standard was converted into a Bombay edition of Indian Express with a selling price of Rs. 0 1 6. Within six months it too claimed to have doubled its circulation During this period the Times of India which did not reduce its selling price continued to retain its readership. Thus it would appear that Free Press Journal and Indian Express by reducing their price have been able to tap new readership which was latent in the market but which could not pay the higher prices prevailing earlier." " Though the prices of newspapers appear to be on the low side it is a fact that even so many people find it difficult to pay that small price. This is what has been pointed out by the Press Commission in Paragraph 52 of its report. According to it the most common reason for people in not purchasing newspapers is the cost of the newspaper and the inability of the household to spare the necessary amount. This conclusion is based upon the evidence of a very large number of individuals and representatives of Associations. We would, therefore, be justified in relying upon it and holding that raising the price of newspaper even by a small amount such as one 354 nP. in order that its present size be maintained would adversely affect its circulation. " This is not a novel phenomenon. A stamp tax on newspapers came to be levied in England in 1712. It virtually crippled the growth of the English press and thus became unpopular. There was a lot of agitation against the said tax. But on its abolition in 1861, the circulation of newspapers increased enormously. The following account found in the Encyclopaedia Britannica (1962) Vol. 16 at page 339 is quite instructive: "Abolition of "Taxes on knowledge". The development of the press was enormously assisted by the gradual abolition of the "taxes on knowledge," and also by the introduction of a cheap postal system. . To Lord Lytton, the novelist and politician, and subsequently to Milner Gibson and Richard Cobden, is chiefly due the credit of grappling with this question in Parliament to secure first the reduction of the tax to a penny in 1836, and then its total abolition in 1855. The number of news papers established from the early part of 1855, when the repeal of the duty had become a certainty, and continuing in existence at the beginning of 1857, amounted to 107; 26 were metropolitan and 81 provincial. The duties on paper itself were finally abolished in 1861. The abolition of the stamp taxes brought about such reductions in the prices of newspapers that they speedily began to reach the many instead of the few. Some idea of the extent of the tax on knowledge imposed in the early 19th century may be gathered from the fact that the number of stamps issued in 1820 was nearly 29,400,000, and the incidence of the advertisement tax, fixed at 3s. in 1804, made it impossible for the newspaper owner to pass on the stamp tax to the advertiser. In 1828 the proprietors of the Times had to pay the state more than 68,000 in stamp and advertisement taxes and paper duty. But after the reduction of the stamp tax in 1836 from four pence to one penny, the circulation of English news papers, based on the stamp returns, rose from 39,000,000 to 122,000,000 in 1854. " 355 The Second Press Commission in its Report (Vol. II) at pages 182 183 has stated that the figures of circulation of newspaper A compiled by the Audit Bereau of Circulation (ABC) for the period January to June 1981 indicated that the circulation of newspapers in the period January to June 1981 was 1.9% lower than in the previous six months period The decline in the circulation of dailies was more in the case of very big newspapers with circulation of one lakh and above than in the case of smaller papers. The Commission said that the decline in circulation would appear to be attributable mainly to two factors increase in the retail price of newspapers in September October, 1980 and again in April May, 1981 and that the increase in retail prices appeared to have become necessary following continuing increase in newsprint prices in the last few years including levy of import duty in 1981 and increase in wages and salaries cost on account of Palekar Award. Of these factors which were responsible for increase in prices, the imposition of import duty on newsprint was on account of State action. This aspect of the matter is not seriously disputed by the Government. The pattern of the law imposing customs duties and the manner in which it is operated to a certain extent exposes the citizens who are liable to pay customs duties to the vagaries of executive discretion. While parliament has imposed duties by enacting the and the , the Executive Government is given wide power by section 25 of the to grant exemptions from the levy of Customs duty. It is ordinarily assumed that while such power to grant exemptions is given to the Government it will consider all relevant aspects governing the question whether exemption should be granted or not. In the instant case in 1975 when the was enacted, 40% ad valorem was levied on newsprint even though it had been exempted from payment of such duty. If the exemption had not been continued, newspaper publishers had to pay 40x6 ad valorem customs duty on the coming into force of the . Then again in 1982 by the Finance Act, 1982 an extra levy of Rs. 1,000 per tonne was G imposed in addition to the original 40% ad valorem duty even though under the exemption notification the basic duty had been fixed at 10% of the value of the imported newsprint. No information is forthcoming from the Government as to whether there was any material which justified the said additional levy. It is also not clear why this futile exercise of levying an additional duty of 356 Rs. 1,000 per tonne was done when under the notification issued under section 25 of the on March 1, 1981 which was in force then, customs duty on newsprint above 10% ad valorem had been exempted. As mentioned elsewhere in the course of this judgment while levying tax on an activity which is protected is also by Article 19(1)(a) a greater degree of care should be exhibited. While it is indisputable that the newspaper industry should also bear its due share of the total burden of taxation alongwith the rest of the community when any tax is specially imposed on newspaper industry, it should be capable of being justified as a reasonable levy in court when its validity is challenged. In the absence of sufficient material, the levy of 40% plus Rs. 1,000 per tonne would become vulnerable to attack. If the levy imposed by the statute itself fails, there would be no need to question the notifications issued under section 25 of the . But having regard to the prevailing legislative practice let us assume that in order to determine the actual levy we should take into consideration not merely the rate of duty mentioned in the but also any notification issued under section 25 of the which is in force. Even then the reasons given by the Government to justify the total customs duty of 15% levied from March 1, 1981 or Rs. 825 per tonne as it is currently being levied appear to be inadequate. In the Finance Minister 's speech delivered on the floor of the Lok Sabha in 1981, the first reason given for the levy of 15% duty was that it was intended "to promote a measure of restraint in the consumption of imported newsprint and thus help in conserving foreign exchange". This ground appears to be not tenable for two reasons. In the counter affidavit filed on behalf of the Government, it is stated that the allegation that the position of foreign exchange reserve is comfortable is irrelevant, it. This shows that nobody in Government had over taken into consideration the effect of the import of newsprint on the foreign exchange reserve before issuing the notifications levying 15% duty. Secondly no newspaper owner can import newsprint directly newsprint import is canalised through the State (Trading Corporation. If excessive import of newsprint adversely affects foreign exchange reserve, the State Trading Corporation may reduce the import of newsprint and allocate lesser quantity of imported newsprint to newspaper establishments. There is however, no need to impose import duty with a view to curbing excessive import of newsprint. In the Finance Minister 's speech there is no reference to the capacity of the newspaper industry to bear the levy 15% of 357 duty. In the counter affidavit it is asserted that the extent of A burden faced by the newspaper industry in India is irrelevant to the levy of import duty on newsprint. This clearly shows again that the Government had not also considered a vital aspect of the question before withdrawing the total exemption which was being enjoyed by newspaper industry till March 1,1981 and imposing 15% duty on newsprint. The petitioners have alleged that the imposition of customs duty has compelled them to reduce the extent of the area of the newspapers for advertisements which supply a major part of the sinews of a newspaper and consequently has adversely affected their revenue from advertisements. It is argued by them relying upon the ruling in Bennett Coleman 's case (supra) that Article 19(1) (a) is infringed thereby. Our attention is drawn to the following passages in Bennett Coleman 's case (supra) which are at pages 777778 and at page 782: "Publications means dissemination and circulation The press has to carry on its activity by keeping in view the class of readers, the conditions of labour, price of material, availability of advertisements, size of paper and the different kinds of news comments and views and advertisements which are to be published and circulated The law which lays excessive and prohibitive burden which would restrict the circulation of a newspaper will not be saved by Article 19(2). If the area of advertisement is restricted. price of paper goes up. In the price goes up circulation will go down. This was held in Sakal Papers Case (supra) to be the direct consequence of curtailment of advertisement. The freedom of a newspaper to publish any number of pages or to circulate it to any number of persons has been held by this Court to be an integral part of the freedom of speech and expression. This freedom is violated by placing restraints upon something which is an essential part of that freedom. A restraint on the number of pages, a restraint on circulation and a restraint on advertisements would affect the fundamental rights under Article 19(1)(a) on the aspects of propagation, publication and circulation. . The various provisions of the newsprint import policy have been examined to indicate as to how the petitioners ' II 358 fundamental rights have been infringed by the restrictions on page limit, prohibition against new newspapers and new editions. The effect and consequences of the impugned policy upon the newspapers is directly controlling the growth and circulation of newspapers. The direct effect is the restriction upon circulation of newspapers. The direct effect is upon growth of newspapers through pages. The direct effect is that newspapers are deprived of their area of advertisement. The direct effect is that they are exposed to financial loss. The direct effect is that freedom of speech and expression is infringed. " In meeting the above contention the Government relying on the decision in Hamdard Dawakhana ( Wakf ) Lal Kuan, Delhi & Anr. vs Union of India & Ors.(1) has pleaded in defence of its action that the right to publish commercial advertisement is not part of freedom of speech and expression. We have carefully considered the decision in Hamdard Dawakhana 's case (supra). The main plank of that decision was that the type Of advertisement dealt with there did not carry with it the protection of Article 19(1)(a). On examining the history of the legislation, the surrounding circumstances and the scheme of the Act which had been challenged there namely the (21 of 1954) the Court held that the object of that Act was the prevention of self medication and self treatment by prohibiting instruments which may be used to advocate the same or which tended to spread the evil. The Court relying on the decision of the American Supreme Court in Lewis J. Valentine vs F.J. Chresten sen (2) observed at pages 687 689 thus: "It cannot be said that the right to publish and distribute commercial advertisements advertising an individual 's personal business is a part of freedom of speech guaranteed by the Constitution. In Lewis Valentine vs F.). Chrestensen it was held that the constitutional right of free speech is not infringed by prohibiting the distribution in city streets of handbills bearing on one side a protest against action taken by public officials and on the other advertising matter. The object of affixing of the protest to the (1) ; (2) ; 359 advertising circular was the evasion of the prohibition of a city Ordinance forbidding the distribution in the city streets of commercial and business advertising matter. Mr. Justice Roberts, delivering the opinion of the court said: "This Court has unequivocally held that the streets are proper places for the exercise of the freedom of communicating information and disseminating opinion and that, though the states and municipalities may appropriately regulate the privilege in the public interest, they may not unduly burden or prescribe its employment in these public thoroughfares. We are equally clear that the Constitution imposed no such restraint on government as respects purely commercial advertising y . If the respondent was attempting to use the streets of New York by distributing commercial advertising the prohibition of the Code provisions was lawfully invoked against such conduct. " It cannot be said, therefore, that every advertisement is a matter dealing with freedom of speech nor can it be said that it is an expression of ideas. In every case one has to see what is the nature of the advertisement and what activity falling under article 19(I) it seeks to further. The advertisements in the instant case relate to commerce or trade and not to propagating of ideas; and advertising of prohibited drugs or commodities of which the sale is not in the interest of the general public cannot be speech within the meaning of freedom of speech and would not fall within article 19(1)(a). The main purpose and true intent and aim, object and scope of the Act is to prevent self medication or self treatment and for that purpose advertisement commending certain drugs and medicines have been prohibited. Can it be said that this is an abridgement of the petitioners right of free speech ? In our opinion it is not. Just as in Chamarbaugwalla 's case ; it was said that activities undertaken and carried on with a view to earning profits e.g. the business of betting and gambling will not be protected as falling within the guaranteed right of carrying on business or trade, so it cannot be said that an advertisement commending drugs and substances an 360 appropriate cure for certain discases is an exercise of the right of freedom of speech. " In the above said case the Court was principally dealing with the right to advertise prohibited drugs, to prevent self medication and self treatment. That was the main issue in the case. It is no doubt true that some of the observations referred to above go beyond the needs of the case and tend to affect the right to publish all commercial advertisements. Such broad observations appear to have been made in the light of the decision of the American Court in Lewis J. Valentine vs F. J. Chrestensen (supra), But it is worthy of notice that the view expressed in this American case has not been fully approved by the American Supreme Court itself in its subsequent decisions. We shall refer only to two of them. In his concurring judgment in William B. Cammarano v, United States of America(1) Justice Douglas said " Valentine vs Chrestensen held that business of advertisements and commercial matters did not enjoy the protection of the First Amendment, made applicable to the States by the Fourteenth. The ruling was casual, almost off hand. And it has not survived reflection". In Jeffrey Gole Bigelow vs Commonwealth of Virginia(2) the American Supreme Court held that the holding in Lewis J. Valentine vs F.J. Chrestensen (supra) was distinctly a limited one. In view of the foregoing, we feel that the observations made in the Hamdard Dawakhana 's case (supra) are too broadly stated ' and the Government cannot draw much support from it. We ate of the view that all commercial advertisements cannot be denied the protection of Article 19 (1) (a) of the Constitution merely because they are issued by businessmen. In any event the Government cannot derive any assistance from this case to sustain the impugned notifications. It was next urged on behalf of the Government that the levy of customs duty on newsprint was not strictly a levy on newsprint as such since though customs duties were levied with reference to goods, the taxable event was the import of goods within the customs barrier and hence there could be no direct effect on the freedom of speech end expression by virtue of the levy of customs duty on newsprint. Reliance was placed in support of the above contention (1) ; 3 L ed 2d 462 (2) ; 44 L ed 2d 600 at 610 361 On the decision in In re Sea Customs Act.(l) That decision was A rendered on a reference made by the President under Article 143 of the Constitution requesting this Court to record its opinion on the question whether the Central Government could levy customs duty on goods imported by a State. The contention of the majority of the States in that case was that the goods imported by them being their property no tax by way of customs could be levied by reason of Article 289 (t) of the Constitution which exempted the property of a State from taxation by the Union. This Court (majority 5, minority 4) held that in view of clause (1) of Article 289 which was distinct from clause (2) thereof which provided that nothing in clause (1) of Article 289 would prevent the Union from imposing or authorising the imposition of any tax to such extent, if any, as Parliament might by law provide in respect of a trade or business of any kind carried on by or on behalf of a State or any operations connected therewith or any property used or occupied for the purposes of such trade or business or any income accruing or arising in connection therewith and the other provisions of the Constitution which enabled the Union to levy different kinds of taxes, customs duty levied on the importation of goods was only a to levied on international trade and not on property. The Court further held that the immunity granted under Article 289 (1) in favor of States had to be restricted to taxes levied directly on property and even though customs duties had reference to goods and commodities they were not taxes on property and hence not within the exemption in Article 289 (1). The above decision is again of very little assistance to the Government since it cannot be denied that the levy of customs duty on newsprint used in the production of newspapers is a restriction on the activity of publishing a newspaper and the levy of customs duties had a direct effect on that activity. There exists no analogy between Article 289 (l) and Article 19 (1) (a) and (2) of the Constitution. Hence the levy cannot be justified merely on the ground that it was not on any property of the publishers of newspapers. Our attention has been particularly drawn to the statement of the Finance Minister that one of the considerations which prevailed upon the Government to levy the customs duty was that the newspapers contained 'piffles '. A 'piffle ' means foolish nonsense. It appears (1) ; 362 that one of the reasons for levying the duty was that certain writings in newspapers appeared to the Minister as piffles '. Such action is not permissible under our Constitution for two reasons (i) that the judgment of the Minister about the nature of writings cannot be a true description of the writings and (ii) that even if the writings are piffles it cannot be a ground for imposing a duty will whiohhinder circulation of newspapers. In this connection it is useful to refer to the decision of the American Supreme Court in Robert E. Hannegan vs Esquire, Inc.(l) in which it was held that a publication could not be deprived of the benefit of second class mailing rates accorded to publications disseminating "information of a public character, or devoted literature, the sciences, arts, or some special industry" because its contents might seem to the Postmaster General by reason of vulgarity or poor taste, not to contribute to the public good. Justice Douglas observed in that decision thus: "It is plain, as we have said, that the favorable second class rates were granted to periodicals meeting the requirements of the Fourth condition, so that the public good might be served through a dissemination of the class of periodicals described. But that is a far cry from assuming that Congress had any idea that each applicant for the second class rate must convince the Postmaster General that his publication positively contributes to the public good or public welfare. Under our system of government there is an accommodation for the widest varieties of tastes and ideas. What is good literature, what has educational value, what is refined public information, what is good art, varies with individuals as it does from one generation to another. There doubtless would be a contrariety of views concerning Cervantes ' Don Quixote, Shakespeare 's Venus & Adonis, or Zola 's Nana. But a requirement that literature or art conform to some norm prescribed by an official smacks of an ideology foreign to our system. The basic Values implicit in the requirements of the Fourth condition can be served only by uncensored distribution of literature. From the multitude of competing offerings the public will pick and choose. What seems to one to be trash may have for others fleeting or even enduring values." (1) ; 363 Matters concerning the intellect and ethics do undergo fluctuations from era to era. The world of mind is a changing one. A It is not static. The streams of literature and of taste and judgment in that sphere are not stagnant. They have a quality of freshness and vigour. They keep on changing from time to time, from place to place and from community to community. It is one thing to say that in view of considerations relevant to public finance which require every citizen to contribute a reasonable amount to public exchequer customs duty is leviable even on newsprint used by newspaper industry and an entirely different thing to say that the levy is imposed because the newspapers generally contain 'piffles '. While the former may be valid if the circulation of newspapers is not affected prejudicially, the latter is impermissible under the Constitution as the levy is being made on a consideration which is wholly outside the constitutional limitations. The Government cannot arrogate to itself the power to prejudge the nature of contents of newspapers even before they are printed. Imposition of a restriction of the above kind virtually amounts to conferring on the Government the power to precensor a newspaper. The above reason given by the Minister to levy the custom duty is wholly irrelevant. To sum up, the counter affidavit filed on behalf of the Government in these cases does not show whether the Government ever considered the relevant matters. It says that the extent of burden on the newspaper industry imposed by the impugned levy is irrelevant. It says that the position that foreign exchange reserve is comfortable is not relevant. It does not say that the increasing cost of imported newsprint was taken into consideration. The Finance Minister says that the levy was imposed because he found piffles ' in some newspapers. There is no reference to the effect of the implementation of the Palekar Award on the newspaper industry. It does not also state what effect it will have on the members of the public who read newspapers and how far it will reduce the circulation of newspapers. It is argued on behalf of the Government that the effect of the impugned levy being minimal, there is no need to consider the contentions urged by the petitioners. As observed by Lord Morris of Borth Y Gest in Honourable Dr. Paul Borg Olivier & Anr vs Honourable Dr. Anton Buttigieg(l) a case from Malta, that where (1) 11967] A.C. 115 (P.C.) 364 fundamental rights and freedom of the individual are being considered, a court should be cautious before accepting the view that some particular disregard of them is of minimal account. The learned Lord observed in the above case that there was always the likelihood of the violation being vastly widened and extended with impunity. He also referred to the words of Portia 'Twill be recorded for a precedent, and many an error by the same example will rush into the state ', and the following passage from the American case i e Thomas vs Collins (I) "The restraint is not small when it is considered what was restrained. The right is a national right, federally guaranteed. There is some modicum of freedom of thought, speech and assembly which all citizens of the republic may exercise throughout its length and breadth, which no state, nor all together, not the nation itself, can prohibit, restrain or impede. If the restraint were smaller than it is, it is from petty tyrannies that large ones take root and grow. This fact can be more plain than when they are imposed on the most basic right of all. Seedlings planted in that soil grow great and, growing, break down the foundations of liberty. " In the above decision the Privy Council cited with approval the view expressed by this Court in Romesh Thappar 's case (supra) and in Martin vs City of Struthers(2) The Privy Council observed thus: "A measure of interference with the free handling of the newspaper and its free circulation was involved in the prohibition which the circular imposed. It was said in an Indian case Romesh Thappey vs State of Madras): "There can be no doubt that freedom of speech and expression includes freedom of prepagation of ideas and that freedom is secured by freedom of circulation. 'Liberty of circulation is as essential to that freedom as the liberty of publication. Indeed without circulation the publication would be of little value." (2) ; (3)[1943] ; 365 Similar thoughts were expressed by Black J. in his judgment in Martain vs City of Struthers when he said: "Freedom to distribute information to every citizen wherever he desires to receive it is so clearly vital to the preservation of a free society that, putting aside reasonable police and health regulations of time and manner of distribution, it must be fully preserved". We respectfully endorse the high principle expounded by the Privy Council in the above case. Moreover in the absence of a proper examination of all relevant matters, it is not possible to hold that the effect of the levy is minimal. In fact the impact of the impugned levy in these cases is not minimal at all. For example, The Tribune Trust has to pay Rs. 18.7 lacs and The Statesman Ltd. has to pay Rs. 35.9 lacs by way of customs duty on newsprint imported during 1983 84. Other big newspapers have also to pay large sums by way of customs duty annually. The question in the present cases is whether the tax has been shown to be so burdensome as to warrant its being struck down ? The petitioners have succeeded in showing a fall in circulation but whether it is a direct consequence, of the customs levy and the increase in price has not been duly established. It may be due to various circumstances. The fall in circulation may be due to the general rise in cost of living and the ' reluctance of people to buy as many newspapers as they used to buy before. It may be due to bad management. It may be due to change of editorial policy. It may be due to the absence of certain feature writers. It may be due to other circumstances which it is not possible to enumerate. Except the synchronizing of time, there is nothing to indicate that the slight fall in circulation is directly due to the levy of customs duty. One curious feature of the case is that the petitioners have made no efforts to produce their balance sheets or profit and loss statements to give us a true idea of how burdensome the customs levy really is. On the other hand, the Government also has made no efforts to show the effect of the impact of the levy on the newspaper industry as a whole. All these years, the very exemption which they granted was an indication that the levy was likely to have a serious impact on the newspaper industry. Even now the exemption given to the small and medium newspapers shows that there is bound to be an impact. No effort has been made on the part of the Government to show 366 the precise nature of the impact. On the other hand, the case of the Government appears to be that such considerations are entirely irrelevant, though the outstanding fact remains that for several years, the Government itself thought that the newsprint deserved total exemption. On the material now available to us, while it is not possible to come to the conclusion that the effect of the levy is indeed so burdensome as to affect freedom of the press, we are also not able to come to the conclusion that it will not be burdensome. This a matter which touches the freedom of the press which is, as we said, the very soul of democracy. This is certainly not a question which should be decided on the mere question of burden of proof. There are factors indicating that the present levy is heavy and is perhaps heavy enough to affect circulation. On such a vital issue, we cannot merely say that the petitioners have not placed sufficient material to establish the drop in circulation is directly linked to increase of the levy when, on the side of the Government the entire exercise is thought to be irrelevant. Hence there appears to be a good ground to direct the Central Government to reconsider the matter afresh in the light of what has been said here. Is the classification of newspapers made for the purpose of exemption violative of Article 14 7 We do not, however, see much substance in the contention of some of the petitioners that the classification of the newspapers into small, medium and big newspapers for purposes of levying customs duty is violative of Article 14 of the Constitution. The object of exempting small newspapers from the payment of customs duty and levying 5% ad valorem (now Rs. 275 per MT) on medium newspapers while levying full customs duty on big newspapers is to assist the small and medium newspapers in bringing down their cost of production. Such papers do not command large advertisement revenue. Their area of circulation is limited and majority of them are in Indian languages catering to rural sector. We do not find anything sinister in the object nor can it be said that the classification has no nexus with the object to be achieved. As observed by Mathew, J. in the Bennett Coleman 's case (supra) it is the duty of the State to encourage education of the masses through the medium of the press under Article 41 of the Constitution. We? therefore, reject this contention. 367 VIII Relief Now arises the question relating to the nature of relief that may be granted in these petitions. These cases present a peculiar difficulty which arises out of the pattern of legislation under consideration. If the impugned notifications ale merely quashed, they being notifications granting exemptions, the exemptions granted under them will cease. Will such quashing revive the notification dated July 15,1977 which was in force prior to March 1,1981 under which total exemption had been granted ? We do not think so. The impugned notification dated March 1, 1981 was issued in supersession of the notification dated July 15,1977 and thereby it achieved two objects the notification dated July 15,1977 came to be repealed and 10% ad valorem. customs duty was imposed on newsprint. Since the notification dated July 15,1977 had been repealed by the Government of India itself, it cannot he revived on the quashing of the notification of March 1,1981. The effect of such quashing of a subsequent notification on an earlier notification in whose place the subsequent notification was issued has been considered by this Court in B.N. Tiwari vs Union of India and Ors.(1) In that case the facts were these: in 1952, a 'carry forward ' rule governing the Central Service was introduced whereby the unfilled reserved vacancies of a particular year would be carried forward for one year only. In 1955 the above rule was substituted by another providing that the unfilled reserved vacancies of a particular year would be carried forward for two years. In T. Devadasan vs The Union of India & Anr.(2) the 1955 rule was declared unconstitutional. One of the questions which arose for consideration in this case 'Tiwari 's case (supra) was whether the 1952 rule had revived after the 1955 rule was struck down. This Court held that it could not revive. The following are the observations of this Court on the above question: "We shall first consider the question whether the carry forward rule of 1952 still exists. It is true that in Devadasan 's case, the final order of this Court was in these terms: "In the result the petition succeeds partially and (1) ; (2) ; 368 the carry forward rule as modified in 1955 is declared invalid. " That however does not mean that this Court held that the 1952 rule must be deemed to exist because this Court said that the carry forward rule as modified in 1955 was declared invalid. The carry forward rule of 1952 was substituted the carry forward by rule of 1955. On this substitution the carry forward rule of 1952 clearly ceased to exist because its place was taken by the carry forward rule of 1955. Thus by promulgating the new carry forward rule in 1955, the Government of India itself canceled the carry forward rule of 1952. When therefore this Court struck down the carry forward rule as modified in 1955 that did not mean that the carry forward rule of 1952 which had already ceased to exist, because the Government of India itself canceled it and had substituted a modified rule in 1955 in its place, could revive. We are therefore of opinion that after the judgment of this Court in Devadasan 's case there is no carry forward rule at all, for the carry forward rule of 1955 was struck down by this Court while the carry forward rule of 1952 had ceased to exist when the Government of India substituted the carry forward rule Of 1955 in its place." In Firm A.T.B. Mehtab Majid & Co. vs State of Madras & Anr.(1) also this Court has taken the view that once an old rule has been substituted by a new rule, it ceases to exist and it does not get revived when the new rule is held invalid. The rule in Mohd. Shaukat Hussain Khan vs State of Andhra Pradesh(2) is inapplicable to these cases. In that case the subsequent law which modified the earlier one and which was held to be void was one which according to the Court could not have been passed at all by the State Legislature. In such a case the earlier law could be deemed to have never been modified or repealed and would, therefore, continue to be in force. It was strictly not a case of revival of an earlier law which had been repealed or modified on (1) [19631 Supp. 2 S.C.R. 435 at 446. (2) ; 369 the striking down of a later law which purported to modify or repeal A the earlier one. It was a case where the earlier law had not been either modified or repealed effectively. The decision of this Court in Shri Mulchand Odhavji vs Rojkot Borough Municipality is also distinguishable. In that case the State Government had been empowered by section 3 of the Saurashtra Terminal Tax and Octroi Ordinance (47 of 1949) to impose octroi duty in towns and cities specified in Schedule I thereof and section 4 authorised the Government to make rules for the imposition and collection of octroi duty. These rules were to be in force until the City Municipalities made their own rules. The rules framed by the Municipality concerned were held to be inoperative. Then the question arose whether the rules of the Government continued to be in force. The Court held a "The Government rules, however, were to cease to operate as the notification provided "from the date the said Municipality put into force their independent by laws. " It is clear beyond doubt that the Government rules would cease to apply from the time the respondent Municipality brought into force its own bye laws and rules under which it could validly impose, levy and recover the octroi duty. The said notification did not intend any hiatus when neither the Government rules nor the municipal rules would be in the field. Therefore, it is clear that if the bye laws made by the respondent Municipality could not be legally in force some reason or the other, for instance, for not having been validly made, the Government rules would continue to operate as it cannot be said that the Municipality had 'put into force their independent bye laws". The Trial Court, as also the District Court, were therefore, perfectly right in holding that the respondent Municipality could levy and collect octroi duty from the appellant firm under the Government rules. There was no question of the Government rules being revived, as in the absence of valid rules of the respondent Municipality they continued to operate. The submission of counsel in this behalf, therefore, cannot be sustained. " In the cases before us we do not have rules made by two (1 ) A.l. R. 370 different authorities as in Mulchand 's case (supra) and no intention on the part of the Central Government to keep alive the exemption in the event of the subsequent notification being struck down is also established. The decision of this court in Koteswar Vittal Kamath vs K Rangappa Baliga & Co.(1) does not also support the petitioners. In that case again the question was whether a subsequent legislation which was passed by a legislature without competence would have the effect of reviving an earlier rule which it professed to supersede. This case again belongs to the category of Mohd. Shaukat Hussain Khan 's case (supra). It may also be noticed that in Koteswar Vittal Kamath 's case (supra) the ruling in the case of Firm A.T.B. Mehtab Majid & Co. (supra) has been distinguished. The case of State of Maharashtra etc. vs The Central Provinces Manganese Ore Co. Ltd.(2) is again distinguishable. In this case the whole legislative process termed substitution was abortive, because, it did not take effect for want of the assent to the Governor General all the Court distinguished that case from Tiwari 's case (supra). We may also state that the legal effect on an earlier law when the later law enacted in its place is declared invalid does not depend merely upon the use of words like, 'substitution ', or 'supersession '. It depends upon the totality of circumstances and the context in which they are used. In the cases before us the competence of the Central Government to repeal or annul or supersede the notification dated July 15, 1977 is not questioned Hence its revival on the impugned notifications being held to be void would not arise. The present cases are governed by the rule laid down in Tiwari 's case (supra) Hence if the notification dated July 15, 1977 cannot revive on the quashing of the impugned notifications, the result would be disastrous to the petitioners as they would have to pay customs duty of 40% ad valorem from March 1, 1981 to February 28, 1982 and 40% ad valorem plus Rs. 1,000 per MT from March 1, 1982 onwards. In addition to it they would also be liable to pay auxiliary duty of 30% ad valorem during the fiscal year 1983 84 and auxiliary duty of 50% ad valorem during the fiscal year 1982 83. They would straigtaway be liable to pay the whole of customs duty and any other duty levied during the current fiscal year also. Such a result cannot be allowed to 'ensue. (1) ; (2) [1977] I S.C.R. 1002. 371 It is no doubt true that so me of the petitioners have also questioned the validity of the levy prescribed by the itself. But we are of the view the it is unnecessary to quash it because of the pattern of the legislative provisions levying customs duty which authorise the Government in appropriate cases either to reduce the duty or to grant total exemption under section 25 of the having regard to the prevailing circumstances and to very such concessions from time to time. The Governmental practice in the matter of customs duties has made the law imposing customs virtually a hovering legislation. Parliament expects the Government to review the situation in each case periodically and to decide what duty should be levied within the limit prescribed by the . Hence the validity of the provision in the need not be examined now. Since it is established that the Government has failed to discharge its statutory obligations in accordance with law while issuing the impugned notifications issued under section 25 of the Custom Act, 1962 on and after March 1, 1981, the Government should be directed to re examine the whole issue relating to the extant of exemption that should be granted in respect of imports of newsprint after taking into account all relevant considerations for the period subsequent to March 1,1981 We adopt this course since we do not also wish that the Government should be deprived of the legitimate duty which the petitioners would have to pay on the imported newsprint during the relevant period. In the result, in view of the peculiar features of these cases and having regard to Article 32 of the Constitution which imposes an obligation on this Court to enforce the fundamental rights and Article 142 of the Constitution which enables this Court in the exercise of its jurisdiction to make such order as is necessary for doing complete justice in any cause or matter pending before it, we make the following order is these cases: The Government of India shall reconsider within six months the entire question of levy of import duty or auxiliary duty payable by the petitioners and others on newsprint used for printing newspapers, periodicals etc. with effect from March 1, 1981. The petitioners and others who are engaged in newspaper business shall make available to the Government all information necessary to decide the question. If on such reconsideration the Government decides that 372 there should be any modification in the levy of customs duty or A auxiliary duty with effect from March 1, 1981, it shall take necessary steps to implement its decision. Until such redetermination of the liability of the petitioners and others is made, the Government shall recover only Rs. 550 per MT on imported newsprint towards customs duty and auuiliary duty and shall not insist upon payment of duty in accordance with the impunged notifications. The concessions extended to medium and small newspapers. may, however, remain in force. If, after such redetermination, it is found that any of the petitioners is liable to pay any deficit amount by way of duty, such deficit amount shall be paid by such petitioner within four months from the date on which a notice of demand is served on such petitioner by the concerned authority. Any bank guarantee or security given by the petitioners shall be available for recovery of such deficit amounts. If, after such redetermination, it is found that any of the petitioners is entitled to any refund such refund shall be made by the Government within four months from the date of such redetermination. A writ shall issue to the respondents accordingly in these cases. Parties shall, however, bear their own costs. The petitions are accordingly allowed.
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The Indian Tariff Act of 1934 placed a tax, called a customs duty, on paper that was brought into the country. However, there was an exception. White, grey, or plain newsprint (the paper used for newspapers) could be imported with a customs duty of only 1.5%. Later, this was changed to a specific import duty of 50 Rupees per metric ton, which lasted until 1966. In 1965, a committee studying small newspapers looked at the newsprint customs duty. They suggested that newsprint should be completely exempt from this duty. Following this suggestion, the government eliminated the customs duty on newsprint in 1966. In 1971, a new tax called a "regulatory duty" of 2.5% was placed on imported newsprint. In 1973, this regulatory duty was removed and replaced with a 5% "auxiliary duty" by the Finance Act (a law about money). When the Indian Tariff Act of 1934 was replaced, a basic customs duty of 40% was placed on newsprint under the new law (the 1975 Act). However, the 5% auxiliary duty from 1973 stayed in place until it was also removed in July 1977. The complete removal of customs duty on newsprint continued until March 1, 1981. At that time, a new rule said that newspaper publishers had to pay a 10% customs duty on imported newsprint. Around the same time, another rule said that the auxiliary duty above 5% would not apply to newsprint. The result was a total duty of 15% on newsprint for the year 1981-82. This increased the price of newspapers, which led to fewer people buying them. The first set of court cases challenged this 15% tax. While these cases were ongoing, the law was changed to a 40% duty plus 1000 Rupees per metric ton on newsprint. The auxiliary duty on all goods subject to customs duty was also increased to 50%. But, in February 1982, a new rule was issued that replaced the March 1, 1981, rule. This new rule set the customs duty at 550 Rupees per ton and the auxiliary duty at 275 Rupees per ton. In total, newspaper companies had to pay 825 Rupees per ton in duty. Under the government's newsprint policy, there were three ways to get newsprint: (1) buying it while it was being shipped, (2) buying it from a government-controlled stock, and (3) buying newsprint made in India. Imported newsprint was a key part of the total amount of newsprint used by newspaper companies. The court cases questioned whether it was legal to tax newsprint imported from other countries under the laws and rules in place. The arguments in the court cases were: (1) the import duty limited freedom of speech because it increased the price of newspapers and reduced their sales; (2) newspapers should naturally grow by 5% each year as the population and literacy increase, but the price increase was stopping this growth; (3) the way the import duty was set gave too much power to government officials; (4) there was no need for the customs duty because the country had plenty of foreign money, and newsprint had been exempt from the duty until March 1, 1981. The government sold newsprint to small newspapers (under 15,000 copies) without any import duty included in the price. Medium newspapers (15,000 to 50,000 copies) paid a price that included a 5% duty. Large newspapers (over 50,000 copies) paid a price that included a 15% duty. This way of dividing newspapers into big, medium, and small was not logical. Sometimes a publisher would own many newspapers of different sizes and classes. Also, the rising price of newsprint and the bad economy made it impossible for the industry to pay the duty. Since the ability to pay the duty is important for whether the tax is fair, the tax violated the Constitution's guarantees of freedom of speech and the right to work. The tax on large newspapers was meant to hurt newspapers that criticized the government. Dividing newspapers into small, medium, and big for the import duty was against the Constitution's guarantee of equal treatment; and (6) the government's power to tax newspapers threatened freedom of the press, which was against the Constitution. The government argued that (1) the duty was in the public interest to raise money for the government. The government also said it had to make sure there was a good reason to remove the customs duty. Otherwise, it had to follow the law passed by the government that set the duty rate; (2) dividing newspapers for tax purposes was done in the public interest and was not done unfairly. Since everyone should share the cost of running the country, a customs duty on newsprint was not against freedom of speech. The government also said that whether the tax was too high was not relevant to the import duty on newsprint; (3) having enough foreign money was not a reason to not have an import duty; and (4) since the duty was an indirect tax paid by the newspaper buyers, the newspaper companies should not be upset about it. The Court's Decision: 1. The Constitution does not use the words "freedom of the press," but it is included in the freedom of speech, which is protected by the Constitution. Freedom of the press means being free from government control that would interfere with what newspapers say or how they are distributed. 2. There cannot be any limits on freedom of speech except those listed in the Constitution. It is clear that there cannot be any interference with that freedom in the name of public interest. Even after the Constitution was changed to allow reasonable limits on freedom of speech for the sake of the country's safety, its relationships with other countries, public order, or morality, the government did not add a reason about public interest. 3. Freedom of the press is central to society and politics. The press educates the public, especially in developing countries where television and other modern ways of communicating are not available to everyone. The press should share facts and opinions so people can make good decisions in a democracy. Newspapers often publish information about the government that the government may not like. To prevent problems with the free flow of information, democracies around the world have rules to protect freedom of speech and limit interference with it. It is the duty of courts to protect this freedom and strike down any laws or government actions that interfere with it, unless they are allowed by the Constitution. (i) Except for small newspapers (under 10,000 copies per day), larger newspapers are like big businesses. The government has to provide them with many services, which costs the government a lot of money because many of these services are heavily supported. Therefore, these big newspapers should pay their fair share of taxes. (ii) When deciding if a law violates freedom of speech, decisions by the United States Supreme Court can be considered for understanding the basic ideas of freedom of speech and why it is important in a democracy. (iii) The rules about freedom of speech in the Indian Constitution are different from those in the American Constitution, which are almost absolute. The rights in the Indian Constitution must be read along with other parts of the Constitution that allow for some restrictions. 6. Newspapers are not specifically exempt from taxes. The Constitution gives the government the power to tax the sale or purchase of newspapers and advertisements in them. The power to tax goods brought into the country also belongs to the government. 7. The First Amendment to the American Constitution is almost absolute, so the American Congress cannot make laws that limit freedom of the press. However, American courts have allowed the government to tax newspapers, but the courts can review these taxes to make sure they are fair. 8. The power to control society through police, taxes, and taking private property for public use is needed for peace and good government. In India, the power to tax people who run newspapers must be recognized because it is part of what a government does. But, courts should review how this power is used. 9. The press does not have to obey the government. As long as the courts exist, newspapers do not have to worry about their freedom being limited unfairly. Just because the government has the power to tax does not mean that freedom of the press is lost. The courts are there to protect that freedom. 10. Newspapers have both freedom of speech and the freedom to work in any job or business. While there cannot be a tax on freedom of speech, there can be a tax on jobs, businesses, and industries. So, there can be a tax on newspapers. But, if that tax interferes with freedom of speech, it becomes illegal. As long as the tax is reasonable and does not block freedom of speech, it is allowed. It is up to the courts to decide when a tax on a business becomes a limit on freedom of speech. 11. When taxing newspapers, it must be remembered that the tax should not be too heavy, and newspapers should not be treated unfairly. A tax like the customs duty on newsprint is like a tax on knowledge and puts a burden on people for being able to read and for wanting to be informed citizens. People need to be well-informed so they can make good decisions that affect them. 12. Freedom of speech serves four purposes: (i) it helps people grow as individuals, (ii) it helps find the truth, (iii) it helps people take part in making decisions, and (iv) it helps balance stability and change in society. Everyone should be able to have their own beliefs and share them with others. In short, people have a right to know. Freedom of speech should be supported by those who believe in people taking part in government. Because society has a special interest in freedom of speech, the government should be more careful when taxing newspapers than when taxing other things. 13. Because newsprint is closely tied to freedom of the press, the rules for deciding if a law taxing newsprint is legal should be different from the rules for other tax laws. For ordinary taxes, the laws can only be questioned if they take away property or are a trick to do so. But for a tax on newsprint, it is enough to show that the tax is noticeably burdensome and is clearly caused by the tax. 14. In these cases, even if the government's power to make exceptions to the tax is a legislative power (power to make laws), and the rules made by the government are like laws, the rules can still be questioned if they are unreasonable. 15. A rule made by the government does not have the same protection as a law passed by the legislature. Government rules can be questioned for the same reasons as laws. They can also be questioned if they do not follow the law they are based on, or if they go against another law. Government rules must follow laws passed by the legislature. They can also be questioned if they are unreasonable, meaning they are obviously unfair. 16. In India, unfairness is not a separate reason because it is covered by the Constitution's guarantee of equal treatment. When deciding if a government rule is legal, it must be limited to the reasons that laws can be questioned. That is, it goes against other laws, it is so unfair that it does not follow the law, or it violates the Constitution. Government rules cannot be questioned for violating principles of fairness in the same way that government actions can be questioned. 17. A difference must be made between giving someone else the power to make laws and giving someone the power to use their judgment. In the second case, the decision can be questioned for the same reasons that government actions can be questioned, such as not considering the issue carefully, considering irrelevant information, or failing to consider relevant information. A government rule can be struck down as unfair or against the law if it fails to consider important facts that the law or the Constitution says must be considered. This can only be done if the rule does not follow the law or Constitution, or if it violates the Constitution's guarantees of equal treatment or freedom of speech. It cannot be done just because the rule is not reasonable or has not considered relevant information that the court thinks is important. 18. In cases where the government has the power to act in the public interest, the court may require the government to use that power reasonably and in line with the Constitution. The fact that a rule must be presented to the legislature does not change the court's power to decide if it is legal. 19. The law that allows the government to make these rules gives the government both the power and the duty to consider the whole issue in light of the public interest. It says that if the government believes it is necessary in the public interest, it can exempt any goods from the customs duty. The government's power is discretionary but not unlimited. 20. Any rule made under a law is also a "law" as defined by the Constitution, and it can be struck down if it violates any of the basic rights protected by the Constitution. 21. If the government taxes newsprint, that cost will be passed on to the newspaper buyers unless the industry can afford to absorb it. To pass on the cost, the price of newspapers has to increase. This naturally reduces the number of newspapers sold. 22. The way customs duties are imposed gives government officials too much power to decide who has to pay them. The legislature has imposed duties through laws, but the government has the power to exempt people from paying the customs duty. It is assumed that the government will consider all relevant information when deciding whether to grant an exemption. In 1975, a 40% duty was placed on newsprint even though it had been exempt. If the exemption had not continued, newspaper publishers would have had to pay this duty. Then, in 1982, an extra duty of 1000 Rupees per ton was added even though the exemption rule had set the basic duty at 10%. The government did not provide any reason for this extra duty, especially since the existing rule exempted customs duty above 10%. When taxing something that is also protected by freedom of speech, more care should be taken. While newspapers should pay their fair share of taxes, any special tax on newspapers must be shown to be a reasonable tax in court if challenged. Without enough information, a tax of 40% plus 1000 Rupees per ton is likely to be struck down. 23. The reasons given by the government for the 15% customs duty from March 1, 1981, or the 825 Rupees per ton being charged now, seem inadequate. In 1981, the government said the 15% duty was meant to "promote restraint in the consumption of imported newsprint and thus help in conserving foreign exchange." This reason is not valid for two reasons. First, the government had never considered the effect of newsprint imports on foreign money before issuing the duty. Second, newspaper owners cannot import newsprint directly. The government controls newsprint imports. If too much newsprint is being imported, the government can reduce the amount being imported. There is no need to impose an import duty to stop too much newsprint from being imported. The government did not consider important information before removing the exemption that newspapers had enjoyed until March 1, 1981, and imposing the 15% duty. 24. It was also pointed out that the government said one of the reasons for the duty was that newspapers contained "piffles." A "piffle" means foolish nonsense. It seems that one of the reasons for the duty was that certain writings in newspapers seemed like "piffles" to the government. This is not allowed under the Constitution. 25. Ideas and ethics change over time. The world of thought is not constant. Literature, taste, and judgment are not stagnant. They are always changing from time to time, from place to place, and from community to community. 26. It is one thing to say that customs duty is needed on newsprint because everyone should pay their fair share of taxes. It is another thing to say that the duty is imposed because newspapers contain "piffles." The first may be valid if it does not hurt newspaper sales, but the second is not allowed under the Constitution because the reason for the duty is outside the limits of the Constitution. The government cannot decide what the contents of newspapers are like even before they are printed. This is like giving the government the power to censor newspapers. This reason given by the government to impose the customs duty is completely irrelevant. 27. The government's argument that the duty has a minimal effect cannot be accepted. 28. There are signs that the current duty is heavy enough to affect sales. There is good reason to tell the government to reconsider the issue. 29. Dividing newspapers into small, medium, and big for the customs duty does not violate the Constitution. The goal of exempting small newspapers and taxing medium newspapers 5% while taxing big newspapers the full amount is to help small and medium newspapers lower their costs. These newspapers do not have much advertising money. They are mostly in local languages and serve rural areas. There is nothing wrong with this goal, and the way newspapers are divided is related to the goal. 30. Canceling the rule from March 1, 1981, would not bring back the rule from July 15, 1977, that had completely removed the duty. Once an old rule has been replaced, it no longer exists and cannot be revived if the new rule is found to be invalid. Since the government's power to cancel the rule from July 15, 1977, is not being questioned, it would not come back even if the new rules are found to be void. Therefore, if the rule is canceled, the petitioners would have to pay the customs duty of 40% from March 1, 1981, to February 28, 1982, and 40% plus 1000 Rupees per ton from March 1, 1982, onward. They would also have to pay auxiliary duty of 30% during year 1982-83 and 50% during the year 1983-84. They would have to pay the full customs duty and any other duty charged during the current year as well. This cannot be allowed to happen. The challenge to the tax set by the law itself cannot be allowed to succeed. 31. The government has failed to do what it was required to do when issuing the rules. The government is told to reexamine the whole issue after considering all relevant information for the time after March 1, 1981. The government cannot be deprived of the duty it is legally owed on imported newsprint. 32. Because of the special facts of these cases and the Constitution, which requires the Court to protect basic rights, the Court made the following order: 1. The government must reconsider the entire issue of import duty on newsprint used for printing newspapers from March 1, 1981, within six months. The petitioners and others in the newspaper business must give the government all the information needed to decide the issue. 2. If the government decides to change the customs duty from March 1, 1981, it must take steps to carry out its decision. 3. Until the duty is decided again, the government can only collect 550 Rupees per ton on imported newsprint for customs duty and cannot demand payment according to the rules being challenged. The reduced duties for medium and small newspapers can remain in place. 4. If it is found that any of the petitioners owes more duty after the redetermination, that amount must be paid within four months of receiving a notice from the government. Any bank guarantee or security given by the petitioners will be used to recover the money owed. 5. If it is found that any of the petitioners is owed a refund after the redetermination, the government must make that refund within four months of the redetermination. A legal order will be sent to the government.
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23 of 1983 and 23 of 1984. 6446 47 of 1181 (Under Article 32 of the Constitutions of India) A.K. They challenge in these petitions the validity of the imposition of import duty on newsprint imported from abroad under section 12 of the (Act 52 of 1962) read with section 2 and Heading No. (2) in the First Schedule to the (Act 51 of 1975) and the levy of auxiliary duty under the Finance Act, 1981 on newsprint as modified by notifications issued under section 25 of the with effect from March 1, 1981. Under the scheme in force, the State Trading Corporation of India sells newsprint to small newspapers with a circulation of less than 15,000 at a price which does not include any import duty, to medium newspapers with a circulation between 15,000 and 50,000 at a price which includes 5% ad valorem duty (now Rs. 275 per MT) and to big newspapers having a circulation of over 50,000 at a price which includes the levy of 15% ad valorem duty (now Rs. It is stated that when exemption is given from the customs duty, the Executive has to satisfy itself that there is some other corresponding public interest justifying such exemption and that in the absence of any such public interest, the Executive has Do power to exempt and that it has to carry out the mandate of Parliament which has fixed the rate of duty by the . It is pleaded that since every section of the society has to bear its due share of the economic burden of the State, levy of customs duty on newsprint cannot be considered to be violative of Article 19 (1) (a) of the Constitution. On March 1, 1981, the notification dated July 15, 1977 issued under section 25 (1) of the granting total exemption from customs duty was superseded by the issue of a fresh notification which stated that the Central Government had in the public interest exempted newsprint imported into India for printing of newspapers, books and periodicals from so much of that portion of the duty of customs leviable thereon as was in excess of 10 per cent ad valorem. The effect of the said notification was that publishers of newspapers had to pay ten per cent ad valorem customs duty on imported newsprint. By another notification issued at about the same time auxiliary 305 duty imposed by the Finance Act of 1981 above 5 per cent ad valorem was exempted in the case of newsprint. While no customs duty was levied on newsprint because of the exemption granted by Customs Notification No. No. No. 306 The price of imported newsprint in March 1,1981 was A Rs. At the moment the present definition is that these which have a circulation of 15,000 or less are classified as small, those with a circulation of more than 15,000 but less than 50,000 are classified as medium and those with a circulation of over 50,000 are called big newspapers. Therefore, the small newspapers with a circulation of 15,000 and less will not pay any customs duty those with a circulation between 15,000 and 50,000 will pay customs duty of 5 per cent and with a circulation of over 50,000 will pay 15 per cent. (1) Except as otherwise provided n in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the (5l of 1975), or any other law for the time being in force, on goods imported into or exported from India. The above rate of auxiliary duty was to be in force during the financial year 1982 83 and it was open to the Government to grant exemption from the whole or any part of it under section 25 of the . 550 per tonne was imposed as customs duty on newsprint and auxiliary duty was fixed at Rs. What is of significance is that when the Government was of the view that the total customs duty on newsprint in the public interest should be not more than 15 per cent and when these writ petitions questioning even that 15 per cent levy were pending in a this Court, Parliament was moved by the Government specifically to increase the basic customs duty on newsprint by Rs. D The effect of the imposition of 15 per cent duty may to some extent have led to the increase in the price of newspapers in 1981 and it resulted in the fall in circulation of newspapers. Our Constitution does not use the expression 'freedom of press ' in Article 19 but it is declared by this Court that it is included in Article 19(1)(a) which guarantees freedom of speech and expression. (1) All citizens shall have the right (a) to freedom of speech and expression; . In Romesh Thappar vs The State of Madras and Brij Bhushan 's case (supra) this Court firmly expressed its view that there could not be any kind of restriction on the freedom of speech and expression other than those mentioned in Article 19(2) and thereby made it clear that there could not be any interference with that freedom in the name of public interest. It may therefore be subject to certain restrictions, but these shall only be such as are provided by law and are necessary: 313 (a) For respect of the rights or reputations of others; (b) For the protection of national security or of public order (order public), or of public health or morals. " The First Amendment to the Constitution of the United States of America declares: "Amendment I Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech or of the press, or the right of the people peaceably to assemble, and to petition the government for a redress of grievances." Of these, we shall refer to some observations made by this Court in some of them. Since circulation of a newspaper is a part of the right of freedom of speech the Act must be regarded as one directed against the freedom of speech. Of course that is what it should be because in no free country with a democratic Government we have any such taxes as the sales tax or the advertisement tax . I would, there. It does not say that there shall be sales and advertisement tax imposed on newspapers. It does not commit the House today to the imposition of a tax on the sales of or a tax on advertisements published in newspapers, All that we have emphasised is that newspapers as such should be taken away from the purview of the provincial Governments and brought to the Central List so that if at all at any time a tax is to be imposed on newspapers it should be done by the representatives of whole country realising the full 326 implications of their action. As a general rule, the constitutional guaranties of freedom of speech and of the press are subject to the proper exercise of the government 's power of taxation, so that the imposition of uniform and non discriminatory taxes is not invalid as applied to persons or organisations engaged in the dissemination of ideas through the publication or distribution of writing. A license or license tax to permit the enjoyment of freedom of speech and freedom of press may not, however, be required as a form of censorship, and where the purpose of the tax or license is not for revenue, or for reasonable regulation, but is a deliberate and calculated device to prevent, or to curtail the opportunity for, the acquisition of knowledge by the people in respect of their governmental affairs, the statute or ordinance violates the constitutional guaranties, and particularly the Fourteenth Amendment to the federal Constitution. 331 "In the light of all that has now been said, it is evident that the restricted rules of the English law in respect of the A freedom of the press in force when the Constitution was adopted were never accepted by the American colonists, and that by the First Amendment it was meant to preclude the national government, and by the Fourteenth Amendment to preclude the states, from adopting any form of previous restraint upon printed publications, or their circulation, including that which had theretofore been effected by these two well known and odious methods It is not intended by anything we have said to suggest that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the government. (Underlining by us) The levy imposed by Louisiana was quashed by the Supreme 332 Court of the United States of America in the above case on the ground that it violated the First Amendment to the Constitution of the United States of America since it was of the view that the tax levied in this case was a device to limit the circulation of information. Freedom of press, freedom of speech, freedom of religion are in a preferred position." 337 (2) Nothing contained in or done under the authority of any law shall be held to be inconsistent with or in contravention of this section to the extent that the law in question makes provision (a) that is reasonably required (i) in the interests of defence, public safety, public order, public morality or public health; or (ii) for the purpose of protecting the reputations, rights and freedoms of other persons, or the private lives of persons concerned in legal proceedings, preventing the disclosure of information received in confidence, maintaining the authority and independence of the courts, or regulating telephony, telegraphy, posts, wireless, broadcasting, television or other means of communication, public exhibitions or public entertainments; or (b) that imposes restrictions upon public officers." that. Be that as it may, it is difficult to grant that merely because the Government has the power to levy taxes the freedom of press would be totally lost. Newspaper industry enjoys two of the fundamental rights, namely the freedom of speech and expression guaranteed under Article 19 (l) (a) and the freedom to engage in any profession, occupation, trade, industry or business guaranteed under Article 19 (1) (g) of the Constitution, the first because it is concerned with the field of expression and communication and the second because communication has become an occupation or profession and because there is on invasion of trade, business and industry 340 into that field where freedom of expression is being exercised. They have drawn our attention to the following passage in the decision in Sakal 's case (supra) which is at page 863: " It may well be within the power of the state to place, in the interest of the general public, restrictions upon the right of a citizen to carry on business but it is not open to the State to achieve this object by directly and immediately curtailing any other freedom of that citizen guaranteed by the Constitution and which is not susceptible of abridgement on the same grounds as are set out in cl. (3) to (6). Neither of them was concerned with the power of Parliament to levy tax on any goods used by the newspaper industry As we have observed earlier taxes have to be levied for the support of the Government and newspapers which derive benefit from the public expenditure cannot disclaim their liability to contribute a fair and reasonable amount to the public exchequer. What may, however, have to be observed in levying a tax on newspaper industry is that it should not be a over burden on newspapers which constitute the Fourth Estate of the country. A While we, therefore, cannot agree with the contention that no tax can be levied on newspaper industry, we hold that any such levy is subject to review by courts in the light of the provisions of the V Are the impugned notifications issued under section 25 of the beyond the reach of the Administrative Law. It further contended that the Court could not issue a mandamus to the Government to issue a notification to amend the Schedules to the statute as the act of issuing such a notification was a legislative act and no writ could be issued to a 344 legislative body or a subordinate Legislative body to a make a law or to issue a notification, as the case may be, which would have the effect of amending a law in force. In the present cases we are concerned with a power to grant exemption conferred on Government by section 25 of the and not with a power to amend the Act by means of a notification. In such cases if the act of such a body in the exercise of the power conferred on it by the law is unreasonable, the courts can hold that such exercise is void for the unreasonableness. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. In India any enquiry into the vires of delegated legislation must be confined to the grounds on which plenary legislation may be questioned, to the ground that it is contrary to the statute under which it is made, to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity with the statute or that it offends Article 14 of the Constitution. vs State of (1) [1980] 2 S.C.R 1111. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken n into account relevant circumstances which the Court considers relevant. In cases where the power vested in the Government is a power which has got to be exercised in the public interest, as it happens to be here, the Court may require the Government to exercise that power in a reasonable way in accordance with the spirit of the Constitution. The Government should strike a just and reasonable balance between the need for ensuring the right of people to freedom of speech and expression on the one hand and the need to impose social control on the business of publication of a newspaper on the other. In any event any notification issued under a statute also (1) ; (2) 351 being a 'law ' as defined under Article 13 (3) (a) of the Constitution is liable to) be struck down if it is contrary to any of the fundamental rights guaranteed under Part III of the Constitution. In Sakal 's case (supra), this Court has observed thus; 353 "The effect of raising the selling price of newspaper A has been considered by the Press Commission. 1,000 per tonne was done when under the notification issued under section 25 of the on March 1, 1981 which was in force then, customs duty on newsprint above 10% ad valorem had been exempted. While it is indisputable that the newspaper industry should also bear its due share of the total burden of taxation alongwith the rest of the community when any tax is specially imposed on newspaper industry, it should be capable of being justified as a reasonable levy in court when its validity is challenged. The freedom of a newspaper to publish any number of pages or to circulate it to any number of persons has been held by this Court to be an integral part of the freedom of speech and expression. The direct effect is that freedom of speech and expression is infringed. " The Court relying on the decision of the American Supreme Court in Lewis J. Valentine vs F.J. Chresten sen (2) observed at pages 687 689 thus: "It cannot be said that the right to publish and distribute commercial advertisements advertising an individual 's personal business is a part of freedom of speech guaranteed by the Constitution. It cannot be said, therefore, that every advertisement is a matter dealing with freedom of speech nor can it be said that it is an expression of ideas. Can it be said that this is an abridgement of the petitioners right of free speech ? It was next urged on behalf of the Government that the levy of customs duty on newsprint was not strictly a levy on newsprint as such since though customs duties were levied with reference to goods, the taxable event was the import of goods within the customs barrier and hence there could be no direct effect on the freedom of speech end expression by virtue of the levy of customs duty on newsprint. The contention of the majority of the States in that case was that the goods imported by them being their property no tax by way of customs could be levied by reason of Article 289 (t) of the Constitution which exempted the property of a State from taxation by the Union. This Court (majority 5, minority 4) held that in view of clause (1) of Article 289 which was distinct from clause (2) thereof which provided that nothing in clause (1) of Article 289 would prevent the Union from imposing or authorising the imposition of any tax to such extent, if any, as Parliament might by law provide in respect of a trade or business of any kind carried on by or on behalf of a State or any operations connected therewith or any property used or occupied for the purposes of such trade or business or any income accruing or arising in connection therewith and the other provisions of the Constitution which enabled the Union to levy different kinds of taxes, customs duty levied on the importation of goods was only a to levied on international trade and not on property. The above decision is again of very little assistance to the Government since it cannot be denied that the levy of customs duty on newsprint used in the production of newspapers is a restriction on the activity of publishing a newspaper and the levy of customs duties had a direct effect on that activity. It does not also state what effect it will have on the members of the public who read newspapers and how far it will reduce the circulation of newspapers. It was said in an Indian case Romesh Thappey vs State of Madras): "There can be no doubt that freedom of speech and expression includes freedom of prepagation of ideas and that freedom is secured by freedom of circulation. 'Liberty of circulation is as essential to that freedom as the liberty of publication. Is the classification of newspapers made for the purpose of exemption violative of Article 14 7 We do not, however, see much substance in the contention of some of the petitioners that the classification of the newspapers into small, medium and big newspapers for purposes of levying customs duty is violative of Article 14 of the Constitution. customs duty was imposed on newsprint. In that case the subsequent law which modified the earlier one and which was held to be void was one which according to the Court could not have been passed at all by the State Legislature. 435 at 446. In the cases before us we do not have rules made by two (1 ) A.l. Since it is established that the Government has failed to discharge its statutory obligations in accordance with law while issuing the impugned notifications issued under section 25 of the Custom Act, 1962 on and after March 1, 1981, the Government should be directed to re examine the whole issue relating to the extant of exemption that should be granted in respect of imports of newsprint after taking into account all relevant considerations for the period subsequent to March 1,1981 We adopt this course since we do not also wish that the Government should be deprived of the legitimate duty which the petitioners would have to pay on the imported newsprint during the relevant period. In the result, in view of the peculiar features of these cases and having regard to Article 32 of the Constitution which imposes an obligation on this Court to enforce the fundamental rights and Article 142 of the Constitution which enables this Court in the exercise of its jurisdiction to make such order as is necessary for doing complete justice in any cause or matter pending before it, we make the following order is these cases: The Government of India shall reconsider within six months the entire question of levy of import duty or auxiliary duty payable by the petitioners and others on newsprint used for printing newspapers, periodicals etc.
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At that time, a new rule said that newspaper publishers had to pay a 10% customs duty on imported newsprint. The court cases questioned whether it was legal to tax newsprint imported from other countries under the laws and rules in place. The arguments in the court cases were: (1) the import duty limited freedom of speech because it increased the price of newspapers and reduced their sales; (2) newspapers should naturally grow by 5% each year as the population and literacy increase, but the price increase was stopping this growth; (3) the way the import duty was set gave too much power to government officials; (4) there was no need for the customs duty because the country had plenty of foreign money, and newsprint had been exempt from the duty until March 1, 1981. The government sold newsprint to small newspapers (under 15,000 copies) without any import duty included in the price. Dividing newspapers into small, medium, and big for the import duty was against the Constitution's guarantee of equal treatment; and (6) the government's power to tax newspapers threatened freedom of the press, which was against the Constitution. Since everyone should share the cost of running the country, a customs duty on newsprint was not against freedom of speech. The government also said that whether the tax was too high was not relevant to the import duty on newsprint; (3) having enough foreign money was not a reason to not have an import duty; and (4) since the duty was an indirect tax paid by the newspaper buyers, the newspaper companies should not be upset about it. The Constitution does not use the words "freedom of the press," but it is included in the freedom of speech, which is protected by the Constitution. Freedom of the press means being free from government control that would interfere with what newspapers say or how they are distributed. It is clear that there cannot be any interference with that freedom in the name of public interest. It is the duty of courts to protect this freedom and strike down any laws or government actions that interfere with it, unless they are allowed by the Constitution. In India, the power to tax people who run newspapers must be recognized because it is part of what a government does. Just because the government has the power to tax does not mean that freedom of the press is lost. While there cannot be a tax on freedom of speech, there can be a tax on jobs, businesses, and industries. So, there can be a tax on newspapers. It is up to the courts to decide when a tax on a business becomes a limit on freedom of speech. Because newsprint is closely tied to freedom of the press, the rules for deciding if a law taxing newsprint is legal should be different from the rules for other tax laws. In these cases, even if the government's power to make exceptions to the tax is a legislative power (power to make laws), and the rules made by the government are like laws, the rules can still be questioned if they are unreasonable. When deciding if a government rule is legal, it must be limited to the reasons that laws can be questioned. This can only be done if the rule does not follow the law or Constitution, or if it violates the Constitution's guarantees of equal treatment or freedom of speech. It cannot be done just because the rule is not reasonable or has not considered relevant information that the court thinks is important. In cases where the government has the power to act in the public interest, the court may require the government to use that power reasonably and in line with the Constitution. The fact that a rule must be presented to the legislature does not change the court's power to decide if it is legal. It says that if the government believes it is necessary in the public interest, it can exempt any goods from the customs duty. Any rule made under a law is also a "law" as defined by the Constitution, and it can be struck down if it violates any of the basic rights protected by the Constitution. While newspapers should pay their fair share of taxes, any special tax on newspapers must be shown to be a reasonable tax in court if challenged. The first may be valid if it does not hurt newspaper sales, but the second is not allowed under the Constitution because the reason for the duty is outside the limits of the Constitution. The government cannot decide what the contents of newspapers are like even before they are printed. Since the government's power to cancel the rule from July 15, 1977, is not being questioned, it would not come back even if the new rules are found to be void. The government cannot be deprived of the duty it is legally owed on imported newsprint.
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Petitions Nos. 5637 41,5643 45, 5646 47,5649 51, 5597 98,5553 67,5609 11,5516 20,5623 28,5657, 5673 74,5702 23,5668, 5659 67,5733, 5740 42, 5782 84, 5763 64, 5762,5747 52,5779 81,5745, 5785, 5737 39, 5841 43, 5786 5797, 5861 62 and 5863 64 of 1980. (Under Article 32 of the Constitution.) AND Civil Appeal No. 2734 of 1980. Appeal by special leave from the Judgment and Order dated 12.11.1980 of the Allahabad High Court in W.P.No. 3115/80. R.A. Gupta for the Petitioners in WPs.5637 41/80, 5797,5733/80 and CA No.2734/80. A.P.S. Chauhan, Roopendra Singh Gajraj Singh, and C.K. Ratnaparkhi for the Petitioners in WP 5762/80. B.S. Chauhan, Birj Bihari Singh Sridhar for the Petitioner in WP 5745/80. Rameshwar Dial and Sarwa Mitter for the Petitioners in WPs 5782 84/80 R.K. Garg, S.N. Kacker, R.K. Jain and R.P. Singh for the Petitioners in WPs 5553 5567, 5616 5620, 5646, 5647, 5750 52, 5779 81,5623 28,5646 47, 5649 5651,5643 45,5702 to 5723, 5673 5674,5659 to 5667,5740 42, 5737 39 and 5841 43/80. R.P. Singh for the Petitioners in WPs 5609 11 & 5597 98/80. Soli J.Sorabjee, Arvind Minocha and Mrs. Veena Minocha for the Petitioners in WP 5661/70. Mohan Behari Lal for the Petitioners in WPs 5785/80, 5786/80, and 5657/80. A.K. Gupta for the Petitioners in WPs 5763 64/80. Lal Narain Sinha Att. , S.C. Maheshwari Addl. Advocate General (U.P.), O.P. Rana, Mrs.Shobha Dikshit for the Respondents in all the matters. The Judgment of the Court was delivered by, FAZAL ALI, J. Inspired by the objective of removing nation wide shortage of sugar and for the purpose of enhancing sugar production 99 in order to achieve an equitable distribution of the commodity so as to make it available to consumers at reasonable rates and thereby relieving the sugar famine, the Cane Commissioner, Government of Uttar Pradesh by virtue of a Notification dated 9th October, 1980, acting under clause 8 of the Sugarcane (Control) Order, 1966 (hereinafter referred to as the 'Control Order ') directed that no power crusher, with certain exceptions, of a khandsari unit or any agent of such owner in the reserved area of a mill could be worked until December 1, 1980. The exact contents of the Notification may be extracted thus: "Lucknow, Thursday 9th October 1980 In exercise of the powers under clause 8 of the Sugarcane (Control) Order, 1966 read with the Central Government, Ministry of Food & Agriculture, Community Development and Cooperation (Department of Food), Government of India Order No. GSR 122/Ess. Comm/Sugarcane dated July 16, 1966, I, Bhola Nath Tiwari, Cane Commissioner, Uttar Pradesh hereby direct that no owner of power Crusher (other than those vertical power crushers which manufacture Gur or Rab from Sugarcane grown on their own fields) or a Khandsari Unit or any agent of such owner shall in any reserved area, of any Sugar Mill work the Power Crusher, or the Khandsari Unit prior to December 1, 1980 during the Year 1980 81. By Order Bhola Nath Tiwari Cane Commissioner Uttar Pradesh" The Control Order was passed by the Central Government in exercise of the powers conferred on it by s.3 of the (hereinafter referred to as the 'Act of 1955 '). In order to understand the contentions raised by the parties it may be necessary to analyse the prominent features of the above Notification with reference to the situation it was intended to meet. It is not disputed that sugar was being produced in the State of U.P. by the sugar mills through hydraulic process and by the power crushers through what is known as the 'open pan process '. Both the mills as also the crushers drew their raw material, namely, sugarcane, from the sugarcane growers. In order to facilitate production by the sugar mills, most of whom were controlled by the State, a reserved area of the fields growing sugarcane was fixed throughout the State 100 The Notification applied only to the reserved areas of a mill and not to any other areas. In other words, any area which fell outside the reserved area was not affected by the Notification and the power crushers situated in that area could still manufacture Khandsari by the open pan process. Thus, it would be seen that the ban imposed by the notification was confined only to a particular area in the State of U.P. Secondly, the Notification limited the ban to work power crushers only to a short period of one month and a half i.e., from October 9, 1980 to December 1, 1980. Thirdly, (and it has also not been disputed) the owners of power crushers of khandsari units, who are the petitioners in these cases, had taken out regular licences under the U.P. Khandsari Sugar Manufacturers Licensing Order of 1967 (hereinafter referred to as the 'Licensing Order '). It, therefore, logically follows that the power crushers owned or worked by the conditions of the licences under which they were working the crushers. Fourthly, what was prohibited by the Notification was only the manufacture of khandsari while the production of gur or rab from sugarcane grown in the fields belonging to the owners of the crushers was left out of the ambit of the Notification. We have mentioned these essential features of the Notification because the most important argument put forward before us by the counsel for the petitioners has been that it imposes unreasonable restrictions on the right of the petitioners under article 19(1)(g) of the Constitution to carry on their trade namely, production of khandsari. A subsidiary argument buttressing the main contention was that the Notification intends to create a monopoly in favour of the sugar mills at the cost of the crushers owned by the petitioners and is, therefore, clearly violative not only of article 19(1)(g) but also of article 14 of the Constitution. We would, however, deal with this aspect of the matter when we examine the contentions raised by the counsel for the parties. The Attorney General, appearing for the Union of India, and Mr. Maheshwari, Additional Advocate General appearing for the State of U.P., contended that, decision to ban the power crushers of the petitioners was taken as a part of a high powered policy to boost the production of sugar which had fallen during the year 1979 80 with the result that in the current year the country faced a great sugar famine. As the situation called for some positive action to increase the production, the matter having been discussed at the 34th Annual Convention of 101 Sugar Technologists of India, it was decided to ban the production of khandsari by the power crushers for a limited period. A large number of documents in the nature of affidavits, counter affidavits, reports and books have been filed by the counsel for both the parties in support of their respective contentions. We might also mention here that the Notification has since spent its force and, in fact, was not carried into effect because immediately after it was issued the present writ petitions were filed in this Court and the petitioners obtained stay of the operation of the Notification from this Court. The Attorney General, however, insisted that the matter should be finally decided so that if the Central Government wants to take any steps of this kind in future it may be aware of the correct constitutional or legal position. The petitioners also insisted that the constitutional and legal questions involved in these cases may be decided even though our decision may be more or less of an academic value. This brings us now to the various contentions raised by counsel for the petitioners and the respondents. As the Notification has already spent its force, we propose to deal only with the important and relevant contentions that have been advanced before us. The counsel for the petitioners headed by Mr. Garg, Mr. Mridul and others raised the following constitutional points before us : (1) The Notification, as also the Control Order under which it was passed are clearly violative of of article 19(1)(g) and the restrictions purported to be placed on the right of the petitioners not do contain the quality of reasonableness. (2) Clause 8 of the Control Order under which the impugned Notification has been issued suffers from the vice of excessive delegation of powers and is, therefore, violative of Article 14 of the Constitution. By the same token, as the impugned Notification seeks to establish a monopoly in favour of the sugar mills at the cost of the petitioners, invidious discrimination is writ large on the very face of the Notification which must be struck down as being violative of article 14. (3) There is absolutely no rational nexus between the prohibition contained in the Notification preventing the crushers of the petitioners from working them and the object sought to be achieved by it. Thus, the State had selected the petitioners for hostile discrimination between one segment 102 and another of persons engaged in the purchase of sugarcane, its sale and production of sugar without striking a just balance between the manufacturers of gur, khandsari and sugar. India lives in villages and it was not understandable why the Central Government was bent on reducing the support price of sugarcane which was adversely affecting the sugarcane growers because while the mills were not able to pay a reasonable price the crushers were able to pay a handsome price for the sugarcane supplied to them by the growers. When tested for reasonableness, therefore, the Notification completely fails. (4) Clause 8 of the Control Order does not contemplate a complete prohibition of the production of an article but envisages only a regulation of the period or hours of working. (5) The Notification violates the principles of natural justice inasmuch as it was passed without hearing the petitioners whose valuable rights were curtailed as they were put completely out of production even though for a short period. (6) The impugned Notification violative of clause 11 of the Control Order itself inasmuch as the prohibition against the working of the power crushers amounts to partial revocation of the licences of the petitioners granted to them under clause 3 of the Licensing Order. Clause 11 of the Control Order clearly provides that no adverse orders could be passed against any manufacturer without hearing him. (7) Even though the impugned Notification purports to have been passed under the Control Order which itself was passed under section 3 of the Act of 1955 yet if the notification is properly considered and the mischief it causes is borne in mind, it goes against the very spirt and object of the Act of 1955 and, in fact, frustrates the equal distribution and production of sugar which apparently seems to be the objective of the impugned notification. The Attorney General and the Additional Advocate General appearing for the Union of India and the State of U.P. respectively countered the submissions made by the petitioners on the following grounds: (1) An order passed under clause 8 of the Control Order is of a legislative character and therefore the question of the 103 application of the principles of natural justice to it does not arise. (2) The Notification does not violate article 14 or 19 because it is in great public interest and is aimed at maintaining and securing proper and equitable distribution of sugar in view of the nation wide shortage of the commodity. (3) The Notification is justified by the fact that recovery of sugar from sugarcane in case of khandsari units run by power crushers is between 4 to 6 per cent whereas in the case of sugar factories it ranges between 9 1/2 to 11 1/2 per cent, so that utilisation of sugarcane in the case of mills is double that of the power crushers. In these circumstances, khandsari units and mills belong to two different classes which cannot be said to be similarly situate so as to attract article 14 (vide pp. 69 70 of W.P .5565 5567 of 1980 Bhagwati Sugar Industry 's case). (4) The khandsari produced by the crushers has got a very narrow sphere of consumption as it is used mostly by halwais or villagers, whereas sugar produced by the sugar mills is consumed in far larger quantities by the public in India generally and in foreign countries after export. Therefore, the sugar mills fall within a special class and the question of hostile discrimination does not arise. Similarly, the action taken in order to protect national interests and distribution of sugar to the entire country on a rational basis cannot be said to be an unreasonable restriction. (5) There is a marked difference between the quality of khandsari and that of sugar produced by the mills in their character, specification, etc., which is evident from the various reports filed by the State. (6) The question of natural justice does not arise because the crusher owners were fully aware of the situation and had also knowledge of the considerations which prevailed with the Government in stopping crushers for a short period in order to boost production by the sugar mills and fix support price for the sugarcane supplied to the mills. However, as the Notification has expired, if proper guidelines are laid down by the Court, before passing a fresh order the State will certainly hear the petitioners in order to know their point of view. 104 (7) Clause 8 of the Control Order uses the words `period ' or working hours ' which are wide enough to embrace within their ambit a fixed period of time covering more than a day as also hours of work on any working day. We might also mention that some of the sugarcane growers have supported the arguments advanced by the petitioners. We now proceed to scrutinise and examine the contentions of the counsel for the petitioners. On the contention according to which the impugned notification is violative of article 19(1)(g), it may be necessary to dwell in some detail. It is no doubt well settled that where a citizen complains of the violation of fundamental rights contained in sub clause (g) of clause (1) of Art 19 or for that matter in any of sub clauses (a) to (g) thereof, the onus is on the State to prove or justify that the restraint or restrictions imposed on the fundamental rights under clauses 2 to 6 of the Article are reasonable. In the instant case, we are mainly concerned with sub clauses 4, 5 and 6 of Art.19. As far back as 1955 this Court in Saghir Ahmad vs The State of U.P, and Ors.(1) made this position very clear and observed as follows : "There is undoubtedly a presumption in favour of the constitutionality of a legislation. But when the enactment on the face of it is found to violate a fundamental right guaranteed under article 19(1) (g) of the Constitution, it must be held to be invalid unless those who support the legislation can bring it within the purview of the exception laid down in clause (5) of the article. If the respondents do not place any materials before the Court to establish that the legislation comes within the permissible limits of clause (6), it is surely not for the appellants to prove negatively that the legislation was not reasonable and was not conducive to the welfare of the community. " A similar view was taken in Mohammed Faruk vs State of Madhya Pradesh and Ors.(2) where this Court, speaking through Shah, J. reiterated the position mentioned above in the following words: "When the validity of a law placing restriction upon the exercise of fundamental rights in Article 19(1) is challenged, the onus of proving to the satisfaction of the Court that the restriction is reasonable lies upon the State." 105 We, therefore fully agree with the contention advanced by the petitioners that where there is a clear violation of article 19(1)(g), the State has to justify by acceptable evidence, inevitable consequences or sufficient materials that the restriction, whether partial or complete, is in public interest and contains the quality of reasonableness. This proposition has not been disputed by the counsel for the respondents, who have, however, submitted that from the circumstances and materials produced by them the onus of proving that the restrictions are in public interest and are reasonable has been amply discharged by them. This brings us to the main question as to the circumstances under which restriction imposed by the State can be said to contain the quality of reasonableness. For this purpose, almost all the decisions of this Court on the subject have been placed before us and it may be necessary to notice those of them which have a close bearing on the point at issue. It is abundantly clear that fundamental rights enshrined in Part III of the Constitution are neither absolute nor unlimited but are subject to reasonable restrictions which may be imposed by the State in public interest under clauses 2 to 6 of Art.19. As to what are reasonable restrictions would naturally depend on the nature and circumstances of the case, the character of the statute, the object which it seeks to serve, the existing circumstances, the extent of the evil sought to be remedied as also the nature of restraint or restriction placed on the rights of the citizen. It is difficult to lay down any hard or fast rule of universal application but this Court has consistently held that in imposing such restrictions the State must adopt an objective standard amounting to a social control by restricting the rights of the citizens where the necessities of the situation demand. It is manifest that in adopting the social control one of the primary considerations which should weigh with the Court is that as the directive principles contained in the Constitution aim at the establishment of an egalitarian society so as to bring about a welfare state within the frame work of the Constitution, these principles also should be kept in mind in judging the question as to whether or not the restrictions are reasonable. If the restrictions imposed appear to be consistent with the directive principles of State policy they would have to be upheld as the same would be in public interest and manifestly reasonable. Further, restrictions may by partial, complete, permanent or temporary but they must bear a close nexus with the object in the 106 interest of which they are imposed. Sometimes even a complete prohibition of the fundamental right to trade may be upheld if the commodity in which the trade is carried on is essential to the life of the community and the said restriction has been imposed for a limited period in order to achieve the desired goal. Another important consideration is that the restrictions must be in public interest and are imposed by striking a just balance between the deprivation of right and the danger or evil sought to be avoided. Thus freezing of stocks of food grains in order to secure equitable distribution and availability on fair prices have been held to be a reasonable restriction in the cases of Narendra Kumar and Ors. vs The Union of India and Ors.(1) M/s. Diwan Sugar and General Mills (P) Ltd. and Ors vs The Union of India and The State of Rajasthan vs Nath Mal and Mitha Mal(3). These are some of the general principles on the basis of which the quality of reasonableness of a particular restriction can be judged and have been lucidly adumbrated in State of Madras vs V.G. Row 's(4) case. Another important test that has been laid down by this Court is that restrictions should not be excessive or arbitrary and the Court must examine the direct and immediate impact of the restrictions on the rights of the citizens and determine if the restrictions are in larger public interest while deciding the question that they contain the quality of reasonableness. In such cases a doctrinaire approach should not be made but care should be taken to see that the real purpose which is sought to be achieved by restricting the rights of the citizens is subserved. This can be done only by examining the nature of the social control, the interest of the general public which is subserved by the restrictions, the existing circumstances which necessitated the imposition of the restrictions, the degree and urgency of the evil sought to be mitigated by the restrictions and the period during which the restrictions are to remain in force. At the same time the possibility of an alternative scheme which might have been but has not been enforced would not expose the restrictions to challenge on the ground that they are not reasonable. 107 Finally, in determining the reasonableness of restrictions imposed by law in the field of industry, trade or commerce, the mere fact that some of the persons engaged in a particular trade may incur loss due to the imposition of restrictions will not render them unreasonable because it is manifest that trade and industry pass through periods of prosperity and adversity on account of economic, social or political factors. In a free economy controls have be introduced to ensure availability of consumer goods like food stuffs, cloth or the like at a fair price and the fixation of such a price cannot be said to be an unreasonable restriction in the circumstances. Thus, apart from the various other factors which we have referred to above where restrictions are imposed on a citizen carrying on a trade or commerce in an essential commodity, the aspect of controlled economy and fair and equitable distribution to the consumer at a reasonable price leaving an appreciable margin of profit to the producer is undoubtedly a consideration which does not make the restriction unreasonable. In fact, the leading case decided by this Court which may justly be regarded as the locus classicus on the questions as to what are reasonable restrictions is V.G. Row 's case (supra) where Patanjali Sastri, C.J., speaking for the Court observed as follows: "It is important in this context to bear in mind that the test of reasonableness, where ever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern, of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby the disproportion of the imposition the prevailing conditions at the time, should all enter into the judicial verdict. In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judges participating in the decision should play an important part, and the limit to their interference with legislative judgment in such cases can only be dictated by their sense of responsibility and self restraint and the sobering reflection that the Constitution is meant not only for people of their way of thinking but for all, and that the majority of the elected representatives of the people have, in 108 authorising the imposition of the restrictions, considered them to be reasonable." This case was followed in a later decision of this Court in Mineral Development Ltd. vs The State of Bihar and Anr.(1) where after quoting the observations of Patanjali Sastri, C.J., as extracted above, Subba Rao, J., speaking for the Court observed as follows: "These observations, if we may say so with great respect, lay down the correct principle. It follows that it is the duty of this Court to decide, having regard to the aforesaid considerations and such others whether a particular statute satisfies the objective test of `reasonableness '." In the case of Collector of Customs, Madras vs Nathella Sampathu Chetty and Anr.(2) the observations of Patanjali Sastri, C.J., were endorsed by this Court when Ayyangar, J., speaking for the Court, made the following observations: "There are several decisions of this Court in which the relevant criteria have been laid down but we consider it sufficient to refer to a passage in the judgment of Patanjali Sastri, C.J., in State of Madras vs V.G. Row." In M/s. Diwan Sugar and General Mills (Private) Ltd. and Ors. vs U.O.I.(3) which was also a case arising out of the Act of 1955 and the Sugar Control Order of 1955 promulgated by the Central Government under section 3 of the said Act, a Constitution Bench of this Court while examining the nature of the restrictions imposed in that case took into account the various circumstances and observed : "Clause 5 of the Order lays down the factors which have to be taken into consideration in fixing prices. These factors include among other things a reasonable margin of profit for the producer and/or trade and any incidential charges. This was kept in mind when prices were fixed by the impugned notification. The prices were prevalent in the free market and must certainly have taken account of a fair margin of profit for the producer, though in the case of an individual factory due to factors for which the producer might 109 himself be responsible, the cost of production might have been a little more. Therefore, the prices fixed by the Government by the impugned notification can on no circumstances be said to have been proved to be below the cost of production." . . "In these circumstances if price is fixed in this area, price all over India is practically fixed, and it is not necessary to fix prices separately so far as factories in other States which are said to be mainly deficit, are concerned. There is, therefore, in our opinion, no discrimination in effect by the fixation of prices in these three regions. " It will be noticed that even though clause 5 had fixed prices, the Court upheld the restrictions because a reasonable margin of profit for the producer was left and did not insist that the producer should be allowed to have full sway in the production of sugar to the maximum capacity possible. Similarly one of the important tests laid down by this Court was that the price prevailing in the free market must be taken into account in the formula of fixation of price for essential commodities secondly while dealing with the price control imposed on factories in various States, this Court held that the policy of fixation of price could not be challenged because States where they were fixed were deficit areas. We might mention here that the sheet anchor of the argument of the Attorney General is that the impugned Notification was passed in order to relieve the sugar famine by boosting the production of sugar by mills. Similarly, in Nath Mal and Mitha Mal 's case (supra), which was also a case dealing with food grains, an order freezing the stocks of the commodity in order to secure its equitable distribution so as to make it available at a fair price to consumers was upheld by the Court with the following observations: "The clause authorises the Commissioner and various others authorities mentioned therein and such other officers as may be authorised by the Commissioner to frreeze any stock of foodgrains held by a person. Nor do we think that the power to freeze the stocks of foodgrains is arbitrary or based on no reasonable basis. . We are clear, therefore, that the freezing of stocks of food grains is reasonably related to the object which the Act was in 110 tended to achieve, namely, to secure the equitable distribution and availability at fair prices and to regulate transport, distribution, disposal and acquisition of an essential commodity such as foodgrains. " The most material ratio of this case is that even the freezing of stocks of foodgrains, with a view to securing their equitable distribution and availability was held to be a reasonable restriction. Even if by seizing the food stocks the right of a citizen to trade in food grains was seriously impaired and hampered yet such a State action was justified on the ground of public interest. On a parity of reasoning, therefore, a restriction (on the right of a trader dealing in essential commodities) like the ban in the instant case or fixation of prices aimed at bringing about distribution of essential commodities keeping the consumers interests as the prime consideration, cannot be regarded as unreasonable. We are fortified in our view by a decision of this Court in Prag Ice and Oil Mills and Anr. vs Union of India(1) where Beg, C.J. observed as follows : "All the tests of validity of the impugned price control or fixation order are, therefore, to be found in section 3 of the Act. Section 3 makes necessity or expediency of a control order for the purpose of maintaining or increasing supplies of an Essential Commodity or for securing its equitable distribution at fair prices the criteria of validity. It is evident that an assessment of either the expediency necessity of a measure, in the light of all the facts and circumstances which have a bearings on the subjects of price fixation, is essentially a subjectives matter. It is true that objective criteria may enter into determinations of particular selling prices of each kilogram of mustard oil at various time. But, there is no obligation to have to fix the price in such a way as to ensure reasonable profits to the producer or manufacturer. It has also to be remembered that the objective is to secure equitable distribution and availability at fair prices so that it is the interest of the consumer and not of the producer which is the determining factor in applying any objective tests at any particular time. " The observations extracted above, furnish a complete answer to the contentions raised by the petitioners on contention No. 1. 111 Furthermore, we would like to reiterate what Chandrachud, C.J,, observed in that case regarding the history and the manner in which the petitioners rushed to this Court : "Before closing, we would like to mention that the petitioners rushed to this Court too precipitately on the heels of the Price Control Order. Thereby they deprived themselves of an opportunity to show that in actual fact, the Order causes them irreparable prejudice. Instead they were driven through their ill thought haste to rely on speculative hypotheses in order to buttress their grievance that their right to property and the right to do trade was gone or was substantially affected. A little more patience, which could have been utilised to observe how the experiment functioned, might have paid better dividends. " This is exactly what the petitioners have done in this case by rushing to this Court the moment the notification was issued and thus depriving the State as also themselves of the actual consequences of the issuing of the notification and the prejudice which it really may have caused. They did not at all show any patience in waiting for a while to find out if the experiment functioned successfully and in the long run paid good dividends. As the petitioners obtained stay orders from this Court on filing these petitions, the experiment died a natural death and the notification remained ineffective. It was vehemently contended by Mr. Garg that the Notification or the Control Order is in direct contravention of the Directive Principles of State policy contained in article 39 in part IV of the Constitution inasmuch as instead of developing small scale industries like the crushers the Notification has curbed the rights of their owners in order to benefit the mills. It is true that one of the important considerations which must weigh with the Court in determining the reasonableness of a restriction is that it should not contravene the Directive Principles contained in Part IV of the Constitution which undoubtedly has a direct bearing on the question as held by this Court in the cases of Saghir Ahmad vs State of U.P. and Ors.(1) and The State of Bombay and Anr. vs F. N. Balsara(2) where this Court made the following observations : 112 "The new clause in Article 19(6) has no doubt been introduced with a view to provide that a State can create a monopoly in its own favour in respect of any trade or business, but the amendment does not make the establishment of such monopoly a reasonable restriction within the meaning of the first clause of Article 19(6). The result of the amendment is that the State would not have to justify such action as reasonable at all in a Court of law and no objection could be taken to it on the ground that it is an infringement of the right guaranteed under Article 19(1) (g) of the Constitution" (Saghir Ahmed 's case) "In judging the reasonableness of the restrictions imposed by the Act, one has to bear in mind the directive principles of State policy set forth in Article 47 of the Constitution." (Balsara 's case) In the instant case, however, if the argument of the Attorney General is to be accepted, there is no violation of the Directive Principles because the main object sought to be achieved by a temporary suspension of the business of the petitioners is to ensure large scale production of white sugar and to make it available to the consumers at reasonable rates which is an implementation rather than a contravention of the Directive Principles particularly clauses (b) and (c) of article 39. Whether the State has been able to prove this fact or not would be considered when we deal with the facts and materials placed before us by the parties. Another important aspect to which we may advert at this stage is the test which should be laid down to determine the reasonableness of a restriction involving a citizen carrying on trade or business in an essential commodity. We have already seen that this Court has held that fixation of price of sugar or freezing of stock of foodgrains does not amount to an unreasonable restriction on the fundamental right to trade enshrined under article 19(1)(g). There are other cases in which this Court has clearly held that in the case of essential commodities like sugar the question of the economic production and distribution thereof must enter the verdict of the Courts in deciding the reasonableness of the restrictions. In such cases even if the margin of profit left to the producer is slashed that would not make the restriction unreasonable. The reason for this view is that such a trade or commerce is subject to rise and fall in prices and other diverse factors which may destroy or prohibit one industry or the other so as to affect the general body of the consumers and if any measure is taken to strike a just 113 balance between the danger sought to be averted and the temporary deprivation of the right of a citizen to carry on his trade, it will have to be upheld as a reasonable restriction. In Shree Meenakshi Mills vs U.O.I. (1) Ray C.J., speaking for the Court observed as follows: "If fair price is to be fixed leaving a reasonable margin of profit, there is never any question of infringement of fundamental right to carry on business by imposing reasonable restrictions. The question of fair price to the consumer with reference to the dominant object and purpose of the legislation claiming equitable distribution and availability at fair price is completely lost sight of if profit and the producer 's return are kept in the fore front. In determining the reasonableness of a restriction imposed by law in the field of industry, trade or commerce, it has to be remembered that the mere fact that some of those who are engaged in these are alleging loss after the imposition of law will not render the law unreasonable. By its very nature, industry or trade or commerce goes through periods of prosperity and adversity on account of economic and sometimes social and political factors. In a largely free economy when control have to be introduced to ensure availability of consumer goods like foodstuff, cloth and the like at a fair price it is an impracticable proposition to require the Government to go through the exercise like that of a Commission to fix the prices. " According to the Attorney General by virtue of the impugned Notification this is exactly what the Central Government wants to achieve by banning the working of power crushers for a short period. This case was followed in another decision of this Court in Saraswati Industrial Syndicate Ltd. vs U.O.I.(2) which was also a case of a notification issued under clause 7 of the Control Order of 1966, where the following observations were made: "It is a well known fact that rationalisation of industry by the use of modern methods, reduces the amount of labour needed in more mechanised modes of manufacture. Therefore, we do not think that these assertions could prove any inequitable treatment meted out to the Haryana manufacturers of sugar. In any case no breach of a mandatory duty, which could justify the issue of writ of mandamus, was established. ' 114 In the light of the principles enunciated and the decisions discused above, we now proceed to examine the facts and circumstances placed before us by the Union of India to prove that the restrictions imposed under the impugned Notification contain the quality of reasonableness and are not violative of article 19(1)(g). The main pleas of the State of U.P. which have been adopted by the Union of India, are to be found in paragraphs 6 to 11 of the counter affidavit filed by the respondents in writ petition Nos. 5565 5567 of 1980. The respondents have taken the stand that there has been a very steep rise in the prices of sugar which is doubtless an essential commodity. It has further been alleged that one of the major factors responsible for the present rise in the prices of sugar is that there is a sharp rise in the demand for consumption of sugar whereas its production has slumped to a very low level. In order to illustrate the point it has been averred that the demand of sugar in the country has increased to over 60 lakh tonnes whereas production of the commodity in the preceding year (1979 80) was only about 39.5 lakh tonnes. In order to meet the demand the Central Government had to import for the first time after several years 2 lakh tonnes of sugar at a cost of about one hundred crores of rupees. One reason for the shortfall in production during 1979 80 was the poor availability of cane to the sugar factories. This in turn resulted from the worst drought conditions faced by our country particularly the State of U.P. which is one of the main suppliers of sugarcane. Yet another cause of the shortage was that the sugar famine led to the large scale diversion of cane to gur and khandsari manufacturers. The counter affidavit then proceeds to give a chart of the production of sugar by the crushers and the mills. It was further averred that unless the position was set right the stocks of 1979 80 would have been exhausted completely by the middle of November 1980. To meet this national crisis, the Government of India took various steps to increase the production of sugar in the country during the current season (1980 81). In the first place, the Government of India allowed rebate in the basic excise duty on excess sugar production in order to serve as an incentive to the sugar mills to start early cane crushing operation. This step however, could not possibly have the desired effect unless the sugar factories got the raw material, viz., constant supply of sugarcane. Indisputably sugarcane is utilised for manufacture of sugar, gur, rab and khandsari and some of the quantity is also utilised for seed, feed and chewing. It was further alleged that the crushers particularly those producing gur were in an advantageous position so as to be able to purchase cane at a very high rate and outcompete the sugar 115 factories. It was possible for the crushers to pay a higher price because no excise duty or compulsory levy was imposed on them, on the other hand, the factories suffered from certain disabilities, namely, sixty five per cent of the sugar production was taken by the Government of India on levy process and excise duty on free sale sugar was very high as compared to khandsari sugar. Further, the Government required distribution of molasses at a fixed price of Rs.6/ per quintal to the mills whereas there was no such obligation on the power crushers. Finally, because of the monthly release system the factories could sell only released quantity during a particular month whereas there was no such restriction on khandsari units owned by the petitioners. These steps taken by the then Government resulted in an unhealthy competition causing diversion of cane from the sugar factories with the result that sugar factories could get only 61.5% of the bonded cane. It was further pointed out in the counter affidavit that keeping in view the fact that the sugar stocks of 1979 80 were likely to be exhausted by the middle of November 1980, it was considered necessary to maintain an adequate supply of sugarcane to the sugar factories which would have started production earlier because of the incentives given to them by the Government of India. In an additional affidavit filed by the respondents, sworn by Karan Singh, Joint Cane Commissioner, Government of U.P, it was pointed out that khandsari sugar could never be a substitute for sugar produced by sugar mills because khandsari sugar is not used for domestic purpose in preference to mill sugar as the former has higher molasses content and has unpleasant smell and taste. Further, there is no gradation of khandsari sugar as its grain is not regular and bold. It was further alleged that in public distribution it is only the mill sugar which is supplied at fair price to the consumers at large and which also forms the bulk of the export. The khandsari sugar, according to the respondents, was generally consumed for preparation of sweets, boora and batasha and was consumed mostly by the halwais. There is no reliable evidence to rebut the aforesaid facts detailed in the counter affidavit of the respondents. Thus, in view of the factors detailed above, it was contended by the Union of India that it was in public interest that with a view to remove shortage of sugar and achieve equal distribution of sugarcane to the mills the impugned notification was passed which seems to strike a just balance between the requirements of the country and those of the khandsari units. The Attorney General contended that since the ban was imposed only for a very short period of about 116 one month and a half, there could be no appreciable loss to the khandsari units, and even if there was some loss it could be recouped after the ban was lifted because the working cost of the khandsari units was much less than that of the mills. In other words, by virtue of the policy adopted by the Government in passing the impugned notification, a fair margin of profit was left to the khandsari units which were not completely closed. It was further stated that out of 89 sugar mills in the entire State of U.P., 18 sugar mills are owned by the U.P. State Sugar Corporation which is a Government company and controlled by the State. Sixteen sugar mills are under the cooperative sector in which the Government Investment is considerable and these mill are run by cooperative societies of which cane growers are shareholders. Thus, the ultimate benefit did undoubtedly go to the sugarcane growers also through the profits made by the cooperative societies. The learned counsel, Mr. Garg, appearing for the petitioners countered the inferences drawn by the respondents with the submission that although the above facts may not be disputed yet it was not correct to say that the khandsari units had put the mills completely out of competition. It was suggested that the khandsari units were also, apart from paying a higher price to the sugarcane growers, prepared to be subjected to compulsory levies or excise duty levied on the mills or to such terms as the Government may like to put on the owners of the crushers. The argument is, no doubt, attractive but we are not sure if and when these harsher terms are imposed on the petitioners, it would be possible for them to run the crushers and make the huge profits which they are making without the aforesaid impositions. At any rate, since the impugned notification has expired, the Government will certainly consider the desirability of a reappraisal of the situation after taking into account this aspect of the matter. It was further pointed out by the Union of India that only 39 sugar mills are in the private sector and ensuring actual availability of sugar at reasonable rates to the sugar mills was the prime consideration which formed the basis of impugned notification in conformity with the object of the Act of 1955 and the Control Order so as to maintain a fair price for the general public. Learning a lesson from the performance of the sugar market in the preceding year, the Government thought it more desirable to channelise the production of sugarcane so that the interests of neither the sugar mill owners nor of the khandsari units nor those of the cane growers suffered. It was then contended that the impugned notification far from causing any appreciable damage or loss to the petitioners serve a 117 two fold purpose which ensures equitable production and distribution of sugar. Another important argument advanced by the Attorney General which has impressed us most is one resulting from the use by the mills of the hydraulic process as distinguished from the open pan process employed by khandsari units for the production of sugar. The consequence is the recovery of sugar from sugarcane in the case of khandsari units run by power crushers is between 4 to 6 per cent whereas in the case of sugar factories it ranges between 9 1/2 to 11 1/2 per cent. Thus, the overall position is that the utilisation of sugarcane by the mills is double that by the crushers and if the crushers are not able to produce more than the existing 4 to 6 per cent, half of the total quantity of sugarcane supplied to them goes waste which, if utilised by the factories, would have served for production of more sugar. This solid distinction between the two processes of manufacture followed by the mills and the crushers is, in our opinion, a very rational distinction which puts the mills in a different class and which also provides a reasonable nexus between the restrictions imposed on the crushers and the object sought to be achieved. The petitioner sought to falsify the figures quoted by the Union of India regarding the percentage of recovery of sugar by reference to a book written by Mr. Bepin Behari, and entitled `Rural Industrialization in India '. On page 100 of the book, the author has observed as follows : "Originally, the percentage of recovery in traditional khandsari units did not go beyond 6.5 per cent, but recent innovations have raised the recovery ratio to almost 9.5 per cent. Thereby the two processes have become almost commutative. In inversion loss, however, there is some difference. In the large scale sugar mills, only ten per cent of the sugar is lost while in small khandsari plants the loss can be as much as 30 per cent." and great reliance has been placed on these observations of the author. It may be noted, however, that the author has not cited any expert opinion as the foundation for his conclusion nor has he referred to any experiment carried out by him personally. In fact he has not even disclosed the source of his information. Apart from that the book fully supports the averments of the respondents that the percentage of recovery in traditional khandsari units did not go beyond 6.5 per cent. Besides, there is no evidence or allegation in any of the affidavits filed by the petitioners to the effect that any new methodo 118 logy or innovation was adopted by any of the petitioners. In these circumstances, the extract from the book does not appear to be of any assistance to the petitioners. On the other hand, the facts detailed by the respondents in the various counter affidavits filed by them are based on the statistics maintained by the Government from year to year and reports of experts. One such report entitled `studies on Specific Conductances of Indian Sugar ' has been filed by the State before us and it gives the entire history and economics of sugar production. After a careful consideration of the arguments and documents produced by both the parties we are satisfied that the restriction imposed by the impugned notification in stopping the crushers for the period 10th October to 1st December 1980 is in public interest and bears a reasonable nexus to the object which is sought to be achieved, namely, to reduce shortage of sugar and ensure a more equitable distribution of this commodity. One of the tests that has been laid down to determine the reasonableness of a restriction is to find out if the restraint is more excessive than that warranted by the situation. In the instant case, taken an overall picture of the history of sugar production it cannot be said that the stoppage of sugar crushers for a short period is more excessive than the situation demanded. In Madhya Bharat Cotton Association Ltd. vs Union of India & Anr.(1) while considering a restriction imposed for a short time, this Court observed as follows : "Further, cotton being a commodity essential to the life of the community, it is reasonable to have restriction which may, in certain circumstances, extend to total prohibition for a time, of all normal trading in the commodity. Accordingly, we are of opinion that Clause 4 of the Cotton Control Order of 1950 does not offend article 19 (1) (g) of the Constitution because sub clause (5) validates it." (Emphasis supplied) In that case the restriction imposed on cotton was for a short period of one month in February 1954 and for another month in May 1954; and was held to be justified and a reasonable restraint so 119 as not to be violative of Art 19 (1) (g). The situation here is similar. Afterall, the petitioners were working their crushers under a licence granted to them under the Licensing Order and the impugned notification merely seeks to regulate the right and not to abolish the same. For the above reasons the first contention put forward by the petitioners that the restrictions imposed by the impugned notification are unreasonable is hereby overruled and it is held that such restrictions clearly contain the quality of reasonableness and when tested on the touchstone of the principles laid down by the various authorities referred to above, they fully satisfy all the requirements of a reasonable restriction. This takes us to contention No. 2 raised by the petitioners. It was submitted before us that clause 8 of the Control Order under which the impugned notification has been issued suffers from the vice of excessive delegation of powers and is, therefore, violative of article 14 of the Constitution. It was argued that as the notification seeks to establish a monopoly in favour of the sugar mills at the cost of the petitioners it seeks to make per se an invidious discrimination which is writ large on the very face of the notification which is, therefore violative of article 14. As regards first limb of the argument it may be necessary to state that the Control Order itself has been passed under the authority of s.3 of the Act of 1955 which has been held by this Court to be constitutionally valid and is not in any way discriminatory so as to attract article 14. The Control Order itself having been passed under s.3 contains sufficient guidelines, checks and balances to prevent any misuse or abuse of the power conferred on the authorities concerned under clause 8. Clause 8 runs thus: "8. Power to issue directions to producers of khandsari, sugar, power crushers, khandsari units, crushers and cooperative societies. The Central Government may, from time to time, by general or special order, issue directions to any producer of khandsari sugar or owner of a power crusher, khandsari unit or crusher or the agent of such producer or owner or a cooperative society regarding the purchase of sugar or sugarcane juice, production, maintenance of stocks, storage, price, packing, payment disposal, delivery and distribution of sugar cane, gur gul, jaggery and rab or khandsari sugar or the period or hours to be worked. " 120 To begin with it may be noticed that the power to issue orders or directions from time to time is conferred on the Central Government which is undoubtedly a very high authority and must be presumed to act in a just and reasonable manner. This point is well settled and concluded by several decisions of this Court as detailed below. In Chinta Lingam & Ors. vs Government of India Ors. , (1) this Court made the following observations: "At any rate, it has been pointed out in more than one decision of this Court that when the power has to exercised by one of the of the highest officers the fact that no appeal has been provided for is a matter of no moment. .It was said that though the power was discretionary but it was not necessarily discriminatory and abuse of power could not be easily assumed. There was moreover a presumption that public officials would discharge their duties honestly and in accordance with rules of law. " This case was followed in V. C. Shukla vs State (Delhi Admn.)(2) where one of us (Fazal Ali, J.) speaking for the Court observed as follows : "Furthermore, as the power is vested in a very high authority, it cannot be assumed that it is likely to be abused. On the other hand, where the power is conferred on such a high authority as the Central Government, the presumption will be that the power will be exercised in a bona fide manner and according to law." Moreover, the power cannot be said to be arbitrary or unguided because the impugned notification derives its source from section 3 of the Act of 1955 which clearly lays down sufficient guidelines and the existence of certain conditions for proper distribution of an essential commodity. The said guidelines therefore, govern the authority passing the impugned notification. Secondly, clause 8 merely seeks to regulate and guide the conditions and the circumstances under which the manufacturers may exercise their rights. In other words, any order passed under clause 8 is prima facie purely of a regulatory nature. It was, however, submitted that the Notification has been passed by the Cane Commissioner, Government of U.P. and it does not contain any materials 121 or reasons why the ban was imposed on the crushers owned by the petitioners. As the Notification itself has been passed under clause 8 of the Control Order read with Government of India G.S.R. No. 1122 dated July 16, 1966 and under the it was not necessary for the Cane Commissioner to have stated or detailed the reasons why the Notification was issued. In fact, the Notification and the Control Order have to be read in the light of the main Act, viz., the Act of 1955, which itself provides the necessary guide lines, namely, that it is essential in public interest and to secure proper distribution of an essential commodity to pass orders by various authorities from time to time. This is the scheme of section 3 of the Act of 1955 which has not been challenged before us by the petitioners. It was further argued in the same token that the impugned notification seeks to establish a monopoly in favour of the sugar mills at the cost of the petitioners who have been selected for hostile discrimination as against the mills. While detailing and narrating the facts and the history of sugar production we have already shown that the State has placed cogent materials before us to show why the sugar mills had to be given a special treatment by temporarily stopping the production of sugar by the crushers. We have already dealt with the various factors while examining contention No. 1 of the petitioners and it is not necessary for us to repeat the same here. There was no question of creating any monopoly to benefit the mills particularly when a very large majority of the mills were controlled by the State or cooperative societies and only a small fraction of them were working in the private sector. In view of the low working cost of the crushers they sought to outcompete the mills and deprive them of the requisite amount of sugarcane which they should have got. It was not only just but also essential to boost the production of the factories so that white sugar may be produced on a large scale and sugarcane may not be wasted which would have been the case if most of the sugar cane went to the crushers. We have pointed out that the recovery of sugarcane juice by the mills is double that by crushers, and if the latter were allowed to operate the wastage of the sugarcane would have been almost 50 per cent which could have been avoided if sugar cane was allowed to be utilised by the mills. The third limb of the argument on this point was that there was was no rational nexus between the prohibition contained in the Notification preventing the petitioners from working their crushers, even though for a short period, and the object sought to be achieved by it. This contention also must necessarily fail as we have already shown that such nexus existed. 122 It was argued by Mr. Garg that as India lives in villages it was not understandable why the Central Government was bent on reducing the support price of sugarcane and thus causing loss to the sugarcane growers. It was true that the mills were not in a position to pay as high a price for sugarcane as the crushers but that was for so many reasons which we have discussed above, namely, the various liabilities which were imposed on the mills, e.g., the excise duties, the levy, etc. Once a certain amount of stability was achieved in the sugarcane industry, the ultimate benefit would undoubtedly go to the sugarcane grower even though he may have to be paid a lesser support for supply of sugarcane to the mills. It was, therefore, in public interest that a lesser support price for sugarcane had been fixed. Moreover, it was for the Central Government who was in the know of the circumstances prevailing in the State or for that matter in the country to determine the support price of sugarcane. Even though the crushers may have paid a higher price, in the long run, the sufferers would be the sugarcane growers as also the consumers who would be deprived of the sugar produced by the mills which was undoubtedly superior to the khandsari sugar and has a vaster area of consumption in the country and is also meant for purposes of export. The report entitled 'Studies on Specific Conductances of Indian Sugar ' referred to above, details the distinctive features of the white sugar produced by the mills and the khandsari sugar where the various features of the nature and character of sugar are pointed out thus. "This plantation sugar is crystalline, white lustrous and has a purity of 99.8 per cent. The size of the crystal of this sugar varies from 0.3 to 2.5mm. This sugar is graded according to the Indian sugar standards: Sugar corresponding to 30A is very white sugar with grain size of about 2.5mm. While 27 E refers to less white sugar with grain size of about 0.4 mm. The numeral 30, 29 and 27 indicate the decreasing order of the whiteness of the sugars and the letters A E to the grade of the grain size Apart from these sugars produced in well established commercial factories, the similar type of which are known in other countries, another kind of sugar produced perhaps only in India and nowhere else, is the khandsari sugar which is being manufactured in small scale industrial units While, in the sulphitation factories the classified sugar syrups are boiled under vacuum, in Khandsari units the same is carried out in the open pans. This sugar used to be palish yellow in colour 123 Nagaranjars and his co workers studied the conductivity of plantation white sugars and refined sugars and found distinctive difference in conductivity of plantation white sugar and refined sugar. " It has been clearly averred in para 15 of the counter affidavit filed by Mr. Bhola Nath Tiwari, Cane Commissioner, Government of U.P. (who issued the impugned notification) that in year 1978 79 the production in the reserved areas was 578.78 lakh tonnes out of which the percentage of cane utilised by the sugar mills was 27.24 whereas it was 9.73% in the case of the khandsari manufactured by power crushers. It is also stated that out of the total quantity of sugarcane only 45.23 per cent was utilised by gur manufacturers and the remaining 17.5 per cent was used for seed, feed and chewing purposes etc. Similarly, in the year 1979 80 there was a steep fall in the production of sugarcane from 578.78 lakh tonnes in the previous year to 471.11 lakh tonnes. Owing to this loss of production, there was keen competition for purchase of sugarcane between the sugar mill owners and the khandsari units. As a result of this unhealthy competition sugar mills had to close down prematurely resulting in the loss of production of sugar. A very attractive argument was submitted before us by Mr. Gupta, appearing for some of the owners of power crushers. It was submitted that so far as the petitioners represented by him were concerned, they were growing sugarcane in their own fields and had installed power crushers in their own land though the said land fell within the reserved area. It was argued that these petitioners fell in a separate category and the Government could not compel them to supply sugarcane to the mills instead of using the sugarcane grown by them in their own crushers. An apparent snag in this argument is that if in the larger public interest it becomes necessary to compel the sugarcane growers to supply sugarcane to the mills at a particular rate in order to meet a national crisis, no person can be heard to say that his rights are taken away in an unjust or discriminatory fashion. Personal or individual interests must yield to the larger interests of the community. This is exactly the philosophy behind the passing of the Act of 1955. Merely because the petitioners are growing sugarcane in their own fields and own power crushers, therefore, they cannot be treated as a class separate from the others owners of power crushers situated within the reserved area of the the mills. 124 Secondly, it was argued by Mr. Gupta and, in our opinion, rightly that the impugned notification is ex facie discriminatory inasmuch as it differentiates between vertical and horizontal power crushers without any rhyme or reason. He submitted that no rational basis has been suggested by the State for making the distinction when both types of crushers produce almost the same quantity of khandsari and apply the same mechanical process (open pan process). What difference does it make, says Mr. Gupta, if a power crusher is vertical or horizontal ? In the case of a horizontal power crusher rollers are in a horizontal line situated on the surface whereas in the vertical power crusher the rollers instead of being on the surface are in a vertical position without there being any difference in the working of the two crushers. We are of the opinion that this argument of Mr. Gupta is sound and must prevail. The Additional Advocate General, U.P. sought to draw several distinctions between a vertical power crusher and a horizontal one, namely, (1) a vertical power crusher can crush 1500 quintals of sugarcane per month whereas a horizontal one crushes 5600 quintals of the commodity in the same period; (2) vertical power crushers are non commercial and fall within the category of cottage industry whereas horizontal power crushers are included in the category of small scale industry; (3) vertical power crushers are run by their owners them selves and draw supplies from sugarcane growers and (4) vertical power crusher do not require any licence. So far as the last part of the argument of the Additional Advocate General of U.P. that vertical power crushers do not require a licence is concerned, it is factually wrong because all such crushers require a licence by virtue of the Orders passed by the Central Government under s.3 of the Act of 1955. Regarding the other distinctive features the mere ipse dixit of deponent Gupta who has sworn an affidavit, there is absolutely no documentary evidence to support the features pointed out or relied upon by the Additional Advocate General. In these circumstances, it has not been proved to our satisfaction that there is any real distinction between a vertical and a horizontal power crusher, and we regard both as falling in the same class. The notification by exempting vertical power crushers and prohibiting horizontal power crushers is clearly discriminatory and the discrimination is not justified by any rational nexus between the prohibition and the object sought to de achieved. In these circumstances, therefore, we hold that in so far as the word 'vertical ' used in the impugned Notification is concerned it must be struck down as being violative of article 14. This, however, 125 does not render the entire notification void because the word 'vertical ' used in the notification is clearly severable from the other portions of the notification. All that has to be done is to read the notification without the the word 'Vertical ' as a result of which the exemptions from ban will include all owners of power crushers (whether vertical or horizontal) which manufacture gur or rab from sugarcane grown on their fields. Again, as the notification has al ready spent its force, if any order is passed in future, the Government will see to it that such an invidious discrimination is not repeated. We now come to contention No.4 by which it was urged that the express language of clause 8 of the Control Order does not contemplate a complete prohibition of the production of an article but envisages mere regulation of the period or hours of working. It was argued that the words 'period or hours ' used in clause 8 are relatable only to the number of actual hours in a day for which the crushers may be permitted to work from time to time and not a complete stoppage or prohibition of the crushers for a period of a month or two. Clause 8, as extracted supra, uses the words 'period or hours to be worked. ' A plain reading of this expression clearly reveals that the words 'period ' and 'hours ' have been used to connote two different aspects of the matter. In other words, clause 8 contemplates regulation of working of the sugar by two separate methods (1) where only hours of work per day are to be regulated or fixed, for instance, where a crusher normally works for 10 hours, a notification under this clause may provide that it should work only for 8 hours or 6 hours or 10 hours a day or for a number of days. (2) The word 'period ' however, has nothing to do with the hours to be worked but it refers to another category of regulation viz., whether a crusher is to run or not for a particular period of time. We are unable to agree with the contention of Mr. Garg that the two words must be taken to have been used in clause 8 in the same sense. In fact, this interpretation of the words will cause violence to the language of the statutory provision and instead of advancing its object it would frustrate the purpose which clause 8 seeks to subserve. In the instant case, the notification has resorted to the first category, viz., the period of the working of the crushers, that is to say, about one and a half month, and has not at all touched or impinged upon the working hours of the crushers. If, however, the notification had fixed certain hours of the day during which only the crushers could work, then the notification would have resorted to the alternative mode of regulation, which obviously has not been done in this case We are unable to agree with the contention put forward by Mr. 126 Garg and hold that the impugned notification is wholly consistent with the provisions contained in clause 8 of the Control Order. Contention Nos. 5, 6 and 7 relate to the objection taken by the petitioners to the validity of the impugned notification on several grounds. In regard to contention No. 5, the notification has been attacked on the ground that the Central Order violates the principles of natural justice inasmuch as it was passed without hearing the petitioners whose valuable rights were involved and their trade was stopped and they were put completely out of production even though for a short period of about one and a half month. It was contended that though clause 8 does not expressly provide for a hearing yet even if it be considered to be an administrative order, the rule of audi alteram partem fully applies and the Cane Commissioner should have passed the impugned notification only after hearing the petitioners. Reliance was placed for this proposition on a large number of authorities. It is true that with the growth of law in our country, this Court has consistently held for the last few years that the rules of natural justice must apply even to an administrative order unless the same are expressly excluded. Mr. Garg as also other counsel for the petitioners submitted that the mere fact that there is no express provision in clause 8 for hearing the petitioners before imposing any restrictions on their business provides good reason to hold that the right to be heard was inherent in the very act of prohibition since the stoppage of the business of the petitioners would entail civil consequences. Thus, they argued, as no hearing was given to the petitioners, the notification was void and inoperative. Reliance was placed on the observations of Krishna Iyer, J., in Mohinder Singh Gill & Anr. vs The Chief Election Commissioner, New Delhi & Ors. ( ') which may be extracted thus: "Indeed, natural justice is a pervasive facet of secular law where a spiritual touch enlivens legislation administration and adjudication, to make fairness a creed of life. It has many colours and shades, many forms and shapes and, save where valid law excludes, it applies when people are affected by acts of Authority. It is the bone of healthy government, recognised from earliest times and not a mystic testament of judge made law The dichotomy between administrative and quasi judicial functions vis a vis the doctrine of natural justice is presumably 127 Obsolescent after Kraipak in India and Schmidt in England. . The procedural pre condition of fair hearing, however minimal, even post decisional, has relevance to administrative and judicial gentlemanliness. The Election Commission is an institution of central importance and enjoys far reaching powers and the greater the power to affect others ' right or liabilities the more necessary the need to hear. . We consider it a valid point to insist on observance of natural justice in the area of administrative decision making so as to avoid the devaluation of this principle by administrators already alarmingly insensitive to the rationale of audi alteram partem !" Strong reliance was also placed on the observations of this Court in Maneka Gandhi vs U. O. I.( ') where Bhagwati, J., after full discussion of the entire subject, observed thus: "The law must, therefore now be taken to be well settled that even in an administrative proceeding which involves civil consequences, the doctrine of natural justice must be held to be applicable. " Similarly, in a very recent case section L. Kapoor vs Jagmohan(2) this Court had taken an opportunity to emphasis the importance of rules of natural justice and reiterated as follows: "The old distinction between a judicial act and an administrative act has withered away and we have been liberated from the psittacine incantation of "administrative action". Now from the time of the decision of this Court in State of Orissa vs Dr. (Miss) Binapani Dei ; , even an administrative order which involves civil consequences. must be made consistently with the rules of natural justice. " A number of other decisions were also cited on the question of natural justice and we agree with the propositions adumbrated by 128 Mr. Garg that normally where an administrative order adversely affects the valuable rights of the party affected, a reasonable opportunity of hearing must be given to the person affected. The instant case, however, contains two prominent features which exclude the rules of natural justice. Section 3 of the Act of 1955 under which the Control Order was passed really covers an emergent situation so as to meet a national crisis involving the availability or distribution of any essential commodity which may make it necessary to restrict or control the business carried on by a citizen. It has already been pointed out by us while discussing the case of the respondent that there was an acute shortage of sugar which was not made available to consumers at reasonable rates and the situation caused serious dissatisfaction among the people. Nothing short of immediate and emergent measures taken to solve this crisis would have eased out the situation. We are fortified in this opinion by a Constitution Bench decision of this Court in Prag Ice and Oil Mills and Anr. vs U. O. I.( ') where Chandrachud, C. J. observed as follows: "The dominant purpose of these provisions is to ensure the availability of essential commodities to the consumers at a fair price. And though patent injustice to the producer is not to be encouraged, a reasonable return on investment or a reasonable rate of profit is not the sine qua non of the validity of action taken in furtherance of the powers conferred by section 3 (1) and section 3 (2) (c) of the . The interest of the consumer has to be kept in the forefront and the prime consideration that an essential commodity ought to be made available to the common man at a fair price must rank in priority over every other consideration. " If hearing was to be given to so many owners of power crushers, it would have completely defeated and frustrated the very object not only of the Notification but also of the Act of 1955 and created complications which may have resulted in a further deterioration of an already serious situation. If the rules of natural justice were not applied in such an emergent case, the petitioners cannot be heard to complain. Afterall the notification directed stoppage of operation of the petitioners ' crushers only for a very short period and they would have had an opportunity of recouping their loss after they were allowed to function because the proportion of consumption of khandsari sugar was limited as indicated 129 above. The petitioners were, therefore, not seriously prejudiced and have rushed to this Court rather prematurely. The Attorney General had, however, a much more effective answer to the contention raised by Mr. Garg on this point. It was submitted by the Attorney General that having regard to the circumstances, the background and the situation in which the impugned notification was issued under clause 8 of the Control Order, it had a statutory complexion and should be regarded as purely legislative in character. He added that no one had ever argued that before passing a legislation, the persons affected by the legislation should he heard, and that therefore, the question of hearing or complying with the rules of natural justice would not arise. The Attorney General placed reliance on a decision of this Court in Saraswati Industrial Syndicate Ltd. etc. (supra) and particularly on the following observations made by Beg, J., "Price fixation is more in the nature of a legislative measure even though it may be based upon objective criteria found in a report or other material. It could not, therefore, give rise to a complaint that a rule of natural justice has not been followed in fixing the price. Nevertheless, the criterion adopted must be reasonable. Reasonableness, for purposes of judging whether there was an "excess of power" or an "arbitrary" exercise of it, is really the demonstration of a reasonable nexus between the matters which are taken into account in exercising a power and the purposes of exercise of that power. (Emphasis ours) Having regard to the facts in the instant case, a temporary ban on power crushers of a particular type was a measure governed by same, if not higher, considerations as an order of fixation of price. The las tmentioned case is an authority for the proposition that an order like the impugned notification is a legislative measure. That being the position, the rules of natural justice stand completely excluded and no question of hearing arises. Mr. Garg, however, submitted that in that case the petitioner did not urge that the price fixation required a quasi judicial procedure. Even so, the Court clearly decided that a measure like the one we have in the instant case is purely of a legislative character and there is no question of complying with the rules of natural justice in such cases. 130 In Chairman Board of Mining Examination and Anr. vs Ramjee( ') Krishna Iyer, J. speaking for the Court, pointed out that there may be cases where rules of natural justice can be dispensed with. In this connection he observed as follows: "Natural justice is no unruly horse, no lurking land mine nor a judicial cure all. If fairness is shown by the decision maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice, can be complained of. Unnatural expansion of natural justice, without reference to the administrative realities and other factors of a given case, can be exasperating." (Emphasis supplied) In Joseph Beauharnais vs People of the State of IIIinois(2) the following observations were made which are apposite to the facts of the present case : "This being so, it would be out of bounds for the judiciary to deny the legislature a choice of policy, provided it is not unrelated to the problem and not forbidden by some explicit limitation on the State 's power. That the legislative remedy might not in practice mitigate the evil, or might itself raise new problems, would only manifest once more the paradox of reform. It is the price to be paid for the trial and error inherent in legislative efforts to deal with obstinate social issues. " The passing of the notification in the instant case was an act of a legislative character and was really a trial and error method adopted to deal with a very serious social problem. In Bates vs Lord Halsham of St. Marlebone and Ors.(3) under similar circumstances a statutory committee had made an order in relation to powers to licence hackney carriages. Commenting on this provision Megarry, J. Observed as follows: "In the present case, the committee in question has an entirely different function: it is legislative rather than administrative or executive. The function of the committee is to make or refuse 131 to make a legislative instrument under delegated powers. The order, when made, will lay down the remuneration for solicitors generally; and the terms of the order will have to be considered and construed and applied in number less cases in the future. Many of those affected by delegated legislation, and affected very substantially are never consulted in the process of enacting that legislation, and yet they have no remedy. " For the reasons aforesaid we find ourselves in complete agreement with the argument of the Attorney General that the impugned notification having been passed to effectuate the object or ideal to be achieved in order to solve a national crisis cannot but be considered a legislative measure so as to exclude rules of natural justice. The contention raised by the petitioners on this ground is, therefore, overruled. In contention No. 6 another infirmity pointed out by the learned counsel for the petitioners was that the impugned notification is clearly violative of clause 11 of the Control Order itself because the prohibition against the working of the power crushers even for a short period amounted to a partial revocation of the licences granted to the petitioners under clause 3 of the Licensing Order. In order to appreciate this contention it is necessary to extract clause 11 (2) of the Control Order which runs: "(2) Where all or any of the powers conferred upon the Central Government by this Order have been delegated in pursuance of sub clause (I) (b) to any officer or any authority of a State Government, every Order or direction issued by such officer or authority in exercise of that power may be amended, varied or rescinded by the State Government to whom the officer or authority is subordinate either suo motu, or on an application made within a period of thirty days from the date of the order or direction. Provided that no order revoking a licence or permit issued to a person shall be made without giving such person an opportunity to make representation. " Reliance was particularly placed on the proviso extracted above. It was contended that even a temporary suspension of the operation of power crushers amounted to a partial revocation of the licence granted to the petitioners and that therefore it was incumbent on the authorities concerned to give the petitioners an opportunity of being 132 heard and making a representation before such revocation took effect. The Attorney General rightly pointed out that neither subclause (2) nor the proviso thereto is attracted in the instant case. It is true that the petitioners got licences under the Licensing Order which was also passed under the Act of 1955. A revocation of a licence means that the licence has not been suspended but cancelled for all times to come entailing civil consequences and complete abolition of the right for the exercise of which the licence was granted. A temporary suspension of the working of the crushers owned by the petitioners cannot amount to a revocation, either complete or partial. In fact, in our opinion, the proviso to sub clause (2) of clause 11 of the Control Order does not at all envisage a partial or periodical revocation of a licence. The proviso would come into play only if a licence is revoked or cancelled once for all. Since a revocation or cancellation of the licence would operate to the serious prejudice of the licensee and affect him adversely, it was considered necessary and expedient to give him a hearing. We are fully satisfied that the impugned notification does not attract the conditions laid down in the proviso so as to confer upon the petitioners a right of hearing. The proviso is, therefore, wholly inapplicable to the facts of the present case. It was further submitted by the counsel for the petitioners that even if clause 11 did not apply because the notification is of a legislative character a hearing would have removed the apprehensions of the petitioners. This argument has no substance because once it is held that the notification is impressed with a legislative character, the question of hearing does not arise. It may be true that despite the fact that there is no necessity of hearing, the Government could have evolved some method of giving a very short notice to the Association and taking its views. But the omission to do so would not vitiate the notification impugned. It is well settled that possibility of an alternative scheme which might have been but has not been designed, would not be sufficient to make a restriction unreasonable. In State of Maharashtra vs Mumbai Upnagar Gramodyog Sangh(1) this Court observed as follows: "The legislature has designed a scheme by which reasonable restrictions are placed upon the right of a citizen to dispose of his property: possibility of an alternative scheme which might have been but has not been designed, will not justifiably expose 133 the first scheme to the attack that it imposes unreasonable restrictions. " Lastly, on contention No. 7 it was urged that the impugned notification, which purports to have been passed under the Control Order (which itself was a subordinate legislation passed under s.3 of the Act of 1955) if properly considered along with the serious mis chief it causes to the citizens, goes against the very spirit and object of the Act of 1955 and frustrates the equitable distribution and production of sugar which apparently seems to be the main object sought to be achieved. This argument has already been considered by us when we dealt with the various facts and materials produced before us to justify the impugned notification. We have already pointed out that in view of an extraordinary situation viz., the sugar famine and the increasing demand of sugar by the consumers, the interests of the consumers had to rank above all considerations. The notification, as stated by us earlier strikes a just balance between the needs of the consumers and the harm which may be done to the owners of the crushers. The degree and urgency of the evil sought to be remedied by a social control is the purport and the central theme of the impugned notification. Having regard to the various aspects which we have indicated above, it cannot be argued with any show of force that the remedy sought by the notification is in any way arbitrary or excessive. On the other hand, the report of the experts, stoppage of the production of sugar by the factories, the drought conditions and other factors have to enter into the decision of the Government in passing the impugned notification. The notification ex facie cannot be said to have been passed without due care and deliberation. Relevant portion of Section 3 of the Act of 1955 runs thus: "3. (1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices. (or for securing any essential commodity for the defence of India or the efficient conduct of military operations) it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. " The impugned notification having been passed under s.3 of the Act, it fulfils all the conditions contained therein, viz., it is expedient for maintaining or increasing the supply of an essential commodity namely, sugar, which is included in clause (e) of s.2 of the Act of 134 1955 and it regulates the supply and distribution of that essential commodity and the trade and commerce therein. Having regard, therefore, to the facts and circumstances proved in this case, it cannot be said that either the Control Order or the the impugned notification is against the tenor and spirit of section 3. On the other hand, it is manifestly clear from the circumstances disclosed above that it is in pursuance of the aim and object for which s.3 was enshrined in the Act of 1955 that the Control Order and the notification were promulgated. The contention of the learned counsel for the petitioners on this score is accordingly overruled. Mr. Rameshwar Dayal, appearing for some of the petitioners raised a novel argument which was to the effect that not only the notification impugned but also the Control Order was violative of article 14 of the Constitution. It was contended that since the State had already fixed reserved areas for the factories, the selection of khandsari units for banning or stopping their production amounted to a mini classification without any rational basis. We are, however, unable to accept this contention because in view of the various circumstances discussed above, the classification, if at all, was based on a reasonable nexus with the object sought to be achieved by the notification. Certain other aspects were also raised by Mr. Dayal which amount to almost a repetition of the main arguments placed before us by Mr. Garg and the counsel following him. Thus, on an overall consideration of the various aspects of the matter we are fully satisfied that applying the well established tests of reasonableness, the impugned notification cannot be said to contain the quality of unreasonableness but is per se fair and reasonable and fully satisfies the conditions laid down by this Court in determining whether or not a restriction is reasonable. Before closing the judgment we would like to lay down certain guidelines for any future policy that the Government may consider fit to shape in the light of the discussion on the points raised before us in this case. In fact, both counsel for the petitioners and the Attorney General had requested us to lay down certain guidelines so that the Government may benefit from the same. Although we have upheld the impugned notification but having regard to the special features of the present case we are not quite satisfied that a better policy to control sugar or increase its production could not be followed which may satisfy the parties concerned, viz., the crushers, the mills, the sugarcane growers and the consumers. 135 In case the Government decides to impose a ban in future on the power crushers or other units, it may consider the desirability of giving a bare minimum hearing not to all the owners of khandsari units but to only one representative of the Association representing them all, and getting their views on the subject. It is possible that they might give some suggestions which the Government would like to incorporate in formulating its policy. Even if the Government thinks that an emergent situation has arisen and it may not be possible to give a hearing, atleast a representation against the proposed action may be called for from such Association and considered after giving the shortest possible notice. Not that such action is a legal requirement but it will generate greater confidence of the persons who may be affected by any order to be passed against them. In the same token, we may mention that when in passing an order like the impugned one, the Government has adopted the trial and error method, it would be in the fitness of things if the matter is carried to its logical end so that any future order passed contains the colour and quality of objectivity. Secondly, could it not be possible for the Government to allow the crushers to function by regulating the working hours or to fix a quota of sugarcane to be delivered to the mills and the crushers in the ratio of 60:40 or 70:30, as may be advised by the experts and to insist that both the crushers and the mills should pay a uniform price to the cane growers ? The counsel for the petitioners have brought to our notice a disturbing element in the entire case which is that in the past although the sugarcane growers supplied sugarcane on condition of payment to them of the support price fixed. by the Government yet the mills did not pay the price to the cane growers for a long time with the result that arrears accumulate running into lakhs of rupees. It would indeed be extremely desirable for the Government to take steps to see that payment of the price of the quantity of the cane supplied to the mills or the crushers is paid against delivery or, at any rate, within a reasonable time thereafter so as to provide a strong incentive to the farmers to increase their production and earn substantial profits by supplying the sugarcane to mills or crushers during the crushing season (October to May). Lastly, it was represented to us by the petitioners that the crushers are used for the twin purpose of production of khandsari sugar and gur, rab, etc., but as the crushers are sealed by the officers of the Government, the owners are not in a position to produce 136 even gur or rab on the production of which not only no ban has been imposed by the impugned notification but the same has been completely exempted from the purview of the notification. Thus it was asserted that the owners of crushers who want to switch over to production of gur or rab, because of the ban imposed by the Government on the production of khandsari may be allowed to do so. The Attorney General, however, pointed out that if this course is adopted it will be difficult to detect as to how many crushers are producing khandsari sugar in the garb of gur or rab. Wherever any step for banning production is taken, the Government has to evolve some procedure to detect the defaulters and with the resources at its command, we cannot understand why a special staff cannot be appointed on a temporary basis for looking after the compliance of the order by the "crushers and making surprise checks periodically. Another method to prevent the abuse of the privilege of production of gur or rab by producing khandsari in a clandestine fashion may be to insert a condition in the licences of the manufacturers of khandsari sugar that if they produce khandsari during the period of the ban their licences would be cancelled. The result is that all the contentions raised by the petitioners except the one raised by Mr. Gupta that the introduction of the word 'vertical ' was violative of article 14 of the Constitution are rejected. The word 'vertical ' must be considered to have been deleted from the impugned notification. Since the impugned notification has already spent its force. no relief can be given even to the petitioners represented by Mr. Gupta. But, in future the Government will bear in mind the infirmity pointed out. The petitions, along with the Civil Appeal, are accordingly dismissed but in the circumstances without any order as to costs. N.V.K. Petitions and Appeal dismissed.
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In Uttar Pradesh, sugar mills made sugarcane through the "hydraulic process." Power crushers used the "open pan process." Both mills and crushers got their sugarcane from farmers. To help sugar mills, most of which were run by the state, certain areas were set aside for growing sugarcane. To fix the nationwide sugar shortage, increase sugar production, and fairly distribute sugar at reasonable prices, the Cane Commissioner used their power under the Sugarcane (Control) Order, 1966. They issued a notice on October 9, 1980, saying that power crushers (except those making *gur* or *rab* from their own sugarcane, *Khandsari* units, or their agents) couldn't work in the reserved areas until December 1, 1980. The petitioners, who owned power crushers and *Khandsari* units with licenses under the Uttar Pradesh *Khandsari* Sugar Manufacturers Licensing Order 1967, challenged the notice. It limited their ability to work for a month and a half (October 9 to December 1, 1980). They filed legal challenges in court, arguing that: (1) The notice and the Control Order it was based on violated their right to practice any profession or to carry on any occupation, trade or business. The limits placed on them weren't reasonable. (2) Clause 8 of the Control Order gave too much power to the Cane Commissioner, violating the Constitution. The notice created a monopoly for sugar mills at the petitioners' expense, which was also unconstitutional. (3) There was no logical connection between stopping the petitioners' crushers and the goal the notice was trying to achieve. (4) Clause 8 of the Control Order was meant to regulate working hours, not completely stop production. (5) The notice violated principles of fairness because the petitioners weren't consulted before their rights were restricted, shutting down their production. (6) The notice, by stopping the power crushers, partially cancelled the petitioners' licenses, violating clause 11 of the Licensing Order. (7) The notice went against the purpose of the Act of 1955, which was to equally distribute and produce sugar. The state argued that: (1) An order under clause 8 of the Control Order was like a law, so the principles of fairness didn't apply. (2) The notice didn't violate the Constitution because it was in the public interest and aimed to fairly distribute sugar. (3) Sugar factories recovered 9 1/2 to 11 1/2 percent of sugar from sugarcane, while *Khandsari* units only recovered 4 to 6 percent. So, mills used sugarcane more efficiently. (4) *Khandsari* sugar was mainly used by sweet makers or villagers, while sugar from mills was used by more people. Protecting national interests and fairly distributing sugar justified the restriction. (5) *Khandsari* and sugar from mills were different in quality and specifications. (6) The crusher owners knew about the situation and why the government was temporarily stopping crushers to help sugar mills and set a support price for sugarcane. So, fairness wasn't an issue. (7) Clause 8 of the Control Order used the words "period or working hours," which included both a fixed period of time and hours of work on any day. The court dismissed the petitions, ruling that the notice wasn't unreasonable. However, the word "vertical" in the notice was unconstitutional. But this didn't invalidate the whole notice because the word "vertical" could be removed without changing the notice's meaning. This meant the ban exemptions would include all power crusher owners, whether vertical or horizontal, making *Gur* or *rab* from their own sugarcane. Because the notice had already expired, the government was told to avoid such unfair discrimination in the future. (i) If someone claims their basic rights under Article 19 are violated, the state must prove that the restrictions on those rights are reasonable. (ii) Basic rights are not absolute but can be reasonably restricted by the state in the public interest. What's reasonable depends on the situation, the law, its purpose, and the extent of the restriction. If the restrictions align with the government's goals, they are likely reasonable. (iii) Restrictions can be partial, complete, temporary, or permanent, but they must relate to the goal they're meant to achieve. Sometimes, completely stopping a trade is allowed if the product is essential and the restriction is temporary. Freezing food stocks to ensure fair distribution and prices is a reasonable restriction. (iv) When deciding if restrictions on industry, trade, or commerce are reasonable, the fact that some businesses might lose money doesn't make the restrictions unreasonable. Trade and industry go through good and bad times due to various factors. In a free economy, controls are needed to ensure consumer goods like food are available at a fair price, and setting that price isn't unreasonable. (v) When restricting trade in essential goods, the idea of a controlled economy and fair distribution to consumers at a reasonable price is a valid consideration. (vi) A restriction on traders dealing with essential goods, or setting prices to distribute those goods while considering consumers, isn't unreasonable. In this case, the Petitioners rushed to court, not giving the State a chance to see what happened from the notice. Since they got court orders to stop the notice, it never took effect. (vii) For essential goods like sugar, economic production and distribution are important when deciding if restrictions are reasonable. Even if the profit margin is reduced, the restriction isn't unreasonable. Trade is subject to price changes, and measures to balance the risk and the right to trade are reasonable. (viii) Stopping crushers for a short period was in the public interest and related to the goal of reducing sugar shortages and fairly distributing sugar. Considering the history of sugar production, stopping crushers for a short time wasn't excessive. 2(i) The Control Order was made under Section 3 of the Act of 1955, which is constitutional and doesn't discriminate. The Control Order has enough rules to prevent power from being misused. The Central Government, which has the power under clause 8, is a high authority expected to act fairly. (ii) The goal wasn't to create a monopoly for mills. Most mills were state-controlled or co-ops. Crushers, with lower costs, tried to outcompete the mills for sugarcane. It was necessary to help factories produce more sugar and avoid wasting sugarcane. Mills recover twice as much juice from sugarcane as crushers. (iii) If it's necessary to make sugarcane growers supply mills at a certain rate to address a national crisis, no one can claim their rights are unjustly taken away. Personal interests must give way to the community's interests. This is the idea behind the Act of 1955. 3. There's no real difference between vertical and horizontal power crushers. They're in the same class. The notice unfairly favored vertical crushers, and there's no logical reason for this. 4. (i) Clause 8 used the words "period or hours to be worked." "Period" and "hours" mean different things. Clause 8 allows for two ways to regulate sugar: (1) regulating daily working hours, and (2) setting a period when a crusher can't run at all. In this case, the notice used the "period" method, stopping crushers for a month and a half, without affecting their working hours. So, the notice follows clause 8 of the Control Order. 5. (i) Two things make fairness rules not apply here. Section 3 of the Act of 1955 addresses emergencies, allowing restrictions on businesses dealing with essential goods. There was a sugar shortage, and immediate action was needed. Giving hearings to crusher owners would have defeated the purpose of the Act and the notice, making things worse. The notice only stopped operations for a short time, and owners could make up for losses later. So, the petitioners weren't seriously harmed but rushed to court too soon. (ii) The notice is like a law. So, fairness rules don't apply. Passing the notice was a trial-and-error method to solve a serious problem. 6. Revoking a license means cancelling it forever. Stopping crushers temporarily isn't a revocation, partial or complete. Clause 11 of the Control Order doesn't allow for partial or temporary revocation. The clause only applies if a license is completely cancelled. So, it doesn't apply here. 7. The notice was carefully considered. It was made under Section 3 of the Act, which allows it to maintain or increase the supply of sugar (an essential commodity) and regulate its distribution. The Control Order and the notice align with Section 3. They were made to achieve the goals of Section 3 of the Act of 1955. 8. If the government bans power crushers in the future, it should get the views of a representative of the crusher owners' association. Even in an emergency, the government should ask for and consider the association's input quickly. 9. When banning production, the government must create a way to detect violations and ensure compliance.
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5637 41,5643 45, 5646 47,5649 51, 5597 98,5553 67,5609 11,5516 20,5623 28,5657, 5673 74,5702 23,5668, 5659 67,5733, 5740 42, 5782 84, 5763 64, 5762,5747 52,5779 81,5745, 5785, 5737 39, 5841 43, 5786 5797, 5861 62 and 5863 64 of 1980. Comm/Sugarcane dated July 16, 1966, I, Bhola Nath Tiwari, Cane Commissioner, Uttar Pradesh hereby direct that no owner of power Crusher (other than those vertical power crushers which manufacture Gur or Rab from Sugarcane grown on their own fields) or a Khandsari Unit or any agent of such owner shall in any reserved area, of any Sugar Mill work the Power Crusher, or the Khandsari Unit prior to December 1, 1980 during the Year 1980 81. We have mentioned these essential features of the Notification because the most important argument put forward before us by the counsel for the petitioners has been that it imposes unreasonable restrictions on the right of the petitioners under article 19(1)(g) of the Constitution to carry on their trade namely, production of khandsari. The Attorney General, appearing for the Union of India, and Mr. Maheshwari, Additional Advocate General appearing for the State of U.P., contended that, decision to ban the power crushers of the petitioners was taken as a part of a high powered policy to boost the production of sugar which had fallen during the year 1979 80 with the result that in the current year the country faced a great sugar famine. We might also mention here that the Notification has since spent its force and, in fact, was not carried into effect because immediately after it was issued the present writ petitions were filed in this Court and the petitioners obtained stay of the operation of the Notification from this Court. The counsel for the petitioners headed by Mr. Garg, Mr. Mridul and others raised the following constitutional points before us : (1) The Notification, as also the Control Order under which it was passed are clearly violative of of article 19(1)(g) and the restrictions purported to be placed on the right of the petitioners not do contain the quality of reasonableness. (2) Clause 8 of the Control Order under which the impugned Notification has been issued suffers from the vice of excessive delegation of powers and is, therefore, violative of Article 14 of the Constitution. (6) The impugned Notification violative of clause 11 of the Control Order itself inasmuch as the prohibition against the working of the power crushers amounts to partial revocation of the licences of the petitioners granted to them under clause 3 of the Licensing Order. (7) Even though the impugned Notification purports to have been passed under the Control Order which itself was passed under section 3 of the Act of 1955 yet if the notification is properly considered and the mischief it causes is borne in mind, it goes against the very spirt and object of the Act of 1955 and, in fact, frustrates the equal distribution and production of sugar which apparently seems to be the objective of the impugned notification. The Attorney General and the Additional Advocate General appearing for the Union of India and the State of U.P. respectively countered the submissions made by the petitioners on the following grounds: (1) An order passed under clause 8 of the Control Order is of a legislative character and therefore the question of the 103 application of the principles of natural justice to it does not arise. (3) The Notification is justified by the fact that recovery of sugar from sugarcane in case of khandsari units run by power crushers is between 4 to 6 per cent whereas in the case of sugar factories it ranges between 9 1/2 to 11 1/2 per cent, so that utilisation of sugarcane in the case of mills is double that of the power crushers. (6) The question of natural justice does not arise because the crusher owners were fully aware of the situation and had also knowledge of the considerations which prevailed with the Government in stopping crushers for a short period in order to boost production by the sugar mills and fix support price for the sugarcane supplied to the mills. This proposition has not been disputed by the counsel for the respondents, who have, however, submitted that from the circumstances and materials produced by them the onus of proving that the restrictions are in public interest and are reasonable has been amply discharged by them. This brings us to the main question as to the circumstances under which restriction imposed by the State can be said to contain the quality of reasonableness. For this purpose, almost all the decisions of this Court on the subject have been placed before us and it may be necessary to notice those of them which have a close bearing on the point at issue. Thus, apart from the various other factors which we have referred to above where restrictions are imposed on a citizen carrying on a trade or commerce in an essential commodity, the aspect of controlled economy and fair and equitable distribution to the consumer at a reasonable price leaving an appreciable margin of profit to the producer is undoubtedly a consideration which does not make the restriction unreasonable. Row 's case (supra) where Patanjali Sastri, C.J., speaking for the Court observed as follows: "It is important in this context to bear in mind that the test of reasonableness, where ever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern, of reasonableness can be laid down as applicable to all cases. (3) which was also a case arising out of the Act of 1955 and the Sugar Control Order of 1955 promulgated by the Central Government under section 3 of the said Act, a Constitution Bench of this Court while examining the nature of the restrictions imposed in that case took into account the various circumstances and observed : "Clause 5 of the Order lays down the factors which have to be taken into consideration in fixing prices. Therefore, the prices fixed by the Government by the impugned notification can on no circumstances be said to have been proved to be below the cost of production." observed as follows : "All the tests of validity of the impugned price control or fixation order are, therefore, to be found in section 3 of the Act. The result of the amendment is that the State would not have to justify such action as reasonable at all in a Court of law and no objection could be taken to it on the ground that it is an infringement of the right guaranteed under Article 19(1) (g) of the Constitution" (Saghir Ahmed 's case) "In judging the reasonableness of the restrictions imposed by the Act, one has to bear in mind the directive principles of State policy set forth in Article 47 of the Constitution." Whether the State has been able to prove this fact or not would be considered when we deal with the facts and materials placed before us by the parties. We have already seen that this Court has held that fixation of price of sugar or freezing of stock of foodgrains does not amount to an unreasonable restriction on the fundamental right to trade enshrined under article 19(1)(g). The reason for this view is that such a trade or commerce is subject to rise and fall in prices and other diverse factors which may destroy or prohibit one industry or the other so as to affect the general body of the consumers and if any measure is taken to strike a just 113 balance between the danger sought to be averted and the temporary deprivation of the right of a citizen to carry on his trade, it will have to be upheld as a reasonable restriction. According to the Attorney General by virtue of the impugned Notification this is exactly what the Central Government wants to achieve by banning the working of power crushers for a short period. It was possible for the crushers to pay a higher price because no excise duty or compulsory levy was imposed on them, on the other hand, the factories suffered from certain disabilities, namely, sixty five per cent of the sugar production was taken by the Government of India on levy process and excise duty on free sale sugar was very high as compared to khandsari sugar. In an additional affidavit filed by the respondents, sworn by Karan Singh, Joint Cane Commissioner, Government of U.P, it was pointed out that khandsari sugar could never be a substitute for sugar produced by sugar mills because khandsari sugar is not used for domestic purpose in preference to mill sugar as the former has higher molasses content and has unpleasant smell and taste. Thus, in view of the factors detailed above, it was contended by the Union of India that it was in public interest that with a view to remove shortage of sugar and achieve equal distribution of sugarcane to the mills the impugned notification was passed which seems to strike a just balance between the requirements of the country and those of the khandsari units. The Attorney General contended that since the ban was imposed only for a very short period of about 116 one month and a half, there could be no appreciable loss to the khandsari units, and even if there was some loss it could be recouped after the ban was lifted because the working cost of the khandsari units was much less than that of the mills. It was further stated that out of 89 sugar mills in the entire State of U.P., 18 sugar mills are owned by the U.P. It was further pointed out by the Union of India that only 39 sugar mills are in the private sector and ensuring actual availability of sugar at reasonable rates to the sugar mills was the prime consideration which formed the basis of impugned notification in conformity with the object of the Act of 1955 and the Control Order so as to maintain a fair price for the general public. The consequence is the recovery of sugar from sugarcane in the case of khandsari units run by power crushers is between 4 to 6 per cent whereas in the case of sugar factories it ranges between 9 1/2 to 11 1/2 per cent. This solid distinction between the two processes of manufacture followed by the mills and the crushers is, in our opinion, a very rational distinction which puts the mills in a different class and which also provides a reasonable nexus between the restrictions imposed on the crushers and the object sought to be achieved. After a careful consideration of the arguments and documents produced by both the parties we are satisfied that the restriction imposed by the impugned notification in stopping the crushers for the period 10th October to 1st December 1980 is in public interest and bears a reasonable nexus to the object which is sought to be achieved, namely, to reduce shortage of sugar and ensure a more equitable distribution of this commodity. For the above reasons the first contention put forward by the petitioners that the restrictions imposed by the impugned notification are unreasonable is hereby overruled and it is held that such restrictions clearly contain the quality of reasonableness and when tested on the touchstone of the principles laid down by the various authorities referred to above, they fully satisfy all the requirements of a reasonable restriction. It was submitted before us that clause 8 of the Control Order under which the impugned notification has been issued suffers from the vice of excessive delegation of powers and is, therefore, violative of article 14 of the Constitution. As regards first limb of the argument it may be necessary to state that the Control Order itself has been passed under the authority of s.3 of the Act of 1955 which has been held by this Court to be constitutionally valid and is not in any way discriminatory so as to attract article 14. vs Government of India Ors. , (1) this Court made the following observations: "At any rate, it has been pointed out in more than one decision of this Court that when the power has to exercised by one of the of the highest officers the fact that no appeal has been provided for is a matter of no moment. It was, however, submitted that the Notification has been passed by the Cane Commissioner, Government of U.P. As the Notification itself has been passed under clause 8 of the Control Order read with Government of India G.S.R. No. This is the scheme of section 3 of the Act of 1955 which has not been challenged before us by the petitioners. It was not only just but also essential to boost the production of the factories so that white sugar may be produced on a large scale and sugarcane may not be wasted which would have been the case if most of the sugar cane went to the crushers. We have pointed out that the recovery of sugarcane juice by the mills is double that by crushers, and if the latter were allowed to operate the wastage of the sugarcane would have been almost 50 per cent which could have been avoided if sugar cane was allowed to be utilised by the mills. The third limb of the argument on this point was that there was was no rational nexus between the prohibition contained in the Notification preventing the petitioners from working their crushers, even though for a short period, and the object sought to be achieved by it. It was true that the mills were not in a position to pay as high a price for sugarcane as the crushers but that was for so many reasons which we have discussed above, namely, the various liabilities which were imposed on the mills, e.g., the excise duties, the levy, etc. Even though the crushers may have paid a higher price, in the long run, the sufferers would be the sugarcane growers as also the consumers who would be deprived of the sugar produced by the mills which was undoubtedly superior to the khandsari sugar and has a vaster area of consumption in the country and is also meant for purposes of export. (who issued the impugned notification) that in year 1978 79 the production in the reserved areas was 578.78 lakh tonnes out of which the percentage of cane utilised by the sugar mills was 27.24 whereas it was 9.73% in the case of the khandsari manufactured by power crushers. In these circumstances, therefore, we hold that in so far as the word 'vertical ' used in the impugned Notification is concerned it must be struck down as being violative of article 14. It was contended that though clause 8 does not expressly provide for a hearing yet even if it be considered to be an administrative order, the rule of audi alteram partem fully applies and the Cane Commissioner should have passed the impugned notification only after hearing the petitioners. Similarly, in a very recent case section L. Kapoor vs Jagmohan(2) this Court had taken an opportunity to emphasis the importance of rules of natural justice and reiterated as follows: "The old distinction between a judicial act and an administrative act has withered away and we have been liberated from the psittacine incantation of "administrative action". Section 3 of the Act of 1955 under which the Control Order was passed really covers an emergent situation so as to meet a national crisis involving the availability or distribution of any essential commodity which may make it necessary to restrict or control the business carried on by a citizen. It was submitted by the Attorney General that having regard to the circumstances, the background and the situation in which the impugned notification was issued under clause 8 of the Control Order, it had a statutory complexion and should be regarded as purely legislative in character. Even so, the Court clearly decided that a measure like the one we have in the instant case is purely of a legislative character and there is no question of complying with the rules of natural justice in such cases. For the reasons aforesaid we find ourselves in complete agreement with the argument of the Attorney General that the impugned notification having been passed to effectuate the object or ideal to be achieved in order to solve a national crisis cannot but be considered a legislative measure so as to exclude rules of natural justice. 6 another infirmity pointed out by the learned counsel for the petitioners was that the impugned notification is clearly violative of clause 11 of the Control Order itself because the prohibition against the working of the power crushers even for a short period amounted to a partial revocation of the licences granted to the petitioners under clause 3 of the Licensing Order. In order to appreciate this contention it is necessary to extract clause 11 (2) of the Control Order which runs: "(2) Where all or any of the powers conferred upon the Central Government by this Order have been delegated in pursuance of sub clause (I) (b) to any officer or any authority of a State Government, every Order or direction issued by such officer or authority in exercise of that power may be amended, varied or rescinded by the State Government to whom the officer or authority is subordinate either suo motu, or on an application made within a period of thirty days from the date of the order or direction. This argument has already been considered by us when we dealt with the various facts and materials produced before us to justify the impugned notification. (1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices. Mr. Rameshwar Dayal, appearing for some of the petitioners raised a novel argument which was to the effect that not only the notification impugned but also the Control Order was violative of article 14 of the Constitution. We are, however, unable to accept this contention because in view of the various circumstances discussed above, the classification, if at all, was based on a reasonable nexus with the object sought to be achieved by the notification. Although we have upheld the impugned notification but having regard to the special features of the present case we are not quite satisfied that a better policy to control sugar or increase its production could not be followed which may satisfy the parties concerned, viz., the crushers, the mills, the sugarcane growers and the consumers. Secondly, could it not be possible for the Government to allow the crushers to function by regulating the working hours or to fix a quota of sugarcane to be delivered to the mills and the crushers in the ratio of 60:40 or 70:30, as may be advised by the experts and to insist that both the crushers and the mills should pay a uniform price to the cane growers ? Lastly, it was represented to us by the petitioners that the crushers are used for the twin purpose of production of khandsari sugar and gur, rab, etc., but as the crushers are sealed by the officers of the Government, the owners are not in a position to produce 136 even gur or rab on the production of which not only no ban has been imposed by the impugned notification but the same has been completely exempted from the purview of the notification.
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Both mills and crushers got their sugarcane from farmers. To help sugar mills, most of which were run by the state, certain areas were set aside for growing sugarcane. To fix the nationwide sugar shortage, increase sugar production, and fairly distribute sugar at reasonable prices, the Cane Commissioner used their power under the Sugarcane (Control) Order, 1966. They issued a notice on October 9, 1980, saying that power crushers (except those making *gur* or *rab* from their own sugarcane, *Khandsari* units, or their agents) couldn't work in the reserved areas until December 1, 1980. (2) Clause 8 of the Control Order gave too much power to the Cane Commissioner, violating the Constitution. (3) There was no logical connection between stopping the petitioners' crushers and the goal the notice was trying to achieve. (4) Clause 8 of the Control Order was meant to regulate working hours, not completely stop production. (5) The notice violated principles of fairness because the petitioners weren't consulted before their rights were restricted, shutting down their production. (6) The notice, by stopping the power crushers, partially cancelled the petitioners' licenses, violating clause 11 of the Licensing Order. (7) The notice went against the purpose of the Act of 1955, which was to equally distribute and produce sugar. The state argued that: (1) An order under clause 8 of the Control Order was like a law, so the principles of fairness didn't apply. (2) The notice didn't violate the Constitution because it was in the public interest and aimed to fairly distribute sugar. So, mills used sugarcane more efficiently. (4) *Khandsari* sugar was mainly used by sweet makers or villagers, while sugar from mills was used by more people. (5) *Khandsari* and sugar from mills were different in quality and specifications. (6) The crusher owners knew about the situation and why the government was temporarily stopping crushers to help sugar mills and set a support price for sugarcane. So, fairness wasn't an issue. (7) Clause 8 of the Control Order used the words "period or working hours," which included both a fixed period of time and hours of work on any day. (ii) Basic rights are not absolute but can be reasonably restricted by the state in the public interest. (iii) Restrictions can be partial, complete, temporary, or permanent, but they must relate to the goal they're meant to achieve. Sometimes, completely stopping a trade is allowed if the product is essential and the restriction is temporary. Freezing food stocks to ensure fair distribution and prices is a reasonable restriction. (iv) When deciding if restrictions on industry, trade, or commerce are reasonable, the fact that some businesses might lose money doesn't make the restrictions unreasonable. In a free economy, controls are needed to ensure consumer goods like food are available at a fair price, and setting that price isn't unreasonable. (vii) For essential goods like sugar, economic production and distribution are important when deciding if restrictions are reasonable. Even if the profit margin is reduced, the restriction isn't unreasonable. (viii) Stopping crushers for a short period was in the public interest and related to the goal of reducing sugar shortages and fairly distributing sugar. Considering the history of sugar production, stopping crushers for a short time wasn't excessive. 2(i) The Control Order was made under Section 3 of the Act of 1955, which is constitutional and doesn't discriminate. (ii) The goal wasn't to create a monopoly for mills. It was necessary to help factories produce more sugar and avoid wasting sugarcane. The notice unfairly favored vertical crushers, and there's no logical reason for this. In this case, the notice used the "period" method, stopping crushers for a month and a half, without affecting their working hours. So, the notice follows clause 8 of the Control Order. So, the petitioners weren't seriously harmed but rushed to court too soon. Clause 11 of the Control Order doesn't allow for partial or temporary revocation. The clause only applies if a license is completely cancelled. It was made under Section 3 of the Act, which allows it to maintain or increase the supply of sugar (an essential commodity) and regulate its distribution. The Control Order and the notice align with Section 3. They were made to achieve the goals of Section 3 of the Act of 1955. If the government bans power crushers in the future, it should get the views of a representative of the crusher owners' association.
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Appeals No. 632 to 646 of 1976. (From the Judgment and Order dated the 22/23/26/27th of April, 1976 of the Bombay High Court in S.C.A. Nos. 997, 2128, 2773, 2077, 2065, 2045, 1172, 1193, 1195, 1196, 1199, 1200, 1210/ 75 and 2050 & 2071 of 1976) and CIVIL APPEALS NOS. 655 & 1286 of 1976 (From the Judgment and Order dated the 14 5 1976, 23rd, 24th, 27th April, 1976 of the Bombay High Court in S.C.A. No. 2985 of 1976 and Misc. Petition 4 of 1976) and WRIT PETITIONS NOS. 98, 102 107, 110 113 & 115 120 1976 Under article 32 of the Constitution of India) B. Sen, (in CA. 632) Y.S. Chitale, (in CA. 633) Sachin Chowdhary, (in CA. 634) F.S. Nariman and R.N. Bennerjee, Adv. (in CA. 637) H.P. Shah, (in CAs. 632 638) A.J. Rana, (in CA. 635) P.H. Parekh & Miss Manju Jetly, with them, for the appellants in CAs. 632 637 Vallabhadas Mohta, Sardar Bahadur Saharya & Vishnu Bahadur Saharya, for the appellants in CAs. 638 644 & 644. J.L. Nain, A.J. Rana, Janendra Lal, B.R. Agarwala and Gagras & Co., with him for the appellants in CAs 645 & 646 except for appellant No. 52 in CA. 646 F.S. Nariman, R.N. Banerjee, J.B. Dadachanji " K.J. John with him for the appellant No. 62 in 646/76 Madhukar Soochak, K. Rajendra Chowdhary, K.A. Shah and (Mrs.) Veena Devi Khanna, Advocates for the Appellant in CA. 1286/76 S.K. Dholakia, V.J. Kankaria & R.C. Bhatia, for the petitioners in all the Writ Petitions. Niren De, Attorney Genl. (only in CAs. 632, 638 and W.P. No. 98/76 1. W. Adik, Adv. of Maharashtra, M.N. Shroff for the Respondents in the appeals and Writ Petitions M.P. Chandrakantral Urs and N. Nettar, for the interven er in CA. 632/76 (State of Karnataka) 832 K. Parasaran, Adv. Tamil Nadu. A. V. Rangam, V. Sathiadev and (Miss) A. Subhashini, in the for the inter vener in CA. 632 (State of Tamil Nadu, K. Rajendra Chowdhary, for the interveners/Applicants A Ratnaabhapati and Jayalakshimi & Co. M/s. Jeshtmal, K.R. Chowdhary, Mrs. Veena Devi Khanna, for the intervener/applicant N. Dhanraj. B.A. Desai, S.C. Agarwala and V.J. Francis, for Re spondents 4 & 5 in CA. 1286/76. The Judgment of the Court was delivered by KRISHNA IYER, J. The distance between societal reali ties and constitutional dilettantism often makes for the dillemma of statutory validity and the arguments addressed in the present batch of certificated appeals and writ petitions evidence this forensic quandary. Likewise, the proximity between rural cum clum economics and sociaL relief legislation makes for veering away from verbal obsessions in legal construction. A constitution is the documentation of the rounding faiths of a nation and the fundamental direc tions for their fulfilment. So much so, an organic, not pedantic, approach to interpretation, must guide the judicial process. The healing art of harmonious construc tion, not the tempting game of hair splitting, promotes the rhythm of the rule of law. These prologuic observations made. we proceed to deal with the common subject matter of the appeals and the writ petitions. A bunch of counsel, led by Shri Nariman and seconded by Shri B. Sen, have lashed out against the vires of the Maharashtra Debt Relief Act, 1976 (for short, the Debt Act). The former has focused on the fatal flaw in the Act based on article 301 of the Constitution and the latter has concentrated his fire on the incompetency of the State Legislature to enact the Debt Act. A plurality of submis sions by a procession of lawyers has followed, although the principal points have been comprehensively covered by Shri Nariman and Shri B. Sen. To encore is not to augment, and yet, some counsel, who had not much to supplement, claimed the right to. be heard and exercised it ad libiem, essaying what had already been forcefully urged and forget ting that a fine, fresh presentation of a case is apt to be staled by a second version of it and pejorated by a third repetition. While in constitutional issues of great moment this Court is reluctant to ratio oral submission it is important, by comity of the Bench and the Bar, to conserve judicial time in the name of public justice so that internal allocations avoiding over lapping may be organised among many counsel who may appear in several appeals, substantial ly dealing with the same points. A happy husbandry of advo cacy is helpful for judge and lawyer alike and to streamline forensic business is the joint responsibility of both the limbs of the institution of justice. Back to the beginning. article 301 of the Constitution man dates 833 "301. Freedom of trade commerce and inter course Subject to the other provisions of this Part, trade, commerce and intercourse through out the territory of India shall be free. " We may also read the cognate provision viz., article 304 (b): "304 (b). Restrictions on trade, commerce and among States. Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law X X X X (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. " The unmincing submission of Shri Nariman is that money ending is very much a trade, that the Debt Act deals drasti cally with moneylenders in defiance of article 301 and, since the manacles on moneylenders and money lending are unreason ably harsh and callously indiscriminate, the 'freedom" which belongs constitutionally to professional money lenders is breached by the 'statutory liquidation of their loans. Nor can the invalidatory consequence of this violation be obvi ated by article 304(b). This latter provision salvages stat utes which contravene freedom of trade, commerce and inter course only if they possess the virtues of reasonableness and public interest. The injustice of wiping out the debts of marginal farmers, rural artisans, rural labour ers and workers as provided in the scheme of the Act was anathematised by Shri Nariman as an unwarrantedly unrea sonable annihilation of the trade and 'its capital. We will deal with this contention presently but we may merely mention for later discussion another short, lethal objection to a part of the law, put forward by counsel. He stated that there was legislative incompetency for the State Legislature because it had forfeited the power to legislate on money lending where gold loans were involved, since Parliament had occupied the field under Entry 52 of List I by enacting the Gold Control Act, 1968, and had thereby elbowed out the State Legislature from that field. Considerable eclectic study of English, Australian and American cases was displayed in the course of arguments, reverberating in Indian precedents dealing with Part XIII of the Constitution. Of course, we will refer to them with pertinent brevity, although we must administer to our selves the caveat that the same words used in constitutional enactments of various nations may bear different connota tions 834 and when Courts are called upon to interpret them they must acclimatize the expressions to the particular conditions prevailing in the country concerned. Different lands and life styles, different value systems and economic solu tions, different social milieus and thought ways, different subject matters and human categories these vital variables influence statutory projects and interpretations, although lexicographic aids and understandings in alien jurisdictions may also be looked into for light, but not beyond that. The constitutional guarantee of the commercial mobility and unity of the country in article 301 is sought to be made the major sanctuary of 'money lenders ' whose 'freedom ' to lend and thereby end the lendee is, by legislative judgment, hand cuffed. Before unravelling the provisions of the Debt Act, we must first found ourselves on the quintessentials of article 301 and the juristic and economic basics implied in that provision. We are not construing a petrified legal parchment but reading the luscent lines of a human text with a national mission. We must never forget that the life of the suprema lex is nourished by the social setting, that juridical abstractions and theoretical conceptions may be fascinating forensics but jejune jurisprudence, if the raw Indian realities are slurred over. We are expounding the Constitution of a nation whose people hunger for a full life for each, and therefore, a perception of the signature of social justice writ on it is imperative. 'Nothing is more certain in modern society ', declared the American Supreme Court at mid century, 'than the principle that there are not absolutes '. Legal Einsteinism guides the Court, not doctrinal absolutes, as we will presently discuss. Since article 301 has loomed large in the debate at the bar, it is pertinent to ask what is its object and design. For, if the impugned legislation does violate article 301, it must perish unless rescued by article 304(b). This Court, in Atiabari Tea Co. C), tracing the roots of article 301, observed: "Let us first recall the political and constitutional background of Part X/II. It is a matter of common knowledge that, before the Constitution was adopted, nearly two thirds of the territory of India was subject to British Rule and was then known as British India, while the remaining part of the territory of India was governed by Indian Princes and it consisted of several Indian States. A large number of these States claimed sovereign rights within the limitations imposed by the paramount power in that behalf, as they pur ported to exercise their legislative power of imposing taxes in respect of trade and com merce which inevitably led to the erection of customs barriers between themselves and the rest of India. In the matter of such barriers British India was governed by the provisions of section 297 of the Constitution Act, 1935. To the provisions of this section we will have occasion later to (1) ; , 843. 835 refer during the course of this judgment. Thus, prior to 1950 the flow of trade and commerce was impeded at several points which constituted the boundaries of Indian States. After India attained political freedom in 1947 and before the Constitution was adopted the historical process of the merger and the integration of the several Indian States with the rest of the country was speedily accom plished with the result that when the Consti tution was first passed the territories of India consisted of Part A States which broadly stated represented the Provinces in British India, and Part B States which were made up of Indian States. This merger or integra tion of Indian States with the Union of India was preceded by the merger and consolidation of some of the States inter se between them selves. It is with the knowledge of the trade barriers which had been raised by the Indian States in exercise of their legislative powers that the Constitution makers framed the Articles in Part XIII. "The main object of article 301 obviously was to allow the free flow of the stream of trade, commerce and inter course throughout the territory of India. " It is fair to realise that article 301 springs from Indian history and hope. We may recall the political and consti tutional background of Part XIII the divided days of Brit ish rule, the united aspirations of Independent India, the parochial pressures and regional pulls leading inevitably to the erection of fiscal barriers and hampering of economic oneness. The integration of India was not merely a histor ical process but a political, social and economic necessity. Gajendragadkar J., in Atiabari Tea Co. (supra) pointed out: "In drafting the relevant Articles of Part XIII the makers of the Constitution were fully conscious that economic unity was absolutely essential for the stablity and progress of the federal polity which had been adopted by the Constitution for the governance of the coun try. Political freedom which had been won, and political unity which had been accom plished by the Constitution, had to be sustained and strengthened by the bond of economic unity." (p. 843) "Free movement and exchange of goods throughout the territory of India is essential for the economy of the nation and for sustain ing and improving living standards of the country. The provision contained in article 301 guaranteeing the freedom of trade, commerce and intercourse is not a declaration of a mere platitude, or the expression of a pious hope of a declaratory character; it is not also a mere statement of a directive principle of State policy; it embodies and enshrines a principle of paramount importance that the economic unity of the country will provide the main sustaining force for the stability and progress of the political and cultural unity of the country." (p. 844) 836 Such being the perspective, the judicial sights must be set high ' while reading Article 301. Social solidarity is a human reality, not mere constitutional piety, and a non exploitative economic order outlined in article 38, is the bedrock of a contented and united society. Social disorder is the bete noire of commerce and trade. All this is non controversial ground but the learned Attorney General con tests the very applicability of article 301 to money lenders and moneylending visa vis the humble beneficiaries of the statute, viz., the marginal farmers, rural artisans, rural labourers, workers and small farmers. It is a cruel legal joke to legitimate as trade this age old bleeding business of agrestic India whereby the little peasant. the landless tiller, the bonded labourer, the pavement tenant and the slum dweller have been born and buried during the Raj and the Republic in chill penury. Is trade in human bondage to be dignified legally, betraying the proletarian generation? For whom do the constitutional bells of the socialist Repub lic toll? Therefore, argues the Attorney General, it is juristic blasphemy to call 'unscrupulous moneylending ' a rural spectre which stalks Maharashtra a trade at all. These chronic operations, socially obnoxious and economical ly inhuman, cannot be recognised as licit and wear the armour of article 301, for this preliminary reason. Not all systematic economic activity is trade. Sinister, socially shocking ones, are not. Shri Nariman has counter asserted, backed by a profusion of precedents, that money lending in the modern complexities of business life is a lubricant for the wheels of commerce and has been treated as trade. It is the life blood of business. It needs no argument to say that the topics of legislation, listed in the Seventh Schedule, must receive a large and liberal, yet realistic, interpretation. So understood, the expression 'trade ' in its wide import, covers not merely 'buying and selling of goods ' but trading facilities like advances, overdrafts, mercantile documents, trading intelligence, telegraphic and telephonic communica tions, banking and insurance and many other sophisticated operations connected with and essential for commerce and intercourse. Even travel facilities in certain circum stances have a nexus with trade and commerce and are part of them. Learned counsel referred to Ibrahim(1) wherein this Court has referred to the corresponding provisions in the Australian Constitution and imparted a comprehensive meaning to 'trade '. American and Australian case law, Halsbury and the Judicial Committee, were read with special emphasis on the amplitude of the expression 'trade '. An inventory of Indian statutes wherein 'money lending ' as a business was mentioned and licensed, was also brought to our notice. Indeed, this wealth of legal literature may well be held to make out that money lending, banking, insurance and other financial transactions, commercial credit and mercantile advances may, conceptually, be characterised as 'busi ness '. Mercantile credit, money lending, pawn broking and advances on pledges are business. Otherwise, the commerce of our country will grind to a halt. Can we con ceive of trade without credit, or commerce without mercan tile documents, discounting, lending and (1) 837 negotiable paper? To deny to monetary dealings the status of trade is to push India into the medieval age: Broadly viewed, money lending amongst the commercial community is integral to trade and is trade. So far we go with Shri Nariman and others who have urged the same point with allomorphic modifications. The learned Attorney General 's stance is radical and rooted in the rural bondage to break which is the mission of this legislation. If accepted, it will mean that money lending, in the limited statutory setting and projected on the Indian rural urban screen visa vis the exploited people below the poverty line, cannot be regarded as 'trade '. It is apt to be reminded of the then famous epigram of Frederick W. Maitland: "A woman can never be outlawed, for a woman is never in law. " Money lending is it in law at all? No trade, no article 301, and so the baptismal certificate that article 301 insists upon from the economic activity that seeks its 'free ' blessings is that it is 'trade, commerce or intercourse '. Thus the critical question is as to whether money lending and the class of money lenders who have been preying upon the proletarian and near proletar ian segments of Indian society for generations may be legal ly legitimated as 'traders ' or 'businessmen '. This is not an abstract legal question turning on semantic exercises but a living economic question of incurable indebtedness. Blood, sweat and tears animate amelioratory law which exiles literal interpretation. The heartbeats of the Debt Act, according to the State counsel, cannot be felt without humanistic 'insight by first ostracising, in the name of social order, the die hard, death grip practices which have defied legislative policing in the past and have kept, in chronic servitude, vast numbers of the Indian agrarian community and working class. But if, as urged by the oppo sition, the law flatly flouts article 301, it fails. The rule of law, for functional success, must run close to the rule of life. Therefore, constitutional assays must be on the touchstone of societal factors. So we cannot embark upon a study of the working of stock exchanges, the dependence of industry and business on credit and key loans, the role of pledges in financing commercial activity, when the challenge is to an economic legislation dealing with the lowliest and the lost, the destitude and the desperate, far from big business and industry, trade and commerce and high finance and sophisticated credit. We must zero in on the social group the Debt Act seeks to save, the pattern of lending the statute strikes at, the heaviness of the blow and on whom it falls, and the raison detre of the measure. Does this specific species of deleterious economic activity, masked as moneylending 'trade ', qualify for the .freedom that article 301 confers on trade? The specific social malady and the legislative therapeutics suggested guide the court. Here again, relativity, not absolutes, rules jurisprudence. Of course, while interpreting the relevant Articles in Part XIII and pronouncing upon the concept of 'trade ', we must have regard to the general scheme of the Constitution and should not truncate the 838 scope and amplitude of economic unity, free movement, pro tection from discrimination, unhampered financial arrange ments and the like. Undoubtedly, the freedom, while it is wide, is not absolute. Our Constitution, framed by those who were sensitive to the massive poverty of the country and determined to extirpate the social and economic backwardness of the masses, could not have envisioned a development where some will be 'free ' to keep many 'unfree ' [See Articles 38 and 39 (c)]. That is why, to make assurance doubly sure, a further provision is made in article 304(b) by adding a rider to the freedom of commerce subjecting it to the requirement of reasonableness and imposition of restrictions in public interest. Das, J., in Automobile Transport (1) struck the true note, if we may say so with great respect, that while the text of the Articles is a vital consideration in inter preting them, 'we must ' at the same time, remember that we are dealing with the Constitution of a country and the interconnection of the different parts of the Constitution forming part of an integrated whole '. The learned Judge asks: 'Even textually, we must ascertain the true meaning of the word 'free ' occurring in article 301 From what burdens or restrictions is the freedom assured? This is a question of vital importance even in the matter of construction '. Later, in the ' judgment, Das J., drives home the point that 'the conception of freedom of trade in a community regulated by law pre supposes some degree of restriction, that freedom must necessarily be delimited by considerations of social orderliness ' (underscoring supplied). Even the Australian Case (1916 22 CLR 556, 573) conceptulizes freedom as nothing extra legem, lest freedom should be confounded with anarchy. 'We are the slaves of the law ', said Cicero, 'that we may be free '. Sir Samuel Griffith, C.J. in Duncan vs State of Queensland (22 CLR.556, 573), said: "But the word 'free ' does not mean extra legem any more than freedom means anarchy. We boast of being an absolutely free peo ple, but that does not mean that we are not subject to. " The conscience of the commerce clause in India, as elsewhere, is the promotion of an orderly society. social justice is the core of the constitutional order. Two inter connected, but different facets of freedom of trade and commerce fall for serious consideration in the light of the above discussion. Is anti social, usurious, unscrupulous money lending to economically weaker sec tions, eligible for legal recognition as 'trade ' within the meaning of article 30,1 ? Secondly, assuming that even such activities have title to be termed 'trade ' are the provi sions of the Debt Act reasonable, regulatory and in the public interest ? The learned Attorney General argued for the proposition that the narrow, noxious category of money lending with which we are concerned is so oppressive and back breaking so far as the poorest sections of the community are concerned that a sense of social justice forbids the court to legiti mate it as 'trade '. Not all systematic economic activity, even if not formally banned by the law, can be christened 'trade ', he submits, and relies on Chamorbaughwala to. reinforce this reason (1) [1963] (1) S.C.R. 491. (2) ; 839 ing. In that case the impugned Act was said to offend against article 301. The Court, therefore, considered whether gambling was not 'trade, commerce or intercourse ' and took a sky view of the numerous decisions in various countries bearing on this branch of sociological jurisprudence. One of the Australian cases dealing with lotteries (Mansell vs Beck) elicited the observation that lotteries, not conducted under the authority of government, were validly suppressed as pernicious. Taylor, J. made the trenchant observation: " . whilst asserting the width of the field in which section 92 may operate it is necessary to observe that not every transac tion which employs the forms of trade and commerce will, as trade and commerce, invoke its protection. The sale of stolen goods, when the transaction is juristically analy sed, is no different from the sale of any other goods but can it be doubted that the Parliament of any State may prohibit the sale of stolen goods without infringing section 92 of the ,Constitution ? The only feature which distinguishes such a transaction from trade and commerce as generally understood is to be found in the subject of the transaction; there is no difference in the means adopted for carrying it out. Yet it may be said that in essence such a transaction constitutes no part of trade and commerce as that expression is generally understood. Numerous examples of other transactions may be given, such as the sale of a forged passport, or, the sale of counterfeit money, which provoke the same comment and, although legislation prohibiting such transactions may, possibly, be thought to be legally justifiable pursuant to what has, on occasion, been referred to as a 'police power ', I prefer to think that the subjects of such transactions are not, on any view, the subjects of trade and commerce as that expres sion is used in section 92 and that the protection afforded by that section has nothing to do with such transactions even though they may require for their consummation, the employment of instruments, whereby inter State trade and commerce is commonly carried on." (RMDC Case, pp. 915 916) In the United States of America, operators of gambling sought the protection of the commerce clause. But the .Court upheld the power of the Congress to regulate and control the same. Likewise, the Pure Food Act which prohib ited the importation of adulterated food was upheld. The prohibition of transportation of women for immoral purposes from one State to another or to a foreign land was held valid. Gambling itself was held in great disfavour by the Supreme Court which roundly stated that 'there is no consti tutional right to gamble '. Das, C. 1., after making a survey of judicial thought, here and abroad, opined that freedom was unfree when society was exposed to grave risk or held in ransom by the operation of the impugned 840 activities. The contrary argument that all economic activi ties were entitled to freedom as 'trade ' subject to reasona ble restrictions which the Legislature might impose, was dealt with by the learned Chief Justice in a sharp and forceful presentation: "On this argument it will follow that criminal activities undertaken and carried on with a view to earning profit will be pro tected as fundamental rights until they are restricted .by law. Thus there will be a guaranteed right to carry on a business of hiring out goondas to commit assault or even murder, of housebreaking, of selling obscene pictures, of trafficking in women and so on until the law curbs or stops such activities. This appears to us to be completely unrealis tic and incongruous. We have no doubt that there are certain activities which can under no circumstance be regarded as trade or busi ness or commerce although the usual forms and instruments are employed therein. To exclude those activities from the meaning of those words is not to cut down their meaning at all but to say only that they are not within the true meaning of those words. Learned counsel has to concede that there can be no 'trade ' or 'business ' in crime but submits that this principle should not be extended . " We have no hesitation, in our hearts and our heads, to hold that every systematic, profit oriented activity, however sinister, suppressive or socially diabolic, cannot, ipso facto, exalt itself into a trade. Incorporation of Directive Principles of State Policy casting the high duty upon the State to strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice social, economic and politi cal shall inform all the institutions of the national life, is not idle print but command to action. We can never forget, except at our peril, that the Constitution obligates the State to ensure an adequate means of livelihood to its citizens and to see that the health and strength of workers, men and women, are not abused, that exploitation, moral and material, shall be extradited. In short, State action defending the weaker sections from social injustice and all forms of exploitation and raising the standard of living of the people, necessarily imply that economic. activities, attired as trade or business or commerce, can be de recog nized as trade or business. At this point, the legal cul ture and the public morals of a nation may merge, economic justice and taboo of traumatic. trade may meet and jurispru dence may frown upon dark and deadly dealings. The consti tutional refusal to consecrate exploitation as 'trade ' in a socialist Republic like ours argues itself. The next question then is whether rural and allied money lending is so abominable as to be 'bastardized ' by the law for which the Attorney General pleaded. Shri Nariman controverted the vulgar generalisation that all money lend ers are vampirish as unveracious imagery. He argued that many of them were not only licenced but had complied with the conditions of their licences in doing honest lending business and supplying rural credit to those in need. He 841 pointed out that institutional credit had hardly penetrated rural India and the non institutionalised money lenders had done economic service to a primitive peasantry although several of them had abused. the situation of helplessness in which the weaker denizens of backward regions found them selves. His contention was that there was no justification for castigating money lending as non trade not was there valid material to condemn wholesale all those who had served as the financial backbone of agricultural communities in the past. Reasonable restrictions to obviate abuse were permis sible legislation, but obdurate refusal to treat what in fact was trade as trade was injustice born of hostile hunches. He had separate arguments on the unreasonableness of the provisions of the Debt Act which we will deal with later. The bone of contention between the parties, there fore, is as to whether money lenders as a class and money lending as a systematic traditional activity in the special context of the weakest sections of agrarian humanity and the working class, can be called 'trade '. The legal principles have already been explained by us which we may sum up brief ly by stating that, generally speaking, the systematic business of lending is trade, as understood in the commer cial world and in ordinary monetary dealings. Moreover, trade cannot be confined to the movement of goods but may extend to transactions linked with merchandise or the flow of goods, the promotion of buying and selling, advances, borrowings, discounting bills and mercantile documents, banking and other forms of supply of funds. It is possible, however, to project a different view point and this is precisely what the learned Attorney Gener al has done. Free flow, understood in Article 301, implies some movement from place to place. Freedom of trade, subject to reasonable restrictions, is guaranteed under article 19. The special advantage derived by the Trade by virtue of article 301 consists in the interdict on impeding, directly and immediately, movement of goods or money transactions con nected with movement of merchandize or commercial inter course. In short, the Attorney General considers the element of movement as essential to Pat. 301 in contrast with article 19. We see the force of the submission but are inclined to the view that dealings of Banks and similar institutions having some nexus with trade, actual or poten tial, may itself be trade or intercourse. All modern com mercial credit and financial dealings, covered by the various rulings cited at the bar, come under this heading. Even so, the village based, age old, feudal pattern of money lending to those below the subsistence level, to the village artisan, the bonded labourer, the .marginal tiller and the broken farmer, who borrows and repays in perpetual labour, hereditary service, periodical delivery of grain and unvouchered usurious interest, is a countryside incubus. This is not an isolated evil but a ubiquitous agrarian bondage. Such debts ever swell, never shrink. such captive debtors never become quits, such countryside creditors never get off the backs of the victims. The worker and peasant of India whose lot is to be 'born to Endless Night ' is symbol ized by Jawaharlal Nehru, an architect of the Constitution, as the Man with the Hoe: 842 "Bowed by the weight of centuries he leans Upon his hoe and gazes on the ground, The emptiness of ages on his face, And on his back the burden of the world. X X X X "Through this dread shape the suffering ages look, Time 's tragedy is in that aching stoop, Through this dread shape humanity betrayed, Plundered, profaned and disinherited, Cries protest to the powers that made the world, A protest that is also prophecy. " All this painful poetry and prose is borne out by the record in the case and by studies by economists. A recent issue of the Eastern Economist reads: "The problem of rural indebtedness is as old as Indian agriculture itself. It is the net result of usurious money lending, improvident spending and adversities in agri culture. The heavy burden of debt not only continues to cripple our rural economy, but it also grows in alarming magnitude. Several attempts have been made by expert bodies from time to time for a realistic estimation of rural indebtedness. Nevertheless, the fact remains that the rural indebtedness in physi cal terms is mounting up and the nightmare of indebtedness continues to haunt the Indian peasants. Quite recently the report published by the All India Rural Debt and Investment Survey relating to 1971 72 also depicts an increasing trend in rural indebtedness. It has been estimated that the aggregate borrowings of all rural households on June 30, 1971 was Rs.3921 crores, while the average per rural household being Rs.503/ . Fortythree per cent of the rural families had reported borrowings . If the problem of rural indebtedness is to be kept within meaningful limits and man ageable proportions, following legislative and non legislative measures should be taken: 1. At present the institutional agen cies provide only 50 per cent of the total rural credit needs. Increased efforts by all the institutional agencies are called for especially in the context of the declaration of moratorium on rural debt which may affect the flow of non institutional finance. There are about 75 million marginal farmers with less than one hectare of opera tional holding, 20 million artisans and 47 million agricultural labourers in rural sec tor, who constitute the rural poor. Liquida tion of existing debt is an essential step in order to give relief to these weaker sec tions. The Debt Relief Acts passed in differ ent states should be effectively implemented. 843 3. Institutionalisation of rural savings and inculcation of saving habits amongst rural folk is a positive step to mitigate this problem. Massive propaganda and education on economising expenditure may discourage ex travagant spending by certain categories of rural .households. If necessary, certain legislative measures such as abolishing dowry system and imposing austere marriages may also be resorted to. 4. Attempts must also be made to bring the money lenders under some form of monetary regulation and control on the lines suggested by the Banking Commission. Though at present legislations exist in several states for the regulation of money lenders they lack enforce ment which render the ineffective." (emphasis, added) ( 'Current Trends in Rural Indebtedness by M. Gopalan & V. Kulandaiswamy Eastern Economist d/April 23, 1976 Vol. 66, No. 17, pp. 826 829) Professor Panikar, referring to the nightmare of debt has this to say: "Perhaps, it may be that the need for borrowing is taken for granted. But the undisguised fear that the oppressive burden of debt on Indian farmers is the main hindrance to progress is unanimous. There are many writers who depict indebtedness of Indian farmers as an unmixed evil. Thus, Alak Ghosh quotes with approbation on the French proverb that 'Credit supports the farmer as the hang man 's rope the hanged '." (Rural Savings in India P. G.K. Panikar Somaiya Publications Pvt. Ltd., Bombay, 1970) Dr. Bhattacharya, in his book 'Social Security Measures in India ' (Metropolitan Book Co., Delhi, 1970) dwells on the problem of agri cultural indebtedness: "A sample survey conducted by Second Agricultural Commission revealed the grim condition of rural indebtedness. The Survey observes, 'Of the estimated total number of 16.3 million agricultural labour households in the country, 63.9 per cent were indebted and debt per indebted household was Rs.138 per annum '. This is indeed a danger signal par ticularly for a country whose entire economy is dependent on the prosperity .of rural population. The same source sums up the total volume of rural indebtedness in the following words, 'Thus the total volume of debt of the indebted agricultural labour households may be estimated at about Rs.143 crores in 1956 57. A similar estimate was made on the basis of the results of the 1950 51 Enquiry (i.e., the First Agricultural Commission Report) and it worked out to about Rs.80 crores, Even though the estimated number of agriculture labour households in 3 206SCI/77 844 1956 57 was lower by 1.6 million, as,com pared with 1950 51, the total debt of indebted agriculture labour.household had considerably increased in 1956 57." (pp. 1.64 165) Dhires Bhattacharya in his 'Concise History of the Indian Economy ' (Progressive Publishers, Calcutta, 1972) refers to the Indian rural drama and the role of the anti hero played by the_ money lender: "Money lending thus became an easy method of earning an income and subsequently of acquiring valuable title to land in the event of default by the debtor. Throughout the nineteenth century ownership rights in land were being lost by the ryot and acquired by moneyed interests, both rural and urban." "The situation created by such extensive loss of perry by the cultivating classes exploded into riots against money lenders and usurpers of land in several parts of the country. The agricultural riots in Poona and Ahmednagar in Bombay Presidency in 1875 are most widely known because they were followed by the appointment of a Commission of Inquiry." (pp. 77 78) The author recounts the series of legislation made during the British Indian period and concludes: "These laws also failed in their purpose because no restrictions had been imposed on the transfer of land between members of the agricultural classes. Money lenders could, therefore, operate through a benamidar (fictitious agent) belonging to an agricultur al class and acquire land almost as easily as before. At the same time the bigger agricul turists had no difficulty in swallowing up the smaller ones by giving loans at exorbitant rates of interest to the latter. (p. 78) The economic literature, official and other, on agri cultural and working class indebtedness is escalating and disturbing. Indeed, the 'money lender ' is an oppressive component of the scheme. A.N. Agrawal, in his book 'Indian Economy ' (Vikas Publishing House) indicates that 'money lenders charge heavy interest ranging. from 15% 50% and often more. In addition to .high interest, these people take advantage of illiteracy of agriculturists and manipulate the accounts regarding loans to their advantage. The conditions of loan repayment are so designed that the debtor is forced to sell his produce to the mahajan at low prices and purchase goods for consumption and production at high prices. In many other ways take advantage of the poverty and the helplessness of farmers and exploit them . Unable to pay high interest and the principal, 845 the farmers even lose their land or live from generation to generation under heavy debt. Unless viable alternatives are made available, the mahajan will continue to hold, an impor tant, harmful and enervating place m this sphere '. The harmful consequences of indebtedness are economic and affect efficient farming, social in that the 'relations between the loan givers and loan receivers take on the form of relations of hatred, poisoning the social life '. The money lenders, few in number, belong to poor class. There are often dis putes between the two classes which get sharpened. on the exploitation of the poor. In fact the social groups get split into two broad classes. The exploiting class and the exploited class. Apart from losing land and leading to tension in the villages their evil effect is rampant. the heavily indebted farmers lose even their human existence. They not only render bonded labour to money lenders, their very self respect and even respect of their women folk do not remain safe. They are forced to live the life of slaves. Of course, laws have now been enacted which protect these debtors. But these laws are difficult to be enforced either because farmers are illiterate, or they do not have enough resources to go to the courts, or the money lenders prove too clever for them. " Dr. C.B. Mamoria in his book 'Agricultural Problems of India ' (Kitab Mahal) has stressed that rural indebtedness has long been one of the most pressing problems of India. "Rural people have been under heavy indebtedness of the average money lenders and sahukars. The burden of this debt has been passed on from generation to generation inasmuch as the principal and interest went on increasing for most of them. According to Wold. The country has been in the grip of Mahajans. It is the bond of debt that has shackled agricul ture. " Very convincing and compelling, with special reference to Maharashtra, is the Report of a high powered Committee appointed by the Government of Maharashtra to make recommen dations for the relief of rural and urban indebtedness. The study is at once revealing and 'grim. Rural artisans, industrial workers, marginal farmers and indigent agricul turists have been steeped in debt despite statutory meas ures and ineffective credit institutions. These human areas have been the happy hunting ground of money lenders. The Bombay Moneylenders ' Act, according to the Committee, hardly helped bail out the weaker sections. Despite the Act, licensed and unlicensed moneylenders pursued their exploita tive profession. The Debt .Act implements some of the recommendations of this Committee although positive institu tional finance to save the sunken segments from the grip of the moneylenders remains to go into action. Even enforce ment of the Bombay Moneylenders ' Act appears to be lukewarm according to the Committee. Be that as it may, the economic distress, for which moneylenders dealing with the weaker sections are mainly responsible, is clearly brought out in the Report. Nor is there anything in this Report or in any other literary material on rural economics (particularly relating to artisans, workers and collapsing cultivators) to substantiate the dichotomy of scrupulous and unscrupulous moneylenders, vehemently pressed before us by Shri 846 Nariman. The former species are more a pious wish and the latter tribe a spectre on the increase, if statistical economic studies are to be trusted. The gravestone on the old 'moneylender ' system and the cornerstone of the new liberated order .are thus the programme for the Administra tion. The Debt Act is part of the package. There was much argument about the reasonableness of the restriction on moneylenders, not the general category as such but the cruel species the Legislature had to confront and we have at great length gone into the gruesome background of economic illequities, since the test of reasonableness is not to be applied in vacuo but in the context of life 's realities. Patanjali Sastri C.J., in State of Madras V.G. Rao(1) observed: "It is important in this context to bear in mind that the test of reasonableness wher ever prescribed, should be applied_ to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevail ing conditions at the time, should all enter into the judicial verdict. " Money lending and trade financing are indubitably 'trade ' in the broad rubric, but our concern here is blinkered by a specific pattern of tragic operations with no heroes but only anti heroes and victims. Many Conferences, Commissions and resultant enactments before and after Independence provided but marginal protec tion for the rural debtor. Even licensing was evaded by the money lender successfully and concilliation machinery proved a mirage. Statutes made of sterner stuff became the desideratum. In the counter affidavit filed on behalf of the State of Maharashtra, a lurid presentation of the lender borrower scenario is found. The deponent states: ". that it was a common sight around the secretariat, Government Offices, Textile Mills, factories and elsewhere in Bombay to find moneylenders waiting at the gates to catch workers to collect their dues. " There is also reference to a number of Official Committees which have examined the question of indebtedness in the urban and rural areas and have recommended measures of relief. The affidavit goes on to state: "I say that in Maharashtra and its predecessors the State of Bombay there have been several legislations on this subject including the Deccan Agricultural Debt Relief Act, 1879, Bombay Agricultural Debtors Relief Act, 1939, 847 and in the Vidarbha areas of the State, the Madhya Pradesh Postponement of Execution of Decree Act, 1956. I say that there is a well established history of dealing with indebted ness in the State by means of legislation. I say that .the Reserve Bank carried out an inquiry in the matter of indebtedness in 1971 which is referred to as All India Debt and Investment Survey during 1971 72. The Reserve Bank of India survey established that the total debt liabilities in the rural areas in Maharashtra was Rs.358 crores in 1971 72. A preliminary analysis made by the Reserve Bank of India also indicated weaker sections of the community thereby showing the extent of the burden of debt on the weaker sections of the community. I crave leave to refer to and rely upon the statistical tables prepared by the Reserve Bank of India in this connection when produced. I say that the extent of indebted ness may be much more than what is indicated by the statistical survey of the Reserve Bank of India. The licensed moneylenders alone in the State are known by themselves to have disbursed during 1972 73 a sum of about 74.37 crores and the information gathered by the respondents indicates that the known indebted ness in the city of Bombay alone would be of the order of Rs.45 crores. I say that in addition to the licensed moneylenders unli censed money lending is also carried on in the State. " The Statement of Objects and Reasons of the Maharashtra Ordinance VII of 1975 which was the precursor to the impugned Act contains the following statement: "The problem of urban and rural in debtedness has assumed enormous proportions in recent times. The noninstitutional sources of credit, namely, unscrupulous. money lenders, have been charging usurious rates of interest, indulging in malpractices and taking undue advantage of the weak position of the economically weaker sections of the people both in rural and urban areas. The Ordinance, therefore, seeks to give relief to certain sections of people from indebtedness. " Even the 'whereas ' vocabulary of the draftsman of the Act refers to the need for immediate action to provide for relief from indebtedness to certain farmers, rural artisans, rural labourers and workers in the State of Maharashtra. The judgment under appeal also makes reference to the continual legislative effort made in the past to save the agricultural community from chronic indebtedness. The learned Judges. observe: "Indeed, agricultural indebtedness has always been the bane of Indian economy ever since the beginning of the twentieth cen tury. Any elementary book on. Indian econom ics will disclose that even the British Government had 848 thought it necessary to make an enquiry into agricultural indebtedness. That was one of the terms of Royal Commission on Agriculture, and from time to time enquiry committees were set up including the Banking Enquiry Committee to go into the question of agricultural indebtedness with a view to find out how alternative sources of credit to be made available to the agriculturists could be brought into existence. In a sense, the phrase 'agricultural indebtedness ' has earned a connotation over the passage of years to indicate the unhappy position in which an Indian agriculturist has always found ever since the phenomenal fall of prices in 1929. It has become proverbial that an Indian agriculturist is born in debt, he lives in debt and he dies in debt." Eminent economists and their studies have been adverted to by the High Court and reliance has been placed on a Report of a Committee which went into the question of relief from rural and urban indebtedness which shows the dismal economic situation of the rural farmer and the labourer. It is not merely the problem of agricultural ' and kindred indebtedness, but the menacing proportions of the moneylend ers ' activities that have ' attracted the attention of the Committee. Giving facts and figures, which are alarming, bearing on the indebtedness amongst industrial workers and small holders, the Committee has highlighted the exploita tive role of money lenders and the high proportion/on of non institutional borrowings. We have made this extensive tour of the economic scene, with special reference to agricultural indebtedness and the lot of industrial labour, only to present vividly how the predatory money lender has had a stranglehold on rural and urban proletarians, by resort to methods which are scan dalizingly calamitous and unshakably resistant to legisla tive policing. The learned Attorney General contends that the courts must have a sense of history .and sociology informing their judicial perspective and then it is easy to_ understand the syndrome of village and working class indebt edness. There are commercial lendings, banking loans and institutional finances. There are friendly loans, and occasional accommodations. There are liabilities arising from various circumstances between citizen and citizen and citizen and State. But the pernicious species of money lending stubbornly flourishing in the rural and industrial areas of our country, with the weakest sections as their bled white clientele, cannot be regarded as 'trade" because of the painful pages of economic history to which this country is witness. The life of the law is not neat noesis but actual expe rience. The perspective of Poverty Jurisprudence is radi cally different from the canons and values of traditional Anglo Indian jurisprudence. The subject matter of the impugned legislation is indebtedness, the beneficiaries are petty farmers, manual workers and allied categories steeped in debt and bonded to the money lending tribe. So, in passing on its constitutionality, the principles of Develop mental Jurisprudence ' must come into play. 849 We agree with Shri Nariman that the intimate unity of national life sought to be sustained by Part XIII cannot be invidiously breached against the money lenders provided they qualify to be traders. If a law cuts into the flesh of the commercial unity and integrity of the country, ' unreasona bly or against public interest, Part XIII electrocutes it. A meaningful, yet minimal analysis of the Debt Act, read in the light of the times and circumstances which compelled its enactment, will bring out the human ;setting of the statute. The bulk of the beneficiaries are rural indi gents and the rest urban workers. These are weaker sections for whom constitutional concern is shown because institu tional credit instrumentalities have ignored them. Moneylending may be ancilliary to commercial activity and benignant in its effects, but money lending may also be ghastly when it facilitates no flow of trade, no movement of commerce, no promotion of intercourse, no servicing of business, but merely stagnates rural economy, strangulates the borrowing community and turns malignant in its reper cussions. The former may surely be trade, but the latter the law may well say is not trade. In this view, we are more inclined to the view that this narrow, deleteri ous pattern of moneylending cannot be classed as 'trade. ' No other question then arises, since the petitioners and appellants cannot summon article 301 to their service. Assuming that all money lending is 'trade ', can it be contended that this relief measure is invulnerable to attack on the ground that the texture of the restrictions is rea sonable and regulatory ? Article 304(b) relaxes in favour of the State the prohi bition in article 301 provided the law imposes only such re strictions as are reasonable and in public interest. Shri Nariman 's submission is that the Debt Act is too draconic to fair, processually and substantively, and so it cannot be rescued by article 304(b). With persuasive pressure he invited us to look at the horror of procrustean infliction of equal hostility by the legislature in dealing with the asuric Shylock and the dharmic lender. The law which brands the good and the bad alike and indiscriminately discharges all debts, just and unjust, lacks sense, con science and reasonableness. Secondly 'How is it fair, ' asks Shri Nariman, 'that, if the object of the legislation is to save the victims of rural indebtendness and working class burdens that credit institutions should be exempted while non institutionalised lenders should be picked out for hostile treatment ? ' There is no merit in the plea. Liabilities due to government to local authorities are not tainted with exploi tation of the debtor. Likewise, debts due to banking compa nies do not ordinarily suffer from overreaching, unscrupu lousness or harsh treatment. Moreover, financial insti tutions have, until recently, treated the village and urban worker and petty farmer as untouchables and so do not figure in the picture. To exempt the categories above referred to is reasonable. Many debt relief laws adopt this classifica tion and those familiar with the lowest layers of economic life will agree that this is as it should be. Money lenders of the type we are concerned with in the Debt Act are, 850 by and large, heartless in their lending tactics, and the borrowers are anaemic mostly members of the Scheduled Castes and Scheduled Tribes, nomadic groups, artisans, workers and the like. Section 13 of the Debt Act is illu minating, regarding the handicapped humans the statute is concerned with. We quote that provision: "13. Aggreement for labour in lieu of debt to become void. Any custom or tradition or any agreement (whether made before or after the appointed day), whereunder or by virtue of which a debtor or any member of his family is required to work as labourer or otherwise for the creditor shall be void and of no effect and shall never be enforceable in any civil court. " Maybe, some stray money lenders may be good souls and to stigmatize the lovely and unlovely is simplistic betise. But the legislature. cannot easily make meticulous excep tions and 'has to proceed on broad categorisations, not singular individualisations. So viewed, pragmatics overrule punctilious and unconscionable money lenders fall into a defined group. Nor have the creditors placed material before the Court to contradict the presumption which must be made in favour of the legislative judgment. After all, the law makers, representatives of the people, are expected to know the socio economic Conditions and customers. Since nice distinctions to suit every kindly creditor is beyond the law making process, we have to uphold the grouping as reasonable and the restrictions as justified in the circum stances of the case. In this branch, there are no finali ties. The observations of the Privy Council in the Austra lian Bank Nationalisation Case(1) are apposite: "Yet about this, as about every other proposition in this field, a reservation must be made. For their Lordships do not intend to lay it down that in no circumstances could the exclusion of competition so as to create a monopoly either in a State or Commonwealth agency or in some other body be justified. Every case must be judged on its own facts and in its own setting of time and circumstance, and it may be that in regard to some economic activities and at some state of social devel opment it might be maintained that prohibition with a view to State. monopoly was the only practical and reasonable manner or regulation, and that inter State trade, commerce and intercourse thus prohibited and thus monopo lized remained absolutely free. " We do not downright denounce all money lenders but the lawmakers have, based on socio economic facts, picked out a special class of money lenders whom they describe as unscru pulous. (1) Commonwealth of Australia vs Bank of New South Wales , 311. 851 Every cause claims its martyr and if the law, necessi tated by practical considerations, makes generalisations which hurt a few, it cannot be helped by the Court. Other wise, the enforcement of the Debt Relief Act will turn into an enquiry into scrupulous and unscrupulous creditors, frustrating, through endless litigation, the instant relief to the indebted which is the promise of the legislature. In this perspective, we see no constitutional flaw in the Act on the score that the sheep have not been divided from the goats. Realism in the legislature is a component of reasonableness. It was urged by Shri Chitale that the definitional deficiency in ignoring the movable wealth of debtors makes the scheme arbitrary and unreasonable. A romantic view of the debtors being considerable owners of costly art pieces and sophisticated gadgets and yet eligible for relief is good rhetoric but unrealistic. A pathetic picture of the money lender being deprived of his loan assets while being forced to repay his lender was drawn but that cannot affect the reasonableness of the relief to the grass roots borrower. Nor is it value to attack the Act on the score that the whole debt i.e., the very capital of the business, has been dissolved. More often than not, the money lender would have, over the Iong lived debts and repeated renewals, realized more than the principal if economic studies tell the tale truly. The injustice of today is often the hangover of the injustice of yesterday, as spelt out by history. The business of money lending has not been prohibited. The Act is a temporary measure limit ed to grimy levels of society. Existing debts of some classes of indigents alone have been liquidated. If impos sible burdens on huge human numbers are not lifted, social orderliness will be threatened and as a regulatory measure this limited step has been taken by the Legislature. Regulation, of the situation is necessitous, may reach the limit of prohibition. Disorder may break out if the law does not step in to grant some relief. Trade cannot flour ish where social orderliness is not secure. H the ten sions and unrests and violence spawned by the desperation of debtors are not dissolved by State action, no moneylending trade can survive. It follows that for the very survival of Trade the regulatory measure of relief of indebtedness is required. That form this relief should take is ordinarily for the legislature to decide. It is not ordinarily for the Court to play the role of 'Economic Adviser to the Administration. Here amelioratory measures have been laid down by the Legislature so that the socio economic scene may become more contented, just and orderly. Obviously, this is regulatory in the interest of Trade itself. This policy decision of the House cannot be struck down as perverse by the Court. The restrictions under the Debt Act are reason able. Equally clearly, if the steps of liquidation of current debts and moratorium. are regulatory, article 301 does not hit them. Even so, argues Shri Nariman, procedural presumptions grossly unreasonable, vitiate the measure. Of course, reasonableness has a processual facet and if the law is lawless in its modalities, it becomes unlaw constitutional ly. We may illustratively advert to some of the criticisms but, at the threshold, we confess we are not impressed with the submissions. 852 Shri Nariman itemised the mischievous provisions in the Debt Act from the processual angle. Others too reiterated with consternation that the provision whereby every debt of every debtor of the specified category stood wholly dis charged was improvident, especially because it did not even require the debtor to move the authorities in that behalf. On the other hand, the burden was on the creditor to raise the question by instituting a proceeding as to the disquali fication of his debtor for the benefit of the Debt Act. On top of this obligation to institute proceedings was the precarious prospect of the order being against the creditor because the 'authorised officer ' had to hold in favour of the debtor if he merely produced a certificate under section 7(5) from one of those officials enumerated therein all minor minions of government at the local level. Once the certif icate was produced by the debtor the onus was shifted to the creditor to make out the contrary. 'How could the money lender prove the debtor 's financial position ? ' asked Shri Nariman. Moreover, the issuance of a certificate by the local little official was a unilateral process where the creditor was not entitled to be heard as to the means or eligibility of the debtor. There were two further unreason able procedural impositions on the creditor, argued Shri Nariman. The lender had to make his application with all the facts within 7 days from the date of receipt of the application from the debtor intimating that the debt stood released. The 7 day period was too short even to make enquiries about the assets of the debtor, And worse, the application by the creditor shall be entertained by the authorised officer only on the creditor depositing the pledged property of its value. Thus the dice was 80 heavi ly loaded against the money lender that even persons who were not petty debtors intended to be beneficiaries might, with illegitimate success, claim the bonus of the Debt Act. Viewed in the abstract, these grievances may look genu ine. but when we get down to the reality, nothing so re volting exists in these provisions. It is true that the creditor has to move, and not the, debtor, before the authorised officer. As between the two, the moneylender is sure to be far shrewder and otherwise more capable of initiating proceedings. To cast that obligation on the debtor remember, in the bull of cases he is the village artisan, landless labourer or industrial worker is to deny relief in effect while bestowing it in the book. Likewise, there is nothing horrendous in the debtor seeking a certifi cate of qualification from the small officer of the area. After all, the officials enumerated in section 7(5) are govern ment servants, local officials, possess familiarity with the wherewithal and the whereabouts of persons within their area and are therefore accessible and competent. There is no reason whatever for allowing the creditor to be heard at the certificate stage except to prolong and puzzle the proceed ings and by dilatory tactics, deny the relief to be debtor. The creditor does not suffer because the certificate that the applicant is a debtor raises only a rebuttable pre sumption and it is idle to argue that the creditor has no means of disproving the income or assets of his debtor. Ordinarily, the mahajan, the sowcar or money lender and the petty borrower live in and around the same neighbourhood the, former knows the circumstances of the latter and often these are not 853 isolated transactions between strangers. So much so the debtor 's financial horoscope or impecunious kismet is nor mally within the ken of the creditor. Moreover, a perusal of the pro forma of the certificate to be issued needs mention of several particulars which have to be. filled up by the certifying officer who has therefore to make the necessary enquiries from and about the debtor. Assurance about the credibility of the certifying officer 's entries is lent by the personal responsibility cast on him for the correctness of the particulars mentioned in the certificate. This is a protection for the creditor that routine and reckless entries will not be made and that the certifying officer will take care, prima facie, to be satisfied by proper enquiry before issuing the certificate. Such a safeguard warrants the raising of a rebuttable presumption of correctness and reduces the possibility of injustice to the creditor for not being allowed an opportunity for being heard at this stage. In this view also we see noth ing unreasonable in the presumptive evidence of the certifi cate without the hearing of the creditor. Fairplay is also afforded in the proceeding not only because the creditor can rebut the certificate but also because under section 8 (6) the authorized officer has the power and duty to determine all questions in dispute. Section 7(7) expressly provides for an opportunity to the creditor and the debtor to be heard. After all, the authorised officer is one who exercises quasi judicial powers even otherwise on the Revenue side. While the enquiry is sum mary, the procedure under the Maharashtra Land Revenue Code will be adopted which is a fair safeguard. Summary trial does not dispense with evidence. or sound judgment but merely relieves the adjudicator from maintaining elaborate records. The enquiring officer, may, in appropriate cases, examine the Debtor or others who can throw light. To equate 'summary ' with 'arbitrary ' is contrary to common experience. The obligation for the production of the pledged article by the creditor as a preliminary to the institution of the preceedings is also a just measure so that when a decision is reached the article may be returned to the. debtor in the vent of the verdict going in his favour. The negation of a right of appeal against an order under section 7(6) of the Debt Act is another circumstance. Shri Nariman has pressed before us. He cited other debt relief measures where a single appeal had been provided for. Does the absence of a right of appeal render the procedure unrea sonable ? It depends. Where the subject matter is substan tial and fraught with serious consequences and complicated questions are litigatively terminated summarily. Without a second look at the findings by an appellate body, it may well be that unfairness is inscribed on the face of the law, but where little men, with petty debts, legally illiterate and otherwise handicapped, are pitted against money lenders with stamina, astuteness, awareness of legal rights and other superiority, if the purpose of instant relief is to be accomplished, the provision of an appeal may, in many cases, prove abult in booby trap that frustrates and ruins the hand to mouth debtor. No surer method of baulking the object can be devised ' than enticing 854 the debtor into an appellate bout! Daughter gone and ducate too will be the sequel. Of course, where the enquiry is a travesty of justice or violaion of provisions, where the finding is a perversity of adjudication or fraud on power, the High Court is not powerless to grant remedy, even after the recent package of Constitutional amendments It is true that in several cases this Court has held that a right of appeal is a gesture of statutory fairness in the disposal of cases. Our attention was drawn to the rulings reported as Jyoti Pershad (1); Mohd Faruk (1) and Ganesh Beedi Works(2) and other cases hearing on the necessity of a right of appeal, as an incident of fair hearing. We cannot dogmatise, generalize or pontificate on questions of law whose application depends sensitively on the nature of the subject matter, the total circumstances, the urgency of the relief and what not. 'We have adduced sufficient reason to hold that the Debt Act is not bad for processual perniciousness or jurisprudence of remedies. The next constitutional missile aimed at the Debt Act was the incompetency of the State Legislature to enact this law, for reasons more than one. The main ground was covered by Shri Nariman, but yet others made their contributions sometimes overlapping, sometimes overflowing. Shri B. Sen also challenged the legislative competency, but on a different basis. Several citations, home spun and foreign, finely woven theories and subtle punditry, gave a grave mein to the argument on this branch. But the point in issue, in our view, admits of straight solution, by passing the heavy learning and jurisprudential finery. When Courts are co cooned by case law or caught in the skein of scholarly doctrines, simple questions become complex. However, prob lems of constitutional law can be well left alone where they do not directly demand a solution in the case on hand. Enough unto the day is the evil thereof: What then is the incompetence of the State Legislature ? Shri B. Sen urged that the wiping out of private debts which formed the capital assets of the money lenders one of the main things .done by the Debt Act was not in any of the legislative Lists and even if Parliament had residuary power under Entry 97 of List I, the State had none. Entry 30 in List II is 'money lending and moneylenders; relief of agri cultural indebtedness '. If common sense and common Eng lish are components of constitutional construction, relief against loans by scaling down, discharging, reducing inter est and principal, and staying the real isation of debts will, among other things, fall squarely within the topic. And that, in a country of hereditary (1) ; (2) ; (3) ; 855 indebtedness on a colossal scale! It is commonplace to state that legislative heads must receive large and liberal meanings and the sweep of the sense of the rubrics must embrace the widest range. Even incidental and cognate matters come within their purview. The whole gamut of money lending and debt liquidation is thus us within the State 's legislative competence. The reference to the Rajah mundry Electricity Case(1) is of no relevance. Nor is the absence of the expression 'relief in Entry 30, List II, of any moment when relief from moneylenders is eloquently implicit in the topic. Sometimes, arguments have only stated to be rejected. The next ground of attack, in its multi form presenta tion, is that the 'gold loan ' part of the Debt Act is void because Parliament has occupied file field. It has also been urged that there is inconsistency between the Debt Act and the Gold Control Act, and pro tanto the former fails to have effect. Let us look at the basics of the legal situation before us, before examining the wealth of learning counsel has accumulated. Article 24 6 vests exclusive power in Parlia ment over matters enumerated in List I (Seventh Schedule) and the State Legislature enjoys like power over topics in List II, subject to clauses (1) and. (2) of the Article. Plainly, therefore, the State can legislate upon any Entry in the State .List. We may visualize situations where Parliamentary occupation may exclude the State Legislature. Where, for instance, Parliament while enacting on a matter in the Union List, makes as it is entitled to make, neces sary incidental provisions to effectuate the principal legislation, such ancillary expansions may trench upon the State field in List II. In such a case, if the State makes a law on an Entry in its exclusive List, and such law covers and runs counter to what has already been occupied by Par liament, through incidental provisions, it may be argued that the State law stands pushed out on account of the superior potency of Parliament 's power in our constitutional scheme. Again, there are certain telltale heads of legisla tion in the Lists where one may plausibly invoke the, doc trine of occupied field. Examples may, perhaps, be fur nished by Entries 52 and 54 of List I, Entries 23 and 24 of List Ii and Entry 33 of List III. Without fear of contra diction, we may assert that article 246(3) read with Entry 30 in List 11, empowers the State to make the impugned law. Why then is it incompetent? Because, says Mr. Nariman, the field of gold industry is already occupied by Parliament and the State Legislature therefore stands excluded. Entry 52 in List I reads: "Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest. " Parliament, in the Industries (Development and Regula tion) Act, 1951 (Act 65 of 1951) has made the necessary declaration contemplated in Entry 52 and has occupied the field of gold industry ', as is (1)[1954] S.C.R. 770. 856 evident from reading section 2 and item 1.B(2) of tile First schedule therein. This expression of Parliamentary intent to legislate upon the gold industry is enough to expel from that ' field the State Legislature. This is Shri Nariman 's contention. But what is the sequitur ? Assuming the ap proprlation by Parliament of the power to legislate on gold, what follows? It can make laws directly on that industry and ancillarily on every allied area where effective exer cise of the parliamentary power necessitates it. So much so 'business in gold ', licensing of gold merchants, regula tion of making or pledging of gold ornaments, keeping of jewellery, disclosure of gold possessions and the like are incidental to the parliamentary power and purpose and the Gold Control Act, 1968 and the Rules made thereunder are valid (vide, for example, Bantha 's Case: 1970 I SCR 4 79). Several sections of the Act, some rules and a few rulings were read before us to drive home the point that gold loans are already within the ken of the law made under Entry 52, List I. If so, what ? Does it spell death sentence on the Debt Act ? Or maim it ? Or leave it intact ? Here we turn to Entry 24 of List II which runs: "Indus tries subject" to the provisions of entries 7 and 52 of List I". This means that the State Legislature loses its power to make laws regarding 'gold industry since Entry 24 '. List II is expressly subject to the provisions of Entry 52 of List I. This does not mean that other entries in the State List become impotent even regarding 'gold '. The State Legislature can make laws regarding money lending even where gold is involved under Entry 30, List II, even as it can regulate 'gambling in gold ' under Entry 34 , impose sales tax on gold sales under Entry 54, regulate by munici pal law under Entry 5 and by trade restrictions under Entry 26, the type of buildings for gold shops and the kind of receipts for purchase or sale of precious metal. To multiply instances is easy, but the core of the matter is that where under its this power Parliament has made a law which over rides an entry in the State List, that area is abstracted from the State List. Nothing more. In the Kannan Devan Mills Case(1) this Court put the point tersely 'while dealing with Entry 52 of the Union List: "Once it is declared by Parliament by law to be expedient "in the public interest to control the industry, Parliament can legis late on that particular industry and the States I would lose their power to legislate on that industry. But this would not prevent the States from legislating on subjects other than that particular industry". (underscor ing, ours). This is authority for the proposition that while Entry 23 of List II, in the light of the fact that under Entry 52 of List I Parliament has made the Gold ' Control Act has become inoperative to legislate on industry, there ' is no inhibition whatever on State legislation on (1) ; 857 subjects other than that particular industry. Money.lending is one such subject and the power to legislate thereon remains intact. We are free to agree that the word 'industry ' as a legislative topic has to be interpreted in the widest ampli tude. We also find, as a fact, that dealings in gold, including pledging, have been covered in part by the Gold Control Act, 1958; even so nothing prevents the State from making the impugned Act. In Paresh Chandra Chatterice(1) Subba Rao J (as he then was ) dealt with an apparent con flict between the Central Act (The Tea Act) and a State legislation [The Assam Land (Requisition and Acquisition) Act, 1948]. After examining the scheme of the two Laws, the learned Judge concluded: "A comparative study of both the Acts makes it clear that the two Acts deal with different matters and were passed for differ ent purposes." Unreal and imaginary conflicts between the Central and the State Acts cannot be the foundation for invalidation of the latter. In Kanan Devan (Supra) it was further pointed out: "If the Act (the Tea Act) is within the competence of Parliament and the impugned Act is within the competence of the State, the ' petitioners must show that the im pugned Act is repugnant to the Tea Act but we can see no conflict between the provisions of the impugned Act and the Tea Act." Banthia(2) was referred to in the course of the arguments and various passages were stressed by different counsel. The essential question there was as to whether manufacture of gold ornaments. by goldsmiths fell within the connotation of the word 'industry '. It did. It was further pointed out by Ramaswami J in that case that some of the entries overlap and seem to be in direct conflict but the duty of the Court is to reconcile and harmonize while giving the widest ampli tude to the language of the Entries. We see nothing in that decision which contradicts the position that while the Gold Control Act fell within Entry 52 of List I, the State List was not totally suspended for that reason for purposes of legislating on subjects which fell within that List, but incidentally referred also to gold transactions. Nobody disputes the paramountcy of parliamentary power. We have to reconciIe the paramountcy principle with the 'trenching ' doctrine. In the Canadian Constitution, the question of conflict and coincidence in the domain in which provincial and domin ion legislation overlap has been considered. If both may overlap and co exist without conflict, neither legislation is ultra vires. But if there is confrontation and conflict the question of paramountcy and occupied field may crop up. It has been held that the rule as to predominance of domin ion legislation can only be invoked in case of absolutely conflicting legislation in pari materia when it will be an impossibility to give effect to both (1) (2) ; 858 the dominion and provincial enactments. There must be a real conflict between the two Acts i.e. the two enactments must come into collision. The doctrine of Dominion paramountey does not operate merely because the Dominion has legislated on the same subject matter. The doctrine of 'occupied field ' applies only where there is a clash between Dominion Legis latic and Provincial Legislation within an area common to both. Where both can co exist peacefully, both reap their respective harvests (Please see; Canadian Constitutional Law by Laskin pp. 52 54 , 1951 Edn). We may sum up the legal position to the extent necessary for our case. Where Parliament has made a law under Entry 52 of List I and in the course of it framed incidental provisions affecting gold loans and money lending business involving gold ornaments, the State, making a law on a different topic but covering in part the same area of gold loans ', must not go into irreconcilable conflicts. Of course, if article 254(2) can be invoked We will presently examine it then the State law may stir prevail since the assent of the. President has been obtained for the Debt Act. Thirdly, the doctrine of 'occupied field ' does not totally deprive the State Legislature from making any law incidentally referable to gold. In the event of a plain conflict, the State law must step down unless, as. pointed out earlier in the previous passage, article 254(2) comes to the rescue. Many more decisions were brought to our notice, bearing on paramountcy, 'occupied field, ' repugnancy and inconsist ency. They were elaborated by counsel sufficiently to convince us that lawyer 's law is divorced from plain seman tics and common understanding of Constitutional provisions becomes a casualty when doctrinal complexities are injected. May be every profession has a vested interest in the learned art of incomprehensibility for the laity. Law, in the administration of which the Bench and the Bar are partners, probably lives up to this reputation. All these questions become academic for two reasons. Firstly, there is no conflict between the Gold Control Act and the Debt .Act. Secondly, the subjects of both the legis lations can be traced to the Concurrent List and article 254(2) validates within the State the operation of the Debt Act. We are of the view, as earlier discussed, and without citing further cases on the point, that the State 's legisla tive power, save under the, Entry 24 of List II, is not denuded. Nor is there any conflict between the two Acts. A detailed study, section by section, of both the legisla tions, has convinced us that they can stand together and that the two authorities and modalities do not contradict each other and that, by elementary comity, a modus vivendi between the Gold Act and the Debt Act can be worked out. The provisions in the Gold Act for declarations and other formalities may not collide with the obligations and appli cations under the Debt Act. We have no doubt that the authorities charged with enforcement under the two statutes will understand the sense and spirit of the provisions and 859 see that the object of the Debt Act is not frustrated or its processes paralysed. Indeed, the learned Attorney General showed how by reading together the two Acts and remember ing their respective purposes a viable resolution of possi ble imbroglios is simple, although officialdom is not unfa miliar with the art of embroilment where artless customers are involved or ulterior ends are to be served. The State, through an effective programme of legal aid and advice and other prompt instructions to the agencies involved, should avoid harassments, hold ups and red tapes which are the bane of processual justice. The jurisprudence of remedies is still a Cinderella of our system. The Advocate General of Maharashtra assured the Court that in the fair enforcement of the law and the follow up of creating alternative credit agencies his client will take quick and impartial care. The learned Attorney General, it may be mentioned before winding up this part of the discussion, did draw our atten tion to article 254(2) which is self explanatory. The State law will prevail in the State, even if there be repugnancy with a Central or existing law, given Presidential assent provided both the legislations fall under the Concurrent List. Do they ? He says, yes; and points, inter alia, to Entry 6 (transfer of property) and Entry 7 (contracts). Of course, the law of contracts deals with pledges; so does the Gold Control Act. The latter does not prohibit pawns where gold is involved, but policies it to prevent evils by prescribing special modalities. The Debt Act relates to contracts and has fulfilled the requirement in Art.254(2). We have nearly come to the end of the judicatory journey and have reached the constitutional conclusion that the guarantee that Trade and Commerce and Intercourse shall be free does not necessitate that the little lendee shall remain unfree. Article. 301 does permit, in our view, legislative action to break agrarian indebtedness and urban usurious bondage lest social disorder disruptive of Trade, break out. The impugned Act is a partial implementation of the economic thesis of Adam Smith when he wrote, two hundred obsolescent.years ago: "No society can surely be flourishing and happy, of which by far the greater part of the numbers are poor and miserable. " We are in a Republic with social justice as its indeli ble signature. And the measure under challenge. promotes social justice, social order and better conditions for the business of healthy money lending. The appalling indebtness which cripples our people is an unhappy heritage of our economic system. The bonded yes terday, the yoke today, and the hope of tomorrow obligate the State to spell out the future tense of the rural human order and to focus on the legislative strategies of allevia tion before the backlash of social confusion begins, and to administer, through working mechanisms, and direct, 7 206SCI/77 860 through social cybernetics, our disenchanted society into fresh formulations of a free future. Without such govern mental measures of rural regeneration even the good money lenders may have to fold up and the better businessmen wind up. The larger interests of Trade, Commerce and Intercourse whose. freedom is a constitutional norm demand that social order shall be preserved through legislative methodolo gy, now radical, now reformatory but always motivated and moderated by the felt necessities of the times. To come to humane terms with harsh realities by subjecting itself to the reasonable, though unpalatable, regulations of the Debt Act and like measures or to face the adaptational break down where law ,may fail to keep order against those who have nothing to lose except their chains this is the sort of sociological Hobson 's choice before the 'money lenders ' of Maharashtra. The option is obviously the former and that is the constitutional vindication of the impugned legislation. All these laws, in themselves marginal, are part of the programschrift for a New Deal which is the cornerstone of the Constitution. We have been addressed many minor criticisms which have chopped little logic and made out small discriminations but serious constitutional decisions go on major considera tions, not gossamer web flimsiness. We have listened to these meticulous submissions but are not persuaded that we should even mention them in our longish judgment. A concluding caveat. The poignant purpose of ending exploitatire rural urban lending to the weaker members of society is the validating virtue of this legislation, viewed from the constitutional angle. But, as Shri Nariman at some stage mentioned and the learned Attorney General also concurred mere farewell to existing debts is prone to prove a teasing illusion or promise of unreality unless the Administration fills the credit gap by an easy, accessible and needbased network of humane credit agencies, coupled with employment opportunities for the small man. The experience of the. past has not inspired adequate confi dence. Authoritative official pronouncement, however, owns that "Arrangements so far made to. give credit and inputs (for rural credit) have had only limited impact. The problem is a vast one and seems to be growing in size. Rural banks, credit societies, farmers ' service societies all these have to be strengthened and their activities expanded. To give pur poseful direction to, this task and to ensure that the interests of agriculturists and farmers, especially the small farmer, are looked after, there is need for an Apex Agri cultural Development Bank in India. " The legislation we uphold is an added responsibility on the State. it shall be vigorously enforced with sympathy for the victim class, lest the progressive measure. prove a paper tiger. The cadres charged with enforcement must have right orientation correct grasp and social activism, if this law is not to leave a yawning implementation 861 gap. Hercics in court and hortation in the House must be followed by effective enforcement in the field. We state this not because the State is not in great earnest it is but because many a welfare legislation in the country reportedly remains a cloistered virtue or slumbrous in effect. The finest hour of the rule of law is when law disciplines life and matches promise with performance. On this note of hopeful valediction we wind up. We dismiss the appeals and the writ petitions, leaving. the parties to bear their costs, although we had at least on one occasion, sufficient provocation to make a different direction.
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The Maharashtra state government passed a law called the Maharashtra Debt Relief Act. This law canceled the existing debts of some poor people. The law was only meant to be temporary. Some people challenged the law in court, arguing that it was not valid. They made these points: (1) Money lending is a business protected by the Constitution. The law puts unfair restrictions on this business. (2) The state government doesn't have the power to make this law. (3) Because the national government already has a law about gold, the state can't make a law about gold jewelry used for loans. The government argued that: (1) Money lending is not always a business. (2) Even if it is a business, the law's restrictions are fair. (3) The state government does have the power to make this law. (4) The national government's law doesn't prevent the state from making this law. (5) The national law and the state law deal with different things. (6) There is no conflict between the two laws. The court agreed that the law was valid and said: (1) It's wrong to call the exploitation of poor people by money lenders a legitimate business. (2) Laws should be interpreted broadly and realistically. (3) Freedom is not unlimited. Not every activity, even if it makes a profit, can be considered a protected business. Banks and similar groups that deal with trade can be considered businesses. But old-fashioned money lending to poor farmers and workers, where they are trapped in debt forever, is not a legitimate business. (4) There is a lot of disturbing information about how money lenders exploit farmers and workers. (5) What is "reasonable" needs to be decided based on real-life situations. The government was trying to deal with cruel money lenders. The law must consider the experiences of poor people. (6) It's fair to exempt banks and credit institutions from the law because they don't usually exploit borrowers. These institutions have not always been willing to lend to poor people. (7) Some money lenders might be good people, but the government can't make exceptions for everyone. The people challenging the law didn't provide enough evidence to prove that the law was unfair. (8) The court also rejected the argument that the law was unfair in how it was carried out. The law requires money lenders to prove the borrower's financial situation. It also gives the borrower a certificate that is presumed to be true, even if the lender isn't there when it's issued. There's no appeal process, and the lender has to start the legal process and deposit the jewelry within seven days. These things are all reasonable. The lender is more likely to be able to start the process than the borrower, who is often a poor farmer or worker. It's okay for the borrower to get a certificate from a local official. The official knows the people in the area. Hearing the lender before the certificate is issued would just take longer. The lender can still challenge the certificate by proving that the borrower has enough income or assets. The lender and borrower usually live nearby. The certificate asks for details that the official will investigate. The official has the power to make fair decisions. Using the state's land law is a good way to protect people, even though it's a quick process. Requiring the lender to show the jewelry is fair, so it can be returned to the borrower if they win the case. There's no need for an appeal process when the debts are small and the borrowers are poor. If the process is unfair or violates the law, the High Court can still provide a solution. (9) The state government has the power to make laws about money lending and helping farmers with debt. This includes reducing interest rates, forgiving debts, and stopping lenders from collecting debts. (10) The national government doesn't have the sole power to make laws about this. (11) If the national government makes a law about gold that affects loans involving gold jewelry, the state can still make a law about money lending that also covers gold loans, as long as the two laws don't conflict. If there is a conflict, the national law takes precedence, unless the state law has been approved by the President. In this case, there is no conflict between the national Gold Control Act and the state law. Also, both laws can be traced to a list of topics that both the national and state governments can make laws about. The state law is valid because it has been approved by the President.
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632 to 646 of 1976. No. 98, 102 107, 110 113 & 115 120 1976 Under article 32 of the Constitution of India) B. Sen, (in CA. 633) Sachin Chowdhary, (in CA. Agarwala and Gagras & Co., with him for the appellants in CAs 645 & 646 except for appellant No. 632, 638 and W.P. No. we proceed to deal with the common subject matter of the appeals and the writ petitions. A bunch of counsel, led by Shri Nariman and seconded by Shri B. Sen, have lashed out against the vires of the Maharashtra Debt Relief Act, 1976 (for short, the Debt Act). The former has focused on the fatal flaw in the Act based on article 301 of the Constitution and the latter has concentrated his fire on the incompetency of the State Legislature to enact the Debt Act. Freedom of trade commerce and inter course Subject to the other provisions of this Part, trade, commerce and intercourse through out the territory of India shall be free. " Restrictions on trade, commerce and among States. Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law X X X X (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. " The unmincing submission of Shri Nariman is that money ending is very much a trade, that the Debt Act deals drasti cally with moneylenders in defiance of article 301 and, since the manacles on moneylenders and money lending are unreason ably harsh and callously indiscriminate, the 'freedom" which belongs constitutionally to professional money lenders is breached by the 'statutory liquidation of their loans. The injustice of wiping out the debts of marginal farmers, rural artisans, rural labour ers and workers as provided in the scheme of the Act was anathematised by Shri Nariman as an unwarrantedly unrea sonable annihilation of the trade and 'its capital. He stated that there was legislative incompetency for the State Legislature because it had forfeited the power to legislate on money lending where gold loans were involved, since Parliament had occupied the field under Entry 52 of List I by enacting the Gold Control Act, 1968, and had thereby elbowed out the State Legislature from that field. Of course, we will refer to them with pertinent brevity, although we must administer to our selves the caveat that the same words used in constitutional enactments of various nations may bear different connota tions 834 and when Courts are called upon to interpret them they must acclimatize the expressions to the particular conditions prevailing in the country concerned. We are expounding the Constitution of a nation whose people hunger for a full life for each, and therefore, a perception of the signature of social justice writ on it is imperative. For, if the impugned legislation does violate article 301, it must perish unless rescued by article 304(b). 835 refer during the course of this judgment. After India attained political freedom in 1947 and before the Constitution was adopted the historical process of the merger and the integration of the several Indian States with the rest of the country was speedily accom plished with the result that when the Consti tution was first passed the territories of India consisted of Part A States which broadly stated represented the Provinces in British India, and Part B States which were made up of Indian States. It is with the knowledge of the trade barriers which had been raised by the Indian States in exercise of their legislative powers that the Constitution makers framed the Articles in Part XIII. (p. 843) "Free movement and exchange of goods throughout the territory of India is essential for the economy of the nation and for sustain ing and improving living standards of the country. The provision contained in article 301 guaranteeing the freedom of trade, commerce and intercourse is not a declaration of a mere platitude, or the expression of a pious hope of a declaratory character; it is not also a mere statement of a directive principle of State policy; it embodies and enshrines a principle of paramount importance that the economic unity of the country will provide the main sustaining force for the stability and progress of the political and cultural unity of the country." All this is non controversial ground but the learned Attorney General con tests the very applicability of article 301 to money lenders and moneylending visa vis the humble beneficiaries of the statute, viz., the marginal farmers, rural artisans, rural labourers, workers and small farmers. It is the life blood of business. An inventory of Indian statutes wherein 'money lending ' as a business was mentioned and licensed, was also brought to our notice. To deny to monetary dealings the status of trade is to push India into the medieval age: Broadly viewed, money lending amongst the commercial community is integral to trade and is trade. The learned Attorney General 's stance is radical and rooted in the rural bondage to break which is the mission of this legislation. Money lending is it in law at all? No trade, no article 301, and so the baptismal certificate that article 301 insists upon from the economic activity that seeks its 'free ' blessings is that it is 'trade, commerce or intercourse '. Thus the critical question is as to whether money lending and the class of money lenders who have been preying upon the proletarian and near proletar ian segments of Indian society for generations may be legal ly legitimated as 'traders ' or 'businessmen '. Das, J., in Automobile Transport (1) struck the true note, if we may say so with great respect, that while the text of the Articles is a vital consideration in inter preting them, 'we must ' at the same time, remember that we are dealing with the Constitution of a country and the interconnection of the different parts of the Constitution forming part of an integrated whole '. social justice is the core of the constitutional order. The learned Attorney General argued for the proposition that the narrow, noxious category of money lending with which we are concerned is so oppressive and back breaking so far as the poorest sections of the community are concerned that a sense of social justice forbids the court to legiti mate it as 'trade '. In that case the impugned Act was said to offend against article 301. Numerous examples of other transactions may be given, such as the sale of a forged passport, or, the sale of counterfeit money, which provoke the same comment and, although legislation prohibiting such transactions may, possibly, be thought to be legally justifiable pursuant to what has, on occasion, been referred to as a 'police power ', I prefer to think that the subjects of such transactions are not, on any view, the subjects of trade and commerce as that expres sion is used in section 92 and that the protection afforded by that section has nothing to do with such transactions even though they may require for their consummation, the employment of instruments, whereby inter State trade and commerce is commonly carried on." Learned counsel has to concede that there can be no 'trade ' or 'business ' in crime but submits that this principle should not be extended . " activities, attired as trade or business or commerce, can be de recog nized as trade or business. The next question then is whether rural and allied money lending is so abominable as to be 'bastardized ' by the law for which the Attorney General pleaded. He 841 pointed out that institutional credit had hardly penetrated rural India and the non institutionalised money lenders had done economic service to a primitive peasantry although several of them had abused. Freedom of trade, subject to reasonable restrictions, is guaranteed under article 19. A recent issue of the Eastern Economist reads: "The problem of rural indebtedness is as old as Indian agriculture itself. If the problem of rural indebtedness is to be kept within meaningful limits and man ageable proportions, following legislative and non legislative measures should be taken: 1. 66, No. But these laws are difficult to be enforced either because farmers are illiterate, or they do not have enough resources to go to the courts, or the money lenders prove too clever for them. " "Rural people have been under heavy indebtedness of the average money lenders and sahukars. The Debt Act is part of the package. There is also reference to a number of Official Committees which have examined the question of indebtedness in the urban and rural areas and have recommended measures of relief. The affidavit goes on to state: "I say that in Maharashtra and its predecessors the State of Bombay there have been several legislations on this subject including the Deccan Agricultural Debt Relief Act, 1879, Bombay Agricultural Debtors Relief Act, 1939, 847 and in the Vidarbha areas of the State, the Madhya Pradesh Postponement of Execution of Decree Act, 1956. I say that there is a well established history of dealing with indebted ness in the State by means of legislation. I say that .the Reserve Bank carried out an inquiry in the matter of indebtedness in 1971 which is referred to as All India Debt and Investment Survey during 1971 72. The Reserve Bank of India survey established that the total debt liabilities in the rural areas in Maharashtra was Rs.358 crores in 1971 72. A preliminary analysis made by the Reserve Bank of India also indicated weaker sections of the community thereby showing the extent of the burden of debt on the weaker sections of the community. Even the 'whereas ' vocabulary of the draftsman of the Act refers to the need for immediate action to provide for relief from indebtedness to certain farmers, rural artisans, rural labourers and workers in the State of Maharashtra. That was one of the terms of Royal Commission on Agriculture, and from time to time enquiry committees were set up including the Banking Enquiry Committee to go into the question of agricultural indebtedness with a view to find out how alternative sources of credit to be made available to the agriculturists could be brought into existence. It has become proverbial that an Indian agriculturist is born in debt, he lives in debt and he dies in debt." Eminent economists and their studies have been adverted to by the High Court and reliance has been placed on a Report of a Committee which went into the question of relief from rural and urban indebtedness which shows the dismal economic situation of the rural farmer and the labourer. The subject matter of the impugned legislation is indebtedness, the beneficiaries are petty farmers, manual workers and allied categories steeped in debt and bonded to the money lending tribe. Moneylending may be ancilliary to commercial activity and benignant in its effects, but money lending may also be ghastly when it facilitates no flow of trade, no movement of commerce, no promotion of intercourse, no servicing of business, but merely stagnates rural economy, strangulates the borrowing community and turns malignant in its reper cussions. The former may surely be trade, but the latter the law may well say is not trade. Shri Nariman 's submission is that the Debt Act is too draconic to fair, processually and substantively, and so it cannot be rescued by article 304(b). Any custom or tradition or any agreement (whether made before or after the appointed day), whereunder or by virtue of which a debtor or any member of his family is required to work as labourer or otherwise for the creditor shall be void and of no effect and shall never be enforceable in any civil court. " But the legislature. Every case must be judged on its own facts and in its own setting of time and circumstance, and it may be that in regard to some economic activities and at some state of social devel opment it might be maintained that prohibition with a view to State. We do not downright denounce all money lenders but the lawmakers have, based on socio economic facts, picked out a special class of money lenders whom they describe as unscru pulous. A pathetic picture of the money lender being deprived of his loan assets while being forced to repay his lender was drawn but that cannot affect the reasonableness of the relief to the grass roots borrower. The business of money lending has not been prohibited. That form this relief should take is ordinarily for the legislature to decide. The restrictions under the Debt Act are reason able. are regulatory, article 301 does not hit them. We may illustratively advert to some of the criticisms but, at the threshold, we confess we are not impressed with the submissions. On top of this obligation to institute proceedings was the precarious prospect of the order being against the creditor because the 'authorised officer ' had to hold in favour of the debtor if he merely produced a certificate under section 7(5) from one of those officials enumerated therein all minor minions of government at the local level. 'How could the money lender prove the debtor 's financial position ? ' Moreover, the issuance of a certificate by the local little official was a unilateral process where the creditor was not entitled to be heard as to the means or eligibility of the debtor. It is true that the creditor has to move, and not the, debtor, before the authorised officer. filled up by the certifying officer who has therefore to make the necessary enquiries from and about the debtor. The obligation for the production of the pledged article by the creditor as a preliminary to the institution of the preceedings is also a just measure so that when a decision is reached the article may be returned to the. The negation of a right of appeal against an order under section 7(6) of the Debt Act is another circumstance. Shri Nariman has pressed before us. Of course, where the enquiry is a travesty of justice or violaion of provisions, where the finding is a perversity of adjudication or fraud on power, the High Court is not powerless to grant remedy, even after the recent package of Constitutional amendments It is true that in several cases this Court has held that a right of appeal is a gesture of statutory fairness in the disposal of cases. 'We have adduced sufficient reason to hold that the Debt Act is not bad for processual perniciousness or jurisprudence of remedies. Shri B. Sen urged that the wiping out of private debts which formed the capital assets of the money lenders one of the main things .done by the Debt Act was not in any of the legislative Lists and even if Parliament had residuary power under Entry 97 of List I, the State had none. It has also been urged that there is inconsistency between the Debt Act and the Gold Control Act, and pro tanto the former fails to have effect. (2) of the Article. Plainly, therefore, the State can legislate upon any Entry in the State .List. In such a case, if the State makes a law on an Entry in its exclusive List, and such law covers and runs counter to what has already been occupied by Par liament, through incidental provisions, it may be argued that the State law stands pushed out on account of the superior potency of Parliament 's power in our constitutional scheme. This is Shri Nariman 's contention. Several sections of the Act, some rules and a few rulings were read before us to drive home the point that gold loans are already within the ken of the law made under Entry 52, List I. If so, what ? The State Legislature can make laws regarding money lending even where gold is involved under Entry 30, List II, even as it can regulate 'gambling in gold ' under Entry 34 , impose sales tax on gold sales under Entry 54, regulate by munici pal law under Entry 5 and by trade restrictions under Entry 26, the type of buildings for gold shops and the kind of receipts for purchase or sale of precious metal. To multiply instances is easy, but the core of the matter is that where under its this power Parliament has made a law which over rides an entry in the State List, that area is abstracted from the State List. Nothing more. This is authority for the proposition that while Entry 23 of List II, in the light of the fact that under Entry 52 of List I Parliament has made the Gold ' Control Act has become inoperative to legislate on industry, there ' is no inhibition whatever on State legislation on (1) ; 857 subjects other than that particular industry. In Kanan Devan (Supra) it was further pointed out: "If the Act (the Tea Act) is within the competence of Parliament and the impugned Act is within the competence of the State, the ' petitioners must show that the im pugned Act is repugnant to the Tea Act but we can see no conflict between the provisions of the impugned Act and the Tea Act." We see nothing in that decision which contradicts the position that while the Gold Control Act fell within Entry 52 of List I, the State List was not totally suspended for that reason for purposes of legislating on subjects which fell within that List, but incidentally referred also to gold transactions. But if there is confrontation and conflict the question of paramountcy and occupied field may crop up. There must be a real conflict between the two Acts i.e. the two enactments must come into collision. The doctrine of 'occupied field ' applies only where there is a clash between Dominion Legis latic and Provincial Legislation within an area common to both. We may sum up the legal position to the extent necessary for our case. Where Parliament has made a law under Entry 52 of List I and in the course of it framed incidental provisions affecting gold loans and money lending business involving gold ornaments, the State, making a law on a different topic but covering in part the same area of gold loans ', must not go into irreconcilable conflicts. Firstly, there is no conflict between the Gold Control Act and the Debt .Act. Nor is there any conflict between the two Acts. Do they ? Of course, the law of contracts deals with pledges; so does the Gold Control Act. Article. promotes social justice, social order and better conditions for the business of healthy money lending. The larger interests of Trade, Commerce and Intercourse whose. All these laws, in themselves marginal, are part of the programschrift for a New Deal which is the cornerstone of the Constitution. give credit and inputs (for rural credit) have had only limited impact. We state this not because the State is not in great earnest it is but because many a welfare legislation in the country reportedly remains a cloistered virtue or slumbrous in effect.
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The Maharashtra state government passed a law called the Maharashtra Debt Relief Act. This law canceled the existing debts of some poor people. The law was only meant to be temporary. Some people challenged the law in court, arguing that it was not valid. They made these points: (1) Money lending is a business protected by the Constitution. The law puts unfair restrictions on this business. (2) The state government doesn't have the power to make this law. (3) Because the national government already has a law about gold, the state can't make a law about gold jewelry used for loans. The government argued that: (1) Money lending is not always a business. (2) Even if it is a business, the law's restrictions are fair. (3) The state government does have the power to make this law. (4) The national government's law doesn't prevent the state from making this law. (5) The national law and the state law deal with different things. (6) There is no conflict between the two laws. The court agreed that the law was valid and said: (1) It's wrong to call the exploitation of poor people by money lenders a legitimate business. (2) Laws should be interpreted broadly and realistically. (3) Freedom is not unlimited. Not every activity, even if it makes a profit, can be considered a protected business. Banks and similar groups that deal with trade can be considered businesses. But old-fashioned money lending to poor farmers and workers, where they are trapped in debt forever, is not a legitimate business. (4) There is a lot of disturbing information about how money lenders exploit farmers and workers. (5) What is "reasonable" needs to be decided based on real-life situations. The government was trying to deal with cruel money lenders. The law must consider the experiences of poor people. (6) It's fair to exempt banks and credit institutions from the law because they don't usually exploit borrowers. These institutions have not always been willing to lend to poor people. (7) Some money lenders might be good people, but the government can't make exceptions for everyone. The people challenging the law didn't provide enough evidence to prove that the law was unfair. (8) The court also rejected the argument that the law was unfair in how it was carried out. The law requires money lenders to prove the borrower's financial situation. It also gives the borrower a certificate that is presumed to be true, even if the lender isn't there when it's issued. There's no appeal process, and the lender has to start the legal process and deposit the jewelry within seven days. These things are all reasonable. The lender is more likely to be able to start the process than the borrower, who is often a poor farmer or worker. It's okay for the borrower to get a certificate from a local official. The official knows the people in the area. Hearing the lender before the certificate is issued would just take longer. The lender can still challenge the certificate by proving that the borrower has enough income or assets. The lender and borrower usually live nearby. The certificate asks for details that the official will investigate. The official has the power to make fair decisions. Using the state's land law is a good way to protect people, even though it's a quick process. Requiring the lender to show the jewelry is fair, so it can be returned to the borrower if they win the case. There's no need for an appeal process when the debts are small and the borrowers are poor. If the process is unfair or violates the law, the High Court can still provide a solution. (9) The state government has the power to make laws about money lending and helping farmers with debt. This includes reducing interest rates, forgiving debts, and stopping lenders from collecting debts. (10) The national government doesn't have the sole power to make laws about this. (11) If the national government makes a law about gold that affects loans involving gold jewelry, the state can still make a law about money lending that also covers gold loans, as long as the two laws don't conflict. If there is a conflict, the national law takes precedence, unless the state law has been approved by the President. In this case, there is no conflict between the national Gold Control Act and the state law. Also, both laws can be traced to a list of topics that both the national and state governments can make laws about. The state law is valid because it has been approved by the President.
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Appeal No. 815 of 1963. Appeal by special leave from judgment and order dated April 23, 1963, of the Madhya Pradesh High Court in 1st Appeal No. 23 of 1963. G.S. Pathak, B. A. Musodkar, section N. Andley and Rameshwar Nath, for the appellant. M. section Gupta, for respondent No. 1. December 20, 1963. The following Judgments were delivered: AYYANGAR J. On behalf of the Chief Justice and himself) We have had the advantage of perusing the judgment of our brother Subba Rao J. and we agree with him that the appeal should be dismissed. The justification for this separate judgment, however, is because of our inability to agree with him in his construc tion of the relative scope of the two limbs of section 29(2) of the Indian Limitation Act. The facts of the case have been set out in detail in the judgment of Subba Rao J. and it is therefore unnecessary to repeat them. There were three principal points that were urged before us on either side which require to be considered and all of them turn on the proper construction of section 29(2) of the Indian Limitation Act which we shall for convenience set out here: "29(2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed therefor by the first schedule, the provisions of section 3 shall apply, as if such period were prescribed therefor in that schedule, and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law (a) the provisions contained in section 4, sections 9 to 18, and section 22 shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law; and 133 (b) the remaining provisions of this Act shall not apply." The learned Judges of the High Court have proceeded on the basis that section 29(2)(a) applies to the case of appeals preferred under section 116 A of the Representation of the People Act, 1951 and on that footing have held that the appeal presented to them by the respondent was within time if computed after making the deductions permitted by section 12 of the Limitation Act. It is the correctness of this view that is challenged before. .us. Proceeding now to deal with the question whether the terms of section 29(2) are apt to take in appeals under the Re presentation of the People Act, the first matter to be con sidered necessarily is whether that Act is a "special or local law" within the opening words of the sub section. As to this, however, Mr. Pathak raised no dispute and he con ceded that section 116A was such a "special or local law. " That this "special or local law" prescribes "for an appeal a period of limitation" is also evident. The first point of controversy, however, has arisen as to whether "the period of limitation prescribed by the special or local Law is different from the period prescribed therefor by the first schedule. " The contention urged strenuously before us by Mr. Pathak, the learned counsel for the appellant, was that there would be "a different period" only where for the identical appeal (to refer only to that proceeding with which we are immediately concerned) for which a period of limitation has been prescribed by the special or local Law, a period is prescribed by first column of the first schedule. and there is a difference between the two periods. It was his further contention that where the Indian Limitation Act made no provision for such an appeal, section 29(2) and the provision contained in its (a) and (b) were inapplicable. There have been several decisions on this point but it is sufficient to refer to the decision of the Bombay High Court in Canara Bank Ltd., Bombay vs The Warden Insurance Co. Ltd., Bombay (1) where Chagla C.J. repelled this construction and held that even where there was no provision in the first schedule for an (1) I. L. R. 134 appeal in a situation identical with that for which the spe cial law provides, the test of "a prescription of a period of limitation different from the period prescribed by the First Schedule is satisfied. This Court in State of U.P. vs Smt. Kaushaliya etc.(1) upheld this construction and approved ,the judgment of Chagla C.J. in the Canara Bank case. Apart from the decision of this Court, we consider the reasoning of Chagla C.J. to be unexceptionable and we agree with Subba Rao J. in holding that the requirement of a prescription by the special law "of a period different" from that prescribed by the First Schedule is satisfied in the present case. The next point was one that arose on the submission of counsel for the respondent and it was this. Assume that the construction of the words "different from" urged by the appellant were accepted, and this requirement would be satisfied only if the First Schedule made provision for an identical appeal as that under the special law, still it was submitted by the respondent that even this was satisfied in this case. For this purpose he relied on article 156 of the first schedule which runs: Time from which "Description of Period of period begins to appeal limitation run 156. Under the Code of Civil Ninety days The date of Procedure, 1908, to a High decree or order Court, except in the cases appealed from." provided for by article 51 and article 153. The argument was that though the right of appeal in the case before us was conferred by section 116A of the Representation of the People Act and it was by virtue thereof that the appeal was filed by the respondent to the High Court, it was still an appeal "under the Code of Civil Procedure, 1908, to a High Court. " For this submission learned Counsel relied principally on two decisions one of the Calcutta and the (1) A. 1. R. 135 other of the Madras High Court, and they undoubtedly support him. In Aga Mohd. Hamdani vs Cohen and Ors.(1) as well as in Ramasami Pillai vs Deputy Collector of, Madura(1) which followed it the Court held that to attract this article it was not necessary in order to be an "appeal under the Code of Civil Procedure" within the meaning of those words in article 156, that the right to prefer the appeal should be conferred by the Code of Civil Procedure but that it was sufficient if the procedure for the filing of the appeal and the powers of the court for dealing with the appeal were governed by that Code. For adopting this construction the Court relied on the reference in article 156 to article 151. Article 151 dealt with appeals to the High Court from judgment rendered on the original side of that Court. The right to prefer these appeals was conferred by the Letters Patent constituting the respective High Courts and not by the Code of Civil Procedure, though the Code of Civil Procedure governed the procedure, jurisdiction and powers of the Court in dealing with the appeals so filed. There would have been need therefore to except cases covered by article 151 only if the words "under the Code of Civil Procedure" were understood as meaning appeals for the disposal of which the provisions of the Code of Civil Procedure was made applicable. We might mention that besides the Calcutta and the Madras High Courts a Full Bench of the Allahabad High Court also has in Daropadi vs Hira Lal (3 ) adopted a similar construction of the Article, the learned Judges pointing out that several Indian enactments, among them the Indian Succession Act, the Probate and Administration Act, the Land Acquisition Act and the Provincial Insolvency Act, proceeded on the basis of a legislative practice of con ferring rights of appeal under the respective statutes without prescribing any period of limitation within which the appeal should be preferred, but directing the application, of the provisions of the Civil Procedure Code to such appeals, the intention obviously being that article 156 would furnish the period of limitation for such appeals. We consider that these deci (1) 1. L. R. (3) 1. L. R. 34 Allahabad 496. (2) 1. L. R. 136 sions correctly interpret article 156 and, in any event, we are not prepared to disturb the decisions which have stood for so long and on the basis of the correctness of which Indian legislation has proceeded. Mr. Pathak drew our attention to some decisions in which a different construction was adopted of the word "under" a particular enactment occurring in other Articles of the Limitation Act and in particular some dealing with appeals in certain criminal matters. In them the word 'under ' was understood as meaning "by virtue of". He was, however, unable to bring to our notice any decision in which the construction adopted of article 156 which we have set out has been departed from. In the cases dealing with the words "under the Criminal Procedure Code" which he placed before us, the situation would obviously be different, since the indication afforded by the mention of article 151 in article 156 does not figure in the Articles dealt with. Therefore that would be a circumstance pointing to a different result. If the construction adopted of article 156 in the Calcutta and Madras decisions to which we have referred were upheld, there could be no controversy that an appeal under section 116A of the Representation of the People Act would be "under the Code of Civil Procedure", for section 116A(2) enacts, to read the material portion: "116A. (2) The High Court shall, subject to the provisions of this Act, have the same powers, jurisdiction and authority, and follow the same procedure, with respect to an appeal under this Chapter as if the appeal were an appeal from an original decree passed by a civil court situated within the local limits of its civil appellate juris diction. . . . . In this view even on the narrowest construction of the words "different from those prescribed therefor in first schedule" occurring the opening part of section 29(2), the exclusion of time provided for by article 12 of the Limitation Act would be permissible in computing the period of limitation for filing the appeal to the High Court in the case before us. 137 The last point which remains for consideration is one which would be material only in the event of the two points we have already dealt with being decided differently. This relates to the relationship or inter connection between the first and the second limbs of section 29(2) of the Limitation Act. The reason why we are dealing with it is because of our inability to agree with the construction which our learned brothers Subba Rao & Mudholkar JJ. have placed on this feature of the sub section. Sub section (2), it would be seen, consists of two parts. The first sets out the conditions to which the special law should conform in order to attract section 3 and that part ends with the words 'as if such period were prescribed therefor in that schedule". This is followed by the conjunction 'and ' that word by the second part reading "for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law (a) the provisions contained in section 4, sections 9 to 18, and section 22 shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law; and (b) the remaining provisions of this Act shall not apply. " The question that has been debated before us is whether the condition postulated by the first limb, namely the special or local law prescribing a period of limitation for a suit appeal etc. different from the period prescribed therefor by the first schedule has to be satisfied in order to render the provisions of cl. (a) applicable. If the conjunction 'and ' was used for the purpose of indicating that the two parts were cumulative, that is, if the two parts operated in respect of the same set of circumstances, then unless the opening words of sub section (2) were satisfied, there would be no basis for the application of cl. (a) to the period prescribed for a suit, appeal or application applicable by the special or local law. If on the other hand, the two parts of the sub section could be read independently as if they made provision for two separate situations, the result would be that the words starting from "for the purpose 138 of determining any period of limitation prescribed for any suit, appeal or application by any special or local law" followed by clauses (a) & (b) would be an independent provi sion unrelated to the first part and therefore could operate unhampered by the condition set out in the first part. In other words, if the latter construction were adopted for every suit, appeal or application for which a period of limitation was prescribed by a special or local law, the provisions in sections 4, 9 to 18 & 22 would apply unless excluded. Mr, Pathak urged that the conjunction 'and ' could in the context be construed only as rendering the second limb a part and parcel of the first, so that unless the conditions laid down by the opening words of the sub section were satisfied, the provisions of the Limitation Act set out in cl. (a) would not be attracted to "determine the period of limitation ' prescribed by the special or local law. The question of the import and function of the conjunction 'and ' was the subject of elaborate consideration by a Full Bench of the Allahabad High Court in a decision in Sehat Ali Khan vs Abdul Qavi Khan(1). The majority of the learned Judges held that the two parts of the sub section were independent and that "for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law". (a) would apply unless excluded. Raghubar Dayal J. then a judge of that Court, however, dissented from this view and held that the entire sub section (2) had to be read as an integrated provision and that the conjunction 'and ' connected the two parts and made it necessary for attracting cl. (a) that the conditions laid down by the opening words of sub section (2) should be satisfied. Mr. Pathak recommended for our acceptance the dissenting judgment of Dayal J. We consider that the view expressed by Raghubar Dayal J. as to the inter relation of the two parts of the sub section reflects correctly our own construction of the provision. Raghubar Dayal J. has approached this question of construction from several angles including the grammar of the passage. Without going into any of them, we would rest our decision on a shorter ground. In order that the second part might be held to be independent ,of the first, the first part should itself be complete and be 1. L. R. [1956]2 Allahabad 252. 139 capable of operating independently. Unless this test were satisfied, the conjunction 'and ' would have to be read as importing into what follows it, the conditions or consideration set out earlier as otherwise even the first part would be incomplete. Let us now see whether the first part could function without the second. The first part reads "where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the first schedule the provision of section 3 shall apply as if that period was prescribed therefor in that schedule. " The question is what this, standing by itself, would signify. If the conditions prescribed by the opening words were satisfied, section 3 of the Limitation Act would be attracted Section 3 reads: "Subject to the provisions contained in sections 4 to 25 (inclusive), every suit instituted, appeal preferred, and application made, after the period of limitation prescribed therefor by the first schedule shall be dismissed, although limitation has not been set up as a defence. . . . In other words, if the special or local law prescribed a period of limitation different from that prescribed by the first schedule by the application of the first part of sub section (2), the court is enabled to dismiss suits, appeals and applications filed beyond time. If this is the only effect it would be seen that the provision is inane and redundant, because even without it, by the very prescription of a period of limitation the jurisdiction of the court to entertain the suit, appeal etc. would be dependent on the same being filed in time. It is possible, however, to construe the reference to section 3 in section 29(2) to mean that the power to dismiss the suit, appeal etc. if filed beyond the time prescribed, is subject to the modes of computation etc. of the time prescribed by applying the provisions of sections 4 to 25 which are referred to in the opening words of section 3. On this construction where a case satisfies the opening words of section 29(2) the entire group of sections 3 to 25 would be attracted to determine the period of limitation prescribed by the special or local law. Now let us test this with reference to the second limb of section 29(2) treating the latter as 140 a separate and independent provision. That part starts with the words "for determining any period of limitation pres cribed for any suit, appeal or application by any special or local law" (italics ours). The words italicised being perfectly general, would manifestly be comprehensive to include every special or local law, and among these must necessarily be included such special or local laws which satisfy the conditions specified by the first limb of section 29(2). We then have this strange result that by the operation of the first part sections 3 to 25 of the Limitation Act are made applicable to that class of special and local laws which satisfy the conditions specified by the first limb, whereas by the operation of the second limb the provisions of section 3, 5, 6 to 8 & 19 to 21 & 23 to 25 would not apply to the same class of cases. A construction which would lead to this anomalous result cannot be accepted and we, therefore, hold that subject to the construction we have put upon sub section (2) of section 29 both the parts are to be read as one whole and that the words following the conjunction 'and ' "for the purpose of determining any period of limitation" etc. attract the conditions laid down by the opening words of the sub section. As we have pointed out earlier this does not affect the result. We agree that the appeal fails and we direct that it be dismissed with costs. SUBBA RAo J. This appeal by special leave raises the question of true construction of the provisions of section 29(2) of the Indian Limitation Act, 1908 (9 of 1908), in the context of its application to section 116 A of the Representation of the People Act, 1951 (43 of 1951), hereinafter called the Act. The facts relevant to the question raised lie in a small compass and they are not disputed. The appellant was elected to the House of the People from the Mahasamund parliamentary constituency in the State of Madhya Pradesh in the third general elections. The respondents were the other contesting candidates. Respondent 1 filed an election petition before the Election Commissioner of India under sections 80 and 81 of the Act for setting aside the election of the appellant and it was duly referred to the Election Tribunal. The 141 Election Tribunal, by its order dated January 5, 1963, dis missed the election petition. On February 11, 1963, the first respondent preferred an appeal against the said order of the Election Tribunal to the High Court of Madhya Pradesh at Jabalpur. Under sub section (3) of section 116 A of the Act every appeal under Ch. IVA of the Act shall be preferred within a period of thirty days from the date of the order of the Tri bunal under section 98 or section 99 thereof. Admittedly, the appeal was filed more than 30 days from the said order. If the time requisite for obtaining a copy of the order of the Tribunal was excluded, the appeal was filed within 30 days; but if in law it could not be excluded, the appeal would certainly be out of time. The appellant contended before the High Court that respondent I was not entitled in law to exclude the time so taken by him in obtaining a copy of the order of the Tribunal, but that plea was rejected by the High Court. On merits, the High Court held that the appellant had committed two acts of corrupt practice as defined by section 123(4) of the Act and on that finding it declared the election of the appellant void. It is not necessary to go into the details of the judgment ofthe High Court given on the merits of the case,as nothingturns upon them in this appeal, for the learned,counsel confined his argument only to the question of limitation. The present appeal has been preferred by the appellant against the said order of the High Court setting aside his ,election. The only question, therefore, is whether for the purpose of computing the period of 30 days prescribed under section 116A (3) of the Act the provisions of section 12 of the Limitation Act can be invoked. Mr. Pathak, learned counsel for the appellant, in an ela borate argument placed before us the different aspects of the question raised, and I shall deal with his argument in the appropriate context in the course of my judgment. It would be ,convenient at the outset to read the relevant provisions of the Act and those of the Limitation Act. 142 The Representation of the People Act, 1951. Decision of the Tribunal Section 98. At the conclusion of the trial of an election petition the Tribunal shall make an order: (a) dismissing the election petition; or (b) declaring the election of all or any of the returned candidates to be void; or Section 116 A. (1) An appeal shall lie from every order made by a Tribunal under section 98 or section 99 to the High Court of the State in which the Tribunal is situated. (2)The High Court shall, subject to the provisions of this Act, have the same powers, jurisdiction and authority, and follow the same procedure, with respect to an appeal under this Chapter as if the appeal were an appeal from an original decree passed by a civil court situated within the local limits of its civil appellate jurisdiction. (3)Every appeal under this Chapter shall be preferred within a period of thirty days from the date of the order of the Tribunal under section 98 or section 99: Provided that the High Court may entertain an appeal after the expiry of the said period of thirty days if it is satis fied that the appellant had sufficient cause for not preferring the appeal within such period. The Indian Limitation Act, 1908 Section 29. (2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed therefor by the First Schedule, the provisions of section 3 shall apply, as if such period were prescribed therefor in that Schedule, and for the 143 purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law (a) the provisions contained in section 4, section 9 to 18, and section 22 shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law; and (b) the remaining provisions of this Act shall not apply. Section 12. (2) In computing the period of limitation prescribed for an appeal, an application for leave to appeal and an application for a review of judgment, the day on which the judgment complained of was pronounced, and time requisite for obtaining a copy of the decree, sentence or order appealed from or sought to be reviewed, shall be excluded. (3)Where a decree is appealed from or sought to be reviewed, the time requisite for obtaining a copy of the judgment on which it is founded shall also be excluded. Section 116 A of the Act confers a right of appeal against an order of the Tribunal under section 98 or section 99 thereof; sub s.(3) thereof prescribes a period of limitation of 30 days for preferring such an appeal. Section 29 of (the Limitation Act attracts, by fiction, the provisions of section 3 thereof to an appeal described in section 29 of the said Act; with the result, the provisions of sub sections (2) and (3) of section 12 of the Limitation Act are attracted thereto; and if those sub sections were attracted in computing the period of limitation prescribed for an appeal the time requisite for obtaining a copy of the decree or order or judgment on which it is founded shall be excluded. Learned counsel for the appellant, therefore, contends that section 29 of the Limitation Act does not apply to an appeal under section 116 A of the Act. The first argument of learned counsel is that for invoking sub s.(2) of section 29 of the Limitation Act the necessary condition is that the First Schedule thereto shall prescribe a period of limitation for an appeal and that a special law shall prescribe for the same type of appeal a different period of limitation and that, as in the 144 present case the First Schedule has not prescribed any period of limitation to an appeal under section 116 A of the Act against an order of the Tribunal, sub section (2) of section 29 of the Act is not attracted. This argument is met by learned counsel for the respondents in two ways, namely, (i) that the First Schedule to the Limitation Act has prescribed a period of limitation for such an appeal, and (ii) that sub section (2) will apply even to a case where the First Schedule to the Limitation Act has not prescribed any period of limitation for an appeal, but a special law prescribed a period of limitation for such an appeal. I shall proceed to consider the two limbs of the argument separately. Has the First Schedule to the Limitation Act prescribed a period of limitation for an appeal against an order of an Election Tribunal under section 98 or section 99 of the Act? Article 156 of the First Schedule to the Limitation Act says that to an appeal under the Code of Civil Procedure, 1908, to a High Court, except in the cases provided for by article 151 and article 153, the period of limitation is 90 days from the date of the decree or order appealed from; and article 151 referred to in article 156 provides for an appeal against a decree or order of any of the High Courts of Judicature at Fort William, Madras, and Bombay, or of the High Court of Punjab in the exercise of its original jurisdiction. What does the expression "under the Code of Civil Procedure" in article 156 of the First Schedule to the Limitation Act connote? Does it mean that a right of appeal shall be conferred under the Code of Civil Procedure, or does it mean that the procedure prescribed by the said Code shall apply to such an appeal? A comparison of the terms of article 156 and article 151 indicates that the emphasis is more upon the procedure applicable to an appeal than on 'the right of appeal conferred under an Act. The heading of the first column in the First Schedule to the Limitation Act is "Description of appeal". The phraseology used in article 156 describes the nature of the appeal in respect of which a particular period of limitation is prescribed. It does not refer to a right conferred under the Code of Civil Procedure, but only describes the appeal with reference to the procedure applicable thereto. Though the word "under" may support the contrary view, the reference to 145 article 151 therein detracts from it. Article 151 is an exception to article 156, indicating thereby that, but for the exception article 156 will apply to an appeal covered by article 151: that is to say, an appeal under article 151 is deemed to be an appeal under the Code of Civil Procedure. Though a right of appeal is conferred under the Letters Patent, it is deemed to be an appeal under the Code of Civil Procedure, because the Code of Civil Procedure governs the said appeal. As Rajamannar, C.J., observed in Kandaswami Pillai vs Kannappa Chetty(1), "It is well established that the Limitation Act and the Code are to be read together, because both are statutes relating to procedure and they are in pari materia and, therefore, to be taken and construed together as one system as explanatory of each other." So construed it may reasonably be held that article 156 provides for an appeal governed by the procedure prescribed by the Code of Civil Procedure. This view was accepted by the Calcutta High Court as early as 1886 in Aga Mahomed Hamadani vs Cohen(1). There, under section 49 of the Burma Courts Act (XVII of 1875), where the amount or value of a suit or proceeding in the Recorder 's Court exceeded Rs. 3,000, and was less than Rs. 10,000, an appeal lay to the High Court. Under section 97 of the said Act, "save as otherwise provided by this Act, the Code of Civil Procedure shall be, and shall, on and from the 15th day of April 1872, be deemed to have been in force throughout British Burma". Section 540 of the Civil Procedure Code of 1882, which was in force at that time, read: "Unless when otherwise expressly provided by this Code or by any other law for the time being in force, an appeal shall lie from the decrees or from any part of the decrees of the Courts exercising original jurisdiction to the Courts authorized to hear appeals from the decisions of those Courts." (1) A. T. R. 134 159 S.C. 10. (2) Cal. 146 The effect of this provision of the Code on the Burma Courts Act was that where an appeal was not expressly excluded by any special Act, an appeal lay to whatever court which under the enactment in force was the appropriate court. But this section was overborne by the Burma Courts Act to the extent it conferred a right of appeal from the Recorder 's Court to the High Court subject to certain conditions, for section 49 of the Burma Courts Act had taken away the right of appeal of value under a prescribed amount and conferred such a right, when the subject matter of the appeal was between two prescribed amounts, from the decree of the Recorder 's Court to the High Court. It is, therefore, not correct to say, as contended by the learned counsel, that a right of appeal was conferred under section 540 of the Code of Civil Procedure, 1882. After the passing of the Burma Courts Act, a right of appeal was, conferred under section 49 of that Act and not under section 540 of the Code. It was contended before the Calcutta High Court, as it is now contended before us, that article 156 of Schedule 11 of the Limitation Act did not apply to an appeal under the Burma Courts Act, on the ground that the said appeal was not an appeal under the Code of Civil Procedure. The learned Judges observed thus, at p. 224: "Now, what is meant by an appeal under the Civil Procedure Code? A particular appeal was given by the Burma Courts Act and the Burma Courts Act is still the only Act which prescribes to what Court this appeal shall lie. If it had not been given by the Burma Courts Act then section 540 of the Civil Procedure Code would have been sufficient to give it, provided that some Court was by some enactment provided as the proper Court to hear the appeal. The procedure in appeals in every respect is governed by the Code of Civil Procedure, The Limitation Act, Schedule 11. article 156, when it speaks of the Civil Pro cedure Code is, on the face of it, speaking of a Code which relates to procedure, and does not ordinarily deal with substantive rights: and the 147 natural meaning of an appeal under the Civil Procedure Code appears to us to be an appeal governed by the Code of Civil Procedure so far as procedure is concerned. " It is manifest from this passage that the learned Judges did not repel the contention on the ground that the right of appeal was conferred by section 540 of the Code of Civil Proce dure, but expressly for the reason that the natural meaning of the relevant expression in article 156 of Sch. 11 of the Limitation Act was that the appeal mentioned therein was one governed by the Code of Civil Procedure. This decision was followed by a Division Bench of the Madras High Court in Ramaswami Pilai vs The Deputy Collector of Madura(1). The learned Judges, Abdur Rahim and Oldfield, JJ., held that article 156 of the Limitation Act (IX of 1908) applied to appeals filed under section 54 of the Land Acquisition Act (1 of 1894). The right of appeal was conferred under the Land Acquisition Act, but the procedure prescribed by the Code of Civil Procedure governed that appeal. The same argument now raised before us was raised, but was repelled. After citing the relevant part of the passage from the judgment of the Calcutta High Court extracted above, the learned Judges stated at p. 55 thus: "It seems to us that this is the correct interpretation of article 156. There seems to be no good reason for saying that an appeal under the Civil Procedure Code means only an appeal the right to prefer which is conferred by the Code itself. On the other hand it would not be straining the language of the article too much to hold that an appeal, the procedure with respect to which, from its inception to its disposal, is governed by the Civil Procedure Code, may rightly be spoken of as an appeal under the Code. " Then the learned Judges referred to article 151 of the Limita tion Act and concluded thus: (1) (1919) 1 L. R. 148 "That also tends to show that what is meant by the legislature is appeals, the hearing and disposal of which is governed by the rules of procedure laid down in the Civil Procedure Code." Though about 77 years have passed by since the decision of the Calcutta High Court and though the Limitation Act was amended a number of times, the Legislature did not think fit to express its dissent from this view by amendment or otherwise. No direct decision has been brought to our notice which has differed from, or even questioned the correctness of, this decision. In this context we may also refer to the decision of the Allahabad High Court in Dropadi vs Hira Lal(1) where it is pointed out) that several Indian enactments, for instance, the Succession Act, the Probate and Administration Act, the Land Acquisition Act and the Provincial Insolvency Act, confer rights of appeal and direct the application of the provisions of the Code of Civil Procedure to such appeals, but prescribed no period within which such appeals might be filed, the idea being that article 156 of the Limitation Act would furnish the period of limitation for the filing of such appeals. Mr, Pathak, learned counsel for the appellant, brought to our notice a number of decisions which considered the forum to which an appeal shall lie against an order under section 476 of the Code of Criminal Procedure and the procedure to be followed therein. In Nasaruddin Khan vs Emperor(1), where an appeal under section 476 B of the Code of Criminal Procedure from the Court of the Munsif was heard in part by the District Judge, and on the next date of hearing the appellant 's pleader was not present in Court, it was held that the District Judge was entitled to consider that the appeal had been abandoned and to dismiss it under the provisions of Order XLI of the Code of Civil Procedure. In Mt. Abida Khatoon vs Chote Khan(1), the Allahabad High Court held, under similar circumstances, that an appellate court could set aside an order dismissing an appeal for default. The Nagpur High Court in (1) All. (2) Cal. (3)A. I. R. 1956 All. 149 Bholanath Balbhadra Sahai vs Achheram Puran Kurmi(1), held that in such an appeal the appellate Court could exercise its power under 0. XLI, r. 27 of the Code of Civil Pro cedure. In Chandra Kumar Sen vs Mathuria Debya (2 ) , the Calcutta High Court applied to such an appeal the period of limitation prescribed under article 154 of the Limitation Act. It is said that the combined effect of these decisions is that the procedure applicable in an appeal against an order made by a civil court under section 476 of the Code of Criminal Procedure is that prescribed by the Code of Civil Procedure whereas the period of limitation is that prescribed for an appeal under the Code of Criminal Procedure. But the lear ned counsel himself conceded that there is a conflict of decisions on the question whether to an appeal against the order of a civil court under section 476 B of the Code of Criminal Procedure, the civil procedure applies or the criminal procedure applies and, therefore, the only decision which may have some bearing on the question now raised is that in Chandra Kumar Sen vs Mathuria Debya(2). There, an application was filed before the Subordinate Judge for filing of a complaint against the petitioner under section 476 of the Code of Criminal Procedure. That was rejected. The complainant preferred an appeal to the District Judge more than 30 days prescribed under article 154 of the Limitation Act. The learned District Judge held that no question of limitation arose, for the District Judge suo motu could lodge a complaint in the criminal court when an offence in connection with the administration of civil justice came to his notice. On that reasoning he instituted a complaint. The High Court held that the appeal was filed before he District Judge under section 476 B of the Code of Criminal Procedure and that under article 154 of the Limitation Act it should have been filed within 30 days from the date of the order of the Subordinate court. It will be noticed that no argument was raised in that case that the appeal was governed by the Code of Civil Procedure and, therefore, the appropriate article of the Limitation Act was not article 154, (1) A. 1. R. (2) Cal. 150 but article 156 thereof, for the simple reason that whichever article applied the apPeal was clearly barred by limitation. It is not, therefore, permissible to read into the decision the entire argument now advanced before us. The present question was neither raised nor argued in that case. It may, therefore, be safely held that for over 75 years the decision of the Calcutta High Court on the construction of article 156 of the Limitation Act stood the ground. Though it must be conceded that the point is not free from difficulty, we are not prepared to depart from the construction put upon the article as early as 1886 and which was not dissented from all these years. 1, therefore, hold that the expression "appeal under the Code of Civil Procedure" in article 156 of the Limitation Act means an appeal governed by the Code of Civil Procedure. Even so, it is contended that under section 116 A(2) of the Act the High Court, though it has the same powers, jurisdiction and authority of an appellate court governed by the Code of Civil Procedure, is not empowered to follow the procedure prescribed under the Code in respect of receiving the appeals. This argument is contrary to the express terms of sub section (2) of section 116 A of the Act. Under that sub section, "The High Court shall, subject to the provisions of this Act, have the same powers, jurisdiction and authority and follow the same procedure, with respect to an appeal under this Chapter as if the appeal were an appeal from an original decree passed by a civil court situated within the local limits of its civil appellate jurisdiction". Under the second part of sub section (2) of section 11 6 A of the Act, a fiction is created, namely, that though a right of appeal is conferred by section 116 A(1) of the Act, the appeal thereunder for the purpose of sub section (2) will be deemed to be an appeal from an original decree passed by a civil court situated within the local limits of its civil apPellate jurisdiction. The first part of the sub section describes the purposes for which the fiction is invoked, namely, the exercise of the powers, jurisdiction and authority and the following of the procedure with respect to such an appeal. The powers, jurisdiction and authority take in the powers, jurisdiction and authority exercisable by an appellate tribunal in regard to various matters prescribed in the Code of Civil 151 Procedure. What does the word "procedure" mean? The procedure must necessarily be the procedure governing such an appeal. It means, inter alia, the manner of receiving an appeal in the court, the preparation of records of the appeal, the posting of the appeal and the manner of its disposal. We find it impossible to exclude from the word "procedure" the filing and receiving of an appeal in the court. If that part was excluded, how could the appeal be received in the High Court? The answer given is that the Government might make rules under section 169(1) of the Act. When section 168(2) confers a statutory power on the High Court to follow the procedure prescribed by the Code of Civil Procedure, we ,cannot invoke the general power of the Central Government to make rules under section 169(1) of the Act. If so, the procedure prescribed by 0. XLI of the Code of Civil Procedure, along with the other relevant provisions of the said Code, equally applies to an appeal filed under section 116 A (2) of the Act. The result is that under section 116 A(2) of the Act, the appeal, by fiction, is equated with an appeal filed under the ,Code of Civil Procedure in the matter of not only the exercise ,of the powers, jurisdiction and authority but also in the matter ,of procedure to be followed from the date of receipt of the :appeal to its final disposal. For the aforesaid reasons, I hold that the special law, namely, the Act, prescribes a period of limitation different from the period prescribed therefor by the First Schedule to the Limitation Act within the meaning of article 29 (2) of the Limitation Act. If so, section 12 of the Limitation Act is attracted, and the 1st respondent was entitled to exclude the time taken by him for obtaining the copy of the order. Even assuming that article 156 of Schedule 1 to the Limitation Act did not prescribe a period of limitation for the kind of appeal under consideration, the question arises whether sub section (2) of section 29 of the Limitation Act would not be appli cable if no period was prescribed by the First Schedule for an appeal created by a special law but the special law pres cribed a period of limitation for the same. The history of this provision throws some light on this question. The first Limitation Act was passed in the year 1859 (Act XIV of 1859). Section 3 of that act provided: 152 "When, by any law now or hereafter to be in force, a shorter period of limitation than that prescribed by this Act is specially prescribed for the institution of a particular suit, such shorter period of limitation shall be applied notwithstanding this Act. " The provisions of the Act of 1859 were repealed by the Limi tation Act IX of 1871. Section 6 of that Act, which is relevant to the present inquiry, read: "When, by any law not mentioned in the schedule hereto annexed, and now or hereafter to be in force in any part of British India, a period of limitation differing from that prescribed by this Act is especially prescribed for any suits, appeals or applications, nothing herein contained shall affect such law." The Limitation Act of 1871 was replaced by Act XV of 1877. Section 6 of this Act read: "When, by any special or local law now or hereafter in force in British India, a period of limitation is especially prescribed for any suit, appeal or application, nothing herein contained shall affect or alter the period so prescribed." The same provision was retained in the Limitation Act IX of 1908, but it was amended in the year 1922 in the present form. Before the amendment of 1922, there was a difference of view on the following questions, namely, (1) whether the general provisions of the Limitation Act, where the word "prescribed" alone without reference to any Act, was used or even where that word was not used, would be applicable to special or local laws, and (2) whether the general provisions of the Limitation Act did not apply at all to the periods of limitation prescribed by special or local laws. Decisions holding that the general provisions of the Limitation Act did not apply to periods of limitations prescribed by other laws relied upon the expression "affect or alter" used in the section as it then stood. Section 29 of the Limitation Act was amended to remove the conflict with a view to make the 153 general provisions applicable to the period of limitation prescribed by special or local laws. A comparison of the phraseology of the earlier sections shows that while section 3 of the Limitation Act of 1859 used the words "shorter period", section 6 of the Act of 1871 used the expression "differing", and section 6 of the Acts of 1877 and 1908 removed both the expressions. The result was that section 6 of the Act of 1871 saved all the special or local laws which prescribed a special period of limitation from the operation of the provisions of the Limitation Act. As the section then stood, it applied to all special or local laws prescribing a ,period of limitation whether the Limitation Act prescribed any period of limitation or not for suits or appeals similar to those governed by special or local laws, or where the period of limitation so prescribed by special or local laws was shorter or longer than that prescribed in the Limitation Act. Can it be said that by the Amending Act of 1922, a conscious departure was made by the Legislature to impose a condition for the application of sub section (2) of section 29, namely, that a period of limitation should have been expressly prescribed by the First Schedule to the Limitation Act in respect of a suit or appeal governed by the special or local law? There was no occasion for such a departure. To put it in other words, apart from resolving the conflict, did the Legislature intend to exclude a particular category of proceedings governed by special or local laws from the operation of the benefit conferred by sub section (2) of section 29? No justification was suggested for such a departure and we find none. The problem may be approached from a different perspective. The scheme of the Limitation Act may be briefly stated thus: The preamble to the Act shows that it was passed to consolidate and amend the laws relating to the law of limitation in respect of the proceedings mentioned in the Act. It applies to the whole of India. Part 11 comprising sections 3 to 11 deals with limitation of suits, appeals and applications; Part III comprising sections 12 to 25 provides for computation of periods of limitation; and Part V deals with savings and repeals. We are not concerned with Schedules II and III for they have been repealed. The First Schedule consists of three divisions: the first division provides for the period 154 of limitation for suits; the second division, for appeals; and the third division, for applications. Article 120 found in the first division prescribes for a suit for which no period of limitation is prescribed elsewhere in the Schedule; article 181 in the third division prescribes for application for which no period of limitation is prescribed elsewhere in the Schedule or by section 48 of the Code of Civil Procedure. But no such residuary article is found in the second division dealing with appeals. The Limitation Act was conceived to be an exhaustive code prescribing for every conceivable proceeding, whether suit, appeal or application, subject to the saving in Part V thereof. It follows that there is no period of limitation for an appeal not provided for in the second division unless the special or local law prescribes for it. If so, it may reasonably be said that, as the First Schedule of the Limitation Act prescribes no limitation for an appeal not covered by articles 150 to 157 thereof, under the Limitation Act such a suit or appeal can be filed irrespective of any time limit. With this background let us revert to the construction of section 29(2) of the Limitation Act. When the First Schedule of the Limitation Act prescribes no time limit for a particular appeal, but the special law prescribes a time limit to it, can it not be said that under the First Schedule of the Limitation Act an appeal can be filed at any time, but the special law by limiting it provides for a different period? While the former permits the filing of an appeal at any time, the latter limits it to the prescribed period. It is, therefore, different from that prescribed in the former. 'This problem was considered by a Division Bench of the Bom bay High Court, consisting of Chagla C.J., and Gajendra gadkar J., in Canara Bank Limited, Bombay vs The Warden Insurance Company, Ltd., Bombay(1). Therein, Chagla C.J., speaking for the Court, observed at p. 1086 thus: "The period of limitation may be different under two different circumstances. It may be different if it modifies or alters a period of limitation fixed by the first Schedule to the Limitation Act. It may also be different in the (1) I. L. R. 155 sense that it departs from the period of limitation fixed for various appeals under the Limitation Act. If the first Schedule to the Limitation Act omits laying down any period of limitation for a particular appeal and the special law provides a period of limitation, then to that extent the special law is different from the Limitation Act. We are conscious of the fact that the language used by the Legislature is perhaps not very happy, but we must put upon it a construction which will reconcile the various difficulties caused by the other sections of the Limitation Act and which will give effect to the object which obviously the Legislature had in mind, because if we were to give to section 29 (2) the meaning which Mr. Adarkar contends for, 'then the result would be that even section 3 of the Limitation Act would not apply to this special law. The result would be that although an appeal may be barred by limitation, it would not be liable to be dismissed under section 3". A Full Bench of the Allahabad High Court, in Sehat Ali Khan vs Abdul Qavi Khan(1) also dealt with this question. The learned Judges expressed conflicting views. Mootham C.J., assumed that the first limb of the sub section ,did not apply to a case where the schedule omitted to provide for a period of limitation. On that assumption he proceeded to consider the second limb of the sub section. DayalJ. took the view that for the application of the first part of s.29(2) the period of limitation should have been prescribed by the First Schedule. Agarwala J., agreed with the view of the Bombay High Court. Bhargava J., agreed with the view expressed by Mootham C.J., and Upadhya J., did not agree with the view of the Bombay High Court. A Division Bench of the Madhya Pradesh High Court in Beharilal Chaurasiya vs Regional Transport Authority (2) (1) I. L.R. (1956) 2 All. 252. (2) A. 1. R. 1961 M. P. 75,77. 156 agreed with the view expressed by the Division Bench of the Bombay High Court. Dixit C.P., speaking for (the Court, stated thus: "A special law may provide a period of limitation and schedule I may omit to do so. None the less the special law would be different from the Limitation Act. Section 29 (2) of the Limitation Act is not very happily worded. It must be construed so as to avoid absurdity. The, expression 'a period of limitation different. from the period prescribed therefor by the first schedule ' occurring in section 29 (2) cannot be construed as meaning that schedule 1 must also positively prescribe the period of limitation. Such a construction would not be in accordance with the intention of the Legislature and would lead to an absurdity. " The learned Chief Justice proceeded to consider the ano malous position that would arise if a literal construction was given to the provisions of the first part of the section. This Court, in Kaushalya Rani vs Gopal Singh (1), had to. consider this question incidentally in the context of the application of section 29(2) of the Limitation Act to an application for special leave to appeal against an order of acquittal under sub section (3) of section 417 of the Code of Criminal Procedure. This Court held that section 5 of the Limitation Act would not apply to an application for special leave to appeal under sub section (3) of section 417 of the Code of Criminal Procedure. The Limitation Act does not provide any period of limitation for an application for special leave to appeal from an order of acquittal under the said section. If that be so, on the argument of learned counsel for the appellant, section 29 of the Limitation Act could not be invoked. But this Court held that section 29(2) of the Limitation Act applied, but that section excluded the application of section 5 to the said application. Sinha C.J., speaking for the Court, observed: "Hence it may be said that there is no limitation prescribed by the Limitation Act for an (1) A. I. R. 157 appeal against an order of acquittal at the instance of a private prosecutor. Thus, there is a difference between the Limitation Act and the rule laid down in section 417 (4) of the Code in respect of limitation affecting such an application. Section 29(2) is supplemental in its character in so far as it provides for the application of section 3 to such cases as would not come within its purview but for this provision." 'This observation clearly supports the position that section 29(2) would apply even to a case where a difference between the special law and the Limitation Act arose by the omission to provide for a limitation to a particular proceeding under the Limitation Act. 1, therefore, hold that in the instant case the Act provides a period of limitation different from that prescribed therefor by the First Schedule to the Limitation Act and, therefore, it is governed by section 29(2) of the said Act. Even if my view on the construction of the first limb of section 29 of the Limitation Act were wrong, it would not help the appellant, for his case squarely falls within the scope of the second limb of the section. , For convenience I restate the relevant part of the section: ". . . and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or focal law. " Learned counsel for the appellant relied upon the conjunc tion "and" in support of his contention that the use of that conjunction makes the following sentence a limitation on the first part of the section. He further argues that if it is not a limitation but an independent clause, it will lead to the anomaly of sections 4 to 25 of the Limitation Act applicable to proceedings failing under the first part and only some of the provisions thereof, namely, sections 4, 9 to 18 and 22 apply ing to the second part of the section. Apart from the grammatical construction, which I will consider presently, I do not see any anomaly in sections 4 to 25 of the Limitation Act applying to the first part of the section and only some of 158 them applying to the second part thereof. Those proceedings to which the first part applies, by fiction the period prescribed in the special or local law is treated as prescribed in the First Schedule itself. There cannot possibly be any reason why section 3 of the Limitation Act in toto shall not apply to them. But the same cannot be said in the case of the proceedings of a different type not provided for in the First:Schedule. So, the Legislature specified the sections applicable tothem and excluded the general sections which relate tolegal disabilities, acknowledgements, part payments and others specified therein. The Legislature may_ have thought that such articles are not generally appropriate to proceedings under special or local laws for reliefs not provided for in the First Schedule. Now, coming to the construction of the section, the relevant rule of construction is well settled. "A construction which will leave without effect any part of the language of a statute will normally be rejected"; or to put it in a positive form, the Court shall ordinarily give meaning to every word used in the section. Does the conjunction "and" make the following clause a limitation on the preceding one? No rule of grammatical construction has been brought to our notice which requires an interpretation that if sentences complete by themselves are connected by a conjunction, the second sentence must be held to limit the scope of the first sentence. The conjunction "and" is used in different contexts. It may combine two sentences dealing with the same subject without one depending upon the other. But, if the interpretation suggested by the learned counsel be accepted, we would not be giving any meaning at all to the word "any" used thrice in the second part of the section, namely "any period", "any suit" and "any special or local law". If the second part is a limitation on the first part, the sentence should read, "for the purpose of determining the period of limitation prescribed for such suit, appeal or application by such special or local law." Instead of that, the use of the word "any" clearly demonstrates that the second. part does not depend upon the first part or vice versa. There is no reason why we should attribute such a grammatical deficiency to the legislature when every word in the second part of 159 the section can be given full and satisfactory meaning. I would, therefore, hold that the second part is an independent provision providing for the aforesaid category of proceedings to which the first part does not apply. This is the view expressed by the majority of the judges of the Full Bench of the Allahabad High Court in Sehat Ali Khan vs Abdul Qavi Khan(1). I agree with the same. It was then said that section 116 A of the Act provided an exhaustive and exclusive code of limitation for the purpose of appeals against orders of tribunals and reliance is placed on the proviso to sub section (3) of that section, which reads: "Every appeal under this Chapter shall be preferred within a period of thirty days from the date of the order of the Tribunal under section 98 or section 99. Provided that the High Court may entertain an appeal after the expiry of the said period of thirty days if it is satisfied that the appellant had sufficient cause for not preferring the appeal within such period. " The contention is that sub section (3) of section 116 A of the Act not only provides a period of limitation for such an appeal. but also the circumstances under which the delay can be excused, indicating thereby that the general provisions of the Limitation Act are excluded. There are two answers to this argument. Firstly, section 29(2)(a) of the Limitation Act speaks of express exclusion but there is no express exclusion in sub section (3) of section 116 A of the Act; secondly, the proviso from which an implied exclusion is sought to be drawn does not lead to any such necessary implication. The proviso has become necessary, because, if the proviso was not enacted. section 29(2)(b) of the Limitation Act would have excluded the operation of section 5 of the Limitation Act, with the result that even if a sufficient cause for the delay existed, the High Court would have been helpless to excuse the delay. 1, therefore, hold that the proviso to sub section (3) of section 116 A of the Act only restores the power denied to the court under section 29(2)(b) of the Limitation Act. 1) I. L. R. [1956] 2 All. 160 Lastly, it is contended that section 12(2) of the Limitation Act, on its express terms, would not apply to an appeal to the High Court against an order of the Election Tribunal under section 98 of the Act. Elaborating the argument it is said that in order to exclude the time for obtaining a copy of the order appealed against, the original shall be a decree or order within the meaning of section 12(2) or judgment within the meaning of section 12(3) of the Limitation Act and the order under section 98 of the Act is neither a decree nor an order or a judgment within the meaning of the said sub sections of section 12 of the Limitation Act. Reference is made to the defini tions of decree, judgment and order in sub sections (2), (9) and (14) of section 2 of the Code of Civil Procedure, respectively, and it is contended that the order under section 98 of the Act does not fall under any of the said three expressions as defined therein. Under sub section (9) of section 2 of the Code of Civil Procedure, "judgment" is defined to mean the statement given by the judge of the grounds of a decree or order. Sub section (14) of section 2 of the said Code defines "order" to mean the formal expression of any decision of a civil court which is not a decree. It follows from the said definitions that judgment is a statement of the reasons given by the judge and order is the formal expression of his decision. Section 104 of the said Code says, "An appeal shall lie from the following orders, and save as otherwise expressly provided in the body of this Code or by any law for the time being in force, from no other orders. " Order XX of the Code deals with the manner of pronouncing a judgment and decree. Under 0. XX, r. 20, of the Code, "Certified copies of the judgment and decree shall be furnished to the parties on application to the Court, and at their expense." Under section 141 of the Code, "The procedure provided in this Code in regard to suits shall be followed as far as it can be made applicable, in all proceedings in any court of civil jurisdiction". The effect of these provisions is that a decree is a formal expression of adjudication conclusively determining the rights of parties with regard to all or any of the controversies in a suit, whereas order is a formal expression of any ,decision of a civil court which is not a decree. Judgment is a statement given by the judge of his grounds in respect of ,a decree or order. Ordinarily judgment and order are en 161 grossed in two separate documents. But the fact that both are engrossed in the same document does not deprive the statement of reasons and the formal expression of a decision of their character as judgment or order, as the case may be. With this background let me look at the provisions of s.116 A of the Act. Under sub section (1) thereof, an appeal shall lie from every order made by a Tribunal under section 98 or section 99 to the High Court of the State in which the Tribunal is situated. Under section 98 of the Act, "At the conclusion of the trial of an election petition the Tribunal shall make an order (a) dismissing the election petition;or (b) declaring the election of all or any of the returned candidates to be void; or (c)declaring the election of all or any of the returned candidates to be void and the petitioner or any other candidate to h ave been duly elected. " Part VI of the Act provides for disputes regarding elections , Ch. III thereof prescribes the procedure for the trial of election petitions, and section 90 therein says: "(1)Subject to the provisions of this Act and of any rules made thereunder, every election petition shall be tried by the Tribunal, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure, 1908, to the trial of suits. " There is noprovision in the Act defining how the decision should be given. It could not have been the intention of the Legislature that the Tribunal need not give the statement of reasons for its decision. As under section 90 of the Act the Election Tribunal is directed to try election petitions as nearly as may be in accordance with the pro cedure applicable under the Code of Civil Procedure, it is the duty of the Election Tribunal to give a statement of reasons for its decision. It is open to it to issue two documents one embodying the reasons for the decision and the 134 159 S.C. 11. 162 other, the formal expression of its decision: the former will be its judgment and the latter, its order. It may issue both in the same document in which case the judgment as well as the order is embodied in the same document. If so it is manifest that an order made under section 98 of the Act, if it contains also the reasons for it, is a composite document ,satisfying the definition of a judgment as well as that of an ,order and thereby attracting the relevant provisions of section 12 of the Limitation Act. That apart, a different approach to the question raised leads to the same conclusion. Section 12(2) of the Limitation Act does not say that the order mentioned therein shall be only such order as defined in the Civil Procedure Code. If a statute provides for the making of can order and confers a right of appeal to an aggrieved party against that order within a prescribed time, sub section (2) of section 12 of the Limitation Act says that the time requisite for obtaining a copy of such order shall be excluded. The Act em powers the Tribunal to make an order and gives a right of appeal against that order to the High Court. Section 12(2) of the Limitation Act is, therefore, directly attracted without any recourse to the definition of an order in the Code of Civil Procedure. In either view, section 12 of the Limitation Act applies and, therefore, the time taken for obtaining a copy ,of the said order shall be excluded in computing the period ,of limitation. In the result, the appeal fails and is dismissed with costs. RAGHUBAR DAYAL J. I agree that the appeal be dismissed, but for different reasons. I am of opinion that the first part of section 29(2) of the Limi tation Act applies only when a special or local law prescribes a period of limitation for an appeal and when for that particular appeal a period of limitation is prescribed in the First Schedule to the Limitation Act, as omission to prescribe a period of limitation cannot be equated with the prescribing ,of any positive period of limitation within which the appeal should be filed, and that the second part of section 29(2) of the Act is independent of the first part and can apply to cases to which the first part does not apply. I am also of ,opinion that article 156 of the First Schedule applies to appeals 163 which are instituted in view of the right of appeal conferred by any special or local law and not in pursuance of the provisions of section 96 C.P.C. I do not elaborate my views as I agree with what my learned brother Mudholkar J., has said in construing the first part of section 29 (2) of the Limitation Act and article 156 of the First Schedule and agree with my learned brother Ayyangar J., with respect to his construction of the second part of section 29(2). The proviso to section 116(a) of the Representation of the People Act gives discretion to the High Court to entertain an appeal presented after the expiry of 30 days from the date of the order of the Tribunal in case it is satisfied that there is sufficient cause for the late presentation of the memorandum of appeal. The respondent has applied in this Court for the condonation of the delay in filing the appeal in the High Court. In the circumstances of the case, I consider it a fit case for condoning the delay. There was a difference of opinion in the High Courts regarding the applicability of section 12 of the Limitation Act to such appeals. The delay was of a few days. The Election Tribunal passed the order on January 5, 1963 and the appeal was filed on February 11, 1963. A party can reasonably desire to obtain a copy of the judgment for deciding, after studying it, whether it is worthwhile appealing against it, and if so. on what grounds. I am satisfied that there was sufficient cause for the respondent 's not presenting the appeal within the period of limitation. I therefore condone the delay and confirm the order of the High Court. MUDHOLKAR J. While I agree with my brother Subba Rao J. that the appeal should be dismissed, I regret my inability to agree with all the reasons which he has given. I need not recapitulate the facts which have been set out fully in the judgment prepared by my learned brother but I would only state the point which we have to consider in this appeal. The point is whether for the purpose of computing the period of 30 days prescribed by section 116A(3) of 164 the Representation of the People Act, 1951 under which an appeal can be preferred from the decision of the Election Tribunal, the provisions of section 12, sub section (2) of the Limita tion Act, whereunder the time requisite for obtaining a copy of the decree and the day on which the judgment complained of was pronounced can be excluded can be pressed in aid. It was contended before us that the appeal should be deemed to be one under the Code of Civil Procedure, in which case it would fall under article 156 of the First Schedule to the Limi tation Act, and that though a shorter period of limitation is prescribed for it by the Representation of the People Act the provisions of section 12(2) of the Limitation Act would be attracted by reason of the provisions of cl. (a) of section 29(2). Reliance was ;)laced in this connection on the first limb of section 29(2). Alternatively it was argued that the first limb of section 29, sub section (2) of the Limitation Act would also apply to an appeal under the Representation of the People Act even though it does not fall under article 156 of the Limitation Act since a different period of limitation was prescribed for it from that prescribed for an appeal in the First Schedule of the Limitation Act and that, therefore, cl. (a) thereof would attract section 12(2) of the Limitation Act. Finally it was argued that even if the appeal cannot be regarded as one falling within the first limb of section 29(2) sub section (2) of section 12 would still apply because the second limb of sub section (2) of section 29 is wide enough in its ambit to include a suit, appeal or application for which no period of limitation is prescribed in the first schedule but a period of limitation has been prescribed by a special or local law. My learned brother has held in his: judgment that an appeal provided for by section 116A of the Representation of the People Act would be an appeal underthe Code of Civil Procedure and thus fall under the first column of article 156 of the First Schedule of the Limitation Act. He has also held that the words "where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed therefor by the first schedule" occurring in the first limb of sub section (2) of section 29 would include a suit or an appeal ' even though it is not of a type for which a period of limitation is prescribed in the First Schedule because it is enough if the special law prescribes for such an appeal a period 165 which is different from any period prescribed in the First Schedule. I regret I am unable to agree with either of these views. Finally, however, my learned brother has construed the second limb of sub section 2 of section 29 "and for the purpose of ,determining any period of limitation prescribed for any suit, appeal or application by any special or local law" as being wide enough to include a suit, appeal or an application under a special or local law which is of a type for which no period of limitation is prescribed in the First Schedule. With this last conclusion I agree. In my judgment what he has said on the last point is enough for the purpose of disposing of the appeal in the way proposed by him. As, however, I do not agree with what he has said on the first two points I must briefly indicate my reasons for coming to different conclusions. In support of the conclusion that article 156 applies, my learned brother has relied upon the decision in Aga Mahomed Hamadani vs Cohen (1) which was followed by the Madras High Court in Ramasami Pillai vs the Deputy Collector of Madura(1). The first of these two cases was one from what was then British Burma. Under section 49 of the Burma Courts Act, 1875 (XVII of 1875) an appeal Jay to the High Court from the decision in a suit or proceeding before the Recorder 's Court in which the amount or value was not less than Rs. 3,000 and was not more than Rs. 10,000. Section 97 of that Act said: "save as otherwise provided by this Act, the Code of Civil Procedure shall be, and shall, on and from the 15th day of April, 1872, be deemed to have been in force throughout British Burma. " Section 540 of the Code of Civil Procedure, 1882 which was in force at that time read thus: "Unless when otherwise expressly provided by this Code or by any other law for the time being in force, an appeal shall lie from the decrees or from any part of the decrees of the Courts exercising original jurisdiction to the Courts authorised to hear appeals from the decisions of those courts." (1) (1886) 1. L. R. (2) (1919) 1. L. R. 166 The question which the High Court had to consider in that case was whether the appeal could be said to be in time as it fell to be governed by article 156 of the First Schedule to the Limitation Act. For deciding this matter the High Court proceeded to consider what was meant by an appeal under the Code of Civil Procedure. While dealing with the matter the High Court observed: "A particular appeal was given by the Burma Courts. Act and the Burma Courts Act is still the only Act which prescribes to what Court this appeal shall lie. If it had not been given by the Burma Courts Act then section 540 of the Civil Procedure Code would have been sufficient to give it. provided that some Court was by some enactment provided as the proper Court to hear the appeal. The procedure in appeals in every respect is governed by the Code of Civil Procedure. The Limitation Act, Sch. 1, article 156 when it speaks of the Civil Procedure Code is, on the face of it, speaking of a Code which relates to procedure, and does not ordinarily deal with substantive rights: and the natural meaning of an appeal under the Civil Procedure Code appears to us to be an appeal governed by the Code of Civil Procedure so far as procedure, is concerned. " Referring to this, my learned brother has observed: "It is manifest from this passage that the learned judges did not repel the contention on the ground that the right of appeal was conferred by section 540 of the Code of Civil Procedure, but expressely for the reason that the natural meaning of the relevant expression in article 156 of Sch. 1 of the Limitation Act was that the appeal mentioned therein was one governed by the Code of Civil Procedur e." That is true. It is, however, not material for my purpose to consider whether or not the High Court was right in hold ing that the appeal before it was under the Burma Courts 167 Act. I would assume that the High Court was right but it is necessary to point out that the provisions of section 29 of the Limitation Act as then in force did not come for considera tion in that case. The question would then be whether its view that an appeal, though not provided by the Code of Civil Procedure, would yet be deemed to be an appeal under the Code for the purpose of article 156 of the Limitation Act,,, was right. With respect I do not think that there was any warrant for holding that an appeal which was not given by, the Code would still be one under the Code merely because the procedural provisions thereof would govern its course . Where the right of appeal is given by some other law, the appeal must be regarded as one under that law and not under the Code. I see no valid reason for construing the words 'under the Code of Civil Procedure ' as meaning 'governed in the matter of procedure by the Code of Civil Procedure '. For, that is, in effect, what the High Court has done in this case. By reading the article in the way it has done the High Court has virtually construed the only provision in the Limitation Act dealing with normal civil appeals; to the High Court as a residuary article which would take in all appeals by whatever law they may be provided, merely because the procedure relating to appeals contained in the Code of Civil Procedure was applicable to them. This would in my judgment go against the plain intended of the Legislature. Indeed, while a right to institute a suit or make an application is a wider kind of right. there can be no right of appeal unless some statute confers it. That is why the Legislature has expressly enacted residuary provisions, articles 120 and 180, for suits and applications respectively in the Limitation Act. The First Schedule is divided into three divisions. Article 156 is one of the eight article& contained in the second division which deals with appeals. The first division of that schedule deals with suits. There, provision is made for a variety of suits including some under special laws. but it was realised that it could not be exhaustive. Therefore, article 120 was provided therein, which deals with "Suits for which no period of limitation is provided elsewhere in this schedule. " The third division of the First Schedule deals with applications of different kinds. Article 181 makes provision for applications for which no 168 period of limitation is prescribed elsewhere in the Schedule. In the second division, however, which deals with appeals, there is no provision analogous to article 120 and article 181. Four of the eight articles deal with appeals under the Code of Criminal Procedure and four with appeals other than those under the Code of Criminal Procedure. As already stated, only one of these articles deals with normal civil appeals to the High Court, namely, article 156. It is not couched in language similar to that used in article 120 and article 181. Would we then be justified in reading the first column of article 156 to mean the same thing as is said in the first column of articles 120 or 181? The Legislature knew that appeals have been provided by various special laws; but it made no provision for such appeals in this Schedule appa rently for the reason that a law which confers a right of appeal is expected to provide for the period of limitation for such an appeal. That seems to be the explanation for the absence of a residuary provision for appeals. The first difficulty, therefore, in interpreting article 156 in the way contended for by the respondents is that where a different period of limitation for appeal is expressly pro vided by a special law article 156 will not in terms be attracted. To bring such an appeal under it would clearly go against the express intention of 'the Legislature which was to confine that article to appeals under the Code of Civil Procedure. The next difficulty is that the entry deals with appeals "under" the Code of Civil Procedure and not appeals arising out of proceedings to which the Code of Civil Procedure applies. Nor again, does it include an appeal which is only deemed to be under the Code of Civil Procedure. Be it noted that so far as proceedings under the Representation of the People Act are concerned, the whole of the Code of Civil Procedure does not apply but only so much of it as is expressly made applicable by the provisions of the Representation of the People Act. It was said that if the provisions of 0. XLI, of the Code of Civil Procedure were not applicable to an appeal under the Representation of the People Act there would be no provision whereunder the party could at all file an appeal. It seems to me, however, that there can be no difficulty at all in this matter as every 169 High Court has made rules partly under the Constitution and partly in exercise of its inherent power to make suitable provisions in regard to this and allied matters. The Calcutta High Court, however, does not appear to have given ,the full consideration in Cohen 's case(1) to the ambit of article 156 and that is another reason why I find myself unable to accept the correctness of the view it has taken in that case. It was then said that the view should be accepted on the ground of stare decisis. In this connection it was pointed out thatso far no court has dissented from that view and indeed theview was fully accepted in Ramasami Pillai 's .case(1) bythe Madras High Court. In so far as the principle of stare decisis is concerned it is nothing more 'than,. as observed by Dowrick in Justice According to the English ,Common Lawyers (1961 ed. p. 195), a precipitate of the notion of legal justice. In other words it is the principle that judicial decisions have a binding character. But in India the position is not quite the same. Here the decision of a High Court is not even always binding upon it in the sense that it can be reconsidered by a Full Bench. No doubt its decision may bind all courts subordinate to it as also all Judges sitting singly or in division benches of the High Court. It is also true that a decision of a Division Bench of a High Court is binding on every other Division Bench of that High Court but there again there have been cases where one Full Bench has reconsidered the decision of an earlier Full Bench. In any case the decision of a High Court has no more than persuasive character in so far as this 'Court is concerned. In that view the decision of the Calcutta High Court, even though it may not have been dissented from since the time it was rendered, cannot, in the proper sense of the term be regarded as stare decisis. What could be stare decisis in this Court would be its own previous ,decisions. But even here instances are not wanting where, unlike perhaps the House of Lords, we have considered ourselves free to go back on previous decisions. (See The Bengal Immunity Company Limited vs The State of Bihar ors. 3 Finally, even where a decision has not been (1) Cal. 221 (2) Mad. 51 (3) 170 dissented from for a long time, but has on the other hand been followed, it is not entitled to be treated as immutable, particularly where it deals only with a question appertaining to the adjective law, such as the law of limitation. There may be a great deal to be said in favour of not disturbing even erroneous decisions affecting substantive rights to property which have stood undisturbed for a long time on the ground that such a course may unsettle existing titles to property. But this or similar considerations which would justify leaving such decisions undisturbed would not stand in the way of overruling an erroneous decision on a matter appertaining to the adjective law however ancient the decision may be(1). Therefore, I do not feel myself persuaded to hold that the present appeal can be regarded as of a type falling within the first column of article 156 of the First Schedule to the Limitation Act. In order to deal with the second ground given by my learned brother it is necessary to reproduce the provisions of section 29, sub section (2) of the Limitation Act. They run thus: "Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed therefor by the First Schedule, the provisions of section 3 shall apply, as if such period were prescribed therefor in that Schedule, and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law . (a) the Provisions contained in section 4., sections 9 to 18, and section 22 shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law; and (b) the remaining provisions of this Act shall not apply." (1) See Allen, Law in the, making (5th edn.) p. 209 fn. 3 171 While expressing the view that the legislature has not ex pressed itself happily while enacting this provision he has agreed with the view taken in Canara Bank Ltd. vs The Warden Insurance Co., Ltd., Bombay(1), which was followed by the High Court of Madhya Pradesh in Beharilal Chaurasiya vs Regional Transport Authority(1). In that case the Bombay High Court has held that article 156 is attracted on the ground that the period provided by the special law is different from that contained in the First Schedule. With great respect to the learned Judges, I find it difficult to strain the language used in the first limb of section 29 (2) in this manner. The legislature has in clear terms spoken of cases in which a special or local law has prescribed for a suit, appeal or an application a period of limitation "different" from that prescribed by the First Schedule. Now, the governing words are "suit, appeal or application". Therefore, what has to be seen is whether a suit, appeal or application under a particular local or special law is of a kind similar to one for which a period of limitation is prescribed in the First Schedule. The first limb of sub section (2) of section 29 is concerned only with proceedings of this kind, that is, proceedings under special or local law for which a period of limitation is provided in the First Schedule. If for such a proceeding the period to be found in the First Schedule is different from that prescribed under a special or local law certain consequences will follow under the provision. I do not think that any inconvenience would be caused by giving literal and natural interpretation to the expression used by the legislature in the first portion of sub section (2) of section 29 because cases of other kind can easily come under the second portion thereof. Since I agree with my learned brother about what he has said regarding the second limb of sub section (2) of section 29 the aapeal must be dismissed with costs as proposed by him. (1) I. L. R. Appeal dismissed. (2) A.I.R. 1961 M. P. 75.
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The person elected to the House of the People was from Madhya Pradesh. The people who ran against him were the other candidates. One of those candidates filed a legal challenge to the election. The Election Tribunal dismissed that challenge. The first candidate then appealed to the High Court, using a law called the Representation of the People Act from 1951. The appeal was filed more than 30 days after the Tribunal's order. If the time it took to get a copy of the Tribunal's order was taken out, the appeal was filed within 30 days. But if that time wasn't taken out, the appeal was too late. The elected person argued that the candidate couldn't legally take out the time to get the order copy. The High Court disagreed with the elected person. The High Court also said the elected person had done two illegal things to win, so they cancelled his election. The elected person then went to the Supreme Court. The only question for the Supreme Court was whether the 30-day deadline could be extended by the time it took to get the order copy. This relates to a section of the law called the Limitation Act. The Supreme Court dismissed the appeal and decided: (according to several judges) (i) You can take out the time to get the order copy when figuring out the deadline for filing the appeal. (According to some of the judges) (ii) Even though the right to appeal comes from the Representation of the People Act, it's still like an appeal "under the Code of Civil Procedure" to the High Court. The appeal doesn't have to be given by the Code of Civil Procedure itself. It's enough if the way the appeal is filed and how the court handles it are based on the Code. (According to other judges) Just because the Code of Civil Procedure guides the process doesn't mean an appeal not given by the Code is still "under" it. If another law gives the right to appeal, it's an appeal under that law, not the Code of Civil Procedure. There's no reason to think that "under the Code of Civil Procedure" just means "guided by the Code of Civil Procedure." (iii) (according to some judges) The whole section of the Limitation Act about this has to be read together. To use a certain part of it, you have to meet the conditions of the first part. (According to other judges) Another part of the section is broad enough to include cases under special laws where the usual time limit doesn't apply. The word "any" shows that the two parts of the section are independent of each other. The second part covers cases that the first part doesn't. (i) The law about elections doesn't completely cover all the rules for appeals. It also doesn't prevent using the general rules of the Limitation Act. The Limitation Act requires a clear statement to prevent its rules from being used. There's no such clear statement in the election law. The added part to the election law that some people think prevents using the Limitation Act doesn't actually do that. It just gives the Court back a power that another part of the Limitation Act would have taken away. Without this added part, the High Court couldn't excuse a delay, even if there was a good reason for it. (ii) A section of the Limitation Act applies to appeals to the High Court about Tribunal orders. An order that also includes the reasons for it counts as both an "order" and a "judgment," so the relevant parts of the Limitation Act apply. The Limitation Act doesn't say that the "order" has to be defined by the Civil Procedure Code. If a law lets someone make an order and gives someone the right to appeal that order within a certain time, the time it takes to get a copy of the order can be taken out. The election law lets the Tribunal make orders and gives the right to appeal to the High Court, so the relevant section of the Limitation Act applies directly. (According to one judge) The first part of the section only deals with cases under special laws where there's a usual time limit. If that time limit is different from the one in the special law, some things will happen. There's no problem in reading the first part of the section literally, because other cases can easily fit under the second part. Case law was referred to.
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There were three principal points that were urged before us on either side which require to be considered and all of them turn on the proper construction of section 29(2) of the Indian Limitation Act which we shall for convenience set out here: "29(2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed therefor by the first schedule, the provisions of section 3 shall apply, as if such period were prescribed therefor in that schedule, and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law (a) the provisions contained in section 4, sections 9 to 18, and section 22 shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law; and 133 (b) the remaining provisions of this Act shall not apply." The contention urged strenuously before us by Mr. Pathak, the learned counsel for the appellant, was that there would be "a different period" only where for the identical appeal (to refer only to that proceeding with which we are immediately concerned) for which a period of limitation has been prescribed by the special or local Law, a period is prescribed by first column of the first schedule. The argument was that though the right of appeal in the case before us was conferred by section 116A of the Representation of the People Act and it was by virtue thereof that the appeal was filed by the respondent to the High Court, it was still an appeal "under the Code of Civil Procedure, 1908, to a High Court. " (1) as well as in Ramasami Pillai vs Deputy Collector of, Madura(1) which followed it the Court held that to attract this article it was not necessary in order to be an "appeal under the Code of Civil Procedure" within the meaning of those words in article 156, that the right to prefer the appeal should be conferred by the Code of Civil Procedure but that it was sufficient if the procedure for the filing of the appeal and the powers of the court for dealing with the appeal were governed by that Code. In this view even on the narrowest construction of the words "different from those prescribed therefor in first schedule" occurring the opening part of section 29(2), the exclusion of time provided for by article 12 of the Limitation Act would be permissible in computing the period of limitation for filing the appeal to the High Court in the case before us. This is followed by the conjunction 'and ' that word by the second part reading "for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law (a) the provisions contained in section 4, sections 9 to 18, and section 22 shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law; and (b) the remaining provisions of this Act shall not apply. " In other words, if the latter construction were adopted for every suit, appeal or application for which a period of limitation was prescribed by a special or local law, the provisions in sections 4, 9 to 18 & 22 would apply unless excluded. The first part reads "where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the first schedule the provision of section 3 shall apply as if that period was prescribed therefor in that schedule. " In other words, if the special or local law prescribed a period of limitation different from that prescribed by the first schedule by the application of the first part of sub section (2), the court is enabled to dismiss suits, appeals and applications filed beyond time. A construction which would lead to this anomalous result cannot be accepted and we, therefore, hold that subject to the construction we have put upon sub section (2) of section 29 both the parts are to be read as one whole and that the words following the conjunction 'and ' "for the purpose of determining any period of limitation" etc. (2)The High Court shall, subject to the provisions of this Act, have the same powers, jurisdiction and authority, and follow the same procedure, with respect to an appeal under this Chapter as if the appeal were an appeal from an original decree passed by a civil court situated within the local limits of its civil appellate jurisdiction. (2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed therefor by the First Schedule, the provisions of section 3 shall apply, as if such period were prescribed therefor in that Schedule, and for the 143 purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law (a) the provisions contained in section 4, section 9 to 18, and section 22 shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law; and (b) the remaining provisions of this Act shall not apply. Section 116 A of the Act confers a right of appeal against an order of the Tribunal under section 98 or section 99 thereof; sub s.(3) thereof prescribes a period of limitation of 30 days for preferring such an appeal. Section 29 of (the Limitation Act attracts, by fiction, the provisions of section 3 thereof to an appeal described in section 29 of the said Act; with the result, the provisions of sub sections (2) and (3) of section 12 of the Limitation Act are attracted thereto; and if those sub sections were attracted in computing the period of limitation prescribed for an appeal the time requisite for obtaining a copy of the decree or order or judgment on which it is founded shall be excluded. Learned counsel for the appellant, therefore, contends that section 29 of the Limitation Act does not apply to an appeal under section 116 A of the Act. The first argument of learned counsel is that for invoking sub s.(2) of section 29 of the Limitation Act the necessary condition is that the First Schedule thereto shall prescribe a period of limitation for an appeal and that a special law shall prescribe for the same type of appeal a different period of limitation and that, as in the 144 present case the First Schedule has not prescribed any period of limitation to an appeal under section 116 A of the Act against an order of the Tribunal, sub section (2) of section 29 of the Act is not attracted. This argument is met by learned counsel for the respondents in two ways, namely, (i) that the First Schedule to the Limitation Act has prescribed a period of limitation for such an appeal, and (ii) that sub section (2) will apply even to a case where the First Schedule to the Limitation Act has not prescribed any period of limitation for an appeal, but a special law prescribed a period of limitation for such an appeal. Has the First Schedule to the Limitation Act prescribed a period of limitation for an appeal against an order of an Election Tribunal under section 98 or section 99 of the Act? Article 156 of the First Schedule to the Limitation Act says that to an appeal under the Code of Civil Procedure, 1908, to a High Court, except in the cases provided for by article 151 and article 153, the period of limitation is 90 days from the date of the decree or order appealed from; and article 151 referred to in article 156 provides for an appeal against a decree or order of any of the High Courts of Judicature at Fort William, Madras, and Bombay, or of the High Court of Punjab in the exercise of its original jurisdiction. It was contended before the Calcutta High Court, as it is now contended before us, that article 156 of Schedule 11 of the Limitation Act did not apply to an appeal under the Burma Courts Act, on the ground that the said appeal was not an appeal under the Code of Civil Procedure. In this context we may also refer to the decision of the Allahabad High Court in Dropadi vs Hira Lal(1) where it is pointed out) that several Indian enactments, for instance, the Succession Act, the Probate and Administration Act, the Land Acquisition Act and the Provincial Insolvency Act, confer rights of appeal and direct the application of the provisions of the Code of Civil Procedure to such appeals, but prescribed no period within which such appeals might be filed, the idea being that article 156 of the Limitation Act would furnish the period of limitation for the filing of such appeals. It is said that the combined effect of these decisions is that the procedure applicable in an appeal against an order made by a civil court under section 476 of the Code of Criminal Procedure is that prescribed by the Code of Civil Procedure whereas the period of limitation is that prescribed for an appeal under the Code of Criminal Procedure. The High Court held that the appeal was filed before he District Judge under section 476 B of the Code of Criminal Procedure and that under article 154 of the Limitation Act it should have been filed within 30 days from the date of the order of the Subordinate court. It will be noticed that no argument was raised in that case that the appeal was governed by the Code of Civil Procedure and, therefore, the appropriate article of the Limitation Act was not article 154, (1) A. Even so, it is contended that under section 116 A(2) of the Act the High Court, though it has the same powers, jurisdiction and authority of an appellate court governed by the Code of Civil Procedure, is not empowered to follow the procedure prescribed under the Code in respect of receiving the appeals. Under that sub section, "The High Court shall, subject to the provisions of this Act, have the same powers, jurisdiction and authority and follow the same procedure, with respect to an appeal under this Chapter as if the appeal were an appeal from an original decree passed by a civil court situated within the local limits of its civil appellate jurisdiction". Under the second part of sub section (2) of section 11 6 A of the Act, a fiction is created, namely, that though a right of appeal is conferred by section 116 A(1) of the Act, the appeal thereunder for the purpose of sub section (2) will be deemed to be an appeal from an original decree passed by a civil court situated within the local limits of its civil apPellate jurisdiction. For the aforesaid reasons, I hold that the special law, namely, the Act, prescribes a period of limitation different from the period prescribed therefor by the First Schedule to the Limitation Act within the meaning of article 29 (2) of the Limitation Act. Even assuming that article 156 of Schedule 1 to the Limitation Act did not prescribe a period of limitation for the kind of appeal under consideration, the question arises whether sub section (2) of section 29 of the Limitation Act would not be appli cable if no period was prescribed by the First Schedule for an appeal created by a special law but the special law pres cribed a period of limitation for the same. Before the amendment of 1922, there was a difference of view on the following questions, namely, (1) whether the general provisions of the Limitation Act, where the word "prescribed" alone without reference to any Act, was used or even where that word was not used, would be applicable to special or local laws, and (2) whether the general provisions of the Limitation Act did not apply at all to the periods of limitation prescribed by special or local laws. The result was that section 6 of the Act of 1871 saved all the special or local laws which prescribed a special period of limitation from the operation of the provisions of the Limitation Act. Can it be said that by the Amending Act of 1922, a conscious departure was made by the Legislature to impose a condition for the application of sub section (2) of section 29, namely, that a period of limitation should have been expressly prescribed by the First Schedule to the Limitation Act in respect of a suit or appeal governed by the special or local law? If so, it may reasonably be said that, as the First Schedule of the Limitation Act prescribes no limitation for an appeal not covered by articles 150 to 157 thereof, under the Limitation Act such a suit or appeal can be filed irrespective of any time limit. When the First Schedule of the Limitation Act prescribes no time limit for a particular appeal, but the special law prescribes a time limit to it, can it not be said that under the First Schedule of the Limitation Act an appeal can be filed at any time, but the special law by limiting it provides for a different period? This Court held that section 5 of the Limitation Act would not apply to an application for special leave to appeal under sub section (3) of section 417 of the Code of Criminal Procedure. 1, therefore, hold that in the instant case the Act provides a period of limitation different from that prescribed therefor by the First Schedule to the Limitation Act and, therefore, it is governed by section 29(2) of the said Act. If the second part is a limitation on the first part, the sentence should read, "for the purpose of determining the period of limitation prescribed for such suit, appeal or application by such special or local law." It was then said that section 116 A of the Act provided an exhaustive and exclusive code of limitation for the purpose of appeals against orders of tribunals and reliance is placed on the proviso to sub section (3) of that section, which reads: "Every appeal under this Chapter shall be preferred within a period of thirty days from the date of the order of the Tribunal under section 98 or section 99. The contention is that sub section (3) of section 116 A of the Act not only provides a period of limitation for such an appeal. 160 Lastly, it is contended that section 12(2) of the Limitation Act, on its express terms, would not apply to an appeal to the High Court against an order of the Election Tribunal under section 98 of the Act. Elaborating the argument it is said that in order to exclude the time for obtaining a copy of the order appealed against, the original shall be a decree or order within the meaning of section 12(2) or judgment within the meaning of section 12(3) of the Limitation Act and the order under section 98 of the Act is neither a decree nor an order or a judgment within the meaning of the said sub sections of section 12 of the Limitation Act. Under section 141 of the Code, "The procedure provided in this Code in regard to suits shall be followed as far as it can be made applicable, in all proceedings in any court of civil jurisdiction". I am of opinion that the first part of section 29(2) of the Limi tation Act applies only when a special or local law prescribes a period of limitation for an appeal and when for that particular appeal a period of limitation is prescribed in the First Schedule to the Limitation Act, as omission to prescribe a period of limitation cannot be equated with the prescribing ,of any positive period of limitation within which the appeal should be filed, and that the second part of section 29(2) of the Act is independent of the first part and can apply to cases to which the first part does not apply. It was contended before us that the appeal should be deemed to be one under the Code of Civil Procedure, in which case it would fall under article 156 of the First Schedule to the Limi tation Act, and that though a shorter period of limitation is prescribed for it by the Representation of the People Act the provisions of section 12(2) of the Limitation Act would be attracted by reason of the provisions of cl. Alternatively it was argued that the first limb of section 29, sub section (2) of the Limitation Act would also apply to an appeal under the Representation of the People Act even though it does not fall under article 156 of the Limitation Act since a different period of limitation was prescribed for it from that prescribed for an appeal in the First Schedule of the Limitation Act and that, therefore, cl. Finally it was argued that even if the appeal cannot be regarded as one falling within the first limb of section 29(2) sub section (2) of section 12 would still apply because the second limb of sub section (2) of section 29 is wide enough in its ambit to include a suit, appeal or application for which no period of limitation is prescribed in the first schedule but a period of limitation has been prescribed by a special or local law. My learned brother has held in his: judgment that an appeal provided for by section 116A of the Representation of the People Act would be an appeal underthe Code of Civil Procedure and thus fall under the first column of article 156 of the First Schedule of the Limitation Act. He has also held that the words "where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed therefor by the first schedule" occurring in the first limb of sub section (2) of section 29 would include a suit or an appeal ' even though it is not of a type for which a period of limitation is prescribed in the First Schedule because it is enough if the special law prescribes for such an appeal a period 165 which is different from any period prescribed in the First Schedule. Finally, however, my learned brother has construed the second limb of sub section 2 of section 29 "and for the purpose of ,determining any period of limitation prescribed for any suit, appeal or application by any special or local law" as being wide enough to include a suit, appeal or an application under a special or local law which is of a type for which no period of limitation is prescribed in the First Schedule. L. R. 166 The question which the High Court had to consider in that case was whether the appeal could be said to be in time as it fell to be governed by article 156 of the First Schedule to the Limitation Act. The question would then be whether its view that an appeal, though not provided by the Code of Civil Procedure, would yet be deemed to be an appeal under the Code for the purpose of article 156 of the Limitation Act,,, was right. By reading the article in the way it has done the High Court has virtually construed the only provision in the Limitation Act dealing with normal civil appeals; to the High Court as a residuary article which would take in all appeals by whatever law they may be provided, merely because the procedure relating to appeals contained in the Code of Civil Procedure was applicable to them. In that case the Bombay High Court has held that article 156 is attracted on the ground that the period provided by the special law is different from that contained in the First Schedule. Therefore, what has to be seen is whether a suit, appeal or application under a particular local or special law is of a kind similar to one for which a period of limitation is prescribed in the First Schedule. The first limb of sub section (2) of section 29 is concerned only with proceedings of this kind, that is, proceedings under special or local law for which a period of limitation is provided in the First Schedule.
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The person elected to the House of the People was from Madhya Pradesh. The people who ran against him were the other candidates. One of those candidates filed a legal challenge to the election. The Election Tribunal dismissed that challenge. The first candidate then appealed to the High Court, using a law called the Representation of the People Act from 1951. The appeal was filed more than 30 days after the Tribunal's order. If the time it took to get a copy of the Tribunal's order was taken out, the appeal was filed within 30 days. But if that time wasn't taken out, the appeal was too late. The elected person argued that the candidate couldn't legally take out the time to get the order copy. The High Court disagreed with the elected person. The High Court also said the elected person had done two illegal things to win, so they cancelled his election. The elected person then went to the Supreme Court. The only question for the Supreme Court was whether the 30-day deadline could be extended by the time it took to get the order copy. This relates to a section of the law called the Limitation Act. The Supreme Court dismissed the appeal and decided: (according to several judges) (i) You can take out the time to get the order copy when figuring out the deadline for filing the appeal. (According to some of the judges) (ii) Even though the right to appeal comes from the Representation of the People Act, it's still like an appeal "under the Code of Civil Procedure" to the High Court. The appeal doesn't have to be given by the Code of Civil Procedure itself. It's enough if the way the appeal is filed and how the court handles it are based on the Code. (According to other judges) Just because the Code of Civil Procedure guides the process doesn't mean an appeal not given by the Code is still "under" it. If another law gives the right to appeal, it's an appeal under that law, not the Code of Civil Procedure. There's no reason to think that "under the Code of Civil Procedure" just means "guided by the Code of Civil Procedure." (iii) (according to some judges) The whole section of the Limitation Act about this has to be read together. To use a certain part of it, you have to meet the conditions of the first part. (According to other judges) Another part of the section is broad enough to include cases under special laws where the usual time limit doesn't apply. The word "any" shows that the two parts of the section are independent of each other. The second part covers cases that the first part doesn't. (i) The law about elections doesn't completely cover all the rules for appeals. It also doesn't prevent using the general rules of the Limitation Act. The Limitation Act requires a clear statement to prevent its rules from being used. There's no such clear statement in the election law. The added part to the election law that some people think prevents using the Limitation Act doesn't actually do that. It just gives the Court back a power that another part of the Limitation Act would have taken away. Without this added part, the High Court couldn't excuse a delay, even if there was a good reason for it. (ii) A section of the Limitation Act applies to appeals to the High Court about Tribunal orders. An order that also includes the reasons for it counts as both an "order" and a "judgment," so the relevant parts of the Limitation Act apply. The Limitation Act doesn't say that the "order" has to be defined by the Civil Procedure Code. If a law lets someone make an order and gives someone the right to appeal that order within a certain time, the time it takes to get a copy of the order can be taken out. The election law lets the Tribunal make orders and gives the right to appeal to the High Court, so the relevant section of the Limitation Act applies directly. (According to one judge) The first part of the section only deals with cases under special laws where there's a usual time limit. If that time limit is different from the one in the special law, some things will happen. There's no problem in reading the first part of the section literally, because other cases can easily fit under the second part. Case law was referred to.
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ivil Appeal Nos. 1622 39 of 1986 From the Judgment and Order dated 28.3.86 of the High Court of M.R. at Jabalpur in Misc. Petition Nos. 3718/85,335 & 785 of 1986. K. Parasaran, Attorney General, A.M. Mathur and S.L. Saxena, Adv. Genl/Dy. of the State of M.P., G.L. Sanghi, F.S. Nariman, N.A. Modi, V.M. Tarkunde, A.B. Divan, Dr. L.M.Singhvi, Soli J. Sorabji, L.N. Sinha, S.N. Kacker, Narayan Nittar, G.S. Narayan, Pramod Swarup, D.P. Sri vastava, V. Ravindra Srivastava, S.L. Athley, R.F. Nanman, A. Subba Rao, V.K. Munshi, I.B. Dadachanji, D.N. Misra, Shri Narain, section Salve, L.S. Diwani, Mrs. A.K. Verma, K.K Sinha, A. Mishra, A. Sapre, R.S. Singh and S.K. Singh for the appearing parties. C.L. Sahu and Bharat Brewris for the Intervenor. Writ Petition No.3718 of 1985 was filed by one Nandial Jaiswal 14 on 28the November 1985 while writ petition No.335 of 1986 was filed by one Sagar Agarwal on 24th January 1986. Both these writ petitions were directed against the policy deci sion of the State of Madhya Pradesh contained in the Cabinet decision dated 30th December, 1984. The third writ petition, viz., writ petition No. 785 of 1986 was also filed challeng ing the same policy decision of the State of Madhya Pradesh by a firm called M/s Doongaji & Co. but it was filed much later at a time when arguments were actually going on in court in the first two writ petitions. The respondents in the first two writ petitions were not aware at that time that it was a writ petition which was filed by M/s Doongaji & Co. They thought that it was merely an intervention appli cation since no notice was served upon them and they had also no opportunity of filing an affidavit in reply to that writ petition. All these three writ petitions were disposed of by a common judgment delivered by a Division Bench of the High Court consisting of Acting Chief Justice J.S. Verma and Justice B.M. Lal. Both the learned Judges, by separate judgments, substantially set aside the policy decision dated 30th December, 1984. Since the decision of the High Court for all practical purposes went against the respondents, they preferred Civil Appeals Nos. 1622 to 1639 of 1986 before this Court by special leave. M/s Doongaji & Co. and Nand Lal Jaiswal also, to the limited extent that they did not succeed, filed special leave petitions Nos. 6206 and 7440 of 1986. That is how the present appeals and special leave petitions have come up before us. The facts giving rise to these appeals and special leave petitions are mate rial and need to be stated in some detail. But, before we advert to the facts, it is necessary to set out the relevant provisions of Madhya Pradesh Excise Act, 1915 which is the statute regulating manufacture, sale and possession of intoxicating ' liquor in the State of Madhya Pradesh. Originally, this Act was enacted for the former Province of C.P. and Berar but subsequently, after the coming into force of the Constitution, it was extended to the State of Madhya Pradesh by M.P. Extension of Laws Act, 1958 and it was rechristened as M.P. Excise Act 1915. Section 2(13) of the Act defines 'liquor ' to mean 'intoxi cating liquor ' and to include "spirits or wine, taft, beer, all liquid consisting of or containing alcohol, and any substance which the State Government may, by notification, declare to be liquor for the purpose" of the Act. The term "manufacture" is defined in Section 2(14) to include "every process, whether natural or artificial, by which any intoxi cant is produced or prepared and also redistillation and every process for the rectification, flavouring, blending or coloring of liquor". There is also the definition of 'spi rit ' in section 15 2(17) which provides that "spirit" means any liquor contain ing alcohol obtained by distillation whether it is denatured or not. Chapter IV of the Act is headed 'Manufacture, Pos session and Sale ' and that is the chapter with which we the concerned in the present appeals. Section 13 provides, inter alia, that no distillery or brewery shall be constructed or worked and no person shall use, keep or have in his posses sion any material, still utensil, implement or apparatus whatsoever for the purpose of manufacturing any intoxicant other than taft, except under the authority and subject to the terms and conditions of a licence granted in that be half. It is also obligatory under this section to have a licence for manufacture of intoxicant and for bottling liquor for sale and no intoxicant can be manufactured and no liquor can be bottled for sale without such licence. Section 14 is a material section and it may, therefore, be repro duced in extenso: 14. Establishment or licensing of distilleries and warehouses (a) establish a distillery in which spirit may be manufactured under a licence granted under section 13 on such conditions as the State Government may impose; (b) discontinue any such distillery; (c) licence, on such conditions as the State Government may impose, the construction and working of a distillery or brewery; (d) establish or licence a warehouse, wherein any intoxicant may be deposited and kept without payment of duty, but subject to pay ment of such fees as the State Government may direct; and (e) discontinue any such warehouse We may then refer to section 17 which provides inter alia that no intoxicant shall be sold except under the authority and subject to the terms and conditions of a licence granted in that behalf. The State Government obviously has the monopoly in regard to manufacture, possession and sale of liquor as held in several decisions of this Court. Section 18 recognises the power of the State Government to "lease to any person, on such conditions and for such period as it may think fit the right (a) of manufacturing or of supplying by wholesale, or of both, or (b) of selling by wholesale or by retail, or (c) of manufactur ing or of supplying by wholesale, or of both, and selling by retail, any 16 liquor or intoxicating drug within any speci fied area. " There are no other sections in the Act material for our purpose until we come to section 62 which confers on the State Govern ment the power to make Rules for the purpose of carrying out the provisions of the Act. Subsection 2(h) of section 62 provides that the State Government may make Rules prescrib ing the authority by, the form in which, and the terms and conditions on and subject to which, any licence, permit or pass shall be granted and by such rules, among other mat ters, fix the period for which any licence, permit or pass shall continue in force. The State Government has, in exercise of the power conferred under section 62, made several sets of Rules. Rule II of the Rules of General Application made inter aria under sub section 2(h) of section 62, lays down the period of licence and clause (2) of this Rule provides: "Wholesale licences for the manufac ture, supply and sale of liquor may be granted for any number of years not exceeding five, as the State Government may in each case decide." Rule XXII also framed under sub section 2(h) of section 62 provides for the manner in which licences shall be granted and it reads as follows: "XXII. Disposal of licences (1) Licence for the manufacture or sale of intoxicants shall be disposed of by tender, auction, fixed licence fee or in such other manner as the State Government may, by general or special order, direct. Except where otherwise prescribed, licence shall be granted by the Collector or by an Officer authorised by him in that be half." Rules III to V of the Distillery and Warehouse Rules also made inter alia under sub section 2(h) of section 62 deal with the subject of grant of licence and provide, in the following terms, for different kinds of licences which may be issued, viz., licences in Forms D 1, D 1(s) and D 2: "III. Subject to the sanction of the State Government, the Excise Commissioner may grant a licence in Form D 1 and Form D 1(s) for the wholesale supply of country spirit to retail vendors. The Collector may issue, on payment of a fee of Rs. 1000 a licence in Form D 2 for the construction and working of a distillery to any person to whom a wholesale supply licence has been issued. 17 V. Subject to sanction of the State Government the Excise Commissioner may issue a licence in Form D 2 for the construction and working of a distillery on payment of a fee of Rs. 1000. " It is clear on a plain reading of Rule XXII that a licence for manufacture or sale of country liquor may be disposed of in any one of four different modes, viz., ten der, auction, fixed licence fee or such other manner as the State Government may by general or special order direct. These four different modes are alternative to one another and any one of them may be resorted to for the purpose of disposing of a licence. It is not necessary that the mode of disposal by tender must first be resorted to and if that cannot be acted upon, then only the mode of disposal by auction and failing that and not otherwise, the third mode of disposal by fixed licence fee and only in the event of it not being possible to adopt the first three modes of dispos al, the last mode, namely, 'such other manner as the State Government may by general or special order direct '. This would seem to be plain and incontrovertible but Mr. Justice B.M. Lal has rather curiously in his judgment held that these four modes of disposal are inter related and "failing in one of the clauses, the next is to be acted upon and for applying the fourth clause, it is incumbent for the State to specify the manner by general or special order and this also includes "specifying how and why the other three clauses are not possible to be acted upon which compels to take resort to the fourth clause". This view taken by Mr. Justice B.M. Lal in regard to the interpretation of Rule XXII is obvious ly unsustainable. It is indeed surprising how such a view could possibly be taken. On a plain grammatical construction of Rule XXII it is obvious that the Collector or an Officer authorised by him in that behalf can choose any one of the four modes set out in that Rule. There is nothing in the language of Rule XXII to justify the interpretation that an earlier mode of disposal set out in the Rule excludes a latter mode or that reasons must be specified where a latter mode is adopted in preference to an earlier one. The lan guage of Rule XXII in fact militates against such construc tion. It is impossible to subscribe to the proposition that it is only when an earlier mode is not possible to be adopt ed for reasons to be specified, that a latter one can be followed. The Collector or an Officer authorised by him can adopt any one of the four modes of disposal of licence set out in Rule XXII, but, of course, whichever mode be adopted, the equality clause of the Constitution should not be vio lated in its application. 18 It is also clear from Rules III, IV and V which we have set out above, that there are two purposes for which a licence in Form D 2 for construction and working of a dis tillery may be granted. It may be granted as an adjunct to the licence in Form D 1 under Rule IV or it may be granted as an independent licence under Rule V irrespective whether the grantee holds a licence in Form D 1 or not. There are also two types of licences for wholesale supply of country liquor to retail vendors, namely, licence in Form D 1 and licence in Form D 1(s). The licence in Form D 1 in clause 5 clearly contemplates that the holder of such licence must also have a licence in Form D 2. No one can have a licence in Form D 1 unless he has simultaneously a licence in Form D 2. He must have a distillery in which he distils country spirit in order that he should be able to make wholesale supply of country liquor to retail vendors. If for any reason he is unable to obtain licence in Form D 2 for work ing a distillery, no licence in Form D 1 can be given to him and if he has such licence, it would become ineffective. It is for this reason that when a person is granted a licence in Form D 1 by the Excise Commissioner under Rule III, he is also simultaneously granted a licence in Form D 2 under Rule IV and the period of both the licences is co terminus. But, though a person cannot be granted a licence in Form D 1 unless he also obtains licence in Form D 2, the converse does not hold true. A licence in Form D 2 can be granted to a person under Rule V even though he does not hold a licence in Form D 1. Where a person is granted a licence in Form D 2 for working a distillery under Rule V, without having a licence in Form D 1 for wholesale supply of country liquor to retail vendors, he cannot make wholesale supply of coun try liquor manufactured by him to retail vendon but he can supply such country liquor to a person holding licence in Form D 1(s) or he can manufacture ractified spirit, dena tured spirit or foreign liquor as contemplated in condition 3 of the licence in Form D 2. It is not necessary that a person holding a licence in Form D 2 must also simultaneous ly have a licence in Form D 1. It is in the context of these provisions of the Act and the Rules that we must consider the facts of this case. There were at all material times in the State of Madhya Pradesh nine distilleries for the manufacture of spirit, which were established long back by the State Government under a licence issued by the Excise Commissioner. The names and other particulars of these distilleries are set out in the following table: 19 Name of Production Production Distillery capacity in 81 82 82 83 proof litres 1. Gwalior 15 lacs 9 lacs 2. Ujjain 13 lacs 10 lacs 10 lacs 3. Dhar 15 lacs 9 lacs 12 lacs 4. Badwaha 20 lacs 12 lacs 14 lacs 5. Chhatisgarh 30 lacs 29 lacs 25 lacs 6. Bhopal 12 lacs 9 lacs 11 lacs 7. Seoni 20 lacs 18 lacs 19 lacs 8. Nowgaon (owned 8 lacs 3 lacs 4 lacs by private individual) Total: 133 lacs 90 lacs 104 lacs 9. Ratlam Alcohol 70 lacs 39 lacs 67 lacs Plant (owned by Govt. Total: 203 lacs 129 lacs 17 1 lacs We are concerned in these appeals with only the first seven distilleries since the Nowgaon Distillery has always been owned and worked by a private firm and the Ratlam Alcohol Plant is owned by the State Government and is managed by the M.P. State Industries Corporation and the impugned policy decision dated 30th December, 1984 does not concern these last two distilleries. So far as the first seven distiller ies are concerned, and hereafter whenever we refer to dis tilleries we shall be referring only to these seven distill eries, the land and buildings in which they were housed belonged to the State Government and originally the plant and machinery also belonged to the State Government but in course of time successive holders of the D 2 licences in respect of these distilleries replaced the plant and machin ery. The practice followed by the Excise Department in regard to the working of these distilleries was to invite tenders for the wholesale supply of country liquor from these distilleries and the tenderers were requested to quote their rates for the wholesale supply of country liquor to the State Government. Normally the lowest tenders were accepted but at times the State Government used to accept even higher tenders taking various relevant factors into account. The State of Madhya Pradesh was divided in several areas and a particular area was attached to each 20 distillery for the wholesale supply of country liquor in that area. The person whose tender was accepted for any particular distillery was given a D 2 licence for working the distillery and also a D 1 licence for wholesale supply of country liquor manufactured in that distillery to retail vendors in the area attached to the distillery. These li cences in Forms D 1 and D 2 were ordinarily issued for a period of five years. Respondent Nos.5 to 11 in the writ petition of Nandlal Jaiswal were the holders of D 1 and D 2 licences in respect of these distilleries for the period ending 31st March, 1986. There were two districts, however, which were not attached to any distillery, namely, Jabalpur and Betul and so far as these two districts were concerned, a licence in Form D 1(s) to make wholesale supply of country liquor to retail vendors in these two districts was being given and for the period ending 31st March, 1986 it was issued in favour of Sagar Aggarwal. The country liquor required by Sagar Agarwal for supply to retail vendors in Jabalpur and Betul Districts was being obtained by him from the Ratlam Alcohol plant at the rate of Rs. 1.80 per proof litre but, as will be presently seen, the supply of country liquor from Ratlam Alcohol Plant was wholly inadequate and Sagar Agarwal was constrained to purchase country liquor from other sources at higher price in order to fulfil his commitment under D 1(S) licence. Since the land and buildings in which the distilleries were housed belonged to the State Government, the holder of D 2 licence in respect of any particular distillery had to pay rent for the land and buildings to the State Government at a rate agreed upon from time to time. So far as the plant and machinery of the distillery was concerned, originally it was installed by the State Government at its own cost but in course of time it had to be replaced and such replacement was allowed to be made by the holder of the D 2 licence for the time being. It was however a condition of D 2 licence that on the expiry of the period of licence, if fresh D 2 licence was not issued in favour of the existing licence holder, he would be bound to transfer the plant and machin ery in favour of the new licence, holder at a price to be determined by a Valuation Committee. Therefore, during the period of D 2 licence, the plant and machinery belonged to the licence holder for the time being. The licence holder was bound to manufacture country liquor in the distillery for which he was given D 2 licence and on the strength of D 2 licence supply country liquor so manufactured to retail vendors in the area attached to the distillery at the rate quoted in the tender and accepted by the State Government. The bottling and sealing charges were also fixed by the State Government from time to time and they were payable to the licence holder by the retail vendors. It may be 21 pointed out that at the material time the bottling and sealing charges were fixed at 80 paise per bottle which came to Rs.3.40 per proof litre. Now, the total capacity of all the 9 distilleries in cluding Nowgaon Distillery and Ratlam Alcohol Plant was only 203 lacs proof litres but even this capacity of production was not realised and the actual production fell for short of this capacity. The total production of country liquor from all the 9 distilleries in the year 81 82 came to only 129 lacs proof litres and though in the year 1982 83 there was some improvement, the total production did not go beyond 171 lacs proof litres. The result was short supply on many occasions leading to loss of licence fee as well as excise duty by the State Government. The State Government, in order to meet the requirement of the consuming public, had actual ly to purchase liquor from other States at a higher price. Moreover, the consumption of liquor was growing from year to year and it was estimated that by the year 1991, the total consumption to country liquor would be likely to be in the neighbourhood of 482.36 lacs proof litres and by the turn of the century it was expected to be in the neighbourhood of 1696.80 lacs proof litres. Obviously, the existing 9 dis tilleries were totally inadequate to meet this growing demand for country liquor. Furthermore, the buildings in which these distilleries were housed had become old and were in a state of disrepair and it was not easy for the State Government to maintain them in good condition without incur ring heavy expenditure every year. The plant and machinery were also old and antiquated and it was necessary to instal new and modern plant and machinery having increased capacity 'to manufacture country liquor. Moreover, it seems that though at the time of construction, these distilleries were away from the city or town, what had happened was that with the growth of population and haphazard and unplanned urban development, these distilleries had now come to be in the heart of the city or own and they created health hazards and pollution problems. There was a demand from all sections of the public living in surrounding area to move the distiller ies away in order to avoid water and environmental pollu tion. It was in these circumstances, when the mind of the State Government was already exercised in respect of these matters that an application was made by M.P. Distillers ' Association in July 1983 for transferring these distilleries to private ownership. The members of the M.P. Distillers ' Association who were old distillers holding D 2 licence in respect of these distilleries offered to invest their own funds in the construction of new buildings and installation of latest plant and machinery with capacity to produce more country liquor in conformity with the standards laid down by M.P. Eradication of Pollution Board for 22 Removal of Polluted water by constructing lagoons, etc., provided they were assured D 1 licence for the area attached to their respective distilleries. This application of M.P. Distillers Association was examined by the State Government at different levels. The Excise Commissioner submitted his opinion to the Separate Revenue Department stating that "it would be more appropri ate to hand over the Government distilleries to private ownership because thereby the Government will get additional income from the sale of buildings, land, etc., of the dis tilleries and at the same time the distillers will pay more heed to the distilleries buildings, etc., due to transfer of the distilleries to private ownership and they will instal the latest machinery and implements as a result of which there will be an increase in liquor production and supply of liquor as per requirement of the State Government and at the same time they will be liable for solving the problem of pollution." The Revenue Department, after obtaining the Report from the Excise Commissioner examined the matter carefully from various aspect. But since several points required consideration such as whether the distilleries should be transferred to private ownership during the period of the subsisting contracts, and if so, what would be the legal consequences and whether the distilleries should be allowed to continue at the same place or should be trans ferred to new sites in view of the problem of pollution and the question of transfer of distilleries to private owner ship was itself an important policy issue, the Separate Revenue Department referred the matter to the Chief Minister with a suggestion that a high level committee should be appointed for the purpose of examining the various issues. The State Government accordingly under the orders of the Chief Minister constituted a Cabinet SubCommittee consisting of Ministers of Separate Revenue Department, Major and Minor Irrigation Department, Commerce and Industry Department and Rehabilitation and Environment Department and four highly placed officers, namely, Chief Secretary, Secretary, Sepa rate Revenue Department, Secretary Finance Department and Excise Commissioner were directed to assist the Cabinet SubCommittee. The Separate Revenue Department submitted a note for the consideration of the Cabinet Sub Committee and this note formulated various issues arising for considera tion and set out various aspects relating to these issues so as to form the basis for. discussion. These issues may be summarised as follows: (1) Whether the transfer of ownership of Government distilleries should be made during the present contract period only or on the commencement of new contract? 23 (2) Necessity of spot inspection of distiller ies and survey of buildings and change of their place? (3) Policy to be adopted for transfer of buildings and lands of distilleries? (4) Establishment of proper machine and imple ments for manufacture of liquor in the dis tilleries for use of Mahuwa product in the State? (5) Determination and question of fixing prices of liquor under the new management? The Cabinet Sub Committee at its meeting held on 27th June 1984 considered these issues and after discussion came to the conclusion that in view of the problem of pollution, it should first of all be examined "as to which distillery is to be transferred from the existing site and which distill ery is to be maintained at the present site" and in order to determine this question, the Cabinet Sub Committee consti tuted a Committee headed by Shri Vijayvargi Special Secre tary, Separate Revenue Department. The Vijayvargi Committee was also authorised to select new sites for the distilleries which in its opinion required to be removed from the exist ing sites on account of the problem of pollution. The Vijay vargi Committee thereafter made spot inspection of all the 9 distilleries in the State and submitted its report to the Cabinet Sub Committee on 18th July 1984. This Report was a detailed and exhaustive Report and it was pointed out in this Report that 5 distilleries, namely, Bhopal, Ujjain, Badwaha, Seoni and Bhilai were required to be removed to new sites on account of the problem of pollution, but so far as the remaming two distilleries at Gwalior and Dhar were concerned, it was not necessary to remove them from their present sites, though in regard to Dhar Distillery, it was necessary to fix lagoon plant for removing pollution. The Vijayvargi Committee also stated in its Report that it was necessary to make arrangement in regard to polluted water thrown out from Nowgaon and Ratlam Distilleries. The Cabinet Sub Committee at its meeting held on 21st July 1984 considered the Report of the Vijayvargi Committee and decided to accept it wholly. The Cabinet Sub Committee directed that an estimate of the cost involved in setting up the Bhopal, Ujjain, Badwaha, Seoni and Bhilai distilleries at the new sites should be worked out by the Excise Commis sioner as also by the M.P. Consultancy Organisa 24 tion and the valuation of the lands and buildings of Gwalior and Dhar distilleries, which according to the Vijayvargi Report, were not necessary to be shifted to new sites, should also be got done by the Collectors concerned on the basis of prevailing market rates. It was also directed by the Cabinet Sub Committee that an estimate of sales of country liquor projected in the next 20 years should be got made and it should also be examined whether such future demand could be met by the present distilleries and on this basis how many ' distilleries in the public cooperative and private sectors would be necessary to be established. Pursu ant to this direction, an estimate of the cost likely to be incurred in establishment of Bhopal, Ujjain, Badwaha, Seoni and Bhilai distilleries at the new sites including purchase of land, construction of buildings, setting up of modern plant and machinery and arrangement for lagoon for polluted water thrown out by the distilleries, was prepared by the Excise Commissioner and the Report made by the Excise Com missioner showed that, according to this estimate, the likely cost would be in the neighbourhood of Rs.20 crores 60 lakhs. The Excise Commissioner also estimated the likely increase in consumption of liquor in the next 20 years and in his Report gave figures showing that at the end of 20 years the annual requirement of liquor in the State would be 2967 lacs proof litres and that the total established capac ity of all the 9 distilleries taken together would not be sufficient to meet this growing requirement of liquor con sumption. So far as the valuation of the land and buildings of Gwalior and Dhar distilleries was concerned, no report was submitted by the concerned Collectors until the next meeting of the Cabinet Sub Committee. The Cabinet Sub Committee thereafter met on 10th August 1984 and at this meeting the Cabinet Sub Committee consid ered the report of the Excise Commissioner in regard to the estimated cost of establishing Bhopal, Ujjain, Badwaha, Seoni and Bhilai distilleries at new sites as also the estimated increase in consumption ,of liquor over the next 20 years and after discussing all the various related issues, the Cabinet Sub Committee arrived at certain deci sions which are set out in paragraph 3 of the proceeding of this meeting which form part of the record. It is not neces sary here to set out these decisions, because ultimately they culminated in the recommendations made by the Cabinet Sub Committee to which we shall presently make reference. But at this meeting the Cabinet Sub Committee decided to invite representatives of the M.P.Distillers Association and to give them a hearing before taking final decision in the matter. The representatives of the M.P. Distillers Association met the 25 members of the Cabinet Sub Committee at the meeting held on 31st August 1984. These representatives made various sugges tions to the Cabinet Sub Committee and these suggestions included inter alia the suggestion that even Gwalior and Dhar distilleries should be transferred to new sites since the problem of pollution, though not pressing at the present moment, was bound to arise after 5 or 7 years, but if the existing lands and buildings of these two distilleries were to be transferred, such transfer should be made on the basis of their book value and not at the market price. It was also pleaded by these representatives that if the distilleries were going to be transferred to private ownership, such transfers should be effected in favour of the existing contractors and not outsiders. Some suggestion was also made on behalf of these representatives that compensation should be paid by the State Government, to the existing contractors for the expenditure incurred by them in construction of roads, molasses collection pits, wharehouses etc. These suggestions were considered and examined by the Cabinet Sub Committee. Before the next meeting of the Cabinet Sub Committee was held on 20th September 1984, a letter dated 10th Sept. 1984 was submitted by the Finance Department in which two points were raised by the Finance Department. One was that "trans fer of distilleries should be made by getting the compara tive bids offered and it should be given to the highest bidder" and the other was whether on transfer to private ownership the distillers "would be required to obtain any permission under the Industries Development and Regulation Act and if permission is not granted, whether any problem would arise out of it. " The Cabinet Sub Committee at the meeting held on 20th September 1984 discussed these two points and so 'far as the first point was concerned, the Cabinet Sub Committee came to the conclusion that "the transfer of distilleries should be made only to the present contractors and their present supply area should be attached with them" and with regard to the second point, the Cabinet Sub Committee felt that since the distilleries which were going to be established at the new sites were in lieu of the present distilleries, it may not be necessary to obtain fresh licence under the Industries Development and Regula tion Act but if fresh licence was required, it should be the responsibility of the distillers to obtain the same. The Cabinet Sub Committee also took various other decisions which are set out in paragraph 4 of the proceedings of this meeting held on 20th September 1984. It is not necessary to reproduce these decisions, but it may be pointed out that the request of the representatives of the M.P. Distillers Association that the land and buildings of the Gwalior and Dhar distilleries may be transferred at 26 book value and not at market value was rejected and the Cabinet Sub Committee decided that the transfer should be at the prevailing market price. The Cabinet Sub Committee, however, agreed that "if any distiller wants a change of place in the future, the decision about it would be taken by the Separate Revenue Department". The Cabinet Sub Committee also recommended that an agreement should be executed in writing between the distillers and the Excise Department in which it should be provided that on the construction of the distillery and the installation of the plant and machinery, the distiller shall be entitled to obtain D 2 licence in respect of the distillery. It was decided at this meeting that the draft Report of the Cabinet Sub Committee shall be finalised in accordance with the decisions taken at the various meetings of the Cabinet Sub Committee. The Report of the Cabinet Sub Committee was thereafter finalised and after setting out the history of the discus sions that preceded the preparation of the Report, it pro ceeded in paragraph 17 to make the following recommenda tions: A. Transfer of ownership of distilleries (1) All the Government distilleries should be transferred to the contractors concerned whose contracts are current for the periods from 1.7.1981 to 31.3.1986. (2) The present buildings, lands of Gwalior and Dhar Distilleries should be transferred as per the price of the present market rates reported by the Committees formed under the Chairmanship of the Regional Commissioners after receiving the same from the distilleries and no concession should be given therein. (3) There should be an agreement with the Distillers who are allotted lands for estab lishing distilleries at the new sites to the effect that the Government will be bound to 'issue them D 2 licence after the construction of buildings and fitting of plant, on fulfill ing all terms and conditions. B. Allotment of lands for construction of distilleries at the new places (4) Generally a principle should be accepted in connection with the price of land to be allotted to the distillers at those 27 five places whose distilleries are to be transferred at any other place that if the land to be allotted is a Government land, its market value plus 20% of its market price and the amount so arrived at should be treated as the premium of that land and on that basis ground rent should be fixed as per rules. The land should be given on 30 years ' lease. (5) If the land to be allotted is a non Gov ernment land and if it is to be allotted after acquisition, then as a result of acquisition the compensation to be paid plus 20% and the amount that would be arrived at should be treated as premium of that land and after taking ground rent as per rules the land should be given on 30 years ' lease. (6) The directions of the Industries Depart ment in connection with allotment of land should also be kept in view. (7) No financial aid should be given by the Government to the distillers for payment of premium, etc., of the land. (8) If the land allotted is used for any other purpose than the purpose for which it is allotted, the land would auto matically stand diverted to the State Government. Such a provision should be made in the terms and conditions of the lease deed. C. Letter of Intent, for grant of D. 2 Li cences (1) D 2 licences should be granted alongwith letter of intent only to those distillers to whom land is allotted for construction of distilleries. The Sub Committee also feels that the distilleries to be constructed at the new sites shall be in lieu of the present distillery. Therefore, this will not be neces sary to obtain licences from the Central Government. But, for any other reason, if any licence is compulsory under the rules, Acts of the Government of India or the State Govern ment, the distiller shall be liable to obtain it. The State Government will send their applications with recommendations to the Government of India. D. Construction of Lagoon, etc., for making arrangement for passing water from distiller ies 28 (11) It will be obligatory for the distillers while constructing the distilleries to observe the standards fixed by the M.P. Eradication of Pollution Board for removing the polluted water and the environment clean and to con struct Lagoon, etc. for the same. (12) It should also be mentioned in the letter of intent that the distillers shall make similar arrangement in the distilleries that would be transferred to the distillers at their present site only. Without such arrange ment D 2 licence should not be given to the distillers. E. Construction of Laboratories for Liquor test (13) The distillers shall be compulsorily required to construct a laboratory for exami nation of liquor in the distillery. It will also be compulsorily required to construct a laboratory for examination of liquor in the distillery. It will be compulsory to construct laboratory for liquor test in the distilleries which are to be transferred to the distillers at the existing spot only. F. Arrangement for manufacturing liquor from Mahuwa (14) The plants for manufacturing liquor from Mahuwa also should be established by the distillers for manufacturing liquor from Mahuwa in all the distilleries in the State so that, if it is necessary, liquor should be manufactured from Mahuwa and the Mahuwa pro duced in the State should be properly used within the state only and they should get reasonable ,price for the Mahuwa purchased by them at the support price of MARPED or Vano Upaj Vyaper Sangh. For each distillery 71/2% liquor should be manufactured from Mahuwa of its total productive capacity and it should be mentioned in D 2 licence. G. Period of D 2 licences (15) In the beginning D 2 licence (Distillery Licence) should be granted for five years and thereafter there should be a provision for its renewal. Necessary amendment in the Excise Act or Rules for the same should be made. 29 H. Fixation of liquor price (16) The Sub Committee was apprised of the system of fixation of cost of liquor in the State of U.P., West Bengal and Maharashtra States. Prices fixed in Uttar Pradesh by calling tenders whereas in Maharashtra under Eythule Alcohol Price Control Order on the recommendation of the State Government, the prices of liquor are fixed by the Government of India. In West Bengal, for fixation of prices a Committee is formed consisting of a Chartered Accountant a cost Accountant and a Senior Officer of the Excise Department. In the opinion of the committee, prima facie, the system being adopted in the West Bengal was found more scientific and appropriate and it was recommended to adopt this method. Action be taken after obtaining necessary details in connection with this system and after the distilleries are transferred to private owner ship, the prices should be fixed every year. " (17) On transfer to private ownership, the rates proposed by the Committee to be brought into effect from 1.4. 1986 should be fixed finally after discussing the same between the State Government and the distillers. Till the final rates are not fixed the present rates of the distilleries shall be maintained as they are and after that only it should be adjusted against the new rates. (18) The present system of connecting the area of supply for each distillery shall be main tained in future also as it is. It would be proper to maintain the present right of reduc tion or increase in the supply regions of any distillery which is with the State Government/Excise Commissioner, as it is. I. Control of Excise Department on the Dis tilleries (12) Even after the transfer of distillaries to private ownership, there should be control of the Excise Department over them as per the present system and for this purpose if any amendment is found necessary, it should be made in the Excise Act/Rules. The Finance Department, however, submitted a Report raising 5 30 points against the recommendations made in the Report of the Cabinet Sub Committee. These points were answered by the General Administration Department in the summary prepared by it for submission to the Cabinet. These points together with the answers given by the General Administration Department may be reproduced as follows: "Point No.1 The distilleries which are to be transferred to the private distilleries on account of the problem of pollution, it is not proper to transfer to them the land and build ings. Answer In this connection it is pertinent to note that the Cabinet Sub Committee has only reommended transfer of Gwalior and Dhar distilleries to the existing distillers. Looking to the problem of pollution, other five distilleries have been recommended to be transferred at the new sites and their con struction and establishment in the private ownership. Hence, the question of transfer of land and buildings of these distilleries does not arise. It is clear that the lands and buildings of the present five distilleries will be of the State Government and they can be used for Government purposes. So far as the transfer of Gwalior and Dhar distilleries and their lands and buildings are concerned, the said distillers have made applications to the State Government that they also intend to establish distilleries at the new sites. If the State Government decides to establish these distilleries at other places, the ques tion of transfer of lands and buildings of these distilleries does not arise. Point No. 2 A serious thought should be given to the question that the State Government should give an undertaking to the distillers that the State Government shall purchase liquor from them for ever and for that purpose no tender will be invited. Answer With regard to this point, it would be proper to make 31 mention of the fact that the distillers whom the land will be allotted for the construction of new distilleries, they will only be granted D 2 licence and letters of intent will be issued in that regard. D 2 licence is granted for the manufacture of liquor. D 1 licence relates to the supply and rates of the same. According to the present arrangement, the State Government purchase liquor from those contractors who are granted licences for the same and in case of any short supply on ac count of some reason, liquor is imported from other States. This arrangement should also be made for future also. As far as the ceiling of tender is concerned, it is with regard to rates of liquor. On this point, a note has been given against point Nos.4 and 5. Point No. 3 As there is a possibility of increases of consumption of liquor in future, and the increased quantity of liquor will have to be purchased by the State Government from the present contractors, that will amount to monopoly system and the contractors may put the State Government into trouble at any time. For this purpose. the State Government should possess a right of granting D 2 licence to any other distiller. Answer In this connection, it should be mentioned that during the existence of the contract. if there is an increase in the consumption of liquor the supply of the same is done by the contractors or from outside. This arrangement shall be continued in future also. As for as grant of D 2 licence to other distillers is concerned, it will be given to them according to the requirement. The Sub Committee has not made such a recommendation that apart from the existing distillers, no other person should be granted D 2 licence. Here a question may arise that on the conferral of private rights on the dis tilleries and in case of absence of favourable conditions or difference of opinion about the fixation of prices of liquor. the distillers taking advantage of their proprietory rights may not close the distilleries? Ordinarily, no such imagination can be made because after 32 investing such a huge amount the intention of the distillers is to gain profits. For that purpose, their effort would be to constantly run the distilleries and for meeting such an eventuality some arrangement should be made in the agreement that could be entered with the distillers so that the distilleries can be taken over the State Government. Point No. 4 The Sub Committee has recommended that for the supply of liquor the rates of the same may be fixed by a Committee consisting of a Chartered Accountant, a cost accountant and a senior Officer of the Excise Department. The Finance Department has suggested that in this Commit tee, representatives of the Finance Department and the Separate Revenue Department and the representative of the Separate Department should be its Chairman which would fix the rates on the basis of principles. Answer This suggestion is capable of being accepted. It may be pertinent to mention here that the Sub Committee was apprised of the different systems adopted by different States with regard to supply rates. The Sub Committee has recommended the system prevalent in West Bengal because the Sub Committee felt that this system is more scientific and fit. The Sub Committee has also mentioned that after obtaining further information about this system, action should be taken and after transfer of the distilleries into private ownership the prices should be fixed every year. Presently, the prices of liquor are fixed for a period of five years. Point No. 5 There should be competition which can be achieved through tender system. Hence, for fixing prices, tender system should be adopted and nobody should be given to say that the rates have been fixed arbitrarily. Answer As mentioned in recommendation No. 17 of the"Sub 33 Committee dated 1.4.86, the rates to be made effective from 1.4.86 will be proposed by a Committee which will be given effect to after discussion (negotiations) with the State Government and the distillers. The Sub Commit tee has also made a recommendation that till the time the final rates are not fixed, till that period the respective distilleries will maintain their existing rates and after that they will adjust against the new rates. Hence, it will be clear that according to the new system fixation of prices will be fixed by calling tenders. For the present supply rates, tenders are invited and on that basis after negotiations with the distillers the final rates are fixed. " The summary alongwith the Report of the Cabinet Sub Committee and all other papers and proceedings leading upto the making of the Report were all placed before the Cabinet at the meeting held on 30th December 1984 when the following decision was taken: "1. Looking to different angles of the sub ject, the recommendations of the Cabinet Sub Committee should be endorsed. If some such similar matters are put up, the department on the basis of the principles should take decisions." Pursuant to this policy decision dated 30th December 1984 a Letter of Intent dated 1st February 1985 was issued by the State Government in favour of each of respondent Nos. 5 to 11 for grant of D 2 lincence for the construction of a distillery at a new site for the purpose of manufacturing country liquor with effect from 1st April 1986 in lieu of the existing distillery in respect of which such respondent held D 2 and D 1 licences for the period ending 3 1st March 1986. The Letter of Intent set out various conditions sub ject to which D 2 licence was to be granted in favour of each of respondent Nos. 5 to 11. Clause (1) of the Letter of Intent prescribed the following condition: 1. (a) The licence shall be granted for a period of five years commencing from 1 4 1986, subject to the payment of licence fees of Rupees Twenty Five thousand in advance and such security as may be prescribed by the Excise Commissioner for due observance of rules, and conditions of licence. (b) It will be the responsibility of the licensee to obtain 34 a licence/permission, if any required by the State Government or Government of India. (c) The licence shall be further sub ject to renewal every year ' on payment of a licence fees of Rs. Five thousand in advance and subject to due observance of the provi sions of the Excise Act and rules made there under and conditions of the licence. The licensee to whom the Letter of Intent was issued was required under Clause 2 of the Letter of Intent to construct the distillery on the land approved by the State Government and the M.P. Pollution Board. It was provided by Clause 12 of the Letter of Intent that the licensee shall make proper arrangements for treatment of effluents discharge under a scheme duly approved by the M.P. Pollution Board and that any direction issued by the Excise Commissioner in this regard shall be binding on the licensee. Clause 14 of the Letter of Intent stipulated that the licensee shall be bound to complete construction of distillery and installation of plant and machinery as required by the Excise Commissioner well before 1st April 1986. The Letter of Intent was followed by a Deed of Agreement dated 2nd February 1985 executed by and between the Governor of Madhya Pradesh acting through the Excise Commissioner and each of respondent Nos. 5 to 11. The Deed of Agreement recited that the Letter of Intent has been issued by the State Government for grant of D 2 licence for construction of distillery for manufacture of spirit with effect from 1st April 1986. Clause 1 of the Deed of Agreement provided that the licensee shall be bound to take land on lease for a period of 30 years from the State Government, but this clause is not material because ultimately none of respondent Nos. 5 to 11 took land on lease from the State Government and each of them purchased his own land, the site of course being approved by the State Government. Clause 2 of the Deed of Agreement is rather material and it may be reproduced in full: "The Govt. shall be bound to sanc tion D 2 licence in favour of the Licensee who has been granted letter of intent to manufac ture spirit w.e.f. 1 4 86 in lieu of CHHAT TISGARH DISTILLERY situated at INDUSTRIAL ESTATE BHILAI for a period of 5 years subject to renewal every year on payment of Licence Fee Rs.5,000 and on due fulfilment of the conditions of the licence and the provisions of M.P. Excise Act 1915 and the Rules made thereunder. " 35 It was provided by Clause 4 of the Deed of Agreement that the licensee shall be bound to manufacture country spirit in the distillery from mahuwa also and the country spirit made from mahuwa shall not be less than 7.5% of the total produc tion in the distillery. So far as the pricing of country liquor made from mahuwa, khandsari molasses or mill molasses was concerned, Clause 6 of the Deed of Agreement provided as follows: "The rate of country spirit made from Mahuwa, Khandsari molasses or mill Molasses shall be determined every year by the State Govt. on the basis of the recommendation of the commit tee constituted by the State Govt. in this behalf. The cost price so determined shall be final and binding on the Licensee. " The other clauses of the Deed of Agreement are not material and we need not refer to them in detail beyond merely stat ing that they were introduced in the Deed of Agreement in conformity with the policy decision dated 30th December 1984. Pursuant to the Letter of Intent and the Deed of Agree ment each Of respondent Nos.5 to 11 selected with the ap proval of the State Government the new site at which the distillery should be located, purchased land at such new site, started constructing buildings for housing the dis tillery and placed orders for purchase the plant and machin ery to be installed in the distillery. Some of the plant and machinery started arriving and it began to be installed in the distillery. There was some dispute between the parties as to how much amount each of respondent Nos. 5 to 11 had expended by the time the first writ petition came to be filed by Nand Lal Jaiswal but it could not be seriously contested that considerable amount of money had already been spent by respondent Nos. 5 to 11 in acquiring land, con structing buildings. placing orders for purchase of plant and machinery and taking other necessary steps before 28th November 1985 when Nand Lal Jaiswal filed the first writ petition. There is evidence to draw that considerable more progress had been made by respondent Nos. 5 to 11 in this direction by the time the second writ petition came to be filed by Sagar Agarwal. Each of them had, on a conservative estimate, spent over one or two crores of rupees by the time Nand Lal Jaiswal and Sagar Agarwal filed these writ peti tions challenging the policy decision dated 30th December 1984. On the filing of these writ petitions, an application for stay was made but it was rejected by the High Court with the result that the work of setting up the.distilleries continued 36 space and the distilleries were almost complete by the time decision came to be given by the High Court disposing of these writ petitions. When the writ petitions were argued before the High Court, one of the questions seriously debated was whether under the policy decision dated 30th December 1984, D 2 licence was to be granted to each of respondent Nos.5 to 11 only for a limited period of 5 years commencing from 1st April 1986 or it was to be granted for a minimum period of five years with a clause for automatic renewal from year to year after the expiration of the period of five years so that all other persons would be totally excluded from enter ing the field and a monopoly would be created in favour of respondent Nos.5 to 11 for all time to come so far as D 2 licence for manufacturing liquor in the distillery was concerned. The petitioners relied on clause 1 of the Letter of Intent in support of their contention that a monopoly was sought to be created in favour of respondent Nos.5 to 11 for maufacturing liquor in the distilleries respectively set up by them by granting D 2 licence which was renewable every year after the expiration of the initial period of 5 years without any limitation of time and this was clearly arbi trary and irrational so as to be violative of Article 14 of the Constitution. This contention was negatived by the Division Bench and particularly by Acting Chief justice, J.S. Verma in view of the categorical statement made on behalf of the State Government by the learned Advocate General as also by the learned Advocates appearing on behalf of respondent Nos.5 to 11 that under the policy decision dated 30th December, 1984, D 2 licence was to be granted only for a maximum period of 5 years "subject to its renewal within the period of 5 years on the terms and conditions" mentioned in the Letter of Intent and "there was no under taking on the part of the State Government" to grant, by way of renewal or otherwise D 2 licence after the expiry of the period of 5 years commencing from 1st April 1986. The learned Attorney General, appearing on behalf of the State Government, as also the learned advocates appearing on behalf of respondent Nos.5 11, reiterated the same stand before us namely, that there was no commitment on the part of the State Government to grant D 2 licence beyond the maximum period of 5 years and that the provision in regard to renewal from year to year was to operate within this period of 5 years. The learned counsel appearing on behalf of the petitioners, however, urged that this concession made on behalf of the State Government and respondent Nos.5 11 was of no avail, since it was contrary to the terms of the policy decision dated 30th December 1984 and the provision in the Letter of Intent and, in any event, the validity of the policy decision dated 30th December 1984 could be tested only 37 on its own terms and if it was otherwise invalid, the con cession made on behalf of the State Government and respond ent Nos.5 11 could not save it. We do not think that this contention urged on behalf of the petitioners is well found ed. It is undoubtedly true that the recommendations of the Cabinet Sub Committee which were accepted by the Cabinet in the policy decision dated 30th December 1984 provided that in the beginning, D 2 licence shall be granted for a period of 5 years and thereafter there shall be a provision for its renewal and for this purpose, necessary amendment in the M.P. Excise Act, 1915 or the Rules made under the Act shall be made. But, it is significant to note that no such amend ment in the Act or the Rules was made by the State Govern ment and when the Letter of Intent was issued and the Deed of Agreement was executed and even thereafter, the provi sions of the Act remained unamended and Rule II of the Rules of General Application also continued to stand in its una mended form. It is obvious that without an amendment of Rule II of the Rules of General Application, the maximum period for which D 2 licence could be granted to respondent Nos.5 11 was only 5 years and there could be no provision for automatic renewal thereafter from year to year. It is; therefore, clear that whatever might have been the original intention, it was not effectuated by carrying out necessary amendment in the provisions of the Act or in Rule II of the Rules of General Application and the ultimate decision of the State Government was to grant D.2 licence for a limited period of 5 years. This would also seem to be clear beyond doubt if we examine closely clause 2 of the Deed of Agree ment. This clause provided in terms clear and explicit that the State Government shall be bound to grant D 2 licence to the licensee "for a period of 5 years subject to renewal every year on payment of licence fee of Rs.5,000 and on the fulfilment of the conditions of the licence,and the provi sions of the M.P. Excise Act, 19 15 and the rules made thereunder?,. Obviously the provision of renewal every year was to operate within the span of 5 years itself and every year, the licence would be renewable on payment of licence fee of Rs.5,000 and due fulfilment of the conditions of the licence and the provisions of the Act and the Rules. It is not possible to spell out from this clause that the licence was to be granted for an initial period of 5 years and thereafter it was liable to be renewed from year to year. This so called concession made on behalf of the State Gov ernment and respondent Nos.5 11 was, therefore, really not a concession at all but it was a stand taken in recognition of the correct position in regard to the grant of D 2 licence. The High Court was, in the circumstances, right in holding that the grant of D 2 licence to respondent Nos.5 11 was for a maximum period of 5 years and it did not operate to create monopoly in their favour for an indefinite period of time. 38 The High Court and particularly the Judgment of the Acting Chief Justice J.S.Varma with Justice B.M. Lal divided the policy decision dated 30th December 1984 into two parts. The first part according to the High Court related "to the grant for construction Of the new distilleries by the exist ing contractors" and the other part related "to the grant of licence for manufacture and wholesale supply of liquor with effect from 1st April 1986 to the existing contractors on construction of new distilleries by them". The High Court first took up for consideration the question of validity the first part and held that having regard to the inordinate delay in the filing of the writ petitions no interference was "called for with the grant to this extent". The High Court observed and we are quoting here in full what the High Court has said in regard to the first part since that con tains the finding of the High Court on the question of delay: "In our opinion, the delay in bringing these petitions to challenge the grant made to the existing contractors who are respondents in these petitions for construction of the new distilleries, is not adequately explained and, therefore, it would not be appropriate to interfere with the grant to this extent since at this stage, particularly when the construc tions by the respondents are nearly complete. We have, therefore, reached the conclusion that without expressing any opinion about the validity of the scheme relating to the grant only to the existing contractors for construc tion of the new distilleries, no interference with the grant to this extent alone should be made in these petitions on the short ground that there is unexplained delay in challenging the grant to this extent in these petitions and during the intervening period, the new distilleries have almost been completed, if not wholly completed and any interference with the grant to this extent will result in need less complications. For this reason alone, we decline to examine the validity of grant made in favour of the respondents only to the extent it permits them to construct the new distilleries. In our opinion, the facet of promissory estoppel relied on against the petitioners on the basis of their conduct is applicable only to this extent." The High Court then proceeded to consider the question of validity of the second part relating to the grant of li cences for manufacture and wholesale supply of country liquor to the existing contractors and held that this part of the policy decision dated 30th December 1984 contra 39 vening Artide 14 of the Constitution and was therefore liable to be struck down as invalid. The High Court took the view that the existing contractors cannot be said to consti tute a distinct class by themselves so that grant of D 1, D 2 licences to them for manufacture and wholesale supply of country liquor to the exclusion of other persons could be justified under the equality clause of the Constitution. Though the High Court did not say so in express terms the view taken by it seem to be that the grant of D 1, D 2 licences given thrown open for all intending applicants and no one should have been excluded from consideration for the grant which means that the proposed grant of D 1, D 2 li cences should have been advertised so that one and all could compete for the grant by filing their tenders or by bidding at an auction. The High Court in this view set aside the grant of D 1, D 2 licences to respondent Nos.5 to 11 but since there are no other distilleries apart from those constructed by respondent Nos.5 to 11 and country liquor under D 1, D 2 licences could be manufactured and supplied only from those distilleries, the High Court evolved a new formula namely, that the persons to whom D 1, D 2 licences may be granted on the basis of tender or auction should be entitled to take over the distilleries constructed by re spondent Nos.5 to 11 at a proper value assessed by the. State Government. The High Court accordingly allowed the writ petitions to this limited extent and directed that each party shall bear and pay its own costs of the writ peti tions. The questions is whether this view taken by the High Court is correct. Before we proceed to consider this question, we may point out that Acting Chief Justice, J.S. Verma, who deliv ered the main judgment in the writ petitions, did not make any comments against the conduct of the State Government in granting to the existing contractors the right to construct distilleries and manufacture and make wholesale supply of country liquor from such distilleries but merely proceeded to invalidate what he called the second part of the policy decision dated 30th December 1984 on the ground that it violated Article 14 of the Constitution. But Justice B.M. Lal delivered a separate concurring opinion and in this opinion, he made certain observations which have been strongly objected to by the learned Attorney General appear ing on behalf of the State of Madhya Pradesh. It is neces sary to set out in extenso what the learned Judge has said in this connection because an application has been made to us by the learned Attorney General that the objectionable remarks made by the learned Judge should be expunged: "This new mischievous device gives scope to respondents 40 No.5 to 11 to monopolize the entire trade of liquor distillery in Madhya Pradesh and also make the State dance at their tips while fixing the rates according to their wishes. However, it appears that the sinister of under hand dealing of the agreement has persuaded the State Government to make the statement before this court during the course of second day of arguments, that they have reduced the period of the agreement dated 2.2.1985 from 30 years to a mere of 5 years period i.e. w.e.f. 1.4.86 to 31.3.1991 with no condition of renewing it thereafter without adhering to the provisions of rule XXII (Supra). By making this statement at the bar, I presume that, the State is trying to mini mise the extent of depletion of public reve nue, but still the loss of 56 crores, as argued by Shri Venugopal, continues if licence in D 1 form is granted to the respondents Nos.5 to 11 even for a period of five years. Making any relaxation in contracts illegally arrived at by violating statutory provisions of rule XXII (Supra) which gives abnoxious smell of malafide involving public revenue in crores, then, in my opinion, even for a moment it cannot be allowed to stand in the eye of law. It appears that by reducing the period of 30 years to a mere five years peri od, the State still wants to extend benefit to respondents 5 to 11, so that the amount so far spent by them in working out the contract in approaching the concerning authorities of the State may be compensated. Why this undue favour is being tried to be extended to the respodents Nos.5 to 11, speaks in itself in volume and is really a matter of the domain of the State Government. The facts relating to under hand dealing brought to our notice during the course of arguments by pointing out from the record are so startling. " These are undoubtedly strong and highly disparaging remarks attributing mala fides, corruption and underhand dealing to the State Government. Are they justified by the record, is a question which we have to consider. We may first consider the question of laches or delay in filling the 41 writ petitions because that is the question which has been decided by the High Court against the petitioners and the petitioners have challenged the correctness of the finding reached by the High Court of this point. The policy decision impugned in the writ petitions was taken 30th December, 1984. The Letter of Intent was issued in favour of each of respondent Nos. 5 to 11 on 1st February 1985 and the Deed of Agreement was executed on 2nd February 1985. Each of re spondents nos. 5 to 11 thereafter proceeded to purchase land where the new disilleries were to be located and incurred large expenditure in purchase of such land and security deposit in a fairly large amount was also paid by each of respondents Nos.5 to 11. Thereafter civil construction work for putting up the distillery buildings was entrusted to reputed builders and various steps were taken by each of respondents Nos.5 to 11 for obtaining requisite permission/consent from Madhya Pradesh Pradushan Nivaran Mandal. The construction of the distillery buildings was started and in many cases considerable progress was made in the construction. Each of respondents Nos. 5 to 11 also placed orders for plant and machinery and this too involved considerable amount of expenditure. All this had to be done with quick despatch because the distilleries were required to be ready for production by 1st April 1986. Each of re spondent Nos. 5 to 11 worked indefeatably, ceaselessly and in all earnestness and spent considerable time, energy and resources in setting up the distilleries at the new sites and by the time the writ petitions came to be filed each of respondent Nos. 5 to 11 had spent at least Rs. 1.5 crores it not more, on acquisi tion of land, purchase of plant and machinery, construction of distillery buildings and other incidental and ancillary expenses. The first writ petition was filed by Nand Lal Jaiswal on 28th November, 1985 about 11 months after the date of the impugned policy decision, while the second writ petition came to be filed by Sagar Agarwal even later on 24th January 1986 and the third writ petition of M/s Doon gaji & Co. was filed when the hearing of the first two writ petitions was actually going on in the High Court. There can be no doubt that the petitioners were guilty of gross delay in filing the writ petitions with the result that by the time the writ petitions came to be filed, respondent Nos.5 to 11 had, pursuant to the policy decision dated 30th Decem ber 1984, altered their position by incurring huge expendi ture towards setting up the distilleries. Now, it is well settled that the power of the High Court to issue an appropriate writ under article 226 of the Con stitution is discretionary and the High Court in the exer cise of its discretion does not ordinarily assist the tardy and the indolent of the acquiescent and the lethargic. If there is inordinate delay on the part of the petitioner in 42 filing a writ petition and such delay is not satisfactorily explained, the High Court may decline to intervene and grant relief in the exercise of its writ jurisdiction. The evolu tion of this rule of laches or delay is premised upon a number of factors. The High Court does not ordinarily permit a belated resort to the extraordinary remedy under the writ jurisdiction because it is likely to cause confusion and public inconvenience and bring in its train new injustices. The rights of third parties may intervene and if the writ jurisdiction is excercised on a writ petition filed after unreasonable delay, it may have the effect of inflicting not only hardship and inconvenience but also injustice on third parties. When the writ jurisdiction of the High Court is invoked, unexplained delay coupled With the creation of third party rights in the meanwhile is an important factor which always weighs with the High Court in deciding whether or not to exercise such jurisdiction. We do not think it necessary to burden this judgment with reference to various decisions or this Court where it has been emphasised time and again that where there is inordinate and unexplained delay and third party rights are created in the intervening period, the High Court would decline tO interfere, even if the State action complained of is unconstitutional or ille gal. We may only mention in the passing two decision of this Court one in Ramanna Dayaram Shetty vs International Airport Authority of India & Ors., ; and the other in Ashok Kumar Mishra & Ant. vs Collector Rajput & Ors., ; , We may point out that in R.D. Shetty 's case (supra), even though the State action was held to be unconstitutional as being violative of Article 14 of the Constitution, this Court refused to grant relief to the petitioner on the ground that the writ petition had been filed by the petitioner more than five months after the acceptance of the tender of the fourth respondent and during that period, the fourth respondent had incurred considerable expenditure, aggregating to about Rs. 1.25 lakhs, in making arrangements for putting up the restaurant and the snack bar of course, this rule of laches or delay is not a rigid rule which . can be cast in a straitjacket formula, for there may be cases where despite delay and creation of third party rights the High Court may still in the exercise of its discretion interfere and grant relief to the petitioner. But, such cases where the demand of justice is so compelling that the High Court would be inclined to interfere inspite of 'delay or creation of ,third party rights would by their very nature be few and for between. Ultimately it would be a matter within the discretion of the Court ex hypothese every discretion must be exercised fairly and justly so as to promote justice and not to defeat it. Here, obviously, there was considerable delay on the part of the 43 petitioners in filing the writ petitions and in the inter vening period, respondent Nos.5 to 11 acquired land, con structed distillery buildings, purchased plant and machinery and spent considerable time, money and energy towards set ting up the distilleries. These circumstances would, in our opinion, be sufficient to disentitle the petitioners to relief under Article 226 of the Constitution. The petition ers however contended that they were not aware of the policy decision dated 30th December 1984 nor had they any knowledge of the fact that the right to construct distilleries and to manufacture and supply wholesale country liquor from such distilleries was granted to the existing contractors and it was only when they came to know about this that they immedi ately proceeded to file the writ petitions. Now, it is difficult to believe that the petitioners were not aware of the policy decision dated 30th December 1984. The considera tion of this matter started as far back as July 1983 and there were prolonged and wide ranging deliberations lasting several months, coupled with spot inspections by the Vijay vargi Committee and the Excise Department and it was after considerable discussion and deliberation that the policy decision was ' arrived at on 30th December 1984. The peti tioners were, on their own showing, liquor contractors by profession and they were "associated with the trade of country liquor in the State since the last several years" and it would be wholly unreal istic and naive to suppose that the petitioners were not aware of the change in the policy which was being discussed at various levels over a period of almost 12 months and which was ultimately brought about by the policy decision dated 30th December 1984. Those who are in the liquor trade would immediately know what is happening and whether any change is taking place in the policy in regard to grant of licences for manufacture and wholesale supply of country liquor. It is also difficult to believe that the peti tioners did not know that new distilleries were being con structed at new sites by respondent Nos.5 to 11. The reigned ignorance of the petitioners is completely exposed by the letter dated 1st April 1985 addressed by Sagar Agarwal to the Commissioner of Excise where it has been stated categor ically: "I have learnt that in order to prevent pollu tion the Government has taken a decision to transfer the distilleries from the densely populated areas and to establish them in areas having less thinner population. Government deserves to be congratulated for this decision in the face of pollution prevailing throughout the world. For this work existing distillers have taken a decision 44 to construct new distilleries at their own cost and they are being granted long term permanent type licences for the same. Besides this, the existing supply areas would be kept in tact with existing distillers. " This letter clearly shows that Sagar Agarwal very well knew about the policy decision dated 30th December 1984 and that he was aware that Iong term permanent licences were being granted to the existing contractors for constructing new distilleries and operating the same. It may also be pointed out that there was considerable publicity in newspapers in regard to the construction of new distillery at village Khapri in Chhatisgarh area and information to that effect appeared in the issues of Yugdhar dated 7th June 1985, Navbharat dated 8th June 1985 and Amrit Sandesh. There was also information in regard to transfer of the Badawah dis tillery to village Khodi in the issue of Nai Dunia published from Indore on 12th July 1985. Of course, the petitioners have stated in their affidavits that they did not see this newspaper publicity but it is difficult to accept their statement. We may also point out that, apart from the letter dated 1st April 1985, there was also another letter dated 25th September 1985 addressed by Sagar Agarwal to the Com missioner of Excise where he made a specific reference to the policy decision dated 30th December 1984 which shows that in any event, Sagar Agarwal knew specifically about the policy decision as far back as 25th September, 1985 and yet no action was taken by him until 24th January 1986. M/s Doongaji & Company also knew by April 1985 that the distill eries were being given 'permanently ' to the existing con tractors, vide their letter dated 12th April 1985 addressed to the Chief Secretary, Government of U.P. The next letter in point of time, namely, that dated 17th May 1985 addressed by M/s Doongaji & Company to the Prime Minister, also shows that M/s Doongaji & Company were aware by this time that the distilleries were being given 'permanently ' to the existing contractors. M/s Doongaji & Company addressed another letter to the Prime Minister on 7th November 1985 in which they once again complained that the distilleries were being made 'permanent ' to the existing contractors. Now if Sagar Agar wal and M/s Doongaji & Company knew as far back as April 1985 that the distilleries were being given in private ownership to the existing contractors, it is difficult to believe that Nand Lal Jaiswal who is also in the liquor trade for years did not known about it. In fact, every person in the liquor trade would have know about this change in policy which had been made by the State Government under the policy decision dated 30th December 1984. We do not therefore see any reason to up set the finding of the High Court that the petitioners were guilty of 45 enormous delay in filing the writ petitions and that in the meanwhile, during the intervening period, the rights of third parties had intervened in that respondent Nos.5 to 11, acting on the basis of the policy decision dated 30th Decem ber 1984, had incurred huge expenditure towards setting up the distilleries. If the policy decision dated 30th December 1984 were now to be set aside at the instance of the peti tioners, it would work immense hardship on respondent Nos. 5 to 11 and cause grave injustice to them, since enormous amount of time, money and energy spent by them in setting up the distilleries would be totally wasted. Obviously, re spondent Nos.5 to 11 would not have proceeded with the work of setting up the distilleries by spending considerable time and energy and incurring huge expenditure, if the writ petitions had been filed in time, for in that event they would have known that they would be running a serious risk of losing time, money and resources in case the writ peti tions were allowed. But since no writ petitions were filed by any liquor contractors challenging the policy decision dated 30th December 1984 for well nigh over 10 months, respondent Nos.5 to 11 could not be blamed for embarking on the task of setting up the distilleries pursuant to the policy decision dated 30th December 1984. It would be most inequitous now to tell respondent Nos. 5 to 11 that they policy decision dated 30th December 1984 was unconstitution al and void and that all the time and energy spent and the enormous expenditure incurred by them in setting up the distilleries is therefore futile and they cannot be permit ted to enjoy its benefits. The High Court however, fell into an error in splitting up the policy decision dated 30th December 1984 into two parts, one part relating to the grant for construction of new distilleries by the existing contractors and the other part relating to the grant of licences for manufacture and wholesale supply of liquor to the existing contractors on construction of new distilleries by them and in holding that delay on the part of the petitioners in filing the writ petitions disentitled them to relief in respect of only the first part 'and not in respect of the second. The High Court took the view that by reason of the delay in filing of the writ petitions, the petitioners could not be permitted to assail the grant made to the existing contractors for con struction of new distilleries but so far as the grant of licences for manufacture and wholesale supply of liquor from the new distilleries was concerned. the challenge to the same was not precluded by the doctrine of laches or delay and taking this view, the High Court proceeded to hold that the grant of licences for manufacture and wholesale supply of liquor made to the existing contractors was violative of the equality clause of the Con 46 stitution. This view taken by the High Court is in our opinion plainly erroneous. The policy decision dated 30th December 1984 was a single integrated decision arrived at by the State Government taking a holistic view of all the aspects involved in the decision and it is difficult to appreciate how the High Court could sustain one part of the policy and strike down the other. Either the policy as a whole could be sustained or as a whole, it could be declared to be invalid, but certainly one part could not be sus tained, whatever be the ground and the other pronounced invalid. That would be making a new policy for the State Government which it was not competent for the High Court to do. Once the High Court came to the conclusion that on account of delay or laches in the filing of the writ peti tions or the creation of third.party rights in the mean while, the Court would not interfere with one part of the policy decision, the Court could not interfere with the second part of the policy decision as well. The consequence of sustaining one part of the policy decision and striking down the other would not only be to create a new policy for the State Government but it would also cause considerable hardship and injustice to respondent Nos. 5 to 11 and also result in public mischief and inconvenience detrimental to the interest of the State. In the first place, under the policy decision dated 30th December 1984, new distilleries were to be constructed by the existing contractors, not with a view to making them available for manufacturing liquor to any other person who might give a more acceptable bid or tender for D 1 and D 2 licences in the open market, but in order that the existing contractors who put up the new distilleries should be able to manufacture liquor and make wholesale supply of it under D 1 and D 2 licences to be granted to them for a period of 5 years. The grant of D 1 and D 2 licences to the existing contractors for a period of 5 years for manufacturing liquor in the new distilleries constructed by them and supply it in wholesale to retail vendors, was an integral part of the policy decision dated 30th December 1984. If D 1 and D 2 licences were not be granted to the existing contractors but they were to be disposed of by auction or tender to any one who offers the most favourable rate, why should the existing contractors or for the matter of that any one, spend so much time, energy and resources and incur so much expenditure for constructing the distilleries. Obviously the inducement to the existing contractors for constructing new distilleries at enormous cost was that they would be granted D 1 and D 2 licences at least for a period of 5 years. Otherwise, we do not see why they should agree to construct new distilleries spending so much time and energy and incurring such huge expenditure. Moreover, according to 47 the policy decision dated 30th December 1984, the rate chargeable for supply of liquor manufactured in the new distilleries was to be determined from year to year by an Expert Committee appointed by the State Government, but if such rate were to depend on the bid which may be made at the auction or tender and obviously the auction or tender could take place only at the end of 3 or 5 years and not from year to year the entire policy of rate fixation laid down by the State Government would be set at naught. What would happen in effect is that the old policy which was being followed up to 31st March 1986 and which was sought to be changed by the State Government would be revived but now the distilleries forming the subject matter of that policy would not be the old distilleries of which the land and building belonged to the State Government and the plant and machinery was subject to transfer at a valuation but the new distilleries con structed by the existing contractors with their own monies and resources under the Letter of Intent dated 1st February 1985 and the Deed of Agreement dated 2nd February 1985, neither of which provided for transfer of the land and building or the plant and machinery to any other person who might be granted D 1 and D 2 licences as a result of auction or tender. The entire policy of the State Government con tained in the policy decision dated 30th December 1984 would be frustrated and a new policy would be made out which patently the High Court has no jurisdiction or power to do. Secondly, it is obvious that respondent Nos. 5 to 11 took tremendous trouble by way of acquiring land, construct ing buildings, purchasing and installing plant and machinery and procuring and utilising large resources in setting up new distilleries with a view to working them and manufactur ing liquor for wholesale supply at such rate or rates as may be fixed by the Expert Committee appointed by the State Government. Now if D 1 and D 2 licences are not granted to them but are disposed of through auction or tender to anoth er person the entire effort put in by them would be wasted and they would be disappointed of a legitimate expectation created by the policy decision dated 30th December 1984 which remained unchallenged for a period of over 10 months. There can be no doubt that this would cause considerable hardship and inconvenience to respondent Nos. 5 to 11. Moreover, it is difficult to see how D 1 and D 2 licences could be disposed of in favour of the most acceptable bidder or tenderer, when such bidder or tenderer has no distillery in which he can manufacture liquor. D 1 licence, as we have pointed out above, cannot be granted to a person who does not hold D 2 licence and the grant of D 2 licence postu lates that a distillery would be available to the licencee where he 48 can work for manufacturing liquor. Here, barring the new distilleries which are being set up by respondent Nos. 5 to 11 and the Ratlam and Nowgaon distilleries, there are no other distilleries in the State of Madhya Pradesh where liquor can be manufactured and hence D 1 and D 2 licences cannot be granted to any person other than respondent Nos. 5 to 11, unless the new distilleries constructed.by respondent Nos. 5 to 11, are transferred to such other person either by agreement or after acquisition by the State Government. We can plainly rule out the possibility of any agreement on the part of respondent Nos. 5 to 11 to transfer the new distill eries to any other person to whom D 1 and D 2 licences may be granted by the State Government and the only alternative left open to the State Government would therefore be to acquire the new distilleries. But that would again frustrate the policy of the State Government to transfer the distill eries to private ownership and the old policy would be revived, though in a different garb. Moreover, the State Government would have to produce over 40 crores of rupees by way of compensation for the acquisition of the new distill eries and that would be a heavy drain on the public revenues which might otherwise be used for developmental and welfare activities. Further more, the entire process of acquisition would take considerable time, may be years, and during this period, there would be no production of liquor and the State Government would have to purchase liquor from outside the State at higher prices in order to satisfy the demand of the consuming public, resulting in loss of licence fee as well as excise duty. Even if the person to whom D 1 and D 2 licences may be granted agrees to set up a new distillery, it would take considerable time and during the period taken up in the construction of the new distillery, the State Government would lose revenue. Of course, it may be urged that if respondent Nos. 5 to 11 are not granted D 1 and D 2 licences but such licences are granted to any other person or persons who offer a more acceptable bid or tender, re spondent Nos. 5 to 11 would be constrained to transfer the new distilleries to such other person or persons because otherwise the new distilleries in their hands would remain idle investment. But the State GOvernment cannot wait for such chance to materialise and in the meanwhile, lose public revenue. We have therefore no doubt that the High Court was not at all justified in splitting up the policy decision dated 30th December 1984 into two parts and in striking down the second part, while sustaining ' the first. The Policy deci sion dated 30th December 1984 was one integrated policy decision and it could either be sustained or struck down as a whole. We must accordingly hold that since the petitioners were 49 guilty of enormous delay in filing the writ petitions and in the intervening period, the rights of respondents Nos 5 to 11 were created in that they spent considerable amount of time, energy and resources and incurred huge expenditure in setting up the new distilleries and sustaining one part of the policy decision while striking down the other would amont to creating a new policy for the State Government and would also entail considerable hardship and inconvenience to respondent Nos. 5 to 11 and would also be detrimental to the interest of the State, it would be unjust. and inequitous to grant relief to the petitioners against the policy decision and the petitioners must in the circumstances be held to be disentitled to relief in respect of the policy decision in its entirity. On this ground alone we would dismiss the writ petitions and allow the appeals of the State Government and respondent Nos, 5 to 11. But since considerable arguments were advanced before us in regard to the validity of the policy decision dated 30th December 1984 with reference to Article 14 of the Constitu tion, we shall proceed to consider this question It would, however, be convenient if we first examine two minor conten tions urged on behalf of M/s. Doongaji & Co. as they are relatively unimportant and can be briefly disposed of in a few words. The first contention raised by the learned coun sel appearing on behalf of M/s. Doongaji & Co. was that it was not competent to the State Government to give effect to the policy decision dated 30th December 1984 until after the publication of Rules made for that purpose under section 62(2) (h) of the Act. The learned counsel pointed out that D 2 licence in its existing form does not contemplate any construction licence at all: it is only a licence to manu facture liquor and not a licence to construct a distillery and hence without publishing Rules relating to licence for construction of a distillery, the State Government could not implement the change of policy under the policy decision dated 30th December 1984. This argument was elaborated by the learned counsel by putting forward the following conten tion which we may reproduce in his own words: "Rule XXII contemplates the disposal of licences either by tender, auction or fixed licence fee or in such other manner as the State Government may by general or special order direct. It does not enable the State Government without publishing the rules to licence construction and working of a distillery under a changed policy: i.e. a policy which does not involve tender, auction or fixed licence fee. Any other construction would render the last clause of Rule XXII as ultra vires section 62(2)(h) and section 63 read with section 7(c). " The learned counsel also urged that "the decision of the Cabinet in a meeting of the 50 Cabinet is not an Order" within the meaning of Rule XXII and since no order under that Rule was produced, the Letter of Intent and the Deed of Agreement were without the authority of law as being in contravention of that Rule. We do not think this contention has any substance. It is a contention of despair. It is difficult to understand why the policy decision dated 30th December 1984 cannot be given effect to without any new Rules being made by the State Government. There is nothing in the policy decision dated 30th December 1984 which is contrary to the Rules made under the Act. It is true that D 2 licence in its existing form does not contemplate construction of a distillery and that the Rules do not seem to have prescribed the form for a licence for constructing a distillery. But, merely because the form of a licence for constructing a distillery is not prescribed by the Rules, it does not mean that such a licence cannot be granted by the Excise Authorities. If the form of a licence is prescribed, then, of course, such form has to be fol lowed, but if no form is prescribed, the only consequence is that the licence to be granted by the Excise Authorities need not conform to any particular form. Section 14(c) of the Act clearly provides that the Excise Commissioner may license the construction and working of a distillery and there was, therefore, nothing contrary to the Act or the Rules in the Excise Commissioner issuing Letter of Intent in favour of each of respondent Nos. 5 11 granting licence for construction of a new distillery. Rule XXII, as we have already pointed out, permits any one of four modes of dis posal of licence to be adopted by the Excise Authorities and it does not prescribe that the fourth mode denoted by the words "such other manner as the State Government may by general or special order direct" can be resorted to only if the first three modes fail. Here, in the present case, the policy decision dated 30th December 1984 provided that respondent Nos. 5 11, who were the existing contractors, should be granted licence to construct new distilleries and D 1 and D 2 licences should be given to them for a period of five years for manufacturing liquor in such new distill eries and making wholesale supply of it to retail vendors in the areas attached to those distilleries. This manner of disposal of licences was clearly covered by the fourth mode of disposal set out in Rule XXII. We fail to understand why any further Rules were necessary to be made by the State Government in order to give effect to this policy decision arrived at by the State Government on 30th December, 1984. The fourth mode of disposal set out in Rule XXII was, in our opinion, sufficient to permit disposal of licences in the manner set out in the policy decision dated 30th December 1984. The argument that there was no general or special order made by the State Government pursuant to the policy decision dated 30th December 1984 which would bring the case within the 51 fourth mode set out in Rule XXII is equally futile. When the policy decision dated 30th December 1984 was arrived at by the State Government itself, there could be no need for separate general or special order to be made by the State Government in that behalf. This would seem to be clear on principle, but we find that there is a dedsion of this Court in State of Orissa & Ors. vs Harinarayan Jaiswal & Ors., ; where the same view has been accepted. There, the section which came up for consideration was section 29 of the Bihar and Orissa Excise Act, 1915. Sub section (2) of this section provided that the sum payable to the State Government in consideration of the grant of an exclusive privilege to manufacture and supply or liquor shall be determined as follows: "by calling tender or by auction or otherwise as the State Government may, by general or special order, direct. " The State Government adopted the method of selling the exclusive privilege by private negoti ations and this was challenged on behalf of the petitioners on the ground that the Government could sell the exclusive privilege by private negotiations only if an order was made under section 29 sub section (2) that the privilege in question shall be sold by private negotiations and no such order having been made by the State Government, the sale effected by the State Government was invalid. This challenge was negatived by Hegde, J., speaking on behalf of the Court in the following words: "In the cases of public auctions or in the case of calling for tenders, orders from the Government directing its subordinates to notify or hold the auctions or call for ten ders is understandable. Public auctions as well as calling for tenders are done by subor dinate officials. Further due publicity is necessary in adopting those methods. To re quire the Government to make an order that it is going to sell one or more of the privileges in question by negotiating with some one is to make a mockery of the law. If the Government can enter into negotiation with any person, as we think it can, it makes no sense to require it to first make an order that it is going to negotiate with that person. We must understand a provision of law reasonably. Section 29(2)(a) does not speak of any order. It says that "the State Government may, by general or special order direct". The direction contem plated by that provision is a direction to subordinate officials. It is meaningless to say that the Government should direct itself." This decision provides a complete answer to the contention urged on 52 behalf of M/s. Doongaji & Co. based on the language of the last clause of Rule XXII. It is true that what has been produced before the Court by way of policy decision dated 30th December 1984 is the decision of the Cabinet and if its production had been objected to on behalf of the State Government, a question would perhaps have arisen whether it is barred form the scrutiny of the Court under clause (3) of Article 163 of the Constitution. But, it has been produced by the petitioners without any objection on the part of the State Government and once it is produced, the Court is entitled to look at it and it clearly contains the decision of the State Government and must be held to fall within the last clause of Rule XXII. This view finds complete support from the decision of this Court in L.G. Chaudhari vs Secre tary, L.S.G. Deptt., Govt. of Bihar & Ors., AIR 1980 SC 383. The learned counsel appearing on behalf of M/s Doongaji & Co. also raised another contention based on the provisions of the Industries (Development & Regulation) Act, 1951. The argument of the learned counsel was that respondent Nos. 5 11 were not entitled to set up new distilleries at the new sites without obtaining a licence from the Central Govern ment under Section 11 of this Act and since there was noth ing to show that they had obtained such licence before setting up the new distilleries, their action in setting up the new distilleries was illegal and could not give rise to any rights in their favour. But, this contention is also unsustainable. In the first place, no such contention was raised in the writ petitions and neither the State Govern ment nor respondent Nos. 5 11 had any opportunity of answer ing such contention. This contention is based on facts and we cannot permit the petitioners to raise it for the first time in the present appeals. The foundation for this conten tion should have been laid in the writ petitions and the necessary facts should have been pleaded in support of it. No such plea having been raised and no such facts having been pleaded in the writ petitions, we cannot allow this contention to be raised before us. Moreover, it is obvious from section 11 read with the definitions of 'factory ' and 'industrial undertaking ' contained in sub sections (c) and (d) of section 3 of this Act that licence from the Central Government for setting up new distilleries would be neces sary only if 50 or more workers would be working in such distilleries and here in the present writ petitions, there is nothing to show that 50 or more workers were going to be employed in the new distilleries. We were told at the Bar that in fact old distilleries were also working without any licence from the Central Government, presumably because less than 50 workers were employed in such distilleries. This contention of the learned counsel on behalf of M/s Doongaji & Co. must also, therefore, be rejected. 53 That takes us to the next contention urged on behalf of the petitioners in regard to the validity of the policy decision dated 30th December 1984 tested with reference to Article 14 of the Constitution. The High Court, of course, declined to interfere with what it called the first part of the policy decision on account of laches or delay on the part of the petitioners but came to the conclusion that the second part of the policy decision was violative of the equality clause. The High Court observed that the policy decision dated 30th December 1984 "in so far as it relates to the grant of licences for manufacture and wholesale supply of country liquor . . contravenes Article 14 of the Constitution and interference to that extent is called for". The argument which found favour with the High Court was, and that is the argument which was reiterated before us on behalf of the petitioners, that the policy decision dated 30th December 1984 that licence to construct new distilleries should be given only to the existing con tractors and D 1 and D 2 licences to manufacture and supply it in wholesale to retail dealers liquor in such new dis tilleries should be granted to them alone to the exclusion of other liquor contractors without holding auction or inviting often which would give an opportunity to all liquor contractors interested in setting up new distilleries and manufacturing and supplying liquor to complete for the grant of such licences, was arbitrary and irrational and there was no valid justification for selectively preferring the exist ing contractors to other liquor contractors for grant of such licences. This contention, plausible though it may seem at tint blush, is, in our opinion, wholly untenable. There are two very effective answers to it given by the learned Attorney General and the learned counsel for Respondent Nos. 5 11 and we shall immediately proceed to discuss them. But, before we do so, we may at this stage conveniently refer to a contention of a preliminary nature advanced on behalf of the State Government and respondent Nos. 5 11 against the applicability of Article 14 in a case dealing with the grant of liquor licences. The contention was that trade or business in liquor is so inherently pernicious that no one can claim any fundamental right in respect of it and Article 14 cannot therefore be invoked by the petitioners. Now, it is true, and it is well settled by several decisions of this Court including the decision in Har Shanker & Ors. etc. vs Deputy Excise & Taxation Commissioner & Ors. , ; that there is no fundamental right in a citizen to carry on trade or business in liquor. The State under its regulatory power has the power to prohibit absolutely every form of activity in relation to intoxicants its manufac ture, storage, export, import, sale and possession. No one can claim as against the 54 State the right to carry on trade or business in liquor and the State cannot be compelled to part with its exclusive right or privilege of manufacturing and selling liquor. But when the State decides to grant such right or privilege to others the State cannot escape the rigour of Article 14. It cannot act arbitrarily or at its sweet will. It must comply with the equality clause while granting the exclusive right or privilage of manufacturing or selling liquor. It is, therefore, not possible to uphold the contention of the State Government and respondent Nos. 5 11 that Article 14 can have no application in a case where the licence to manufacture or sell liquor is being granted by the State Government. The State cannot ride roughshod over the re quirement of that Article. But, while considering the applicability of Article b, in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by the State Govern ment for grant of licences for. manufacture and sale of liquor. The Court would, in view of the inherently perni cious nature of the commodity allow a large measure of latitude to the State Government in determining its policy of regulating, manufacture and trade in liquor. Moreover, the grant of licences for manufacture and sale of liquor would essentially be a matter of economic policy where the court would hesitate to intervene and strike down what the State Government has done, unless it appears to be plainly arbitrary, irrational or mala fide. We had occasion to consider the scope of interference by the Court under Arti cle 14 while dealing with laws relating to economic activi ties in R.K. Garg etc. vs Union of India & Ors. etc. ; We pointed out in that case that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. We observed that the legislature should be ,allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait jacket formula and this is particular ly true in case of legislation dealing with economic mat ters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. We quoted with approval the following admonition give by Frankfurter, J. in Morey vs Dond; , "In the utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative judgment. The legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added 55 to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the 'experts, and the number of times the judges have been overruled by events self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability. " What we said in that case in regard to legislation relating to economic matters must apply equally in regard to execu tive action in the field of economic activities, though the executive decision may not be placed on as high a pedestial as legislative judgment in so far as judicial deference is concerned. We must not forget that in complex economic matters every decision is necessarily empiric and it is based on experimentation or what one may call 'trial and error method ' and, therefore, its validity Cannot be tested on any rigid a 'priori ' considerations or on the application of any straight jacket formula. The court must while adjudg ing the constitutional validity of an executive decision relating to economic matters grant a certain measure of freedom or play in the 'joints ' to the executive. "The problem of Government" as pointed out by the Supreme Court of the United States in Metropolis Theatre Company vs State of Chicago, 57 Lawyers Edition 730 "are practical ones and may justify, if they do not require, rough accommodations, illogical, it may be, and unscientific. But even such criti cism should not be hastily expressed. What is best is not discernible, the wisdom of any choice may be disputed or condemned. Mere errors of Government are not subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void." The Government, as was said in permian Basin Area Rate cases 20 Lawyers Edition (2d) 312, is entitled to make pragmatic adjustments which may be called for by particular circumstances. The Court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide. It is against the background of these observations and keeping them in mind that we must now proceed to deal with the contention of the petitioners based on Article 14 of the Constitution. The first answer to the contention of the petitioners is, and this in our opinion is a fatal answer, that no liquor contractors have in fact been excluded from consider ation under the policy decision dated 30th December 1984. It is undoubtedly true that, on the application of the existing contractors, the State Government decided to grant to them licences to construct new distilleries in lieu of the old distilleries in 56 Gwalior, Ujjain, Dhar, Badwaha, Chattisgarh, Bhopal Seoni as also to give them D 1 and D 2 licences to manufacture liquor in such new distilleries and to sell it in wholesale to retail vendors in the respective areas attached to such new distilleries and it might appear on a superficial reading of the policy decision dated 30th December 1984 that the entire cake was handed over to the existing contractors and all other liquor contractors were left out and they were denied an opportunity of asking for similar licences. But this view, in our opinion, is based on a misreading of the policy decision dated 30th December 1984. It ignores clause 2 of the policy decision which clearly provides that "if some such 'similar matters are put up, the department on the basis of the principles recommended by the Cabinet Sub Committee should take decisions". It is clear from this clause that the State Government envisaged the possibility of other liquor contractors making similar applications for licences to construct new distilleries and to manufacture and supply liquor from such new distilleries and hence provided that if any such applications are made, they should be disposed of by the Excise Department on merits on the basis of the principles "recommended by the Sub Committee" that is, on the basis of the same principles on which the licences were decided to be granted to the existing contrac tors. It is therefore impossible to see how it can at all be contended that other contractors were excluded from consid eration for the grant of licences for new distilleries. If any liquor contractor makes an application for a licence to construct a new distillery on the same terms on which li cences are granted to the existing contractor his applica tion would have to be considered on merits by the Excise Authorities and the Excise Authorities may, if they find the proposal suitable, grant to such liquor contractor licence to construct a new distillery along with D 2 licence on the same basis. The Excise Authorities may, in such event, either (1) direct such liquor contractor to manufacture rectified spirit, denatured spirit or foreign liquor in the new distillery for the remaining period of the D 1 and D 2 licences of the existing contractors and thereafter consider him along with other liquor contractors for grant of D 1 and D 2 licences in respect of the new distillery or (2) reduce and/or alter the area of supply of any of the existing contractors and grant D 1 licence to such liquor contractor in respect of the carved out area. If the Cabinet decision dated 30th December 1984 while granting licences to the existing contractors leaves it open to other liquor contrac tors to come in and apply for similar licences, it is diffi cult to see how the challenge based on Article 14 can be sustained. This view taken by us is sufficient to dispose of the con tention 57 based on Article 14. But apart from this answer to the contention which has found acceptance with us, there is another answer which is equally strong and cogent. Let us consider the circumstances under which the policy decision dated 30th December 1984 came to be taken. The proposal which ultimately culminated in the policy decision was first initiated in July 1983 by the M.P. Distillers Association, which was of course an association of existing distillers, making a representation to the State Government for privati sation of the distilleries. The situation which prevailed at that time in regard to the distilleries was quite disturb ing. Whatever might have been the position at the date when the distilleries were constructed, considerable human habi tation had grown around them over the years and, barring Gwalior and Dhar distilleries, all the other distilleries were in thickly populated localities and even so far as Gwalior and Dhar distilleries were concerned, it was appre hended that within 5 or 7 years they would also be in the same unhappy situation. The result was that the working of the distilleries at the old sites was causing serious air, water and environmental pollution. The note prepared by the separate Revenue Department for the consideration of the Cabinet Sub Committee as also the Report of the Vijayvargi Committee clearly showed that there was considerable air and water pollution on account of dirty water flowing out of the distilleries and fouling air and water. There was not enough space at the old sites for constructing lagoons for removal of the polluted water coming out of the distilleries. It was therefore necessary to transfer the distilleries to new sites which would be away from human habitation and. where the distilleries could be constructed keeping in mind the standards fixed by the M.P. Pradushan Nivaran Mandal for removal of polluted water and keeping the environment dean and wholesome. Moreover, the total capacity of the distill eries including Ratlam Alcohol plant and Nowgaon distillery was only 203 lakhs proof litres and even this quantity of production was not being reached largely on account of old plant and machinery. The result was short supply of country liquor leading to loss of licence fee as well as excise duty on the part of the State Government. Moreover, the estimated consumption of liquor in the State was likely to be around 482.36 lakhs proof litres by the year 1991 and by the turn of the century it was expected to reach the startling figure of 1696.80 lakhs proof litres. The existing distilleries were obviously incapable of meeting this growing demand for country liquor. The plant and machinery of the distilleries had became antiquated and worn out and the licensees for the time being had no incentive to replace it by modern plant and machinery. The buildings in which the distilleries were housed had also become old and dilapidated and the State Government was not in a position to 58 maintain them in good condition and obviously the licencees for the time being were also not interested in keeping the buildings in good state of repair because the buildings did not belong to them. It was therefore absolutely essential to construct new distilleries with modern technologically advanced plant and machinery at new sites where there would be no problem of air or water pollution. The question was as to how this should be done whether the new distilleries should be constructed by the State Government or whether they should be placed in the private sector. The proposal made by M.P. Distillers Association was that the distiller ies should be transferred to private ownership and they offered to take over the existing distilleries. The Cabinet SubCommittee considered this question in all its aspects and reached the conclusion that it would be better to entrust the construction of the new distilleries to the private sector rather than ask the State Government to do so. There are four very good reasons why the Cabinet Sub Committee took this view. In the first place, the distilleries were in private ownership in almost all the States barring the State of M.P. and there was no reason why the State of M.P. should not fail in line with what was happening in the other States. Secondly, the State Government would have to invest about Rs.50 crores, in any event more than Rs.40 crores, if the State Government had to construct and cut up new dis tilleries. This large amount would become available for other developmental and welfare programme, if, instead of the State Government the private sector was entrusted with the task of construction of new distilleries. Thirdly, the State Government would not have to, incur any recurring expenditure on maintenance of the buildings and the plant and machinery, because in the event of construction of the new distilleries being entrusted to private entrepreneurs, maintenance of buildings as well as plant and machinery would become their responsibility and moreover they would have real interest in keeping and maintaining them in good condition. And lastly, the land and buildings in which the distilleries were then housed would become available to the State Government for sale and, situated as they were in thickly populated areas, they would fetch a very handsome price which would go to augment the resources of the State Government. The State Government for these reasons thought it desirable that the construction of new distilleries should be in the private sector and, after discussion with the M.P. Distillers Association the State Government decided to entrust the construction of new distilleries to the existing contractors who had already offered to take over the distilleries. There was also one other factor which, according to the State Government and respondent Nos. 5 to 11, weighed with the State 59 Government in arriving at the decision to entrust the con struction of new distilleries to the existing contractors instead of inviting offers by advertisement and that factor was that the licences of the existing contractors were coming to an end on 31st March, 1986 and it was therefore necessary that the new distilleries should be ready for manufacture of liquor before 1st April, 1986. The construc tion of new distilleries was a time consuming job because it involved selection of appropriate land, approval of the authorities to the land selected, entrustment of contract for construction to a competent contractor, obtaining of sanction of the municipal and other authorities to the plans acquisition of materials and construction of buildings placing of orders for modern sophisticated plant and machin ery and installation of such plant and machinery in the distilleries. This whole process was bound to take consider able time and the State Government could not therefore be faulted if they negotiated with the existing contractors who had come forward with a positive offer and entrusted the construction of new distilleries to them so that they could be ready for manufacture by 1st April 1986. Moreover it may be noted that no other person with experience of working a distillery had come forward with an offer to set up a new distillery. It is not possible to believe that when the existing contractors who were members of M.P. Distillers Association had made an offer to the State Government to set up new distilleries and considerable deliberations and detailed enquiries were going on at the highest level for deciding whether the new distilleries should be handed over to the private sector and negotiations were actually being carried on with the M.P. Distillers Association in that behalf the other liquor contractors were not aware of any such proceedings. Even after the policy decision dated 30th December, 1984 was reached by the State Government, neither Nandial Jalswal nor M/s Doongaji & Co. made any application for grant of licence to construct a new distillery on the same terms on which licences were decided to be granted to the existing contractors. It is true that Sagar Aggarwal did make an offer but it may be noted that in the first place he was at no time a D 2 licencee and he had no experience of working a distillery and secondly, his main interest was in having D 1(S) licences for Jabalpur and Betul districts. It is also significant that while taking a decision to grant licences to the existing contractors to put up new distill eries, the State Government did not wish to create a monopo ly in favour of the existing contractors and the State Government therefore, when entering into the Deed of Agree ment, limited the duration of D 2 licence to be granted to each of the existing contractors to five years and also left it open to other distillery contractors to come in on the same terms. In fact the learned Attorney General 60 frankly stated that if M/s Doongaji & Co. made an applica tion for a licence to construct a new distillery on the basis as others, his application would be considered by the State Government. We fail to appreciate how in these circum stances it can at all be contended that the policy decision dated 30th December, 1984 taken by the State Government was arbitrary or irrational so as to be violative of Article 14 of the Constitution. We may also point out that when the State Government is granting licence for putting up a new industry, it is not at all necessary that it should advertise and invite offers for putting up such industry. The State Government is entitled to negotiate with those who have come up with an offer to set up such industry. This principle was clearly and une quivocally accepted by this Court in Kasturi Lal Lakshmi Reddy vs State of Jammu & Kashmir, ; where contracts entered into by the state Government with three manufacturers giving them the right to set up factories in the State for the manufacture of rosin, turpentine and other derivatives and making available to them an assured supply of 4,000, 3,500 and 8000 metric tonnes of rosin per year by giving them tapping contract were challenged as violative of Article 14 of the Constitution on the ground that the State Government had not issued any advertisement inviting offers for award of tapping contract or stating that the tapping contract would be given to any party who would be prepared to put up a factory for manufacture of rosin, turpentine and other derivatives within the State and thereby equality of opportunity to compete for obtaining such contracts was denied to other persons. This Court speaking through one of us (Bhagwati, J., as he then was) pointed out: "The pre dominant purpose of the trans action was to ensure setting up of a factor by the 2nd respondents as part of the process of industrialisation of the State and since the 2nd respondents for that purpose. If the State were giving tapping contract simplicitor there can be no doubt that the State would have to auction or invite tenders for securing the highest price, subject, of course, to any other relevant overriding considerations of public weal or interest, but in a case like this where the State is allocating re sources such as water, power, raw materials etc. for the purpose of encouraging setting up of industries within the State, we do not think the State is bound to advertise and tell the people that it wants a particular industry to be set up within the State and invite those interested to come up 61 with proposals for the purpose. The State may choose to do so, if it thinks fit and in a given situation, it may even turn to be advan tageous for the State to do so, but if any private party comes before the State and offers to set up an industry, the State would not be committing breach of any constitutional or legal obligation if it negotiates with such party and agrees to provide resources and other facilities for the purpose of setting up the industry. The State is not obliged to tell such party; "Please it. I will first adver tise, see whether any other offers are forth coming and then after considering all offers, decide whether I should let you set up the industry". It would be most unrealistic to insist on such a procedure . . . The State must be free in such a case to negotiate with a private entrepreneur with a view to inducing him to set up an industry within the State and if the State enters into a contract with such entrepreneur for providing resources and other facilities for setting up an indus try, the contract cannot be asailed as invalid so long as the State had acted bona fide, reasonably and in public interest. If the terms and conditions of the contract or the surrounding circumstances show that the State has acted mala fide or out of improper or corrupt motives or in.order to promote the private interests of some one at the cost of the State, the Court will undoubtedly inter fere and strike down State action as aribi trary, unreasonable or contrary to public interest. But so long as the State action is bona fide and reasonable, the Court will not interfere merely on the ground that no adver tisement was given or publicity made or ten ders invited. " Here, in the present case, the pre dominant purpose of the policy decision dated 30th December, 1984 was to ensure construction and setting up of new distilleries with modern technologically advanced plant and machinery at new sites where there would be no possibility of air and water pollu tion and if for achieving this purpose the State Government considered the offer of the existing contractors and negoti ated with them and ultimately decided to grant to them licences for construction of new distilleries on the terms and conditions set out in the recommendations of the Cabinet sub Committee it is difficult to see how, in view of the decision in Kasturi Lal Lakshmi Reddy 's case (supra) the State Government could be said to have acted arbitrarily or capriciously in violation of Article 14 of the Constitution. The con 62 tention of the petitioners based on Article 14 of the Con stitution must therefore stand rejected. Before we part with this case we must express our strong disapproval of the observations made by B.M. Lal, J. in paragraph 1,9, 17, 18, 19 and 34 of his concurring opinion. The learned Judge made sweeping observations attributing mala fides, corruption and underhand dealing to the State Government. These observations are in our opinion not at all justified by the record. In the first place it is difficult to appreciate how any such observation could be made by the learned Judge without any foundation for the same being laid in the pleadings. It is true that in the writ petitions the petitioners used words such as 'mala fide ', 'Corruption ' and 'corrupt practice ', but the use of such words is not enough. What is necessary is to give full particulars of such alle gations and to set out the material facts specifying the particular person against whom such allegations are made so that he may have an opportunity of controverting such alle gations. The requirement of law is not satisfied in so far as the pleadings in the present case are concerned and in the absence of necessary particulars and material facts, we fail to see how the learned Judge could come to a finding that the State Government was guilty of factual mala fides, corruption and under hand dealings. The learned Judge ob served that amount was spent by respondent Nos. 5 to 11 "in working out the contract in approaching the concerned au thorities of the State". This observations carried a direct allegation that money passed from respondent Nos. 5 to 11 to "the concerned authorities" for getting the licences. But no such allegation was at any time made by the petitioners and when the petitioners did not make any such allegation in the pleadings, nor even stated as to which authority took monies by way of illegal gratification, it is difficult to under stand how the learned Judge could possibly make such an observation. The petitioners also did not make any specific imputation of under hand dealing in the writ petitiones and yet the learned Judge inexplicably came to the conclusion that the State Government was guilty of 'sinister underhand dealing '. The learned Judge was clearly not justified in doing so. But, quite apart from this objection based on lack of proper and adequate pleading, we think that even on merits the observations made by B.M. Lal, J. were clearly unjusti fied. There is not an iota of evidence to establish or even as much as to indicate that the State Government was actuat ed by any collateral purpose or was guility of any 'sinister underhand dealing ' or was prompted by any currupt motive in reaching the policy decision dated 30th December, 1984. 63 What the learned Judge has said is based entirely on conjec ture and suspicion and approach which does not go well with judicial disposition of a case. There are two important factors which throw considerable light in determining wheth er a policy decision is mala fide or motivated by improper considerations. One relates to the manner and method of reaching the policy decision and the other to the circum stances in which the policy decision is taken and the con siderations which have entered into the making of it. Now, it is dear from the detailed statement of facts which we have given at the commencement of this judgment that the entire process commencing with the representation of the M.P. Distillers ' Association in July 1983 and culminating in the policy decision dated 30th December 1984 was spread over a period of about 17 months and it included gathering of information, on spot inspection of the sites, collegiality of deliberations, candour of inter departmental and intra departmental communication and a dialectical interaction of different multilateral viewpoints. The policy decision was an informed and reasoned decision arrived at after detailed inquiries, fact finding efforts and reports spreading over a period of more than a year and a half. Several queries and issues were raised by the Finance Department boldly and fearlessly and these queries and issues were fully and frankly dealt with, clarifications were given and the entire matter was fully considered. There was no attempt at any stage of suppress discussion and debate or to avoid or side track or push under the carpet any doubts or questions raised by any of the parties involved in the deliberations. It is also significant that the policy decision was not arrived at by a single individual in the secrecy of his chamber but it was by the entire Cabinet and it was based on the recommendations made by the Cabinet SubCommittee which was composed of four Ministers.assisted by officers from different departments belonging to the highest scholars of the civil service. It may also be noted that the Cabinet Sub Committee considered the matter from different angles, obtained relevant information, sent a Committee of officers for spot inspection, took stock of the valuation and the likely investment, reviewed the problem and worked out the solution and made its recommendations to the Cabinet. The entire proceedings of the Cabinet Sub Committee were before the Cabinet including the reasons for which the recommenda tions were made and it was after considering these recommen dations that the Cabinet reached the policy decision. The entire proceedings show that there was complete openness of discussion and deliberation. There was no suddenness of decision, no impulsive caprice or arbitrariness in reaching the decision. The policy decision was plainly and avowedly an informed and institutionalised decision and the manner in 64 which it was reached is clearly indicative that it was neither mala fide nor guided by any corrupt or collateral considerations. We have already discussed the circumstances under which the policy decision dated 30th December, 1984 came to be made. We need not repeat what we have said in the preceding paragraphs in regard to the making of the policy decision and the circumstances under which it was made. These circum stances plainly and unmistakably point to the bona fides of the policy decision. It is not possible to discern any mala fides or any improper or corrupt motive on the part of the State Government in reaching the policy decision. It is significant to note that the State Government did not con cede whatever was demanded by the existing contractors. The existing contractors wanted the land and buildings of the existing distilleries to be transferred to them at a valua tion but the Cabinet Sub Committee did not agree to this suggestion and insisted that the existing contractors would have to acquire land at new sites, construct buildings for setting up new distilleries, and the land and buildings in which the existing distilleries were housed would come back to the State Government. The Cabinet Subcommittee also insisted on the existing contractors to make the necessary arrangements for removing air and water pollution in the new distilleries as also to construct a laboratory with modern equipment. The State Government also changed the mode of rate fixation. Originally the rates for supply of liquor to the retail vendors were fixed on the basis of tenders every five years with the result that the rates accepted by the excise authorities on the basis of the tenders continued to prevail for a period of five years. Now it is a fallacy to assume that the lowest rates quoted by the tenderers would necessarily be the cheapest and the best. If the tenderers form a syndicate they can push up the rates for supply of liquor and in fact it is obvious from the rates which were accepted by the excise authorities for the five year period, 1st April, 1981 to 31st March, 1986, that these were not the most reasonable rates. The Cabinet Sub Committee therefore felt that the system of rate fixation prevalent in West Bengal was the most beneficial to the State Government because it provided for rate fixation by an expert Committee which would take into account the escalation or de escala tion in the price of raw materials, varying labour cost and fluctuating market conditions every year and arrive at a reasonable rate, fair both to the licencee and to the State Government. The Cabinet Committee also did not recommend taking over of the plant and machinery of the old distiller ies from the existing contractors against payment of its value with the result that the old plant and machinery remained with the existing contractors and obviously it 65 would have no value because they would not be able to sell it to any one and it would be dead junk in their hands and the price paid by them to the out going licences would be totally lost. It is indeed difficult to see how it can at all be said that in making its recomendations, the Cabinet Sub Committee was guilty of any mala fides or underhand dealing or was actuated by any corrupt motive. The Cabinet merely accepted the recomendations made by the Cabinet SubCommittee and in fact when the deed of Agreement came to be executed with each of the existing contractor the State Government actually introduced a provision that D 2 licences would be given only for a period of five years. We are therefore unable to appreciate how B.M. Lal, J. could possi bly pass strictures against the State Government attributing mala fides, under hand dealing and corruption to the State Government. We may also in this connection refer to an allegation made by Sagar Aggarwal that by reason of the policy decision dated 30th December. 1984 the State Government would incur a loss of about Rs. 56 crores. This allegation did not find favour with Acting Chief Justice J.S. Verma but it seemed to have impressed B.M. Lal, J. because he categorically stated in paragraph 17 of his concurring opinion that even if D 1 licences were granted to respondent Nos. 5 to 11 only for a period of five years the State Government would suffer a loss of Rs. 56 crores. We find it difficult to understand how B.M. Lal, J. could possibly come to a conclusion that the State Government would be incurring a loss of Rs. 56 crores by the policy decision dated 30th December, 1984. The figure of Rs. 56 crores was arrived at by Sagar Aggarwal on the assumption that if instead of granting licence to the existing contractors to construct new distilleries and giving them D 1 and D 2 licences for a period of five years, D 1(S) licence was granted to him for the entire territory of the State of Madhya Pradesh and he was able to get liquor from the Ratlam Alcohol plant at the rate of Rs. 1.80 per proof litre in sufficient quantity so as 'to be able to supply liquor to retail vendors in the entire State he would be able to save for the State Government a sum of Rs. 56 crores on the basis that otherwise a rate of Rs. 4 per proof litre would be charged by the existing contractors. This assumption is, in our opinion, wholly unfounded. It is totally absurd and chimerical. In the first place, the Ratlam Alcohol plant was unable to supply the requirements of even Jabalpur and Betul districts and during the period ending 31st March 1986 Sagar Aggarwal himself had to pur chase liquor from outside at higher rates in order to satis fy the requirements of these two districts for which he held D 1(S) licence. 'If that be so, how could Ratlam 65 Alcohol plant which could not produce more than 60 lakh proof litres at the outside, possibly supply liquor for the whole of the territory of the State. If Ratlam Alcohol plant could be made to supply the requirement of the entire State there would be no need for any other distillery at all. But obviously the capacity of the Ratlam Alcohol plant was very limited and it was not able to achieve production on up to this capacity. Secondly, it was decided that the Ratlam Alcohol plant would manufacture only ractified spirit for making masala liquor which was more popular and which brought greater revenue to the State and obviously therefore Ratlam Alcohol plant could not be available for producing ordinary liquor for supply to the retail vendors. Thirdly, it is difficult to understand how the learned Judge could assume that Sagar Aggarwal would continue to get liquor from Ratlam Alcohol plant at the rate of Rs. 1.80 per proof litre. The rate for supply of liquor by the Ratlam Alcohol plant would naturally depend upon varying market conditions. And lastly we fail to understand how the learned Judge could proceed on the assumption that a rate of Rs.4 per proof litre would be fixed by the Export Committee for supply of liquor by the existing contractors from the new distiller ies. We do not know what rate would be fixed by the Expert Committee. That would depend upon diverse considerations and of course one of the considerations would certainly be that Sagar Aggarwal had offered minus 2.31 rupees per proof litre while taking D 1(S) licences for Jabalpur and Betal dis tricts. The figure of Rs.56 crores put forward by Sagar Aggarwal and accepted by the learned judge was clearly hypothetical and based on assumptions which were totally unwarranted. We do not think that the learned Judge was right in observing that the public exchequer would incur a loss of Rs.56 crores by the policy decision dated 30th December, 1984 and that the policy decision was therefore vitiated by mala fides or under hand dealing or improper or corrupt motive. We may observe in conclusion that Judges should not use strong and carping language while criticising the conduct of parties or their witnesses. They must act with sobriety, moderation and restraint. They must have the humility to recognise that they are not infallible and any harsh and disparaging strictures passed by them against any party may be mistaken and unjustified and if so, they may do consider able harm and mischief and result in injustice. Here, in the present case, the observations made and strictures passed by BM. Lal, J. were totally unjustified and unwarranted and they ought not to have been made. 67 We must therefore hold that the High Court was in error in allowing the writ petitions even to a limited extent. We accordingly allow the appeals of the State Government and respondents Nos. 5 to 11 and dismiss the writ petitions. The special leave petitions of M/s. Doongaji & Co. and Nand Lal Jaiswal will also stand dismissed. We would however on the facts and circumstances of the present case make no orders as to costs. S.R. Appeals allowed and Petitions dismissed.
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The Madhya Pradesh Excise Act, 1915 controls the making, selling, and having of alcoholic drinks in the state of Madhya Pradesh. Section 14 is about setting up or giving licenses to distilleries (places where alcohol is made) and warehouses. The state government has made several rules using the power given to them in section 62. Rule II of the general rules, made under section 62(2)(h), says that wholesale licenses to make, supply, and sell liquor can only be given for a maximum of "five years." Rule XXII explains how licenses to make or sell alcohol will be given out. At the time of these events in Madhya Pradesh, there were nine distilleries making alcohol. The state government had set these up a long time ago with licenses from the Excise Commissioner (the person in charge of alcohol-related issues). These nine distilleries were in Gwalior, Ujjain, Dhar Badwaha, Chhatisgarh, Bhopal, Seoni, Nowgaon (owned by private people), and Ratlure (owned by the government). For the first seven distilleries, the land and buildings belonged to the state government. At first, the equipment inside also belonged to the state, but over time, the people who had the licenses for these distilleries replaced the equipment. The Excise Department would ask for bids from people who wanted to supply country liquor (a type of local alcohol) from these distilleries. The bidders would say how much they would charge to supply the country liquor to the state government. Usually, the lowest bids were accepted. But sometimes, the state government would accept higher bids if they thought it was the right thing to do. The state of Madhya Pradesh was divided into areas, and each area was assigned to a specific distillery for the wholesale supply of country liquor. The person whose bid was accepted for a distillery would get a D 2 license to run the distillery and a D 1 license to supply the country liquor made there to stores in the assigned area. These D 1 and D 2 licenses were usually given for five years. The people listed as Respondent Nos. 5 to 11 in the Nandial Jaiswal lawsuit had D 1 and D 2 licenses for these distilleries that were good until March 31, 1986. However, there were two areas, Jabalpur and Betul, that were not assigned to any distillery. For these areas, a D 1(s) license was given to allow someone to supply country liquor to stores. Sagar Aggarwal had this license until March 31, 1986. Sagar Agarwal got the country liquor he needed to supply Jabalpur and Betul from the Ratlam Alcohol Plant for Rs.1.80 per proof litre (a measurement of alcohol content). But the Ratlam plant didn't supply enough, so Sagar Agarwal had to buy country liquor from other places at higher prices to keep his promise under the D 1(s) license. Since the state government owned the land and buildings where the distilleries were located, the person with the D 2 license for a distillery had to pay rent to the state government at an agreed-upon price. The state government had originally paid for the equipment in the distillery, but over time, it had to be replaced. The person with the D 2 license at the time was allowed to replace it. However, the D 2 license said that when the license ended, if the current license holder didn't get a new license, they would have to transfer the equipment to the new license holder at a price decided by a Valuation Committee (a group that determines value). So, during the time of the D 2 license, the equipment belonged to the person who had the license at that time. The license holder had to make country liquor in the distillery and supply it to stores in the assigned area at the price they bid and the state government accepted. The state government also set the prices for bottling and sealing the liquor, and the stores had to pay those charges to the license holder. The total capacity of all nine distilleries was only 203 lakhs proof litres, but they didn't even produce that much. The actual production was less than the capacity. This caused shortages, which led to the state government losing money from license fees and taxes. To meet the needs of the public, the state government had to buy liquor from other states at higher prices. Also, the amount of liquor being consumed was growing each year. It was estimated that by 1991, people would likely consume around 482.36 lakhs of proof litres of country liquor, and by the year 2000, it was expected to be around 1696.80 lakhs proof litres. The existing nine distilleries were not enough to meet this growing demand for country liquor. Also, the buildings where these distilleries were located had become old and run-down. It was difficult for the state government to keep them in good condition without spending a lot of money each year. The equipment was also old and outdated, and it was necessary to install new and modern equipment with a greater capacity to make country liquor. Also, it seemed that when the distilleries were built, they were far from the city or town. But as the population grew and cities expanded without planning, these distilleries were now in the middle of the city or town, causing health problems and pollution. People living in the surrounding areas wanted the distilleries moved to avoid water and environmental pollution. It was in these circumstances, when the state government was already thinking about these issues, that the M.P. Distillers' Association (a group of distillery owners) applied in July 1983 to transfer these distilleries to private ownership. The members of the M.P. Distillers' Association, who were old distillery owners with D 2 licenses, offered to invest their own money to build new buildings and install the latest equipment that could produce more country liquor according to the standards set by the M.P. Eradication of Pollution Board (a board that works to eliminate pollution). They would remove polluted water by building lagoons (ponds for waste water), etc., if they were guaranteed a D 1 license for the area assigned to their distilleries. The state government examined this application from the M.P. Distilleries Association at different levels, including cabinet sub-committees, a special committee headed by Shri Vijayavargi, and spot inspections. The Cabinet sub-committee invited representatives of the M.P. Distilleries Association and listened to them before making a final decision. They also considered the Finance Department's concerns and suggestions. At the cabinet meeting on December 30, 1984, they made the policy decision to privatize (transfer to private ownership) the liquor distilleries. Following the policy decision on December 30, 1984, the state government issued a Letter of Intent (a document stating their intention) on February 1, 1985, to each of Respondent Nos. 5 to 11. This letter said they would be granted a D 2 license to build a distillery at a new location to make country liquor starting April 1, 1986. This would replace the existing distillery for which they held D 2 and D 1 licenses that were good until March 31, 1986. The Letter of Intent listed several conditions that had to be met before the D 2 license would be granted to each of Respondent Nos. 5 to 11 in the lawsuit before the High Court (the W.P. No. 3718/85 case). Clause 2 of the Letter of Intent required the licensee (the person getting the license) to build the distillery on land approved by the state government and the M.P. Pollution Board. Clause 12 of the Letter of Intent said that the licensee must properly treat the waste water they release according to a plan approved by the M.P. Pollution Board. Any instructions from the Excise Commission on this matter would be binding on the licensee. Clause 14 of the Letter of Intent said that the licensee must finish building the distillery and installing the equipment required by the Excise Commissioner well before April 1, 1986. Following the Letter of Intent, a Deed of Agreement (a formal contract) was signed on February 2, 1985, by the Governor of Madhya Pradesh, acting through the Excise Commissioner, and each of Respondent Nos. 5 to 11. The Deed of Agreement stated that the state government had issued the Letter of Intent to grant a D 2 license to build a distillery to make alcohol starting April 1, 1986. Clause 1 of the Deed of Agreement said that the licensee had to lease land from the state government for 30 years. But this clause doesn't matter because none of Respondent Nos. 5 to 11 ended up leasing land from the state government. Instead, they each bought their own land, with the location being approved by the state government. Following the Letter of Intent and the Deed of Agreement, each of Respondent Nos. 5 to 11 chose a new location for the distillery with the approval of the state government. They bought land at the new location, started building the distillery buildings, and ordered the equipment to be installed in the distillery. This policy decision was challenged by Nandial Jaiswal by filing lawsuit W.P. No. 3718/85, by Sagar Agarwal by filing lawsuit W.P. No. 335/86, and by a company called M/s Doongaji & Co. during the arguments in the two lawsuits. All three lawsuits were decided by a single judgment (official decision) delivered by a Division Bench (a panel of judges) of the High Court, consisting of Acting Chief Justice J.S. Verma and Justice B.M. Lal. Both judges, in separate judgments, mostly overturned the policy decision of December 30, 1984. Since the High Court's decision mostly went against the respondents, they appealed to the Supreme Court (the highest court) by filing Civil Appeals No. 1622 to 1639 of 1986. M/s Doongaji & Co. and Nand Lal Jaiswal also filed special leave petitions (requests for permission to appeal) Nos. 6206 and 7440 of 1986, because they didn't fully win their cases. The Court allowed Civil Appeals Nos. 1622 to 1639/86 and dismissed the special leave petitions, and HELD (decided): I. 1.1 Based on a simple reading of Rule XXII, a license to make or sell country liquor can be given out in one of four ways: tender (bidding), auction, fixed license fee, or in some other way that the state government orders. These four ways are alternatives, and any one of them can be used to give out a license. It's not necessary to first try to give out the license by tender. If that doesn't work, then you can use auction. If that doesn't work, then you can use a fixed license fee. Only if none of the first three ways work can you use the last way: "such other manner as the State Government may by general or special order direct." This is clear and undeniable. 1.2 Based on a simple understanding of the grammar of Rule XXII, the Collector (a government official) or an officer authorized by the Collector can choose any of the four ways listed in the Rule. There is nothing in the language of Rule XXII that suggests that an earlier way of giving out the license excludes a later way, or that reasons must be given if a later way is used instead of an earlier one. The language of Rule XXII actually goes against that idea. It's impossible to agree with the idea that a later way can only be used if an earlier way cannot be used for specific reasons. The Collector or an authorized officer can use any of the four ways to give out a license, but of course, whatever way is used, it should not violate the Constitution's promise of equality. 1.3 It is also clear from Rules III, IV, and V that there are two reasons why a license in Form D 2 to build and run a distillery can be given. It can be given along with a license in Form D 1 under Rule IV, or it can be given as a separate license under Rule V, regardless of whether the person already has a license in Form D 1. There are also two types of licenses for the wholesale supply of country liquor to stores: a license in Form D 1 and a license in Form D 1(s). Clause 5 of the license in Form D 1 clearly expects that the person holding the license also has a license in Form D 2. No one can have a license in Form D 1 without having a distillery where they make country liquor, so they can supply it to stores. If someone can't get a license in Form D 2 to run a distillery, they can't be given a license in Form D 1. If they already have a license in Form D 1, it becomes invalid. That's why when someone is given a license in Form D 1 by the Excise Commission under Rule III, they are also given a license in Form D 2 under Rule IV at the same time, and both licenses last for the same period. However, even though someone can't be given a license in Form D 1 unless they also get a license in Form D 2, the opposite is not true. A license in Form D 2 can be given to someone under Rule V even if they don't have a license in Form D 1. If someone is given a license in Form D 2 to run a distillery under Rule V, but they don't have a license in Form D 1 to supply country liquor to stores, they can't supply the country liquor they make to stores. But they can supply it to someone who has a license in Form D 1(s), or they can make other types of alcohol, as mentioned in condition 3 of the license in Form D 2. It's not necessary for someone with a license in Form D 2 to also have a license in Form D 1 at the same time. 2. It is true that the recommendations of the Cabinet Sub-Committee, which were accepted by the Cabinet in the policy decision of December 30, 1984, said that the D 2 license would initially be given for 5 years, and then there would be a way to renew it. They said that they would make the necessary changes to the M.P. Excise Act, 1915, or the rules made under the Act, to allow for this renewal. But, in reality, the state government didn't make any changes to the Act or the Rules. The provisions of the Act remained the same, and Rule II of the Rules of General Application also remained unchanged. It's clear that without changing Rule II of the Rules of General Application, the maximum period for which the D 2 license could be given to Respondent Nos. 5-11 was only 5 years, and there could be no automatic renewal after that from year to year. So, whatever the original plan may have been, it wasn't carried out by making the necessary changes to the Act or to Rule II of the Rules of General Application. The state government's final decision was to grant the D 2 license for a limited period of 5 years. The yearly renewal provision was meant to operate within those 5 years. Each year, the license would be renewable upon payment of a license fee of Rs.5,000 and if the person followed the conditions of the license and the provisions of the Act and the Rules. It's not possible to conclude from the clause that the license was to be given for an initial period of 5 years and then renewed from year to year after that. The so-called concession (something given as a favor) made on behalf of the state government and Respondent Nos. 5 to 11 was not really a concession at all. It was simply an acknowledgement of the correct rules regarding the grant of the D 2 license. In these circumstances, the High Court was right to hold that the grant of the D 2 license to Respondent Nos. 5-11 was for a maximum period of 5 years and did not create a monopoly (exclusive control) in their favor for an unlimited amount of time. 3.1 The High Court was wrong to split the policy decision of December 30, 1984, into two parts and strike down the second part while upholding the first. The policy decision of December 30, 1984, was a single, complete decision made by the state government after considering all aspects of the situation. It's hard to understand how the High Court could uphold one part of the policy and strike down the other. Either the policy as a whole should have been upheld, or it should have been declared invalid as a whole. The High Court couldn't simply sustain one part and pronounce the other invalid. That would be creating a new policy for the state government, which the High Court was not allowed to do. Once the High Court decided that it wouldn't interfere with one part of the policy decision because of delays in filing the lawsuits or because third-party rights had been created in the meantime, the court should not have interfered with the second part of the policy decision either. Upholding one part of the policy decision and striking down the other would not only create a new policy for the state government, but it would also cause hardship and injustice to the licensees and harm the public and the interests of the state. Since the petitioners (the people filing the lawsuits) were guilty of significant delays in filing the lawsuits, and in the meantime, the rights of Respondent Nos. 5-11 had been created as they spent considerable time, energy, and resources and incurred huge expenses in setting up the new distilleries, sustaining one part of the policy decision while striking down the other would amount to creating a new policy for the state government. It would also cause significant hardship and inconvenience to Respondent Nos. 5-11 and harm the interests of the state. 4. The policy decision of December 30, 1984, can be put into effect without the state government making any new Rules. Nothing in the policy decision of December 30, 1984, goes against the Rules made under the Act. It's true that the current D 2 license doesn't mention building a distillery and that the Rules don't seem to have a specific form for a license to build a distillery. But just because the Rules don't have a specific form for a license to build a distillery doesn't mean that the Excise Authorities (the people in charge of alcohol-related issues) can't grant such a license. If there is a specific form for a license, then that form must be used. But if there is no specific form, then the license granted by the Excise Authorities doesn't have to follow any particular form. Section 14(c) of the Act clearly says that the Excise Commissioner can license the construction and operation of a distillery. Therefore, it wasn't against the Act or the Rules for the Excise Commissioner to issue a Letter of Intent to each of Respondent Nos. 5-11, granting them a license to build a new distillery. Rule XXII allows the Excise Authorities to choose any one of four ways to give out a license. It doesn't say that the fourth way, described as "such other manner as the State Government may by general or special order direct," can only be used if the first three ways fail. In this case, the policy decision of December 30, 1984, said that Respondent Nos. 5-11, who were the current contractors (people with contracts), should be granted licenses to build new distilleries. They would also be given D 1 and D 2 licenses for five years to make liquor in the new distilleries and supply it wholesale to stores in the areas assigned to those distilleries. This way of giving out licenses was clearly covered by the fourth way described in Rule XXII. State of Orissa & Ors. vs Harinarayan Jaiswal & Ors., ; ; L.G. Chaudhari vs Secretary, L.S.G. Deptt. of Bihar & Ors., AIR 1980 SC 383, were referred to (cited as examples). 5. The Supreme Court cannot allow any new arguments in this case, such as the argument that not having a license under the Industries (Development and Regulation) Act prevents someone from setting up distilleries. The basis for this argument should have been presented in the lawsuits, and the necessary facts should have been stated to support it. Since this argument was not raised and these facts were not presented in the lawsuits, the court cannot allow this argument to be raised now. Also, it's clear from section 11, along with the definitions of "factory" and "industrial undertaking" in subsections (c) and (d) of section 3 of this Act, that a license from the Central Government (the national government) to set up new distilleries would only be necessary if 50 or more workers were employed. There is nothing to show that 50 or more workers were going to be employed in the new distilleries. In fact, the old distilleries were also operating without a license from the Central Government, likely because they employed fewer than 50 workers. 6. It is well established that the High Court's power to issue a writ (a court order) under article 226 of the Constitution is discretionary (up to the court's judgment). The High Court usually does not help those who are slow, lazy, agreeable, or inactive. If the person filing a lawsuit has delayed too long and doesn't provide a good explanation for the delay, the High Court can choose not to intervene and grant relief (assistance). This rule about delays is based on several factors. The High Court usually doesn't allow someone to use the extraordinary remedy of a writ too late because it's likely to cause confusion and public inconvenience and create new injustices. The rights of third parties may be affected, and if the writ is used after an unreasonable delay, it may cause hardship, inconvenience, and injustice to third parties. When the High Court is asked to use its power to issue a writ, unexplained delay combined with the creation of third-party rights is an important factor that the High Court always considers when deciding whether or not to use that power. However, this rule about delays is not a rigid rule that can be applied in every situation. There may be cases where, despite the delay and the creation of third-party rights, the High Court may still choose to intervene and grant relief to the person filing the lawsuit. But such cases, where the demand for justice is so strong that the High Court would be inclined to interfere despite the delay or the creation of third-party rights, would be rare. Ultimately, it's up to the court's judgment. Every judgment must be exercised fairly and justly to promote justice, not to defeat it. Here, the petitioners were guilty of significant delays in filing the lawsuits. In the meantime, the rights of third parties had been affected, and Respondent Nos. 5-11, acting on the basis of the policy decision of December 30, 1984, had spent money on setting up the distilleries. If the policy decision of December 30, 1984, were now overturned at the request of the petitioners, it would cause immense hardship and injustice to the seven licensees because the significant time, money, and energy they spent setting up the distilleries would be completely wasted. Ramanna Daygram Shetty vs International Airport Authority of India & Ors., ; ; Ashok Kumar Mishra & Anr. vs Collector Raipur & Ors., ; , were referred to (cited as examples). 7.1 A citizen does not have a fundamental right to trade or do business in liquor. The State, using its power to regulate, has the power to completely prohibit all activities related to alcohol, including its manufacture, storage, export, import, sale, and possession. No one can claim the right to trade or do business in liquor against the State, and the State cannot be forced to give up its exclusive right or privilege to manufacture and sell liquor. But when the State decides to grant this right or privilege to others, the State must still follow the rule of law and treat everyone equally. It cannot act arbitrarily or according to its own desires. It must comply with the equality clause (a legal requirement to treat everyone the same) when granting the exclusive right or privilege to manufacture or sell liquor. Therefore, it's not possible to support the argument of the state government and Respondent Nos. 5-11 that article 14 (the equality clause) doesn't apply in a case where the State government is granting a license to manufacture or sell liquor. The State cannot disregard the requirements of that Article. 7.2 But when considering whether article 14 applies in such a case, the court must remember that, given the nature of the trade or business, the court should be slow to interfere with the policy set by the State government for granting licenses to manufacture and sell liquor. Because of the inherently harmful nature of alcohol, the Court should allow the State government a large amount of freedom in deciding its policy for regulating the manufacture and trade of liquor. Also, granting licenses to manufacture and sell liquor is essentially a matter of economic policy (government decisions about the economy), where the court should hesitate to intervene and strike down what the State government has done, unless it appears to be clearly arbitrary (based on random choice), irrational (not based on reason), or mala fide (in bad faith). In complex economic matters, every decision is necessarily based on experience and experimentation, or what one might call "trial and error." Therefore, its validity cannot be judged based on strict, pre-set ideas or on the application of any rigid formula. When judging the constitutional validity (whether it follows the Constitution) of an executive decision (a decision by the government) relating to economic matters, the Court must allow the government a certain amount of freedom. 7.3 It's clear from clause 2 of the policy decision that the State government considered the possibility of other liquor contractors (people with contracts to sell liquor) making similar applications for licenses to build new distilleries and to manufacture and supply liquor from those new distilleries. So, they said that if any such applications were made, the Excise Department should decide on them based on the principles "recommended by the sub-committee," meaning the same principles on which the licenses were decided to be granted to the current contractors. If any liquor contractor applies for a license to build a new distillery on the same terms as the licenses granted to the current contractors, the Excise Authorities must consider that application based on its merits. If the Excise Authorities find the proposal suitable, they may grant the liquor contractor a license to build a new distillery along with a D 2 license on the same basis. In that case, the Excise Authorities may either (i) direct that liquor contractor to manufacture other types of alcohol in the new distillery for the remaining period of the D 1 and D 2 licenses of the current contractors, and then consider them along with other liquor contractors for granting D 1 and D 2 licenses for the new distillery, or (ii) reduce and/or change the area of supply of any of the current contractors and grant a D 1 license to that liquor contractor for the area that has been taken away. If the Cabinet decision of December 30, 1984, while granting licenses to the current contractors, allows other liquor contractors to come in and apply for similar licenses, it cannot be said that article 14 is violated. 7.4 When the State government is granting a license for a new industry, it's not necessary for them to advertise and invite offers for setting up that industry. The State government is allowed to negotiate with those who have offered to set up the industry. Har Shankar & Ors. etc. vs Deputy Excise & Taxation Commissioner & Ors., ; ; R.K. Garg etc. vs Union of India & Ors. etc. , were referred to (cited as examples). Kasturi Lal Lakshmi Reddv vs State of J & K, ; , was followed (used as a legal precedent). Metropolis Theatre Company vs State of Chicago, 57 Lawyers Edition 730, was quoted with approval (agreed with). 8. Judges should not use harsh and critical language when criticizing the actions of parties or their witnesses. They must act with calmness, moderation, and restraint. They must be humble enough to recognize that they are not perfect, and any harsh and disapproving comments they make against any party may be mistaken and unjustified. If so, they may do considerable harm and cause injustice. Here, in this case, the observations and criticisms made by B.M. Lal J. were completely unjustified and unwarranted, and they should not have been made. In this case, the words used in paragraphs 1, 9, 17 to 19, and 34 of Lal J.'s judgment are undoubtedly strong and highly disparaging remarks, accusing the State government of bad faith, corruption, and underhanded dealings, which are not justified by the record.
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of the State of M.P., G.L. Establishment or licensing of distilleries and warehouses (a) establish a distillery in which spirit may be manufactured under a licence granted under section 13 on such conditions as the State Government may impose; (b) discontinue any such distillery; (c) licence, on such conditions as the State Government may impose, the construction and working of a distillery or brewery; (d) establish or licence a warehouse, wherein any intoxicant may be deposited and kept without payment of duty, but subject to pay ment of such fees as the State Government may direct; and (e) discontinue any such warehouse We may then refer to section 17 which provides inter alia that no intoxicant shall be sold except under the authority and subject to the terms and conditions of a licence granted in that behalf. It is clear on a plain reading of Rule XXII that a licence for manufacture or sale of country liquor may be disposed of in any one of four different modes, viz., ten der, auction, fixed licence fee or such other manner as the State Government may by general or special order direct. Since the land and buildings in which the distilleries were housed belonged to the State Government, the holder of D 2 licence in respect of any particular distillery had to pay rent for the land and buildings to the State Government at a rate agreed upon from time to time. So far as the plant and machinery of the distillery was concerned, originally it was installed by the State Government at its own cost but in course of time it had to be replaced and such replacement was allowed to be made by the holder of the D 2 licence for the time being. The Excise Commissioner submitted his opinion to the Separate Revenue Department stating that "it would be more appropri ate to hand over the Government distilleries to private ownership because thereby the Government will get additional income from the sale of buildings, land, etc., of the dis tilleries and at the same time the distillers will pay more heed to the distilleries buildings, etc., due to transfer of the distilleries to private ownership and they will instal the latest machinery and implements as a result of which there will be an increase in liquor production and supply of liquor as per requirement of the State Government and at the same time they will be liable for solving the problem of pollution." These representatives made various sugges tions to the Cabinet Sub Committee and these suggestions included inter alia the suggestion that even Gwalior and Dhar distilleries should be transferred to new sites since the problem of pollution, though not pressing at the present moment, was bound to arise after 5 or 7 years, but if the existing lands and buildings of these two distilleries were to be transferred, such transfer should be made on the basis of their book value and not at the market price. The Cabinet Sub Committee at the meeting held on 20th September 1984 discussed these two points and so 'far as the first point was concerned, the Cabinet Sub Committee came to the conclusion that "the transfer of distilleries should be made only to the present contractors and their present supply area should be attached with them" and with regard to the second point, the Cabinet Sub Committee felt that since the distilleries which were going to be established at the new sites were in lieu of the present distilleries, it may not be necessary to obtain fresh licence under the Industries Development and Regula tion Act but if fresh licence was required, it should be the responsibility of the distillers to obtain the same. The Cabinet Sub Committee also recommended that an agreement should be executed in writing between the distillers and the Excise Department in which it should be provided that on the construction of the distillery and the installation of the plant and machinery, the distiller shall be entitled to obtain D 2 licence in respect of the distillery. The Sub Committee has not made such a recommendation that apart from the existing distillers, no other person should be granted D 2 licence. The Sub Committee has also mentioned that after obtaining further information about this system, action should be taken and after transfer of the distilleries into private ownership the prices should be fixed every year. Pursuant to this policy decision dated 30th December 1984 a Letter of Intent dated 1st February 1985 was issued by the State Government in favour of each of respondent Nos. When the writ petitions were argued before the High Court, one of the questions seriously debated was whether under the policy decision dated 30th December 1984, D 2 licence was to be granted to each of respondent Nos.5 to 11 only for a limited period of 5 years commencing from 1st April 1986 or it was to be granted for a minimum period of five years with a clause for automatic renewal from year to year after the expiration of the period of five years so that all other persons would be totally excluded from enter ing the field and a monopoly would be created in favour of respondent Nos.5 to 11 for all time to come so far as D 2 licence for manufacturing liquor in the distillery was concerned. Verma in view of the categorical statement made on behalf of the State Government by the learned Advocate General as also by the learned Advocates appearing on behalf of respondent Nos.5 to 11 that under the policy decision dated 30th December, 1984, D 2 licence was to be granted only for a maximum period of 5 years "subject to its renewal within the period of 5 years on the terms and conditions" mentioned in the Letter of Intent and "there was no under taking on the part of the State Government" to grant, by way of renewal or otherwise D 2 licence after the expiry of the period of 5 years commencing from 1st April 1986. The learned counsel appearing on behalf of the petitioners, however, urged that this concession made on behalf of the State Government and respondent Nos.5 11 was of no avail, since it was contrary to the terms of the policy decision dated 30th December 1984 and the provision in the Letter of Intent and, in any event, the validity of the policy decision dated 30th December 1984 could be tested only 37 on its own terms and if it was otherwise invalid, the con cession made on behalf of the State Government and respond ent Nos.5 11 could not save it. It is undoubtedly true that the recommendations of the Cabinet Sub Committee which were accepted by the Cabinet in the policy decision dated 30th December 1984 provided that in the beginning, D 2 licence shall be granted for a period of 5 years and thereafter there shall be a provision for its renewal and for this purpose, necessary amendment in the M.P. State Government. We may first consider the question of laches or delay in filling the 41 writ petitions because that is the question which has been decided by the High Court against the petitioners and the petitioners have challenged the correctness of the finding reached by the High Court of this point. The petition ers however contended that they were not aware of the policy decision dated 30th December 1984 nor had they any knowledge of the fact that the right to construct distilleries and to manufacture and supply wholesale country liquor from such distilleries was granted to the existing contractors and it was only when they came to know about this that they immedi ately proceeded to file the writ petitions. In fact, every person in the liquor trade would have know about this change in policy which had been made by the State Government under the policy decision dated 30th December 1984. The High Court took the view that by reason of the delay in filing of the writ petitions, the petitioners could not be permitted to assail the grant made to the existing contractors for con struction of new distilleries but so far as the grant of licences for manufacture and wholesale supply of liquor from the new distilleries was concerned. That would be making a new policy for the State Government which it was not competent for the High Court to do. Once the High Court came to the conclusion that on account of delay or laches in the filing of the writ peti tions or the creation of third.party rights in the mean while, the Court would not interfere with one part of the policy decision, the Court could not interfere with the second part of the policy decision as well. In the first place, under the policy decision dated 30th December 1984, new distilleries were to be constructed by the existing contractors, not with a view to making them available for manufacturing liquor to any other person who might give a more acceptable bid or tender for D 1 and D 2 licences in the open market, but in order that the existing contractors who put up the new distilleries should be able to manufacture liquor and make wholesale supply of it under D 1 and D 2 licences to be granted to them for a period of 5 years. The grant of D 1 and D 2 licences to the existing contractors for a period of 5 years for manufacturing liquor in the new distilleries constructed by them and supply it in wholesale to retail vendors, was an integral part of the policy decision dated 30th December 1984. Moreover, according to 47 the policy decision dated 30th December 1984, the rate chargeable for supply of liquor manufactured in the new distilleries was to be determined from year to year by an Expert Committee appointed by the State Government, but if such rate were to depend on the bid which may be made at the auction or tender and obviously the auction or tender could take place only at the end of 3 or 5 years and not from year to year the entire policy of rate fixation laid down by the State Government would be set at naught. What would happen in effect is that the old policy which was being followed up to 31st March 1986 and which was sought to be changed by the State Government would be revived but now the distilleries forming the subject matter of that policy would not be the old distilleries of which the land and building belonged to the State Government and the plant and machinery was subject to transfer at a valuation but the new distilleries con structed by the existing contractors with their own monies and resources under the Letter of Intent dated 1st February 1985 and the Deed of Agreement dated 2nd February 1985, neither of which provided for transfer of the land and building or the plant and machinery to any other person who might be granted D 1 and D 2 licences as a result of auction or tender. The entire policy of the State Government con tained in the policy decision dated 30th December 1984 would be frustrated and a new policy would be made out which patently the High Court has no jurisdiction or power to do. 5 to 11 and the Ratlam and Nowgaon distilleries, there are no other distilleries in the State of Madhya Pradesh where liquor can be manufactured and hence D 1 and D 2 licences cannot be granted to any person other than respondent Nos. Even if the person to whom D 1 and D 2 licences may be granted agrees to set up a new distillery, it would take considerable time and during the period taken up in the construction of the new distillery, the State Government would lose revenue. We must accordingly hold that since the petitioners were 49 guilty of enormous delay in filing the writ petitions and in the intervening period, the rights of respondents Nos 5 to 11 were created in that they spent considerable amount of time, energy and resources and incurred huge expenditure in setting up the new distilleries and sustaining one part of the policy decision while striking down the other would amont to creating a new policy for the State Government and would also entail considerable hardship and inconvenience to respondent Nos. The learned counsel pointed out that D 2 licence in its existing form does not contemplate any construction licence at all: it is only a licence to manu facture liquor and not a licence to construct a distillery and hence without publishing Rules relating to licence for construction of a distillery, the State Government could not implement the change of policy under the policy decision dated 30th December 1984. The learned counsel also urged that "the decision of the Cabinet in a meeting of the 50 Cabinet is not an Order" within the meaning of Rule XXII and since no order under that Rule was produced, the Letter of Intent and the Deed of Agreement were without the authority of law as being in contravention of that Rule. It is difficult to understand why the policy decision dated 30th December 1984 cannot be given effect to without any new Rules being made by the State Government. But, merely because the form of a licence for constructing a distillery is not prescribed by the Rules, it does not mean that such a licence cannot be granted by the Excise Authorities. 5 11, who were the existing contractors, should be granted licence to construct new distilleries and D 1 and D 2 licences should be given to them for a period of five years for manufacturing liquor in such new distill eries and making wholesale supply of it to retail vendors in the areas attached to those distilleries. We fail to understand why any further Rules were necessary to be made by the State Government in order to give effect to this policy decision arrived at by the State Government on 30th December, 1984. When the policy decision dated 30th December 1984 was arrived at by the State Government itself, there could be no need for separate general or special order to be made by the State Government in that behalf. Sub section (2) of this section provided that the sum payable to the State Government in consideration of the grant of an exclusive privilege to manufacture and supply or liquor shall be determined as follows: "by calling tender or by auction or otherwise as the State Government may, by general or special order, direct. " 5 11 were not entitled to set up new distilleries at the new sites without obtaining a licence from the Central Govern ment under Section 11 of this Act and since there was noth ing to show that they had obtained such licence before setting up the new distilleries, their action in setting up the new distilleries was illegal and could not give rise to any rights in their favour. The argument which found favour with the High Court was, and that is the argument which was reiterated before us on behalf of the petitioners, that the policy decision dated 30th December 1984 that licence to construct new distilleries should be given only to the existing con tractors and D 1 and D 2 licences to manufacture and supply it in wholesale to retail dealers liquor in such new dis tilleries should be granted to them alone to the exclusion of other liquor contractors without holding auction or inviting often which would give an opportunity to all liquor contractors interested in setting up new distilleries and manufacturing and supplying liquor to complete for the grant of such licences, was arbitrary and irrational and there was no valid justification for selectively preferring the exist ing contractors to other liquor contractors for grant of such licences. 5 11 that Article 14 can have no application in a case where the licence to manufacture or sell liquor is being granted by the State Government. It is undoubtedly true that, on the application of the existing contractors, the State Government decided to grant to them licences to construct new distilleries in lieu of the old distilleries in 56 Gwalior, Ujjain, Dhar, Badwaha, Chattisgarh, Bhopal Seoni as also to give them D 1 and D 2 licences to manufacture liquor in such new distilleries and to sell it in wholesale to retail vendors in the respective areas attached to such new distilleries and it might appear on a superficial reading of the policy decision dated 30th December 1984 that the entire cake was handed over to the existing contractors and all other liquor contractors were left out and they were denied an opportunity of asking for similar licences. But this view, in our opinion, is based on a misreading of the policy decision dated 30th December 1984. It is clear from this clause that the State Government envisaged the possibility of other liquor contractors making similar applications for licences to construct new distilleries and to manufacture and supply liquor from such new distilleries and hence provided that if any such applications are made, they should be disposed of by the Excise Department on merits on the basis of the principles "recommended by the Sub Committee" that is, on the basis of the same principles on which the licences were decided to be granted to the existing contrac tors. 5 to 11, weighed with the State 59 Government in arriving at the decision to entrust the con struction of new distilleries to the existing contractors instead of inviting offers by advertisement and that factor was that the licences of the existing contractors were coming to an end on 31st March, 1986 and it was therefore necessary that the new distilleries should be ready for manufacture of liquor before 1st April, 1986. It is also significant that while taking a decision to grant licences to the existing contractors to put up new distill eries, the State Government did not wish to create a monopo ly in favour of the existing contractors and the State Government therefore, when entering into the Deed of Agree ment, limited the duration of D 2 licence to be granted to each of the existing contractors to five years and also left it open to other distillery contractors to come in on the same terms. Here, in the present case, the pre dominant purpose of the policy decision dated 30th December, 1984 was to ensure construction and setting up of new distilleries with modern technologically advanced plant and machinery at new sites where there would be no possibility of air and water pollu tion and if for achieving this purpose the State Government considered the offer of the existing contractors and negoti ated with them and ultimately decided to grant to them licences for construction of new distilleries on the terms and conditions set out in the recommendations of the Cabinet sub Committee it is difficult to see how, in view of the decision in Kasturi Lal Lakshmi Reddy 's case (supra) the State Government could be said to have acted arbitrarily or capriciously in violation of Article 14 of the Constitution. The existing contractors wanted the land and buildings of the existing distilleries to be transferred to them at a valua tion but the Cabinet Sub Committee did not agree to this suggestion and insisted that the existing contractors would have to acquire land at new sites, construct buildings for setting up new distilleries, and the land and buildings in which the existing distilleries were housed would come back to the State Government. 56 crores was arrived at by Sagar Aggarwal on the assumption that if instead of granting licence to the existing contractors to construct new distilleries and giving them D 1 and D 2 licences for a period of five years, D 1(S) licence was granted to him for the entire territory of the State of Madhya Pradesh and he was able to get liquor from the Ratlam Alcohol plant at the rate of Rs. We do not think that the learned Judge was right in observing that the public exchequer would incur a loss of Rs.56 crores by the policy decision dated 30th December, 1984 and that the policy decision was therefore vitiated by mala fides or under hand dealing or improper or corrupt motive.
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The person whose bid was accepted for a distillery would get a D 2 license to run the distillery and a D 1 license to supply the country liquor made there to stores in the assigned area. For these areas, a D 1(s) license was given to allow someone to supply country liquor to stores. This letter said they would be granted a D 2 license to build a distillery at a new location to make country liquor starting April 1, 1986. 1622 to 1639 of 1986. 1.1 Based on a simple reading of Rule XXII, a license to make or sell country liquor can be given out in one of four ways: tender (bidding), auction, fixed license fee, or in some other way that the state government orders. No one can have a license in Form D 1 without having a distillery where they make country liquor, so they can supply it to stores. That's why when someone is given a license in Form D 1 by the Excise Commission under Rule III, they are also given a license in Form D 2 under Rule IV at the same time, and both licenses last for the same period. If someone is given a license in Form D 2 to run a distillery under Rule V, but they don't have a license in Form D 1 to supply country liquor to stores, they can't supply the country liquor they make to stores. It's not necessary for someone with a license in Form D 2 to also have a license in Form D 1 at the same time. It is true that the recommendations of the Cabinet Sub-Committee, which were accepted by the Cabinet in the policy decision of December 30, 1984, said that the D 2 license would initially be given for 5 years, and then there would be a way to renew it. In these circumstances, the High Court was right to hold that the grant of the D 2 license to Respondent Nos. That would be creating a new policy for the state government, which the High Court was not allowed to do. Once the High Court decided that it wouldn't interfere with one part of the policy decision because of delays in filing the lawsuits or because third-party rights had been created in the meantime, the court should not have interfered with the second part of the policy decision either. Upholding one part of the policy decision and striking down the other would not only create a new policy for the state government, but it would also cause hardship and injustice to the licensees and harm the public and the interests of the state. It's true that the current D 2 license doesn't mention building a distillery and that the Rules don't seem to have a specific form for a license to build a distillery. Therefore, it wasn't against the Act or the Rules for the Excise Commissioner to issue a Letter of Intent to each of Respondent Nos. In this case, the policy decision of December 30, 1984, said that Respondent Nos. They would also be given D 1 and D 2 licenses for five years to make liquor in the new distilleries and supply it wholesale to stores in the areas assigned to those distilleries. No one can claim the right to trade or do business in liquor against the State, and the State cannot be forced to give up its exclusive right or privilege to manufacture and sell liquor. 5-11 that article 14 (the equality clause) doesn't apply in a case where the State government is granting a license to manufacture or sell liquor. 7.2 But when considering whether article 14 applies in such a case, the court must remember that, given the nature of the trade or business, the court should be slow to interfere with the policy set by the State government for granting licenses to manufacture and sell liquor. 7.3 It's clear from clause 2 of the policy decision that the State government considered the possibility of other liquor contractors (people with contracts to sell liquor) making similar applications for licenses to build new distilleries and to manufacture and supply liquor from those new distilleries. In that case, the Excise Authorities may either (i) direct that liquor contractor to manufacture other types of alcohol in the new distillery for the remaining period of the D 1 and D 2 licenses of the current contractors, and then consider them along with other liquor contractors for granting D 1 and D 2 licenses for the new distillery, or (ii) reduce and/or change the area of supply of any of the current contractors and grant a D 1 license to that liquor contractor for the area that has been taken away. vs Union of India & Ors.
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N: Criminal Appeal No. 356 of 1983 From the judgment and order dated 25 7 83 of the Special judge, Bombay in Special Case No. 24 of 1983. #AND Transferred Case No. 348 of 1983 AND Transferred Case No 348 of 1983 Ram Jethmalani P.R. Vakil, Ms. Rani Jethmalani, Mukesh Jethmalani, O.P. Malviya, Shailendra Bhardwaj and Harish Jagatlani for the appellant. Dr. L.M. Singhvi, Dalveer Bhandari, A.M. Singhvi, S.S. Parkar, H. Bhardwaj, U.N. Bhandari, H.M. Singh, Ranbir Singh and S.G. Hasnain for the respondent Ashok Desai and Mrs. J. Wad for the petitioner in T.C. No. 348 of 1983. M.N. Shroff for State of Maharashtra K. Parasaran, Attorney General, Ms. A. Subhashini, Gopal Subramanian, R.N. Poddar and C.V. Subba Rao for Union of India. 502 The Judgment of the Court was delivered DESAI, J. Respondent Abdul Rehman Antulay (hereinafter referred to as the accused) was the Chief Minister of the State of Maharashtra from 1980 till he submitted his resignation on January 20, 1982, which became effective from January 20, 1982. He thus ceased. to hold the office of the Chief Minister from January 20, 1982 but continues to be a sitting member of the Maharashtra Legislative Assembly till today. As the contentions canvassed before this Court are mainly questions of law, facts at this stage having a peripheral relevance in the course of discussion, it is unnecessary to set out the prosecution case as disclosed in the complaint filed by complainant Ramdas Shrinivas Nayak (complainant for short) in detail save and except few a pertinent and relevant allegations. In the process the brief history or the litigation may also be traced. The complainant moved the Governor cf Maharashtra by his application dated September 1, 1981 requesting him to grant sanction to prosecute the accused as required by Sec. 6 of the Prevention of Corruption Act, 1947 ( '1947 Act ' for short) for various offences alleged to have been committed by the accused and neatly set out in the application. Complainant then filed the first complaint in the Court of Chief Metropolitan Magistrate, 28th Esplanade, Bombay on September 11, 1981 being Criminal Case No. 76 Misc. of 1981 against the accused and others known and unknown collaborators alleging that the accused in his capacity as Chief Minister and thereby a public servant within the meaning of Sec. 21 of the Indian Penal Code (IPC) has committed offences under Secs. 161, 165 IPC and Sec. 5 of the 1947 Act, Sec. 384 and Sec. 420 IPC read with Secs. 109 and 120 B IPC. The complaint runs into 31 closely typed pages and carried the list of 37 witnesses. The learned Metropolitan magistrate invited the complainant to satisfy him as to how the complaint for offences under Secs. 161, 165 IPC and Sec. 5 of the 1947 Act is maintainable without a valid sanction as contemplated by Sec. 6 of 1971 Act and ultimately held that in the absence of a valid sanction from the Governor of Maharashtra, the complaint filed by the complainant for the aforementioned three offences was not maintainable. The learned Metropolitan Magistrate accordingly held as per order dated October 6, 1981 that the complaint was maintainable only for offences alleged to have been committed by the accused under. 384 and 420 read with Secs. 109 and 120B of the IPC and directed that the case be fixed for 503 examining the complainant as required by Sec. 200 of the Cr. P.C. The complainant questioned the correctness of this order in Special Criminal Application No. 1742 of 1981 filed in the High Court of Judicature at Bombay. In the meantime, another development had taken place which may be briefly noticed. One Shri P.B. Samant, who has also filed an identical complaint against the accused along with several others filed a Writ Petition No. 1165 of 1981 in the High Court of Judicature at Bombay challenging the method of distribution of ad hoc allotment of cement in the State of Maharashtra as being contrary to the rule of law and probity in public life. The accused as the second respondent in this petition, the first and third respondents being the State of Maharashtra and Union of India respectively. By an exhaustive speaking order dated September 23, 1981, a learned Single Judge of the High Court granted rule nisi and made it returnable on November 23, 1981. The writ petition came up for hearing before another learned Single Judge who by his judgment dated January 12, 1982 made the rule absolute. Probably as a sequel to this decision of the High Court, the accused tendered his resignation as Chief Minister on the same day and when the resignation was accepted he ceased to hold the office of the Chief Minister with effect from January 20, 1982. Special Criminal Application ' No. 1942 of 1981 filed by the complainant against the order of the learned Chief Metropolitan Magistrate was dismissed by a Division Bench of the High Court on April 12, 1982. Not the accused but the State of Maharashtra preferred an appeal by special leave under article 136 of the Constitution against the decision of the Division Bench of the High Court rejecting the special criminal application; This. Court rejected the application for special leave at the threshold on July 28, 1982. (See State of Maharashtra vs Ramdas Shrinivas Nayak and others) Promptly, on the heels of the judgment of this Court, the Governor of Maharashtra on the same day granted the sanction under Sec. 6 of the 1947 Act to prosecute the accused in respect of specific charges set out in the order according sanction. Armed with this sanction, the complainant filed a fresh complaint in the Court of the Special Judge, Bombay registered as Criminal Case No. 24 of 1982 against the accused as Accused No. 1 and others known and unknown. In this complaint it is broadly alleged that the accused who was the Chief Minister of the State of Maha 504 rashtra between the period August 1980 to September 1981 conceived scheme of aggrandisement involving obtaining of funds from the members of the public and putting them substantially under his own control for the disbursal of the funds so obtained. The complaint proceeded to refer to the setting up of various trusts and alleged that the corner stone of the scheme involved receipt by the accused of illegal gratification other than legal remuneration as a motive or reward for doing or forbearing to do any official act, or for showing or forbearing to show in the exercise of his official functions, favour or disfavor to persons, or for rendering or attempting to render any service or disservice to such persons who dealt with the State Government in general and with public servants who formed part of the Government. It was specifically alleged that the scheme devised by the accused was a flagrant abuse of his official position as Chief Minister for obtaining control over funds which would be used for purposes conducive to the interest of the accused himself. The complainant proceeded to set out the abuse of office of Chief Minister by the accused citing various alleged instances such as distribution of adhoc cement contrary to law and the binding circulars, granting liquor Licences as and by way of distribution of Government largesse, issuing no objection certificates for letting out premises by obtaining a price for the same. The running thread through various allegations is that the accused by abusing or misusing his office of Chief Minister obtained or attempted to obtain gratification other than legal remunerations a motive or reward for doing or forbearing to do any official act as Chief Minister or for showing or forbearing to show in the exercise of his official functions, favour or disfavour to persons etc. To this complaint, the order granting sanction to prosecute the accused made by the Governor of Maharashtra was annexed and produced. After recording the verification of the complaint, the learned Special Judge took cognizance of the offences and issued process by directing a bailable warrant to be issued in the sum of Rs. 10,000 with one surety and made it returnable on September 3, 1983. On the process being served the accused appeared and sought exemption from personal appearance which was granted for a day and the case was adjourned to October 18, 1982 for recording the evidence of the complainant and his witnesses for the prosecution. When the case was called out on October 18, 1982 an application was moved on behalf of the accused inter alia contending that the Court of the learned special Judge had no jurisdiction in view of the provision contained in Sec. 7 of the Criminal Law Amendment Act, 505 1952 ( '1952 Act ' for short) and that no cognizance can be taken of offences punishable under Secs. 161, 165 IPC and Sec. 5 of the 1947 Act on a private complaint. The case was at that time pending in the Court of the special Judge presided over by one Shri P.S. Bhutta. The learned special Judge by his order dated October 20, 1982 rejected both the contentions and set down the case for November 29, 1982 for recording evidence of the prosecution. The learned special Judge made it abundantly clear that under no circumstance the case would be adjourned on the next occasion and if any revision or appeal is intended to be filed against the order, the learned counsel for the accused should give advance notice to the learned counsel for the complainant. The accused filed Criminal Revision Application No. 510 of 1982 against the order of the learned special Judge dated October 20, 1982 rejecting his application. On January 16, 1983, the Government of Maharashtra issued a notification in exercise of the powers conferred by sub sec. (2) of Sec. 7 of 1952 Act and in modification of the earlier Government order dated April 12, 1982, directing that in Greater Bombay on and after the date of the notification the offences specified in sub sec. (1) of sec. 6 of the 1947 Act which are investigated by the Anti Corruption Bureau of Police in Greater Bombay, except special cases No. 14, 15 and 16 of 1977 and Special Case No. 31 of 1979 to 37 of 1979 (both inclusive) shall continue to be tried by Shri R.B. Sule. The net outcome of this notification was that Special Case No. 24 of 1982 pending in the Court of Special Judge Shri P.S. Bhutta would stand transferred to the Court of Shri R.B. Sule, Additional Special Judge for Greater Bombay. On a reference by the learned Single Judge, a Division Bench of the Bombay High Court heard and dismissed on arch 7, 1983 Criminal Revision Application No. 510 of 1982 filed by the accused against the order of learned special Judge Shri P.S. Bhutta dated October 20, 1982. The Division Bench in terms held that the private com plaint was maintainable and as the required notification has already been issued, Shri R.B. Sule will have jurisdiction to try Special Case No. 24 of 1982. The learned trial Judge Shri R.B. Sue on receipt of the record of the case issued a notice on April 27, 1982 calling upon all parties to appear before him on April 21, 1983. lt appears on July 8, 1783, two applications were moved on behalf of the accused urging the learned trial Judge; (i) to discharge the accused inter alia on the ground that the charge was groundless and that even though the accused 506 had ceased to be the Chief Minister, on the date of taking cognizance of the offences, he was a sitting member of the Maharashtra Legislative Assembly and as such a public servant and in that capacity a sanction to prosecute him would have to be given by the Maharashtra Legislative Assembly and the sanction granted by the Governor would not be valid in this behalf. The second petition requested the learned Judge to postponed the case till the petition for special, leave field by the accused against the decision of the Division Bench cf the High Court holding that the private complaint was maintainable is disposed of Both these applications came up for hearing before Shri R.B. Sule, who by his order dated July 25, 1783 upheld the contention of the accused that M.L.A was a public servant within the meaning of the expression in Sec. 21 (12) (a) IPC and that unless a sanction to prosecute him by the authority competent to remove him from his office as M.L.A. was obtained which in the opinion of the learned Special Judge. was Maharashtra Legislative Assembly the accused is entitled to be discharged. So saying, the learned Judge discharged the accused. The complainant filed a petition for special leave to appeal No. 1850 of 1983 and a Writ Petition (Crl.) No. 145 of 3983 against the decision. Of the learned special Judge. Both these matters came up before this Court on August 3, 1983 when the matters were adjourned to August 10, 1983 to enable the petitioner, original complainant to file a criminal revision application against the order of the learned special Judge in the High Court. Accordingly, the complainant filed Criminal Revision Application No. 354 of 1983 in the High Court against the order of learned special Judge Shri R.B. Sule. This Court ultimately granted special leave to appeal as also rule nisi in the writ petition. By an order made by this Court, the criminal revision application filed by the petitioner stands transferred to this Court. It may be mentioned that this Court has granted special leave to the accused against the decision of the Division Bench of the Bombay High Court holding that a private complaint is maintainable etc. Criminal Appeal No. 247 of 1983 arising out of the said special leave petition is being heard along with this matter but that will be dealt with separately. While discharging the accused, the learned special Judge held that the material date for deciding the applicability of Sec. 6 of the 1947 Act is the date on which the court is asked to take cognizance of the offence. Proceeding further it was held that even though the accused had ceased to hold the office of the Chief Minister on the date 507 on which cognizance was taken by the learned special Judge, Shri Bhutta, yet on that date he was a sitting M.L.A. and was therefore a public servant within the meaning of the expression in Sec. 21 (12)(a) in as much as the M.L.A. is a person in the pay of the Government or at any rate he is remunerated by fees for performance of public duty by the Government and therefore, he is a public servant. As a corollary, the learned Judge held that as on the date of taking cognizance of the offence the accused was a public servant, he could not be prosecuted without a valid sanction as contemplated by Sec. 6 of the 1947 Act. The learned Judge further held that the M.L.A. holds an office and he can be removed from that office by the Legislative Assembly because the latter has the power to expel a member which would amount to removal from office. The learned Judge further held that as there was no sanction by the Maharashtra Legislative Assembly to prosecute the accused and as the Governor had no power to sanction prosecution of the accused in his capacity as M.L.A. the accused is entitled to be discharged for the of offences under Secs. 161, 165, 120 B, 109 IPC and Sec. 5 of the 1947 Act for want of a valid sanction for prosecution, and in respect of the other offences, the accused is entitled to be discharged on the ground that the court of the special Judge had no jurisdiction to try the accused for those offences. In respect of those other offences, the learned Judge directed the complaint to be returned to the, complainant for presenting it to the proper court. It may be mentioned that by a common order in Special Case No. 3 of 1983 instituted upon the complaint of Mr. P.B. Samant, the accused was discharged. 21 IPC defines a 'Public Servant '. The relevant clauses may be extracted as under: "21. The words 'public servant ' denote a person falling under any of the descriptions hereinafter following, namely: Third Every Judge including any person empowered by law to discharge, whether by himself or as a member of any body of persons, any adjudicatory functions. Seventh: Every person who holds any office by virtue of which he is empowered to place or keep any person in confinement Twelfth Every person (a) in the service or pay of the Government or remunerated 508 by fees or commission for the performance of any public duty by the Government; (b) in the service or Pay of a local authority, a corporation establishes by or under a Central, Provincial or State Act or a Government Company as defined in Section 617 of the . Explanation 1: Persons falling under any of the above descriptions are public servants, whether appointed by the Government or not" Sec. 17 defines the expression 'Government to denote the Central Government or the Government of a State. Sec 14 defines the expression 'servant of Government to denote any officer or servant continued, appointed or employed in India by or under the authority of Government. 19 defines the word 'Judge ' as under: "The word "Judge" denotes not only every person who is officially designated as a Judge, but also every person Who is empowered by law to give, in any legal proceeding, civil, or criminal, a definitive judgment, or a judgment which if not appealed against, would be definitive, or a judgment which, if confirmed by some other authority, would be definitive, or who is one of a body of person, which body of persons is empowered by law to give such a judgment.". Sec. 7 provides that 'every expression which is explained in any part of the Code (IPC), is used in every part of this Code in conformity with the explanation. ' Sec. 5 of the 1947 Act defines the offence of criminal misconduct and a public servant who commits an offence of criminal misconduct is liable to be punished with imprisonment for a term which shall not be less than one year but which may extend to seven years and shall also be liable to fine. 6 provides for a sanction as a pre condition for a valid prose 509 cution for offences punishable under Sec. 161, 164, 165 IPC and Sec. 5 of the 1947 Act. It reads as under: "6(1) No court shall take cognizance of an offence punishable under Section 161 or Section 165 of the Indian Penal Code, or under sub section (2) of Section S of this Act, alleged to have been committee by a public servant, except with the previous sanction, (a) in the case of a person who is employed in connection with affairs of the Union and is not removable from his office save by or with the sanction of the Central Government, (b) in the case of a person who is employed in connection with the affairs of a State and is not removable from his office save by or with the sanction of the State Government, (c) in the case of ally other person, of the authority competent to remove him from his office. (2) Where for any reason whatsoever any doubt arises whether the previous sanction as required under sub section (1) should be given by the Central or State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed". With a view to eradicating the evil of bribery and corruption, the Government of India set up a Committee to make recommendations for the improvement of the laws relating to bribery and corruption under the Chairmanship of Dr. Bakshi Tek Chand. The recommendations of the Committee led to the enactment of the Criminal Law Amendment Act, 1952 By the 1952 Act, power was conferred on the State Government to appoint special offences as may be necessary for such area or areas as may be specified in the notification to try the following offences namely; offences punishable under Sections 161, 162, 163, 164, 165 and 165A IPC and Sec. 5 of the 1947 Act and any conspiracy to commit or any attempt to commit or any abetment of 510 any of the offences hereinabove mentioned; See. 7 conferred exclusive jurisdiction on the special Judges appointed under See. Sub sec. (2) of Sec. 7 provides for specific territorial jurisdiction of a special Judge. Sub sec. (3) conferred power on the special Judge also to try any offence other than an offence specified in. Sec. 6 with which the accused may, under the Code of Criminal Procedure, 1898, be charged at the same trial. Sec. 8 prescribed the procedure to be followed by the special Judge in the trial of the offences. The Court of special Judge was deemed to be a Court of Sessions trying cases without a jury within the local limits of the jurisdiction of the High Court for the purposes of Chapter XXXI and XXXII of the Code of Criminal Procedure as provided by Sec. 9. The appellant, the original complainant, contends that the learned special Judge was in error in holding that M.L.A. is a public servant within the meaning of the expression under Sec. 21(12)(a). The second submission was that if the first question is answered in the affirmative, it would be necessary to examine whether a sanction as contemplated by Sec. 6 is necessary. If the answer to the second question is in the affirmative it would be necessary to identify the sanctioning authority. The broad sweep of the argument was that the complainant in his complaint has alleged that the accused abused his office of Chief Minister and not his office, if any, as M.L.A. and therefore, even if on the date of taking cognizance of the offence the accused was M.L.A., nonetheless no sanction to prosecute him is necessary as envisaged by Sec. 6 of the 1947 Act. lt was urged that as the allegation against the accused in the complaint is that he abused or misused his office as Chief Minister and as by the time the complaint was filed and cognizance was taken, he had ceased to hold the office of the Chief Minister no sanction under Sec. 6 was necessary to prosecute him for the offences alleged to have been committed by him when the accused was admittedly a public servant in his capacity as Chief Minister. On behalf of the accused, it was contended that not only the accused would be a public servant as falling within the meaning of tile expression in Sec. 21(12)(a) but he would also be a public servant within the contemplation of clauses (3) and (7) of Sec. 21. The next limb of the argument was that if an accused hold plurality of Offices, each of which confers on him the status of a public servant and even if it is alleged that he has abused or misused one office as a public servant notwithstanding, the fact that there no allegation of abuse or misuse of other office held as public servant, sanction of each authority com 511 petent to remove him from each of the offices would be a sine qua non under Sec. 6 before a valid prosecution can be launched against the accused. On these rival contentions some vitat and some not so vital points arise for consideration, some easy of answer and some none tooeasy. For their scientific and logical treatment they may be formulated. (a) What is the relevant date with reference to which a valid sanction is a pre requisite for the prosecution of a public servant for offences enumerated in Sec. 6 of the 1947 Act? (b) If the accused holds plurally of offices occupying each of which makes him a public servant, is sanction of each one of the competent authorities entitled to remove him from each one of the offices held by him necessary and if anyone of the competent authorities fails or declines to grant sanction, is the Court precluded or prohibited from taking cognizance of the offence with which the public servant is charged ? (c) Is it implicit in Sec. 6 of the 1947 Act that sanction of that competent authority alone is necessary, which is entitled to remove the public servant from the office which is alleged to have been abused for misused for corrupt motives ? (d) Is M.L.A. a public servant within the meaning of the expression in Sec. 21(12)(a) IPC ? (e) Is M.L.A. a public servant within the meaning of the expression in Sec.21(3) and Sec. 21(7) ICP ? (f) Is sanction as contemplated by Sec. 6 of the 1947 Act necessary for prosecution of M.L.A. ? (g) If the answer to (f) is in the affirmative, which is the Sanctioning Authority competent to remove M.L.A. from the office of Member of the Legislative Assembly? Re. (a): The 1947 Act was enacted, as its long title shows, to make more effective provision for the prevention of bribery and corruption. Indisputably, therefore, the provisions of the Act must receive 512 such construction at the hands of the court as would advancehte object and purpose underlying the Act and at any rate not defeat it. If the words of the statute are clear and unambiguous, it is the plainest duty of the court to give effect to the natural meaning of the words used in the provision. The question of construction arises only in the event of an ambiguity or the plain meaning of the words used in the statute would be self defeating. The court is entitled to ascertain the intention of the legislature to remove the ambiguity or the plain meaning of the words used in the statute would be self defeating. The court is entitled to ascertain the intention of the legislature to remove the ambiguity by construing the provision of the statute as a whole keeping in view what was the mischief when the statute was enacted and to remove which the legislature enacted the statute. This rule of construction is so universally accepted that it need not be supported by precedents. Adopting this rule of construction, whenever a question of construction arises upon ambiguity or where two views are possible of a provision, it would be the duty of the court to adopt that construction which would advance the object underlying the Act namely, to make effective provision for the prevention of bribery and corruption and at any rate not defeat it. Section 6 bars the court from taking cognizance of the offences therein enumerated allegel to have been committed by a public servant except with the previous sanction of the competent authority empowered to grant the requisite sanction. Sec. 8 of 1952 Act prescribes procedure and powers of special Judge empowered to try offences set out in Sec. 6 of 1947 Act. Construction of Sec. 8 has been a subject of vigorous debate in the cognate appeal. In this appeal we will proceed on the assumption that a special Judge can take cognizance of offences he is competent to try on a private complaint. 6 creates a bar to the court from taking cognizance of offences therein enumerated except with the previous sanction of the authority set out in clause (a), (b) & (c) of sub Sec. The object underlying such provision was to save the public servant from the harassment of frivolous or unsubstantiated allegations. The policy underlying Sec. 6 and similar sections, is that there should not be unnecessary harassment of public servant. (Sec C.R. Bansi vs State of Maharashtra(1)). Existence thus of a valid sanction is a pre requisite to the taking of cognizance of the enumerated offences alleged to have been committed by a public servant. The bar is to the taking of cognizance of offence by the court. Therefore, when the court is called upon to take cognizances of such offences, it must enquire whether there is a valid sanction to prosecute the public servant for the offence alleged to have been committed by 513 him as public servant. Undoubtedly, the accused must be a public servant when he is alleged to have committed the offence of which he is accused because Sections 161, 164, 165 IPC and Sec. 5(2) of the 1947 Act clearly spell out that the offences therein defined can be committed by a public servant. If it is contemplated to prosecute public servant who has committed such offences, when the court is called upon to take cognizance of the offence, a sanction ought to be available otherwise the court would have no jurisdiction to take cognizance of the offence. A trial without a valid sanction where one is necessary under Sec. 6 has been held to be a trial without jurisdiction by the court. (See R.R. Chari vs State of U.P.(1) and S.N. Bose vs State of Bihar(2) In Mohd. Iqbal Ahmed v: State of A.P.(3), it was held that a trial without a sanction renders the proceedings ab initio void. But the terminus a quo for a valid sanction is the time when the court is called upon to the cognizance of the offence. If therefore, when the offence is alleged to have been committed, the accused was a public servant but by the time the court is called upon to take cognizance of the offence committed by him as public servant, he has ceased to be public servant, no sanction would be necessary for taking cognizance of the offence against him. This approach is in accord with the policy underlying Sec. 6 in that a public servant is not to be exposed to harassment of a frivolous or speculative prosecution. If he has ceased to be a public servant in the meantime, this vital consideration ceases to exist. As a necessary corollary, if the accused has ceased to be a public servant at the time when the court is called upon to take cognizance of the offence alleged to have been committed by him as public servant, Sec. 6 is not attracted. This aspect is not more res integra. In S.A. Venkataraman vs The State(4) this Court held as under: "In or opinion, in giving effect to the ordinary meaning of the words used in section 6 of the Act, the conclusion is inevitable that at the time a court is asked to take cognizance not only the offence must have been committed by a public servant but the person accused is still a public servant removable from his office by a competent authority before the provisions of section 6 can apply. In the present appeals, admittedly, the appellants had cease to be public servants alleged to have been committed by them as public servants. Accordingly, the provisions of s.6 of the Act 514 did not apply and the prosecution against them was not vitiated by the lack of a previous sanction by a competent authority". And this view has been consistently followed in C.R. Bansi 's case and K.S. Dharmadatan vs Central Government & Ors.(1) It therefore appears well settled that the relevant date with reference to which a valid sanction is sine qua non for taking cognizance of an offence committed by a public servant required by Sec. 6 is the date on which the court is called upon to take cognizance of the offence of which he is accused. The accused tendered resignation of his office as Chief Minister and ceased to hold the office of Chief Minister with effect from January 20, 1982. The complaint from which the present appeal arises and which was registered as Criminal Case No. 24/82 appears to have been filed on August 9, 1982 and the cognizance was taken by the learned Magistrate on the same day. It unquestionably transpires that long before the date on which the cognizance was taken by the learned special Judge, the accused had ceased to hold the office of the Chief Minister and as such had ceased to be a public servant. In other words, he was not public servant in his capacity as Chief Minister on August 9, 1982 when the court took cognizance of the offence against him. A fortiori no sanction as contemplated by Sec. 6 was necessary before cognizance of the offence could be taken against the accused for offences alleged to have been committed in his former capacity as public servant. Re: (b) and (c): It was strenuously contended that if the accused has held or holds a plurality of offices occupying each one of which makes him a public servant, sanction of each one of the competent authorities entitled to remove him from each one of the offices held by him, would be necessary and if anyone of the competent authorities fails or declines to grant sanction, the court is precluded or prohibited fome taking cognizance of the offence with the public servant is charged. This submission was sought to be repelled urging that it is implicit in Sec. 6 that sanction of that authority alone is necessary which is competent to remove the public servant from the office which he is alleged to have misused or abused for corrupt motives. 6(1)(c) is the only provision relied upon on behalf of the accused to contend that as M.L.A. he was a public servant on the date of taking cognizance of the offences, and therefore, sanction of that authority comepetent to remove him from that office is a since qua non for taking cognizance of offences. 6 (1)(c) bars taking cognizance of an 515 offence alleged to have been committed by public servant except with the previous snaction of the authority competent to remove him from his office. In order to appreciate the rival contentions the fact situation relevant to the topic under discussion may be noticed. At a general election held in 1980, accused was elected as Member of the Legislative Assembly of Maharashtra State fom Shrivardhan Assembly Constituency. He was appointed as Chief Minister of Maharashtra State, and he was holding that office at the time he is alleged to have committed the offences set out in the complaint filed against him. He tendered his resignation of the office of the Chief Minister and ceased to hold that office with effect from January 20, 1982. However, he continued to retain his seat as M.L.A. The contention is that as M.L.A., he was a public servant, a submission seriously controverted, which we would presently examine and that he was such public servant even on the date on which the court took cognizance of the offences set out in the complaint without a valid sanction and therefore the court had no jurisdiction to take cognizance of the offences. In support of the submission it was urged that if the policy underlying Sec. 6 and similar provisions like Sec. 197 Cr. P.C. was to spare the harassment to the public servant consequent upon launching of frivolous or speculative prosecutions, the same would be defeated if it is held that the sanction to prosecute is necessary from an authority competent to remove the public servant from the office which he is alleged to have misused or abused. Proceeding along this line it was urged that even if the accused has ceased to be a public servant in one capacity by ceasing to hold the office which he is alleged to have misused or abused yet if he continued to be a public servant in another capacity, the authority competent to remove him from the latter office would have to decide whether the prosecution is frivolous or speculative and in larger public interest to thwart it by declining to grant the sanction. It was also urged that if a public servant has to discharge some public duty and perform some public functions and he is made to cool his heels in law courts, public interest would suffer by keeping him away from his public duty and therefore, to advance the object underlying Sec. 6, the court must hold that if the public servant who is being prosecuted holds more than one public office occupying each one of which makes him public servants, a sanction to prosecute of each competent authority entitled to remove him from each office is necessitous before taking cognizance of offences against him. It was urged that this approach would advance and 516 buttress the policy underlying Sec. 6 and the contrary view would defeat the same. Offences prescribed in Sec. 161, 164 and 165 IPC and Sec. 5 of the 1947 Act have an intimate and inseparable relation with the office of a public servant. A public servant occupies office which renders him a public servant and occupying the office carries with it the powers conferred on the office. Power generally is not conferred on an individual person. In a society governed by rule of law power is conferred on office or acquired by statutory status and the individual occupying the office or on whom status is conferred enjoys the power of office or power flowing from the status. The holder of the office alone would have opportunity to abuse or misuse the office. These sections codify a well recognised truism that power has the tendency to corrupt. It is the holding of the office which gives an opportunity to use it for corrupt motives. Therefore, the corrupt conduct is directly attributable and flows from the power conferred on the office. This interrelation and interdependence between individual and the office he holds is substantial and not serverable. Each of the three clauses of sub section (1) of Sec. 6 uses the expression `office ' and the power to grant sanction is conferred on the authority competent to remove the public servant from his office and Sec. 6 requires a sanction before taking cognizance of offences committed by public servant. The offence could be committed by the public servant by misusing or abusing the power of office and it is from that office, the authority must be competent to remove him so as to be entitled to grant sanction. The removal would bring about cessation of interrelation between the office and abuse by the holder of the office. The link between power with opportunity to abuse and the holder of office would be severed by removal from office. Therefore, when a public servant is accused of an offence of taking gratification other than local remuneration for doing or forbearing to do an official act (Sec. 161 IPC) or as a public servant abets offences punishable under Secs. 161 and 163 (Sec. 164 IPC) or as public servant obtains a valuable thing without consideration from person concerned in any proceeding or business transacted by such public servant (Sec. 165 IPC) or commits criminal misconduct as defined in Sec. 5 of the 1947 Act, it is implicit in the various offences that the public servant has misused or abused the power of office held by him public servant. The expression `offices ' in the three sub clauses of Sec. 6(1) would clearly denote that office which the public servant misused or abused for corrupt motives for which he is to be prosecuted and in respect of which a sanction to prosecute him is necessary by the competent authority entitled to remove him from that office which he has abused. 517 This interrelation between to office and its abuse if serered would render Sec. 6 devoid of any meaning. An this interrelation clearly provides a clue to the understanding of the provision in Sec. 6 providing for sanction by a competent authority who would be able to judge the action of the public servant before removing the bar, by granting sanction, to the taking of the cognizance of offences by the court against the public servant. Therefore, it unquestionably follows that the sanction to prosecute can be given by an authority competent to remove the public servant from the office which he has misused or abused because that authority alone would be able to know whether there has been a misuse or abuse of the office by the public servant and not some rank outsider. By a catena of decisions, it has been held that the authority entitled to grant sanction must apply its mind to the facts of the case, evidence collected and other incidental facts before according sanction. A grant of sanction is not an idle formality but a solemn and sacrosanct act which removes the umbrella of protection of government servants against frivolous prosecutions and the aforesaid requirements must therefore, be strictly complied with before any prosecution could be launched against public servants. (See Mohd. Iqbal Ahmad vs State of Andhra Pradesh). The Legislature advisedly conferred power on the authority competent to remove the public servant from the office to grant sanction for the obvious reason that that authority alone would be able, when facts and evidence are placed before him, to judge whether a serious offence is committed or the prosecution is either frivolous or speculative. That authority alone would be competent to judge whether on the facts alleged, there has been an abuse or misuse of office held by the public servant. That authority would be in a position to know what was the power conferred on the office which the public servant hold, how that power could be abused for corrupt motive and whether prima facie it has been so done. That competent authority alone would know the nature and functions discharged by the public servant holding the office and whether the same has been abused or misused. It is the vertical hierarchy between the authority competent to remove the public servant from that office and the nature of the office hold by the public servant against whom sanction is sought which would indicate a hierarchy and which would therefore, permit inference of knowledge about the functions and duties of the office and its misuse or abuse by the public servant. That is why the legislature clearly provided that that authority alone would be competent to grant sanction which is entitled to remove the public servant against whom sanction is sought from the office. 518 Now if the public servant holds two offices and he is accused of having abused one and from which he is removed but continues to hold the other which is neither alleged to have been used nor abused, is a sanction of the authority competent to remove him from the office which is neither alleged or shown to have been abused or misused necessary? The submission is that if the harassment of the public servant by a frivolous prosecution and criminal waste of his time in law courts keeping him away from discharging public duty, are the objects underlying Sec. 6, the same would be defeated if it is held that the sanction of the latter authority is not necessary. The submission does not commend to use. We fail to see how the competent authority entitled to remove the public servant from an office which is neither alleged to have been used or abused would be able to decide whether the prosecution is frivolous or tendentious. An illustration was posed to the learned counsel that a Minister who is indisputably a public servant greased his palms by abusing his office as Minister, and then ceased to hold the office before the court was called upon to take cognizance of the offence against him and therefore, sanction as contemplated by Sec. 6 would not be necessary; but if after committing the offence and before the date of taking of cognizance of the offence, he was elected as a Municipal President in which capacity he was a public servant under the relevant Municipal law, and was holding that office on the date on which court proceeded to take cognizance of the offence committed by him as a Minister, would a sanction be necessary and that too of that authority competent to remove him from the office of the Municipal President. The answer was in affirmative. But the very illustration would show that such cannot be the law. Such an interpretation of Sec. 6 would render it as a shield to an unscrupulous public servant. Someone interested protecting may shift him from one office of public servant to another and thereby defeat the process of law. One can legitimately envisage a situation wherein a person may hold a dozen different offices, each one clothing him with the status of a public servant under Sec. 21 IPC and even if he has abused only one office for which either there is a valid sanction to prosecute him or he has ceased to hold that office by the time court was called upon to take cognizance, yet on this assumption, sanction of 11 different competent authorities each of which was entitled to remove him from 11 different public offices would be necessary before the court can take cognizance of the offence committed by such public servant, while abusing one office which he may have ceased to hold. Such an interpretation in contrary to all canons of construction and leads to an absurd and product which of necessity must be avoided. Legislation 519 must at all costs be interpreted in such a way that it would not operate as a rougue 's charter. (See Davis & Sons Ltd. vs Atkins) Support was sought to be drawn for the submission from the decision of the Andhra Pradesh High Court in Air Commodore Kailash Chand vs The State (S.P.E. Hyderabad)(2) and the affirmance of that decision by this Court in The State (S.P.E. Hyderabad) vs Air Commodore Kailash Chand.(3) In that case accused Kailash Chand was a member of the Indian Air Force having entered the service on 17th November 1941. He retired from the service on 15th June, 1965, but was re employed for a period of 2 years with effect from 16th June, 1965. On 7th September, 1966, the respondent was transferred to the Regular Air Force Reserve with effect from June 16, 1965 to June 15, 1970 i.e. for a period of 5 years. On 13th March, 1968, the re employment given to the respondent ceased and his service was terminated with effect from April 1, 1968. A charge sheet was submitted against him for having committed an offence under Sec. 5(2) of the Prevention of Corruption Act, 1947 during the period March 29, 1965 to March 16, 1967. A contention was raised on behalf of the accused that the court could not take cognizance of the offence in the absence of a valid sanction of the authority competent to remove him from the office held by him as a public servant. The learned special Judge negatived the contention. In the revision petition filed by the accused in the High Court, the learned Single Judge held that on the date of taking cognizance of the offence, the accused was a member of the Regular Air Force Reserve set up under the Reserve and Auxiliary Air Force, 1952 and the rules made there under. Accordingly, it was held that a sanction to prosecute him was necessary and in the absence of which the court could not that cognizance of the offences and the prosecution was quashed. In the appeal by certificate, this Court upheld the decision of the High Court. This Court held following the decision in S.A. Venkataraman 's case that if the public servant had ceased to be a public servant at the time of taking cognizance of the offence, Sec. 6 is not attracted. Thereafter the court proceeded to examine whether the accused was a public servant on the date when the court took cognizance of the offence and concluded that once the accused was transferred to the Auxiliary Air Force, he retained his character as a public servant because he was required to undergo training and 520 to be called up for service as and when required. The court further held that as such the accused was a public servant as an active member of the Indian Air Force and a sanction to prosecute him under Sec. 6 was necessary. This decision is of no assistance for the obvious reason that nowhere it was contended before the court, which office was alleged to have been abused by the accused and whether the two offices were separate and distinct. It is not made clear whether the accused continued to hold the office which was alleged to have been abused or misused even at the time of taking cognizance of the offence. But that could not be so because the service of the accused was terminated on April 1, 1968 while the cognizance was sought to be taken in June, 1969. Indisputably, the accused had ceased to hold that office as public servant which he was alleged to have misused or abused. The court was however, not invited to consider the contention canvassed before us. Nor was the court informed specifically whether the subsequent office held by the accused in that case was the same from which his service was terminated meaning thereby he was re employed to the same office. The decision appears to proceed on the facts of the case. We would however, like to make it abundantly clear that if the two decisions purport to lay down that even if a public servant has ceased to hold that office as public servant which he is alleged to have abused or misused for corrupt motives, but on the date of taking cognizance of an offence alleged to have been committed by him as a public servant which he ceased to be and holds an entirely different public office which he is neither alleged to have misused or abused for corrupt motives, yet the sanction of authority competent to remove him from such latter office would be necessary before taking cognizance of the offence alleged to have been committed by the public servant while holding an office which he is alleged to have abused or misused and which he has ceased to hold, the decisions in our opinion, do not lay down the correct law and cannot be accepted as making a correct interpretation of Sec. 6. Therefore, upon a true construction of Sec. 6, it is implicit therein that sanction of that competent authority alone would be necessary which is competent to remove the public servant from the office which he is alleged to have misused or abused for corrupt motive and for which a prosecution is intended to be launched against him. In the complaint filed against the accused it has been repeatedly alleged that the accused as Chief Minister of Maharashtra State accepted gratification other than legal remuneration from various sources 521 and thus committed various offences set out in the complaint. No where, not even by a whisper, it is alleged that the accused has misused or abused for corrupt motives his office as M.L.A. Therefore, it is crystal clear that the complaint filed against the accused charged him with criminal abuse or misuse of only his office as Chief Minister. By the time, the court was called upon to take cognizance of the offences, so alleged in the complaint, the accused had ceased to hold the office of the Chief Minister. On this short ground, it can be held that no sanction to prosecute him was necessary as former Chief Minister of Maharashtra State. The appeal can succeed on this short ground. However, as the real bone of contention between the parties was whether as M.L.A. the accused was a public servant and the contention was canvassed at some length, we propose to deal with the same. The learned special Judge held that the accused as M.L.A. is a public servant because he is in the pay of the Government or he is remunerated by feces for the performance of public duty by the Government. The learned special Judge simultaneously rejected the contention canvassed on behalf of the accused that the accused is a public servant because he is a person empowered by law to discharge as a member of a body of persons adjudicatory functions as contemplated by the Third clause of Sec. 21. Re: (d): We would first examine the correctness or otherwise of the finding of the learned special Judge whether the accused as M.L.A. was in the pay of the Government or was remunerated by fees for the performance of any public duty by the Government so as to be clothed with the status of a public servant within the meaning of cl. (12)(a) of Sec. 21 IPC. (12)(a) provides that every person in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty by the Government would be a public servant. The three limbs of cl. (12)(a) according to the learned special Judge are: (i) Every person in the service of the Government; or (ii) Every person in the pay of the Government; or (iii) Every person remunerated by fees or commission for the performance of any public duty by the Government. If any person falls in any of the three limbs according to the 522 learned special Judge, he would be a public servant within the meaning of the expression in Sec. It was conceded before the learned special Judge and not retracted before us that the case of the accused does not fall in the first limb i.e. the accused as M.L.A. could not be said to be in the service of the Government. The contention is that the accused while receiving his salary as M.L.A. under the Maharashtra Legislature Members ' Salaries and Allowances Act, 1956 was and is in the pay of the Government. The second limb of the submission was that even if the pay which the accused received as M.L.A. under the relevant Act would not make the accused a person in the pay of the Government, nevertheless the pay received by him would be the remuneration which the accused would receive for performance of public duty from the Government. It was contended on behalf of the complainant that the expression `in the pay of the Government ' would, in the context in which the expression is used in Sec. 21(12)(a), mean only one thing that the payment must be by a master to a servant and unless there is relationship of master and servant or relationship of command and obedience between the payer and the payee, mere payment even if styled as pay would not mean that the payee is in the pay of the payer. Proceeding along it was submitted that M.L.A. could not be said to be subject to obedience of any command by the Government, and therefore the accused as M.L.A. could not be said to be `in the pay of the Government '. And as regards the third limb, it was urged that the accused as M.L.A. was not performing any public duty for the performance of which he was remunerated by the Government. Additionally, it was urged that the expression `Government ' in cl. (12) (a) must receive the same meaning assigned to it in Sec. 17 IPC meaning thereby that it denotes the Central Government or the Government of a State as the context requires. It was urged that in that sense the expression `Government ' in cl. (12) (a) would mean `Executive Government ' and it would be adding insult to injury if it can ever be said that M.L.A. is in the pay of the Executive Government or State Government. On behalf of the accused these submissions were repelled by urging that the use of word `or ' signifies a disjunctive and not conjuctive and that viewed from this angle the first part of cl. (12) (a) `in the service of the Government ' would import the notion of master servant or command obedience relationship, but the expression `in the pay of the Government ' would signify someone other than that included in the first limb and as the legislature could not be accused of tautology or redundancy the expression `in the pay of the Government ' would exclude any notion of master servant or command obedience relationship. It was submit 523 ted that conceivably there can be a person in the service of the Government though not paid by the Government and conversely there can be a person `in the pay of the Government ' without being in the service of the Government. It was also submitted on behalf of the accused that it would be constitutional impertinence to say that M.L.A. does not perform any public duty. His duty may be political or moral as urged on behalf of the complainant but it is nonetheless a constitutional duty which he is performing and that duty would be comprehended in the expression `public duty ' in cl. (12) (a). As a corollary it was submitted that the remuneration in the form of pay which the accused receives and has been receiving since he ceased to be the Chief Minister under the relevant Act is remuneration for the performance of the public duty by the Government. The neat question that emerges on the rival contentions is one of construction of the expression `in the pay of ' and the expression `Government ' in cl. (12) (a). At the threshold learned counsel for the accused sounded a note of caution that the Court should steer clear of the impermissible attempt of the appellant to arrive at a true meaning of legislative provision by delving deep into the hoary past and tracing the historical evolution of the provision awaiting construction. It was submitted with emphasis that this suggested external aid to construction falls in the exclusionary rule and cannot be availed of. Therefore, it has become necessary to examine this preliminary objection to the court resorting to this external aid to construction. 21 (12) (a) acquired its present form in 1964. Mr. Singhvi contended that even where the words in a statute are ambiguous and may be open to more than one meaning or sense, a reference to the debates in Parliament or the report of a Commission or a Committee which preceded the enactment of the statute under consideration is not a permissible aid to construction. This is what is called the exclusionary rule. In support of the submission, reliance was placed upon Assam Railways and Trading Co. Ltd. vs Inland Revenue Commissioners(1) in which the House of Lords declined to look into the Report of the Royal Commission on Income tax in order to ascertain the meaning of certain words in the Income Tax Act, 1920 on the ground that no such evidence for the purpose of showing the intention, that is the purpose or object, of an Act is admissible. The intention of the legislature must be ascertained from the words of the 524 statute which such extraneous assistance as is legitimate. This view appears to have been consistently followed in United Kingdom because in Katikiro of Buganda vs Attorney General(1), the Privy Council held in agreement with the Court of Appeal of Eastern Africa that the contents of the White Paper were not admissible in evidence for the purpose of construing the schedule. Similarly in Central Asbestos Co. Ltd. vs Dodd the House of Lords declined to look at the Committee Report which preceded the drafting of the Act. In the Administrator General of Bengal vs Premlal Mullick & Ors(3), the Privy Council disapproved the reference to the proceeding of the Legislature which resulted in the passing of the Act II of 1874 as legitimate aids to the construction of Sec. 31 by the Appeal Bench of Calcutta High Court. Relying on these decisions, a valiant plea was made to persuade us not to depart from this well accepted proposition of law in England. The trend of law manifested by these decisions broadly indicate that in the days gone by the courts in England were of the view that reference to the recommendations of a Commission or Committee appointed by the Government or statements in White Paper which shortly preceded the statute under consideration were not legitimate aids to construction of the statute even if the words in the statute were ambiguous. The trend certainly seems to be in the reverse gear in that in order to ascertain the true meaning of ambiguous words in a statute, reference to the reports and recommendations of the Commission or Committee which preceded the enactment of the statute are held legitimate external aids to construction. The modern approach has to considerable extent roded the exclusionary rule even in England. Constitution Bench of this Court after specifically referring to Assam Railways and Trading Co. Ltd. vs I.R.C. in State of Mysore vs R.V. Bidap(4) observed as under: "The trend of academic opinion and the practice in the European system suggest that interpretation of a statute being exercise in the ascertainment of meaning, every thing which is logically relevant should be admissible. . . There is a strong case for whittling. down the Rule of Exclusion followed in the British courts and for less apologetic reference to legislative proceedings and like materials to read the meaning 525 of the words of a statute. Where it is plain, the language prevails, but where there is obscurity or lack of harmony with other provisions and in other special circumstances, it may be legitimate to take external assistance such as the object of the provisions, the mischief sought to be remedied. , the social context, the words of the authors and other allied matters. " Approaching the matter from this angle, the Constitution Bench looked into the proceedings of the Constituent Assembly and "The Framing of India 's Constitution; A Study ' by B. Shiva Rao. It was however urged that before affirmatively saying that in Bidap 's case this Court has finally laid to rest this controversy, the court may refer to Commissioner of Income Tax, Andhra Pradesh, Hyderabad vs Jaya lakshmi Rice and oil Mills Contractor Co.(1) At page 368 a bench of three Judges of this Court without so much as examining the principle underlying the exclusionary rule dissented from the view of the High Court that the report of the Special Committee appointed by the Government of India to examine the provisions of the Bill by which Sec. 26A was added to the Income tax Act, 1922 can be taken into consideration for the purpose of interpreting relevant provisions of the Partnership Act. However it may be stated that the Court did not refer to exclusionary rule. It dissented from the view of the High Court on the ground that the statement relied upon by the High Court was relating to clause 58 corresponding to Sec. 59 of the Partnership. Act and that statement cannot be taken into consideration for the purpose of interpreting the relevant provisions of the Partnership Act. This decision was not noticed in Bidap 's case but the decision in Assam Railways & Trading Co. Ltd relied upon by Mr. Singhvi was specifically referred to. This decision cannot therefore be taken as an authority for the proposition canvassed by Mr. Singhvi. Further even in the land of its birth, the exclusionary rule has received a serious jolt in Black Clawson International Ltd. vs Paperwork Waldhef Ascheffenburg AC(2) Lord Simon of Claisdale in his speech while examining the question of admissibility of Greer Report observed as under: "At the very least, ascertainment of the statutory objective can immediately eliminate many of the possible meanings that the language of the Act might bear and if 526 an ambiguity still remains, consideration of the statutory objective is one of the means of resolving it. The statutory objective is primarily to be collected from the provisions of the statute itself. In these days, when the long title can be amended in both Houses, I can see no reason for having recourse to it only in case of an ambiguity it is the plainest of all the guides to the general objectives of a statute. But it will not always help as to particular provisions. As to the statutory objective of these a report. leading to the Act is likely to be the most potent aid and, in my judgment, it would be more obscurantism not to avail oneself of it. here is, indeed clear and high authority that it is available for this purpose". And in support of this statement of law, a number of cases were relied upon by the learned Law Lord. It may also be mentioned that Per Curiam it was held that "where there is an ambiguity in a statute, the court may have regard to the Report of a Committee presented to Parliament containing proposals for legislation which resulted in the enactment of the statute, in order to determine the mischief which the statute was intended to remedy". Though the unanimous view was that the report of a committee presented to Parliament preceding the statute could be seen for finding out the then state of the law and the mischief required to be remedied, it must be stated that the majority were of the opinion that report could not be looked at to ascertain the intention of Parliament. The minority (per Lord Dilporne and Lord Simon) were of the opinion that when a draft bill was enacted in a statute without any alteration, Parliament clearly manifested its intention to accept committee 's recommendation which would imply that Parliament 's intention was to do what committee wanted to achieve by its recommendations. A reference to Halsbury 's Laws of England, Fourth Edition, Vol. 44 paragraph 901, would leave no one in doubt that 'reports of commissions or committees preceding the enactment of a statute may be considered as showing the mischief aimed at and the state of the law as it was understood to be by the legislature when the statute was passed. ' In the footnote under the statement of law cases quoted amongst others are R. vs Ulugboja(1) R. vs Blexham(2) in which Eigth report of Criminal Law Revision Committee was admitted as an extrinsic aid to construction. Therefore, it can be confidently said that the exclusionary rule is flickering in its 527 dying embers in its native land of birth and has been given a decent burial by this Court. Even apart from precedents the basic purpose underlying all canons of construction is the ascertainment with reasonable certainty of the intention of Parliament in enacting the legislation. Legislation is enacted to achieve a certain object. The object may be to remedy a mischief or to create some rights, obligations or impose duties. Before undertaking the exercise of enacting a statute, Parliament can be taken to be aware of the constitutional principle of judicial review meaning thereby the legislation would be dissected and subjected to microscopic examination. More ' often an expert committee or a Joint Parliamentary committee examines the provisions of the proposed legislation. But language being an inadequate vehicle of thought comprising intention, the eyes scanning the statute would be presented with varried meanings. If the basic purpose underlying construction of a legislation is to ascertain the real intention of the Parliament, why should the aids which Parliament availed of such as report of a special committee preceding the enactment, existing state of law, the environment necessitating enactment of legislation, and the object sought to be achieved, be denied to court whose function is primarily to give effect to the real intention of the Parliament in enacting the legislation. Such denial would deprive the court of a substantial and illuminating the to construction. Therefore, departing from the earlier English decisions we are of the opinion that reports of the committee which preceded the enactment of a legislation, reports of Joint Parliamentary Committee, report of a commission set up for collecting. information leading to the enactment are permissible external aids to construction. In this connection, it would be advantageous to refer to a passage from Crawford on Statutory Construction (page 388). It reads as under: "The judicial opinion on this point is certainly not quite uniform and there are American decisions to the effect that the general history of a statute and the various steps leading upto an enactment including amendments or modifications of the original bill and reports of Legislative Committees can be looked at for ascertaining the intention of the legislature where it is in doubt but they hold definitely that the legislative history is inadmissible when there is no obscurity in the meaning of the statute". In United States vs St. Paul M.M. Rly. Co.(1) it is observed that 528 the reports of a committee, including the bill as introduced, changes 'made in the frame of the bill in the course of its passage and the statement made by the committee chairman incharge of it, stand upon a different footing, and may be resorted to under proper qualifications '. The objection therefore of Mr. Singhvi to our looking into the history of the evolution of the section with all its clauses, the Reports of Mudiman Committee and K Santhanam Committee and such other external aids to construction must be overruled. Tracing the history of cl. (2) of Sec. 21 IPC with a view to ascertaining whether M.L.A. would be comprehended in any of the clauses of Sec. 12 so as to be a public servant, it must be noticed at the outset that Indian Penal Code is a statute of the year 1860 when there were no elected legislatures and a fortiori there were no M.L.As. Even if Moaulay is to be adjudged a visionary, who could look far beyond his times yet in 1860 it was inconceivable for him to foresee the constitutional development of India stages by stages and to envisage the setting up elected legislatures, the members of which would without anything more be comprehended as public servant in any of the subclauses of Sec. 21. Undoubtedly, framing of a legislation is generally not of a transient nature but it is enacted and put on the statute book for reasonably long period until the society for which it is meant undergoes a revolutionary transformation so as to make the law irrelevant or otiose. A visionary can fores possible changes which may be inter connected with the present situation one leading to the other. But the East India a Company rule which had just ended in 1857 after the first war of independence, it was difficult to divine the possible revolutionary changes that may come in by 1919. At any rate at the time when the Indian Penal Code was enacted. there was no elected legislature and therefore, there was no M.L.A. In construing a statute more especially the ancient statute, the court may look at the surrounding circumstances when the statute was enacted. In Halsbury 's Laws of England, Fourth Edition, Vol. 44 paragraph 898, it is observed that the construction of ancient statutes may be eludicated by what in the language of the courts is called contemporanea expositio, that is, by seeing how they were understood at the time when they were passed, Undoubtedly, this doctrine cannot be applied to modern statutes or indeed to any statute whose meaning appears to the court to be plain and unambiguous. At any rate, one can justifiably say that M.L.A. could not be comprehended in any of the clauses of Sec. 21 to be a public servant when the Indian Penal Code was enacted in 1860. 529 The next stage in the historical evolution of the law with regard to corrupt actions of members of public bodies is the one to be found in a Bill introduced in 1925 called Legislative Bodies Corrupt Practices Act, 1925. This Bill was introduced to give effect to the recommendations of the Reforms Enquiry Committee known as Mudiman Committee. In the book 'Evolution of Parliamentary Privileges ' by Shri S.K. Nag, the author traced the steps which led to the introduction of the Bill. In the statement of objects and reasons accompanying the Bill, it was stated that the corrupt influencing of votes of members of the legislature by bribery, intimidation and like should be made penal offences under the ordinary criminal law and para 124 indicates that this recommendation was a unanimous recommendation of the Committee as a whole. Then comes the more important statement which may be extracted: "The tender of a bribe to, or the receiving of a bribe by, a member of a legislature in India as an inducement for him to act in a particular manner as a member of the legislature is not at present an offence. " The Bill sought to fill in the lacuna. It thus follows that till 1925, it was clearly understood that the M.L.A. as the holder of that office which must have come into existence by the time under the Government of India Act, 1919, was not a public servant falling in any of the clauses of Sec. 21 and this lacuna was sought to be remedied by introducing Chapter 9 B bearing the heading of offences by or relating to members of Legislature Bodies '. The dictionary clause in the Bill would have included M.L.A. in the expression "Member of Legislative Bodies. The object of the Bill was to provide for punishment of corrupt practice by or relating to members of Legislative Bodies constituted under the Government of India Act. This was to be passed by the Central Legislature. It was an abortive attempt by members themselves to be brought within the purview of the penal law. One can write a finale by saying that the Bill was not enacted into law. That is the second stage in the history of evolution. Before we proceed further in the journey, it is necessary to take note of one intermediate stage to which our attention was not drawn during the arguments. In Prevention of corruption Act, 1947 by Sethi and Anand at page 50, it is mentioned that till Criminal Law (Amendment) Act, 1958 (Act No. II of 1958) was put on the statute book, Sec. 21 of the IPC consisted only of eleven clauses. Clause 12 530 was introduced by the aforementioned Act and it read 'Every officer in the service or pay of a local authority or of a Corporation engaged in any trade or industry which is established by a Central, Provincial or state Act or of a Government Company as defined in Sec. 617 of the '. Obviously, as incorporated clause 12 would not comprehend M.L.A. and cl 9 as it stood till then, could not have comprehended him as would be presently pointed out. 12 introduced by Act II of 1958 is re enacted as cl.12 (b) and it is nobody 's case that M.L.A. is covered in cl. 12 (b). The next stage of development ma/ now be noticed. While participating in the debate on the demand. for grants for the Ministry of Home affairs in June 1962, some members of the Lok Sabha specifically referred to the growing menace of corruption in administration. In reply to the debate, the then Home Minister suggested that some Members of Parliament and if possible some other public men do sit with the officers in order to review the problem of corruption and make suggestions. Pursuant to this announcement, a Committee chaired by Shri K.Santhanam, M.P. was appointed with nine specific terms of reference which inter alia included: "to suggest changes which would ensure speedy trial of cases of bribery, corruption and criminal misconduct and make the law otherwise more effective '. This Committee submitted its report on March 31 1964. While examining the fourth term of reference extracted hereinabove, the Committee in Section 7 of its report considered the question of proposed amendment to Indian Penal Code. The Committee focussed its attention on the definition of 'public servant ' in Sec. Paragraph 7.6 is most important for the present purpose. It reads as under: "7.6 Section 21 defines "public servant ' Twelve categories of public servants have been mentioned but the present definition requires to be enlarged. The ninth category describes a large variety of officers charged with the performance of different kinds, of duties relating to pecuniary interests of the State. The last sentence of this category, namely, "every officer in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty" should be put as a general definition. After the word "government", he towards "local authority", "public corporation", or "government company" should be added. ' The words "engaged in any trade or industry" may also be deleted from the twelfth clause of Section 21 as these words 531 have a restrictive. effect. It should also be made clear that all Ministers, Ministers of State Deputy Ministers, Parliamentary Secretaries and members of local authorities come under the definition of 'public servant ' A further category should be added to included all persons discharging adjudicatory functions under any Union or State Law for the time being in force. We also consider it necessary to include the following categories within the definition of the term 'public servant ': President, Secretary and all members of Managing Committee of a registered Co operative Society; Office bearers and employees of educational, social, religious and other institutions, in whatever manner established, which receive aid in any form from the Central or State Government". This recommendation led to three important amendments in cls. 3, 9 and 12 of Sec. 21. The unamended clauses and the effect of the amendment in 1964 must be brought out in sharp contrast so as to appreciate the change made and its effect on the language employed. Clause as they stood prior to Amended by the 1964 the 1964 Amendment Amendment. Third: Every Judge. Third: Every Judge in including any person empo wered by law to discharge, whether by himself or as a member of any body of per sons, any adjudicatory functions; Ninth:: Every officer whose duty Ninth: Every officer it is, as such officer to take, whose duty it is, as such receive keep or expend any officer to take, receive, property of the Government, keep, or expend any property or to make any survey, on behalf of the Government, assessment, or contract on or to make any survey, as behalf of the Government or to sessment or contract on be execute any revenue process, half of the Government or to or to report, on any matter affec 532 ting the pecuniary interest of execute any revenue process, the Government or to make or to investigate, or to authenticate or keep any docu report, on any matter affec ment relating to the pecuniary ting the pecuniary interest interest of the Government, of the Government or make or to prevent he infraction of authenticate or keep any any law for the protection of document relating to the of the pecuniary interests of pecuniary interests of the the Government, and every Government, or to prevent officer in the service or pay the infraction of any law of the Government or remunerat for the protection of the ed by fees or commission for pecuniary interest of the performance of any public Government. (Underlining ours); Twelfth: Every officer in the Twelfth: Every person: service or pay of a local auth (a) in the service or pay of ority or of a corporation the Government or remune engaged in any trade or indust rated by fees or commission ry which is established by a for the performance of any Central, Provincial or State public duty by the Govern Act or of a Government Company ment; as defined in section 617 of the . (b) in the service or pay of local authority, a corpora tion established by or under Central, Provincial or State Act or a Government Com pany as defined in section 617 of the . A bare comparison of the two cls. (9) and (12) would reveal the change brought by the Amending Act 40 of 1964. The last part (underlined portion) in the unamended cl. (9): 'every officer in the service or pay of the Government or remunerated by fees or commission for the performance of any 'public duty ' has been severed from the 9th clause and incorporated as an independent clause (12) (a). The original clause (12) was deleted and has been re enacted, as cl. (12) (b) with minor modifications. This history of development is noteworthy for a very compelling reason to be presently mentioned. 533 discretionary power and this included Minister both Cabinet and State, Deputy Ministers and parliamentary Secretaries. M.L.As were not considered holding political offices capable of abuse of power. The Committee recommended amendment of the definition of the expression 'public servant in Sec. 21 IPC so as to include Ministers of all rank of Central and State level and Parliamentary Secretaries in the definition of 'public servant '. The Committee did not recommend that the proposed amendment should comprehend M.L.A. The Committee separately dealt with the M.L.As in paragraph 11.4 in Sec. 11 of the Report '. After stating that, 'next to the Minister, the integrity of Members of Parliament and of legislatures in the State will be a great factor in creating a favourable social climate against corruption. It is desirable that a Code of Conduct for legislators embodying these and other principles should be framed by a special committee of representatives of Parliament and the legislatures nominated by the Speakers and Chairman. This Code should be formally approved by resolutions of Parliament and the legislatures and any infringement of the Code should be treated as a breach of privilege to be inquired into by the Committee of privileges, and if a breach is established, action including termination of membership may be taken. Necessary snactions for enforcing the Code of Conduct should also be brought into existence". The Government minutely examined the Report. The recommendations of the Committee which were accepted by the Government led to the introducing of The Anti Corruption Laws (Amendment) Bill 1964 (Bill No. 67 of 1964) in the Parliament. The salient features of the Bill worth noticing are that cl. (3) of Sec. 21 was proposed to be amended as recommended with minor structural change. (9) of Sec 21 was dissected as recommended and its last part 'and every officer in the service are pay of the Government or remunerated by fees or commission for the performance of any public duty ' was detached and re enacted as cl. (12) (a) and the original cl. (12) was renumbered as Cl. (12) (b) with slight modification. This would imply that no attempt was made to bring in M.L.A. within the conspectus of clause in Sec. so as to make him public servant. The position of the Minister was slightly fluid but a clear picture emerged during the debate on the Bill in the Lok Sabha. Mr. Hathi Minister incharge while piloting the Bill, on November 7, 1964 amongst others stated that the will not deal with those recommendations which had not been accepted by the Government, but would explain them later, if any point is raised in that behalf, (See Lok Sabha Debates (Third 534 that he will not deal with those recommendations which had not been accepted by the Government, but would explain them later, if any point is raised in that behalf. (See Lok Sabha Debates (Third Series), Vol. XXXV, Col. 245) While replying to the debate, Mr. Halhi stated that the code of conduct has already been evolved for Ministers because the recommendation of Santhanam Committee for including Ministers of all ranks and Parliamentary Secretaries in the definition of 'public servant ' was not accepted by the Government. But there is an interesting caveat to this statement to which we would presently revert He further stated that the specific recommendations about the definition 'public servant ' to include Ministers has not been accepted and included in the Bill because Ministers are not merely public servants but they have a greater moral and social responsibility towards the people. Later on in the debate it was conceded that the Minister is already included in the definition of 'public servant ' even before the proposed amendment in view of the decision of the Supreme Court in Shiv Bahadur Singh 's case in which Minister was held to be a public servant. It was further stated that in view of this judgment, the Government was advised that the recommendation of the Santhanam Committee for inclusion specifically of Ministers of all rank and Parliamentary Secretaries was redundant. (Sec Lok Sabha Debates (Third Series) Vol. 35 cols. 729 and 731). Whatever that may be the conclusion is inescapable that till 1964 at any rate M.L.A. was not comprehended in the definition of 'public servant ' in Sec. 21. And the Santhanam Committee did not recommend its inclusion in the definition of public servant, in Sec. 21. Bill No. 47 of 1964 was enacted as Act 40 of 1964. Now if prior to the enactment of Act 40 of 1964 M.L.A. was not comprehended as a public servant in Sec. 21, the next question is: did the amendment make any difference in his position. The amendment keeps the law virtually unaltered. Last part of cl.9 was enacted as cl. 12 (a). If M.L.A. was not comprehended in clause 9 before its amendment and dissection, it would make no difference in the meaning of law if a portion of cl. 7 is re enacted as cl. 12 (a). It must follow as a necessary corollary that the amendment of Cls. (9) and (12) by Amending Act 40 of 1964 did not bring about any change in the interpretation of cl. (9) and cl. (12)(a) after the amendment of 1964. In this connection, it would be advantageous to refer to G.A. Monterio vs The State of Ajmer(1) followed and approved in The State of Ajmer vs Shiji Lal(2) in both of 535 which cl. (9) as it stood prior to its amendment came up for construction. In the first mentioned case, the accused was a chaser in the Railway Carriage Workshop at Ajmer. He was held to be an officer in the pay of the Government, comprehended in the last part of cl. (9) of Sec. 21 as it then stood. In the second case, accused was a teacher in a railway school at Phulera. His contention had found favour with the learned Judicial Commissioner but in reaching the conclusion, he appeared to have ignored the last part of cl.(9) prior to its amendment in 1964. In the appeal by the State, this Court held that the case of the accused would be covered by the last part of cl. (9) because the accused fulfilled the twin conditions of either being in the service or pay of the Government and was entrusted with the performance of a public duty. It may also be mentioned that the last three words 'by the Government ' found in cl. (12) (a) after the amendment were not there in the last part of cl. 9 '. The question was whether addition of words 'by the Government ' made any difference in the interpretation of last part of cl. (9) which is substantially re enacted as cl. (12)(a). The Gujarat High Court in Manshanker Prabhashanker Dwivedi and Anr. vs The State of Gujarat (1) trace the history of amendment that payment by the Government was implicit in cl. (9) through the words 'by the Government ' were not there and were added to cl. (12)(a) after re enacting the last part of cl. (9) as (12)(a). This becomes clear from the decision of this Court in the appeal against the judgment of the Gujarat High Court in the State of Gujarat vs Manshanker Prabhashnker Dwivedi. (2) The accused in that case was charged for having committed offences under Sec. 161 IPC and Sec. 5 (2) of the 1947 Act. The facts alleged were that the accused respondent before this Court was an examiner appointed by the University for the first year B.Sc. examination. He was alleged to have accepted gratification of Rs. 500 other than legal remuneration for showing favour to a candidate by giving him more marks than he deserved in the Physics practical examination. The learned special Judge convicted him. In the appeal, the High Court after taking note of cl. 9 and cl. 12 of Sec. 21 prior to their amendment by Act 40 of 1964 held that for cl. 9 to apply the person should be an officer 'in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty 'and that such pay or remuneration or commission must come from the Government '. It was further held that the context of the whole of the Ninth Clause, as 536 remuneration or in respect of the performance of public duty. ' It was further held that the use of the word 'officer ' read in the context of the words immediately preceding the last part would indicate that the remuneration contemplated was remuneration by Government. The High Court further held that the amendment made in 1964 and in particular the addition of the words 'by the Government ' in sub cl.(a) of clause Twelfth showed the legislative interpretation of the material portion of clause Ninth as it stood before the amendment under consideration, After extraction these reasons which appealed to the High Court, this Court observed than the reasoning of the High Court does not suffer fro many infirmity. It would transpire that payment by the Government was implied without the use of the expression, by the Government in cl. 9. The words 'by the Government ' are added in cl. (12)(a) amended. This apparently does not make any difference. It would therefore necessarily follow that the amendment of cls (9) and (12) did not bring about any change in the coverage and construction of the two clauses prior to and since their amendment. If that be so, it would follow as necessary corollary that if M.L.A. was not a public servant with in the meaning of the expression prior to Act 40 of 1964, since the Act, the law, legal effect and on average of expression public servant remains unaltered and hence, M.L.A. is not a 'public servant ' comprehended in cl. (12)(a). Thus looking to the history and evolution of Sec. 21 as traced, it is clear that till 1964 M.L.A. could not have been conceivably comprehended in expression 'public servant ' and the law did not undergo any change since the amendment. On the contrary, the recommendation of the Santhanam Committee which recommended inclusion of Ministers and Parliamentary Secretaries but not of M.L.A. separately recommended a code of conduct for M.L.A for seving them from the spectre of corruption would clearly and unmistakably show that till 1964 M.L.A. was not comprehended in expression 'public servant ' in Sec. 21 IPC and the amendment by Amending Act 40 of 1964 did not bring about the slightest change in this behalf concerning the position of M.L.A. Therefor, apart from anything else, on historical evolution of Sec. 21 adopted as an external aid to construction, one can confidently say that M.L.A. was not and is not a 'public servant ' within the meaning of the expression in any of the clauses of Sec. 21 IPC. Assuming that it would not be legally sound or correct according to well accepted canon of construction of a statute to construe Sec. 21 (12) (a) by mere historical evolution of the section and the constitutionally valid approach would be to look at the language em (12) (a) by mere historical evolution of the section and the constitutionally valid approach would be to look at the language employed in the section and upon its true construction, ascertain whether M.L.A. is a public servant within the meaning of the expression in that sub clause. The learned special Judge held that M.L.A. is a public servant because he is either in the pay of the Government or is remunerated by fees for the performance of any public duty by the Government. A person would be a public servant under cl. (12) (a) if (i) he is in the service of the Government; or (ii) he is in the pay of the Government; or (iii) he is remunerated by fees or commission for the performance of any public duty by the Government. On behalf of the complainant appellant, it was contended that in order to make a person a public servant on the ground that he is in the pay of the Government, there must exist a master servant relationship or a command obedience relationship, and if these elements are absent even if a person is in the pay of the Government, he would not be a public servant. On behalf of the respondent, it was countered asserting that the concept of master servant relationship or command obedience relationship is comprehended in the first part of cl. (12) (a) which provides that every person in the service of the Government would be a public servant. It was urged that if even for being comprehended in the second part of the clause namely, a person would be a public servant if he is in the pay of the Government, their ought to be a master servant or command obedience relationship, the Legislature would be guilty of tautology and the disjunctive 'or ' would lose all significance. The use of the expression 'or ' in the context in which it is found in cl. (12)(a) does appear to be a disjunctive. Read in this manner, there are three independent categories comprehended in cl. (12) (a) and if a person falls in any one of them, he would be a public servant. The three categories are as held by the learned special Judge; (i) a person in the service of the Government; (ii) a person in the pay of the Government; and (iii) a person remunerated by fees or commission for the performance of any public duty the Government. One can be in the service of the Government and may be paid for the same. One can be in the pay of the Government without being in the service of the Government in the sense of manifesting master servant or command obedience relationship. The use of the expression 'or ' does appear to us to be a disjunctive as contended on behalf of the respondent. Depending upon the context, 538 'or ' may be read 'and ' but the court would not do it unless it is so obliged because 'or ' does not generally mean 'and ' and 'and ' does not generally mean 'or '. (See Green vs Premier Glyrhonwy State Company Ltd. '(1) Babu Manmohan Das & Ors. vs Bishun Das, (2) Ramta Prasad Aggarwal etc. Executive Engineer, Balladgarh & Anr.(3) and several other which we consider it unnecessary to enumerate here. Once it is accepted that 'a person in the pay of the Government ' connotes a specific and independent category of public servant other than ' a person in the service of the Government ' does not inhere a master servant or command obedience relationship between the Government as the payer and the public servant as the payee, no part of the section is rendered superfluous. Each part will receive its own construction. We therefore consider it unnecessary to refer to those decisions, which were cited on behalf of the respondent that the correct canon of construction to be adopted in such a situation is that effect must be given, if possible, to the words used in the statute, for the Legislature is deemed not to waste its words or to say anything in vain. What then is the true interpretation of the expression 'in the pay of the Government '. In other words, is M.L.A. a person 'In the pay of the Government ' so as to be public servant within the meaning of the expression in Sec. 21 (12) (a). The expressions that call for construction are (i) 'in the pay of ' and (ii) 'Government '. article 195 of the Constitution provides that ' Members of the Legislative Assembly and the Legislative Council of a State shall be entitled to receive such salaries and allowances as may from time to time be determined by the Legislature of the State by law and, until provision in that respect is so made, salaries and allowances at such rates and upon such conditions as were immediately before the commencement of the Constitution applicable in the case of members of the Legislative Assembly of the corresponding Province. ' Armed with this power, the Maharashtra State Legislative Assembly has enacted 'The Maharashtra Legislature Members ' Salaries and Allowances Act, 1956 (Bombay Act XLIX of 1956) '. Sec. 3 (1) provides that 'there shall be paid to each member during the whole of his term of office a salary at the 539 rate of Rs. 450/ per month and sub sec. (2) provides that 'there shall be paid to each Member during the whole of his term of office per month a sum of Rs. 400/ as a consolidated allowance for all matters not specifically provided or by under the provision of the Act '. Sec. 4 provides for daily allowances to be paid to Members. 5 provides for travelling allowance to be paid to Members. 5AC provides for a free travel by railway and steamer by a Member subject to the conditions therein prescribed. Members are also eligible for some allowances as specified in various sections of the Act. The Maharashtra Legislature Members Pensions Act, 1976 makes provision for payment of pension with effect from April 1, 1981 at the rate of Rs. 300 per month to every person who has served as a Member of the State Legislature for a term of 5 years subject to other conditions prescribed in the section. There is a similar Act which makes provisions for salaries and allowances of the Ministers of Maharashtra State. Undoubtedly, M.L.A. receives a salary and allowances in his capacity as M.L.A. Does it make him a person 'in the pay of the Government '? Our attention has been drawn to the meaning of the word 'pay ' in different dictionaries and to the decision in M. Karunanidhi vs Union of India(1) where after ascertaining the meaning of the word 'pay ' given in different dictionaries, the Court observed that the expression 'in the pay of ' does not signify master servant relationship. The word 'pay ' standing by itself in open to various shades of meaning and when the word is used in a phrase 'in the pay of '. it is more likely to have a different connotation than when standing by itself. Before referring to the various shades of meaning set out in the dictionaries, it would be advisable to caution ourselves against an unrestricted reference to dictionaries. Standard dictionaries as a rule give in respect of each woad as meanings in which the word has either been used or it is likely to be used in different contexts and connections. While it may be permissible to refer to dictionaries to find out the meaning in which a word is capable of being used or understood in common parlance, the well known canon of construction should not even for a minute be overlooked that the meaning of the words and expressions used in a statute ordinarily take their colour from the context in which they appear. In Dy. Chief Controller of Imports & Exports, New Delhi vs R.T. Kosalam & Ors.(2) this Court observed as under 540 "It is not always a safe way to construe a statute or a contract by dividing it by a process of etymological dissection and after separating words from their context to give each word some particular definition given by lexicographers and then to reconstruct the instruments upon the basis of those definitions. What particular meaning should be attached to words and phrases in a given instrument is usually to be gathered from the context, the nature of the subject matter, the purpose of the intention of the author and the effect of giving to them one or the other permissible me aning on the object to be achieved. Words are after all used merely as a vehicle to convey the idea of the speaker or the writer and the words have naturally, therefore, to be so construed as to fit in with the idea which emerges on a consideration of the entire context. Each word is but a symbol which may stand for one or a number of objects. The context, in which a word conveying different shades of meanings is used, is of importance in determining the precise sense which fits in with the context as intended to be conveyed by the author". In State Bank of India vs N. Sundara Money, Krishna Iyer, J. speaking for the Court observed in his inimitable style that 'dictionaries are not dictators of statutory construction where the benignant mood of a law, may furnish a different denotation '. With this caution, we may briefly refer to the meaning of the expression 'pay ' and 'in the pay of ' given by different dictionaries. As far as the expression 'pay ' is concerned, a Constitution Bench of this Court in Karunanidhi 's case referred to various dictionaries and concluded that the word ordinarily means 'salary, compensation, wages or any amount of money paid to the person who is described as in the pay of the payer '. Serious exception was taken on behalf of the appellant that no canon of construction would permit picking out shades of meaning of word 'pay ' and then read the phrase 'in the pay of ' as synonymous with the word 'pay '. On the other hand, it was asserted that the point is concluded by the observation of the Constitution Bench that 'so far as the second limb of the clause, 'in the pay of the Government ' is concerned, that appears to be of a much wider amplitude so as to include within its ambit even a public servant who 541 pay of the other person and yet there may not be a master servant relationship between them. The court did not ascertain the meaning ascribed to phrase 'in the pay of ' in different dictionaries. The phrase 'in the pay of ' would ordinarily import the element of employment or paid employment or employed and paid by the employer. In Concise Oxford Dictionary, 7th edition at page 753, the meaning assigned to the expression 'in the pay of ' is 'in the employment of '. In New Collins Concise English Dictionary at page 831, 'in the pay of 'carries one meaning as 'one in paid employment '. In Websters New World Dictionary, the phrase 'in the pay of ' carries the meaning 'employed and paid by '. Relying on all these shades of meaning, it was urged that the phrase 'in the pay of ' does necessarily import the element of master servant relationship and its absence cannot be countenanced. It was submitted even if A is paid by B a sum styled as pay unless B is servant of A, it cannot be said that B is in the pay of A. We see force in this submission. However, it is not implicit in the expression 'in the pay of ' that there ought to exist a master servant relationship between payer and payer. One can be in the pay of another without being in employment or service of the other. We are not inclined to accept the submission that 'in the pay of ' must in the context, imply master servant relationship for the obvious reason that the court has to construe the phrase 'in the pay of ' in its setting where it is preceded by the expression 'in the service of the Government ' and succeeded by the expression 'remunerated by fees or commission for the performance of any public duty by the Government '. The setting and the context are very relevant for ascertaining the true meaning of the expression. In order to avoid the charge of tautology, the phrase 'in the pay of the Government ' in cl. (12) (a) may comprehend a situation that the person may be in the pay of the Government without being in the employment of the Government or without there being a master servant relationship between the person receiving the pay and the Government as payer. It was however, contended that the question whether a person 'in the pay of the Government ' is ipso facto a public servant is no more res integra and concluded by the decision of the Constitution Bench in Karunanidhi 's case? In that case before adverting to the dictionary meaning of the expression 'pay ', the Constitution Bench speaking through Fazal Ali, J. observed as under at page 282: "We are of the opinion that so far as the second limb 'in the pay of the Governments ' is concerned, that appears to be of 542 "We are of the opinion that so far as the second limb 'in the pay of the Government ' is concerned, that appears to be of a much wider amplitude so as to include within its ambit even public servant who may not be a regular employee receiving salary from his master". The Court further observed that "the expression 'in the pay of ' connote that a person is getting salary, compensation, wages or any amount of money. This by itself however, does not lead to the inference that a relationship of master and servant must necessarily exist in all cases where a person is paid salary". We are also of the opinion that the phrase 'in the pay of the Government ' does not import of necessity a master servant relationship. It is perfectly possible to say that a person can be in the pay of the Government if he is paid in consideration of discharging an assignment entrusted to him by the Government without there necessarily being a master servant relationship between them. It is not unusual in common parlance to speak of a person being in the pay of another if he is paid for acting at the behest or according to the desire of the other without the other being his master and he the servant, that is to say without the control over the manner of doing the work which a master servant relationship implies. It is such a category in addition to the one 'in the service of the Government ' that is sought to be comprehended in cl. (12)(a). In respect of the extracted observation of the Constitution Bench, there is no attempt to distinguish the decision in Karunanidhi 's case and therefore, it is not necessity to consider the decisions cited in support of the submission that a judgment of the Supreme Court especially of the Constitution Bench cannot be distinguished lightly and is binding on us and unless questions of fundamental importance to national life are involved, need not be by us. We must however point out that the ratio of the decision in Karunanidhi 's case is not what is extracted hereinbefore but the ratio is to be found at page 290 where the Constitution Bench held the Chief Minister to be a public servant as comprehended in cl. (12)(s) of Sec. 21 on the finding: "1. That a Minister is appointed or dismissed by the Governor and is, therefore, subordinate to him whatever be the nature and status of his constitutional functions. That a Chief Minister or a Minister gets salary for the public work done or the public duty performed by him. That the said salary is paid to the Chief Minister or the Minister from the Government funds". 543 It would appear at glance that no argument was advanced and none has been examined by the Constitution Bench bearing on the interpretation of the expression 'Government ' in cl. (12)(a). It was assumed that salary and allowances paid to the Chief Minister are by Government. What does expression 'Government ' in the clause connote was not even examined. And it is on the aforementioned finding that the Chief Minister was held to be a public servant but that does not conclude the matter. This is not the end of the matter. The question may be posed thus: 'Even if M.L.A. receives salary and allowances under the relevant statute, is he in the pay of the Government '? In other words, what does the expression 'Government ' connote? There is a short and a long answer to the problem. 17 IPC provides that 'the word Government ' denotes the Central Government or the Government of a State '. 7 IPC provides that 'ever expression which is explained in any part of the Code, is used in every part of the Code in conformity with the explanation '. Let it be noted that unlike the modern statute Sec. 7 does not provide 'unless the context otherwise indicate ' a phrase that prefaces the dictionary clauses of a modern statute. Therefore, the expression 'Government ' in Sec. 21 (12)(a) must either mean the Central Government or the Government of a State. Substituting the explanation, the relevant portion of Sec. 21 (12) (a) would read thus: 'Every person in the pay of the Central Government or the Government of a State or remunerated by fees or commission for the performance of any public duty by the Central Government or the Government of a State '. At any rate, the Central Government is out of consideration. Therefore, the question boils down to this: whether M.L.A. is in the pay of the Government of a State or is remunerated by fees for the performance of any public duty by the Government of a State ? In the debate between the Presidential form and Parliamentary form of democracy, during the early days of the Constituent Assembly, the balance tilted in favour of Parliamentary form of Government. Mr. K. M. Munshi, one of the members of the Drafting Committee spoke in this connection as under: "We must not forget a very important fact that, during the last hundred years, Indian public life has largely drawn upon the traditions of British Constitutional Law. Most of us have 544 looked up to the British model as the best. For the last thirty or forty years, some hind of responsibility has been introduced in the governance of the country. Our constitutional traditions have become parliamentary and we have now all our Provinces functioning more or less on the British model. " In Rai Sahib Ram Jawaya Kapur & Ors. vs The State of Punjab a Constitution Bench of this Court observed as under: "Our Constitution, though federal in its structure, is modelled on the British Parliamentary system where the executive is deemed to have the primary responsibility for the formulation of governmental policy and its transmission into law though the condition precedent to the exercise of this responsibility is its retaining the confidence of the legislative branch of the State". It was further observed that "in the Indian Constitution executive as in England and the Council of Ministers we have the same system of parliamentary consisting, as it does, of the members of the legislature is, like, the British Cabinet 'a hyphen which joins, a buckle which fastens the legislative part of the State to the executive part". In Shamsher Singh & Anr. vs State of Punjab, a seven Judges Bench unanimously overruled the decision in Sardari Lal vs Union of India and Ors. and held that 'our Constitution embodies generally the Parliamentary or Cabinet system of Government of the British Model both for the Union and the States '. This view has not been departed from. Now in parliamentary form of Government modelled on British model, the executive, legislature and judicial powers are in the main entrusted to separate instruments of the State. It is not for a moment suggested that there is strict or water fight division of powers, but the functions are certainly divided. In Halsbury 's Laws of England, Fourth Edition, Vol. 8 para 813, separation of executive, legislative and judicial powers in the Westminster Model have been adverted to. It reads as under: "It is clear that the powers of government are divided. The executive, legislative and judicial powers are in the main 545 entrusted to separate instruments of the State; and local government is further administered separately. Thus the original concentration of power in the Sovereign no longer exists; in the eighteenth century this division of the powers of government seemed to be such an essential characteristic of the English Constitution that it was made the basis for the doctrine of separation of powers. This doctrine, which is to the effect that in a nation which has political liberty as the direct object of its constitution on one person or body of persons ought to be allowed to control the legislative, executive and judicial powers, or any two of them, has never in its strict form corresponded with the facts of English government mainly because, although the functions and powers of government are largely separated, the membership of the separate instruments of state overlap. Only in one aspect of the constitution can it be said that the doctrine is strictly adhered to, namely, that by tradition, convention and law the judiciary is insulated from political matters". Parliament that is the Legislature exercises control over the executive branch of the Government because it is a postulate of Parliamentary form of Government that Executive is responsible to the Legislature. In other words the Government of the country is controlled by a ministry and Cabinet chosen by the electorate which while remaining responsible to the electorate is responsible directly to the Legislature and such effective means of exercising control is that any expense from. Consolidated Fund of the State must have been earlier placed before the Legislature. In Halsbury 's Laws of England, Fourth Edition, Vol. 34 para 1005, it is stated that Parliament exercises control over the actions of the executive government and the administration of the laws it has enacted in various ways, one such being by the doctrine of the constitution by which supply is granted annually by the House of Commons and must receive legislative sanction each year and the supply granted must be appropriated to the particular purposes for which it has been granted. It may also be noticed that the staff of the House of Commons is appointed by the House of Commons Commission comprising the Speaker, the Leader of the House of the Commons, a member of the House nominated by the Leader of the opposition and three other members appointed by the House. This Commission is charged with a duty to determine the number and remuneration and other terms and conditions of service. This Commission is also responsible for laying before 546 the House an estimate of the expenses of the House departments and of any other expenses incurred for the service of the House of Commons. (ibid para 1155). Let us turn to relevant provisions of the Constitution. Part VI of the Constitution provides that 'the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with the Constitution. ' Chapter III in Part VI provides for State Legislature. Every State is to have a Legislature which shall consist of the Governor and it can be unicameral or bicameral as the case may be Where the State has a unicameral legislature, the assembly is called Legislative Assembly. article 170 provides for members of the Legislative Assembly being chosen by direct election from territorial constituencies in the State. articles 178 to 186 provide for officers of the State Legislatures such as the Speaker and Deputy Speaker of the Legislative Assembly and Chairman and Deputy Chairman of Legislative Council as the case may be, their powers, functions and their either vacating the office or removal from the office. article 187 (1) provides that 'the House or each House of the Legislature of a State shall have a separate secretarial staff '. Marginal note of the article is 'Secretariat of State Legislature '. Sub art.(2) of article 187 provides that 'the Legislature of a State may by law regulate the recruitment, and the conditions of service of persons appointed, to the secretarial staff of the House or Houses of the Legislature of the State '. article 266 obliges the State to set up its Consolidated Fund. article 203 prescribes the procedure with respect to estimates. The estimates as relate to expenditure charged upon the Consolidated Fund of a State shall not be submitted to the vote of the Legislative Assembly but the discussion in the Legislature is permissible thereon. However, so much of the said. estimates as relate to other expenditure shall be submitted in the form of demands for grants to the Legislative Assembly, and the Legislative Assembly shall have power to assent, or to refuse to assent, to any demand, or to assent to any demand subject to a reduction of the amount specified therein. In other words, Legislative Assembly has complete power of purse. article 204 casts an obligation to introduce a Bill to provide for appropriation out of the Consolidated Fund of the State of all moneys required to meet (a) the grants so made by the Assembly; and (b) the expenditure charged on the Consolidated Fund of the State but not exceeding in any case the amount shown in the statement previously laid before the House or Houses. A conspectus of these provisions clearly indicate that the Legislature enjoys the power of 547 purse. Even with regard to expenses charged on the Consolidated Fund of the State to be set up under article 266, an appropriation bill has to be moved and adopted, undoubtedly, the same would be non votable. And it is not disputed that salaries and allowances payable to M.L.A. are not charged on the Consolidated Fund of the State. This probably is an emulation of the situation in England where salary and allowances of the members of the Parliament are not charged on the Consolidated Fund. As a necessary corollary, it would be a votable item. There thus is a broad division of functions such as executive, legislative and judicial in our Constitution. The Legislature lays down the broad policy and has the power of purse. The executive executes the policy and spends from the Consolidated Fund of the State what Legislature has sanctioned. The Legislative Assembly enacted the Act enabling to pay to its members salary and allowances. And the members vote the grant and pay themselves. In this background even if there is an officer to disburse this payment or that a pay bill has to be drawn up are not such factors being decisive of the matter. That is merely a mode of payment, but the M.L.As. by a vote retained the fund earmarked for purposes of disbursal for pay and allowances payable to them under the relevant statute. Therefore, even though M.L.A. receives pay and allowances, he is not in the pay of the State Government because Legislature of a State cannot be comprehended in the expression 'State Government '. This becomes further clear from the provision contained in article 12 of the Constitution which provides that 'for purposes of Part III, unless the context otherwise requires, "the State" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India '. The expression 'Government and Legislature ', two separate entities, are sought to be included in the expression 'State ' which would mean that otherwise they are distinct and separate entities. This conclusion is further reinforced by the fact that the executive sets up its own secretariat, while article 187 provides for a secretarial staff of the Legislature under the control of the Speaker, whose terms and conditions of the service will be determined by the Legislature and not by the executive. When all these aspects are pieced together, the expression 'Government ' in Sec. 21 (12)(a) clearly denotes the executive and not the Legislature. M.L.A. is certainly not in the pay of the executive. Therefore, 548 the conclusion is inescapable that even though M.L.A. receives pay and allowances, he can not be said to be in the pay of the Government i.e. the executive. This conclusion would govern also the third part of cl. (12)(a) i.e. 'remunerated by fees for performance of any public duty by the Government '. In other words, M.L.A. is not remunerated by fees paid by the Government i.e. the executive. It was also contended that M.L.A. is not performing any public duty. It is not necessary to examine this aspect because it would be rather difficult to accept an undly vide submission that M.L.A. is not performing any public duty. However, it is unquestionable that he is not performing any public duty either directed by the Government or for the Government. He no doubt performs public duties cast on him by the Constitutional and his electorate. He thus discharges constitutional functions for which he is remunerated by fees under the Constitution and not by the Executive. It was further contended that on the analogy of the decision in His Majesty the King vs Boston & Ors.,( ' M.L.A. would be a public servant. In Boston 's case, the allegation was that Harrison and Mitchel more paid to defendant Boston in his official capacity as a Member of the Legislative Assembly of New South Wales and the latter corruptly accepted in that capacity as inducement to him in violation of his official duty to use his position as such member; (a) to secure the acquisition by the Government of the State of New South Wales of certain estates and the payment for such estates out of the public funds of the State; and (b) to put pressure upon the Minister for Lands and other officers of the Crown to acquire and pay for such estates. The contention was that the agreement between the defendants might have been to pay money to Boston to induce him to use his position exclusively outside Parliament, and not by vote or speech in the Assembly, and that the transaction in connection with which he was to use his position to put pressure on the Minister might consistently with the information, be one which would never come before Parliament and which, in his opinion and in the opinion of those who paid him, was highly beneficial to the State; that such an agreement would not amount to a criminal offence, and that consequently the information is bad. Negativing this contention, it was held that it is settled law that an agreement or combination to do an act which tends to produce a public mischief amounts to a criminal conspiracy. It was further 549 held by the majority that the payment of money to, and the receipt of money by, a member of Parliament to induce him to use his official position, whether inside or outside Parliament, for the purpose of influencing or putting pressure on a Minister or other officer of the Crown to enter into or carry out a transaction involving payment of money out of the public funds, are acts tending to the public mischief, and an agreement or combination to do such acts amounts to a criminal offence. The question has been examined in the light of the settled law that an agreement or combination to do an act which tends to produce a public mischief amounts to a criminal conspiracy. Isaacs and Rich, JJ posited the question: how far a member of the Legislative Assembly of New South. Wales can, without incurring any real personal responsibility that is other than political rejection, make his public position the subject of profitable traffic by engaging in departmental intervention on behalf of individuals in return for private pecuniary consideration to himself ? The concurring judgment examined the general position of a member of Parliament and then proceeded to examine the special provisions of the relevant clause. On this point it was concluded that the fundamental obligation, which is the key to this case, is the duty to serve and, in serving, to act with fidelity and with a simplemindedness for the welfare of the community. It was further observed that a member of Parliament is, therefore, in the highest sense, a servant of the State; his duties are those appertaining to the position he fills, a position of no transient or temporary existence, a position forming a recognized place in the constitutional machinery of government. It was also held that he holds an office. In the third concurring judgment of Higgins, J, while conceding that the member of Parliament has to discharge a duty in which the public is interested, but after examining provisions of the public Service Acts, it Was held that he is not public officer within the meaning of that Act because he is not required to obey the commands of the King or of the departmental heads. It was however concluded that as a member of Parliament, he holds a fiduciary relation towards the public, and that is enough. The minority judgment of Gavan Duffy and Starke, JJ. clearly proceeds on their holding that a member of Legislative Assembly of New South Wales is not the holder of a public office within the meaning of the common law and even if he could be regarded as the holder of such an office, the acts charged as intended to be done by the defendant Boston, however improper they may be, would not be malversation in his office or acts done in his office or acts done in his office unless they were done in the discharge of his legislative functions. As we are concerned with a legislative enactment Sec. 21(12)(a), this decision based on the 550 concept of common law and some of the statutes as prevailing in Australia would not be very helpful. It may be mentioned while comparing M.L.A. and M.P. in India with M.P. in U.K. that the M.P. in U.K. is neither covered by the Prevention of Corruption Act, 1906 nor the Prevention of Corruption Act, 1916. It may also be mentioned that The Public Bodies Corrupt Practices Act, 1889 does not cover M.P. in U.K. 'The acceptance by any member of either House of Parliament of a bribe to influence him in his conduct as such member or of any fees, compensation or reward in connection with the promotion of, or opposition to any bill, resolution, matter or thing submitted or intended to be submitted to the House or any committee thereof is a breach of privilege. '( ') Attempts to bring M. P. in U.K. either under the provisions of the Prevention of Corruption Act or the public Bodies Corrupt Practices Act have not met with success. Even such modicum of decency in public life as disclosing relevant, pecuniary interest or benefit of whatever nature whether direct or indirect that he may have had or may be expecting to have while participating in a debate or proceeding in House by M.P. in U.K. was stoutly resisted in 1974. But Paulson Affair stirred many and Royal Commission on Corruption in Public Life headed by Lord Justice Salmon was set up. The Commission inter alia recommended in 1976 that M.Ps. should be brought within the scope of the corruption laws regarding their actions inside as well outside Parliament. No follow up legislative action appears to have been taken since then. If M.L.A. is not in the pay of the Government in the sense of Executive government or is not remunerated by fees for performance of any public duty by the Executive Government, certainly he would not be comprehended in the expression 'public servant ' within the meaning of the expression in cl. (12) (a). He is thus not a public servant within the meaning of the expression in cl.(12) (a). This conclusion reinforces the earlier conclusion reached by us after examining the historical evolution of cl. (12) (a). Mr. Singhvi, however, strenuously contended that M.L.A. would be comprehended in cl. (3) or cl. (7) of Sec. 21 IPC to be a public servant He went so far as to suggest that, his emphasis would have been more on cl. (3) comparatively and not on cl. (12) (a). Therefore, it may now. be examined whether M.L.A. is comprehended either in cl. (3) or cl. (7) of Sec. 21 IPC. 551 Re (e): Cl.(3) of Sec. 21, as it at present stands, takes within its purview every Judge including any person empowered by law to discharge whether by himself or as a member of any body of persons, any adjudicatory functions. Prior to its amendment by Act 40 of 1964 the cl. (3) read simply 'Every judge '. (3) was amended to read, as it at present stands, pursuant to the recommendations of the Santhanam Committee. In Para 7.6 of the Report, it was recommended that 'a ' further category should be added to include all persons discharging adjudicatory functions under any Union of State Law for the time being in force '. With this end in view, the Committee recommended that cl. (3) should read: 'Every Judge including any person entrusted with adjudicatory functions in the course of enforcement of any law for the time being in force '. At the Bill stage, the clause was recast so as to give full effect to the recommendation of the Committee and this equally becomes clear from the Statement of objects and Reasons accompanying Bill No. 67 of 1964 which when adopted became Act 40 of 1964. In para 2 (a) of the Statement of objects and Reasons it is stated that 'the definition of public servant in Sec. 21 of the Indian Penal Code is proposed to be amended so as to bring within its purview certain additional categories of persons such as persons performing adjudicatory functions under any law, liquidators, receivers, commissioners etc. ' If we recall the earlier discussion about the history of evolution of cl, (12) (a) and the entire range of recommendation of the Santhanem Committee, it can be confidently said the M.L.A. was never intended to be brought within the conspectus of clauses of Sec. 21 so as to clothe him with the status of a public servant. Independent of this historical evolution and focussing attention on the language of cl. (3) it is difficult to hold that M.L.A. as a member of a body of persons such as the Legislative Assembly performs any adjudicatory functions empowered by law to discharge that function. In fact, Santhanam Committee contemplated covering such officers like liquidators, receivers, commissioners etc. each of whom is empowered by different statutes to discharge such adjudicatory functions as prescribed by the concerned law. It was however, contended that expression 'Judge ' has been defined in Sec. 19 IPC to denote 'not only every person who is officially designated as a Judge, but also every person who is empowered by law to give, in any legal proceeding, civil or criminal, a definitive judgment, or a judgment which, if not appealed against, would be definitive, or a judgment, if confirmed by some other authority, would be definitive, 552 or who is one of a body of persons which body of persons is empowered by law to give such a judgment and in cl. (3) this definition cannot be substituted because it is an inclusive definition which means it is extensive in character. Accepting the position that inclusive definition extends the specific meaning of the expression which it would not otherwise bear, it is necessary to determine whether this extension of the expression 'Judge ' is so wide as to cover within its umbrella M.L.A. on the ground that while voting upon a motion for breach of privilege or for contempt of the House, he is discharging adjudicatory functions and that he is so empowered by law to do so. When with the permission of the Speaker, a motion for breach of privilege is moved in the Legislative Assembly or a motion for taking action for contempt of the House is moved, undoubtedly, every member of the House has a right to participate and after the motion is debated upon, the majority vote is recorded as a decision of the House. Does that make M.L.A. a person as a member of a body persons who discharges adjudicatory functions? The definition of expression 'Judge ' comprehends adjudication in any legal proceeding, civil or criminal and in which the person as a Judge is empowered to give a definitive judgment. It is difficult to accept the submission that the proceedings before the House either upon a motion for breach of privilege or for contempt is a civil or criminal proceeding, as these terms ordinarily connote. A motion for breach of privilege or for contempt of the House is brought before the House when the mover feels that the powers, privileges and immunities of the House have been violated. The House has the power to punish for contempt ' and the penal jurisdiction of the House is not confined to their own Members nor to offences committed in their presence, but extends to all contempts of the Houses, whether committed by Members or by persons who are not Members, irrespective of whether the offence is committed within the House or beyond its walls '. (See Earskine May Parliamentary Practice 20 ed. p. 122). This power of commitment is truly described as a key stone of Parliamentary Practice. It was pointed out that 'the origin of the power which is judicial in its nature is to be found naturally in the medieval conception of Parliament as primarily a court of justice the High Court of Parliament ' (ibid page 124). It is however, difficult to say that a State Legislature functioning under our Constitution can be described as High Court of Legislative Assembly. In blindly tailoring our Constitutional Law to the Parliamentary Practice in U.K., one is apt to overlook the obvious fact that House of Lords always possessed the judicial power as any Court of Westminster Hall. (ibid p. 124). In this connection in Special 553 Ref. No. 1 of 1964(1) it was clearly stated that the result of the provision contained in the latter part of article 194(3) was not intended to be confer on the State Legislatures in India the status of a superior Court of Record. It was further observed that the House and indeed all Legislative Assemblies in India never discharged any judicial functions and their historical and constitutional back ground does not support the claim that they can be regarded as Court of Record in any sense Undoubtedly, the Legislative Assembly in view of the provisions contained in article 194(3) has the power to inflict punishment for breach of privilege and for contempt of the House And when a motion is moved complaining breach of privilege or for taking action for the contempt of the House, the members would participate in the debate analyse evidence and absence thereof in support of the motion and against the motion and ultimately decide as a body by a democratic process whether the motion is affirmed or rejected. The question is whether this process can be styled as an adjudicatory process discharged by M.L.A. as empowered by law. If the expression 'law ' were to include the Constitution, certainly this power is enjoyed by M.L.A. but expression 'law ' ordinarily does not include the Constitution. Art 13(1) of the Constitution provides that all laws in force in the territory of India immediately before the commencement of the Constitution in so far as they are consistent with the provision of Part III shall to the extent of inconsistency be void. Sub article (2) imposes a restriction on the legislative power of the State to make any law which takes away or abridges the rights conferred by Part III and any law made in contravention of sub Art (2) shall to the extents of the contravention, be void 'Expression 'law ' as used here would be law other than Constitution. in other words law enacted in exercise of the legislative power. The majority view in I.C. Golaknath vs State of Punjab(1) that amendment of the Constitution is part of the legislative process does not survive as valid any longer because it was admitted that Constitution (Twenty Fourth) Amendment Act, 1971 in so far as it transfers the power to amend the Constitution from the residuary entry or Article 248 of the Constitution to Article 368 is valid. After so saying the trend of discussion in various judgments in H.H. Keshvnand Bharathi Sripadanaga galavaru vs State of Kerala and another(2) shows that when the power amend the Constitution is exercise by Parliament it exercises Constituent power and this is independent of the ordinary 554 legislative process. And this approach is borne out by a reference to the definition of expression Indian law in the General Clauses Act which does not include the Constitution. A passing reference may also be made to the form of oath prescribed for a Judge of the Supreme Court and the Judge of the High Court in the Third Schedule which separately refer to the Constitution and the laws. Participation in a debate on a motion of breach of privilege or for taking action for contempt of the House and voting thereon is a constitutional function discharged by the members and therefore, it cannot be said that such adjudicatory function if it can be so styled, constitutes adjudicatory function undertaken by M.L.A. as empowered by law. Viewed from this angle it is not necessary to examine the contention that adjudication and a resultant judgment presupposes a lis between persons other than adjudicator, and M.L.A. has no lis before him as a body of persons when passing upon the motion for contempt or breach of privilege. Accordingly the submission that the accused would be a public servant within the meaning of the expression in cl. (3) of Sec. 21 IPC must be rejected. The last limb of the submission was that at any rate, the accused would be a public servant within the meaning of cl. (7) of Sec. 21 IPC, which takes within its ambit 'every person who holds any office by virtue of which he is empowered to place or keep any person in confinement '. This limb of the submission was not placed for consideration of the learned trial Judge. And it has merely to be stated to be rejected. We, however, did not want to reject it on this narrow ground. Expanding this contention, it was urged that M.L.A. is empowered to adjudge a person guilty of breach of privilege or contempt of the House and when prison sentence is imposed to keep him in confinement. Assuming for the purpose of this argument that M.L.A. holds an office, is he a person empowered to place or keep any person in confinement. Power to impose punishment is independent of the power to keep a person in confinement. First is the power to impose a prison sentence. but second is the power flowing from the execution of the sentence to place or keep any person in confinement meaning thereby, there is an execution of warrant Persons whose duty it is to deprive a person directed to be imprisoned to deprive him of his liberty to remain free and to keep or place him in confinement in due execution of the warrant would be comprehended in cl. It is difficult to accept the submission that M.L.As. as a body can keep or place any person in confinement. Reference was, however, made to some of the passages 555 in Parliamentary Practice by Earskine May, 20th Edn. as also to Practice and Procedure of Parliament, Third Edition by Kaul and Shakdher, p. 208. The authors observed at page 208 that 'each House of the Legislature of State, has the power to secure the attendance of persons on matters of privilege and to punish for break of privilege or contempt of the House and commit the offender to custody or prison '. At page 212, it is observed that 'each House has the power to enforce its orders including the power for its officers to break open the doors of a house for that purpose, when necessary, and execute its warrants in connection with contempt proceedings '. We fail to see how these observations assist us in understanding the expression 'empowered to place or keep any person in confinement. ' Broadly stated, the expression comprehends Police and Prison Authorities or those under an obligation by law or by virtue of office to take into custody and keep in confinement any person. In M P. Dwivedi 's case, this Court observed that Seventh and Eighth clauses of Sec. 21 deal with persons who perform mainly policing duties. To say that M.L.A. by virtue of his office is performing policing or prison officers ' duties would be apart form doing violence to language lowering him in status. Additionally, cl. (7) does not speak of any adjudicatory function. It appears to comprehend situations where as preliminary to or an end product of an adjudicatory function in a criminal case, which may lead to imposition of a prison sentence, and a person in exercise of the duty to be discharged by him by virtue of his office places or keeps any person in confinement. The decisions in Homi D. Mistry vs Shree Nafisul Hussan & Ors.(1). Harendra Nath Barua vs Dev Kanta Barua & Ors (2) and Edward Kelley vs William Carson, John Kent & Ors.(2) hardly shed any light on this aspect. Therefore, the submission that M.L.A. would be comprehended in cl. (7) of Sec. 21 so as to be a public servant must be rejected. Having meticulously examined the submission from diverse angles as presented to us, it appears that M.L.A. is not a public servant within the meaning of the expression in cl. (12)(a), cl. (3) and cl.(7) of Sec. 21 IPC. Re: (f) & (g): The learned Judge after recording a finding that M.L.A. is a public servant within the comprehension of cl. (12)(a) and further recording the finding that as on the date on which the Court 556 was invited to take cognizance, the accused was thus a public servant proceeded to examine whether sanction under Sec. 6 of the 1947 Act is a pre requisite to taking cognizance of offences enumerated in Sec. 6 alleged to have been committed by him. He reached the conclusion that a sanction is necessary before cognizance can be taken. As a corollary he proceeded to investigate and identify, which is the sanctioning authority who would be able to give a valid sanction as required by Sec; 6 for the prosecution of the accused in his capacity as M.L.A.? We have expressed our conclusion that where offences as set out in Sec. 6 are alleged to have been committed by a public servant, sanction of only that authority would be necessary who would be entitled to remove him from that office which is alleged to have been misused or abused for corrupt motives. If the accused has ceased to hold that office by the date, the court is called upon to take cognizance of the offences alleged to have been committed by such public servant, no sanction under Sec. 6 would be necessary despite the fact that he may be holding any other office on the relevant date which may make him a public servant as understood in Sec 21, if there is no allegation that office has been abused or misused for corrupt motives. The allegations in the complaint are all to the effect that the accused misused or abused his office as Chief Minister for corrupt motives. By the time the Court was called upon to take cognizance of those offences, the accused had ceased to hold the office of Chief Minister. The sanction to prosecute him was granted by the Governor of Maharashtra but this aspect we consider irrelevant for concluding that no sanction was necessary to prosecute him under Sec. 6 on the date on which the court took cognizance of the offences alleged to have been committed by the accused. Assuming that as M.L.A. that aspect becomes immaterial. Further Sec. 6 postulates existence of a valid sanction for prosecution of a public servant for offences punishable under Secs. 161, 164, 165 IPC and Sec. 5 of the 1947 Act, if they are alleged to have been committed by a public servant. In view of our further finding that M.L.A. is not a public servant within the meaning of the expression in Sec. 21 IPC no sanction is necessary to prosecute him for the offences alleged to have been committed by him. In view of the conclusions reached by us, we consider it unnecessary to ascertain which would be the authority competent to sanction prosecution of M.L.A. as envisaged by Sec. 6 thought it must be frankly confessed that considerable time was spent in the deliberations 557 in search of competent sanctioning authority. The vital question has become one of academic interest. We propose to adhere to the accumulated wisdom which has ripened into a settled practice of this Court not to decide academic questions. The question is left open. Before we conclude let it be clarified that more often in the course of this judgment, we have used the words `office of M.L.A. ' It was debated whether the M.L.A. holds seat or office? Our use of the expression `office ' should not be construed to mean that we have accepted that the position of M.L.A. can be aptly described. as one holding public office or for that matter. To sum up, the learned special Judge was clearly in error in holding that M.L.A. is a public servant within the meaning of the expression in Sec. 12(a) and further erred in holding that a sanction of the Legislative Assembly of Maharashtra or majority of the members was a condition precedent to taking cognizance of offences committed by the accused. For the reasons herein stated both the conclusions are wholly unsustainable and must be quashed and set aside. This appeal accordingly succeeds and is allowed. The order and decision of the learned Special Judge Shri R.B. Sule dated. July 25, 1983 discharging the accused in Special Case No. 24 of 1982 and Special Case No.3/83 is hereby set aside and the trial shall proceed further from the stage where the accused was discharged. The accused was the Chief Minister of a premier State the State of Maharashtra. By a prosecution launched as early as on September 11, 1981, his character and integrity came under a cloud. Nearly 2/1/2 years have rolled by and the case has not moved an inch further. An expeditious trial is primarily in the interest of the accused and a mandate of article 21. Expeditious disposal of a criminal case is in the interest of both, the prosecution and the accused. There, fore, Special Case No. 24 of 1982 and Special Case. No 3/83 pending in the Court of Special Judge, Greater Bombay Shri R.B. Sule are withdrawn and transferred to the High Court of Bombay with a request to the to the learned Chief Justice to assign these two cases to a sitting Judge of the High Court. On being so assigned, the learned Judge may proceed to expeditiously dispose of the cases Preferably by holding the trial from day to day.
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R.S. Nayak, the person making the complaint, said that A.R. Antualy, a government official who was the Chief Minister of Maharashtra, misused his power. He filed the complaint under certain sections of the Indian Penal Code (I.P.C.) and the Prevention of Corruption Act of 1947. The complaint was first rejected because R.S. Nayak didn't have permission from the Governor of Maharashtra to prosecute A.R. Antualy, as required by the 1947 Act. Later, the Governor gave the necessary permission, so R.S. Nayak filed a new complaint against A.R. Antualy in the Special Judge's Court, using the same reasons as before. However, by the time the new complaint was filed, A.R. Antualy had already quit his job as Chief Minister. A.R. Antualy argued that the Special Judge didn't have the authority to try him under the Criminal Law Amendment Act of 1952, and that the court couldn't accept a complaint filed by a private citizen. The Special Judge disagreed with A.R. Antualy's arguments. Meanwhile, the state government issued an order under the Criminal Law Amendment Act of 1752 to move the case to a different Special Judge. A.R. Antualy filed a criminal appeal against the first Special Judge's order. A panel of judges in the High Court decided that the first Special Judge did have the power to try A.R. Antualy and that the private complaint was valid. When the second Special Judge started working on the case, A.R. Antualy asked to be let off, saying the charges against him were without basis. He also claimed that because he was a Member of the Legislative Assembly (M.L.A.), permission was needed under the 1947 Act to prosecute him. The Special Judge released A.R. Antualy, stating that as an M.L.A., he was a government official under the I.P.C., and without permission from the Legislative Assembly, the court couldn't proceed with the case. The Special Judge also said that the important date for deciding whether permission was needed under the 1947 Act was the date when the court was asked to consider the case. R.S. Nayak challenged the Special Judge's order in this appeal. The main questions to be answered were: (a) What is the key date for deciding if permission is needed to prosecute a government official under the 1947 Act? (b) If the accused person holds multiple positions that each qualify them as a government official, is permission needed from every authority that can remove them from each position? If one authority refuses permission, does that stop the court from taking up the case? Or does the 1947 Act mean that only the permission of the authority that can remove the official from the specific position they allegedly misused is necessary? (c) Is an M.L.A. a government official according to the I.P.C.? (d) Is permission needed to prosecute an M.L.A. under the 1947 Act? If so, which authority has the power to grant that permission? The appeal was allowed. The court stated that laws should be interpreted in a way that supports their goals, not defeats them. If the words of a law are clear, the court must apply their plain meaning. If the plain meaning of the words is unclear or leads to a contradictory result, the court can try to understand the legislature's intention by looking at the law as a whole. The court should consider the problem the law was meant to solve. When a law is unclear or has multiple possible interpretations, the court should choose the interpretation that best achieves the law's purpose. The main goal of interpreting laws is to understand what Parliament intended when creating the law. To do this, the court can use resources that Parliament used, such as reports from special committees, the existing laws, the situation that led to the law, and the goals of the law. Denying the court access to these resources would prevent it from fully understanding Parliament's intention. Therefore, unlike previous English court decisions, reports from committees, parliamentary groups, and commissions that helped create the law are allowed as external sources for interpreting the law. When interpreting a law, especially an old one, the court can look at the circumstances at the time the law was created. The meaning of old laws can be clarified by seeing how they were understood when they were passed. This is known as "contemporanea expositio." Standard dictionaries usually list many possible meanings for each word, based on how the word has been or could be used in different situations. While dictionaries can be helpful for finding the common meaning of a word, it's important to remember that the meaning of words in a law should be based on the context in which they are used. Section 6 of the Prevention of Corruption Act of 1947 prevents courts from hearing cases against government officials for certain offenses, unless they have prior permission from the appropriate authority. Therefore, when a court is asked to hear such a case, it must check if there is valid permission to prosecute the official for the alleged offense. The accused person must have been a government official when the offense was committed, because the relevant sections of the I.P.C. and the 1947 Act state that these offenses can only be committed by government officials. A trial without valid permission, when permission is required under Section 6, would be a trial without legal authority. The key date for deciding whether permission is needed to prosecute a government official is the date when the court is asked to hear the case. If the accused was a government official when the offense was committed, but is no longer a government official when the court is asked to hear the case, Section 6 doesn't apply, and no permission is needed. This approach aligns with the purpose of Section 6, which is to protect government officials from unnecessary or speculative legal cases. If the person is no longer a government official, this protection is no longer needed. In this case, A.R. Antualy had already left his position as Chief Minister long before the Special Judge was asked to hear the case. Therefore, he was no longer a government official in his role as Chief Minister. As a result, no permission was required under Section 6 before the court could hear the case against him for offenses allegedly committed while he was Chief Minister. The argument that permission is needed from every authority that could remove A.R. Antualy from any position he holds that qualifies him as a government official is not acceptable. Such an interpretation of Section 6 would allow dishonest government officials to avoid prosecution. Someone who wants to protect the official could move them to a different government position, preventing the legal process from moving forward. This interpretation goes against the principles of legal interpretation and leads to an absurd result, which should be avoided. The term "office" in Section 6(1) refers to the specific position that the government official misused for corrupt purposes. Permission to prosecute is needed from the authority that can remove them from that specific position. The authority that grants permission must carefully consider the facts of the case, the evidence, and other relevant information. Granting permission is not just a formality; it's a serious action that removes the protection government officials have against frivolous legal cases. The requirements for granting permission must be strictly followed before a prosecution can be started against a government official. Therefore, Section 6 implies that permission is only needed from the authority that can remove the official from the specific position they allegedly misused for corrupt purposes. The Special Judge's decision that A.R. Antualy was a government official as an M.L.A. and that permission from the Legislative Assembly was needed to prosecute him is incorrect. A person is a government official under Section 21 of the I.P.C. if they fall into one of three categories: (i) they are employed by the government; (ii) they are paid by the government; or (iii) they are paid fees or commissions by the government for performing a public duty. Looking at the history and development of Section 21 of the I.P.C., it's clear that an M.L.A. was not and is not a government official under any of the clauses in Section 21 of the I.P.C. Even if it's not legally correct to interpret Section 21(12)(a) based solely on its historical development, a valid approach is to look at the language used in the section to determine if an M.L.A. is a government official under that section. Depending on the context, the word "or" can have different meanings. The use of "or" in clause (12)(a) seems to indicate that the categories are separate. Therefore, a person is a government official if they meet any one of the three conditions. The question is whether an M.L.A. falls into any of these three categories. It is agreed that an M.L.A. is not employed by the government, but it is argued that they are paid by the government. M.L.A.s do receive a salary and allowances as M.L.A.s under the relevant laws. But does this mean they are "in the pay of the Government"? The word "pay" can have different meanings, and when used in the phrase "in the pay of," it's likely to have a different meaning than when it stands alone. The phrase "in the pay of" usually suggests an employer-employee relationship, where someone is employed and paid by the employer. The phrase doesn't necessarily mean that there is a master-servant relationship between the person receiving the pay and the government as the payer. Next, what does the term "Government" mean in clause (12)(a) of Section 21 of the I.P.C.? Section 17 of the I.P.C. states that "Government" refers to the Central Government or the government of a state. Section 7 of the I.P.C. states that "every expression which is explained in any part of the Code, is used in every part of the Code in conformity with the explanation." Unlike modern laws, Section 7 doesn't include the phrase "unless the context otherwise indicates." Therefore, the term "Government" in Section 21(12)(a) must mean either the Central Government or the government of a state. Since the Central Government is not relevant here, the question is whether an M.L.A. is paid by the government of a state or is paid fees for performing a public duty by the government of a state. Even though M.L.A.s receive pay and allowances, they are not paid by the state government, because the legislature of a state cannot be considered the same as the "State Government." This conclusion also applies to the third part of clause (12)(a): "paid fees for performance of any public duty by the Government." Therefore, if an M.L.A. is not paid by the executive branch of the state government or is not paid fees for performing a public duty by the executive branch of the government, they cannot be considered a "government official" under clause (12)(a). Thus, an M.L.A. is not a government official under clause (12)(a). This conclusion supports the earlier conclusion reached after examining the historical development of clause (12)(a). The argument that the accused is a government official under clause (3) of Section 21 of the I.P.C., which includes "any person empowered by law to discharge any adjudicatory functions," must be rejected. Participating in a debate on a motion about a breach of privilege or for taking action for contempt of the House and voting on it is a constitutional function performed by the members. Therefore, it cannot be said that these functions, even if they can be called adjudicatory, are adjudicatory functions undertaken by an M.L.A. as empowered by law. The argument that an M.L.A. is a government official under clause (7) of Section 21 of the I.P.C. must be rejected. Clause (7) includes "every person who holds any office by virtue of which he is empowered to place or keep any person in confinement." This generally refers to police and prison authorities or those who are legally obligated to take someone into custody and keep them confined. To say that an M.L.A. is performing "policing or prison officers" duties would be an inaccurate and demeaning description. Additionally, clause (7) doesn't mention any adjudicatory function. It seems to refer to situations where, before or after an adjudicatory function in a criminal case that could lead to imprisonment, someone places or keeps a person in confinement as part of their official duty. Since an M.L.A. is not a government official under clauses (12)(a), (3), and (7) of Section 21 of the I.P.C., no permission is needed under Section 6 of the Prevention of Corruption Act to prosecute them. Therefore, it's not necessary to determine which authority would be competent to grant permission to prosecute an M.L.A. In this case, the complaint alleges that the accused misused his position as Chief Minister for corrupt purposes. By the time the court was asked to hear the case, the accused had already left his position as Chief Minister. The Governor of Maharashtra granted permission to prosecute him, but this is not relevant because no permission was needed to prosecute him under Section 6 for the alleged offenses. Even if the accused is a government official as an M.L.A. under Section 21, that is not relevant because there are no allegations that he misused his position as an M.L.A. Furthermore, Section 6 requires valid permission to prosecute a government official for offenses punishable under certain sections of the I.P.C. and Section 5 of the 1947 Act, if those offenses were allegedly committed by a government official. Since an M.L.A. is not a government official under Section 21 of the I.P.C., no permission is needed under Section 6 to prosecute them for the alleged offenses.
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356 of 1983 From the judgment and order dated 25 7 83 of the Special judge, Bombay in Special Case No. 5 of the 1947 Act, Sec. Not the accused but the State of Maharashtra preferred an appeal by special leave under article 136 of the Constitution against the decision of the Division Bench of the High Court rejecting the special criminal application; This. 24 of 1982 against the accused as Accused No. When the case was called out on October 18, 1982 an application was moved on behalf of the accused inter alia contending that the Court of the learned special Judge had no jurisdiction in view of the provision contained in Sec. 14, 15 and 16 of 1977 and Special Case No. Sue on receipt of the record of the case issued a notice on April 27, 1982 calling upon all parties to appear before him on April 21, 1983. lt appears on July 8, 1783, two applications were moved on behalf of the accused urging the learned trial Judge; (i) to discharge the accused inter alia on the ground that the charge was groundless and that even though the accused 506 had ceased to be the Chief Minister, on the date of taking cognizance of the offences, he was a sitting member of the Maharashtra Legislative Assembly and as such a public servant and in that capacity a sanction to prosecute him would have to be given by the Maharashtra Legislative Assembly and the sanction granted by the Governor would not be valid in this behalf. Proceeding further it was held that even though the accused had ceased to hold the office of the Chief Minister on the date 507 on which cognizance was taken by the learned special Judge, Shri Bhutta, yet on that date he was a sitting M.L.A. and was therefore a public servant within the meaning of the expression in Sec. is a person in the pay of the Government or at any rate he is remunerated by fees for performance of public duty by the Government and therefore, he is a public servant. As a corollary, the learned Judge held that as on the date of taking cognizance of the offence the accused was a public servant, he could not be prosecuted without a valid sanction as contemplated by Sec. The learned Judge further held that as there was no sanction by the Maharashtra Legislative Assembly to prosecute the accused and as the Governor had no power to sanction prosecution of the accused in his capacity as M.L.A. 5 of the 1947 Act for want of a valid sanction for prosecution, and in respect of the other offences, the accused is entitled to be discharged on the ground that the court of the special Judge had no jurisdiction to try the accused for those offences. Seventh: Every person who holds any office by virtue of which he is empowered to place or keep any person in confinement Twelfth Every person (a) in the service or pay of the Government or remunerated 508 by fees or commission for the performance of any public duty by the Government; (b) in the service or Pay of a local authority, a corporation establishes by or under a Central, Provincial or State Act or a Government Company as defined in Section 617 of the . It reads as under: "6(1) No court shall take cognizance of an offence punishable under Section 161 or Section 165 of the Indian Penal Code, or under sub section (2) of Section S of this Act, alleged to have been committee by a public servant, except with the previous sanction, (a) in the case of a person who is employed in connection with affairs of the Union and is not removable from his office save by or with the sanction of the Central Government, (b) in the case of a person who is employed in connection with the affairs of a State and is not removable from his office save by or with the sanction of the State Government, (c) in the case of ally other person, of the authority competent to remove him from his office. (2) Where for any reason whatsoever any doubt arises whether the previous sanction as required under sub section (1) should be given by the Central or State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed". The recommendations of the Committee led to the enactment of the Criminal Law Amendment Act, 1952 By the 1952 Act, power was conferred on the State Government to appoint special offences as may be necessary for such area or areas as may be specified in the notification to try the following offences namely; offences punishable under Sections 161, 162, 163, 164, 165 and 165A IPC and Sec. is a public servant within the meaning of the expression under Sec. The second submission was that if the first question is answered in the affirmative, it would be necessary to examine whether a sanction as contemplated by Sec. lt was urged that as the allegation against the accused in the complaint is that he abused or misused his office as Chief Minister and as by the time the complaint was filed and cognizance was taken, he had ceased to hold the office of the Chief Minister no sanction under Sec. The next limb of the argument was that if an accused hold plurality of Offices, each of which confers on him the status of a public servant and even if it is alleged that he has abused or misused one office as a public servant notwithstanding, the fact that there no allegation of abuse or misuse of other office held as public servant, sanction of each authority com 511 petent to remove him from each of the offices would be a sine qua non under Sec. a public servant within the meaning of the expression in Sec. a public servant within the meaning of the expression in Sec.21(3) and Sec. Therefore, when the court is called upon to take cognizances of such offences, it must enquire whether there is a valid sanction to prosecute the public servant for the offence alleged to have been committed by 513 him as public servant. Undoubtedly, the accused must be a public servant when he is alleged to have committed the offence of which he is accused because Sections 161, 164, 165 IPC and Sec. (1) and S.N. If therefore, when the offence is alleged to have been committed, the accused was a public servant but by the time the court is called upon to take cognizance of the offence committed by him as public servant, he has ceased to be public servant, no sanction would be necessary for taking cognizance of the offence against him. As a necessary corollary, if the accused has ceased to be a public servant at the time when the court is called upon to take cognizance of the offence alleged to have been committed by him as public servant, Sec. In S.A. Venkataraman vs The State(4) this Court held as under: "In or opinion, in giving effect to the ordinary meaning of the words used in section 6 of the Act, the conclusion is inevitable that at the time a court is asked to take cognizance not only the offence must have been committed by a public servant but the person accused is still a public servant removable from his office by a competent authority before the provisions of section 6 can apply. He was appointed as Chief Minister of Maharashtra State, and he was holding that office at the time he is alleged to have committed the offences set out in the complaint filed against him. The contention is that as M.L.A., he was a public servant, a submission seriously controverted, which we would presently examine and that he was such public servant even on the date on which the court took cognizance of the offences set out in the complaint without a valid sanction and therefore the court had no jurisdiction to take cognizance of the offences. Proceeding along this line it was urged that even if the accused has ceased to be a public servant in one capacity by ceasing to hold the office which he is alleged to have misused or abused yet if he continued to be a public servant in another capacity, the authority competent to remove him from the latter office would have to decide whether the prosecution is frivolous or speculative and in larger public interest to thwart it by declining to grant the sanction. The offence could be committed by the public servant by misusing or abusing the power of office and it is from that office, the authority must be competent to remove him so as to be entitled to grant sanction. 5 of the 1947 Act, it is implicit in the various offences that the public servant has misused or abused the power of office held by him public servant. Therefore, it unquestionably follows that the sanction to prosecute can be given by an authority competent to remove the public servant from the office which he has misused or abused because that authority alone would be able to know whether there has been a misuse or abuse of the office by the public servant and not some rank outsider. 21 IPC and even if he has abused only one office for which either there is a valid sanction to prosecute him or he has ceased to hold that office by the time court was called upon to take cognizance, yet on this assumption, sanction of 11 different competent authorities each of which was entitled to remove him from 11 different public offices would be necessary before the court can take cognizance of the offence committed by such public servant, while abusing one office which he may have ceased to hold. A contention was raised on behalf of the accused that the court could not take cognizance of the offence in the absence of a valid sanction of the authority competent to remove him from the office held by him as a public servant. Accordingly, it was held that a sanction to prosecute him was necessary and in the absence of which the court could not that cognizance of the offences and the prosecution was quashed. The court further held that as such the accused was a public servant as an active member of the Indian Air Force and a sanction to prosecute him under Sec. We would however, like to make it abundantly clear that if the two decisions purport to lay down that even if a public servant has ceased to hold that office as public servant which he is alleged to have abused or misused for corrupt motives, but on the date of taking cognizance of an offence alleged to have been committed by him as a public servant which he ceased to be and holds an entirely different public office which he is neither alleged to have misused or abused for corrupt motives, yet the sanction of authority competent to remove him from such latter office would be necessary before taking cognizance of the offence alleged to have been committed by the public servant while holding an office which he is alleged to have abused or misused and which he has ceased to hold, the decisions in our opinion, do not lay down the correct law and cannot be accepted as making a correct interpretation of Sec. 6, it is implicit therein that sanction of that competent authority alone would be necessary which is competent to remove the public servant from the office which he is alleged to have misused or abused for corrupt motive and for which a prosecution is intended to be launched against him. The learned special Judge simultaneously rejected the contention canvassed on behalf of the accused that the accused is a public servant because he is a person empowered by law to discharge as a member of a body of persons adjudicatory functions as contemplated by the Third clause of Sec. was in the pay of the Government or was remunerated by fees for the performance of any public duty by the Government so as to be clothed with the status of a public servant within the meaning of cl. (12)(a) provides that every person in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty by the Government would be a public servant. If any person falls in any of the three limbs according to the 522 learned special Judge, he would be a public servant within the meaning of the expression in Sec. It was contended on behalf of the complainant that the expression `in the pay of the Government ' would, in the context in which the expression is used in Sec. As a corollary it was submitted that the remuneration in the form of pay which the accused receives and has been receiving since he ceased to be the Chief Minister under the relevant Act is remuneration for the performance of the public duty by the Government. Mr. Singhvi contended that even where the words in a statute are ambiguous and may be open to more than one meaning or sense, a reference to the debates in Parliament or the report of a Commission or a Committee which preceded the enactment of the statute under consideration is not a permissible aid to construction. as the holder of that office which must have come into existence by the time under the Government of India Act, 1919, was not a public servant falling in any of the clauses of Sec. 617 of the '. (9) of Sec 21 was dissected as recommended and its last part 'and every officer in the service are pay of the Government or remunerated by fees or commission for the performance of any public duty ' was detached and re enacted as cl. Later on in the debate it was conceded that the Minister is already included in the definition of 'public servant ' even before the proposed amendment in view of the decision of the Supreme Court in Shiv Bahadur Singh 's case in which Minister was held to be a public servant. 729 and 731). was not comprehended as a public servant in Sec. In the appeal by the State, this Court held that the case of the accused would be covered by the last part of cl. (9) as (12)(a). was not and is not a 'public servant ' within the meaning of the expression in any of the clauses of Sec. A person would be a public servant under cl. (12) (a) if (i) he is in the service of the Government; or (ii) he is in the pay of the Government; or (iii) he is remunerated by fees or commission for the performance of any public duty by the Government. On behalf of the complainant appellant, it was contended that in order to make a person a public servant on the ground that he is in the pay of the Government, there must exist a master servant relationship or a command obedience relationship, and if these elements are absent even if a person is in the pay of the Government, he would not be a public servant. (12) (a) which provides that every person in the service of the Government would be a public servant. It was urged that if even for being comprehended in the second part of the clause namely, a person would be a public servant if he is in the pay of the Government, their ought to be a master servant or command obedience relationship, the Legislature would be guilty of tautology and the disjunctive 'or ' would lose all significance. The three categories are as held by the learned special Judge; (i) a person in the service of the Government; (ii) a person in the pay of the Government; and (iii) a person remunerated by fees or commission for the performance of any public duty the Government. One can be in the service of the Government and may be paid for the same. We therefore consider it unnecessary to refer to those decisions, which were cited on behalf of the respondent that the correct canon of construction to be adopted in such a situation is that effect must be given, if possible, to the words used in the statute, for the Legislature is deemed not to waste its words or to say anything in vain. a person 'In the pay of the Government ' so as to be public servant within the meaning of the expression in Sec. article 195 of the Constitution provides that ' Members of the Legislative Assembly and the Legislative Council of a State shall be entitled to receive such salaries and allowances as may from time to time be determined by the Legislature of the State by law and, until provision in that respect is so made, salaries and allowances at such rates and upon such conditions as were immediately before the commencement of the Constitution applicable in the case of members of the Legislative Assembly of the corresponding Province. ' We are not inclined to accept the submission that 'in the pay of ' must in the context, imply master servant relationship for the obvious reason that the court has to construe the phrase 'in the pay of ' in its setting where it is preceded by the expression 'in the service of the Government ' and succeeded by the expression 'remunerated by fees or commission for the performance of any public duty by the Government '. 21 (12) (a) would read thus: 'Every person in the pay of the Central Government or the Government of a State or remunerated by fees or commission for the performance of any public duty by the Central Government or the Government of a State '. is in the pay of the Government of a State or is remunerated by fees for the performance of any public duty by the Government of a State ? receives pay and allowances, he is not in the pay of the State Government because Legislature of a State cannot be comprehended in the expression 'State Government '. This becomes further clear from the provision contained in article 12 of the Constitution which provides that 'for purposes of Part III, unless the context otherwise requires, "the State" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India '. would be a public servant. and M.P. in U.K. that the M.P. is not in the pay of the Government in the sense of Executive government or is not remunerated by fees for performance of any public duty by the Executive Government, certainly he would not be comprehended in the expression 'public servant ' within the meaning of the expression in cl. He is thus not a public servant within the meaning of the expression in cl. is not a public servant within the meaning of the expression in cl. (12)(a) and further recording the finding that as on the date on which the Court 556 was invited to take cognizance, the accused was thus a public servant proceeded to examine whether sanction under Sec. 6 are alleged to have been committed by a public servant, sanction of only that authority would be necessary who would be entitled to remove him from that office which is alleged to have been misused or abused for corrupt motives. If the accused has ceased to hold that office by the date, the court is called upon to take cognizance of the offences alleged to have been committed by such public servant, no sanction under Sec. 6 would be necessary despite the fact that he may be holding any other office on the relevant date which may make him a public servant as understood in Sec 21, if there is no allegation that office has been abused or misused for corrupt motives. is not a public servant within the meaning of the expression in Sec. is a public servant within the meaning of the expression in Sec. The accused was the Chief Minister of a premier State the State of Maharashtra.
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Antualy argued that the Special Judge didn't have the authority to try him under the Criminal Law Amendment Act of 1952, and that the court couldn't accept a complaint filed by a private citizen. Meanwhile, the state government issued an order under the Criminal Law Amendment Act of 1752 to move the case to a different Special Judge. Antualy filed a criminal appeal against the first Special Judge's order. Antualy, stating that as an M.L.A., he was a government official under the I.P.C., and without permission from the Legislative Assembly, the court couldn't proceed with the case. The Special Judge also said that the important date for deciding whether permission was needed under the 1947 Act was the date when the court was asked to consider the case. The main questions to be answered were: (a) What is the key date for deciding if permission is needed to prosecute a government official under the 1947 Act? Or does the 1947 Act mean that only the permission of the authority that can remove the official from the specific position they allegedly misused is necessary? To do this, the court can use resources that Parliament used, such as reports from special committees, the existing laws, the situation that led to the law, and the goals of the law. While dictionaries can be helpful for finding the common meaning of a word, it's important to remember that the meaning of words in a law should be based on the context in which they are used. Therefore, when a court is asked to hear such a case, it must check if there is valid permission to prosecute the official for the alleged offense. If the accused was a government official when the offense was committed, but is no longer a government official when the court is asked to hear the case, Section 6 doesn't apply, and no permission is needed. In this case, A.R. As a result, no permission was required under Section 6 before the court could hear the case against him for offenses allegedly committed while he was Chief Minister. Antualy from any position he holds that qualifies him as a government official is not acceptable. Antualy was a government official as an M.L.A. A person is a government official under Section 21 of the I.P.C. if they fall into one of three categories: (i) they are employed by the government; (ii) they are paid by the government; or (iii) they are paid fees or commissions by the government for performing a public duty. was not and is not a government official under any of the clauses in Section 21 of the I.P.C. is a government official under that section. is not employed by the government, but it is argued that they are paid by the government. Therefore, the term "Government" in Section 21(12)(a) must mean either the Central Government or the government of a state. is paid by the government of a state or is paid fees for performing a public duty by the government of a state. Therefore, if an M.L.A. is not a government official under clause (12)(a). The argument that the accused is a government official under clause (3) of Section 21 of the I.P.C., which includes "any person empowered by law to discharge any adjudicatory functions," must be rejected. is a government official under clause (7) of Section 21 of the I.P.C. It seems to refer to situations where, before or after an adjudicatory function in a criminal case that could lead to imprisonment, someone places or keeps a person in confinement as part of their official duty. is not a government official under clauses (12)(a), (3), and (7) of Section 21 of the I.P.C., no permission is needed under Section 6 of the Prevention of Corruption Act to prosecute them. Therefore, it's not necessary to determine which authority would be competent to grant permission to prosecute an M.L.A. The Governor of Maharashtra granted permission to prosecute him, but this is not relevant because no permission was needed to prosecute him under Section 6 for the alleged offenses. Even if the accused is a government official as an M.L.A. under Section 21, that is not relevant because there are no allegations that he misused his position as an M.L.A. and Section 5 of the 1947 Act, if those offenses were allegedly committed by a government official. is not a government official under Section 21 of the I.P.C., no permission is needed under Section 6 to prosecute them for the alleged offenses.
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